How do you create customer intimacy without proximity?

A photographic portrait of Errol Gardner
Errol Gardner

EY Global Vice Chair – Consulting

Contributors

7 minute read 22 Jul 2020
Related topics
Transformation Realized
Customer
Risk
Innovation
Consulting

The shift in customer behavior caused by the pandemic is driven by three dominant consumer expectations.

In brief

  • Personalization, prediction and adaptability are three dominant consumer expectations that are driving a trend toward virtual customer intimacy.
  • A small minority of companies have redefined the customer experience, raising expectations to a level most companies can’t meet.
  • To create customer intimacy in a post-pandemic world, companies need to create meaningful connection, accelerate the use of analytics and AI, and innovate at scale.

At the height of the global pandemic, with bricks and mortar stores closed and people sheltering at home, customers were left with few buying options. The result was a significant disruption in the customer journey across almost every industry. According to the EY Future Consumer Index, in the months ahead, 52% of consumers expect to change the way they shop and 41% say they will change the products they buy. Interaction among customers, companies, products and services will likely change forever. Even businesses that were highly dependent on physical interaction are exploring new models.

This accelerated shift in behavior will drive significant changes in customer expectations. Although some behavioral changes may be temporary, the trend from face-to-face interactions to online experiences or hybrid models, such as online purchase and curbside pickup, continues. With intimacy expectations only set to increase, companies will have to redouble their efforts to deliver customer intimacy without proximity.

Three dominant consumer expectations drive the trend toward virtual customer intimacy

At the heart of this trend lies three dominant customer expectations:

1. Personalization.

Customers have come to expect that every interaction a company has with them will be personalized. Customers want companies to know who they are, what they want and how they want it.

2. Prediction.

Customers expect that because they have a relationship with a company — that they’ve demonstrated their preferences and purchasing behavior — that the company should be able to anticipate product or service opportunities that may be of benefit and offer them before they even know that they want them.

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3. Adaptability.

Customers today live in a smart environment — smart thermostats, smart televisions, smart refrigerators. They expect companies to have the same sensitivity to their environment and adapt based on the specifics of that environment. They want companies to know where they are and how they want to engage.

 

If personalization, prediction and adaptability are key expectations in a trend line that has been growing for the better part of two decades, it begs a question: Why aren’t companies already delivering the experience customers expected to receive?

 

A disruptive few are redefining the customer experience for the many

The answer lies in the disruptive few that exponentially elevated customers’ expectations.

 

Fifteen years ago, 80% of companies believed they delivered a “superior experience” to their customers.1 When customers were asked, only 8% agreed. Companies seem not to have learned since then: in 2019, still 90% of customers said brands were failing to meet their experience expectations.2

 

The small minority of companies who have redefined the customer experience and continue to evolve their product or service offerings to personalize, predict and adapt have done such a good job that it has raised the expectation by which every other company is now measured. On a comparative basis, most organizations fall considerably short. 

A window of opportunity to set new ground rules
of participants in an EY webcast were worried about how to deliver the experience customers expect in the “next” and “beyond.”

How companies can create customer intimacy in a post-pandemic world

The pandemic-driven disruption to the business landscape may create some good news. For companies that find themselves in the position of playing catch-up, the COVID-19 crisis has leveled the playing field. For the 59% of participants in an EY webcast who indicated they were most worried about how to deliver the experience that customers expect in the “next” (three to six months) and “beyond” (six to 18 months), they have a window of opportunity to set new ground rules.

Companies need to demonstrate empathy and create meaningful connection by putting humans at the center. They need to deploy technology at speed to gain understanding and insight into their customers and deliver new experiences in the time and manner customers expect. And they need to innovate at scale by developing, deploying and delivering environmentally sensitive products and services. Those that can deliver on all three of these foundational drivers will be able to seize the opportunity to leapfrog competitors in hyper-personalization, prediction and adaptability.

Companies must demonstrate empathy and create meaningful connection by putting humans at the center. They must deploy technology at speed to gain understanding and insight into their customers. And they need to innovate at scale by developing, deploying and delivering environmentally sensitive products and services.

To create connection, humans have to be at the center of every stage in the customer journey

We are living in a moment in time when a company’s ability to be highly empathetic, highly intimate and entirely trusted is really going to matter. Customers will remember how companies behaved during the pandemic, how they adapted and how quickly. If companies put customers at the center by demonstrating empathy, engage with them in ways that resonate and act ethically with the data they are providing, customers will remember and remain loyal.

This latter point is particularly important. Nearly three-quarters of UK consumers and two-thirds of US consumers in a global ESOMAR and HERE Technologies study3 indicate a willingness to share personal data, provided companies are transparent about their data collection practices. If companies put humans at the center, viewing customers rather than compliance as a starting point for privacy, they can create a form of value exchange whereby customers will give companies their data. In return, companies will assure their privacy, build a trusted relationship with them, and deliver a uniquely personalized experience that predicts their needs and adapts to their environment.

We are living in a moment in time when a company’s ability to be highly empathetic, highly intimate and entirely trusted is really going to matter. Customers will remember how companies behaved during the pandemic, how they adapted and how quickly.

Hyper-personalization and prediction need technology at speed

The pandemic made companies across all sectors realize that digital transformation was no longer optional — it was essential. Customers met friction in their digital journeys, and companies struggled to harness the reams of data they were gathering. As a result, 82% of participants polled in a recent EY webcast4 indicated they were accelerating digital transformation in their customer journey across a number of areas, including ecommerce, digital selling, customer journey enhancements and virtualized customer service.

Digital transformation is no longer optional
of participants polled in a recent EY webcast indicated they were accelerating digital transformation in their customer journey.

Companies already gather reams of data on their customers, especially now that every step of the customer journey occurs online. Many may even be using analytics and AI to gain an understanding of their customers — who they are, what they want and how they want it. However, few have mastered the ability to act on that understanding and insight by creating, rapidly deploying and delivering new experiences.

Companies need to be in the market, testing a range of different experiences that can drive value for customers. At the same time, they will want to embed AI in core processes, which will give them an opportunity to “get smarter by the second,” according to EY Global Data and Analytics Leader for Consulting Services, Beatriz Sanz Saiz. The ability to identify the problem that needs to be addressed and then aligning AI to the process and business need, will allow companies to act on the insight they’re gaining to deliver the personalized experiences customers expect.

Many companies might be using analytics and AI to gain an understanding of their customers — who they are, what they want and how they want it. However, few have mastered the ability to act on that understanding and insight by creating, rapidly deploying and delivering new experiences.

Innovation at scale can help companies adapt experiences to environment

For years, many sectors have traditionally gone through an intermediary to get their products to market. Retailers, automotive dealers, travel agencies and broadcasters are only a few examples. The next generation of companies will break the fourth wall in terms of customer interactions, moving from a B2B relationship to a direct B2C relationship. Having these direct relationships with customers will help companies build a level of intimacy, leveraging what they learn from the relationships — their preferences, their patterns of behavior — to hyper-personalize and predict what customers want.

However, to get from ideation to doorstep delivery, companies are going to need to completely reimagine their supply chains and their partner ecosystems. From linear to networked to autonomous, companies need to transform their supply chains to be data-driven, provide end-to-end visibility and engage real-time communication.

At the same time, they’ll need new business models that enable them to make real-time decisions and integrate data to source, make, sell and deliver their products through supply chains that produce them at the source of consumption. And with the right partner ecosystem, companies will have the capacity to scale, accelerate and adapt their ability to respond quickly to customer demands as they change.

Companies that put humans at the center of their customer journey can achieve customer intimacy without proximity

From a customer experience and overall business perspective, the pandemic has left many companies flat-footed. To create customer intimacy, accelerate the use of analytics and AI for hyper-personalization and prediction, and innovate at scale while adapting to changing customer demand, C-suite executives will need to devote more attention to their transformation agenda. They’ll need to leave behind the traditional sources of competitive advantage — scope, scale and efficiency — in favor of three dynamic value drivers: humans at center, technology at speed and innovation at scale.

In doing so, they’ll also be positioning their companies to demonstrate long-term value creation that can be measured in their performance with their customers, employees, and society as a whole — all of which, if done well, will return the favor in improved business performance and market sustainability.


Summary

There has been a significant shift in customer behavior as a result of the COVID-19 pandemic. Although some changes may be temporary, the trend toward online experiences looks set to continue. This means there is pressure on companies to redouble their efforts to deliver customer intimacy without proximity. There are already a disruptive few that are exponentially elevating customers' expectations.

About this article

A photographic portrait of Errol Gardner
Errol Gardner
EY Global Vice Chair – Consulting
Helping clients embrace disruption to drive change. Passionate about inclusion and mentoring. Avid Manchester United fan.

Contributors

Related topics
Transformation Realized
Customer
Risk
Innovation
Consulting

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