The world of customer experience moves in waves, pushed and pulled over time by dynamic factors such as price, convenience, scale, and technological innovation.
Think of the changes we have seen in grocery shopping. Our parents’, or grandparents’ generation may have expected a one-to-one service in small shops and markets within their community, dealing with people who knew them personally. But over time, with economic changes and advances in transport, food production and storage, and trends within society and the workforce, supermarkets and large, out of town shopping centres became the norm. Consumers chose scale and price competitiveness over more personal levels of service.
Since then, perhaps aware another wave would come along and disrupt them in the way they disrupted traditional retailers, supermarkets have been trying to get more personal and improve the customer experience through store layout, loyalty schemes, online shopping and home delivery. Over time, data and analytics have played an increasing role in how supermarkets assessed and planned customer experience.
But now we see the hegemony of the supermarkets being challenged by a resurgence in farmers markets and a dramatic rise in small retailers and online subscription services for everything from razors to fresh fruit and vegetables. The inconveniences of having to visit multiple shops for multiple items are being eroded by online and home delivery, or being trumped by the desire for greater experiences.
Consumers in growing numbers are being drawn in by the desire for new, more bespoke experiences and are increasingly prizing the experience over other factors. McKinsey data shows US consumers, a key barometer of how trends will play out worldwide, are now spending more on experiences than products, and millennials are spending more on experiences than past generations. As millennial incomes grow and this trend matures globally, the significance of the experience economy will the defining trend of the era.
We are also seeing data play an even greater role in experience. Smart businesses are recognising the importance of the data they collect and create in helping them gain a greater understanding of their customers and the ways in which they can adapt the experience they provide to better meet heightened consumer expectations.
The adoption of AI, which looks set to spike this year, will dramatically increase the ability of brands to analyse their data and create greater experiences based on in-depth understanding of their customers. Recent Adobe research revealed 48% of businesses expect to roll out AI for customer and business analytics in 2019.
As such, as the year begins, we confidently predict the growing importance of customer experience will be the most significant trend of 2019. A confluence of factors will make it more important than ever, but here’s my take on the four reasons why this trend will gather significant pace through 2019, across many industries, from automotive to financial services and retail.
1. Across society, we have seen changes that have put a greater focus on the quality of experience companies deliver. People have less time to spare and more things competing for their attention. They value convenience above all else in this environment, and want access to everything on-demand. Today, even the best product in the world loses its attraction if customers feel they need to put too much effort or time into obtaining it.
2. Increasingly the things we buy are digital. We are amassing fewer physical possessions and instead we are buying digital experiences. In the past year, music streaming overtook CD sales for the first time, according to figures from industry body the International Federation of the Phonographic Industry (IFPI). Similarly, we’ve seen DVD sales and rentals replaced by services such as Netflix which has become synonymous with a new kind of at-home experience, from bringing far greater choice – or more arguments, depending on your perspective – to a family movie night, to giving the world the phrase “Netflix and chill”.
Such digital experiences need to reflect the individuality and preferences of consumers and the analysis of data, and using that data to personalise an experience is crucial. An example from our own work with Condé Nast is the way the publisher uses data captured about a reader’s consumption habits to tailor their online and in-app experience. For example, a Glamour reader who receives the Condé Nast newsletter will be more likely to read articles about fashion rather than football; and a reader of Wired will respond better to advertising promoting GQ subscriptions. A customer’s reading patterns is an essential piece of data that should shape their experience. Using that information to make their experience more tailored is a smart move, promoting matches and content relevant to their team.
3. Micro and macro-economic trends are proving significant and will put an even greater emphasis on experience in the coming year. Young people are increasingly choosing to spend their money on experiences and services, rather than amassing the traditional trappings of grown-up life such as a home and a car, that may have motivated their parents. Car sharing schemes are rising, and are a clear example of why experience, over product, is so important. If people are no longer buying cars but rather are hiring a car only when they need it, the car itself is less important than the service. Those moments of need shine a light on the quality of the service and experience – how easy it is to find a car in good condition that works perfectly for their purposes, for the duration they need it.
4. Social media and vicarious living via Instagram, Snapchat, and Facebook have raised the profile of experiences further and brought an almost competitive element to dining out, travelling, and enjoying exotic locations. Such platforms have also created a new way of interacting with brands, enabling people to enjoy a more personalised, more engaging relationship with the brands they buy from or use.
We are now in an age of experience and the companies who recognise this and respond most effectively, with an agile, adaptable approach that can change with future waves of consumer expectations will be the victors in an increasingly competitive marketplace.