CX trends 2021 in the tech and software industries: Towards a new era of customer engagement?

Europe’s tech sector is now worth four times what it was five years ago as some of the leading companies make way for the next generation of ambitious tech firms. Despite the challenges of the pandemic, 2020 has proven to be a fertile ground for European tech firms: Venture capital investment in innovative new companies has hit new records while the digital transformation of larger corporations continued at pace. At the same time startup-friendly reforms by some European governments and an ongoing change in how graduates perceive entrepreneurship has put Europe in a better position than it has ever been to capitalise on digital trends.

Software is now as fundamental to automotive as it is for utilities, machinery and plant engineering – industries, where many of the global leaders are headquartered in Europe. As software is also increasingly critical to production and manufacturing, Europe could seize the opportunity to become a technology hotspot and a bigger software contender, but there are challenges.

Take customer centricity as an example: Typical software and start-up methodologies such as the minimum viable product or creating product-marketing fit are useful and theoretically convincing. Yet many technology companies have a tendency to focus ‘inside-out’ on tech innovation rather than putting the customer at the heart of everything they do. Under the pressure to continuously innovate and introduce new products, many tech companies take an approach, where future products are often developed by engineers in a vacuum, favouring tech innovation rather than taking market dynamics and current and future customer needs seriously into account.

CX is a key differentiator when it comes to competing in markets where the disruptors are starting to lose market share to a new generation of younger, more aggressive firms or facing regulatory issues. To reach their full potential, firms must now start to prepare and future-proof their CX and upgrade their customer engagement as a basis for future growth.

Technology companies have seen a great deal of change in 2020: Virtually overnight, the pandemic created significant shifts in how tech is used, how tech companies are run, and how customers interact with brands. Online-native companies have profited from the shift towards digital and driven engagement with customers in 2020 (fig). At the same time, the Zendesk CX Trends Report 2021 has confirmed a wider divide in the adoption of digital in some geographical areas: Certainly, this needs to be seen in a more differentiated way, but Germany, the engine of the European economy, has been a digital laggard along many categories whereas France’s digital adoption has accelerated.

Internally, the pandemic has forced tech companies to re-evaluate how contact centers are leveraged, how employees deliver relevant customer support, and how digital channels can be used in a more personalised way to support business continuity through the crisis and beyond. This includes investing in the employee experience (EX). Happy employees are simply more productive.

Firms have recognised they need to invest: 54% of tech companies in our survey said they care more about CX this year than last. The ability to adapt quickly has long been a useful business skill, but 2020 upped the stakes: 47% of tech companies are looking to become more agile by using blended agents, workflow management tools, and AI.

Overnight, tech companies had to leap years ahead in their plans for digitisation, but in a difficult economy, not all have the budget to invest in the digital tools they need. 39% saw their budgets increase for CX in 2020, while 39% faced budget decreases. The outlook for 2021 is more positive: 58% anticipate having more budget to invest in CX technology in 2021.

Externally, customers have adopted new behaviours during 2020 that have become habit-forming and will force firms to further adjust their personalisation strategies. Advances in personalisation can revitalise the digital experience, but even this isn’t enough. Good CX now requires meeting customers where they are. Many customers also expect two-way interaction with a brand through messaging or online chat. Tech companies with the best CX track records are 1.5 times as likely to use messaging channels. And customers are on the move: 64% say they’ve tried new channels in 2020. The vast majority of tech companies are paying attention and 83% say they’re looking for new ways to engage with customers. Companies also need to consider ways how they use the mix of automation and self-service to respond to these new needs. From the survey it appears that omnichannel is the way forward for high performance.

At the same time transitioning to digital technologies has opened up brand new possibilities. Harnessing data and analytics to inform an agile and responsive approach to addressing customer needs and support is one side.But then there are also the new opportunities associated with AI which are yet to be fully discovered. AI is still an underutilised tool in many firms.

A watershed moment

These are just some of the key trends we are currently seeing in the tech and software sector, but one thing is clear: Just being digitally developed is not enough to ensure the existence of any tech company in the current environment. The pandemic will continue to drive pre-existing digital trends harder and faster than ever. Radical customer-centricity is becoming a must to adapt to the post-pandemic world. Businesses that best anticipate the impacts of new patterns of consumer behaviour will reap the benefits. The question is will European companies learn from the crisis and be ready to meet this challenge?