The customer engagement stakes have never been higher, with brand owners that use first-party data to drive their marketing seeing higher revenues, greater loyalty, and better ROI and those that don’t facing the prospect of a customer exodus.
So says Twilio’s fourth annual State of Customer Engagement Report, which reveals that, amid constrained resources and economic uncertainty, eight out of 10 (81%) companies that invested in customer engagement met their financial goals.
In the UK, 94% of companies that invested in digital customer engagement saw revenues grow, with an average increase of 107%.
The data shows that effective customer engagement strengthens a brand’s 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 in ten (58%) UK businesses report that investment in digital customer engagement has improved their ability to meet changing customer needs.
Based on a survey of more than 4,700 business leaders in key sectors across the world, and a parallel survey of over 6,000 global consumers, the study also incorporates data from Twilio’s own customer engagement platform.
The findings highlight an urgent need for brands to leverage zero- and first-party data in order to improve customer experience and increase customer lifetime value.
Using that data effectively can be hugely beneficial, with UK consumers reporting they will spend 15% more with brands that personalise engagements, even though companies believe the impact is even bigger, reporting that consumers spend 41% more when engagement is personalised.
However, brands continue to overestimate how well they are meeting consumer expectations for communication preferences, protecting customer data privacy, and transparency around customer data usage.
In fact, customer tolerance for impersonal experiences has never been lower. Nearly half (48%) of consumers report being frustrated with their interactions over the past year, rising from 44% the year before. More concerningly, 51% of consumers say they will stop using a brand if it doesn’t personalise their customer experience by taking into account their needs, expectations and preferences.
Consumers also want a faster transition to a cookieless future. Nearly one third (32%) of UK consumers always or often reject cookies on websites, while nearly two thirds (64%) would prefer brands use only first-party data to personalise their experiences. Half (50%) of UK consumers have left a site in the past 12 months rather than accepting cookies. Meanwhile, 81% of global brands are still reliant on third-party data.
Nearly three quarters (71%) say that personalised experiences increase their loyalty to brands. However, UK respondents did emerge as the least loyal, suggesting that brands will have to work even harder to engage consumers in this market.
UK consumers also want more control over their customer data, placing top priority on “identity data” such as name, account login and location. Over a quarter (28%) consumers say they have stopped doing business with a brand after their expectations for data privacy and transparency weren’t met.
Twilio customer engagement consultant Sam Richardson said: “When every penny is being scrutinised, businesses need to know they are putting their marketing spend in the right places.
“Companies aren’t the only ones grappling with smaller resources, so are consumers. The brands that pay close attention to changing customer needs and ensuring they give them the experiences they crave, will be the ones that win this climate.”
Cutting back on CX will hit you hard, retailers warned
Marketers’ drive to boost CX still facing huge barriers
Why are we waiting? Retailers in dock over CX failings
Invest in data, tech and talent to beat slump, firms told
Brands wake up to folly of cuts as ad budgets hold firm
Where will we be in 2023… with marketing spend?
Exposed: Long-term damage of short-term budget cuts