Why understanding customer experience in the digital world is crucial to business outcomes

In this article by Kirk Kristofferson, Assistant Professor of Marketing at Ivey Business School and George and Mary Turnbull Faculty Fellow, he explores how customer dynamics are impacted by digitalization and how businesses can leverage data collected in the digital world to optimize their customer experience across multiple organizational levels.

How does a digital setting impact consumer behaviour? 

Digitalization has brought on significant changes to the journeys consumers follow when engaging with brands. Understanding these changes, and the uniqueness of digital customer journeys, is vital for businesses trying to compete and create value in today’s marketplace. 

Two significant but related shifts that have emerged from digitalization are in how people 1) search for information about, and 2) subsequently evaluate products and/or services. Traditionally, customers relied on firms to communicate to them and to share their product’s benefits through marketing communications. In the digital space, however, communication is most certainly a “two-way street”. While firm-to-consumer communications of course still exist, consumers now share their own real-time experiences through reviews and real-time feedback, and even through direct public communication with brands. These types of communication not only require the firm to respond quickly, but also serve to influence the decisions of other consumers. Social media has amplified this communication shift by allowing consumers to publicly share their experiences broadly, both positive and negative. For example, many consumers – whether influencers or not – will publicly “unbox” new products, and share their first-impressions and opinions. While this sharing and consumer-to-consumer information adds an element of authenticity, the shift to the digital landscape has taken control away from the firm and the marketer. Potential customers now seek out user-generated content such as reviews and/or ratings, or turn to online communities for advice and recommendations instead of looking to the brand. 

Another monumental shift that has emerged over the last ten years is the amount of information and data available to both consumers and firms. While consumers previously preferred to keep their personal information more private, in the digital era consumers have become increasingly open and willing to sharing their data with firms. Indeed, in order to even access many of our daily scrolling rituals, we as consumers grant approval to access various applications, products, and services in online spaces. The benefit consumers see is a more personalized set of recommendations, but this vast amount of personalized past and present information allows marketers to learn more about their target segments than ever before.  

While buzzwords like AI, big data, and customer analytics abound, the real question is how leaders can effectively integrate and use this enormous volume of data throughout their organizations. The goal is to harness it and enhance both customer relationships and long-term value for the firm.

The evolution of the customer journey  

For firms to not only understand, but also to harness the digitalization-driven evolution in customer journeys requires a deep understanding of the data consumers can generate and strategic planning for leveraging this data to create customer value. Data might be generated directly from consumers through qualitative (i.e., interviews, focus groups) and quantitative (i.e., traditional surveys, experiments) data, or indirectly via social media listening, location-specific behaviour, and analytics. Each method of customer data collection can be valuable at different stages of the customer journey as long as the data is structured and communicated across the organization. 

In the past, a simple trip to a physical store could be enough to meet a customer's needs or desires. Most customers would make decisions based on brand familiarity, personal recommendations from trusted sources, or simply choosing from the available products available at the local stores in their communities. Businesses then relied on more traditional tools to assess their customers’ satisfaction. With the advent of online shopping platforms and forums for customers to share their experiences, an entirely new shopping experience became available to consumers. As such, it has naturally has led to a more complicated decision process. 

The digital customer journey encompasses stages beyond the mere purchase and use of a product or service. While a customer journey still begins with need recognition, today we can gain insights into people's interests and desires perhaps even prior to stated need recognition based on online search behaviour (once again thanks to the newfound willingness to share data). The challenge for marketers lies in deciphering this data, learning from it, and identifying potential customers. It is then essential to connect and engage with these potential customers in a non-intrusive manner, and ensure that one’s brand remains top-of-mind when consumers begin to evaluate potential options. Failure to enter a consumer’s consideration set will mean losing out to competitors every time. 

The customer experience should be emphasized across the whole organization  

In light of the vast amount of information and data available in our digital age, it has become imperative to effectively integrate this wealth of consumer knowledge throughout the layers of an organization. The driving force behind this integration should be a relentless focus on the customer and their relationship with the brand. Whether you are situated at the organization's headquarters, production facility, the shop floor of a physical retail store, or even remotely as part of the social media team, the customer must always remain at the center of the firm’s efforts. 

When everyone within an organization shares this customer-centric mindset and strives to add value to the end consumer, a cohesive synergy can emerge. It is essential that data integration be approached strategically so that every individual and team across the organization can access and use the insights it provides. This is not merely a matter of stating that “we focus on consumers”; it is about embedding a customer-centric approach into the organization's core functioning. The key questions to ask are: How can we continually create value for both consumers and our organization? What data can either support our existing strategies or signal the need for a change in direction? 

The crucial insights gathered from customer interactions need to be effectively disseminated throughout the entire organizational structure, and be used to guide decision-making and future planning. These insights pertain to one’s core customer base, and their significance lies in their potential to enhance our offerings not only in the present but also in the future. This can be positive feedback that builds on a successful product launch or update, or essential negative feedback to understand when consumers are not happy and respond quickly with change when the anticipated positive reaction does not occur. 

Integrating new technology for the customer experience  

The allure of new technology is not a one-size-fits-all phenomenon. Indeed, it is fair to say that not all consumers universally crave every novel technological advancement, and in fact some may even actively rebel against “new tech”. Do emerging technologies offer brands an opportunity to differentiate and create value for their consumers? Absolutely. However, the crucial factor lies in identifying the appropriate context, and most importantly understanding the unique attributes of emerging technologies that can create value for the right consumers. 

One avenue that my research team at Ivey has been fascinated with is the persuasive potential of virtual reality in marketing. Under specific circumstances, we find that VR can be an incredibly effective tool for brands, and result in more favorable outcomes compared to conventional marketing channels in specific contexts. Creating immersive virtual experiences is undoubtedly captivating and can outperform traditional channels that consumers are already familiar; however, it is imperative to recognize both the opportunities and limitations inherent in these technologies and how they intersect with established marketing strategies.  

Rather than rushing into adopting every new technology with the assumption that consumers will embrace it, a more nuanced approach from brands is needed. The key takeaway here is the importance of understanding the value that emerging technologies bring to core consumers. Without this understanding and focus on keeping the customer at the center of everything a brand does, even the most promising and innovative technology can end up gathering dust on store shelves (or worse). It is not about what cool innovations leaders and designers envision, but meeting the genuine desires and needs of consumers. 

What can we predict for the future of digital consumer behaviour?  

Are consumers more open to marketing communications and promotional content in today’s digital landscape? In certain contexts, research suggests potentially yes. One salient example that many of us as consumers can relate to is the role that social media and influencers can have in shaping consumer attitudes and downstream purchase behaviours, and the relationship consumers have with brands (Lamberton and Stephen 2016). Factors such as authenticity, relatability, and perceived expertise in influencer marketing campaigns have been shown to increase purchase intention towards promoted brands (e.g., Vrontis et al. 2021).  

As user behaviour in the digital landscape continues to change rapidly, regulations will continue to evolve to impose more stringent requirements on influencers and brands as a means of protecting consumers. For example, in multiple areas influencers must disclose when their content is the result of paid brand sponsorship. These regulatory changes are constantly changing, which reflects the dynamic nature of the digital marketing landscape and the shifting attitudes of their audience. In a similar vein, understanding how consumers react to the knowledge that their data is being tracked, utilized, and shared is a complex area that warrants further exploration. 

For leaders and brands, it is imperative to stay informed about these developments. Awareness of evolving regulations and consumer preferences is essential for making informed decisions in marketing and communication strategies. Brands have a multitude of communication tactics at their disposal but utilizing them effectively and ethically requires a deep understanding of consumer expectations and the regulatory environment. 

Ultimately, it is incumbent on the research community and marketers to continue to delve into the intricate aspects of consumer behaviour and digital marketing. Researchers must ask the right questions and work with marketers to develop a deeper understanding of how consumers navigate the ever-changing digital landscape, and how best to create value for them and firms in both the short and long term. 

Additional Resources

A Thematic Exploration of Digital, Social Media, and Mobile Marketing Research's Evolution from 2000 to 2015 and an Agenda for a Future Research by Cait Lamberton and Andrew T. Stephen (Journal of Marketing)

Social media influencer marketing: A systematic review, integrative framework and future research agenda by Demetris Vrontis, Anna Makrides, Michael Christofi, and Alkis Thrassou (International IJC)

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