Personalization and trust - the critical elements of B2C customer engagement

B2C companies spend a lot of time creating great customer experiences, but as the new Twilio State of Customer Engagement study shows, there is some work to do for a vital element of that experience, engagement.

Let's start with a basic point - experience and engagement are similar... but not quite! Like many people, I tend to get caught trying to distinguish between customer experience and customer engagement.

• Customer experience relates to how a company presents its brand and products, and services to customers and the impression it leaves on those customers. It’s an all-encompassing term that looks at all interactions across the entire customer lifecycle from the customer’s perspective.
• Customer engagement is one element of customer experience - a crucial element. It is all the activities and tactics a company employs to “engage” with a customer. Here we are talking about interactions through channels like SMS, email, video, and voice. And it includes how we personalized experiences such as customer support, loyalty programs, marketing campaigns, and more.

One bad interaction can lead to an overall bad experience for a customer. And an important point to remember is that although the engagement is digital, we cannot forget there is a human connection brands need to maintain - it’s a fine line to walk.

A renewed focus on digital customer engagement

Twilio's report, which includes a mix of consumer and business surveys and data from Twilio’s engagement platform, shows that companies that invest in digital customer engagement strategies have seen revenue growth of 70% on average. Investment in these strategies is only expected to grow. But what a brand considers a great engagement is not always in line with customer expectations.

Let’s look at personalization. According to the report, 75% of B2C brands say they have a good or excellent personalized experience. Forty-eight percent of consumers surveyed agreed with this statement.

We’ve covered the topic of personalization in B2C - and B2B, for that matter - quite a bit on diginomica (check out some of the recent articles to start), and what’s clear is that it’s something brands need to work on. Why? For most, the first challenge is data.

To create a personalized experience, a brand needs to have its data in order, and that’s proved challenging. For enterprise companies, the number of data silos seems endless, and the process to connect them all daunting. For mid-sized companies with fewer data silos, the work is still complex, especially without the right technology.

But it’s not just the amount of data and the work required to clean and organize it around a customer. It’s also about the type of data. First-party data offers the best insights about the customer, and they give that data willingly. So there’s an expectation a brand will use first-party data to deliver a personalized experience. But many brands also rely on third-party data to get those experiences just right, and much of that data is going away with the demise of third-party cookies.

Personalization and trust go hand-in-hand

In the report, 55% of brands aren’t prepared for a cookieless world. Many cite concerns around lower ROI on ad spend, decreased ability to measure advertising efficiency, and concerns that it will be harder to acquire new customers. Data clean rooms (where a brand and other parties exchange anonymous, aggregated data for analysis) may provide brands with a way around the loss of third-party cookies. Still, I suspect it will be a while before they are widely adopted.

There was an interesting point in the report that’s worth thinking about. Sixty-one percent of consumers said they would stop using a brand if their experience wasn’t personalized, yet only 29% said it boosts loyalty “a great deal.” Another 54% said personalization only “somewhat” increases loyalty. At the same time, consumers don’t see personalization as critical to their decision to buy from a brand, yet brands indicate it is.

Confused? The confusion may lie in the type and quality of the personalized experience. Too little (Hi <name> in an email) won’t impact sales. Yet too much comes across as invasive and creepy and has the potential to drive consumers away.

Wrapped up in personalization is trust - do customers trust a brand enough to share even more first-party data? In this study, 85% of consumers want brands to use only first-party data when creating personal experiences. But at the same time, they aren’t willing to share more data if they don’t trust the brand. Madeline Bennett recently provided a great example of how Walgreens is building privacy and compliance into its personalization efforts.

Improve digital engagement across the entire customer lifecycle

Brands focus a lot of time and attention on engagement at the beginning of the customer lifecycle, but it’s equally important to ensure they engage appropriately with customers on the other end of the sale.

When brands make it hard for customers to engage with support, they risk alienating those customers and losing them to competitors. We see this challenge in the high rates of digital fatigue in the Twilio report. Thirty-six percent of customers faced digital fatigue in the last thirty days. That number is even higher for millennials and Generation Z.

Some of the top reasons for feeling this way were customer support issues such as not being able to connect with support and being shifted to multiple support reps for a single issue. The ability to find information was also high on the list of frustrations.

Although not mentioned in the report, digital fatigue is also caused by an overwhelming amount of advertising everywhere you turn, particularly irrelevant and not personalized advertising.

My take

Although there are some good takeaways in this report, it wasn’t clear what personalization brands and consumers were asked about. There are so many ways to personalize experiences, so which ones work best? And, equally important, which ones do brands get wrong?

Also, getting consumers to trust a brand enough to share first-party data is critical to creating the right personalized experience - not just on the front-end of the customer lifecycle but across the entire customer lifecycle. So how do you do that? Open, transparent communication is a start. Then delivering on the promises given in those communications follows.

Change is the only constant brands can count on these days, and it’s pretty clear that a new approach to engagement that appropriately considers personalization and trust is necessary to keep up.