THIRD EDITION Insights from over 8,000 consumers and business buyers worldwide State of the Connected Customer Salesforce Research 2 About This Report For this third edition of the “State of the Connected Customer” report, Salesforce Research surveyed over 8,000 consumers and business buyers worldwide to discover: How customer expectations continue to shift Which emerging technologies are transforming standards for engagement The role of trust in customer relationships The rising importance of corporate values in buying decisions Data in this report is from a double-blind survey conducted April 218, 2019, that generated responses from 8,022 individuals in Australia/ New Zealand, Canada, France, Germany, Hong Kong, India, Italy, Japan, Singapore, Spain, Switzerland, Thailand, the United Kingdom/ Ireland, and the United States. All respondents are third-party panelists (not limited to Salesforce customers). See page 61 for detailed respondent demographics. Percentages may not total 100 due to rounding. All comparison calculations are made from total numbers (not rounded numbers). Salesforce Research provides data-driven insights to help businesses transform how they drive customer success. Browse all reports at salesforce/research. 1,590 3,210 3,222Salesforce Research 3 State of the Connected Customer We examine survey results from three primary groups: Consumers Those reporting on their interactions with companies when purchasing for themselves Business Buyers Those reporting on their interactions with companies when purchasing on behalf of their employers Customers Aggregated consumers and business buyers We also examine survey results across three generations of customers: Respondents were required to be 18 years of age or older. Millennials/Gen Zers Born between 19812000 Gen Xers Born between 19651980 Silents/Baby Boomers Born before 1965 State of the Connected Cutomer Salesforce Research 3 Consumers Business Buyers All Customers Gen ers Millennials/Gen Zers Silents/ Baby Boomers Salesforce Research About This ReportState of the Connected Customer Salesforce Research 4 Contents Executive Summary .5 Introduction .6 Extraordinary Experiences Raise the Bar for Customer Engagement .8 New Expectations Shift the Digital Transformation Playbook . 14 Trust Becomes More Important, Yet More Elusive . 19 Corporate Values Sway Buying Decisions . 22 Last Look: How Well Are Industries Engaging Customers? . 25 Country Profiles . 26 Regional Profiles . 41 Appendix . 45 Survey Demographics . 61 01 02 03 04 Salesforce ResearchSalesforce Research 5 State of the Connected Customer Executive Summary Companies are being challenged to rethink not just the individual experiences they provide customers, but their entire approach to customer engagement. Twenty-five years since the popularization of the internet and 12 years after the introduction of the iPhone, customer expectations keep soaring. Companies are in a race to transform themselves to foster the digitally savvy relationships that consumers and business buyers alike demand. At the same time, trust has become only more relevant. Collective concern over an array of societal issues has prompted customers to examine what companies stand for. Customers standards for modern engagement are a far cry from the transactional, one-size-fits-all experiences that were once de facto. Tailored, contextualized engagement across multiple touchpoints is the benchmark, and disruptive business models are further raising the bar. Seventy-three percent of customers say one extraordinary experience raises their expectations of other companies. Extraordinary Experiences Raise the Bar for Customer Engagement (see page 8) 01 Innovation is accelerating across industries thanks to emerging technologies like artificial intelligence (AI) and the Internet of Things (IoT). With many consumers and business buyers willing to pay a premium for differentiated, first-to-market products and services that enhance their experiences, the pressure is on for companies to get ahead of the digital curve. Seventy-five percent of customers expect companies to use new technologies to create better experiences. New Expectations Shift the Digital Transformation Playbook (see page 14) 02 Trust has always been foundational in customer relationships, but it's a more nuanced subject in an era where customers expect transparency, authenticity, and ethics. A lot goes into fostering customer trust, and its an increasingly formidable challenge. Fifty-four percent of customers say its harder than ever for companies to earn their trust. Trust Becomes More Important, Yet More Elusive (see page 19) 03 The days when businesses were expected to sit on the sidelines of societal issues are over. Today, customers expect companies to not only operate ethically and with their communities interests at heart, but in a way that advances causes such as equal rights, philanthropy, and sustainability. Seventy-three percent of customers say a companys ethics matter more than they did a year ago. Corporate Values Sway Buying Decisions (see page 22) 04State of the Connected Customer Salesforce Research 6 prompts nearly three-quarters of customers to hold other companies to higher standards. Introduction The Customer Experience Stakes Have Never Been Higher *“State of Sales,” Salesforce Research, May 2018. *“State of Marketing,” Salesforce Research, December 2018. “Enterprise Technology Trends,” Salesforce Research, May 2019. 84% of customers say the experience a company provides is as important as its products and services up from 80% in 2018. Customer experience is not a new concept, but it has never been more relevant. Case in point: Salespeople once solely focused on closing transactions now track customer satisfaction more than any other metric. *Nearly half of marketers once concerned only with driving new leads now champion customer experience initiatives across their entire companies. *Even leaders in information technology (IT) once thought of as the ultimate back-office function now cite customer experience as their top priority. These shifts in business focus are for good reason. Great experiences reap great rewards, with almost two-thirds of customers willing to pay a premium for them. Whats more, a standout experience with one company Business Buyers Consumers84% of customers say the experience a company provides is as important as its products and services 83% 89%66% of customers are willing to pay more for a great experience 59% 82%73% of customers say one extraordinary experience raises their expectations of other companies 69% 82%Salesforce Research 7 State of the Connected Customer A lot of factors ranging from new technologies and products to new business models and increased awareness of corporate ethics make customer expectations a moving target. Thus, delivering the great experiences that meet those changing expectations is a difficult endeavor. Companies are being challenged to rethink how they engage with increasingly connected, empowered, and discerning customers. Each customer is unique, and each company will use different tactics to delight them. Yet a focus on several key principles including treating customers like the individuals they are, connecting interactions and touchpoints across their journeys, investing in digital transformation, and leading with trust and values can help companies shape their strategy of how to best engage their customers. Ultimately, these principles can help companies develop valuable one-to-one customer relationships. Introduction Innovation, Connectivity, Trust, and Values Raise the Bar for Customer Engagement All Customers Business Buyers Consumers Better access to information (e.g., product information, reviews) Customers Who Say These Factors Change Their Expectations of Companies Increased product choice New types/categories of products Ecommerce Increased awareness of corporate values, ethics, and business practices Peer reviews (e.g., Yelp, Amazon reviews) New methods of communication (e.g., messaging apps.) New business models (e.g., sharing economy, subscriptions, direct-to-consumer) 91% 92% 94% Emerging technologies (e.g., chatbots, voice assistants) 91% 91% 91% 85% 86% 89% 78% 81% 88% 74% 77% 84% 69% 71% 76% 58% 64% 77% 59% 65% 78% 52% 58% 75% 54% of customers say companies need to transform how they engage with them. See page 46 for additional data segmentations.State of the Connected Customer Salesforce Research 8 The first step to understanding todays connected customers is to cast aside any generalizations about their interests. Customers expect to be treated as people rather than personas. Like with friendships, customer relationships bloom when individuals feel understood. But when customers feel like their needs aren't appreciated, even after multiple interactions, relationships can weaken. Expectations for personalized engagement span generations, rebutting outdated strategies aimed at broad segmentations and challenging companies to learn more about individuals. Yet companies havent caught up, with relatively few understanding customers needs and expectations let alone adapting to their actions and behavior. Companies Arent Living Up to Customers Personalization Expectations 01 Extraordinary Experiences Raise the Bar for Customer Engagement 52% of customers including 56% of consumers say companies are generally impersonal. 51% of customers say companies generally understand their needs and expectations 73% of customers expect companies to understand their needs and expectations 47% of customers say companies generally adapt based on their actions and behavior 62% of customers expect companies to adapt based on their actions and behavior 77% 75% 63% 67% 65% 52% EXPECTATION REALITY 57% 53% 40% 53% 49% 36% Millennials/Gen Zers Silents/Baby Boomers Gen XersSalesforce Research 9 State of the Connected Customer 01 Extraordinary Experiences Raise the Bar for Customer Engagement If a friend ignores a call, text, or email, it probably doesnt bode well for the overall relationship. The same dynamic is true for todays customers, who live in an always-on world where an answer is just a tap away. Expectations for timeliness start when customers are just browsing, with more than half expecting to find whatever they need be it pricing, inventory, or something else in three clicks or less. It extends to when they make a purchase, with nearly six in 10 willing to switch to a competitor with quicker and cheaper shipping. It persists when they have questions for customer service: 78% of customers expect to solve complex issues by speaking to one person. Most customers won't wait for someone to give them information they can find themselves. Sixty-eight percent would rather use self- service channels like knowledge bases or customer portals for simple questions or issues. Modern Customer Engagement Happens in Real Time 71% of customers expect companies to communicate with them in real time. of customers expect to find whatever they need from a company in three clicks or less 56% of customers can generally find whatever they need from a company in three clicks or less 45% of customers wont buy from a company that cant ship quickly and cheaply 57% of customers will take their business to Amazon if a company cant match their shipping speed and cost 59% See pages 47 and 48 for additional data segmentations.Salesforce Research 10 State of the Connected Customer 01 Extraordinary Experiences Raise the Bar for Customer Engagement Companies aren't just expected to be available anytime they're also expected to be available anywhere. Multichannel behavior is a fact of everyday life . Forty percent of customers wont do business with a company if they cant use their preferred channels. Millennials and Gen Zers are the most omnichannel generations by far citing, on average, 51% more channels as “preferred” than the silent and baby boomer generations. Younger customers are, unsurprisingly, more digitally savvy when engaging with companies. More than half (56%) of millennial and Gen Z customers prefer mobile apps, and are more than twice as likely than silents/baby boomers to prefer voice assistants like Siri and Alexa. Email is favored across generations. Preferred Channels Span Online and Offline Worlds 55% of customers including 68% of millennials/Gen Zers prefer digital channels over traditional ones. Customers Who Prefer the Following Channels When Communicating with Companies Gen Xers Millennials/Gen Zers Silents/Baby Boomers 65% 64% 62% Email 64% 59% 56% 62% In-person 59% 57% 53% 58% Phone 56% 42% 56% 24% Mobile app 43% 45% 55% 28% Online chat/live support (e.g., popup windows on website) 45% 44% 50% 29% Online portals (e.g., self-service account information) 43% 41% 49% 29% Online knowledge bases (e.g., self-service FAQs, searchable libraries) 41% 36% 48% 21% Messenger apps (e.g., WhatsApp, Facebook Messenger) 37% 38% 40% 28% Online forms 36% 30% 45% 15% Social media 32% 30% 35% 25% Text/SMS 31% 29% 39% 16% Online communities (i.e., forums) 30% 22% 28% 13% Voice assistants (e.g., Siri, Alexa) 22% See page 49 for additional data segmentations.Salesforce Research 11 State of the Connected Customer Customers prefer a variety of channels, at least in part, because of context. It may be most convenient to use a mobile app while riding transit, for example, or to send a detailed email to cust