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In the last two years, we have seen a digital transformation happen at lightning speed. Everything from technology adoption to shifts in digital strategy has happened in record time as we shifted how we work, live, and interact with each other — and companies had to respond in kind. According to new research from Twilio’s third annual State of Customer Engagement Report, which details the findings of 3,450 business leaders and 4,500 consumers across 12 countries, B2C companies did 6.5 years’ worth of work on digital strategies in 2 years.
That’s a staggering number. But the bigger story here? Companies that invested in customer engagement boosted revenue by an impressive 70%. The Twilio study found that investment in digital customer engagement and personalization technologies have a significant, measurable, positive impact on customer retention and trust — and on revenues. A desirable outcome for companies based upon investment in technology and practices that leverage a customer-first approach coupled with the continued application of data and technology to improve CX. Here are a few key points that caught my attention.
Cookies are Dying
I have been talking about this for the last year or so — third-party cookies are on their way out. Firefox and Safari now block third-party cookies. Google has promised to get rid of third-party cookies by the end of 2023 on Chrome. Apps on iOS ask users if and how they want to be tracked. We are seeing the end of a lucrative era, and marketers need to be prepared.
As companies like Apple are implementing strategic changes to prioritize privacy with its IDFA being a core example, we are now in a time where that data is becoming more unreliable and harder to source, first-party data needs to be the priority. However, according to the survey, 81% of companies said they still rely on third-party data.
In a striking discord, 85% of consumers want brands to use first-party data for personalized experiences. As we continue further into this cookieless world, brands will be required to collect and manage more first-party data if they want to continue to deliver consistent experiences. And when 55% percent of companies say they aren’t prepared for a cookieless world, those who are ready will reap the benefits. We are about to enter a time where collecting, managing, and acting on first-party data, won’t just be a differentiator but also critical for survival.
I continue to believe the trade-off of data for experience is largely acceptable by consumers, but the caveat is that the experience is truly enhanced through the usage of first-party data. This will continue to require investment and focus from companies that want to earn loyalty and satisfy customers in an environment of increased data privacy awareness.
Personalization is Key, But Customers Aren’t Happy…Yet
Customer expectations have dramatically shifted in the last two years. People want brands to know what they want and how they want it. Brands must know what channels to use to reach customers and what messages are most effective. In an always-on, always-connected world, it can be difficult, to say the least.
The brands that succeed will attract customers and develop brand loyalty. On the flip side, nearly two-thirds of customers will stop using a brand if the experience is not personalized. And while customer experience remains important to everyone involved, Twilio’s survey uncovered a discrepancy. 75% of companies claim to have good or excellent personalized experiences, but more than half of consumers disagree and report bad, poor, or just average experiences.
As we lose access to third-party data, companies need to be aware of where their customer stand and likely over-deliver on the experience that they think are getting the job done right now. Personalization has come a long way, but data challenges will continue to hinder some companies—especially those that can’t convert engagement into a more meaningful loyalty.
First-party Data Means Digital Survival
Last year in March of 2021, when I covered the Twilio second annual State of Customer Engagement Report, I said that 2021 would be about continuing digital transformation with purpose when we thought the pandemic was almost over. And while that sentiment was mostly accurate, we still dealt with COVID throughout 2021 and felt the impact through how and where shopped. This meant businesses were still dealing with a shifting consumer experience strategy that was layered with additional challenges like continued supply chain delays.
For this year, and with data from the Twilio report to back me up, continuing the transformation with a focus on first-party data and the technologies in the martech stack that will enable businesses to deliver the desired personalized experiences will be critical. Customer data platforms to organize, sort, and manage data will continue to be key.
Customer experiences and personalization will never decrease in importance. Businesses looking to capitalize on the cookieless world will adopt the platforms that will able them to take advantage of their first-party data. Doing so at this point will mean digital survival.
We’ve continued to see disruption on a scale never before seen. Understanding and delivering on the promise of customer experience will undoubtedly be a key focus point and differentiator for enterprises across industries. Organizations focused on creating and fostering customer relationships, and implementing the leading technologies and data skills to accomplish this, will be the ones that last.
Disclosure: Futurum Research is a research and advisory firm that engages or has engaged in research, analysis, and advisory services with many technology companies, including those mentioned in this article. The author does not hold any equity positions with any company mentioned in this article.
Analysis and opinions expressed herein are specific to the analyst individually and data and other information that might have been provided for validation, not those of Futurum Research as a whole.
The original version of this post was first published on Forbes.
Daniel Newman is the Principal Analyst of Futurum Research and the CEO of Broadsuite Media Group. Living his life at the intersection of people and technology, Daniel works with the world’s largest technology brands exploring Digital Transformation and how it is influencing the enterprise. Read Full Bio