The annual State of Customer Engagement Report reveals the growing importance of brands disclosing how they use customer data to deliver AI-powered experiences. It also issues a clear warning about the risks of underestimating consumers’ demand for transparency: While 91% of brands say they’re transparent with customers about how AI uses their data, only 48% of customers agree.
The report noted that in Hong Kong consumers are more loyal to the brands they do business with, with 24% claiming they are “extremely loyal”, only behind India from a global perspective. They are also more likely to increase their spending if AI improves customer engagement, with 87% of respondents saying they would spend slightly to significantly more under this assumption.
The report also reveals that only 64% of brands in Hong Kong have used AI for personalized content and marketing, slightly lower than the global average of 70%.
Kathryn Murphy, SVP Product at Twilio, says customers today expect personalized experiences and want to understand how businesses use their data to shape those experiences. She opines that brands must be clear about how they use AI, ensuring that they balance how they deploy it with equally robust measures to protect customer privacy. “Transparency is not optional,” she posits, “It's a critical component of building and maintaining customer trust and loyalty.”
Protecting customer data is not an option
Protecting consumer data is the most effective way to maintain trust as Hong Kong topped the list
As businesses embrace AI to drive personalized customer engagement, they gather every customer's click, share, follow, like, and purchase to understand their preferences and needs.
More than ever, businesses must keep their customers’ data safe to maintain their trust. This year’s report found that six in 10 consumers say protecting their data is the top way for brands to earn their trust.
About 49% say they would trust a brand more if it disclosed how customer data is used in AI-powered interactions. When it comes to the use of customer data in AI, organizations in Hong Kong are expected to comply with the Personal Data Privacy Ordinance (PDPO) and ensure that they are transparent about how they use customer data for AI applications.
This report echoes this trend as it shows that Hong Kong is the only market among the 18 surveyed countries where brands are meeting consumer transparency around AI and that 75% of them will use AI to ensure customer data security, privacy and compliance, as compared to the global average of 68%.
Consumers aren’t the only ones worried about data privacy. Forty per cent of businesses surveyed report that finding a balance between security and customer experience is one of their most pressing challenges this year.
One particular area of focus for brands is reducing friction during the account signup process while keeping customer data safe. In 2024, 40% of brands say they’re prioritizing simplifying the signup and login process to improve customer engagement.
AI bridges the disconnect between brands and customers, but activating data remains a challenge
The report uncovered a wide customer experience gap: considering all markets, 84% of businesses say they provide ‘good’ or ‘excellent’ customer engagement, yet only 54% of consumers agree.
The report found AI is helping businesses close this gap and improve their customer engagement. For example, seven in 10 companies already leverage AI to personalize content and marketing, which as mentioned, brands in Hong Kong slightly fall behind at 64%.
As a result, these forward-thinking brands are realising several benefits including higher customer satisfaction scores (45% of companies), better data-driven decision-making (41%) and improved market segmentation and targeting (41%).
Although more businesses are embracing AI, the majority struggle to activate customer data. Only 16% of brands strongly agree that they have the data they need to understand their customers, and just 19% of businesses strongly agree they have a comprehensive profile of their customers.
Additionally, it is found that brands in Hong Kong (78%) rely most heavily on third-party data in the absence of their own first-party data compared to other regions. Potentially, this could hamper the brand’s competitiveness in the market and emphasize the need for brands to speed up their transformation to collect first-party data from applications that they directly own, as we move into a cookieless era.
