Cloud Adoption Is Essential for the Modern Customer Experience

Google says a manufacturer’s digital transformation starts with cloud adoption and ends with increased revenue.

According to the global market intelligence provider IDC, only 20 percent of manufacturing companies believed their business model was future-proof. With unpredictable disruptions to the economy and evolving customer demands, manufacturers need to modernize their entire production strategy to remain competitive in an ever-changing landscape.

To remain competitive, manufacturers must find ways to differentiate themselves from other companies and their available products in an already crowded market. Customer experience (CX) is quickly becoming one of the core strategies companies can use to differentiate themselves from their competitors. A new research study conducted by IDC and sponsored by Google, entitled “The Digital Customer Journey for Manufacturers,” surveyed more than 1,500 manufacturing leaders to evaluate digital customer journeys. The study highlights that companies experiencing the most growth are taking advantage of cloud-enabled digital transformation of their CX.

CX Is One of the Biggest Drivers of Growth in Manufacturing

According to the survey results, the maturity of manufacturers’ CX correlated with their change in revenue and profit. For example, companies with the most mature digital CX (orchestrated) had a 13.5 percent increase in revenue and a 14 percent increase in profit over the past year. In contrast, companies with very limited management of customer journeys experienced a reduction in revenue and profit and only a minor increase in sales.

Results from the survey indicate that companies with the most mature customer experience have the greatest increase in sales and profit. In the survey, companies with very limited maturity do not manage customer journeys, early stages are beginning to manage customer journeys, preconfigured create and manage journeys that are preconfigured, end to end manage customer journeys end-to-end based on near-real-time customer behavior, and orchestrated manage customer journeys in real-time and adapt dynamically to customer needs. (Image courtesy of IDC.)

Results from the survey indicate that companies with the most mature customer experience have the greatest increase in sales and profit. In the survey, companies with very limited maturity do not manage customer journeys, early stages are beginning to manage customer journeys, preconfigured create and manage journeys that are preconfigured, end to end manage customer journeys end-to-end based on near-real-time customer behavior, and orchestrated manage customer journeys in real-time and adapt dynamically to customer needs. (Image courtesy of IDC.)

In the survey, companies that describe their CX as orchestrated manage their customer journeys holistically and in real time. This involves flexibility in adapting to customers’ needs and serving them accordingly. Unsurprisingly, companies that indicated their CX was orchestrated also made the most use of e-commerce and experienced the most significant increase in sales over a two-year period. With close to equal distribution across the five stages of CX maturity, it is clear that meeting the modern needs of customers is an important strategy to increase profit margins.

In the survey, respondents were also asked about their intentions when it comes to improving CX. The survey found that the top driver of CX innovation in manufacturing is to both improve customer satisfaction (approx. 44 percent) and, logically, increase sales and revenue ( approx. 42 percent). It appears that this strategy is already paying off for companies with the most mature CX offerings.

Cloud Is Critical for the Next Generation of CX

As customer expectations continue to evolve, some companies struggle to deliver the increasingly personalized and complex demands of their customers. Although many challenges can hold companies back from a digital transformation of their CX, some of the most common issues include data silos, legacy IT systems and a lack of talent focused on customer acquisition and retention in a digital landscape.

“Manufacturers are realizing that their current operating models need to evolve, and with growing competition and the commoditization of products, having a differentiated digital customer experience is a key component to staying competitive and driving revenue,” said Simon Floyd, director of manufacturing and transportation industries at Google Cloud. “Successful manufacturers are breaking down the silos within their workforces and data systems to unlock new ways to attract, engage and satisfy today’s buyers who want smart recommendations and solutions so they can reduce the time spent researching, selecting and ordering.”

Realistically, siloed and legacy systems cannot be used to keep up with the digital economy. In the past, companies could rely on manual systems for CX but now artificial intelligence (AI)-based strategies will be necessary for intuitive, personalized CX over the next decade. Companies that experienced the greatest return on investment for their CX are no longer relying on legacy, manual systems but instead using AI-based tools on cloud platforms to support an optimized CX.  

Interestingly, the survey found that a company’s cloud adoption journey was closely linked to its CX maturity. Cloud computing improves collaboration in an increasingly hybrid workforce and facilities the ongoing evolution of IT and digital transformation. By transitioning to the cloud, manufacturers can continue to take advantage of the Internet of Things (IoT) and AI-based tools for everything from manufacturing to data collection and supply chain management. Compared to legacy systems, the amount of data that can be collected, managed and mined in the cloud is unparalleled. To truly take advantage of big data, cloud computing is necessary, whether solutions are pre-configured or proprietary.

In the survey, 50 percent of respondents with mature cloud computing were highly effective at applying data-driven insights to operations and CX compared to only 11 percent of new cloud users.

The survey found that companies with the most mature customer experience are also the furthest along in their cloud adoption journey. (Image courtesy of IDC.)

The survey found that companies with the most mature customer experience are also the furthest along in their cloud adoption journey. (Image courtesy of IDC.)

“The [IDC study] reinforces what we’ve seen for the past three years, which is that customer experience and cloud maturity are strongly correlated,” Floyd said. “As manufacturers become more market-driven and better prepared to pivot, a connected data cloud platform that unlocks real-time intelligence enables workplace collaboration and creates an immersive, AI-driven personalized customer experience will become essential to long-term success.”

For companies that weren’t already investing in next-generation products to evolve the digital CX, the survey found that nearly 55 percent of companies plan to invest in cloud-enabled technology in the near future.

Cloud Is Just the Beginning

In general, the survey identified three straightforward areas for investment by manufacturing companies to meet the modern needs of customers: collecting and curating data, mining this data for customer/sales insights, and then using those insights to improve the overall CX.

Using big data will be crucial for future CX, but most companies are already struggling to make the most of their data. The next focus must be on generating intelligent insights and mining useful information from collected data. This will most likely come in the form of AI-driven tools. In the survey, companies that used AI were a clear divider between mature and less mature CX.

One application of big data can be to improve personalization. The survey found that companies with the most mature CX also introduced the most opportunities for customers to personalize their experience. Product searchability is one of the most important parts of CX, and being able to find a product, use personalized search options and realistically envision a product in an e-commerce environment are all essential for future CX. Personalization can also go beyond customer profiles and custom search tools to allow for improved personalization of the actual product or use of the product. That can include integration with AI-based tools or smart home capabilities to enhance the utility and customization of each product, another factor used primarily by companies with the most mature CX. Personalization is also a key indicator for customer retention and product renewal.

What will make the largest difference will be connecting the digital and physical worlds. In the survey, the most mature CX manufacturers used augmented reality (AR) and AI-enabled marketing and chat/messaging capabilities. In the future, manufacturers will need to use big data, AI-driven insights and personalization opportunities to make a CX that truly differentiates them from their competitors. A digital journey can only be genuinely transformative once it impacts every stage of manufacturing, from production to supply chain management to marketing and CX.