It is no secret that people are influenced by the actions of others. Social proofing is partly why we tend to score, grade, and review everything from meals to movies. If a company treats its workers poorly or makes the faux pas of tone-deaf social media posts after laying off employees, there will be a price to pay on Glassdoor and Indeed. If a customer has a negative experience with a company or product, the damage to the brand can be catastrophic.
Good CX is a Critical Investment Area for Brands
Good customer experience (“CX”) leaves people feeling heard and appreciated. The better the customer experience, the more likely a customer will buy more, be loyal, and share their experience within their network.
Conversely, poor CX can cause companies to lose customers, and research shows that companies are afforded few opportunities to get CX right. Just one bad experience can cause 17% of U.S. customers to walk away. Several more bad experiences can increase this number to 59%. Companies today recognize the value of CX and AI, and continue to increase investment dollars into growing both capabilities.
Indeed, top areas of increased investment in the past 2 years according to U.S. marketers included data quality, artificial intelligence, personalization, and real-time engagement.
AI and Data Quality
Brinks home security competes against a host of security options including ADT, Ring, Arlo, and Nest. Despite its small market share (2%), it is highly regarded by customers and industry analysts. In the fall of 2020, Brinks wanted to find a way to leverage its trove of historical data (accumulated since 1994) to accelerate its business and compete.
Brinks worked with an AI start-up called OfferFit to test thousands of combinations of messages and offers, content, and delivery times to reorganize the way Brinks operated its business from customer acquisition to call scheduling. Brinks was able to increase its A/B testing from two to three tests a day to approximately 50,000. The result of the increased use of AI with rich data quality? Brinks was able to increase its average direct-to-consumer package 2x (from $489 to $968) and increased overall revenue by 9.5%
AI and Personalization
People are convinced that a conversation about a product with a colleague results in increased ad targeting. While it may seem that a device listening in is the cause of this phenomenon, it is mostly the case of complex ad tracking which includes keyword search, persona algorithms, and geolocation.
There is a reason why companies go through such lengths to get the right ads and products in front of the right people at the right time: because customers demand it. 71% of customers expect a personalized experience, and 76% of customers get frustrated when they do not find it.
Amazon recently purchased iRobot, the makers of Roomba for $1.7B. While Roomba is a market-leading device, Amazon did not purchase the company because of its love for vacuuming, but rather to augment its ability to personalize shopping for its Prime customer base by mapping homes. Not only does Amazon know what its customers buy on its website, it knows what they watch (through Prime), what goes on in their neighborhoods (Ring), what they eat (Amazon Fresh and Wholefoods), and now what furniture they are missing to complete their living rooms.
AI and Real-Time Engagement
Interactive voice response (IVR) was meant to help businesses handle heavy call volumes while managing the costs of staff and call centers. However, a 2019 survey by Vonage found that 61% of respondents found that IVR resulted in poor customer service. In fact, of those customers that terminated an IVR call, 89% of the money they would have spent was diverted towards competitors.
Advancements in natural language processing (NLP) and AI have made intelligent voice automation (IVA) the next frontier in customer service. Despite technological advances with software-based web services, IVR, and chatbots, 71% of companies still use voice agents because humans still like speaking with humans. However, if an IVA is convincing and can deliver human-like experiences, there are plenty of use cases that can make an IVA a top option to deliver exceptional customer service.
AI in CX is an Attractive Investment Area
The general consensus is that the role of AI in CX will become more important in the coming years. AI-enabled analytics like predictive analytics and deep analytics will help companies understand customer behaviors and preferences, and allow for more meaningful customer experiences that will drive loyalty and sales. With AI being a core part of our investment thesis and CX being a critical aspect of the advertising and retail e-commerce markets, companies that create the connective tissue between AI and CX are attractive targets for Covenant Venture Capital.
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