Every year I like to analyze year-over-year trends and the positive state of technology, so I was looking forward to the Twilio 2024 State of Customer Engagement report. With such a huge explosion in generative AI in 2023, it’s no wonder that it played a central role in this year’s analysis. The analysis surveyed 4,750 business leaders and 6,300 consumers to understand how well brands are doing at customer engagement. satisfaction.
The 2024 State of Customer Engagement report includes samples from 18 countries and four age groups, from Gen Z (ages 18-27) to Baby Boomers (ages 60-75). The answer was obvious. Everyone, young and old, near and far, wants better, more consistent digital experiences. In fact, 81% of brands say they deeply understand their customers, but less than half (46%) of consumers agree. Perhaps 2024 will be the year that brands find ways to bridge the gap in the use of AI and generative AI to meet growing consumer demands.
Throughout the extensive report, in-depth research and analysis focused on five key customer engagement insights. Here's a breakdown of the areas of focus and my analysis of what data means for companies focused on leveraging technology to deliver next-generation customer experiences.
AI can improve customer engagement
While this trend seems obvious, Twilio has a track record that shows that relying on AI can have solid benefits for both brands and consumers. Case in point: Of the 4,750 companies surveyed by Twilio, only 17% were deemed engagement leaders (leading the pack in terms of personalized customer experiences, omnichannel engagement, first-party data usage, etc.) However, these companies also achieved clear results. , in the real world, it has advantages over lower performing competitors. According to the report. The Engagement Leader increased his average revenue by 123% this past year, specifically due to investments in customer engagement. Brands that invested less or were considered “less mature” saw only a 30% increase.
On average, 7 in 10 companies surveyed say they already use AI to personalize content and marketing. They also say they are already experiencing tangible impacts, including:
● Higher customer satisfaction score (45%)
● Improve data-driven decision making (41%)
● Improved market segmentation and targeting (41%)
Reinforcing existing trends, 55% of consumers say they are willing to spend more for a customized experience. The bottom line is that investing in an AI-powered customer engagement strategy can help brands become more connected with their customers while growing their business.
For reference, the average top five ways companies incorporate AI into their engagement strategies are customer analytics (59%), CRM systems (58%), communications platform as a service/CPaaS (54%), and customer Survey (54%). , marketing automation platform (53%).
Consumer data and trust are linked
Consumer opinion was clear in this year's report. 6 out of 10 people say protecting their data is important to them of The best way to build trust. There was no significant difference in this respect between different age groups. Both Gen Z (56%) and Baby Boomers (67%) were more than half-majority in this regard. At the same time, another perception gap surfaced. Companies say privacy and security are a big concern for him in 2024, yet only 64% of companies are currently using AI to manage fraud or reduce risk. This means there is a lot of scope for AI to enhance and help alleviate some of the security issues inherent in a data-centric world.
Just as people want to know that their data is safe, they also want to know how brands are using their personal information. Nearly half said they would trust brands more if they were more upfront about how their data is used in AI-powered interactions. I'm surprised the numbers aren't higher. Aren't we all interested in how algorithms use our data to deliver products and services? And when it comes to transparency issues, we see another gap . More than 90% of brands say they are transparent with customers about how their data is used by AI, but less than half of consumers agree with that statement.
Essentially, what we're seeing is that while brands are taking on a greater burden of using personal information to make their customers feel seen and heard, That means customers don't necessarily understand why or how their information is being used to create interactions with brands. . In fact, this survey showed that 40% of brands said finding a balance between security and customer experience is one of their most pressing challenges in 2024. Again, I'm surprised this number isn't much higher.
Third-party cookies still exist
Apple started making it harder to collect cookies a few years ago, and Google will phase out cookies by the third quarter of this year. Still, Twilio's report showed that more than 50% of brands still rely on third-party data. Therefore, this year should see a surge in first-party data collection to help companies continually improve their personalization projects.
The switch to in-house data collection has begun. Last year, only 19% of people migrated primarily to first-party data for marketing purposes. This year, the percentage was 48%. There is much work to be done. Only two out of three brands said they were “completely ready” for a cookie-free future. And being prepared means not only having direct access to your data, but also being able to analyze it in a meaningful way. This is also where AI comes in and where many brands fall short. One of the most shocking insights was that only 16% of brands “strongly agree” that they have the tools they need to understand their customers. They have a job ahead of him for 2024.
Younger consumers have more demanding digital experiences
According to Twilio, Gen Z and Millennial consumers want nearly 70% of their interactions with brands to be digital. The fact that nearly 60% of baby boomers feel this way shows that the shift to preferred digital experiences is fairly universal. While there is conflicting evidence on this point (some sources say Gen Z is returning to in-store shopping experiences), Twilio's research shows that most of us already know That seems to confirm that a personalized customer experience is the key to brand success across age groups. Approximately 70% of Gen Z and Millennials say they would stop using a particular brand without a personalized experience.
True growth lies in the gap
The best way for brands to ensure they win today is to reduce the gap between what they think they're doing and how their customers feel when it comes to customer engagement. More than 80% of brands said they were good or excellent at providing positive customer engagement. At the same time, only 54% of consumers agreed with this. In fact, more than 30% of consumers said they purchased from another brand when a company failed to personalize their experience in real time.
Do customers have unrealistic expectations of what brands can now deliver in terms of personalized experiences through AI and generative AI? Or do brands need to create the experiences consumers want? Are we failing to collect/analyze the data we need? The truth is probably both.
There has been so much enthusiasm for AI and generative AI over the last year that consumers, especially small and medium-sized businesses that lack the resources to invest in AI for a completely seamless customer experience, are excited about what AI is capable of. You may have a biased opinion. experience. This means that many customers may still be dealing with issues such as disjointed omnichannel experiences and “bad AI” moments, such as seeing an ad for a product they left a scathing review. means. These experiences can make brands seem desensitized and tone-deaf because customers: know You'll have a better experience.
At the same time, the consumer experience could feel a little broken next year, especially as third-party cookies are phased out and more brands move quickly to first-party cookies. Brands need to communicate better transparency to their customers, letting them know the limits of what is possible now and what they hope to offer in the future. All the data in the world can't create great customer experiences if companies don't have the right technology in place to analyze and act on insights. And all the AI in the world is pointless if companies don't have some of the foundation in place to collect the data they really need to understand their customers.
Twilio's 2024 State of Customer Engagement report aligns well with our intelligence and market perspective that AI will be front and center connecting these worlds. And given the current impact that AI is having on every industry, role, geography, and business, leaders should expect this to continue for years to come.