The CX dilemma: expectations grow while budgets shrink

Hamstrung retailers have recognised customer experience (CX) as an area of deficit but don’t have the resources to make the desired upgrades.

Engaging CX is viewed as a key differentiator against competitors by four in five (83%) businesses, said research from Wunderman and Thompson. Commensurate with this belief, 71% of retail leaders have been asked to maintain or surpass 2022’s CX performance in 2023.

However, this expectation comes despite the majority of retailers operating with significantly reduced budgets.

Suffering under the pressure, almost half of retailers surveyed (46%) cited lack of budget as diminishing their CX initiatives. A lack of time (36%) and inconsistency across shopping channels (33%) were also identified as major challenges.

A third (33%) of retailers admitted to providing inconsistent experience across shopping channels, with FMCG (80%) and automotive (46%) brands struggling in particular.

If given carte blanche access to a blank cheque, more than seven in ten (71%) respondents said they would completely overhaul and redesign their current CX from scratch, highlighting a disconnect between retailers’ CX desires and their ability to invest in upgrades.

The dangers of falling behind in the CX game

Wunderman Thompson’s report posits that amid the cost of living crisis, economic uncertainty and tightening of purse strings, brands are forced to deliver superior experiences to win over increasingly discerning consumers.

Rachel Smith, Customer Experience Director at Wunderman Thompson Commerce and Technology, said: “Customer experience has sat in the shadows of retailers’ strategy for too long, previously an afterthought in a world where brand loyalty and digital proficiency were enough to get by.

“But recently, there has been a noticeable shift in the importance businesses place on customer experience, and those that do, are reaping the benefits. Covid-19 has eradicated brand loyalty, in favour of brilliant service, reliable operations and favourable prices.”

A point of concern for retailers identified in the report is despite many believing they know their consumers inside and out, that confidence may be completely unfounded.

76% of respondents feel they have a clear understanding of key customer frustrations, 77% believe they have a clear view of their highest value customers and four-in-five (79%) are confident in their ability to connect with those customers across channels.

Yet, just 15% have conducted their own customer research in the past 3 months and considering most businesses typically plan their CX initiatives 12 months in advance, some retailers may be met with an unwelcome surprise when their CX is exposed to true customer expectations.

Smith concluded: “Only with a reliable, innovative CX strategy that combines insights gained directly from audiences, alongside industry foresight, can retailers meet and exceed shoppers’ needs and desires. It’s the only formula that will see retailers reap the rewards of customer acquisition, conversion and retention, irrespective of industry and size of business.”