Listen: Next in Tech | Episode 96: CX Holiday Extravaganza!

View Full Transcript

Transcript provided by Kensho.

Eric Hanselman

Welcome to Next in Tech, an S&P Global Market Intelligence podcast where the world of emerging tech lives. I'm your host, Eric Hanselman, Chief Analyst for the technology, media and telecom at S&P Global Market Intelligence. And today, we're going to be digging into a customer experience extravaganza. It is the holiday season or maybe sort of tailing out of it but a time of year when we're a little more focused on customer experience in many facets. And to discuss it, Sheryl Kingstone, the Head of our Customer Experience team is back. Sheryl, welcome back to the podcast.

Sheryl Kingstone

Thank you, Eric. I'm really excited to be here today.

Eric Hanselman

It's great to have you. Of course, customer experience is one of those things that with all the purchasing and gifting that's happening at this time of year, there's a lot that's going on. But there's even more to it than just all of the holiday spirit that's floating around. There is an awful lot that's in play at this time of year. And you've got not only some previews that are talking about it, but of course, a lot of background on what really is happening out there.

Question and Answer

Eric Hanselman

And I guess why don't we start with some holiday perspectives? What are your thoughts about what organizations are doing? And really what's the impact of this year and the focus on customer experience?

Sheryl Kingstone

Yes. So it's really a storm out there. Literally, today, there's a storm outside my door, but there is a storm, there is a storm brewing...

Eric Hanselman

You've got the real storm.

Sheryl Kingstone

Oh, my God. I mean we left COVID, and we saw some digital acceleration that we've talked about on this podcast in the past. And we did have that -- a little bit of a pullback. And now we're in a completely different macroeconomic time, right, where now we're concerned about rising costs and inflation.

But what had happened over the last couple of years was the shift to online. And then a lot of question that was out there is, what's going to happen in this upcoming holiday season as consumers start hitting back to their back to normal, return to store? And will the continued escalation of online shopping prevail in this upcoming year?

And the reality is we did see a little bit of a pullback as expected. But what we did forecast was there was a subset of consumers that we're going to continue to stay online, and they did. And our numbers did turn out pretty consistent. There was around 10% of shoppers that's usually more of that conservative nature, older generation that did want to return to store.

And so that is where you will see a little bit of a pullback on the e-commerce shopping, but it's still just a pullback. We still see an ongoing growth of digital experiences. We see ongoing investment in this space. And that's really putting front and center some concerns that, do businesses have all their ducks in order to create these unique experiences online moving forward?

And just last week, you could see -- I don't know if you guys followed the news, and I was one of the users, Amazon had a hiccup with their checkout capabilities. So for a few hours, they are even -- the golden child had a problem with checking out online. So it is something we're still struggling with.

And it has to do with the fact that we have redundancy issues, we have infrastructure issues. We have the ability to make sure that all the applications are talking to each other. There's patches, there's so much complexity as it relates to delivering these experiences online.

And what's most important is to do it right, right? So one of the things I do say is that experiences are the currency of the digital economy. And we have to make sure that we're doing everything we can to stay relevant in the eyes of our consumers.

Eric Hanselman

Well, and if we think about all of the different pieces that have to play together, it's not only the functional aspect, but as you've identified, it's a lot of that telemetry, a lot of the information that we're getting around the consumers, around those customers that are actually starting to bring all of this together.

And those are a lot of different piece parts to assemble and make sure that the gears all mesh well, that we're bringing together and extracting the kind of data that we can actually take action based on it so that we could build experiences around it. I mean there are a lot of different pieces that have to come together to really make this all fit well.

Sheryl Kingstone

Yes, absolutely. And the data is really important, right? So I've been saying that data remains that core battleground for creating these unified customer experiences. We need to do it in real time, and we see that more businesses are shifting to that discussion.

So businesses, they need to more than just unify those disparate data sources. They need to make sure that they're contextualizing the information, they're operationalizing it. And so that's where you can pull it all together and you want to make sure that you're putting these insights into the stakeholders that really have a hand at shaping that customer journey.

Eric Hanselman

I guess the problem is, I mean, you talked about Amazon's issue as a hiccup, but that's something that there's brand reputation -- beyond I mean just the fact that the actual purchase process got interrupted, there are all these lingering effects that organizations have to think of. But there's a lot that they should be looking at as they're continuing to plan.

And I guess for most retail environments, they've been -- their technology infrastructure has been probably pretty close to lockdown throughout the holiday season. As they look towards next year, they're going to get a chance to reexamine what they did right, what they want to do more of, where they want to go next. So you've actually been writing about -- with the previews for next year and expectations. I want to dig into those a little bit.

Sheryl Kingstone

Sure, would love to.

Eric Hanselman

There are a bunch of different aspects that you were talking about, including social media integration. Where does that fit? And where do you see that going?

Sheryl Kingstone

Yes. So that's a really good question because we are seeing social commerce and service technologies becoming more mainstream. Just as we're seeing a lot of these social companies implode a little bit -- think about what's going on with Facebook's and Meta's investment in Metaverse, and we can put that off to a different discussion after this.

But as we get to where consumers are, they still are on Instagram, and yes, that is Facebook, but the reality is the companies -- consumers want to make sure that they are where they want to be. They are looking at images. They are on social commerce. They are sharing information. And that leads to the fact that businesses need to still plan to grow to make everything a lot more relevant.

And so where we see social media landscape play out is still a very strong strategy. There's still a lot of investment that's getting played out in social commerce. We do see it as one of the strongest investments in social customer service by digitally driven organizations. So it's not just about selling on them. It's about servicing them. And they want to do it in real time, right? So that's where decision-making on social selling capabilities have one of the highest investments here.

And when we look at social commerce, it really is also about how to make sure that we're responding from a service standpoint. So the ability to take a look at where we are communicating and messaging either in-app, whether that be in the social media or in a custom app where we're trying to go, or in some of the SMS and WhatsApp type of technology or WeChat depending on region. So we do have to use all these social channels to also communicate directly because consumers want to. They want a direct message. They want to have comments. They want to share the information.

And lastly, the one other thing we also are seeing around social has to do with just the sheer value add that things like ratings and reviews play into the overall trust and transparency. So a lot of consumers are sharing, and they want to make sure that, that user-generated content is actually leveraged effectively to promote their brand. And so we're starting to see a lot of that investment moving forward even in the social world.

Eric Hanselman

It's interesting because we think about all of the outbound pieces, the style statements, tastemakers, all of the brand-led influencing that takes place. But you're pointing out the importance of the other side of that, the service aspect, the engagement pieces, ensuring that, in fact, the full customer experience is available through social media and something that they can actually integrate and, from a retail perspective, you've got to integrate to make that really work.

Sheryl Kingstone

Yes. It's all about that customer journey because a consumer doesn't think, okay, well, now I need the service, right? I was buying, and now I've got -- consumers don't think that way. We don't have a button in our head that can switch where we are at that point in time in the overall customer journey. And it is linear, right? It's haphazard. It's interactive. It's impulsive. And so we have to make sure that we're able to be much more agile with this experience and meet consumers where they want to be met.

Eric Hanselman

It's one of those things you pointed out on a previous episode, is that you can't have this disjointed customer experience of you're going to buy this way, you're going to get serviced this way, you're going to get support, returns, all the other aspects of this in different ways. It's all got to be one cohesive whole from the customer's perspective.

Sheryl Kingstone

Absolutely.

Eric Hanselman

And one of those things that not always the case in many cases. But I want to do -- you mentioned the Metaverse.

Sheryl Kingstone

Yes.

Eric Hanselman

And invoking the M word, I guess my question is, are -- is this something that people should really be thinking about this year? I guess there's so much that's sounding early about the Metaverse. But yet if you look at a lot of the things that Amazon was talking about at re:Invent, a lot of the 3-dimensional world things that Werner Vogels was talking about as part of a consumer experience piece, are we close enough that businesses should really be thinking about that?

Sheryl Kingstone

Businesses are already thinking about that. We have 35% of respondents are really taking a look at what they're doing. And you could say that roughly only 1/3, right? So it is still a little nascent, but they see it as highly transformational over the next 3 years, right? So we've got companies that are really using proof of concept to understand, can we create these more immersive experiences?

Today, it really is all about brand awareness. And they're looking more towards that Web3 side of it, right What are we doing to really meet organizational needs around commerce and brand? And are we able to create a more immersive experience for the shopper?

Or are we creating more enhancing customer engagement strategies like Wendy's with the Baconator, right? I have to get where it is. But it's like loyalty points and engagements and where that's trying to go. Only roughly 15% are really looking at it from an additional source of revenue, and only 5% are looking for it from a future proof, right? It really is all about brand awareness and customer engagement.

Eric Hanselman

Oh, wow. Well, I mean the Werner Vogels example was actually buying shoes and doing 3D custom fit and then being able to actually show himself with the shoes in different styles but fit exactly to his proportions.

Sheryl Kingstone

Now we've had that for a while, though. Think about that. That is not the Metaverse. That has been more of the embedding AR/VR into the overall retail experience that we've been playing around with for a couple of years now, right? When you bring in the Metaverse, we're also bringing in more virtual worlds and virtual goods and keeping it more as a customer-to-customer scenario. There are so many things that the Metaverse is playing around with.

As it relates to low-hanging fruit of AR and VR and being able to bring some -- and customize shoes and understand what does this look like or a different makeup, L'Oréal, there've been really leading-edge companies that have played more around augmented reality versus virtual reality to make these test environments, right? Can I see what this makeup looks like online? Can I see what this outfit looks like online? And being able to make that a little bit more personalized today because of the advancements here.

Eric Hanselman

But you're pointing out that really important piece, which is the Metaverse is the thing that actually starts to build that interaction with others. It creates that more social stage on which to interact, that environment that is that next step beyond just the augmented and virtual reality pieces that hopefully, you're saying those are -- basically, those are table stakes for most organizations today.

Sheryl Kingstone

Yes.

Eric Hanselman

I think for a lot of businesses, they're still starting to climb up that AR/VR ladder.

Sheryl Kingstone

Well, and once they climb up it, then the real question is, where are we going with the virtual goods? Like really talking Metaverse. But the whole point being owning the virtual good versus the real good, there's a generation that really wants that tangible good, and then there's a generation that really wants to transact using NFTs to make sure that they have that virtual good. And that's really where the Metaverse will shine also.

Eric Hanselman

Well, and opens the door to some interesting differentiation in terms of both the brand perspective and how you're actually perceived where you exist and where these experiences exist and new options because if -- today, we've only got the physical world.

To be able to have that kind of brand establishment so that there actually are goods that exist in the Metaverse, in that virtualized world, that really opens up a bunch of different engagement points. And we talk about omnichannel and the different ways of delivering goods. Now we've got one more channel to add to the way in which there is that expectation of goods delivery.

Sheryl Kingstone

Absolutely. And look for more research here. We have more research coming out from the consumer's perspective of what they really want and also what businesses are investing in for some of the use cases, coming out in 2023 and dedicated research on the Metaverse coming out in Q2.

Eric Hanselman

Got it. All right. Well, people should be clued into that because there are key aspects of this that are coming in. And we'll have a link to the previews in the show notes to be able to point people to where a lot of these perspectives are. And in the previews, there was actually one of those things that I thought was really insightful that you'd mentioned, which was identifying that emotion is the currency of experience. And given that that's part of all of this, how should organizations be thinking about that -- wrapping that into service in terms of how they're dealing with customers?

Sheryl Kingstone

Yes. That's the black eye for many businesses, and it just drives me nuts. So why do we not focus on customer service and really putting the tools in place to harness and understand intent and turn that emotion into brand loyalty? Right now, we turn it into negativity, right?

It's always like get on a call, get off the call, solve their problem, get off the call. I don't care, hang up on them, have them wait in line for as long as we can because we don't really need to staff all of this. But when we look at organizations' top business objectives, it really is to grow revenue from existing customers and also improve customer service retention, right? So we see services becoming the new marketing, right?

So if it is all about customer service, what are we doing to make sure that we're putting a greater emphasis to tap into voice of the customer and improve things like real-time customer feedback? And how are we handling the next-generation digital experience for the customer service departments? And that's where we're going to see a huge dramatic shift between what customer service centers are doing and how we really need to embrace technology.

Eric Hanselman

Well, and it seems like it opens the door to a set of interactions in which you've now got that service interaction as something that is furthering that engagement with the customer, which I think for a lot of organizations, they see service as sort of the burden. And there's -- it sounds like what you think is there's so much more that they could do to engage customers throughout every interaction they happen to have.

Sheryl Kingstone

Correct, right? A lot of times, service is a potential cross-sell opportunity, right? We've been trying to make that customer service and contact centers more like a profit center for almost 2 decades now. And we just haven't looked from the outside in to make that happen.

And now if we take a look at the role of technology and the role that we're able to really empower the agents to be that total experience, right, this is where the EX and the CX come together. What are we doing to empower our customer service reps to really make sure that, that customer experience is stellar? What are we doing to make sure that those conversations are guided in the right way, that they are multimodal?

So when someone is online and chat and they're getting frustrated, how do you escalate it up to an agent that can handle it either more effectively, seamlessly and passing off information, maintaining that context? A lot of information like this isn't really done today because we don't have those real-time platforms.

Eric Hanselman

Well, and I don't want to lose that key point that you just made, which is the interaction of customer experience and employee experience and how they are intertwined to be able to really create that total experience environment because that, I think, is so critical because as you're identifying, you've got to have employee capabilities to be able to engage. You've got to have also satisfied employees to ensure that you're actually -- you've got people who are in a sufficiently well-supported state to be able to deal with your customers to ensure they've got a good experience.

Sheryl Kingstone

Absolutely. And some of the data that we have around metrics is, yes, the top 2 areas that, of course, everyone is measuring is employee satisfaction today and customer satisfaction because of that intertwining, right? But when you look at it together, that's where you take a look at average time to respond to a customer inquiry, right? There's 3x more likely, if you're digitally driven, to have top improvements on that.

So when I look at digitally driven organizations which are early adopters of technology in formal strategies, that's where they're much stronger with the ability to respond to customer inquiries, which will improve customer satisfaction. But if you think about it, you're empowering the employee with the right information to get it done, which makes the employee more satisfied.

Eric Hanselman

So what organizations do -- what do they have to do to be able to get that level of intelligence both from the employee side, the customer side and bring that all together? It sounds like there really has to be emerging of a lot of these different perspectives. Is that -- should that be part of the digitization journey? Or what...

Sheryl Kingstone

It is. It's really the foundation of what we've been talking about for a while, which is you need to put that data platform in place, right, so that you have the right data at the right time. You need an orchestration layer, right, so that you're using that data in a process-centric way. You need to make sure that you're using intelligent AI services so that you're not just generating rules, you're being much more dynamic with some of the guidance. And all of this is what leads to that critical metric of improvement.

In order to do that, though, it needs to be part of a strategy. It needs to make sure that you have continuous improvement of what the business needs, along with that technology innovation because that platform is what is going to be used to make sure that both the employees and the customers have what they need. Again, it goes back to remaining relevant in the eyes of our customers.

Eric Hanselman

And critical to ensure that you bind that customer to your business because as we talked about previously, it's that digitally demanding customer that both is aware of the potential, is aware of what they want and has such high value if you can retain them.

Sheryl Kingstone

Yes. That's a really good question, right? So a lot of these digitally demanding customers are higher income sometimes or they are younger. So they always want to demand everything quickly, get it done, what have you done for me lately. But what's really interesting is when you do some of the analysis, these digitally demanding customers can also be extremely brand advocate if done correctly. So that's really what you want because they're going to share on customer service. They're going to then tweet out all the information about your customer or they're going to share on Instagram.

All of that is where you're going to get your user-generated content. And that's where you're going to want to embrace a lot of this to create those brand advocates, which is extremely important. What we wound up missing in the future when we were talking about some of these holiday experiences, when we think about some of the shift to subscription services and where we're going with the outright buying of these products versus subscribing, so what's really changing is some of the models out there, the subscription model. And what that's doing is it's changing that short-term economic to long-term relationship with customers. So that's what's necessitating some of this, too.

So as we shift to subscription model, experiences are even more essential, right? It creates the stronger loyalty and focus on retention. And that's why we really need to focus on building these consistent positive interaction with our customers. Now you don't have to have a subscription model to make this happen, but you want to make sure that you're really jumping on that brand advocacy model and really putting in place and tapping into those customers.

Eric Hanselman

We've really come full circle in the discussion. It's all the way around to ensuring that not only you have the systems in place but that you're actually able to engage and to be able to bring those customers back in that final stage in terms of ensuring that they do become those brand ambassadors, that they are representing your brand and your image to be able to put that together from the consumer side of this as well as from the brand itself.

Sheryl Kingstone

One last thing -- well, I don't know if we're going to end, but one of the things that I haven't really said enough about yet today is trust and privacy.

Eric Hanselman

Critical fundamental pieces to ensuring that relationship, yes.

Sheryl Kingstone

Yes. So one of the things we're -- as we're shifting towards data being so important, we do have to make sure that we're doing it in a balanced approach. So the changing data privacy climate, the emerging compliance requirements, we need to make sure that we're building that trust with the consumer so that we don't break it. And we are seeing consumers becoming less and less trusting of businesses as they make decisions about how to use this data in an environment to either personalize or even improve their overall customer experience.

So we have to make sure that we're being much more transparent, is really empowering the digital customer to understand what they're opting into, to make sure that IT builds the platform that is secure. And so we are looking at things like fraud prevention and data breaches. And all of this is going to be extremely relevant now and into the next decade.

Eric Hanselman

But I think that aspect, you're identifying transparency if you as an enterprise can be clear about how you're using the data, what you're going to be doing with it, here's how we're going to personalize it. I mean it seems like that's really what ought to be a business' primary focus, right?

Sheryl Kingstone

Correct. And we have seen, if you're transparent with it, they will opt in, and they will opt in also if you're giving them something back, so rewards, loyalty. So make sure that you're putting in place data privacy ways to either revoke doing that, but you're also being transparent on how you're using it.

Eric Hanselman

Yes. I mean the regulatory requirements that you may need to be able to cover, right to be forgotten, those sorts of things. But fundamentally, this is then about building relationships with those most critical parts of your business, the consumers who are actually going to buy.

Sheryl Kingstone

Absolutely.

Eric Hanselman

Well, thank you, Sheryl. This has been great and, I think, a lot of insights. We'll have to see how things play out in the remainder of this holiday season. But I think this hopefully will give businesses, large and small, an idea about what to look at as they start thinking about how the season went and where they should be going next.

Sheryl Kingstone

Absolutely. And it's really important. Again, anything that touches your customer, either growth revenue or investments to reduce overall cost in this macroeconomic environment, I mean if you're improving the overall customer experience in a digital world, a lot of it is self-service. So kudos to businesses that can really nail that experience.

Eric Hanselman

And to your point, this is one of those places where we're seeing that divide between those who've made the jump and those who are still lingering. And toss in some macroeconomic pressures into all of this, and I think we can probably expect that divide to grow even further.

Sheryl Kingstone

Yes. It's going to be a very interesting year.

Eric Hanselman

Well, and I would love to have you back to talk about it further when we get to the other side of all of this and see how they shook out and see where these forces come into play. And so I look to having you back yet again. So thank you very much for all the insights.

Sheryl Kingstone

Thank you.

Eric Hanselman

I'll point our listeners to the previews for customer experience as well as the rest of the TMT perspectives that are out on the website.

Sheryl Kingstone

Absolutely. Thank you.

Eric Hanselman

Well, thank you. And that is it for this episode of Next in Tech. Thanks to our audience for staying with us. And thanks to our production team, including Caroline Wright and Ethan Zimman on the Marketing and Events teams and our studio lead, Kyle Cangialosi.

I hope you'll join us for our next episode where we're going to be looking ahead at the coming year and taking a look at the kinds of things that we expect to be taking place and what looks like some fairly turbulent times with Simon Robinson to talk about what's coming next. I hope you'll join us then because there is always something Next in Tech.

Copyright © 2023 by S&P Global Market Intelligence, a division of S&P Global Inc. All rights reserved.

These materials have been prepared solely for information purposes based upon information generally available to the public and from sources believed to be reliable. No content (including index data, ratings, credit-related analyses and data, research, model, software or other application or output therefrom) or any part thereof (Content) may be modified, reverse engineered, reproduced or distributed in any form by any means, or stored in a database or retrieval system, without the prior written permission of S&P Global Market Intelligence or its affiliates (collectively, S&P Global). The Content shall not be used for any unlawful or unauthorized purposes. S&P Global and any third-party providers, (collectively S&P Global Parties) do not guarantee the accuracy, completeness, timeliness or availability of the Content. S&P Global Parties are not responsible for any errors or omissions, regardless of the cause, for the results obtained from the use of the Content. THE CONTENT IS PROVIDED ON "AS IS" BASIS. S&P GLOBAL PARTIES DISCLAIM ANY AND ALL EXPRESS OR IMPLIED WARRANTIES, INCLUDING, BUT NOT LIMITED TO, ANY WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR USE, FREEDOM FROM BUGS, SOFTWARE ERRORS OR DEFECTS, THAT THE CONTENT'S FUNCTIONING WILL BE UNINTERRUPTED OR THAT THE CONTENT WILL OPERATE WITH ANY SOFTWARE OR HARDWARE CONFIGURATION. In no event shall S&P Global Parties be liable to any party for any direct, indirect, incidental, exemplary, compensatory, punitive, special or consequential damages, costs, expenses, legal fees, or losses (including, without limitation, lost income or lost profits and opportunity costs or losses caused by negligence) in connection with any use of the Content even if advised of the possibility of such damages. S&P Global Market Intelligence's opinions, quotes and credit-related and other analyses are statements of opinion as of the date they are expressed and not statements of fact or recommendations to purchase, hold, or sell any securities or to make any investment decisions, and do not address the suitability of any security. S&P Global Market Intelligence may provide index data. Direct investment in an index is not possible. Exposure to an asset class represented by an index is available through investable instruments based on that index. S&P Global Market Intelligence assumes no obligation to update the Content following publication in any form or format. The Content should not be relied on and is not a substitute for the skill, judgment and experience of the user, its management, employees, advisors and/or clients when making investment and other business decisions. S&P Global Market Intelligence does not act as a fiduciary or an investment advisor except where registered as such. S&P Global keeps certain activities of its divisions separate from each other in order to preserve the independence and objectivity of their respective activities. As a result, certain divisions of S&P Global may have information that is not available to other S&P Global divisions. S&P Global has established policies and procedures to maintain the confidentiality of certain nonpublic information received in connection with each analytical process.

S&P Global may receive compensation for its ratings and certain analyses, normally from issuers or underwriters of securities or from obligors. S&P Global reserves the right to disseminate its opinions and analyses. S&P Global's public ratings and analyses are made available on its Web sites, www.standardandpoors.com  (free of charge), and www.ratingsdirect.com  and www.globalcreditportal.com (subscription), and may be distributed through other means, including via S&P Global publications and third-party redistributors. Additional information about our ratings fees is available at www.standardandpoors.com/usratingsfees.

© 2023 S&P Global Market Intelligence.