Editorial
The Gist
- Digital Customer Evolution. The early stages of digital customer experience evolution set the stage for integrating online and offline interactions seamlessly.
- Digital transformation catalyst. Digital transformation reshapes business operations, leveraging customer insights to remain competitive and responsive.
- Omnichannel experience essential. Seamless omnichannel customer experience is now expected, driving loyalty and repeat business through consistent engagement across platforms.
Once upon a time, experts in customer understanding drew a clear line between online and offline customer experiences, marking the early stages of the digital customer experience evolution. While some consumers engaged in online shopping, most customer interactions occurred in physical brick-and-mortar locations. Retailers packaged technology, such as antivirus software or word processing programs, into boxes that were sold in stores for desktop computers.
The advent of Web 2.0 ushered in a new era of dynamic and interactive online experiences. Social media platforms, user-generated content and collaborative online spaces became the norm.
Today, with Web 3.0, the focus has shifted to a more intelligent and interconnected web that uses technologies like AI and machine learning to provide personalized and context-aware digital experiences.
Web 4.0 is on the horizon, offering a decentralized web with technologies like blockchain and distributed ledgers (rather than centralized databases) playing a central role. The evolution continues, shaping the way we engage with technology and transforming digital experiences.
Modern customers operate across channels every day for work, school, shopping, playing games, talking to people, and even deciding what ingredients to order so they can cook at home. Even more importantly, customers expect these omnichannel experiences to be seamless, no matter how they choose to engage. Research shows satisfied customers are five times more likely to be repeat customers and even loyal brand advocates who share the news of their great experiences with others.
The discipline of seamlessly connecting omnichannel transactions through a digital customer experience (DCX), is already complicated, but it has become more important than ever. If your DCX is lacking, adding AI will only further complicate your efforts in AI.
What does that mean for companies and how they interact with customers? Let’s discuss the relationship between digital customer experience, digital transformation and AI to explore how businesses can use each to create a seamless, customer-centric ecosystem.
Related Article: 5 Digital Customer Experience Trends for 2024
Digital Transformation Starts With Understanding Your Audience
DCX helps drive digital transformation, a holistic shift that requires optimizing processes, thinking, strategies and organizational culture based on understanding the needs of your audiences, both internal and external. Customers’ needs help define the capabilities required as you build or buy technology to meet them. This process uses technology to fundamentally change how a business operates, delivers value and engages with customers. The driving force behind digital transformation is the desire to remain competitive, agile and responsive in a rapidly changing world.
But digital transformation is more than simply adopting new software or technology. In fact, leading with technology would be a mistake. Even if technology is the catalyst for change, successful transformation begins with understanding the experiences of customers, defining processes and capabilities and solving for what technology is needed to meet your goals.
We’ve all heard the adage, “Sell them what they want. Give them what they need.” No matter how useful, innovative, or interesting your product is, it won’t be relevant if you don’t first understand your customer’s needs and translate your insights into something that adds value in some way, whether that’s making their lives simpler, more efficient, more productive or just more fun.
Digital Customer Experience Fuels Digital Transformation
That’s why DCX is a catalyst for digital transformation — you use it as design criteria to ensure success and alignment.
Smart entrepreneurs understood the significance of DCX even before the advent of AI. In the early days of Slack, the work communication application’s creators sent a memo to their team highlighting the mission-critical importance of CX to Slack’s value before its 2013 launch.
“Understanding what people think they want and then translating the value of Slack into their terms’ is something we all work on,” the memo stated. “It is the sum of the exercise of all our crafts. We do it with copy accompanying signup forms, with fast-loading pages, with good welcome emails, with comprehensive and accurate search, with purposeful loading screens, and with thoughtfully implemented and well-functioning features of all kinds.”
So, while customer understanding and experience have always been center stage for DCX, now everyone has the potential advantage of AI to drive their digital transformations further.
Related Article: How to Leverage Customer Insights to Shape Product Strategy and Growth
The Intersection of AI and DCX Hinges on Data
To create a digital customer experience with AI, useful and meaningful data is critical.
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DCX and digital transformation involve reimagining customer journeys by using data insights and embracing innovation to create meaningful interactions that resonate with consumers. In turn, customers provide more data via their behaviors. Companies can harvest this data as intelligence or use it to power additional decision making.
AI-powered chatbots, voice assistants and other applications can achieve these goals, all while providing faster, more personalized service to customers and enriching the data used to make decisions. AI enhances customer experiences through online channels, ultimately creating a positive brand perception, increased loyalty and higher satisfaction.
For example, streaming platforms use AI to recommend shows and movies based on the user’s history. AI uses images to find tires for a car or to find alternative routes for long-haul truckers that give them places to sleep, eat and gas up. AI is even used to shorten your line at Costco or Sam's Club at checkout (no more people checking your receipts).
In these and countless other ways, AI and DCX can work together to create truly transformative customer experiences, such as:
Personalization and Data Insights
AI combined with a DCX enables businesses to collect and analyze vast amounts of data, offering valuable insights into customer behaviors and preferences. Businesses can use this data to create highly personalized experiences, tailoring products, services and interactions to their individual customers' needs.
In a Harvard Business Review article, Dynamic Action co-founder Michael Ross described a clothing retailer who wanted to deliver a smarter shopping experience. The retailer’s idea was to change the algorithm so it would recommend clothing to customers based on size and availability, avoiding customer frustration or returns.
Another clothing retailer modified its algorithm that recommended purchases to website visitors. Before, the algorithm had done well at driving customers to best-selling items, which benefited sales, but the company realized providing recommendations for harder-to-sell or overstock items would benefit other metrics by generating revenue from a wider variety of products.
These examples demonstrate not only AI’s ability to identify patterns and trends to meet customer and business needs but also their power to adjust to new data insights or changing markets.
Streamlined Customer Journeys
Digital tools are meant to streamline and optimize customer journeys, reduce friction points, and enhance the overall experience.
A common customer pain point is finding answers to questions. When you add AI to your DCX, you enable chatbots that not only provide 24/7 support to customers but also generate answers to common questions, provide product recommendations and even process simple transactions — all tailored for each customer. When intuitive, efficient and focused on meeting customer goals, these tools can help to improve response times and reduce the workload for human customer service representatives.
AI is not a replacement for human interaction, though. Qualtric’s 2024 Consumer Trends report showed that human connection is still critical in digital experiences and that most customers still prefer to interact with human channels over digital. While AI can be effective in handling simple customer inquiries, complex or emotional issues still require the intervention of a human customer service representative.
Security and Trust
With increased digital interactions come heightened concerns about data security and privacy. Companies must be transparent and ethical with their AI use, and they must use customer data responsibly and only with consent.
We know that organizations poised to build digital trust are “more likely than others to see annual growth rates of at least 10 percent on their top and bottom lines,” McKinsey reported. Building trust through robust cybersecurity measures and transparent data handling practices is essential to maintaining a positive digital customer experience.
Building security and trust into AI and DCX is especially important because AI is reaching into the most private areas of our lives, such as our finances and healthcare. Many healthcare recipients, for example, look forward to a future where AI helps make better diagnoses or speed the development of medications, but a breach of AI security and trust would quickly erode their faith in AI’s abilities.
Related Article: Improving Customer Experience With Human-Centric Design
Digital Transformation Is Only the Beginning
The fusion of AI and DCX presents an incredible opportunity for businesses to reimagine customer interactions, innovate their offerings and build lasting relationships. To reap these benefits, company leaders will need to integrate AI and DCX strategically. That means taking stock of your current state, understanding your future state and mapping how AI can move the needle incrementally to meet both the needs of customers and the company.
By embracing the power of technology, organizations can create a customer-centric ecosystem that not only meets but surpasses expectations. In an age of constant change, the ability to seamlessly integrate digital transformation and digital customer experience will be the driving force behind sustained success and growth.
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