A staggering 71% of businesses are grappling with the challenge of customer retention, highlighting a critical issue in this competitive market.

This struggle underscores the importance of implementing effective customer engagement strategies and personalized experiences to foster loyalty. Companies must prioritize understanding their customers' needs and preferences, leveraging data-driven insights to enhance satisfaction and build lasting relationships. In an era where consumer expectations are continually evolving, retaining customers has become more crucial—and more difficult—than ever before.

Zoho, a leading global technology company, has found that 71% of UK businesses struggle to retain customers, facing huge challenges in delivering an excellent customer experience (CX), according to its Digital Health Survey.

Around four fifths (79%) of respondents were unable to rate their CX innovation as excellent, despite 43% seeing improved customer experience as the top benefit of digital transformation. Those found to have good digital health (43%) are more likely than those with average digital health (19%) or poor digital health (11%) to rate their CX as excellent, demonstrating the positive impact of digitisation.

Despite a comprehensive market of customer-focused technology, the biggest issues cited were technology, rather than people related. Almost a quarter of respondents (23%) reported that not being able to see the entire customer journey across all touchpoints and departments is negatively impacting CX.

Almost a fifth (17%) say they do not have the right software in place to be able to deliver good CX. 12% say that not being able to collaborate easily across the business affects CX. Poor leadership (15%) and not having a strong customer support team (15%) are two other factors cited as obstacles to deliver good CX.

In today's competitive landscape CX is critical to success. This is demonstrated by 97% of UK business respondents citing that they plan to invest more in CX in the next year. Almost three in five (58%) are planning to invest more in AI (Artificial Intelligence) as part of CX investments in the next year. However, for those with good digital health, this rises dramatically to 81%. Half (50%) are also planning to invest in CX through customer support software, and almost two fifths (39%) are planning to invest in a Customer Relationship Management (CRM) system. This demonstrates the impact of digitisation on a business's ability to deliver good CX.

Sachin Agrawal, Managing Director at Zoho UK comments: "Customer experience is the lifeblood of any company today - it is no longer just a 'nice-to-have'. An excellent experience can drive improved retention, loyalty, and advocacy, which are critical. It is clear from the findings that more needs to be done to not only drive further use of technology to help, but to educate on the right strategy to make a positive impact.  We remain committed to helping our customers serve their customers better through digital transformation."

Agrawal continues, "Businesses must realise the interplay between other functions and work holistically to improve customer experience. Employee experience is a crucial factor. If employees feel valued and are given the right digital tools to enable them to perform better and meet their goals, it has a direct impact on customer experience. Leadership and culture play a vital role here too."

Employee Experience - the underplayed link?

According to the study, four fifths (80%) of UK businesses surveyed noted they had shifted to focus more on Employee Experience (EX) over the past couple of years. Respondents say this is driven by the need to increase staff retention and counter the 'Great Resignation' (45%) and to remain competitive (33%).

The study shows that 32% of UK businesses acknowledge improving EX as one of the top three benefits derived from digital transformation. This is cited more by UK businesses surveyed with good or average digital health (both 36%), than those found to have poor digital health (24%).

Technology empowerment is acknowledged by the majority of respondents, with 88% citing the importance of digital tools and technology in enhancing EX. However, when evaluating the introduction of new cloud software applications, only 21% of UK businesses surveyed cite the importance of EX as one of their top three considerations.

The results highlight a disparity in the perceived importance of digital tools and technology to EX based on an organisation's overall digital maturity. 85% of UK respondents with good digital health view such tools as very important, compared with 44% of those with average digital health and just 14% of those with poor digital health.

A major outcome of good EX is staff motivation. However, it can be difficult especially when facing so many macro-economic challenges. In order to keep staff motivated, UK respondents are prioritising the provision of the right technological tools (58%) to help them achieve their goals and improve EX. Another important factor cited to retain a motivated workforce is clear communication of business objectives (39%).

The findings are part of Zoho's Digital Health Study, which rated businesses surveyed on their practices within digital transformation. Only 19% of UK businesses responding were found to have good digital health, around half (51%) have average digital health and under a third (29%) have poor digital health.  Large UK businesses tend to perform better when it comes to digital health, with over a third (33%) rated as having good digital health. 14% of medium UK businesses receive a good digital health rating, and just 11% of small UK businesses have good digital health.