Providing a good Customer Experience (CX) is on just about every organisation’s agenda these days. But where exactly is it headed? We can’t say for sure. What we can tell you though, is that this CX’s ecosystem of solutions is tethering between both expansion and consolidation. New niche solutions are sprouting up everywhere you look, from Live Chat tools and Customer Experience Management (CEM) software to Customer Success platforms and User Feedback solutions. Meanwhile, many of these same tools are being acquired by larger enterprises and ‘all-encompassing’ CX suites, such as Verint and Medallia. Movements in the market which are all attributed to trends in CX. So let’s address the question on everyone’s mind…What’s happening in CX and what lies ahead?
This article takes a look at: why CX has become a heavy focus for many organisations, why there is so much movement (both expansion and consolidation) taking place among CX software solutions, and where CX might be headed (according to the experts).
Why is providing a good CX so important in business today?
Contrary to popular belief, the factors motivating organisations to adopt and maintain an effective CX approach haven’t evolved from traditional customer service teams, but rather from the customers themselves. Our customers are the ones who are pleading for better service. Our customers are the ones who have set the standards high in terms of immediate access, quick response times and a smooth online journey. And as a result, organisations are shifting gears and making an effort to cater to these customers by providing a good CX.
As HubSpot puts it,
Customer experience is of critical importance to the sustained growth of a business. It’s important to ensure a positive customer experience so customers build brand loyalty and affinity, evangelize your product or service and refer their friends, and leave you positive customer reviews that will help your business retain revenue and earn new customers.
The Rise of CX Software Solutions
There has been a long standing debate among digital experts about what’s happening across the digital CX landscape. But clear evidence reveals that the consolidation and expansion of CX software solutions is happening simultaneously.
It’s a near universal truth: markets and businesses exhibit a cyclical pattern of expansion and consolidation.Scott Brinker, editor of Chief Marketing Technologist
Let’s take a closer look at these movements…
Expansion of CX Software Companies
Martech’s Annual Marketing Technology Landscape Supergraphic is a great resource for understanding just how many ‘martech’ solutions have cropped up over the past few years. As you can see below, in just a span of five years, the Customer Experience industry has exploded with niche solutions.
2014 Martech Landscape with 19 solutions, Source: chiefmartech.com
2019 Martech Landscape with 289 solutions, Source: chiefmartech.com
From 19 solutions to 289 solutions! And actually, this overview doesn’t even cover it. According to the author of this supergraphic, there are plenty more solutions that haven’t been listed, including regional martech apps, vertical industry martech apps and more.
So why are there so many niche tools sprouting up?
Perhaps not surprisingly, there is a direct link between major CX trends and this expansion of CX tools. Here are a few of those trends:
- More companies are tapping into data analysis. Previously, the primary focus of organisations looking to boost their CX was to collect data on their customers, whether that was through email surveys, online polling, or website surveys. Now we’re seeing more organisations conducting a more thorough analysis of this data to make it actionable. This trend has brought about countless tools that can not only collect but also measure and analyse the incoming data for the user. Examples include Mopinion and Mixpanel.
- A more digital approach is needed. Customer journeys are becoming more and more complex, with different touchpoints and channels, both online and offline. This trend is pushing organisations to find ways to cater to their customers online as well. There are, for example, many traditional CX tools – that previously focused on their call centers as a primary means for customer communication – that have had to ramp up their offerings, adding digital solutions to their packages. Meanwhile others were catching onto this trend and building their own solutions, hence the birth of the Marketing Technology Stack and the explosion of niche tools that they are comprised of.
- Social media becomes a CX channel. According to BeyondtheArc, “social networks are constantly shifting based on user interaction, so you’ll want to stay current on where to invest your efforts”. Social media is constantly changing, with new demands each year and an increasing need to monitor all channels in which your customer is interacting with your brand. This trend has led to the birth of several analysis tools such as Buffer, Sprout Social, Sendible and more.
And how have these smaller, more specialised software companies managed to ‘stand their ground’ against the bigger tech companies? For one, they are often capable of things that the bigger players can’t quite fully manage, such as their flexibility and responsiveness to market trends and new technologies. In other words, these smaller scale tools are more hyperactive in terms of development.
But then again, nothing is set in stone. There will be bigger fish entering the market, looking to capitalise on the development and progress these smaller tools have made or even start providing these offerings themselves, which brings me to the other end of the spectrum: the consolidation of CX software solutions…
Consolidation of CX software companies
Of course, there will be consolidation. The larger fish will eat smaller fish — this is a necessary dynamic for them to acquire the fruits of small-firm agility and innovation. But, as in nature, the population of small fish keeps rejuvenating.
Among the CX software grouping, consolidation is a constant. This consolidation occurs when the much bigger (and well-financed) companies acquire technologies that will improve or expand upon their existing platforms. These are often CX suites or major ‘marketing clouds’ that are making efforts to digitise their offerings.
Latest CX Software Acquisitions
To give you an idea, here are some of the biggest acquisitions that have taken place in the last few years that have had a significant impact on CX:
One of the most notable in this area is Verint Systems, a global leader in Actionable Intelligence and a great example of a contact centre software moving into CX:
- In mid 2011, the organisation acquired enterprise feedback management (EFM) solution, Vovici, which offered up strong EFM and analytics capabilities.
- Later on, by the end of 2016, Verint purchased OpinionLab, in an effort to extend its ‘Customer Engagement Optimization’ portfolio and simultaneously drive ‘smarter, real-time digital engagement’.
- And just recently this year (2019) Verint acquired digital customer insight vendor Foresee, providing Verint users with a broader range of VoC capabilities.
We’ve also witnessed several traditional market research and survey solutions moving into the CX and digital CX space.
For example, in 2014, customer experience and market research company MaritzCX acquired CX software Allegiance (which at the time was a provider of web-based feedback tools).
Additionally this past March (2019), survey software SurveyMonkey acquired web survey tool Usabilla.
In late 2016, global Customer Experience Management (CEM) leader Medallia acquires Kampyle, and became the new product solution, Medallia Digital. This acquisition has since widened Medallia’s customer experience offerings.
And then of course, there are plenty of other tech giants who want a “piece of the pie”. For example, major software corporation SAP. At the beginning of 2019, SAP acquired experience management software, Qualtrics which constitutes one of the biggest deals recently in the SaaS market.
To learn more about other recent acquisitions, click here.
So why are these acquisitions happening?
Like the expansion of niche CX software companies, the consolidation of CX software companies is also attributed to the trends and happenings within the CX space:
- Digital technologies and newer technologies such as Artificial Intelligence and Machine Learning are becoming more important among CX companies. It’s trends like these that are driving these larger scale, yet more traditional enterprises to ‘fish’ among the niche tools and strengthen their software on the digital front. Verint’s acquisition of ForeSee is a perfect example of this.
Ryan Hollenbeck, chief marketing officer at Verint:
Digital is becoming the obvious priority. We felt the acquisition of ForeSee allowed us to double down on the digital portion of the customer experience.
- Growing popularity of website and mobile analytics. As we previously mentioned (in the section about software expansion), data analytics has become a major trend in CX. Any company that wishes to keep up with their customers (i.e. with Voice of Customer data) has to have the know-how and technology to measure and analyse the data they are collecting from customers. We’re seeing that this is also true of mobile feedback capture and analytics. A good example of this is Medallia’s acquisition of Kampyle and it’s ‘state-of-the-art web and mobile feedback analytics platform’.
Keep in mind. These are just a few examples of trends driving these movements in Customer Experience. There are many more out there and many more to come.
But what exactly can we expect? Well, that’s a good question for the experts.
Consulting the Experts
The following interviews include various perspectives on how the digital strategies and trends mentioned in this article will evolve, as well as how these experts foresee the industry taking shape in the future.
Let’s see what they had to say…
Shep Hyken, Chief Amazement Officer of Shepard Presentations
Hyken is a Customer Service and Experience Expert and Hall of Fame Speaker. He is also a New York Times and Wall Street Journal bestselling author and owner of Shepard Presentations.
Source: Grand Cardone TV
Omnichannel to Channel-less
‘Companies in the CX space have been talking about the importance of ‘omnichannel’ for years now. But the reality is, the customer doesn’t know what that word omnichannel really means, nor do they care. What they do know is that if they want to purchase something or have their questions answered, they just simply pick up their phone or open up their laptop. In other words, they’re not thinking in ‘channels’, but rather how they can achieve their objectives with little to no hassle.
In fact, I recently had an interesting chat with Jeff Nicholson, Vice President of Pegasystems, who introduced me to the term ‘channel-less’. It’s this concept of shifting the focus from interactions around the channel to interactions around the customer. In other words, it shouldn’t be all about the channel itself, but rather communication. I believe that when companies have this figured out, they will be able to provide a much more seamless and frictionless experience for their customers.
On top of that, I found this statistic to be quite thought-provoking,’
Your average customer support employee will switch applications at least 1100 times a day.
‘Now just imagine how much time it could save, and how frictionless the process would be if this employee were working in a suite that incorporated all of these applications. A solution that cuts across all departments would enable teams to crawl out of their silos and start focusing more on the customer.’
Artificial Intelligence will make us smarter
‘Another interesting development in CX is the growing role of Artificial Intelligence (AI) and Predictive Analytics. These technologies will play a part in making the organisation smarter about the customer as they will give us a better sense of our customers’ needs. Artificial Intelligence keeps track of all interactions with your customers across all channels and will use historical data to predict how they may act or what they will ask next. With such insights, organisations will know how to create a better experience for these customers.’
Esteban Kolsky, Founder of ThinkJar LLC
Kolsky has over 20 years experience in customer strategy and CRM solutions. Prior to founding consultancy ThinkJar, Esteban spent eight years as a Gartner analyst.
‘When we started doing CEM and then CRM back in the early 2000s, we quickly discovered that software without a vision, mission, strategy, and an enterprise-wide adoption was just software. In this world, I introduced customer feedback systems (in 2001), and later renamed it EFM (later VoC and now CX) as a way of doing more than surveys and collecting feedback.
Since then the introduction of social networks and online communities have changed the way we collect feedback and what we do with it. Sure, we still need direct feedback, but with new analytics and Artificial Intelligence and Machine Learning tools, we can also use tons of other data that was previously useless on its own.
Today, CX – which is the same concept (putting the customer in charge of customer centricity, using feedback as the message to control it, and analytics and insights as the fuel to change processes) – is more of a discipline than it ever was, while software continues to serve as more of an aid to it.
The real work is done between the moment of education after the consultant leaves and before engagement with the customer is achieved. In the future, I expect to see more data-driven insights, and less tech-as-a-solution.’
Kees Wolters, Managing Partner & Co-Founder of Mopinion
Wolters has 10+ years of experience in the Digital Customer Experience space. Founder and Co-Managing Partner of feedback software Mopinion, he has advised brands such as TomTom, KPN, Travix and Renault on their digital feedback strategy.
‘When you look purely at technology, there are two main trends. There are those major tech vendors entering the kitchen and living room with IoT devices such as Alexa (Amazon) and Google Home and then there is the large umbrella of Artificial Intelligence (AI) which revolves around analysing customer experience (CX) data and insights as well as automating customer contact (via bots, speech to text, and more).’
IoT and Artificial Intelligence
‘While tools like Alexa and Google Home will first have an impact on ecommerce and retail, my expectation is that they will also become an interface for connecting with service-orientated organisations, such as insurance, telecommunications and utilities companies. Then again, if you look at the current performance of tools such as SIRI and other voice-user interfaces (VUI), it’s clear to see that they still have a long way to go. So, the question we need to ask ourselves is: once improved, will these technologies serve as ‘better’ or more preferred interfaces than screens? Based on history alone, it looks like IoT devices won’t replace other interfaces entirely, but that they will in fact, coexist.’
‘Artificial Intelligence – on the other hand – still has a lot of marketing “fluff”. Sure, it powers the chat and voice interfaces of the bots inside your Alexa device, but this is not exactly ‘true intelligence’. Many of these solutions are based on machine learning (ML) models that predict the probability of ‘input A’ relating to ‘output B’ (i.e. the probability that you said you wanted to order some bananas). And if we refer back to CX and customer support, these are similar to the ML models that predict your question about ordering is most likely relating to answer X. The big benefit is that they are becoming pretty good at crunching huge amounts of data.’
This technology has a long way to go in becoming more intelligent but these ML models are absolutely automating various CX-related processes, and are therefore going to have a big impact!
New Generation of Consumers
‘It’s also interesting to consider some key demographics and trends in population. For example, the younger generations. The largest, ‘new group’ of consumers entering the market are those of Generation Z (the demographic cohort after the Millennials) and I’ll be curious to see what their expectations are in terms of Customer Experience. Remember, these will be consumers who have grown up in an online world, and who simply don’t know what the world was like before the World Wide Web! Needless to say, this demographic will likely keep things moving in a digital direction and continue to build upon a digital way of both working and living. That includes the apps they use, too.
My expectation is that popular mobile apps among these groups – such as Instagram or Snapchat – will become even more prominent if and when they expand their service offerings. This is similar to trends at companies like Uber (ie. expanding to food delivery) and Facebook with their recent announcement of offering their own financial solutions and currency (Libra).’
‘Lastly, I predict that market will undergo some major changes with regards to mobile. There are – for example – huge differences between cultures and how they use the internet to order online and interact with companies in the digital age. Just look at the popularity of mobile devices in Asian and African countries. Unlike many Western countries, these countries didn’t grow up with laptop and desktop computers in the early 90s and 00s. As a result, a large part of the population skipped this phase entirely and went straight to mobile devices. This partly explains the popularity of chat apps like WeChat (Tencent), where you can do almost anything via chat interfaces, such as communicating with your peers, ordering/buying products, interacting with your service providers, ordering a cab/scooter, and making online payments / money transfers.
You can already see how Western companies are struggling with offering their services via chat apps such as WhatsApp. If this trend is adopted by Western consumers, it will have a huge impact on the future of CX…
When you relate this to market consolidation or recent acquisitions in the CX space today, there is still a lot of room for innovation and new players to emerge.’
Udesh Jadnanansing, Managing Partner & Co-Founder of Mopinion
Jadnanansing has 10+ years of experience in the Digital Customer Experience space. Founder and Co-Managing Partner of feedback software Mopinion, he has advised brands such as Ahold, Arcadia, KLM and Decathlon on their digital feedback strategy.
‘I believe the software solutions in CX are maturing and will indeed to consolidate further. Not only will the usual suspects such as Adobe and Medallia continue to acquire more niche companies but there is also a big chance that companies from other industries such as media and web content software (i.e. Open Text) will move into the CX space as well.’
So what is the reason for this consolidation?
‘In my opinion, this consolidation is a direct result of businesses that are still failing to break out of their silos. Despite CX being a ‘buzzword’ over the last few years and listening to experts preach about cross-departmental communications, it seems businesses are still unsuccessful in spreading their CX program initiatives across all departments. If we look at user feedback, for example, we see plenty of companies collecting data but missing out on the opportunity to really do something productive with the data and offering more than just a self-service form builder. I suspect these organisations will soon figure this out, but it’s taking a little more time than expected.’
Despite CX being a ‘buzzword’ over the last few years and listening to experts preach about cross-departmental communications, it seems businesses are still unsuccessful in spreading their CX program initiatives across all departments.
‘On the other hand, there are still plenty of organisations that focus on a niche or certain expertise that seem to know how to ‘stick around’ and evolve with the market. This is a stark contrast to all of those traditional VoC players who tend to put their attention more towards what’s happening in their contact centers rather than across digital touchpoints. In any case, it will be interesting to see how things play out…’
Buckle up for CX
It’s safe to say that managing the Customer Experience is becoming quite complex. We’re seeing that more and more customers are craving personalised and frictionless experiences; a trend that demands software companies to deliver if they want to survive.
We’re also seeing the simultaneous expansion and consolidation in terms of software – with niche tools paving the way and leveraging their size and tight lines of communication to stay ahead (through hyper-specialisation and quick responsiveness to trends), and tech giants swallowing up these same companies in an effort to digitise their offerings and stay in tune with the market.
But most importantly, we foresee a big future for CX with multiple factors coming into play such as preferred channels, new technologies (AI and predictive analytics), the rise of mobile and more.