The customer-journey nurturing that brands are mandated to do in this age of CX has set many brands back on their heels, and if then result has been poor CX, a lot of them have paid the price in today’s fickle marketplace. But new research from customer engagement platform Twilio shows that those that have invested in customer engagement continue to drive revenue growth and meet their financial goals in the face of economic headwinds.
The proof is in the numbers: The firm’s fourth annual State of Customer Engagement report reveals that amid constrained resources and economic uncertainty, investment in digital customer engagement increased brands’ revenue by a whopping 90 percent on average, up from 70 percent last year.
The data also show that effective customer engagement strengthens brands’ ability to adapt to shifting market conditions and evolving consumer preferences. Customer engagement leaders report increased customer retention, conversion and long-term loyalty, while six out of 10 companies report that investment in digital customer engagement improved their ability to meet changing customer needs.
This year’s research explores essential consumer trends around personalization, data privacy and trust. The findings highlight the urgent need for brands to leverage zero- and first-party data—data collected directly from interactions with customers rather than a third party—in order to improve CX and increase customer lifetime value.
The stakes of using data effectively are high, with 66 percent of consumers claiming they will stop using a brand if their experience is not personalized. Meanwhile, brands continue to overestimate how well they are meeting consumer expectations for communication preferences, protecting customer data privacy, and transparency around customer data usage.
Additional consumer insights include:
Consumers want a faster transition to a cookieless future
Nearly one third of consumers always or often reject cookies on websites, while nearly two thirds (65 percent) of consumers would prefer brands use only first-party data to personalize their experiences. Meanwhile, eighty-one percent of brands are still reliant on third-party data.
Consumer frustration with inconsistent digital experiences is growing
About half (51 percent) of consumers report being frustrated with their interactions over the past year, rising from 46 percent the year before.
Real-time personalization boosts customer lifetime value
A large majority (86 percent) of consumers say that personalized experiences increase their loyalty to brands, and consumers spend on average 21 percent more on brands that personalize.
Consumers trust brands less than brands realize
Virtually all (95 percent) consumers want more control over their customer data, placing top priority on “identity data.” Four in 10 consumers say they have stopped doing business with a brand after their expectations for trust and privacy weren’t met.
As part of the research, the firm divided B2C companies into three categories based on their customer engagement maturity: customer engagement leaders, framers, and beginners. Customer engagement leaders—companies that have the most mature use of personalization, first-party data, and highest level of digital engagement—reported enormous benefits and increased revenue growth compared to those who have less advanced customer engagement strategies. Specifically,
- 82 percent of customer engagement leaders met or exceeded their company’s financial goals for 2022, compared to 62 percent of customer engagement beginners
- 40 percent of engagement leaders reported much higher customer retention rates than previous years, compared to 12 percent of beginners
- 41 percent of engagement leaders reported much higher customer conversion rates than previous years, vs. 15 percent of beginners.
“In this macroeconomic climate, every business is looking to do more with less budget,” said Joyce Kim, chief marketing officer at Twilio, in a news release. “This research reflects what we’re hearing across our customer base, which is that when brands use first-hand data to personalize engagement with customers, it saves companies meaningful marketing spend and increases lifetime value. For brands facing growing headwinds, this means ROI today.”
Download the full report here.
Twilio’s State of Customer Engagement Report is based on a survey of more than 4,700 B2C leaders in key sectors across the world, plus a parallel survey of over 6,000 global consumers. It also incorporates data from Twilio’s own customer engagement platform, including Twilio Segment, the leading customer data platform (CDP) for 2021 market share according to IDC.