Industries Using CX
While CX is very much a cross-industry concern, the Retail, Discrete Manufacturing, Banking, Healthcare, and Hospitality and Entertainment industries have been particularly noted for their expenditures and, in some cases, their innovations in improving their customers' experiences.
- Studies show that 86% of consumers are willing to pay a higher price in return for an excellent customer experience.
- By 2020, customer experience is expected to surpass both price and product as the "key brand differentiator."
- The retail industry is expected not only to have the highest spend in CX in 2019 at an estimated $56.7 billion but to have the fastest growth in its spend at a CAGR of 13.1% over the next four years.
- The drivers for developing a strong CX strategy (see above) are particularly important for retail.
- Many retail companies, particularly in the fashion sector, are using augmented reality to allow customers to "try on" their wares before making online purchases, including eyeglass retailer Warby Parker and Rolex.
- Likewise, clothing store Hollister has developed its in-store CX by tantalizing "shoppers’ senses with enticing lighting and even a bespoke store fragrance."
- Nike offers a value-added app that enables customers to track their runs but which also provides Nike with information about the customer's habits and suggests when it is time to purchase a new pair of shoes.
- Neiman Marcus' "Snap. Find. Shop" app enables customers to take a picture of a product that they like. The app then pairs those customers with links to similar items in Neiman Marcus' inventory.
- However, the most winning CX strategies in the Retail industry are those with a personal touch, as 75% of consumers say they want more human interaction in their customer journeys, not less.
- An example of a company successfully engaging with its customers is clothing-store chain Reformation, which provides "a shopping experience that makes customers feel like rock stars," including the ability to have different sizes or even items brought to the wardrobes by employees via a tablet.
- Discrete manufacturing is in second place in its CX spend for 2019.
- The main driver in this spending appears to be an attempt to overcome several acknowledged disconnects in the industry's CX, which follow the disconnects noted in another brief in this project.
- As noted in a Verndale report, "Manufacturing & Distribution companies are at a critical inflection point — rethinking their business and their customers relationships in a digital context."
- Tesla has particularly stood out among manufacturers seeking to capitalize on excellent CX, opening "fancy showrooms in shopping
malls and prime locations, with a completely
transformed customer experience" which focuses on the tangible, human-centric side of CX over the digital despite being a cutting-edge technology company.
- Banking is in third place in its CX spend for 2019.
- According to the Digital Banking Report, "improving the customer experience" has been a major trend in this industry for at least the past several years.
- Likewise, according to another report by Kantar, "financial institutions that lead in customer experience (CX) have a higher recommendation rate, a higher share of deposits, and a greater likelihood that customers will increase their portfolio of new products and services from their bank."
- The most recent trends have focused on "humanizing" the digital banking CX, bringing human and digital resources together to focus on partnering with customers and building long-term relationships.
- Among financial institutions, USAA tops Kantar's CX scoring list, followed by Regions Bank, Chase, BB&T and Citizens Bank. Kantar attributes this to pursuing a customer-centric model that delivers "a great customer experience that exceeds their brand promise."
- Healthcare is second only to Retail in how fast it is growing its CX spend, with a CAGR of 11.5% expected over the next four years.
- As noted in a recent Forrester report, healthcare organizations (HCOs) have historically had a limited understanding of their customers' desires, needs, and behaviors, have put too much focus on digital channels, and have lost control of the end-to-end customer experience, and yet these matters are critical to future success.
- Taking the above two together, we understand the Healthcare industry to broadly recognize the truth articulated by Forrester and, consequently, to be rapidly accelerating their CX programs.
- Increased CX spend is also necessitated by the fact that CX is an "unknown frontier" in healthcare, leaving the industry unprepared for the shift towards consumerism in the industry, further forcing the rapid shift in budget priorities.
- HCOs have, therefore, turned to consulting companies to fill the experience gap. Examples include:
- Influence Health, "a vendor of CX-related technologies geared at healthcare providers, including a CRM system, authoritative health content, appointment systems and related details," which improves the healthcare CX by providing patients with more communication and information tools.
- Acxiom Corp, a Big Data company which provides HCOs the tools they need to leverage their existing patient data into improved customer experiences.
Hospitality and Entertainment
Though not listed in the IDC report, the Hospitality and Entertainment industries have been at the forefront of using technology to enhance the customer experience while gathering data so that they can continue to fine-tune their offerings. For example:
- Disney uses "Magic Bands" at its theme parks to provide conveniences to their visitors such as freeing them from needing to carry a wallet, keys, and tickets while also providing Disney with valuable information about the movement of their visitors through the park, allowing the company to continually fine-tune its CX there.
- Disney and Royal Caribbean use AI-driven facial recognition "to gauge how visitors are reacting to performances" or menu items to improve the customer's experience.
- Streaming services like Spotify and Netflix are using customized playlists which not only offer suggestions based on their customers' overarching viewing habits, but which take into account the time and day of the week to, for example, provide energetic music at the time when the customer is in the habit of working-out or only suggesting R-rated movies after 8 pm in families with children.
- We are unable to determine the fifth most-common industry to invest heavily in CX based on the available public data.
- However, in addition to those above, IDC tracks the following 15 industries for CX, suggesting that they are among the highest spenders: Insurance, securities and investment services, process manufacturing, construction, resource industries, wholesale, professional services, personal and consumer services, transportation, federal/central government, state/local government, education, telecommunications, media, and utilities.
- Based on overlap with a Forbes list of the 100 most "customer-centric" companies, segmented by industry, we suspect that the insurance, telecom, or process manufacturing would be in the fifth slot; however, as this list focuses on success rather than expenditures, it appears more relevant to another brief in this project.
In identifying key market segments for a given industry (in this case, the industries served by CX), we most often begin our research by locating existing market reports for the industry in question. While these reports are most often proprietary and expensive to obtain, the public abstracts often provide important details and guidance to the remainder of our research. In this case, we found only one report, published by IDC, that provided any details about market segmentation. This report outright stated the top three industries by CX spend (though it provided the dollar amount for only one) and allowed us to infer a fourth (healthcare) based on how fast its spend is growing. However, while the report also notes other industries whose CX spend was significant enough to warrant being in the report, we could not determine which would likely be in the 5th slot, let alone the 6th of 7th, from the public portions released by IDC.
Therefore, we attempted to ascertain CX spends and/or top industries from other sources. However, we found no public data that directly pertained to the request. For example, Forbes list of the 100 most "customer-centric" companies, segmented by industry, might lead us to suspect that the insurance, telecom, or process manufacturing would be in the fifth slot. However, this list focuses on success rather than expenditures and appears more relevant to another brief in this project.
Consequently, we have provided our analysis of the four industries we are certain about in addition to a list of other possibly-significant industries in our findings above.