Happy Friday! ‘This week in CX’ brings you the latest roundup of industry news.
This week, there’s a lot in the news about customer loyalty in the build-up to Christmas, with how loyalty programme incentives are crucial during the cost of living crisis, but actually fail to secure long-term brand loyalty. We’re also looking at the risks of poor website performance, and plans to spend on AI marketing next year.
Key news
- As interactive video content continues to gain ground, Finnish-Luxembourgish Videobot is attracting new clients in the realm of politics. Luxembourg’s liberal Demokratesch Partei (DP) used Videobot’s technology on its website to present its parliamentary election campaign platform to potential voters. The party wanted to portray the election process in a simple manner, explain its policies in a concise yet comprehensive way, and engage digital audiences in a more immersive manner.
- Kore.ai’s new report reveals that customers across sectors like banking, health, retail, travel, and telecom/cable/media increasingly rely on AI-powered intelligent virtual assitants (IVAs) to get prompt and relevant information while engaging conversationally, without having to repeat themselves. While users prefer the advanced AI technology’s help with complex service interactions, they also appreciate an easy handoff to a live agent when needed.
- Sitecore, reveals that 77% of consumers will be buying cheaper presents this Christmas and 69% will have fewer gifts under their trees. 21% say they’ll be selling their possessions in order to afford gifts this Christmas. And as an alternative to using cash, 49% will be using loyalty points or rewards accumulated throughout the year to make purchases. 29% said they’ll be using financing services to spread the cost.
UK’s top e-commerce players risk losing 16% of customer conversions due to poor website performance
New research from vshosting~ reveals a major performance gap in UK’s e-commerce landscape. While UK’s largest e-commerce businesses have enjoyed significant online success, these businesses are trailing behind UK’s fastest-growing businesses when it comes to vital web metrics – a disparity that could impact future security and success.
A significant 67% miss the industry benchmark of 1-2 seconds loading time, with the slowest recorded at 7.13 seconds, compared to just a third (36%) of the fastest-growing retailers. This discrepancy results in a potential 16% lower e-commerce conversion rate compared to the highest-growth ecommerce brands.
The report sheds light on the key infrastructural underpinnings that drive success for e-commerce businesses in the UK. It aggregates various e-commerce site performance metrics and compares industry leaders with the fastest-growing counterparts.
The UK’s largest e-commerce businesses excel in other critical growth areas and technology to improve the customer experience, including:
- Nearly all (98%) of the largest e-commerce businesses have mobile apps, compared to just 21% of the fastest-growing online retailers
- When looking at customer service, 52% of the largest online retailers now use AI chatbots to streamline customer communications. 26% of high growth e-commerce firms have implemented this technology on their websites
- None of the fastest-growing retailers have AR reality software on their websites, missing out on this rising trend of virtual fitting rooms and ‘see-it-in-your-home’ technology
Reward-based incentives key to customer loyalty in a cost of living crisis
A survey of more than 1,000 UK adults, commissioned by the Gift Card and Voucher Association (GCVA), found that just under half of households are worse off than they were this time last year. 12% are experiencing a significant impact on their personal finances. As a result, people are looking for more ways to earn and save.
Whilst customer rewards and incentives were desired across multiple sectors, a supermarket reward scheme has the most impact on loyalty, highlighting the impact of rising food prices on household budgets. 54% of those surveyed said a reward card would increase their loyalty to a supermarket, with 17% saying it would increase significantly.
However, only 37% said a rewards and incentives scheme would ensure loyalty to fashion and beauty retailers. This reflects that over half (53%) of consumers are cutting back on non-essential purchases, regardless of incentives to spend.With high energy bills forcing 70% of households to amend spending habits, an incentive offered by a utility company would have the next biggest impact on loyalty. 42% of people said a reward, such as a £50 gift card, would increase the chances that they would stay with a provider.
Discounts and rewards alone fail to secure long-term loyalty in the UK
While price is the deciding factor for many UK consumers, discounts and rewards aren’t securing long term brand loyalty in 2023. That’s according to the Customer Loyalty Index (CLI) from SAP Emarsys, which conducted research on over 10,000 consumers globally – including over 2,000 in the UK – to examine the differing motivations for customer loyalty.
According to the CLI, cost is unsurprisingly king for most in the UK. Two thirds of shoppers will switch products if a cheaper alternative becomes available. But despite this, Incentivised Loyalty – loyalty based on brands offering discounts, incentives, and rewards – has dropped by 20% points this year, from 71% in 2022 to just 51% in 2023.
This is because incentivised loyalty depends on a suspension of ‘normal’ prices. Shoppers switch to find better deals where available. 50% of consumers actively expect exclusive offers in exchange for their loyalty. 42% state that brands could lose their loyalty if prices increase. 23% simply believe that they can no longer afford to be loyal and are happy to follow the lowest price at all times.
So, while Incentivised Loyalty is powerful, it’s also fleeting. Brands need to go beyond offers to secure shoppers for the long term. And with 21% stating that retailers and brands need to do more to get their loyalty, and 15% of the belief that they haven’t rewarded them enough, that window can be very short.The CLI goes on to suggest that the window of opportunity that Incentivised Loyalty creates should be used to drive customers towards True Loyalty — a loyalty based purely upon a love and connection with brands. With True Loyalty increasing by just 1% between 2022 and 2023, it’s one of the most reliable types of loyalty once secured, but also one of the hardest to achieve.
Over half of companies plan to spend even more on AI in marketing in 2024
New research from Twilio shows that AI automation has emerged as the primary means by which businesses are looking to grow revenues and operate efficiently.
Twilio Segment’s 2023 Growth Report, a study of 2,450 business leaders, found that 88% of businesses are already using some form of AI in their marketing efforts this year. 54% expect to spend even more on AI-powered campaigns in the coming year. The findings show that leaders expect their AI investments to pay off, with 90% of leaders reporting that AI will deliver either time or cost savings for their business.
The rise of generative AI chatbots appears to be having an impact on marketing leaders, as chatbots are the most common way businesses expect to use AI. Among the survey’s respondents, 38% of businesses say they will be using AI chatbots in their marketing efforts.
Data quality and CDPs are critical enablers
The report also shines a light on the essential role of data quality: 40% of businesses are struggling with technology infrastructure or low-quality data, highlighting the pivotal role of relevant, timely data in unleashing the full power of AI. 71% of respondents say AI could be more useful with access to higher-quality data.
CDPs are having a positive effect in ensuring data quality: Companies using a CDP experienced a 32% growth rate in the past year, compared to a 21% growth rate at companies not using a CDP. Because CDPs unify customer data that is collected across the organisation, it offers brands a single source of truth for their customers’ needs. These powerful tools are displacing the traditional CRM software — 24% of respondents say they plan to simplify, remove, or reduce their CRM spend in the coming 12 months. This shift points to the broader trend of businesses investing more in alternative technologies like data warehouses for customer data management that are powerfully interoperable with CDPs.
Consumer privacy concerns persist
On the topic of customer data, privacy remains paramount. While 66% of leaders feel that customers would appreciate AI-enhanced marketing if it leads to superior service, 28% express concerns about data privacy associated with AI adoption. Addressing these concerns, 85% of businesses say it’s a priority to do a better job of capturing and leveraging first-party data in the coming year, marking a 14% increase from the 71% recorded in 2022.
Thanks for tuning into CXM’s weekly roundup of industry news. Check back next Friday for the latest updates of the week!