Information Asymmetry: The Unseen Barrier to Seamless CX

If I had a penny for every time I tried to buy a product online (because its ad wouldn’t go away from my feed for a month) and it was out of stock, well, let’s say I’d be counting pennies and not writing this blog. 

You may be thinking, why am I being so dramatic about buying a product online? 

Because of two things – one, the brand continued to show ads to a consumer who wasn’t its target audience, and two, when I did decide to buy the product, it was a dead end, with no stock available; thus ending my inclination to ever shop with the brand again. 

What could the brand have done better? 

To begin with, it could have targeted the right audience. 

No, wait. Let me back up a bit. To begin with, the brand should not have advertised about an unavailable product, let alone to the wrong audience. 

This is what information asymmetry does to your business — create fragmented experiences for the customers that can push them away, potentially forever. 

Understanding information asymmetry 

Before we delve deeper into its impact on businesses, let’s first understand what information asymmetry is.

Annette Franz explains it in simple terms in this clip:

In a world where data drives decisions, information asymmetry can pose significant challenges in building a customer-centric culture. When one party — usually the brand  — holds more information than the other, typically the customer, it disrupts the balance needed for trust and transparency to build healthy and long-lasting customer relationships. 

The same holds for a contact centre's internal operations too. When one application, a department or a database has access to more customer data than the agents who speak with customers regularly, it hampers the overall quality of customer service for the agents and the customers.

The impact on customer centricity  

There are two questions brands should ask themselves when trying to build a customer-centric culture:  

1. Do our agents have all the information they need to provide personalized customer service? 
2. Do our customers trust us with their data? 

The answer to both these questions must be “Yes.” The capability to deliver great customer experiences (CX) consistently depends greatly on how data-empowered your agents are and how personalized your CX is.   

Shortcomings in either of those departments can have severe adverse effects on the business. Some of those include:  

1. Loss of customer trust  

Customers are likely to distrust brands that hold undisclosed information about them. If they aren't informed about how their data is collected and used, they may feel uneasy about engaging with the brand.  

2. Lack of personalization  

Personalization is at the heart of stellar customer experiences. Without the knowledge of customer preferences and behaviours, businesses can't tailor experiences to meet individual expectations and will most certainly end up losing their competitive edge.    

3. Frustration in problem resolution  

Customer service interactions often suffer when agents don't have a comprehensive view of the customer's history and preferences. Agents are left with no choice but to gather this information from customers instead. This results in repeated information exchanges, leaving customers frustrated and undervalued.   

A real-world example  

In this clip, Annette Franz shares an example to demonstrate how information asymmetry can damage customer relationships.

5 ways of addressing information asymmetry 

Businesses must strive for transparency and collaboration to successfully build a customer-centric culture. By doing so, they can effectively overcome challenges like information asymmetry.   

Here are five ways you can address it:  

1. Transparency in data collection 

Be upfront about what data you collect and why. Inform customers how their information will be leveraged — to improve products, tailor marketing efforts or refine customer experiences. This transparency builds trust and empowers customers to make informed decisions about their data.  

2. Empower customers with data access 

Provide customers with easy access to their data. Allow them to review, update or delete their information as they see fit. This not only complies with data protection regulations but also demonstrates respect for customer autonomy.  

3. Leverage AI for enhanced personalization 

AI technologies can be pivotal in overcoming information asymmetry. Machine learning algorithms can analyze large data sets to uncover customer preferences and behaviors, enabling personalized experiences without the need for invasive data collection. 

• Predictive analytics
  Use AI to predict customer needs based on past interactions, allowing for proactive engagement and personalized offerings.
• Generative AI and natural language processing (NLP)  
  Implement NLP to understand better customer sentiment and feedback, improving communication and service delivery. Leverage GenAI to summarize the insights and support the agents with responses that are considerate and aligned with customers’ emotions.   

4. Integrate holistic customer views 

Ensure that customer service agents have access to a comprehensive view of the customer's history and interactions with the brand. This equips them to resolve issues efficiently and fosters a sense of being valued and understood.  

5. Continuous communication 

Maintain an open line of communication with customers. Regularly update them on how their feedback is being used to enhance products or services. This ongoing dialogue reinforces trust and demonstrates a commitment to putting the customer's needs first.  

Conclusion 

While information asymmetry can become a barrier to customer centricity, it also presents an opportunity for innovation and improvement. By prioritizing transparency, leveraging AI technologies and fostering open communication, businesses can close the information gap and cultivate lasting, trust-based relationships with their customers. By doing so, you can transform information asymmetry from a barrier into a bridge towards true customer centricity.  

For more insights on CX challenges and solutions from renowned experts, check out our website CX-WISE.