The future of the customer experience will be an expression of our deepest instinctive human behaviors—at warp speed and exponential scale—egged on by advances in technology.

The first signal of this shift in the customer experience is in convenience. Humans have continually sought convenience, not only for its own sake but also as a proxy for our inherent desire to create more meaning in our lives. Eliminating tiresome errands gives us more time to do things we consider meaningful, such as being with our families.

Technology has always powered our quest for convenience. But things are different now because people are no longer companies’ only customers. Artificial intelligence (AI) and the technologies that support it, such as Big Data, cloud, Internet of Things (IoT) sensors, and machine learning, are becoming researchers, collaborators, augmented assistants, and even proxies for humans in the customer experience.

These technologies are already causing a huge disruption in the customer experience as humans shift the purchase of mundane items to the background to be managed by machine learning algorithms.

Any customer experience that does not carry meaning or emotional value risks being relegated to the background to be handled by AIs. Driven only by their interpretation of their human proxies’ best interest, these AIs will test companies’ ability to emotionally connect with customers.

Beyond the search for meaning, other human instincts, such as creativity, cooperation, and curiosity are finding freer expression through technology.1

How will companies survive in a world where customers precisely specify the terms of the relationship—and then completely delegate it to AI? Where they value morality and meaning more than brand names and product features? Where customers multiply their market power through digital tribes or other connected groups?

As part of a broader series examining life and business in the 21st century, SAP Insights research center worked with more than a dozen industry experts to answer these and other questions, uncovering five trends that will determine the digital customer experience over the next decade:

  • Make Way for Meaning
  • Embracing AI Intermediaries
  • Customers Become Contributors
  • From Markets to Mobs
  • Values Define Value

In this report, we examine each of these trends and offer recommendations for how companies should respond now.

Make Way for Meaning

Increasingly, customers are choosing experiences that have meaning and delegating the rest to AI.

Businesses must shift their emphasis from the routine to the sublime.

Call it the revolution of meaning. Almost everything—from Facebook to yoga classes to self-help books—is training an exploding global middle class, with 160 million new members each year,2 to seek more meaning from their daily lives, something that humans yearn for instinctively.3

Companies must still fulfill the old customer expectations—quality products and services delivered with efficiency and good customer service—but they must now also focus on what customers wish their lives to be.

Any portion of the customer experience that does not deliver an emotionally fulfilling sense of value will move to the background (see “Embracing AI Intermediaries”), where set-it-and-forget-it algorithms will take over.4

Technologies such as machine learning, cloud computing, and IoT sensors are driving anything perceived as humdrum or repetitive into an automated background customer experience. But the good news is that those same technologies also open new possibilities for companies to make different parts of the experience more meaningful than it is today.

Though there are as many definitions of meaningful experiences as there are people, for companies, these experiences fit into four broad categories:

Entertainment.
In malls in California, Florida, Nevada, and the United Kingdom this year, shoppers donned virtual reality (VR) headsets and wandered through a custom-made, haptic-technology-enabled space designed to give them the sensation of being in a Star Wars movie. The experience got great reviews.5The lines separating consumer brands, retailers, and entertainment will continue to blur, as evidenced by the success of movies and YouTube features that are basically extensions of commercials or video games.6

Connection.
In small towns, people used to go to the butcher or general store not just to stock up on essentials but also to fill up on gossip about their neighbors. Big-box retailers made those connective experiences inefficient. But as machine learning and online retailing grab the reins of efficiency away, retailers could counter by creating new ways for people to connect with other people and with their communities. Using technologies such as VR, augmented reality (AR), and AI, high-end retailers could become 21st-century nightclubs, for example, while the state fair or sports arena could become a new mall.

Learning.
Businesses must take advantage of our fascination with understanding how things work to create or extend a meaningful relationship with customers. Improving customers’ mastery of a product makes it more meaningful to them. For cellphone makers now competing on the quality of their cameras, that means offering photography classes both in stores and at home through technologies like VR and AR, for example.

Aspiration.
The alignment of selling with a core human aspiration could explain why the number of mindfulness and fitness centers in malls has doubled in the last five years.7It also explains why health and fitness tracking apps have become popular, as customers seek ways to monitor progress and share their aspirations with a larger community.

What can your business do?

If meaning isn’t there, create it. 
Businesses that don’t already offer a meaningful element to the experience will be pushed to the background by customers or efficiency-seeking AIs acting on their behalf. If an element of meaning is there, businesses need to double down on increasing it to protect themselves from competitors. They can use emerging technologies to expand the boundaries of the experience or go completely beyond those boundaries to take their products or services into another space where meaningful experiences already exist.

Curate, don’t control.
In a world where customers can shout out whatever they want to a voice-activated AI assistant, owning the entire customer experience is impossible. Curation is the next best thing. It helps customers cut through the noise and shows off a business’ ability to pull the best stuff together, let’s say, as a subscription package, even if some of the curation must be done by others (such as a niche brand with highly specific expertise in a certain area).

Remove the distractions. 
Once the core meaning proposition has been identified, automate away everything that distracts customers from the most meaningful elements of the experience.

Provide a platform to create meaning. 
Companies can produce technology platforms that enable meaning for relatively little cost. In the fitness realm, for example, companies are providing platforms for developers to create apps that let users feel connected through data such as personal bests, crowdsourced routes, and “king of the hill” competitions.

Embracing AI Intermediaries

AI engines are the new intermediaries between companies and customers in the buying decision.

The complexities of modern life are driving our brains into cognitive overload. To cope, customers are pulling AI engines close, relying on their recommendations while pushing traditional brand interactions into the background.

We happily accept the shows Netflix suggests, the music Spotify plays, the cleaning regime Roomba chooses, and the results Google displays. We have become so trusting of the choices these machine learning systems make that 35% of Amazon purchases and 75% of Netflix selections are driven by machine learning recommendations, according to McKinsey.8

Why? Because customers are increasingly distinguishing between aspects of the customer experience that are routine and those that have meaning (see “Make Way for Meaning”). As AI’s accuracy and utility continue to increase, customers will offload the thinking for decisions that they deem unimportant to AI engines. Companies that fall into the “unimportant” category will be pushed farther from their customers and will be forced to engage customers through AI assistants acting as gatekeepers.

AI intermediaries are pushing businesses into the background in several ways:

More work will be done in the background.
With AI systems capable of gathering, indexing, and analyzing mountains of data, customers feel increasingly comfortable that AI bots can interpret their personal preferences and make choices on their behalf. Background research conducted by AI engines will soon expand to background shopping completed by AI assistants.

What’s love got to do with it?
Emotional marketing appeals can create loyal humans, but not loyal AI engines. As customers turn over routine buying decisions to AI assistants, businesses will need new strategies for winning over their automated audience.

Task boundaries will disappear.
Mundane chores are often grouped into discrete bundles, such as cleaning the house or paying the bills. These boundaries will disappear as AI-enabled machines take on many different chores at once. Companies that can’t adapt to AI task masters will lose customers.

How can your business adapt?

Become your industry’s AI intermediary. 
Build a specialist AI engine that brings unique knowledge to customers. Co-opt AI capabilities to make that specialized knowledge and skills available to customers directly and through generalist AI assistants.

AI-enable products. 
As customer touch points are pushed into the background, products will play a more central role as brand ambassadors. Use Big Data, IoT sensors, and machine learning to improve the experience for customers by increasing delight, reducing cognitive load, and eliminating unnecessary actions. Find ways to create a human connection to customers through products.

Optimize AI shelf placement. 
General AI-based systems will be the next digital “shelf space” for optimizing product placement. While it is very early days for AI engine optimization, expand the focus of existing search engine optimization teams to establish leadership early on. Fact-based, information-driven product and service descriptions will drive success through AI intermediaries.

Enhance human-to-human touchpoints. 
Use AI-based tools to mediate customer interactions by looking for ways to augment frontline employees with customer insights and communication suggestions. For instance, analytics and machine learning can be used to feed employees deep insights into individual customers, improving the personalization of customer interactions.

Customers Become Contributors

Businesses are creating open platforms where customers can participate in all aspects of the experience, both actively and passively.

Customers are no longer content to be merely recipients of goods and services; they have become embedded in the business model itself.

Customers’ participation can be active, in which they contribute to design, production, marketing, and ways of using products and services. Their participation can also be passive, with them agreeing to let companies use their data to formulate and deliver products and services for them.

Either way, businesses can’t survive without creating data platforms that encourage both active and passive customer participation in the development of products, services, and the overall experience. Unlike classic data repositories that serve only companies, these open platforms provide value both to customers and the business.

For example, rather than making customers wait for the next release of a food tracking or recipe app, companies have created open platforms where users can add new foods, food products, and recipes for others to search for and use. The food and recipe companies improve customer loyalty and create exponential scalability for their platform with little additional investment.

All this data gives the food companies invaluable information about how and where to expand their businesses. The platform becomes the basis of the business itself and provides abundant customer insights to apply toward future strategic direction.

Other companies, from farming equipment suppliers to jet engine makers, are also creating platforms that track customers’ usage and invite participation. As these platforms become smarter and as more features are added, participation becomes easier, creating a virtuous cycle. In return for giving businesses their creativity and expertise, customers expect to receive better products and services, naturally, but they also enjoy the status, recognition, and feelings of belonging and meaning that come with contributing to something they care about.

Here are four ways customers increasingly expect to contribute:

As users. 
The most successful companies are now making customer data part of the experience itself, giving customers direct, instant value from it. Fitness trackers, for instance, used to be the experience. Now they are input devices that feed data platforms so that customers can enjoy much richer experiences than they could from just the device, such as personal bests, crowdsourced competitions, meet-ups, and route sharing.

As creators. 
Companies are providing digital platforms to unleash customer creativity. Rather than making customers wait for the next release of their video game, for example, producers are releasing open platforms where gamers can create new levels and modules for the whole community to use. Others allow customers to suggest new product designs.

As producers. 
Customers are actively contributing to the making of products. For instance, renewable energy systems let customers who generate excess electricity sell it to the grid, while online meal providers deliver the ingredients and instructions for customers to make their meals themselves at home (Nothing delivers meaning more than a home-cooked meal with the family, right?).

As sustainers. 
Customers increasingly prefer companies that let them be active, visible participants in the “three R’s” (reduce, reuse, recycle) and recommerce programs.9 Products that can be easily repurposed, resold, or dismantled and recycled bring satisfaction to those concerned about climate change, especially as the three R’s become an increasingly moral issue for more customers (see “Values Define Value”).

What are your business’s next steps?

Create value from passive participation. 
Customers are often fine with turning over their data in return for something of value, especially if they don’t have to do anything. For example, after obtaining customer permission to access banking and credit card data, financial companies use machine learning algorithms, analytics, and massive data repositories to create useful investment reports without customers having to lift a finger.

Shift from delivering end products to delivering open platforms.
Think of customers as full partners, able to participate at any point in the value chain. Leave a portion of the product for them to tinker with, such as open online video games, or even to fulfill, such as meal services where customers make the meals themselves. Make a long-term commitment to shared ownership of the business through collaboration with customers, other businesses, and curation.

Master the quid pro quo. 
Be clear about the value customers receive for their contributions to the value chain. Creative expression, community connection, recognition, and personalized experiences, in addition to the value in the product itself, are all examples of what customers could receive.

From Markets to Mobs

Markets of individual customers, enabled by platforms and algorithms, can now instantly become an outspoken tribe for collective and cooperative action.

Technology is making it ever easier for customers to discover one another and to organize into infinite numbers of demanding, sometimes mutinous, digital tribes.

These tribes often form at a moment’s notice and grow exponentially at near-zero cost. We see it in the way individual stories go viral and in how companies can face, almost overnight, mobs that take action in ways that cannot easily be managed.

Creating and sharing social objects is at the heart of this revolution in digital tribes.10Digital tribes were initially based on shared interests and formed around online watering holes such as newsgroups and their digitally powered artifacts, posts. These days, digital social objects take all sorts of forms, such as tweets, photos, peer reviews, and status updates—just about anything that draws mass interest and participation and that can be shared easily.

For example, over 140,000 global communities have formed on Reddit, covering the serious to the utterly obscure. A 71,000-member group shares pictures of those little knobs on the bottom of animals’ paws (a.k.a., jelly bean toes).

The ease with which groups like this can form, communicate, and act means that these social tribes aren’t always just for fun. Some are formed explicitly to cause change or disrupt companies. TV watchers, for example, have successfully brought back shows from the dead, lobbied to kill off those they don’t like, and demanded that some be rewritten.

To be successful, businesses must become adept at creating social objects that matter to digital groups and, by extension, become the centerpiece of the group’s functioning. It’s a fine balance: businesses must avoid earning a group’s ire and becoming the object of their scorn.

Customers are banding together to affect companies in four ways:

Use products as social objects.
Several online gaming companies have spawned participative tribes by turning their games into social objects. Gamers can share strategies, create new versions of the games, and play them together. Music services turn favorite playlists into social objects that are easily shared with others looking for that killer party mix.

Make informed decisions. 
Today’s review sites are often used by people to praise or decry a company based on their experiences. Others use those reviews to determine which product to buy. Increasingly, AI-enabled digital tribes will form to share opinions, tips, best practices, and personal stories around shared interests.

Pool resources. 
Data platforms enable customers to group together to purchase items at a discounted price. Coupon-based platforms secure discounted prices for minimum quantities set by the supplier. Crowdfunding sites let customers draw attention to a charitable cause or provide backing to develop new products; in return for their upfront cash, funders typically receive the new product when it launches.

Trigger AI bots to work collectively. 
Tasked by customers to secure the best price, AI bots could collaborate to collectively barter and purchase goods in the future. AI bots will learn how to seek out and enlist other AI bots to help serve the best interests of all their customers.

Here’s what your company can do next:

Make social sharing natural. 
Use Big Data and IoT sensors to design social objects into your products, digital platforms, and online presences that people want to create and share. Shift from creating and controlling all relevant corporate content to cultivating your company’s tribes to share content that benefits the company as part of their social connections.

Become the center of your tribe’s orbit. 
Your product is an opportunity to be the purpose for a tribe, providing meaningful ways for people to connect. For example, many fitness device makers use apps to create tribes around the devices and to scale connection through digital platforms.

Help tribes find meaning. 
Help digital tribes understand what they want to be, champion their values, and facilitate how they get there. Several apparel companies, for example, have tapped into their tribes’ desires to make a difference in the world, where buying a product also gives to communities in need.

Values Define Value

Digital transparency is turning customer decisions that were once seen as personal or aesthetic choices into moral choices.

Customers used to make decisions based on attributes such as quality and value. Increasingly, they now make decisions based on whether businesses think and act like them.

Think of it as the rise of the moral purchase decision.

Social media and digital platforms enable companies to quickly and transparently monitor what’s important to customers. New fashion trends, for example, spread across the world in hours, not days or weeks. Social media also enables customers to easily connect with others anywhere in the world who share their beliefs and ideologies.

Technology platforms have created a global consciousness about global issues, including climate change, violence, and human rights. Meanwhile, social media and digital technology are creating ever greater transparency into companies’ operations, allowing customers to easily learn about their values. Customers then decide on brands and products that reflect their own values.

Expanding digital transparency lets customers evaluate the values of businesses across three major categories:

Aesthetic values influence the pleasure and displeasure we get from things such as music, fashion, and design. Social platforms spread people’s aesthetic choices further and faster, causing aesthetic-based trends to shift faster than ever.

Personal values determine feelings about health, lifestyle, and relationships. Customers expect businesses to tailor products to their personal values as increased customization and personalization become possible.

Moral values, such as honesty, fairness, and compassion, define what individuals believe to be right and wrong. Brand alignment with moral values is taking greater precedence in customer decisions.

Social platforms are creating a greater awareness of human challenges around the globe, such as access to food and water, climate change, and risk of violence. That awareness gives moral values increased weight in customer decisions. For instance, what was once an aesthetic choice about shoe style is increasingly a choice to stop forced labor and make a difference.

Transparency is pushing businesses to take positions. Customers are realizing that, through their spending power, they can influence businesses (see “From Markets to Mobs”) to visibly support the values they care about. Two-thirds of consumers say that they will support companies that they believe make a positive difference in society.11 And a growing number of consumers are punishing companies whose values they disagree with.12 Clearly the stakes for companies are high and growing.

To align your business with moral purchase decisions:

Understand the market’s moral values. 
Companies must integrate a deep understanding of their target market’s moral values into product design and provide ways for customers to share those values by making statements. Surface and express values in every part of the experience, from packaging or materials indicating product origin to digital scorecards capturing the company’s commitment to key causes.

Reflect moral values across the business. 
Customers know if businesses are being authentic. Tap emerging technologies to provide transparency into material sources, labor conditions, environmental impact, and good stewardship within local communities. For instance, blockchain can help ensure compliance across supplier networks.

Take a stand together. 
Stake out visible, public positions on issues that employees and customers care about. Develop programs that encourage partnership around a shared mission and use digital platforms to scale impact. For example, utility smart meters show a commitment to helping customers save energy together. “Buy one, give one” programs embed the partnership directly into the transaction.

Make your customers the heroes. 
Communicate success in a way that highlights the impact made by customers, with your business in a supporting role. Develop platforms that allow customers to see their impact directly. For example, IoT sensors can monitor product usage so that customers can share their accomplishments on social media.

1James Rowland Angell, “The Important Human Instincts,” in Psychology: An Introductory Study of the Structure and Function of Human Conscious (3rd edition, revised), (New York: Henry Holt and Co., 1906), 294–309, https://brocku.ca/MeadProject/Angell/ Angell_1906/Angell_1906_p.html.

2 Homi Kharas, The Unprecedented Expansion of the Global Middle Class: An Update (Brookings, February 2017), https://www.brookings. edu/research/the-unprecedented-expansion-of-the-global-middle- class-2/.

3Neel Burton, “Our Hierarchy of Needs,” Psychology Today, May 23, 2012 (updated September 2017), https://www.psychologytoday.com/ us/blog/hide-and-seek/201205/our-hierarchy-needs.

4Volker Hildebrand, Lori Mitchell-Keller, Christopher Koch, and Polly Traylor, “Customer Relationship Status: It’s Complicated,” Digitalist Magazine, November 18, 2015, https://www.digitalistmag.com/ executive-research/customer-relationship-status-its-complicated.

5“The VOID – Glendale Galleria,” Yelp, accessed October 2, 2018, https://www.yelp.com/biz/the-void-glendale-galleria-glendale-2.

6The LEGO Movie,” Warner Bros., accessed October 2, 2018, https:// www.warnerbros.com/lego-movie. “Assassin’s Creed,” 20th Century Fox Movies, accessed October 2, 2018, https://www.foxmovies.com/ movies/assassins-creed.

7Diana Olick, “Malls Hope to Get Back in Shape by Adding Gyms,” CNBC, February, 1, 2018, https://www.cnbc.com/2018/02/01/malls- hope-to-get-back-in-shape-by-adding-gyms.html.

8Ian MacKenzie, Chris Meyer, and Steve Noble, “How Retailers Can Keep Up with Consumers,” McKinsey & Co., October 2013, https:// www.mckinsey.com/industries/retail/our-insights/how-retailers-can- keep-up-with-consumers.

9Alissa Marchat, “Consumers Prefer Reverse Vending Machines for Bottle Recycling, Survey Finds,” The Shelby Report, April 27, 2018, http://www.theshelbyreport.com/2018/04/27/consumer-recycling- preference-survey/. Brandon Gaille, “27 Recommerce Industry Statistics and Trends,” Brandon Gaille, January 22, 2018, https:// brandongaille.com/27-recommerce-industry-statistics-and-trends/.

10“Social objects,” Wikipedia, accessed on October 2, 2018, https:// en.wikipedia.org/wiki/Social_objects.

11Raphael Bemporad, “Brand Purpose in Divided Times,” BBMG, October 5, 2017, http://bbmg.com/brand-purpose-in-divided-times/.

12 Britta Wyss Bisang, “Five Key Sustainability Trends for 2018,” Ethical Corporation, March 12, 2018, http://www.ethicalcorp.com/five-key- sustainability-trends-2018.

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