THIRD EDITION STATE CONNECTED CUSTOMER

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THIRD EDITIONSTATECONNECTEDCUSTOMERInsights from over 8,000 consumersand business buyers worldwide

About This ReportState of the Connected Customer2For this third edition of the “State of theConnected Customer” report, SalesforceResearch surveyed over 8,000 consumers andbusiness buyers worldwide to discover: How customer expectations continue to shiftWhich emerging technologies aretransforming standards for engagementThe role of trust in customer relationshipsThe rising importance of corporate values inbuying decisions1,590Data in this report is from a double-blind surveyconducted April 2–18, 2019, that generatedresponses from 8,022 individuals in Australia/New Zealand, Canada, France, Germany, HongKong, India, Italy, Japan, Singapore, Spain,Switzerland, Thailand, the United Kingdom/Ireland, and the United States.3,2223,210All respondents are third-party panelists (notlimited to Salesforce customers). See page 61 fordetailed respondent demographics.Percentages may not total 100 due to rounding.All comparison calculations are made from totalnumbers (not rounded numbers).Salesforce Research provides data-driven insights to helpbusinesses transform how they drive customer success.Browse all reports at salesforce.com/research.Salesforce Research

About This erCutomer3We examine survey results from three primary groups:ConsumersThose reporting on their interactions with companieswhen purchasing for themselvesBusiness BuyersThose reporting on their interactions with companieswhen purchasing on behalf of their employersBusiness BuyersConsumersCustomersAggregated consumers and business buyersAll CustomersWe also examine survey results across three generationsof customers: Respondents were required to be 18 yearsof age or older.Millennials/Gen ZersBorn between 1981–2000Gen XersBorn between 1965–1980Silents/Baby BoomersMillennials/Gen ZersGen XersSilents/Baby BoomersBorn before 1965Salesforce Research

ContentsState of the Connected Customer4Executive Summary.5Introduction.601Extraordinary Experiences Raise the Bar for Customer Engagement.802New Expectations Shift the Digital Transformation Playbook. 1403Trust Becomes More Important, Yet More Elusive. 1904Corporate Values Sway Buying Decisions. 22Last Look: How Well Are Industries Engaging Customers?. 25Country Profiles. 26Regional Profiles. 41Appendix. 45Survey Demographics. 61Salesforce Research

Executive SummaryCompanies are being challenged torethink not just the individualexperiences they providecustomers, but their entireapproach to customer engagement.Twenty-five years since thepopularization of the internetand 12 years after the introductionof the iPhone, customerexpectations keep soaring.Companies are in a race totransform themselves to foster thedigitally savvy relationships thatconsumers and business buyersalike demand.At the same time, trust has becomeonly more relevant. Collectiveconcern over an array of societalissues has prompted customers toexamine what companies stand for.State of the Connected Customer015Extraordinary Experiences Raise the Bar for Customer Engagement(see page 8)Customers’ standards for modern engagement are a far cry from the transactional, one-size-fits-allexperiences that were once de facto. Tailored, contextualized engagement across multiple touchpointsis the benchmark, and disruptive business models are further raising the bar. Seventy-three percent ofcustomers say one extraordinary experience raises their expectations of other companies.02New Expectations Shift the Digital Transformation Playbook(see page 14)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 apremium for differentiated, first-to-market products and services that enhance their experiences, thepressure is on for companies to get ahead of the digital curve. Seventy-five percent of customersexpect companies to use new technologies to create better experiences.03Trust Becomes More Important, Yet More Elusive(see page 19)Trust has always been foundational in customer relationships, but it's a more nuanced subject in an erawhere customers expect transparency, authenticity, and ethics. A lot goes into fostering customer trust,and it’s an increasingly formidable challenge. Fifty-four percent of customers say it’s harder thanever for companies to earn their trust.04Corporate Values Sway Buying Decisions(see page 22)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’ interestsat heart, but in a way that advances causes such as equal rights, philanthropy, and sustainability.Seventy-three percent of customers say a company’s ethics matter more than they dida year ago.Salesforce Research

IntroductionCustomer experience is not a new concept,but it has never been more relevant. Case inpoint: Salespeople — once solely focused onclosing transactions — now track customersatisfaction more than any other metric.*Nearly half of marketers — once concernedonly with driving new leads — now championcustomer experience initiatives across theirentire companies.** Even leaders in informationState of the Connected Customertechnology (IT) — once thought of as theultimate back-office function — now citecustomer experience as their top priority.†These shifts in business focus are for goodreason. Great experiences reap great rewards,with almost two-thirds of customers willing topay a premium for them. What’s more, astandout experience with one company6prompts nearly three-quarters of customers tohold other companies to higher standards.84%of customers say the experience acompany provides is as important as itsproducts and services – up from 80% in 2018.The Customer Experience Stakes Have Never Been HigherConsumers83%89%84%of customers say theexperience a companyprovides is as importantas its products and services***†“State of Sales,” Salesforce Research, May 2018.“State of Marketing,” Salesforce Research, December 2018.“Enterprise Technology Trends,” Salesforce Research, May 2019.Business Buyers69%82%73%of customers say oneextraordinary experienceraises their expectations ofother companies59%82%66%of customers arewilling to pay more fora great experienceSalesforce Research

IntroductionState of the Connected CustomerA lot of factors – ranging from newtechnologies and products to new businessmodels and increased awareness of corporateethics – make customer expectations a movingtarget. Thus, delivering the great experiencesthat meet those changing expectations is adifficult endeavor.Innovation, Connectivity, Trust, and ValuesRaise the Bar for Customer EngagementCompanies are being challenged to rethinkhow they engage with increasingly connected,empowered, and discerning customers.Better access to information(e.g., product information,reviews)54%of customers say companies needto transform how they engage with them.7Customers Who Say These Factors Change Their Expectations of CompaniesAll CustomersConsumersBusiness Buyers91%92%94%91%91%Increased product choice91%85%86%New types/categories of products89%78%Each customer is unique, and each companywill use different tactics to delight them. Yet afocus on several key principles – includingtreating customers like the individuals they are,connecting interactions and touchpoints acrosstheir journeys, investing in digitaltransformation, and leading with trust andvalues – can help companies shape theirstrategy of how to best engage their customers.Ultimately, these principles can helpcompanies develop valuable one-to-onecustomer relationships.88%74%Increased awareness of corporatevalues, ethics, and business practices77%84%69%Peer reviews(e.g., Yelp, Amazon reviews)71%76%New business models(e.g., sharing economy, subscriptions,direct-to-consumer)New methods of communication(e.g., messaging apps.)Emerging technologies(e.g., chatbots, voice assistants)See page 46 for additional data 75%Salesforce Research

01 Extraordinary Experiences Raise the BarState of the Connected Customer8for Customer EngagementThe first step to understanding today’sconnected customers is to cast aside anygeneralizations about their interests. Customersexpect to be treated as people rather thanpersonas. Like with friendships, customerrelationships bloom when individuals feelunderstood. But when customers feel like theirneeds aren't appreciated, even after multipleinteractions, relationships can weaken.Expectations for personalized engagementspan generations, rebutting outdated strategiesaimed at broad segmentations and challengingcompanies to learn more about individuals. Yetcompanies haven’t caught up, with relativelyfew understanding customers’ needs andexpectations – let alone adapting to theiractions and behavior.52%of customers – including56% of consumers – say companies aregenerally impersonal.Companies Aren’t Living Up to Customers’Personalization ExpectationsEXPECTATION73%REALITY77% 75%63%of customers expectcompanies to understandtheir needs andexpectations62%51%57%of customers saycompanies generallyunderstand their needsand expectations67% 65%of customers expectcompanies toadapt based on theiractions and behaviorMillennials/Gen Zers52%Gen Xers53%40%47%53%of customers saycompanies generallyadapt based on theiractions and behavior49%36%Silents/Baby BoomersSalesforce Research

01 Extraordinary Experiences Raise the BarState of the Connected Customer9for Customer EngagementIf a friend ignores a call, text, or email, itprobably doesn’t bode well for the overallrelationship. The same dynamic is true fortoday’s customers, who live in an always-onworld where an answer is just a tap away.71%Modern Customer Engagement Happens in Real Time56%of customers expect to find whatever theyneed from a company in three clicks or less45%of customers can generally find whatever theyneed from a company in three clicks or less57%of customers won’t buy from a companythat can’t ship quickly and cheaply59%of customers will take their business to Amazon if acompany can’t match their shipping speed and costof customers expect companies tocommunicate with them in real time.Expectations for timeliness start whencustomers are just browsing, with more thanhalf expecting to find whatever they need — beit pricing, inventory, or something else — inthree clicks or less. It extends to when theymake a purchase, with nearly six in 10 willing toswitch to a competitor with quicker andcheaper shipping. It persists when they havequestions for customer service: 78% ofcustomers expect to solve complex issuesby speaking to one person.Most customers won't wait for someone to givethem information they can find themselves.Sixty-eight percent would rather use selfservice channels – like knowledge bases orcustomer portals – for simple questions orissues.See pages 47 and 48 for additional data segmentations.Salesforce Research

01 Extraordinary Experiences Raise the BarState of the Connected Customer10for Customer EngagementCompanies aren't just expected to beavailable anytime — they're also expected to beavailable anywhere. Multichannel behavior is afact of everyday life . Forty percent ofcustomers won’t do business with acompany if they can’t use their preferredchannels.Millennials and Gen Zers are the mostomnichannel generations by far — citing, onaverage, 51% more channels as “preferred”than the silent and baby boomer generations.Younger customers are, unsurprisingly, moredigitally savvy when engaging with companies.More than half (56%) of millennial and Gen Zcustomers prefer mobile apps, and are morethan twice as likely than silents/baby boomersto prefer voice assistants like Siri and Alexa.Email is favored across generations.Preferred Channels Span Online and Offline WorldsCustomers Who Prefer the Following Channels When Communicating with CompaniesEmailIn-personPhoneOnline chat/live support(e.g., popup windows on website)Mobile appOnline portals(e.g., self-service account information)Online knowledge bases(e.g., self-service FAQs, searchable libraries)Messenger apps(e.g., WhatsApp, Facebook Messenger)55%of customers — including 68% ofmillennials/Gen Zers — prefer digital channelsover traditional ones.Online formsSocial mediaText/SMSOnline communities(i.e., forums)Voice assistants(e.g., Siri, Alexa)Millennials/Gen ZersSee page 49 for additional data segmentations.Gen 3%28%55%42%56%44% 50%29%41% %21%64%48%40%45%35%29% 39%13% 22% 28%Silents/Baby BoomersSalesforce Research

01 Extraordinary Experiences Raise the BarState of the Connected Customer11for Customer EngagementCustomers prefer a variety of channels, at leastin part, because of context. It may be mostconvenient to use a mobile app while ridingtransit, for example, or to send a detailed emailto customer service when there’s a complexissue at hand. But as lives get busier andattention spans shorter, cross-channelengagement isn’t as cut and dry as it once was.Today’s customer journeys are complex,nonlinear, and fragmented across touchpoints.The majority of consumers and business buyersacross generations have used multiple channelsto start and complete single transactions — suchas when they first see an ad on social mediaonly to make a purchase on a website later.What’s more, nearly two-thirds (64%) ofcustomers have used multiple devices tostart and complete transactions — such asbrowsing on a smartphone only to sign up foran account on a desktop later.This multichannel, multi-device reality poses avexing question: How can companies fostergreat customer engagement across nonlinearjourneys? In other words, how can they keepexperiences connected?Context Matters for Connected Customer EngagementCustomers Who Say the Following78%73%71%64%I prefer different channelsdepending on context(i.e., where I am and what I'm doing)82%80%67%I prefer different devicesdepending on context(i.e., where I am and what I'm doing)79%76%61%79%73%I have used multiple channels to startand complete a single transactionI have used multiple devices to startand complete a single transaction55%75%67%44%Millennials/Gen ZersGen XersSilents/Baby BoomersSee page 49 for additional data segmentations.Salesforce Research

01 Extraordinary Experiences Raise the BarState of the Connected Customer12for Customer EngagementEffective customer engagement isn't justpersonalized, timely, and omni-channel. It'salso connected, meaning that customers'preferences are known across touchpoints,and any required information can be quicklyaccessed.69%Customers Expect Unity but Often Face Silos78%of customers expectconsistent interactionsacross departments59%of customers say it generally feelslike they’re communicating withseparate departments, not one companyof customers expectconnected experiences.Omni-channel and omni-device behaviormakes connected experiences challengingenough, but customers also expect therepresentatives they encounter across thosetouchpoints to have the same information. Incustomers' minds, for example, a service agentshould know about a recently signed salescontract, or the details of a recent ecommercetransaction, and engage accordingly. Sixty-fourpercent of customers expect tailoredengagement based on past interactions.72%of customers expect allcompany representatives to havethe same information about them66%of customers say they often have torepeat or re-explain information todifferent representativesFor many companies, this is easier said thandone. The average enterprise uses 900 differentapplications, 29% of which are integrated.*Customers feel the effects, with nearly threefifths reporting experiences that generallyreflect separate departments rather thanunified companies.“MuleSoft Connectivity Benchmark Report,” February 2019.See pages 47 and 48 for additional data segmentations.*Salesforce Research

SpotlightState of the Connected Customer13Direct to ConsumerSixty-five percent of customers say newbusiness models are changing theirexpectations of companies. Direct-to-consumersales is a prime example.Pioneers such as Warby Parker and Dollar ShaveClub disrupted entire industries by cutting outintermediaries and offering products directly toend users. Established branded manufacturerssuch as adidas are embracing the direct-toconsumer model, with 99% of them investingin such initiatives.* The impact has been hugenot only for revenue streams and retailrelationships, but for customer expectations.Seventy-three percent of consumers expectto be able to buy directly from a brand aswell as from a retailer.76%Direct-to-Consumer Models Are a Hit with Younger GenerationsConsumers Who Say the Following49%I buy at least one product directlyfrom a brand on a regular basis47%I identify more with the brands I buy thanthe retailers I buy from44%I expect to buy more productsdirectly from brands in the future58%49%39%54%45%40%53%43%34%Millennials/Gen ZersGen XersSilents/Baby Boomersof consumers expect the same levelof engagement when buying from a brand aswhen buying from a retailer.Today, nearly half of consumers buy at least oneproduct directly from a brand on a regularbasis. Much like digital channels, millennial andGen Z consumers are particularly fond of thisnew way to shop.*“Consumer Goods and the Battle for B2B and B2C Relationships,”Salesforce, May 2019.Salesforce Research

02 New Expectations Shift the DigitalState of the Connected Customer14Transformation PlaybookDirect-to-consumer sales is an example ofsomething more critical than ever as customerexpectations soar: innovation – the adaptationto customer needs or technological change.Innovation Commands a Premium, Especially for Business BuyersCustomers Who Say the Following67%of customers expect companies toprovide new products and services morefrequently than before — up from 63% in 2018.Innovation can come through new products ornew ways of engaging customers. Whatever theform factor, the bar for innovation is higherthan ever, with the majority of customers sayingcompanies must do more in order to impressthem — let alone capture their attention. A lackof innovation, in fact, now signals a company’sapathy toward its customers.Innovation is particularly critical for businessbuyers, whose purchasing decisions can impacttheir own competitiveness. Seventy percent ofbusiness buyers will pay more for differentiatedproducts, and nearly as many (62%) will paymore for products that are first to market.See pages 50 and 51 for additional data segmentations.All Cus

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

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