- Twilio's fifth annual Customer Engagement Report 2024 shows that consumers spend an average of 54% more on brands that personalize experiences, but only 16% of brands have the data needed to do this personalization
- 49% of consumers say they would trust a brand more if it disclosed how their customer data is used in AI-based interactions
Companies are succeeding in using artificial intelligence (AI) to enhance interactions with their customers, making them more personalized and intelligent. However, they also began to face challenges related to the use of technology, such as the need for greater transparency and the lack of data (especially quality) from customers. This is what the fifth, and newest, edition of the Customer Engagement Report 2024, from Twilio. The report, based on a global survey conducted across 18 countries with more than 4,750 executives from B2C companies and 6,300 consumers, explores how brands are implementing AI to build better relationships with their customers, where AI is yielding the greatest return on investment for brands and which engagement trends are most important to consumers.
The report reveals the growing importance of brands disclosing how they are using their customer data to deliver AI-powered experiences. It also issues a clear warning about the risks of underestimating consumers' demand for transparency: although 91% of brands say they are transparent with customers about how AI uses their data, only 48% of customers agree with the statement.
“Today, customers expect personalized experiences and want to understand how companies use their data to shape those experiences,” said Kathryn Murphy, senior vice president of products at Twilio. “It is imperative that brands are clear about how they use AI, ensuring they balance how they implement it with equally robust measures to protect customer privacy. Transparency is not optional – it is a critical component to building and maintaining customer trust and loyalty.”
How is Brazil?
The study reports that Brazilian companies are pioneers in the use of AI, with greater adoption of this technology than North American companies. For example, in Brazil 86% of companies are already using AI for personalized product and service recommendations, compared to just 66% of American companies. AI has also been used locally to help and answer customer queries (81%), analyze customer data to understand customer needs and pain points (76%), and perform customer segmentation and targeting (74%).
This rapid adoption of the use of AI has already shown results, as 40% of the professionals interviewed say that its use is positively impacting the company's revenue. For this year, 70% of those interviewed say they will spend more than last year on technology, 22% the same amount, and only 8% less.
From the perspective of Brazilian consumers, it is possible to note that personalization is essential for a lasting relationship with brands. 71% of Brazilian customers say they would stop using brands that were not investing in creating personalized interactions, based on their preferences, interests and expectations.
“The data in the report shows that Brazil continues to be one of the countries that has most embraced this technology, and has been looking for ways to better use it, even surpassing the North American market in some statistics. This shows how the Brazilian consumer feels about the use of AI, and how this will soon stop being a differentiator and will become a standard for our market”, says Vivian Jones, vice president LATAM at Twilio.
Protecting consumer data is the most effective way to maintain trust
As companies adopt AI to drive personalized customer engagement, they collect each customer's clicks, shares, follows, likes, and purchases to understand their preferences and needs. More than ever, companies must keep their customers' data secure to maintain their trust. This year's report found that six in 10 consumers say protecting their data is the best way for brands to earn their trust. Nearly half (49%) say they would trust a brand more if it revealed how customer data is used in AI-based interactions.
Consumers aren't the only ones concerned about data privacy. 40% of companies interviewed report that finding a balance between security and customer experience is one of this year's most pressing challenges. A specific area of focus for brands is reducing friction during the account creation process while keeping customer data secure. In 2024, 40% of brands say they are prioritizing simplifying the onboarding and login process to improve customer engagement. In 2023, we saw billions of verifications through the Twilio platform. When a company is intentional about protecting information while maintaining the right amount of friction to keep out bad actors, whether through user authentication or two-factor authentication, it promotes mutual trust.
AI bridges the disconnect between brands and customers, but data activation remains a challenge
This year's report revealed a huge gap in customer experience: 84% of companies say they provide “good” or “excellent” customer engagement, but only 54% of consumers agree that this is the case.
The report concluded that AI helps companies bridge this gap and improve customer engagement. For example, 7 in 10 companies already use AI to personalize content and marketing. As a result, these forward-thinking brands are realizing a range of benefits, including higher customer satisfaction scores (45% from companies), better data-driven decision-making (41%), and better market segmentation and targeting ( 41%).
Although more companies are adopting AI, most are struggling to activate customer data. Only 16% of brands strongly agree that they have the data needed to understand their customers, and only 19% of companies strongly agree that they have a comprehensive profile of their customers.
AI-Driven Personalization Boosts Your Bottom Line
When companies adopt AI-based personalization, consumers reward them by spending an average of 54% more with them compared to brands that don't. Additionally, 55% are willing to spend more money for a personalized experience, while 48% say they have repeated purchases from a company based on the level of personalization they received.
Consumers expect brands to deliver highly individualized experiences and have little patience for those that don't: 64% of consumers surveyed would abandon a brand if their experiences weren't personalized, while 31% say it led them to purchase from an entirely different brand .
This is especially true among younger generations: nearly 7 in 10 Gen Zers and Millennials would stop using a brand that doesn't offer personalized experiences on their preferred channels. Additionally, more than a third of them will abandon a brand that doesn't directly interact with them in real time.
The full 2024 customer engagement report is available on here.
Methodology
Twilio's SOCER 2024 is based on a survey of more than 4,750 B2C executives in key industries and a parallel survey of more than 6,300 consumers in 18 different countries. It also incorporates data from Twilio's Customer Engagement Platform.
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