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451 RESEARCH’S

2019 PREVIEW REPORTS


Analysis of the technologies and trends
that will drive and reshape enterprise
technology markets in the year to come

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If you are interested in reading the complete report,


please reach out to sales@451research.com

D EC 20 1 8

2019 Trends in
Customer Experience
& Commerce
Sheryl Kingstone, Research Vice President & General Manager - VoCUL
Jordan McKee, Research Director, Customer Experience & Commerce
Keith Dawson, Principal Analyst, Customer Experience & Commerce
Scott Denne, Senior Analyst
Cam O’Shaughnessy, Associate Analyst

Business is being redefined from a transactional relationship between people into a


more nuanced, tangled relationship between humans and the automated systems and
devices they use to engage the world. Heightened demands for context, convenience
and control in all customer interactions require companies to re-evaluate how they
provide contextually relevant experiences for their customers.

©2018 451 Research, LLC | WWW.451R ES EA RCH.CO M


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The following is an excerpt from an independently published
451 Research report, “2019 Trends in Customer Experience &
Commerce,” released in December 2018. To purchase the full report
or to learn about additional 451 Research services, please visit
https://451research.com/products or email sales@451research.com.

Table of Contents
Trend 1: Experiences Will Drive Paradigm Shift to Contextual Commerce  1
Figure 1: Convenience, Context and Control ������������������������������������������������������������������������������������������������������������������������2
Recommendations ������������������������������������������������������������������������������������������������������������������������������������������������������������3
Winners ���������������������������������������������������������������������������������������������������������������������������������������������������������������������������������4
Losers ��������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������4

Trend 2: A 360-Degree View of the Customer Will Finally Take Shape  5


Figure 2: Challenges for CEM Buyers�����������������������������������������������������������������������������������������������������������������������������������������7
Recommendations ������������������������������������������������������������������������������������������������������������������������������������������������������������8
Winners ���������������������������������������������������������������������������������������������������������������������������������������������������������������������������������8
Losers��������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������8

Trend 3: Mobile Commerce Transaction Volume Will Surpass E-Commerce Globally  9


Figure 3: M-Commerce Transaction Volume Surpasses E-Commerce in 2019����������������������������������������������������� 10
Recommendations ��������������������������������������������������������������������������������������������������������������������������������������������������������� 10
Winners ������������������������������������������������������������������������������������������������������������������������������������������������������������������������������ 11
Losers ����������������������������������������������������������������������������������������������������������������������������������������������������������������������������������� 11

Trend 4: AI and Machine Learning’s Untapped Potential for Digital Innovation Will
Take Hold 12
Figure 4: Machine Learning Use Cases ��������������������������������������������������������������������������������������������������������������������������������� 13
Recommendations����������������������������������������������������������������������������������������������������������������������������������������������������������� 14
Winners ������������������������������������������������������������������������������������������������������������������������������������������������������������������������������ 15
Losers ����������������������������������������������������������������������������������������������������������������������������������������������������������������������������������� 15

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Trend 5: Digital Wallet Usage Will Accelerate Online as Merchants Optimize the
Checkout Experience  16
Recommendations����������������������������������������������������������������������������������������������������������������������������������������������������������� 17
Winners ������������������������������������������������������������������������������������������������������������������������������������������������������������������������������ 17
Losers ����������������������������������������������������������������������������������������������������������������������������������������������������������������������������������� 17

Trend 6: Marketers Will Combine Their TV and Digital Video Ad Buys 18


Figure 5: Netflix and Amazon Dominate Streaming Services�������������������������������������������������������������������������������������� 19
Recommendations ��������������������������������������������������������������������������������������������������������������������������������������������������������� 20
Winners ������������������������������������������������������������������������������������������������������������������������������������������������������������������������������ 20
Losers ����������������������������������������������������������������������������������������������������������������������������������������������������������������������������������� 20

The Long View 21

Further Reading 22

Index of Companies 23

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Trend 2: A 360-Degree View


of the Customer Will Finally
Take Shape
Implication: For decades, businesses have sought a comprehensive picture of customer activity and
behavior, but have been thwarted by data that remains siloed or unanalyzed. Finally, processes for getting a
reliable and complete view of what customers want (and how they want to be contacted) are taking shape.
Tools that synthesize different data sources across enterprises are starting to provide insights into moments
of influence and leverage, enabling faster, more personalized interactions with customers.

To guide the customer experience toward successful outcomes, businesses need a great deal
of information about customer histories, behaviors and trends. They need to balance where the
customer is in the lifecycle (pre-purchase, post-purchase, etc.) with the best methods of connecting
to that individual and the business’ ability to put forward an attractive offer. For years, the amount
of information businesses hold relating to customers has been growing, but it has expanded into
4SIGHT disconnected silos that are hard to connect into a seamless overall view. There have been many
attempts to synthesize separate data resources into a holistic customer view, beginning with
CRM. CRM was notable around the turn of the 21st century for creating an appetite for a broader
customer view, but also for its inability to satisfy the needs of a diverse set of stakeholders (marketers,
salespeople, service teams).

Even as professionals tasked with designing new offers and experiences tried to come to grips with
a rapidly changing set of technologies (especially when it came to communication channels, each of
which comes with a new set of content requirements and customer expectations), it became apparent
within the last five years that the best outcomes stem from having a more complete picture of what
the customer has done and what they want to accomplish. This requires bringing together bits of
information on:

• Activity: How many times has this person been contacted, and what have been the results each time?

• Intent: What has this person been shopping for, and what have they purchased?

• Satisfaction: Have they expressed sentiments about their experiences so far, or can the business
infer sentiment from other signals?

• Influence: Does this customer have a platform to recommend your product to others or dissuade
them from buying?

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• Preferences: How does this person want to be contacted, and when?

• Context: Are there in-the-moment circumstances (e.g., an open service ticket) that affect whether to
make an offer or not?

Having a 360-degree view of the customer, incorporating all of these elements and other variables,
is at the heart of the business use case for many related technologies – everything from applying
machine learning to detect buying intent to creating personalized emails and web landing pages, or
deciding what contact channels to support.

All of this has always been true, but it has also always been aspirational. Recent innovations in
integrating data sources and analyzing them have brought us very close to the point where businesses
can actually take advantage of a broad view of the customer across many of those variables noted
above. Vendors from several sectors have converged on solutions that ingest, cleanse, integrate and
analyze customer data in very close to real time.

Businesses to date have primarily invested in systems of record to serve this purpose, such as legacy
CRM and ERP. While these systems are critical for managing internal operational processes, they are
typically not effective for consolidating customer information at the pace of business change today.
Structured data from operational data stores now provides only a small slice of the overall data needed
to improve customer experience.

Past approaches used combinations of CRM systems, master data management (MDM) and data
lakes to create a single source of truth, but these all struggled to live up to the expectations of front-
line business users in areas such as marketing, customer care and digital commerce. Looking ahead,
however, we expect that companies will look to invest in customer intelligence platforms that do more
than consolidate a single view of the customer – they add a layer of data governance, synthesis and
identity, which powers a dynamic customer graph to fulfill the vision of contextual experiences.

IT departments previously invested in MDM and data warehousing technologies to consolidate


information associated with customer profiles. The emergence of additional unstructured data,
however, further relegated traditional CRM, MDM and other systems to just another silo.

The situation will only become more complex as businesses need to incorporate the exploding growth
of unstructured data from IoT sensors, social data, behavioral data, location data and even third-party
data into a single source of truth. In response, digital marketers and agencies have adopted data
management platforms enabling companies to target campaigns at anonymous audiences across
third-party ad networks and exchanges. Another category, customer data platforms, also evolved over
time to create unified profiles of customers from multiple sources of data regarding both known and
unknown individuals.

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But many firms have been frustrated by these disconnected tools for knitting together the experience
and the view of the customer. For example, in a recent VoCUL survey, we asked business users about
the challenges their organizations face in providing positive customer experiences. The most cited
answer (by 40% of respondents, up from 38% in 2017) is limited integration of data across marketing
applications and other systems of record. Other significant challenges relate to the problem of putting
together a coherent picture of customer reality: 22% cite limited insight into customer journeys and
21% cite limited access to IT teams for data integration projects (see Figure 2).

Figure 2: Challenges for CEM Buyers


Source: 451 Research’s VoCUL: Macroeconomic Outlook - Corporate Software Leading Indicator Survey, September 2018
Q. Which of the following CEM software vendor(s) does your company currently use (or plan on using)? (n=95)
Nov '17 Jul '18

40%
38% 38%
33%
27% 27% 26% 25% 25%
22% 22% 22% 21%
16%
10%
7%

Limited integration of Limited budget for Lack of coordination Inability to measure Reliance on outdated Lack of insight into Limited access to IT Lack of executive (C-
data across additional tools, or collaboration successful outcomes legacy technology customer journeys teams for technology Level) buy-in or
marketing systems and people among departments and data integration support
applications and responsible for projects
other systems of customer experience
record

With the growth of unstructured data, requirements for more control of customer data and advances
in machine learning algorithms, we expect CIPs to become increasingly important for a broader set
of use cases beyond marketing that include line-of-business strategies for intelligently orchestrating
contextual experiences across the customer journey.

The sector of the technology industry that services cross-disciplinary business users – the big suite
vendors that offer ‘clouds’ devoted to marketing, sales and service – have also attacked the problem
through a mix of acquisition, development and partnership. Salesforce, for example, introduced
a product called Customer 360 that collects and leverages information about customers sourced
from across the Salesforce app landscape. Around the same time, SAP, Microsoft and Adobe jointly
announced a project called the Open Data Initiative, which is directly tasked with eliminating data
silos and enabling a single view of the customer. The three firms are enhancing interoperability and
data exchange between their applications and platforms through a common data model. 

These efforts are a recognition of two facts: first, that there is an urgency to solving the problem of
isolated data among both vendors and buyers due to a rapidly changing customer landscape, and
second, that the technology is now up to the task of making it happen in a manner that CRM could not
provide in the past.

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Recommendations
• Identify data silos. Vendors should help their clients audit their existing tech stacks across the
domains of sales, service, marketing and commerce to identify elements of customer data that could
be brought to bear on cross-disciplinary experience design. For example, unstructured data from
contact centers in the form of voice recordings of phone calls contains clues to customer sentiment
and buying intent, which would be relevant to marketers looking to orchestrate experiences. Once
identified, businesses should look at their solution providers as the first line of integration to break
down the silos.

• Focus on the ecosystem. Buyers are pressing their vendor partners (both the large suite players
and those that offer point solutions) to facilitate integrations that don’t require time-consuming
and expensive professional services projects. The market is pulling vendors toward more openness
and interoperability; to achieve a full 360-degree view, that pressure needs to be continuously
applied by buyers. A successful future depends on ecosystems of companies that commit to being
in sync with one another. It is almost inconceivable that a startup or niche vendor can thrive without
support from one or more of the integration ecosystems that are emerging.

Winners
• Those that operationalize the data. Vendors that can provide automated machine-learning tools
that push the ability to visualize and work with integrated data streams at the operational user level
will do well. The key to leveraging customer data is putting actionable intelligence into the hands of
the people who make the daily decisions about which offers go to which customer segments through
which channels. Data shouldn’t be locked up in the hands of data scientists or higher-level analysts.

• Cross-departmental solutions. Solutions that bridge gaps between siloed processes and
departments are just as important as those that act as a bridge between data silos. For example,
account-based marketing tools that identify qualified leads for the handoff between marketing
and sales teams – these can be considered key components in fashioning a 360-degree view of
B2B customers and accounts. Another example is customer journey mapping systems, which look
at activity across the lifecycle, regardless of whether the customer is touched by marketers, service
personnel or someone in retail sales.

Losers
• Vendors with a single-buyer approach. Vendors need to appeal to a broader constituency
within businesses, including buyers from multiple departments (mainly sales, marketing, service
and IT,) who have different values, KPIs and ways of framing the business problems surrounding
the customer experience. They need to speak the languages of all of these groups, and do some
educating about the need to break down silos in data and in business processes. Speaking to just
one set of stakeholders (among many) serves to reinforce silos.

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Trend 4: AI and Machine


Learning’s Untapped Potential for
Digital Innovation Will Take Hold
Implication: Today more than ever the customer is king, expecting businesses to serve up on-demand,
personalized buying experiences. Machine learning can aid in assisting businesses to meet these
expectations, but first it’s important for decision-makers to understand the current use case opportunities of
where machine learning can be applied.

It’s virtually impossible to plan for all potential customer journeys, because each is a nonlinear, self-
directed interaction — or micro-moment — across that customer’s channel of choice. However, facets
of the physical journey, when tracked, can be used as influencing factors in digital interaction. The data
improves algorithms, which factor in overall intent, resulting in greater relevancy and effectiveness.
Since the universe of what is ‘knowable’ about customers is expanding, new machine learning
technologies help augment and scale business transformation. Combining human expertise with
4SIGHT machine intelligence can be powerful, because human interpretation alone can miss contextual clues
in massive data sets.

Our VoCUL: 2H 2018 Digital Transformation Survey illustrates a huge potential for how retailers are
most interested in exploring advancements in machine learning and AI as potential game-changers
over the next 24 months. Our survey results demonstrate that retailers are highly interested in use
cases that prioritize operational efficiency and customer engagement.

Businesses are looking to move beyond segment-based rules analysis toward algorithmic decision-
making that enables hyper-personalization at scale, factoring in individual affinity along with overall
intent, resulting in greater relevancy and effectiveness. Self-learning algorithms allow marketers to
auto-adjust or adapt based on any one factor or a combination of factors, such as individual customer
or visitor behavior, geolocation, inventory levels and manufacturer incentives. The advances in
predictive machine learning intelligence build on a variety of algorithms to achieve real-time,
one-to-one capability (ideally in fewer than 20 milliseconds).

Machine learning embedded in customer-facing applications provides the potential for delivery of
dynamic, rich media content, including images, videos and voice using advanced techniques such
as neural networks, genetic algorithms and computer vision for self-learning improvements. As the
user interacts with the system, it is able to continuously train to ensure a better understanding of the
context of the situation.

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Automated reasoning helps to make inferences and enrichments on each customer profile, and also
helps line-of-business users predict the customer’s future actions such as churn, propensity to buy,
proximity and location. It provides a deeper understanding of individual customer journeys and unique
interactions, combined with transactions, to accurately understand and improve customer experience.

Using AI and machine learning can create a truly unique immersive experience for customers. There
are also ways to improve self-service capabilities through a conversational experience that provides
automated, personalized selling or VIP support experiences. Customers can get help with products or
track shipping status and product returns all within the confines of an automated digital conversation.
If the ticket is escalated to a customer service representative, recommended responses help expedite
resolutions to improve engagement and lower operational costs.

With increasing demands for securing customer data and ensuring privacy and trust, the industry
needs to secure transactions and transparency. Currently, one of the primary retail uses for machine
learning is to reduce manual reviews of suspicious transactions (e.g., billing/shipping address
mismatch, cross-border purchases) by taking humans out of the process and making better-informed
decisions based on previous transactions across numerous different merchants. Behavioral biometrics
is another use case – it compares a users’ behavior to previous interactions with other shoppers (or
bots) that have resulted in fraud. Counterfeit identification and product authentication is another area
relying on machine learning to accurately detect bad-faith commerce.

Customers value experiences, and those experiences often come in the form of social interactions.
Selfies, social feeds, chats and influence stats grab consumers’ attention, and they in turn share their
personal encounters. Machine learning can help businesses uncover insights from a deluge of social
data. Data plays a powerful role in improving digital innovation. Machine-learning technologies help
scale because human interpretation and execution alone can miss contextual clues.

Recommendations
• Embrace more modern identity and consent-based platforms. Businesses must adopt new
policies and technologies that enable them to regain customer trust through embracing more
robust consent and profile management, robust security, and portability of personal data. Consent
must be explicit and customers must be able to manage specific details of the data collected.

• Focus on the application, not the algorithm. Improving customer experience demands an
approach that considers all the tools, processes and data across the customer journey. This complex
process usually involves dynamically maintaining a single source of truth about each customer to
drive personalized experiences based on individual preferences and behaviors.

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Winners
• Those with data will win; those without it will have to pay for it. The next generation of
intelligent applications and services with machine learning and AI capabilities to automatically
translate data into intelligence will succeed, while those without will fall by the wayside. Contact
center applications provide fertile ground for such innovations by converting inbound calls to
text, which can then be analyzed in real time with AI for overall sentiment analysis. Marketing and
customer engagement applications with machine-learning-supported technologies meet rising
customer expectations as they expect intelligent, immersive experiences, all personalized to their
own changing context.

Losers
• Businesses that don’t prioritize transparency and trust. Backlash over data that is used, even
sometimes with permission, has shed light on the fact that the average consumer has been blissfully
unaware of the sheer breadth and depth of their online data profile. We fully expect that the
industry will take two steps back as consumers begin to demand full transparency of exactly how,
when and why businesses use personal data.

• Vendors that lack a modular, full-stack offering and partner ecosystem will struggle to
demonstrate their versatility. They must transition to more intelligent and agile architectures so
their customers can swap complicated manual processes for processes that intelligently extract
relevant data, then integrate it with back-end services to enrich that information and use it to
improve the overall customer experience.

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is a division of The 451 Group.
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