Insight

Experience Management Update

Read more about M&A trends and activity in this sector

Roderick Moon

Roderick Moon

Managing Director, KPMG Corporate Finance LLC, KPMG US

+1 212-954-5834

AI Is Progressing At Bullet Train Speeds

No Industry Is Safe From The AI Revolution

  • Artificial intelligence (AI) has reached an inflection point in development allowing the technology to permeate all walks of life and every industry, driving innovation disrupting previously unassailable firms and competitive moats in the process. Analogous to how a confluence of the computer revolution, microprocessors and the internet gave way to Marc Andreesen’s “software is eating the world” declaration in in 2011, mobile smartphones, global internet, and neural networks have laid the groundwork for AI to revolutionize the global economy across multiple industries for the next decade.1
  • Cognizant of this trend, technology’s titans including Google, Meta, Apple, and Tesla have been racing to build advanced AI models. In 2020, Google’s DeepMind AI team broke biology’s legendary protein folding problem. In July 2022 the DeepMind team followed this breakthrough up by announcing they had predicted the structure of nearly all known proteins to science. One standalone firm in the AI heavyweight mix is OpenAI, which raised over $1 billion from Microsoft in 2019. Below is a transcript of one conversation with OpenAI’s text-davinci-003 model and paintings created by OpenAI’s DALLŸE model. One can see why Microsoft is reported to be in advanced talks to double down on their OpenAI investment in the coming months.
  • Advanced models such as GPT-3 have now crossed a threshold where chief marketing and revenue officers at leading companies would be wise to map out a strategic plan for 2023 that infuses their growth marketing and customer experience interactions with AI.

OpenAI’s GPT-3 Model Responses To Questions (In Green Highlights)

  

OpenAI’s DALL E Responses To Prompts

  

XM2 Represents A New World Order In Your Revenue Growth Strategy

CMOs and CROs Will Need To Work Together To Implement A Comprehensive XM2 Strategy

Customer Experience (CX)

  • Messaging replacing the need for most surveys and reviews use cases
  • CX TAM is $60 billion1
   

  

Social Experience (SX)

  • Passive data gathering and social listening will be disrupted by active conversations with prospective, existing, and former customers
  • SX TAM is $50 billion+4

  
   

Messaging Experience (MX)

  • Total Addressable Market in 2022 is $60 billion5
 
 

 

  

 

Experience Management^2 XM^2

 

  

   
  • The next level of XM will incorporate MX across the key XM categories and grow to look more like a trusted AI advisor, than a disparate data gathering, crunching andeporting system
   

Digital Experience(DX)

  • Messaging augmenting and eventually become the best-in class version of website and online search
  • DX TAM is $25 billion3

  

Employee Experience(EX)

  • Always on messaging capabilities to neutral AI have the potential to collect dramatically more and in real-time feedback from employees
  • EX TAM is $10 billion2
  

Experience Management^2 XM^2  

Customer Experience (CX)

  • Messaging replacing the need for most surveys and reviews use cases
  • CX TAM is $60 billion1

Social Experience (SX)

  • Passive data gathering and social listening will be disrupted by active conversations with prospective, existing, and former customers
  • SX TAM is $50 billion+4

Messaging Experience (MX)

  • Total Addressable Market in 2022 is $60 billion5
   
  • The next level of XM will incorporate MX across the key XM categories and grow to look more like a trusted AI advisor, than a disparate data gathering, crunching andeporting system

Digital Experience(DX)

  • Messaging augmenting and eventually become the best-in class version of website and online search
  • DX TAM is $25 billion3

Employee Experience (EX)

  • Always on messaging capabilities to neutral AI have the potential to collect dramatically more and in real-time feedback from employees
  • EX TAM is $10 billion2
  • Customer Experience (CX) has moved to a top-of-mind priority for the C-suite. Chief Marketing Officers (CMO) now rank investing in improving their digital customer experience as their top priority according to a recent CMO survey. More specifically, CMOs rank AI, chatbots, and machine learning as their top three investment priorities for the next twelve months as well. On one side, CMOs want to understand the voice of the customer, which historically has been accomplished by physically mailing a carefully constructed set of people multi-page surveys. Leading CX firms have since evolved from sending hard copies of surveys to the digital friendly email or even text invites to complete a multi-question survey.
  • CMOs, though, have grown wise to the fact that surveys, whether long or short or physical or digital, are at their core, unnatural forms of communicating with customers. One live interaction with a real customer adds depth and clarity into a customer's key pain points and value drivers. One on one customer feedback post-transaction conversations, in person, between two real people though, is not feasible for any firm that wishes to compete in the global economy in the 21st century. What if there was a way to provide the responsiveness, color, and natural flow of a conversation, with the breadth of distribution of survey?
  • Forward thinking CMOs are now focused on leveraging chatbot tools, driven by AI, to handle the initial onboarding of both existing customers and prospects, and then layering in real- time human interaction as needed. Layering in AI, chatbots, to create a unified omnichannel messaging experience empowers CMOs to take the temperature of a customer base by engaging in a non-stop conversational relationship, twenty-four hours a day continuously. This will be a vast improvement over sending quarterly or annual surveys. Implementing an always on, constant inbound prospecting and customer care program requires a significant commitment from the CMO and their partners across the C-suite.
  • CMOs who recognize that their previously disparate focus areas customer experience, digital experience (search, brand, product), and social experience are all converging into each other to form a unifying experience management (XM), will be ahead of the curve and more prepared to navigate a potential inflationary environment with a nontrivial risk of a global recession in 2023. A new experience category, Messaging Experience, creeping up on the XM space and CMOs and their Chief Revenue Officer Partners (CROs) with ambitious annual growth goals. With exponential progress in machine learning and chat driving increasingly real conversations, messaging directly to customers will disrupt a range of previously mission critical XM activities including surveys, reviews, phone centers as well as sales activities including website search and navigation, responses and information related to queries, explaining product and service details, and ultimately advising on the optimal purchase for their needs.
  • The key winners in the next few years are CMOs who partner with CROs and implement a comprehensive Experience Management (XM) strategy that is underpinned by Messaging Experience (MX). XM x MX = XM2.

     

     

     

     

 

New Sales $s

(CRO + CMO)

 

     

     


XM2

 

     

 

Positive Word of Mouth

(CMO + CXO)

  

     

     

 

Net Existing Customer $s

(CMO + CXO)

  

     

   

Customer Experience (CX)

  • Messaging replacing the need for most surveys and reviews use cases
  • CX TAM is $60 billion1

Social Experience (SX)

  • Passive data gathering and social listening will be disrupted by active conversations with prospective, existing, and former customers
  • SX TAM is $50 billion+4

Messaging Experience (MX)

  • Total Addressable Market in 2022 is $60 billion5


Experience Management^2 XM^2
 

  • The next level of XM will incorporate MX across the key XM categories and grow to look more like a trusted AI advisor, than a disparate data gathering, crunching andeporting system

Digital Experience(DX)

  • Messaging augmenting and eventually become the best-in class version of website and online search
  • DX TAM is $25 billion3

Employee Experience (EX)

  • Always on messaging capabilities to neutral AI have the potential to collect dramatically more and in real-time feedback from employees
  • EX TAM is $10 billion2
   
   

Footnotes

Sources: CapitalIQ, Company filings, Pitchbook

Notes:

  1. CX TAM is from Qualtrics’ Q3 2022 investor presentation
  2. EX TAM is from Technavio and Momentive’s August 2022 investor day presentation
  3. DX TAM is from Grandview Research and Yext’s March 2021 investor day presentation
  4. SX TAM is from Sprout Social’s Q4 2020 investor presentation
  5. MX TAM is from LivePerson’s Q3 2022 investor
  6. TAM stand for Total Addressable Market


We hope you find this information valuable, and as always, feel free to reach out if you would like to discuss in further detail. To read the full report, download the PDF below. Footnotes and sources are noted in the deck.


We hope you find this information valuable, and as always, feel free to reach out if you would like to discuss in further detail. To read the full report, download the PDF below.

Technology

A consistent technology stack coordinates data collection, integration and management, enables teams to perform high quality real-time customer analytics, and effectively collaborate and consume those insights through integration with business processes

Storage & Integration | Collaboration & Consumption

    

Organization

A globally aligned operating model coordinates activity to avoid duplication, share learnings, insights and models, and build digital literacy across the regions.                                                                             

Structure & Roles | Expertise & Fluency

    

    

 

Experience Management^2 XM^2

 

Strategy

The organization shares a vision for advanced analytics, drives a data-driven culture, and prioritizes the work to remain laser focused on the customer, while also executing consistently and at high quality across all regions.

Vision & Culture | Execution & Alignment

   

Data

Internal and external data required to understand customer needs and issues are collected, made accessible to the right teams, and are maintained at high quality.

Policies & Access | Management & Quality

    

Insights

Models and analytics are monitored to ensure value delivery, effective business process implementation, and appropriate governance, risk and controls.

Scalability & Controls | Value & Usability

We hope you find this information valuable, and as always, feel free to reach out if you would like to discuss in further detail. To read the full report, download the PDF below. Footnotes and sources are noted in the deck.


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