Thinking about getting the latest CX and marketing tools for your customer service agents or possibly investing in some artificial intelligence? Are you wondering whether the pandemic ended up hurting or helping digital customer experience? And just how is the recession impacting what CX decision-makers are focusing on? Or perhaps you're wondering whether interest is growing — or diminishing or even stalling — for certain CX tools or strategies. Or maybe you just want to know if others really don't know what headless CMS is or does.
Meet Sarah Kimmel, vice president of research for Simpler Media Group, which runs CMSWire.com. She tells us what the numbers are saying by diving into the findings of the 2023 State of Digital Customer Experience Report. Sarah's got the gift for wrangling meaningful findings that indicate where we're headed. She's based in Chicago, aka the Windy City. If you really want to chew the fat with her, try getting on her good side by bringing up volcanoes or tornadoes.
Dom Nicastro: Hello all, we're back with another edition of CX Decoded season three. Dom Nicastro here, managing editor of CMSWire here with my co-host, and boss, CMSWire Editor-in-Chief Rich Hein. What's going on, Rich?
Rich Hein: Hey, Dom, it is great to be here with you again today. I know it's been a while since I've been on the show and the podcast. But you know, I knew Sarah was coming on. And I just knew it was going to be a great episode and wanted to jump in and talk to you both.
Nicastro: Well, we're happy to have you back, Rich. I mean, we did run the ship without you just fine, by the way, but OK, we’ll let you back in the door boss, I guess. So let's get into this because we have this rare special appearance. She's been on before. Our colleague, our very own VP of research for Simpler Media Group, which owns CMSWire.com and CX Decoded, our friend and colleague, Sarah Kimmel. She's going to be digging into the top findings from our very own 2023 State of Digital Customer Experience Report out the door now, that's produced by her team at CMSWire. Sarah, what's going on?
Sarah Kimmel: Not very much. Dom. Just super happy to be here. And so excited today to share the results of the DCX survey with you and Rich.
Rich: Yeah, you know, Sarah, every year I've been here, over five years now, every year we do this Digital Customer Experience survey that results in this proprietary research we do. It really digs into the nitty-gritty of what's going on in customer experience in the marketing world and is really designed to help leaders kind of make decisions about what's going to be happening in 2023. And I know we want to jump right into that. You've been on the show before. But for those who are uninitiated, I would love to start with you just telling us a little bit about your role in the organization, how you got where you're at, and maybe a fun fact or two about you that's unrelated.
Sarah: Sure, this is my third year as VP of research at Simpler Media Group. I oversee the research that we do for CMSWire into the digital customer experience. And I also on the Rework side, oversee research that we do into the digital workplace. So it's been a pretty exciting couple of years for digital customer experience and the digital workplace. Before I was here, I was VP of research at Human Capital Media, where I did research into corporate learning and development and HR-related topics. My job has always been a little bit of where-social-science-kind-of-meets-the-road, most of business is actually people doing business. And the research that I do is about people doing business for their jobs. What is the people-side of the workplace and the people-side of marketing in this case?
And for a fun fact, you'd probably — neither of you know this about me — but I'm completely obsessed with natural disaster films. I’ve probably seen 75% of natural disaster films made in the last 30 years.
Rich: Oh, interesting. Interesting. So can you give us a top three there?
Sarah: My top No. 1 is a pretty old film called “Volcano,” which is about a volcano that erupts in Los Angeles, which is hilarious.
Rich: Tommy Lee Jones.
Sarah: Yes, and Anne Heche, brilliant film, kind of a case study on what makes a good disaster film. After that, you know, I saw just recently a 2014 film called “Into the Storm,” which is a tornado movie. And it was about 90% tornado. So if you're ever just looking for like a really good time, that was it. You just had enough story to hold it together. But almost all of it was actually tornado.
Dom: My top natural disaster film would be “Karate Kid Part III.” Oh, wait a minute, not talking about that — that was a script disaster. Does that count, Sarah?
Sarah: This is a totally different thing.
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An Astonishing Number of Digital CX Tools Being Used
Dom: All right. Let's get into this. We're gonna go with top five findings that we picked out. I mean, there's a lot more to go with this 2023 State of Digital Customer Experience Report by CMSWire. We'll let you know how to get there, how to find it. But let's just get right into it. OK, Sarah, here we go. Finding number one: There's a DCX app for that. There are a lot of these apps out there. What’d you find there, Sarah?
Sarah: So pretty amazing. There are 29 different digital customer experience tools that are being used by at least 1 in 5 organizations. Since I mean, that's an astonishing number of tools that are actually kind of floating around out there.
Rich: So is that an average? Sarah, are you saying that the average company uses 29 different tools?
Sarah: No, what I'm saying is that 1 in 5 organizations uses at least 29 tools, OK? Actually, I realized that I've actually said that in a way that makes it confusing. Each particular tool is used by about 20%. Right? That's what I'm saying. Each particular tool is used by about 20% of organizations. There are seven core CX tools that are used by the majority of organizations, though, and those kind of core top seven tools and platforms have been really stable, they've been the same for years now, whichever one is kind of like the number one or the most popular, or the most in use has switched around a little bit year to year. But those top seven have remained the top seven. And those are an email marketing tool, a customer relation management, like a CRM system, social media analytics, content management system, social media management platform, so both the analytics and the management of social media, content analytics, super important for your CMS and call center software or like a knowledge base to help with the call center.
Rich: Can you explain that last bullet that you mentioned the call center software knowledge base? I'm not sure what that consists of actually?
Sarah: Right. So this is kind of like an application that would help your customer service agents to make a more seamless experience, like how do they have that kind of information that they're looking for at their fingertips that they need in order to solve customer problems and issues?
Rich: I see. So whatever they're using on their behind-the-scenes to work with the customer in real-time.
Rich: Right. OK, interesting.
Sarah: So the other kind of interesting thing going on here is that even though there are kind of seven tools being used by a majority of organizations, they're not done, what we're seeing is that there's a lot of planned investment in technology and platforms over the next two years. So there's another 15 tools that one-third of organizations say that they're going to adopt in the next two years. And the most likely to be adopted are DXP, CXM, digital asset management, journey orchestration software and a CDP.
And so the interesting thing about that is that what organizations are really looking to acquire are much more sophisticated tools that allow for greater capabilities and more sophisticated customer journey and mapping and that kind of thing. And that's really great. It's wonderful to see that organizations are really planning for these kinds of upgrades to their customer experience, and to get better tools that allow them to do more.
Rich: I'm surprised, Sarah, and I think we're going to talk about a little later that I don't see artificial intelligence and machine learning on that list.
Sarah: They're not and, in fact, what we actually saw was that planned investment in AI has actually ticked down year over year, it's gone from 30% to 25% of organizations who are planning to invest in AI, and we definitely will talk about AI a little bit more.
Rich: Yeah, I definitely want to because I have some theories about what's going on there.
Sarah: I'd love to hear that.
Dom: Yeah. I'm not surprised. Every tool you mentioned, Sarah, from what I'm hearing for practitioners are the blocking and tackling of getting CX work done, especially now, because there's nothing special right now happening in the world, you gotta do blocking and tackling, saving on costs. These are the core tools that get it done, email marketing, content, you know, and analytics. That's what you need. You can just send out emails, I know, everyone says, oh, email's dead? Nope, not even close. We all need it. So these are not surprising to me.
Rich: I do have one question. Just to follow up on those technologies specifically is like I know, our audience is super familiar with DXPs and CXM, and DAM. And we're all familiar with journey orchestration. But how is the journey orchestration software differ from these tools? Isn't that technology built into these tools?
Sarah: It sometimes is and sometimes isn't. And that that is one of the issues going on here in the CX space is that there are so many different tools doing very similar, but not exactly the same sorts of things. And you've probably heard, you know, what counts as a customer data platform now is a little mind-boggling. When we do the CDP market guide every year, there's not nearly — I think there's more than 100 different potential CDPs that are being sold out there. So there's just kind of a lot. Yeah, there's a lot going on.
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Did the Pandemic Improve Digital Customer Experience?
Dom: All right, let's move on to finding number two, shall we? This finding is all about what was a catalyst for DCX. So we're calling it a catalyst converter. That's finding number two, what you got there.
Sarah: So the big question is about the pandemic about COVID. Whether or not this experience that we've had over the last nearly three years has actually improved digital customer experience, right, like when we went into 2020, suddenly, digital customer experience was hugely important to everyone to all of these organizations, where customers were really looking for that digital experience.
But it was a really rough transition. Seems like a lot of organizations hadn't really made the investments in the tools that they needed in 2020. So it was pretty rough. And everybody's budgets got cut at the same time in 2020. So they were not in the best position and had to get a little scrappy with how they were responding and what they were going to do about digital customer experiences.
So we've been looking, you know, it looked like a lot of organizations were looking to invest in these tools. But it's not really a fast process to implement a lot of these customer experience tools, it takes a long time, and a lot of sort of cross-functional collaboration to make it work well. So we've been wondering, you know, did the pandemic really spur organizations to improve their digital customer experience? Did it actually get better, and we see some signs in the data that we have that are pretty promising.
We've been seeing an uptick in the organizations who say that their tools are working well, pretty radical change over the last three years, where now 75% of organizations say that their tools are working well or satisfactory. And three years ago, 50% said their tools needed work. So we looked at them were like, Hey, that's pretty promising.
So this year, we just asked, and what we found was that 61% of our respondents said that their digital customer experience at their organization had improved since the beginning of the pandemic, and only 8% of them said that it had gotten worse. Everyone else said it stayed the same. So it's pretty clear that the pandemic was a real driver for change in the digital customer experience space.
Rich: Yeah, I mean, I think we can all agree that it really shifted customer behaviors. And, you know, I think the most common thing that I get asked around is, are those going to rebound to what they were previously. And you know, in my opinion, I just see this big push between, you know, some people are calling it “phygital.” I don't particularly like that word. But this hybrid digital experience, that is, essentially, they're trying to keep the brick-and-mortars in play. And the only way they can do that these days is through those hybrid experiences. And in order to do those kinds of things that like Lowe's and Home Depot, and even my local Publix is now doing it, that requires quite a sophisticated infrastructure to make that happen.
Sarah: Absolutely. Yeah. You know, the other thing that we see is that customers really want to have that kind of seamless switch between a brick-and-mortar and a digital experience that is really, really hard for organizations to achieve. And we've definitely seen that in some of the comments from the survey respondents this year, that it's something that they're looking to do. They know that they want to provide that seamless experience for customers?
Dom: Yes, yes, I want to call out one particular one that really drives home all these points. Here's what a respondent told us. In the 2023 State of Digital Customer Experience Report, digital and physical experiences continue to blur. We found that some physical experiences are better online. And consumers want to keep it that way. How well you deliver and personalize these experiences will determine our success in 2023. So what you were saying, Rich, is that hybrid is now the way to go. And if you don't do hybrid, well, for this business, in particular, this CX practitioner in particular, that's going to be the sort of end of their company in a way. I mean, they're just practitioners really putting it out there.
Rich: Yeah, I agree. I mean, that's the way that things are moving people like convenience, human beings, just by nature, like technology and want to use more and more technology, it seems. So this isn't a trend that's going to go away, in my opinion.
Sarah: Right. And I submit that it's probably even before the pandemic, it was pretty clear that marketers were going to need to go and meet customers where they were, that this is what's been driving that switch to omnichannel, it needs to be a more and more seamless and easy experience for the customer. But it does complicate things on the marketing side, it means that you actually it's a more complicated experience for a CX professional to deliver.
Rich: And this is something that we've been covering on CMSWire. We talked about it in our events to compete in the enterprise, you have to do exactly what you said Sarah, it's meeting your customers where they are. And omnichannel is the end-all-be-all of that. But you don't necessarily have to be omnichannel. You just have to know who your customers are and be focusing on those right areas. But again, that requires good data, good infrastructure, all those things are a little difficult to nail down when things are siloed and people aren't talking to each other.
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Personalization Stalled This Year
Dom: Great segue. We talked about personalization, omnichannel getting personalization done. Now we can find out through the efforts of Sarah's team if they're doing it. So let's talk about finding number three, still slightly out of reach is the title for this finding. Sarah, tell us more.
Sarah: Yeah, personalization is really kind of stalled out. We had been tracking for year over year for a couple of years. Every year it looked like efforts toward increasing personalization were kind of incrementally improving just a little tiny bit every year. And what we saw this year is that it's stalled, it has stalled out. And only about 1 in 5 of the respondents say that they're actually deriving benefits from their personalization efforts.
This whole area around personalization is something that I've been digging into for a while, because what's pretty clear about it is that personalization is really hard. And good personalization appears to be both tool and platform dependent. So one of the things when we dig into our data that we learn, is that those who say that their tools are working well, are four times as likely to have implemented personalization than those who say that their tools need work. So personalization is, it's an outcome. For organizations with a more mature toolset,
Rich: I would argue that you really can't do that kind of personalization. Without that big technology infrastructure, not at scale anyway. So that totally makes sense to me, Sarah,
Sarah: Right. And then the second thing that is the most predictive variable for whether organizations are getting benefits from personalization is how well they understand their customers. So one of the things that we really see, so when we, when we cut the data by those who say they understand their customers, they're drastically more likely to be using personalization. And to say that they're getting benefits from it.
The problem is that only 17% of organizations say that they do understand their customer behavior really well. And that is probably the most stubborn statistic year over year, in the three years that I've been looking at this data, it's the thing I'm really trying to understand the most. Why is it so hard every year, CX professionals say very clearly, they say we want to understand our customers better, we want to understand their behavior better. And every year, they just don't seem to get any better at this. And it's one of the great kind of mysteries in our data.
Rich: Well, if you think about what we're actually trying to do there, we're trying to predict what people want before they know they want it. And that's what a lot of personalization is, I think you know that this is a related item. This is another thing you might like, a lot of that ties into predictive analytics. And I think that you'd find a lot of the same problems in predictive analytics as well.
Sarah: Right? Part of it is also to, you know, we've mentioned the tools and things like that, and how much that seems to help here. So we also asked this year, because I wanted to get a little bit more granularity on what people are actually doing for personalization. So when they say they're doing it, what do they mean, right? So we ask people, are you doing like one-to-one personalization, or you know, is it really like, the kind of sophisticated personalization is only about 18% of people. And now 25% are using personas and data to refine their personalization.
But the vast plurality of organizations are using personalization in a really basic sense. So they're just segmenting their audience into basic groups. And using automation to send unique messages to those groups, and 17% aren't using any kind of personalization. So like, everyone gets the same message. So when we look at this, we're like, oh, you know, it's the degree of personalization that organizations are using is not really as sophisticated as you might think. And it's very, very tool dependent and very data dependent to improve, right?
If you're going to be at that kind of sophisticated level of using one-to-one personalization, or like one to few, like very granular understanding of your customers. There's not a lot of people doing that. And you know, as you said, Rich, you have to have a lot of infrastructure in place in order to be able to do that.
Rich: Yeah, there's a lot of wheels turning in the background to be successful with that. And there are very few organizations that I think are doing that successfully today.
Sarah: Yeah. Although I would say they definitely want to, you know, year after year, what you hear from professionals in this area is that they this is what they want, they want to understand their customers better. They want to deliver those personalized experiences, then, you know, there's no confusion about that. It's definitely the direction they want to head in.
Rich: Well, Sarah, people are fickle.
Dom: Yeah. And they need to within their personalization efforts, determine who in the company is the buyer, you know, who's the buyer, and that's why a lot of software like campaigns, marketing comes into play, trying to figure out the exact units that they should be going after. This isn't a more of a B2B setting. But, and this speaks to one of the findings from one of our anecdotal pieces of data here where one of the survey respondents says, how to get to engage multiple decision-makers from various units to buy into our services because you could turn the attention of one person in that company, but that person is going to go to five other people before they make the decision.
Like that's, that's like roughly the average in terms of what I'm hearing. You know, me and Rich can't buy something. I mean, maybe if it's cheap, I guess in our company, right. But you know, you got to get some multiple stakeholders involved. So that's another layer of challenges for these practitioners is personalizing within one company. So very interesting finding this, Sarah.
Rich: I’m just curious to know Sarah's thoughts on how compliance and privacy are shifting away from third parties. Do you think that that plays into this difficulty in personalization at all because it's all underlying customer data that this is dependent upon?
Sarah: In two different parts I'll kind of answer this, one is that organizations are incredibly concerned about data privacy, that they don't want to be seen as playing fast and loose with customer data at all. And in some cases, I do think organizations are being super careful about what they're doing.
And the other part of this is that we do see organizations trying to find ways to still be able to personalize, even if they need to work around something like GDPR, or even if they're kind of constrained a little bit, they need to find a way and several organizations are trying to find a way to do personalization, even though they have to be very cognizant of data privacy, one of the things that we see is a kind of this is from a completely different research project I did this year, but we see a lot of proliferation of different ways that organizations are going to customers and kind of asking them for permission to use their data to create kind of a better experience for them. And if you can make that case to customers, a lot of them will go for it because they want that better experience.
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What Is Headless CMS Anyway?
Dom: Alright, let's move on to finding No. 4, shall we? It's called the horsemen rides, and we're talking about the wonderful world of content management systems are Web CMS, or headless CMS, or some kind of CMS. But what are the respondents telling you in this arena, Sarah?
Sarah: OK. So CMS, as we noted earlier, is one of those kind of core tools in use in CX space. This is for managing your content marketing is a lot of content. One of the things that we've been tracking for a while and kind of keeping an eye on is what's going on with the transition or the possible transition from a traditional CMS to a headless CMS. Now, the benefits of going headless are often pitched as far greater flexibility, agility, being able to deliver the same content across multiple channels. So that omnichannel is really kind of the key benefit for a headless system. And the sort of traditional systems are kind of seen as maybe being less flexible or slower to market or a subject of vendor lock in, maybe harder to use. That's debatable.
Rich: I just wanted to jump in for the audience. And just real quickly explain, you know, most of them, I think know, but headless CMS is we talked earlier about meeting your customers where they are. And so the headless CMS is decoupled from the front end, which allows you to create content and have it on the back end. And it's basically prepped for whatever front end, you're going to use it in, whether it be your website or your mobile app, just taking a moment to just define exactly what headless is, versus a regular content management system.
Sarah: And I'm really glad you did that. Because the thing that we found was that one of the things seriously holding back interest in headless is awareness of exactly what headless is and what it's for. So 35% of our sample weren't sure, even what they were using, whether they were using a traditional or a headless system, and an even greater 43% say they don't know which choice between the two would be better for their organizations in the future.
And in case you're thinking, like, oh, like maybe we didn't reach that decision maker. So we cut this by the people who are just leading CX for their organization, and 23% of them, don't know if their CMS is headless or not, and 32% don't know which is the best option for the future. So we think that there's actually a lack of understanding that is actually holding back investment in headless.
When we do ask them, you know, what are you concerned about with headless? What they're worried about? Is that maybe it’s too expensive, that it may be too technical for business users, or that the implementation might be too difficult. The thing that it's not, is that they — what they don't say is, oh, I don't need to help with omnichannel, they absolutely do need help with omnichannel. They're just not sure about the implementation.
Rich: I mean, from what I've heard, a lot of it is around implementation and the fact that you'll pay all this money for a headless CMS and then still have to do a lot of developer work to connect it all up to these other sources. And a lot of organizations don't want to make that investment or are worried, obviously, in a tight market about making that kind of investment
Sarah: Absolutley. And you know, wouldn't be the first time that people have heard a lot of hype around new platforms or different kinds of platforms. And I think that there's a lot of justifiable caution here, kind of have to see how it shakes out, we do see a lot of headless organizations getting better and better at user interface and usability, kind of setting their customers up for success a little bit more. So I think that this is an area to keep an eye on in the future. And we're definitely going to do that again next year and see where this is going.
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Enthusiasm for AI Is Diminishing
Dom: All right, I think we can go with finding No. 5 here, the final finding, and this kind of ties in and wraps around to Rich’s earlier comments on AI. So now we have some data around it. So the finding is slowly losing hope, confidence in AI may be fading. Oh, no, oh, no, say it ain't so, Sarah, what's going on there.
Sarah: So for the second year in a row, we've seen enthusiasm for AI diminish. It's still a majority of CX professionals who do believe that AI is going to have an impact on DCX over the next several years. But what has been eroding is the degree to which they think it's going to have an impact.
So in 2020 74%, of CX professionals thought that AI would have a transformative or significant impact on DCX over the next several years. But that was the high watermark, and it's been declining. And this year, it's only 60%. So it's down 14% over the last two years.
So in addition to this, the percentage of organizations saying that AI and machine learning is an investment is priority for them, has fallen from 30% to 25% in the past year. So I've been wondering, you know, like how to interpret all of this kind of as the shine coming off of AI? Was it too much hype? And organizations are really thinking like, oh, I mean, it's still good, but maybe not all that — maybe not everything that it was made out to be
Rich: My theory on it — and I think a lot of people's theory on it — because, you know, I think I heard this at the Gartner Analytics Summit was I think a lot of this is hinging around the skills and resources necessary to do AI and be successful at it. I think what organizations are finding there is they're going and they're looking at what it takes to actually bring AI into their infrastructure, and the amount of data cleansing they need to do. And the amount of people they need to hire and bring in to create a data infrastructure that can do all the things they want with their AI is overwhelming, and it's expensive. But most importantly, I think, is that there's just not enough skilled people in this market to fill all of those wants and needs that organizations have.
Sarah: Yeah, I think just to chime in there with my wholehearted agreement, you know, because one of the things that we've kind of heard from people is it, a lot of people kind of think, maybe naively about AI or machine learning that it replaces people or that it's just kind of we got this machine to do the job that a person was doing or something like that. But it's clearly not that and it's sometimes it's the complete opposite of that, that you in order to get the AI to work really, really well, you have to have the involvement of a lot of subject matter experts. You've mentioned, there's a lot of, you know, technical skills involved in making it work well. And that implementing it kind of badly might be worse than not doing it at all. And so that's kind of leading to this caution, right, or this kind of tempering of expectations around the use of AI.
Dom: All right, I think we could come to the wrap-up points here. So those are our five key findings. There are so many more in this report, our CMSWire State of the Digital Customer Experience Report. Sarah, I love to educate our listeners a little more on where they can find the report. That'd be a great step.
Sarah: They can find the report on the CMSWire website on the research tab. So go looking into research on CMSWire and you should find it right there. You can just search for 2023 State of the DCX.
Dom: Oh, cool. And Sarah, are we going to have another report or maybe at least an update? By the time CMSWire Connect debuts in Austin, Texas next May?
Sarah: We will have an update to the State of the DC Expo. We're also working right now on a deep dive into the role of the chief marketing officer. So that is the report that will be available in May at our event and Austin will be our State of the CMO Report.
Dom: Oh wonderful. So all kinds of good research and data coming up. Appreciate it very much. Rich Hein, thank you for coming back into the world of CX Decoded with us, my friend.
Rich: Thank you, Dom. It's great being here.
Dom: And Sarah, thank you for your wonderful report. We can't do any of this without you literally. So thanks for your deep dive in and coming on CX Decoded to help our listeners walk through some of these key findings.
Sarah: It's been my pleasure, Dom.
Dom: All right. This is Dom Nicastro, managing editor of CMSWire wrapping up another edition of CX Decoded. Actually, this is our last of 2022. We will be back in 2023 rockin-and-rollin on some more editions of CX Decoded. Hope everyone has a great rest of the holiday season. Thanks for tuning in. See you later
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