Creating compelling, personalized customer experiences leads to increased loyalty and retention, according to a new study from Harvard Business Analytics.
It cannot be said enough: today is a customer-centric world and with economic uncertainty looming, engagement and retention are more important than ever. A new report from Harvard Business Analytics makes clear why companies should be committed to creating an exceptional customer experience and work to overcome obstacles.
The report shows that 92% of survey respondents believe that effective customer engagement “extremely critical” or “highly critical” to the success of their organization. Furthermore, 88% of executives agreed that customer engagement has a significant impact on their organization’s bottom line.
Another key finding was that 36% rated their current customer engagement as ‘good’, while only 9% said it was ‘excellent’.
CX needs to be “personalized, contextual and engaged throughout the customer journey – and do it in a very efficient way that saves you money,” wrote Karen Peacock, CEO of Intercom, which sponsored the report. “The companies that do this are the ones that will thrive and emerge as winners.”
But today, the report notes, organizations of all sizes are struggling to deliver personalized customer engagement at scale, and many issues are holding them back.
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The factors that stand in the way of customer excellence
Poor cross-functional team collaboration is a major obstacle. The survey found that 44% of executive respondents had a lack of collaboration and silo efforts as the main barriers to successful customer engagement.
Executives said disconnected, outdated tech stacks and silo data slow down their teams and prevent personalization, according to the HBA study.
“Tech stacks full of legacy systems and disjointed tools are slow, inefficient and lack contextual data necessary for personalization. Ultimately, outdated tools hinder collaboration and prevent employees from engaging customers in a timely and personalized way,” the report said.
Another problem for 32% of respondents is that their organizations are failing to properly disseminate data-driven customer insights throughout the organization. And 60% of executives don’t think their organization is properly aligning their communications with their current tools, the report said.
“Moreover, many do not have the strategies, organizational structure and culture that are needed. This leads to poor collaboration, lack of coordination and ultimately loss of customers and revenue.”
There is also a scarcity of talent: more than half (56%) of executives struggle to find the right staff to manage customer engagement efforts.
HBA attributes this problem to the fact that “modern customer engagement is a newer discipline than more established, traditional functions such as HR, finance or IT. Unsurprisingly, then, one of the key challenges companies face is finding suitable talent is to fill critical roles – from leadership to execution.”
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Why effective customer engagement is important
In the digital age, today’s customers want and demand convenient, proactive, personalized and efficient experiences at scale. One of the key benefits of creating compelling, personalized customer experiences is increased loyalty and retention, according to 69% of respondents.
And 40% of respondents rely on retention/repeat rates to measure or track the success of customer engagement efforts.
“When departments fail to share information, pool resources, and share contextual data and insights, it’s often the customer who pays the price with a poor customer experience,” the report said. “And in the end, it’s the company that will swallow the cost of lost customers and revenue.”
To address the barriers, 56% of survey respondents said they encourage more cross-functional team collaboration with the explicit goal of improving customer engagement, the report said.
This requires “functional departments, such as customer service, sales and marketing, to work together to provide customers with a cohesive, personalized, world-class experience throughout the customer journey,” the report said. “Organizations must ensure that all investments in technology and collaboration revolve around a culture that values customer engagement.”
Harvard Business Review Analytic Services said it conducted a survey of 317 executives across industries in April 2022 to explore the value of customer engagement.