Building Customer

Experience for the

Future

APRIL 2023
The customer experience is evolving 01

Why CEOs need to pay How customer-experience

attention to their customer champions are outcompeting
experience (CX) the market

01 Unlock short-term profitability gains while building 03 CX is a top investment priority for CEOs
long-term sustained advantage
· Advanced digital and data technologies are 04 CX orchestration is aligned across the organization
advancing, creating new possibilities
· The customer landscape is evolving fast 05 Advanced CX innovators embrace data & AI
· Competitor and new-entrant innovation is disruptive
06 Winners build CX capabilities along each phase of
02 Careful CX orchestration offers companies a huge the digital journey
opportunity to win

Source: BCG analysis.

Customer experience is a fundamental way to drive growth and core 01
business outcomes

Companies leading in CX ...

Create more value Generate more growth Drive more trust

+55% +190% +70%

12.4% 15.9%
70% 28.2
55% 8.0% 190% higher Net 16.4
higher five-year higher three-year Promoter Score
5.5% across
TSR¹ growth revenue growth
archetypes

CX Peers CX Peers CX Peers

leaders leaders leaders

Source: BCG Global Company of the Future Survey 2022; n=263.

Note: CX leader and peer scores refer to total shareholder return, revenue, and NPS scores based on the survey.
1
Total shareholder return.
By improving the customer experience, companies can realize short-term 01
gains and unlock long-term opportunities

· Higher customer engagement; increased loyalty

Enhanced customer satisfaction · Personalized offerings; greater appreciation

· Efficiency of change delivery; greater productivity

Efficiency gains · Increased automation; reduced cycle times
· Reduced IT and operating expenses

· Greater employee engagement

Strengthened capabilities · Faster decision making
· A cadre of experienced journey practitioners

· Lower risk through systems-driven checks

Improved compliance · Greater visibility of risks
· Enhanced compliance and risk monitoring

· Lift in sales productivity; improved conversion

Top-line growth · Relationship deepening; greater consumer spending
· Faster time to cash

Source: BCG.
New data and tech are transforming … creating new ways to 01
customer journeys … interact with customers

Multichannel Omnichannel Multiple touchpoints New ways to engage

1995–2009 2010–2024 2025+ New touchpoints—digital and
physical—are transforming how
customers engage with businesses

Two-way relationships
New tech-enabled experiences are
enabling customers to share feedback
and shape their own relationships
Physical Digital with companies

Average touchpoints across single journey

Predictive & personalized
experiences

20+ ? An explosion in data, combined with

9 analytics & AI, is enabling brands to
measure, predict, and personalize
2014 2021 2021 one-to-one experiences

Sources: BCG Henderson Institute; Think with Google.

Consumer-experience winners conquer complexity by becoming an 02
orchestration engine for all customer interactions

Digital/mobile

From omnichannel to
Sh
Physical/
retail
c
ov
er op Metaverse
omnitouchpoint ...

/b
Dis

uy
· Reinvention of traditional channels
Orchestration
· Emergence of touchpoints
of CX
interactions · Nonlinear journey

ce
· Mix of digital and human interactions to
ie n
Su

po add more value in the customer journey

er
p
p

Contact
rt
s e /ex Future
U · Two-sided conversation
center touchpoints
· Genuine engagement

Smart devices/
Internet of Things
Source: BCG.
Customer-experience winners succeed by transforming their businesses 02
around the customer

CX outcomes not explicitly linked to business benefits Everything a business does starts with the customer

Customer-focused design is embedded into all activities to

Focus on incremental—not big-picture—innovation
reimagine experiences

Customer-journey objectives are used to deliver change

CX delivered in silos, fragmented budgets & resources
across the business

CX not seen as the role of all leaders and employees People are rewarded for customer-centric behaviors

Disconnected channels & data; no single view of the customer Next-generation data & tech truly personalize experiences

Source: BCG.
Customer experience is primed to remain a priority investment 03
across industries
Leaders and peers are spending ~31% on CX, … as well as a top priority for the future across
making it the highest spending area ... most sectors
CURRENT SPENDING ACROSS FOUR OUTCOME CATEGORIES (%) FUTURE SPENDING ACROSS FOUR OUTCOME CATEGORIES (%)
(CX-FOCUSED SECTORS ONLY)

22 24 31 20 25 24 26 27 21 25 28
30
17 15 17
24 21 23 19 21 21 20
19 18
25 24 24
23 23 22 24 21 20 17
24 21 Average: 31%
32 38 38 31 31 38 34 35 CX
28 30
30 30

Auto & mobility

Media

Asset and wealth management

Fashion & luxury

Telco

Retail

Consumer products

Retail banking

Travel & tourism

Retail insurance
Peers CX leaders

Improvement in customer experience and go-to-market

Performance improvement through the operational value chain
Performance improvement in support functions
Innovation and growth in the core and beyond

Source: BCG Global Company of the Future Survey 2022; n=546.

Building customer experience for the future 04
is a process of continual upward growth
Future-built
Foster continuous
Company stage1 Scaling innovation in foundational
Build advanced capabilities and advanced
Emerging capabilities to pivot to digitization/tech to enable
Adopt point solutions to growth from innovation by CX at the core; digitally
Stagnating create business outcomes, orchestrating across all enable new growth
Lay a foundation for the including insights from customer interactions
future via decentralized digital data & engagement across (omnitouchpoint)
and CX initiatives all touchpoints
(omnichannel)

DIGITAL TRANSFORMATION BUILDING FOR THE FUTURE

Programmatic approach enabling companies to deliver on Blueprint to embed & scale cross-functional attributes critical
digital-transformation efforts with a focus on building CX capabilities for CX success while shifting to growth from innovation

Re-engineering, fixing the core, and building Pivot to growth from innovation – focus on AI,
a foundation for innovation new-business build, and advanced digital ecosystems

Source: BCG.
1
Based on Build for the Future framework.
Leaders are finding new ways to engage their customers 05

Stagnating companies are still struggling to manage their … while future-built companies are already embracing the
transition to omnichannel … CX shift toward omnitouchpoint
AVERAGE CAPABILITY ON OMNICHANNEL USE CASES SHARE OF RESPONDENTS SEEING THOSE TECHNOLOGIES
AS RELEVANT OR CRITICAL FOR THE FUTURE (%)
Omnichannel - foundation Omnichannel - advanced
+53% +47% 48
Web3/metaverse
73

NextGen interfaces
50
(including virtual assistants
65
or connected devices)

7.9 7.2 48
AI/cognitive algorithmic
65
5.2 4.9
47
Autonomous machines
62

Stagnating Future-built Stagnating Future-built

Stagnating Future-built

Source: BCG Global Company of the Future Survey 2022; n=546.

While stagnating companies are still struggling with omnichannel, 05
future-built companies are already investing in new ways to engage
Average capability per use case and archetype (not exhaustive)
From channels to touchpoints Individualized customer journey Continuous conversation
Retail Travel & tourism Retail Travel & tourism Media Retail
+69% +60% +60% +100% +61% +140%
8.0
7.3
6.0
5.3
4.5 4.5
4.0 3.3
3.3 3.0
2.7 2.5

AR/VR1 or smart Immersive CX to App/AR integration Digital and biometric Rapid iteration Predictive consumer
mirror to offer visualize facilities for wayfinding and identification to access based on preference (trend
immersive in-store or room enhancing in-store lounge or room real-time feedback detection)
experience experience
Stagnating Future-built
Source: BCG Global Company of the Future Survey 2022; n=546.
1
Augmented reality/virutal reality.
The best-positioned companies
are also automating CX through
generative AI …
Generative AI applies predictive modeling to
generate new content or elements across modalities
Training data is collected and centralized as
input to a generative model
The model establishes complex correlations
between data points embedded within a
training data set
Based on a distinct user prompt, the model
generates a new element
Source: BCG.
05
… resulting in multiple
use cases
Select generative-AI use cases across functions
· Generate visual marketing materials
Marketing · Write white papers, blogs, commercials, ads
· Create custom materials for each lead
· Generate personalized sales pitches
Sales · Create demos tailored to customers
· Write client outreach emails
· Use chatbots to answer customer queries
Customer · Generate answers to customer FAQs
support · Create web guides for onboarding, training
· Build dashboards to track key metrics
Customer · Run simulations to show customers how to
success maximize value
· Build account profiles to outline upsell
opportunities
Leading companies put customers first, building comprehensive capabilities 06
to support the customer journey

M I D A S
Measure Innovate Deliver Activate Synchronize
for impact to be journeys a customer-first across channels
future-ready front-to-back culture

Human-centered design and an agile approach embedded throughout

Ongoing iteration

Sources: Expert calls; desktop research; BCG analysis.

Companies can become customer-experience leaders by deploying 06
the right capabilities at each step of their change journey

From Scaling to Future-Built

Continual innovation journey
From Emerging to Scaling
From Stagnating to Emerging Building advanced capabilities
Building foundational capabilities Customer-centric innovation
Transform @scale rollout of
Journey Journey-led transformation @scale organization changes
Customer segmentation program
Deep customer CX-led DDP,1 CDP, 2 data streams AI-driven orchestration
& insights scaleup and op
understanding model review CX-led organization activation & personalization
Journey analytics & Integrate
advanced tech engine (deep AI)
mapping Develop key digital channels
Rapid journey
across the Predictive CX
innovation Omnichannel strategy Digital & Customer 3603
organization measurement
sprint to prove CX strategy measurement Develop key CX programs
value infrastructure (e.g., loyalty, memberships)
Journey design

Front-to-back journeys

E-commerce and channel excellence

Loyalty & membership programs

CX orchestration transformation
Source: BCG.
1
Data and digital platform. 2Customer data platform. 3Using data analytics to create a 360-degree master view of customers.
CASE STUDY

How a major motorcycle manufacturer developed a digital commerce and

sales strategy
A US motorcycle manufacturer was working on a more sophisticated
digital marketing measurement to perform marketing pilots Outcomes
The objective was to create a build, operate, transfer (BOT) approach to set up a digital ecosystem Digital experience
for increased value creation. Development of state-of-the-art
“white glove” digital purchasing
experience
01 02 03 04
Digital commerce Digital platform MVP1 Internal training Shift toward direct model
program development Trained a newly Clear shift toward direct model in
Developed a
hired client team on select markets with plans for
Developed with best-in-class digital Defined an MVP
work product and broader domestic and international
specific features platform and online Alpha Build (”Alpha”)
team structure to implementation
defined through channel for parts & that delivered a
ensure continuity of
BCG’s agile processes accessories and functioning first #1 pre-owned marketplace
operations
and customer merchandise that version of the Within one month of launch
research, in drives growth and product, which can be
consultation with the margin expansion tested with customers 30+ FTEs2 hired
steering committee in a controlled to create new digital center
and each of the environment
$140M+ gross margin yearly
workstream squads
run rate

Source: BCG.
1
Minimum viable product. 2Full-time employees.
CASE STUDY

How an Australian financial institution implemented a three-year

transformation program
Client had ten-plus years of underperformance for
shareholders, including lower TSR than other big Australian Outcomes
banks in any two-year period and ~60% lower ten-year TSR
Best-performing TSR among the big four Australian banks
performance than the leading Australian bank. Became the third-largest Australian bank in market cap
CEO set a big ambition: reduction of 6,000 roles, $1 billion AUD cost savings in
~$800 million AUD cost savings
three years, and improved customer experience to achieve cost reductions
Line of sight to $1 billion AUD cost savings after two years
without impacting revenue growth.
>400K banker hours saved
Record productivity in FY 2018 and again in FY 2019
01 02 03 30-point average NPS uplift
Strategy Customer Workforce Ranked #1 in priority segments
Introduced customer journeys management 96 digital customer releases
metrics to set Deployed customer Deployed sophisticated Deployed in year one
definition of purpose, journeys, including workforce management
leadership, and Agile at Scale, to levers in the frontline 80%+ reduction
culture accelerate digitization (e.g., dynamic rosters, In end-to-end cycle times for onboarding customers
lead analytics) Ten minutes to open SME1 account
Down from six days, for 90% of customers
Source: BCG.
1
Subject matter expert.