Research firm Forrester has released their 2018 Predictions report and set the marketing world aflutter with its pronouncements of digital disruption, make-or-break AI initiatives, advertising agencies under siege—and, perhaps most ominously, Chief Marketing Officers under renewed scrutiny to deliver results, or make way for someone who can. What implications does Predictions report have for loyalty marketers? Let’s go to the tape.
By Rick Ferguson
Here’s a TL;DR version of the top predictions for those of you with limited time to read the entire report (downloadable here); consider it our public service to you. All data comes directly from the Forrester report.
- CX hits a wall: Thanks to customer expectations changing faster than companies’ ablitity to adapt, 30 percent of companies “will see further declines in CX performance, and those declines will translate into a net loss of a point of growth.”
- The digital crisis: Over 60 percent of executives believe they are behind in digital transformation, and 20 percent of CEOs will fail to act. “As a result, those firms will be acquired or begin to perish.”
- The digital talent divide: Forrester believes that digital leaders have an edge in attracting and retaining talent, meaning that digital laggards will need to “pay up to 20 percent above the market rate to change the game.”
- The empowered machine: In 2018, 10 percent of consumer purchase decisions will be guided by intelligent agents powered by AI.
- The algorithm wars: The war over talent to interpret AI platform insight means that 25 percent percent of CMOs will fail to attract the proper talent.
- The intelligent agent cocoon: The drive for simplicity will lead 1 percent of consumers to filter their spending through intelligent agents, representing $24 billion in spend.
- The advertising correction: Forrester predicts that “ad spend will be flat in 2018 and cause a painful correction in the agency and adtech markets.”
- The GDPR challenge: Some 80 percent of companies will fail to comply with the European Union’s General Data Protection Regulation (GDPR); 50 percent will intentionally not comply.
- Open banking lays siege: Traditional banks will fail to respond to the disintermediation challenge of fintech upstarts—more than 50 percent, according to Forrester.
- Retail experience harmonization: Back to intelligent agents: 67 percent of retailers will be unprepared to exploit them.
- The AI reset: “75 percent of early AI projects will underwhelm due to operational oversights.”
- Blockchain inches along: While blockchain initiatives have been largely a lot of hat and no cattle, Forrester predicts that “30 percent of proofs of concept will accelerate blockchain for those companies able to consider its operational impact.”
- Security for profit: Companies will begin to find ways to link data security investments to CX, leading to “10 percent of firms translating security investments into company profits.”
If there’s a theme to the report, it’s that intelligent agents will increasingly form a barrier between brands and their customers – and that most brands have yet to come to grips with this new reality. And then there’s this money quote:
“CMOs can’t defend underperforming media spend focused on customer acquisition as churn rates escalate or stand idly by as digital platforms threaten to disintermediate their relationship with customers. Instead of plowing money into traditional ad spending, CMOs will increase spend on:
1. Revitalizing CX to drive affinity and stem churn.
2. Synchronizing loyalty programs to customer expectations.
3. Understanding how to decode digital platform algorithms.
4. Advancing martech to deliver individualized experiences at scale.”
That, friends, is as succinct a blueprint for the future of loyalty marketing as you’ll find. We support it, and it’s a theme you’ll see us explore at the 2018 Loyalty Academy Conference. Loyalty marketing never was “just about points,” even back in the days when nearly every loyalty program did nothing but give out points. Loyalty marketing has always been about leveraging the tools of reward and recognition to build profitable, sustainable, one-to-one relationships with best customers. Many loyalty programs have historically fallen short because the tools and technology platforms of the day were simply too expensive, or not up to the task, of fulfilling that vision at scale.
What the Forrester Predictions report illustrates—with, perhaps, a modicum of hyperbole—is that they days of excuse-making are over. The tools and technology platforms are now available to build and sustain customer relationships at scale. That’s the “loyalty experience,” and every brand in the world is, to a greater or lesser degree, attempting to deliver on this promise. CMOs who fail at this task may risk more than the wrath of their customers—they may also risk the wrath of shareholders. We’ll be excited to see how marketers respond to this challenge.
Rick Ferguson is Editor in Chief of the Wise Marketer Group and is a Certified Loyalty Marketing Professional (CLMP).