Part 1: South African Customer Experience Report - The giant disconnect

Source: © 123rf 123rf Part 1 of the South African Customer Experience Report discusses the giant disconnect between businesses and consumers

Authored by Rogerwilco’s CEO Charlie Stewart, ovatoyou’s Amanda Reekie and CX Consultant, Julia Ahlfeldt, the report says that while 71% of consumers want a reliable service and or product offering that they can depend on and will buy from again and again, followed by the best price (63%), the same percentage of businesses (71%) believe that repeat purchases are due to customers trusting them - versus 54% of consumers who concur.

By all accounts this change in consumer behaviour is driven by the fact that we are living through the world’s worst cost-of-living-crisis in decades, with myriad countries, including South Africa, experiencing the brunt of it thanks to stubbornly high interest rates due to persistently steep inflation which causes our money to have less mileage than it used to.

The current scenario

One could be forgiven for believing that price is driving demand in the current cost-of-living crisis.

But this is not incorrect: 63% of consumers say it’s why they will buy from a brand again.

But what is clear from the research is that consumers want to be wooed by their favourite brands and made to feel special too, so much so that they are often willing to pay more.

Brands have upped their Customer Experience (CX) game, improving everything from their check-out mechanics, UX, delivery fees and overall customer engagement whether for pain points or purchasing pleasure.

This has resulted in the current scenario where businesses focus on smoothing things out functionally (to emulate the winning brands) instead of weaving in their own differentiated experience.

This has led to an unfortunate ‘same-same’ situation where few brands stand out and brands serve up pretty much the same CX across the board.

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The opportunity

This has created a R12,148bn opportunity cost for brands.

Beyond implementing the CX essentials which add up to reliable service - which most brands now all do - there is a significant opportunity for businesses to deliver a differentiated brand experience and garner brand love among consumers to imbue faithfulness and loyalty in repeat purchasing.

Right now every rand and cent counts.

But if all experiences are ‘same-same’, the next thing that a consumer will look at is price, leaving brands in a race to the bottom.

Businesses can turn this on its head and look at each point in their customer journey for an opportunity to delight and connect with customers by offering that little bit extra.

Those that do, will win, converting the R12-bn+- lost opportunity cost into a win.

Key Insights

Other key insights, besides this clear disconnect between what consumers say encourages repeat purchases and what businesses believe drives this behaviour, include:

• ‘Loyalty’ and rewards programmes are not a primary driver of repeat purchase behaviour.

• Consumers are willing to pay more for some experiences, but not all. Businesses overestimate consumers’ willingness to pay a premium for experiences, especially among banking, insurance and government services. However, consumers are certainly looking for moments of delight.

• Should businesses and consumers close the opportunity cost gap, online will likely grow even bigger in South Africa. Then brands can delight their customers by offering something unique and different to their peers.

• Teams should not lose sight of experience differentiation as they work to ‘clean up’ and modernise customer journeys. There is a great opportunity to earn customer loyalty for those brands that can stand out.

• When designing or redesigning customer experiences, there is much to be gained from interrogating customer needs and carefully weighing the cost of change vs. customer delight. Often efficiency and experience improvement are the same, but not always.

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The 12.148bn opportunity calculation*

The 12.148bn opportunity cost is calculated in the following way.

There were 32.55 million online shoppers in 2023 with an additional 6.38 million who will shop online for the first time this year, giving a total South African e-commerce audience of 38.93 million (source: ecommerce.co.za).

If the R71bn reported e-commerce spend in 2023 (source: WorldWideWorx) is divided by the number of shoppers in 2024, it implies the average annual spend per capita is R1,824.

The WorldWideWorx report indicates e-commerce spend is growing by 29% per annum.

The 2024 South African CX Report found that 59% of respondents will shop with the same or greater frequency this year as they did in 2023.

Extrapolating the 59% figure onto the projected total audience size of e-commerce shoppers provides a figure of 22.97m individuals who will shop with the same or greater frequency if organisations address shortcomings.

Taking the 29% annual growth in e-commerce and multiplying the 2023 per capita spend of R1,824 by that gives a 2024 per capita spend of R2,353 - an increase of R529 on last year.

Multiplying that by the 22.97 million shoppers arrives at a R12.148 billion opportunity cost.

Should businesses and consumers close the opportunity cost gap, it is highly likely that online will grow even bigger in South Africa, and that brands that can, will delight their customers by offering something completely unique and different to their peers.

Look out for Part 2 that addresses the growing digitisation of society and this is impacting CX.