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Empathy at Scale: How Data and Technology Will Fuel More Human Customer Experiences

November 06, 2019

IDC research on empathy at scale as a driver for customer experience & digital transformation

 

Sponsored by Comcast

Written by Alan Webber, Program Vice President, Customer Experience, IDC

EXECUTIVE SUMMARY

Organizations across the board are undergoing digital transformations (DX), with 54% having recently completed a digital transformation initiative, 58% in the process of implementing one, and 34% planning one or more. Why is so much effort placed on digitally transforming organizations that have generally performed well and been successful? Because their customers' wants and needs are changing.

In any digitally transformed organization, there is a layer of direct and contextual customer data, and the intelligence and analysis capabilities define and power the relationship between the organization and the customer. Organizations at the leading edge of engaging and relating to their customers are using these data and analytical capabilities to focus on providing empathy at scale.

Empathy at scale, and more specifically cognitive empathy at scale, goes beyond the individual customer level. It is the ability to use data and analytics and intelligence technologies to gain an understanding of the thoughts and feelings of a large percentage of the customer population. This might seem counterintuitive, employing emotionless data and technology to enable a more emotionally and connected relationship between the brand and the customer. To get to empathy at scale requires a level of customer focus and vision for the organization, to have gathered the necessary data about its customers and analyzed it, and then to align the ability of the organization to meet customer expectations with the appropriate customer interactions across channels.

How can an organization remain relevant during this period of digital upheaval? By relentlessly focusing on providing an experience that is founded in a technologically enabled empathetic relationship. This means that everything needs to be customer focused, that the strategic direction needs to be in alignment with that customer focus, and that companies should build an infrastructure and a customer-focused technological architecture that provides a pathway to communication and understanding toward empathy between the brand and the customer. But getting there will not be easy for organizations. Barriers such as internal silos, legacy infrastructure, and unclear ownership of the customer experience (CX) end to end in the enterprise can keep an organization from providing a truly empathetic experience.

METHODOLOGY

Society is undergoing a customer experience–driven digital transformation as both customers and brands adopt new technologies that improve on current experiences and others that provide wholly different experiences. To better understand this change, IDC (on behalf of Comcast Business) surveyed 875 United States–based organizations with 100 or more employees. We inquired about their impressions and expectations about the technological, cultural, and social factors impacting the ability of organizations to deliver an empathetic customer experience. We looked at two groups: those representing information technology (IT) departments and those representing line-of-business (LOB) departments. This white paper is a compilation of the findings from that survey and other research efforts that IDC has undertaken to better understand the impact of DX on customer experience.

CUSTOMER EXPERIENCE DRIVES DIGITAL TRANSFORMATION

There are many reasons and purposes that could drive an organization to take on a DX effort. Traditionally, these types of large-scale organizational changes have been focused on outcomes such as market realignment, or operational improvements such as reducing cost structures, or improving organizational efficiency. The digital era has changed that. Instead of focusing on "traditional" bottom-line improvement efforts, organizations have shifted their focus outward, realizing that the most important thing that they can do is build and maintain a solid relationship with their customers.

Forward-looking companies have the perspective that neither marketing nor sales "owns" a customer; instead, a customer is a partner with the whole organization. And since he/she has a relationship with the totality of the organization, the experience the customer receives from the advertising he/she sees to the marketing materials he/she receives, the sales process and the billing process, the account statement he/she receives, and the follow-on support and service for the implementation and continued use of the product or service all determine a customer's overall experience with that brand. As we enter an era of DX of the customer and the enterprise, the experience gap between what a customer expects compared with what he/she receives is an important target for digital transformation. What the customer often implicitly or explicitly wants is empathy and a successful outcome to his/her need.

The gap between customer expectations and actual experience a customer receives is often a gap in empathy — the inability to understand the contextual needs and wants of the customer and construct a humanly appropriate response. In a person-to-person interaction, this can be as simple as saying "I'm sorry" and providing a path forward. Being able to construct some sort of interaction through the lens of technology is a driver of digital transformation. This digital transformation toward empathetic engagement includes building a deep contextual understanding of customers; anticipating the expectations, desires, needs, and actions of customers; and responding to customer needs and expectations in a caring and connected way.

Improving the customer experience through digital transformation can happen in many different areas within an organization and in almost as many ways. The research showed that three primary targets or outcomes for customer experience improvement are tied to digital transformation. Each of these areas of focus for digital transformation falls under the umbrella of actions that would result in better perception of the brand. For example, 43% of respondents said that one of the top 2 drivers for taking on a DX effort was to improve the customer experience, 34% said it was to attract new customers, and 29% said it was to retain existing customers (see Figure 1). Providing good customer experiences requires infrastructure and internal business systems and processes that can keep up or maintain a balanced relationship between business and customer. That explains why, when asked about the top drivers behind the decision to take on a digital transformation initiative, 38% of respondents still said increased employee productivity and 36% quoted reducing operational or product costs.

FIGURE 1 - Top Areas of DX Focus

Q. Overall ranked — What are the top 3 drivers behind your organization's decision to take on these digital transformation initiatives?

Empathy-IDC-Research-fig1 

n = 875
Source: IDC's Measuring DX Through CX and EX Survey, June 2019

BUILDING EMPATHETIC CUSTOMER RELATIONSHIPS

Organizations tend to think of customer experience as something that happens only in marketing, sales, service delivery, or customer support. What these same organizations are learning is that the experience a customer has is the result of multiple touches across the organization that stretch from end to end, including back-end processes that also touch the customer. In addition, these organizations are learning that underlying a digitally transformed organization is a layer of customer data and intelligence that powers the relationship between the organization and the customer. Digital transformation is bringing to the surface that the whole organization is actually responsible for providing a differentiated customer experience.

Digital transformation efforts are shifting away from the wholesale position of providing an experience at a single point in the customer journey to managing the experience through each touch point of the customer journey, or what is called customer experience management (CXM). Though an important step, CXM is not the final step in the digital transformation of the customer experience. Next-generation organizations at the leading edge of engaging and relating to their customers are focused on providing empathy at scale.

Adopting the Necessary Tools to Move Toward Empathy

To move beyond single-point customer experiences to providing empathetic experiences at scale requires a digital transformation foundation that employs customer data, organizational data, analytics, and intelligence to better understand both the customer and the organization. Long-term empathetic relationships are built on understanding the customer's needs, wants, and circumstances and the organization's needs, wants, and circumstances. Thus technologies to gather customer and organizational data; store the data; transport the data from the point of engagement to the cloud, datacenter, or set of applications; analyze the data; and transform the data into value for both the brand and the customer and then transport back the appropriate data and action in real time are one of the primary investment areas when it comes to digital transformation initiatives.

When we looked at the priorities of the respondents through the lens of the customer journey and the drive toward building an empathetic relationship with the customer, the efforts were focused on better understanding the customer. This makes sense because understanding is foundational to being empathetic. Organizations understand this and are building an architecture to support empathy at scale (see Figure 2). We found that:

  • Customer understanding is the first cornerstone of empathy. Customer data and intelligence, the primary source of understanding about the customer, was the top priority (28% of respondents). Customer data and intelligence includes efforts that stretch across the organization to better understand the customers and their context, including customer journey analysis, voice of the customer, social influence, customer action tracking, and integrated customer information.

  • Building a relationship of trust is the second cornerstone of empathy. Trust builds upon understanding, demonstrating that there is value on both sides of the relationship. It follows then that second on the list was customer satisfaction and trust (26%), which includes customer satisfaction measurement, brand sentiment, secure customer data, digital rewards, and continuous engagement efforts. It is critical for customers to feel a level of value from the relationship and secure in the trust that the brand is concerned about their interests, that it will protect the components of the relationship, and that it will follow through on its commitments.

  • Following through on the commitment is the third cornerstone of empathy. Demonstrating a willingness to follow through and to do what the brand promises builds upon the knowledge and the established level of trust. Implementation and customer support (19%) covers post-sales efforts such as implementation assessment and modification, digital-based training and education, customer care and support, digital self-support, and crowdsourced support.

  • Traditional customer experience efforts round out the cornerstones of empathy. Traditional CX efforts, which include sales and renewals (14%) and advertising and marketing (12%), hopefully provide a positive experience and allow the brand to retain value but provide little value to the customer beyond the product or service. Sales and renewals include partner and channel integration, interaction management, ubiquitous commerce, order management, order fulfillment, and predictive upsell and resell. Advertising and marketing include areas and technologies such as content design and creation, digital asset management, digital marketing, marketing campaign management, extended reality engagement, and AI-driven engagement.

FIGURE 2 - Customer Data and Intelligence Are Critical to Empathy

Q. Which customer-focused digital transformation initiative is the top priority for your company?

Empathy-IDC-Research-fig2 

n = 875
Source: IDC's Measuring DX Through CX and EX Survey, June 2019

Though the technologies necessary for providing a differentiated customer experience stretch across the organization and are found among both front-end and back-end business operations, most companies are primarily focused on the technologies that better support building out an empathetic architecture that includes understanding the customer, front-end customer facing systems, and applications that in general support the customer. Based upon the responses from our survey, the primary technology area of attention for customer-focused DX is data analytics (41% of respondents) (see Figure 3). In addition, because data is critical, 19% of respondents said that CRM is an area of focus. In terms of customer-facing applications and technologies, different channel technologies rated high, such as website (39%), social media (34%), mobile customer app (29%), and customer portal (25%).

FIGURE 3 - Technological Priorities Support Digital CX Efforts Leading to Empathy

Q. In which of the following technology areas is your company focusing its digital customer transformation initiatives?

Empathy-IDC-Research-fig3 

n = 875
Source: IDC's Measuring DX Through CX and EX Survey, June 2019

BARRIERS TO EMPATHY AT SCALE

Any form of organizational change is difficult because of what it asks of the organization, as well as its partners and customers, and CX-focused DX leading to empathy at scale implementation is no different. The barriers cover many different organizational issues, such as lack of budget, lack of vision, and the belief that customers are holding the organization back. Respondents cited a number of challenges to implementing a CX-focused DX initiative (see Figure 4), such as business units having different priorities (30%), short-term vision focused on other priorities (25%), and lack of strategic vision from senior leadership (20%).

FIGURE 4 - Different Priorities and Legacy Infrastructure Are Top Challenges

Q. What are your organization's top 3 challenges in starting to work toward your digital transformation priorities?

Empathy-IDC-Research-fig4 

n = 875
Source: IDC's Measuring DX Through CX and EX Survey, June 2019

One of the foundational, but often forgotten, pieces highlighted previously for providing a differentiated customer experience is the infrastructure and technological foundation of a brand. In our survey, 27% of respondents (second-most common challenge) stated that their infrastructure doesn't support initiating a digital transformation. The purpose of infrastructure is to build a technology architecture that facilitates the integration of data sources and systems across multiple departments and functions, providing a single source of information and truth about a customer, and given the multiple facets of a customer, to provide cross-department visibility into the same data to help break down silos. Often this includes providing real-time accessibility to databases and systems that support direct human interactions such as a customer service desk or that provide a tailored and personalized digital experience such as the back-end content management system for a mobile application, all of which are dependent on fast and agile networks.

In the sections that follow, we have consolidated and called out four areas that are the largest barriers for organizations to digitally transform and provide empathy at scale.

Obstacle 1 — Internal Silos

Any organization is bound to have silos that hamper organizational change and progress, and 20% of our respondents said silos are the largest challenge to starting work on corporate DX priorities. There is often a difference in priorities between LOB units that have direct contact with customers and IT units that are more responsible for an organizationwide infrastructure. More than 30% of respondents identified business units having different priorities as an issue, and it was the top issue identified. There are even differences between LOBs, such as between marketing and sales or sales and customer support. The result is that a single initiative doesn't have enough organizational push to move forward, and often the customer suffers the most.

Obstacle 2 — Legacy Infrastructure

The second issue that 27% of the respondents identified was being saddled with a legacy infrastructure that isn't capable of supporting a modern digital enterprise. Some organizations still operate in a mainframe or client/server architecture for their core business processes and functions. To shift business processes and functions that are critical to customer engagement to a new architecture is often a time-consuming and expensive, but necessary, effort. The need to make this update to the CX architecture in as fast and agile a way as possible is one of the primary reasons that organizations are moving to cloud platforms. IDC expects spending on public cloud services to grow from $229 billion in 2019 to over $500 billion in 2023.

Obstacle 3 — Short-Term Perspective

More than one-quarter of respondents identified having other near-term priorities as a top 3 challenge to moving forward on a CX-focused digital transformation initiative. This issue is closely related to other barriers cited by respondents, particularly lack of strategic vision (20%), lack of support for DX initiatives from senior leadership (14%), and lack of belief that investing in DX will result in a transformed business (4%).

Obstacle 4 — Unclear Ownership

The fourth obstacle that organizations face in moving toward customer experience management and building an empathetic understanding of their customer is determining who is in charge internally. Very few organizations have a role such as a chief experience officer (CXO) or a chief customer officer (CCO) that is specifically responsible for the experience a customer receives end to end with a company.

In addition, most CX-focused digital transformation begins at the LOB level but doesn't stay there. After the concept is approved and initial efforts are started, the responsibility for implementation and the budget to support it often falls to the IT department (see Figure 5). Our research found that 44% of respondents identified the CTO as being responsible for digital transformation efforts, followed by the CIO (38%), with other executive roles trailing. When it comes to the budget for DX efforts, the CIO (39%) is primarily in control, followed by the CTO (34%).

FIGURE 5 - Responsibility for CX Often Falls to the CIO and CTO

Empathy-IDC-Research-fig5 

n = 875
Source: IDC's Measuring DX Through CX and EX Survey, June 2019

NEXT ACTIONS: STRATEGY FOR A SUCCESSFUL CUSTOMER-FOCUSED DX EFFORT

The key to the customer treasure chest for organizations today and tomorrow is to focus on providing an empathetic experience for their customers. This doesn't mean providing compassionate or emotional empathy as only another person can do. Rather, it means that it's critical for an organization to be cognitively empathetic toward the customer in a way that demonstrates the organization understands that the customer has feelings about the organization that are related to contextual information, experiences, and perceptions. Consider the examples of anyone who has received an incorrect bill from a brand and been forced to spend a significant amount of time and speak with multiple people to resolve the issue. Often the customer must interact with an employee who has not been trained in providing a differentiated customer experience while interacting with a system that is not customer friendly. The result is a less than empathetic and desirable experience.

Providing an empathetic response allows the organization to communicate with the customer in a way that the customer can best understand and to provide a frame of reference for the organization to understand the customer. How can an organization accomplish this? By relentlessly focusing on three key pillars: everything needs to be customer focused, the strategic direction needs to be in alignment with that customer focus, and an infrastructure and technological foundation needs to be built that provides a pathway to communication and understanding toward empathy between the brand and the customer. With technology remaining the primary means through which companies and customers interact and engage, organizations should focus on five areas:

  • Know your customer. People are complicated enigmas. Any customer experience management effort has to begin and end with knowing your customer. Constructing a level of cognitive empathy with a customer requires deep direct and contextual data about the customer and the technologies to do the analysis both during and after any sort of engagement.

  • Be customer focused. Very seldom will any organization be ahead of its customers such as in the adoption of a technology or the adoption of a channel. More often than not, the company is playing catch-up. That is why organizations prioritize their DX initiatives based on those that improve the customer experience and maintain parity with customer expectations — the customer has to be the primary focus.

  • Identify a strategic direction in alignment with customers. One of the points that was clear from the data is that it is critical that DX efforts and initiatives align with where the customers are at, whether it is the specific need the customers have, the context around their need, or even their emotional state. To do that, the organization needs to have a clear and up-to-date view of who its customers are, what its customers need and want, and the ability to shift as its customers shift.

  • Use the full organization. Organizations also must be able to identify the intersecting needs of the customer and the organization and then to hand it off to the right part of the organization to meet the needs of both the customer and the company. For example, even though a request to improve a part of the customer experience may start in a line of business such as marketing, often the best team to make that change is the IT or technology team. Meeting the needs of the customer requires the capabilities of the full organization.

  • Build a solid technological foundation. In alignment with being customer focused and using the full organization, it is important to understand that customer experience management is about more than just a website or a social media channel. Almost all of the technologies within an organization, both back end and customer facing, contribute to the customer experience. From the speed of response of the infrastructure to the billing system to the supply chain management system to the customer support chatbot and more, organizations need to take into account how they align these technologies and the data that flows through them to provide a targeted, personalized, and empathetic customer experience.

APPENDIX

During June and July 2019, IDC conducted an online survey with 875 United States–based organizations and asked them questions about customer experience and employee experience. Half of the respondents were IT professionals and half came from LOB. Respondents were director level and up who were involved in DX initiatives in their organizations (employee experience and/or customer experience). Respondents work at United States–based midsize and large companies (firms with 100+ employees) that have at least five locations and a WAN. Respondents came from organizations that represent a mix of industries, with an emphasis on healthcare, retail, limited/quick service restaurants, financial services/banking, and hospitality. This white paper covers only the customer experience component of the survey.

About IDC

International Data Corporation (IDC) is the premier global provider of market intelligence, advisory services, and events for the information technology, telecommunications and consumer technology markets. IDC helps IT professionals, business executives, and the investment community make fact-based decisions on technology purchases and business strategy. More than 1,100 IDC analysts provide global, regional, and local expertise on technology and industry opportunities and trends in over 110 countries worldwide. For 50 years, IDC has provided strategic insights to help our clients achieve their key business objectives. IDC is a subsidiary of IDG, the world's leading technology media, research, and events company.

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