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How Gen Z will shape the future of customer experience

The future of customer experience is in the hands of Gen Z -- and new technologies, like generative AI and XaaS. These trends will affect consumer and enterprise markets alike.

Future consumers -- like Generation Z and younger millennials -- heavily influence the future of customers' experiences, as their desires and data shape how businesses will operate moving forward.

At IDC Directions 2023, analysts explored how customer data shapes business purchasing decisions. This data has changed over the past few years due to the COVID-19 pandemic and generational shifts as Gen Z entered the workforce and consumer markets. Customer experiences are becoming digital-first, as personalization and content creation with AI heavily influence how consumers interact with businesses.

Tom Mainelli, general vice president of devices and consumer research at IDC, led the session "General Disruption: Adapting Your Future Consumer Strategy." He discussed how younger generations will affect everything from how consumers interact with businesses to new uses for technologies like AI.

"The trends that are happening here are going to maybe happen first in consumer, but they're going to be very impactful across the enterprise as well," Mainelli said during the session.

More influencers, more marketing opportunities

Many experts often refer to Gen Z and younger millennials as digital natives -- those that grew up simultaneously with many transforming consumer technologies, like cellphones and laptops. Around eight in 10 consumers post online at least once a week, according to Mainelli. As platforms like YouTube and TikTok make content creation easier, the number of content creators will only grow.

The power of popular content creators indicates that organizations of all kinds would benefit from influencer marketing strategies. This approach can help build customer trust -- which younger generations, in particular, strongly value -- without as much effort or cost as traditional strategies. Most influencers have already gained their audiences' trust, so businesses can reach new consumers and get more exposure from verified sources.

"It really has a potential to change the way marketing works, " Mainelli said. "We're already seeing these influencers change the balance of tastemaker powers. … They are reaching an audience that the legacy media is not."

A photo of Tom Mainelli presenting at IDC Directions
Tom Mainelli discussed how future consumers, like Gen Z and young millennials, will shape various industries.

The future of CX will have long-lasting relationships

Anything as a service (XaaS) has taken over enterprise technology throughout the past decade. While the consumer market heavily affects business markets, XaaS is one area where enterprises can influence consumers.

XaaS can also transform CX and how organizations build relationships with their customer bases. Instead of customer acquisitions, an as-a-service model focuses on customer retention. For example, a consumer could pay for a product over a few years rather than face a high upfront cost. The customer then interacts with the organization over time, which can create a stronger relationship, Mainelli said.

The XaaS approach also benefits organizations, as they can get better information on the customer lifecycle -- like how often customers refresh their devices or come across pain points -- and spend more time gathering customer data to enable better personalization.

"It creates a one-to-one relationship with vendors in a trusted environment. … The more times you can actually interact with your customer over the life of that subscription, the better," Mainelli said.

The role of AI for future consumers

AI plays a significant role in how consumers interact with content. Whether popular influencers or organizations post content, people are less likely to see it if AI-powered recommendation engines don't show it to users. TikTok is currently the most popular example of a recommendation engine. While users can follow different accounts, TikTok's For You page is based on its algorithm, which pushes content based on users' interests and interactions.

Additionally, AI in content creation has become more common, with OpenArt offering AI-generated art and ChatGPT generating written content. These tools have received criticism and pushback as much as praise, but Mainelli said vendors will create more AI tools to help users create content more easily.

AI may also play a major role in enabling more personalization, leading to hyper-personalization, in which AI can build and update customer profiles with new data. It will create new ways to collect, process and manage customer data as customers increasingly prioritize trust and privacy.

"[Personalization] changes the dynamic between the consumer and the vendor," Mainelli said. "It requires a new mentality, a move away from one-size-fits-all products. … If you're a hyper-personalized service that gets it wrong, you're probably not going to stick around."

Younger generations have enabled new opportunities for organizations to reach their target audiences, which are transforming within a digital-first world. Over time, businesses can aim to create long-lasting relationships with future consumers through their services and personalization, but they must keep up with advances in AI and XaaS models.

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