September 16, 2021

The Acceleration of Digital Experience

As the world continues to adapt to life during COVID-19, businesses are utilizing digital platforms to develop and enhance customer relationships, ensure satisfactory user experiences and maintain relevance within ever-changing markets. With increasing dependence on digital touch points, corporations with an established but evolving digital strategy continue to grow amidst the global pandemic, while laggers are scrambling to catch up. Although the acceleration of digital innovation comes at a welcome time, many businesses are still falling short in providing premier digital customer experiences and are seeking specialized acquisitions to remedy this gap. A recent Pointillist blog discussing the impact of digitization on customer experience (“CX”) states that, despite the necessity for digitization in the CX space, companies struggle to integrate CX into business objectives, with 91% of digitization laggers agreeing.

According to a recent Pitchbook report, there were over 50 global CX services and technology M&A transactions over the last 18 months. Notable recent transactions include:

  • Bounteous, a digital customer experience agency, acquired by New Mountain Capital
  • Blue Acorn iCi, a premier user experience (“UX”) design and strategy agency, acquired by Infosys
  • Sagepath, a digital transformation and marketing firm, acquired by Reply S.p.A.

 

Given the heightened prioritization for digital transformation across industries, data-centric platforms are experiencing heightened demand. The necessity to track where, why and how customers engage with information plays a key role in this trend. Through capabilities such as multi-channel attribution and data analysis, business leaders can ensure customer behavior is at the forefront of business strategy.

With our extensive experience in the digital transformation sector, we’ve seen a dramatic increase in the past year of buyers interested in tech-enabled services companies specializing in customer and user experience research and consulting. According to a McKinsey & Company survey, shifts in consumer expectations have become commonplace, elevating the role CX/UX research plays within business. When looking at the impact of CX research, McKinsey & Company found that 93% of CX executives reported utilizing survey-based metrics to measure performance with customers, yet only 15% were satisfied by their firms’ overall measurement of CX. This presents a major area of improvement moving forward for CX firms. With the apparent opportunity to expand CX research via data science and data analytics, companies will also increase their appeal to potential acquirers.

Our team anticipates buyer interest to continue upward through the end of 2022. Among recent M&A transactions in the CX space, customer relationship building, journey mapping, data analysis and digital transformation services all remain highly sought-after capabilities. Moving forward, we expect these capabilities to be further prioritized by acquirers given the pandemic’s impact on reaching customers. We anticipate this rapid digitization to continue well into the future, facilitated by an increased prioritization of CX engagement. This digitization allows for ease of communication during global deal processes and provides a smoother transition of data, ultimately allowing tech-enabled services firms to better serve their clients.

 

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