More than half of Australian businesses (55 per cent) believe they are advanced in customer experience (CX), but they are failing to deliver to consumers, creating an ‘expectation gap’, according to a new report by Starcom.

The Starcom Media Futures 2017 report found that 2.5 times more businesses now have specialist CX departments than 12 months ago, as marketers look to improve the customer experience. However, marketers rate themselves 61 per cent higher than consumers do on meeting their expectations and 40 per cent higher on engaging consumers on their terms.

In addition, the report found that overall advertising budgets were predicted to rise by 1.8 per cent this year in paid media, compared to 2.8 per cent in 2016, and by 9.8 per cent for owned and earned media, compared to 9.3 per cent in 2016.

The greatest growth will occur in social media, (up 11.5 per cent), mobile (up 10.9 per cent) and online video and paid search (both up 6.1 per cent). Declines in spending will occur in magazines (down 6.6 per cent), newspapers (down 5.5 per cent) and cinema (down 3.6 per cent).

Starcom Media Futures is the only report of its kind to survey national advertisers, key media executives and consumers Australia-wide. Considered to be Australia’s most authoritative predictor of advertising budget changes, the annual report was launched in 1985. For the first time in 2016, and again in 2017, the report focused on CX.

The greatest expectation gap for consumers, where companies rate themselves more highly than consumers do, occurs in the alcoholic beverages (63 per cent), airlines (61 per cent), banking (52 per cent) and beauty (48 per cent) categories. Those categories where the gap is less include supermarkets (24 per cent), fast moving consumer goods (16 per cent) and consumer electronics (6 per cent).

Almost three quarters (74 per cent) of consumers say that companies do not factor in their desires. For example, seven in 10 retailers (69 per cent) say they provide a personalised experience, however only 26 per cent of consumers agree.

“Our Media Futures report has identified that the ‘expectation gap’ between Australian businesses and consumers is real, despite the huge investment companies have made in CX.  The report found that the corresponding rapid growth in the collection of data by companies has resulted in consumer expectations set higher and companies failing to deliver,” Starcom Australia CEO Toby Barbour said.

“Companies are using CX to focus more on the business transaction than consumer experience. Now is the time to pivot and design the human experience. We need to improve our use of data to unlock real human motivations.”

The report also found that it is not just customer expectations that are changing.

“Business priorities are changing, the business cycle and consumer journey have changed. Media are investing more than $250 million to create change.” Barbour said.

“In this environment, incremental change in spend should not be an option. Planning by channel and transaction doesn’t deliver human value and as a result we need to move from customer experience to human experience. Businesses need to rethink the role of channel planning to achieve the desired outcome of sustained business growth and customer loyalty.”

The full report is available here.

* Methodology: A representative sample of Australia’s top 500 national advertisers, plus every major media sales executive in the country, and 300 consumers participated in the Media Futures study. Interviews were conducted using telephone and online methodologies, with the fieldwork and data provided by McNair Ingenuity Research. Fieldwork was conducted in December 2016 and January 2017. All results are compiled on the basis of one value for each interview, with no weighting according to either the size of the advertisers’ budgets or media billings.