State of Customer Engagement Report 2022: What Does it Mean for Retailers?

Customer engagement has undergone an incredible transformation since 2020, inspired largely by the explosion of e-commerce amid the pandemic. To get a better idea of where digital engagement is headed and how companies can meet the shifting tides of consumer preferences, Twilio surveyed over 3,400 B2C companies and 4,500 consumers from around the world.

The surveys revealed some promising results: Companies that embraced digital customer engagement saw an average revenue growth of 70%. They also exposed key findings about consumer sentiment and preferences that cannot be ignored. If companies wish to see their upward revenue trends continue, they must face some essential truths about how their customers respond to digital engagement—and what it could mean for their strategies going forward.

In our first post in this blog series, we examined our report findings as they related to CX and customer support. Now we’ll examine the state of consumer engagement in retail and explore the opportunities presented to embrace digital engagement strategies.

Creating standout retail experiences in a digital world

Our surveys showed there is strong alignment between B2C companies’ plans for digital engagement and what consumers want. On average, B2C companies reported that more than half of their customer engagement takes place over a digital medium. And in the retail industry, businesses expect their investment in digital customer engagement to double by 2025. For their part, consumers said they expect (and want) over half of their engagement with brands to be digital in about three years’ time.

However, this alignment of B2C strategy and customer expectations is an outlier in our findings. Although businesses and consumers agree that online engagement isn’t about to slow down anytime soon, the report also revealed several key differences in perception of importance to retailers when considering how to use digital engagement going forward.

Customer Personalization Efforts Need a Boost

Amid the noise of an increasingly crowded digital retail landscape, businesses are battling to stay at the top of customers’ minds. One of the most influential tactics they’re turning to is personalization. Companies and consumers alike agree that personalized retail experiences, in which every touchpoint is tailored to the individual shopper’s history and preferences, can provide a major boost to brand loyalty. Loyalty reward programs and personalized product recommendations go a long way in proving a business understands and appreciates its customers. However, there’s a disagreement about the quality of personalization efforts today. Although 75% of B2C companies surveyed believed their personalization efforts were either good or excellent, more than half of consumer respondents disagreed.

The survey results were clear: If retailers continue using personalization as a digital engagement tactic, they’ll have to innovate new ways to make every touchpoint truly unique and memorable. Inserting a name or job title into an email header isn’t going to do the trick anymore. When asked what their biggest digital engagement roadblocks were, more than one-third of retailers cited lack of insight into customers’ journeys. Going forward, retailers will find tremendous value in tools that help them truly understand customer behavior, such as customer data platforms (CDPs). These tools centralize data to provide businesses a unified and insightful customer view so they can discover more opportunities to tailor their engagement throughout the customer’s entire journey.

Digital fatigue is prevalent among consumers, especially Gens Y and Z

Having too much of a good thing can be a real problem, and digital engagement is no exception. More than one in three consumers reported experiencing digital fatigue in the past 30 days. The sheer amount of engagement over digital devices, apps, and services eventually drove them to a state of exhaustion and disengagement. Overwhelming customers with touchpoints won’t just frustrate and exhaust them, it can make them turn off the switch altogether.

The survey revealed digital fatigue is affecting generations differently, with Gen Zs and Millennials more than twice as likely as Baby Boomers to have experienced it within the last 30 days. Regardless of generational views on how much is too much, the report revealed that the pendulum is universally swinging toward “better is better than more.” Engaging smarter—not harder—will be more effective in the long run and present less risk of burning customers out with needless interactions.

Trust is a Critical Factor

Customers love the convenience of purchasing online, but they’re also becoming increasingly aware of the risks associated with sharing their data. In an age when anyone can create a professional-looking online shop and business email, buyers are growing wary of where their information goes after engaging with brands online. Unfortunately, some companies aren’t taking those concerns seriously enough. Although 95% of B2C companies surveyed think consumers trust them to protect their data, only 65% of consumer respondents reported feeling that trust.

The greatest opportunity to bridge the gap in consumer trust is underway. Safari and Firefox have blocked access to third-party cookies, and Google Chrome is poised to follow suit in 2023. With 81% of B2C companies currently relying on third-party cookies to gather customer data, going “cookieless” is set to shake up a fair number of digital engagement strategies. In fact, just 47% of retailers say they’re fully prepared for a cookieless world.

Retailers should start embracing zero- or first-party data by innovating new ways to entice consumers to offer their information directly. This will not only instill a deeper sense of trust in customers but also offer retailers sharper insights into consumer preferences and behavior, which they can use to deliver strong personalized experiences.