Customer Experience

CIOs aiming to improve customer and end-user experiences should focus on removing complexity, according to Michael Chiu, distinguished VP analyst at Gartner. 

IT leaders typically perceive the addition of new features and tools as the best way to improve customer experience. When asked to give ideas on how to enhance CX, fewer than 10% of IT leaders mentioned taking something away, according to a Harvard Business Review study. 

“You cannot add your way to a better customer experience forever,” Chiu said during Gartner’s annual IT Symposium/Xpo 2023 in Orlando, Florida. 

CIOs know the struggle of prioritization. From budget allocation to project selection, trade-offs are unavoidable when determining what gets time and resources. It’s on IT leaders to carry that mindset into how they build end-user experiences. 

End users have a limited amount of time and effort to expend on tasks. Simply adding a feature or tool isn’t always the solution to solving a poor experience — it can actually make matters worse, according to Chiu.

Nearly two-thirds of employees believe that unnecessary effort prevents their company from delivering a higher quality CX, according to a Gartner survey of more than 1,000 workers. 

CIOs can declutter the experience to cut through complexity. For IT leaders wondering where to start, Chiu suggested holding a subtraction brainstorm, discussing where the experience could benefit from streamlining. 

“We need to unlearn some things in customer experience in order to move forward,” Chiu said. “Unlearning works best when you’ve got something to replace it.”

Leaders could appoint an individual to suggest subtraction ideas to balance out the expected flood of suggestions for additives.

“It’s typically addition that gets all the glory,” Chiu said. “Figure out how you’re going to recognize and reward subtraction ideas.”

The vast majority of CEOs, 95%, say blended customer experience and employee experience strategies will positively affect growth, according to NTT’s State of CX 2023 report. But the rate of companies with employee experience strategies is lagging behind that of those with CX strategies.

An MIT Technology Review Insights report highlighted three ways to improve the employee experience: to personalize the workplace, empower employees to engage with customers’ on the company’s values, and to provide employees with the technology, including AI, to make their jobs easier. 

While executives told MIT Technology Review that contact center employees are paramount to business success as the face of their brand, recruitment and retention remain pain points. A 2022 MIT Technology Review Insights survey of CX leaders found that 96% struggle to recruit service agents.

Business leaders know that customer experience and employee experience are intertwined. If an employee is happy in their position, they’re more likley to provide better service.

But while 97% of CEOs say they have a CX strategy, only 81% say they have an EX strategy, according to the NTT report.

The MIT Technology Review Insights report found that employees are looking for the same things as customers from a brand: personalization, values and efficiency.

“To build an engaged and high-performing workforce, organizations need to reshape their employee value proposition to mirror their customer proposition for fast, convenient, and personalized experiences with a brand that shows leadership on sustainable business practices,” the report read.

Key to that are personalization and empowering employees to do their best work. These are especially important among Gen Z, a generation that is increasingly making up contact center employees and who are harder to retain, the report found.

“A lot of companies think it's about pushing a message and winning the hearts of their employees. And it's not really about that,” Leah Leachman, a senior director analyst at Gartner, told CX Dive. “Most employees do really care about customers, but it's: Are you enabling me? Are you supporting me to live up to your brand promise that you've made publicly? And do we have the resources?”

Personalization for customers, associate operations and supply chain optimization represent three areas of opportunity in Walmart's AI strategy, according to CEO Doug McMillon, speaking during the retailer’s Q2 2024 earnings call, for the period ending July 28. 

"Our approach to new tools like generative AI is to focus on making shopping easier and more convenient for our customers and members, and helping our associates enjoy more satisfying and productive work," said McMillon. "Ultimately, the power of generative AI or any technology is only as good as the data that powers it."

The company exceeded Wall Street earnings expectations this quarter, fueled by a 24% year-over-year increase on ecommerce sales. The company will continue to invest in technology, including automation, according to McMillon.

Businesses across industries are working on relevant ways to leverage generative AI. In retail especially, the focus is on how the emerging technology can boost customer experiences.

"There's a great opportunity for us to be more anticipatory, and to be more relevant to [customers] and communicate in a way that shows that we know who they are, in a healthy way, while protecting privacy," said McMillon.

The company is already using AI to estimate demand and respond accordingly. With AI, Walmart runs simulations of customer patterns during Black Friday to anticipate bottlenecks and bolster its supply chain readiness.

Additionally, Walmart has turned to augmented reality to strengthen its fulfillment capabilities. An augmented reality tool called Vizpick, rolled out last year, helps workers move products from the backroom and onto the sales floor more efficiently.

In June, Walmart joined the chorus of companies interested in generative AI applications, launching a GenAI Playground, which functions as an internal hub for employees to familiarize themselves with the technology. 

The retailer is also working to customize large language models that can fulfill its needs.

"We're taking large language models developed by our partners and by the broader tech community and adding retail context to create models that are uniquely suited to the needs of our customers, our associates and our supply chain," said McMillon.

But before AI can help operations, systems must be fed the necessary data, a step Walmart is working to improve.

"We've been working for a few years now to try and get our data in better shape so that we can really put it to work," McMillon said. "We still have room to improve there, but we have made progress." 

IT service desk workers know a thing or two about empathy. A large part of the job is to engage with end users when they can’t solve a problem on their own. 

End users requesting assistance can go through many different channels before an issue is resolved, but most start in a digital self-service channel and migrate to a human touchpoint to speak with a service desk employee. 

Knowledge loss throughout the process only makes it harder for both parties. More than 3 in 5 customer service channel transitions require a lot of effort for end users, according to a Gartner survey of nearly 1,500 B2B and B2C customers published Tuesday.

If an agent isn’t caught up on the end user’s case when they arrive in the queue, the person having an issue repeats everything from the self-service channel resulting in a poor customer experience. 

“Those transition points are where everything lives or dies,” Greg Sanker, former CIO, author and principle advisory director at Info-Tech Research Group, said.

A new generation of AI-enabled self-service tools will have to pass a customer satisfaction test.

“I believe, frankly, that the transition is going to be the make or break in the implementation of the technology,” Sanker said.

While it's common for businesses to have some level of AI powering automated processes or self-service channels already, organizations are expecting to implement more of the technology amid a vendorwide generative AI push. 

More than 4 in 5 IT leaders plan to implement AI in IT operations and just slightly less said they planned to use AI to boost customer experience, according to a June Equinix survey of more than 2,900 IT decision-makers around the world.

How to make transitions with ease

Business implementations of self-service channels have had inadvertent impacts on end-user experience, especially when users think of tools, like chatbots, as a roadblock to reaching a human touchpoint, according to Mark Tauschek, VP distinguished analyst and research fellow at Info-Tech Research Group.

“You know that voice recognition that everybody hates and goes, ‘It doesn’t work,’ from a few years back? It’s improved by orders of magnitude in a very short period of time,” Tauschek said.

In an internal pilot program testing service-desk chatbots, users opted to speak with a human representative at the first opportunity, Tauschek said. 

It’s a pain point that vendors have tried to mitigate as the technology has evolved. At Freshworks, maker of generative AI tool Freddy Self Service, seamless transitions have become a priority as customers emphasize the impact of poor customer experience. 

“What we’re working on is, not only do we want to provide the agent the context of all the conversations, but we also want to provide the agent with the next-best action,” Prakash Ramamurthy, chief product officer at Freshworks and former Oracle SVP of product development, told CIO Dive.

The perfect transition, Sanker said, is characterized by an agent’s ability to understand why the case has been escalated, basic information about the end user such as name and department and the ability to push the conversation forward. 

“It’s like the television sports announcers,” Sanker said. “It’s that moment of, ‘That’s right, Sarah, that was a really good play, and I’ll take it from here.’”

The rise of online business brought IT solutions out of the backroom and into the forefront of retail operations. But, as another holiday buying season puts customer-facing solutions to the test, retailers are rethinking their tech stacks.

“E-commerce captured an outsized amount of attention, especially with non-tech executives, because you can just log on to the website and see it working,” Nikki Baird, VP of strategy at software company Aptos, said in an interview with CIO Dive.

Companies also leaned on technology to enhance the in-store experience, investing in point-of-sale and inventory- and order-management solutions, according to a survey of 300 retail tech executives by Aptos and Bain & Company.

The investments often left retailers with a jumble of poorly integrated tools, with new solutions piled atop legacy systems in a race to provide the full range of omnichannel in-store and online purchase and delivery options.

“You don't have to have three different payment devices to support in-store sales, online shipped-to-home sales and returns,” Baird said. “But they’ve thrown more hardware and more technology into the store in order to be able to do all of those things.”

Rationalizing technology and customer experience across the stack — what Aptos calls a unified-commerce strategy — is a priority for three-quarters of all retailers.

The rationalization supposes a major overhaul. Companies pursuing unified commerce are pushing beyond omnichannel orthodoxy, integrating disparate customer data, systems and sales channels while modernizing both front-end and backroom technologies.

Unifying the stack

To enable transformation, retail tech leaders have leaned on cloud infrastructure and SaaS solutions to shore up e-commerce platforms, supply chain solutions and CRM applications, the report found.

At the individual store level, tech decisions are driven by CIOs, CTOs and other head technologists with the skills to manage networking and security protocols, Baird said.

Store managers, however, often have diverging priorities.

IT wants to rationalize the stack and make it easier to manage, while store managers want to keep the systems they have and avoid the painful process of retraining staff, Baird said.

“I don't think IT leaders have done a good enough job in selling store operations groups on how their lives ultimately could be better,” said Baird, noting there’s a tendency to avoid potentially disruptive in-store changes.

“CIOs get fired when a store shuts down,” Baird said. “So, if there's one thing you're going to do as a CIO in retail is you’re going to make sure that the stores never have to shut down.”

As brick-and-mortar behemoth Walmart deploys generative AI, fast-food giant McDonald’s beefs up in-store analytics and consumer goods leader Unilever expands AI research and development, other companies are sensing the need to optimize data operations and pay down technical debt.

“There's a ticking time bomb in stores around hardware,” Baird said. “When technology supply chains were constrained, retailers were not replacing hardware. A lot of them are still trying to move off of Windows 10 and we’re going to start running out of lifespan on Windows 11, too.”

Upcoming changes to Payment Card Industry compliance standards, set for March, will make some current payment devices obsolete, creating another headache for companies mired in technical debt — and a mitigation intervention opportunity for CIOs.

Most leaders of small and midsized businesses want to boost efficiency in operations as they deploy technology upgrades and additions, according to a report from Verizon. The telecommunications company commissioned Morning Consult to poll 681 SMB leaders. 

The second most-common motivator of technology enhancements for small businesses was to improve connections with existing customers, more than 2 in 5 respondents said. Customer acquisition, hybrid work support and employee retention were also among the top desired outcomes of tech investments.

More than half of small businesses that carried out technology enhancements found boosts to their revenue as a result. For two-thirds of respondents, tech stack upgrades delivered cost-cutting benefits.

IT vendors aggressively pursue large customers who need software and other technology services at scale. But the SMB market can provide opportunities for growth.

Global IT spending from companies in this business category is expected to grow 6.4% year-over-year in 2024, totalling $1.58 trillion, according to an August report from Analysys Mason. 

By 2027, the projected IT spend from SMBs will reach nearly $2 trillion, Analysys Mason expects.

As SMBs turn to a vendor market replete with embedded AI offerings, tech leaders remain torn — and adoption is sparse. 

Most leaders say their company does not currently use AI, they're unaware of potential benefits the technology could deliver or didn't have an opinion on AI. Just 14% of small businesses use AI as part of the tech stack.

However, small business owners remain focused on technology that can help them save time, their most precious resource, said Aparna Khurjekar, chief revenue officer for business markets and SaaS at Verizon Business. 

"This year's survey, for example, found that the main reason that business owners want to deploy artificial intelligence is because it can help them save time," Khurjekar said in an email. “Ultimately, this means that business owners are looking for greater operational efficiency, both in back-of-house and front-of-house."

The median cost of outages with high business impact was $7.75 million, according to New Relic's Observability Forecast report. Enterprise Technology Research consulted 1,700 technology professionals on behalf of New Relic.

More than 3 in 5 technologists said outages cost their organizations at least $100,000 per hour, while one-third said hourly costs ran up to $500,000. For 1 in 5, companies endure $1 million in hourly costs due to an outage. 

Outages causing high business impact take more than 30 minutes to resolve, according to 3 in 5 respondents. For one-third of companies, resolution can take an hour or more.

The modern enterprise relies heavily on digital systems across functions, from payment processing and logistics to staff management. An IT outage that disrupts everyday operations quickly becomes a priority for any CIO.

The financial hit of an outage is typically linked to lost revenue, said Peter Pezaris, chief strategy and design officer at New Relic. 

"If you're developing an e-commerce site, for example, for every hour your website is not available, you're not taking orders, and therefore, you're not tracking revenue for that period of time," Pezaris said.

Losses mount quickly for large enterprises when outages impact core operations, climbing to tens or hundreds of millions of dollars.

Southwest is one costly example. In December 2022, the company's digital systems failed, leading the airline to cancel more than 17,000 flights over the holiday period and face more than $725 million in associated costs.

As a response, the company launched a $5 billion, five-year transformation project to address multiple components of its IT estate, including crew engagement technology and crew recovery systems.