Keeping customers happy is becoming ever more critical to organisations’ survival. Cameron Beveridge, Regional Director of SAP Southern Africa, highlights how customer service can be turned into a major asset.
Let’s start with a provocative thought: the new battle lines between successful and failing businesses are defined by customer experience. A Walker study predicts that customer experience will overtake price and product as the key brand differentiator by 2020. I’d argue that that future has already arrived.
Gartner expects more than 50% of organisations to redirect their investment toward customer experience (CX) innovations in 2019. As many as 89% of organisations already compete primarily on the basis of customer experience – up from a mere 36% in 2010.
Most think they’re doing a great job. Organisations are self-rating their customer experience efforts highly: a Bain study found that 80% of companies believe they deliver super experiences. Only 8% of customers agree.
This disconnect between expectation and experience is driving a divide between organisations on the path to success and those on the road to obsolescence. A battle is playing out between those that can capture data and produce insights leading to improvements in customer experience (organisations with so-called intelligent enterprise capabilities) and those that still rely on outdated best-guess approaches to deliver great experiences.
On-demand services are reshaping customer expectations
The technology companies that power much of the world’s innovations are themselves under immense pressure from the on-demand economy, typified by the cloud services providers and pushed into mainstream consciousness by the likes of Netflix and Uber. Traditional vendors would develop software solutions, sell them to customers, implement the solution directly or via partners, and then maintain those environments. This was an often costly and time-consuming process that left organisations without the ability to make massive changes or to innovate with agility in those environments. Inevitably, further investment would be required to maintain the organisation’s competitiveness.
This dynamic completely changes in a cloud-first world. Cloud providers run core parts of their customers’ business environments on their behalf. Because the vendors manage important aspects of an organisation’s business, they become intrinsic parts of it.
The way cloud services are provisioned has elevated business expectations as to how those services are consumed and charged for. Companies want to consume services and apps only at the rate at which they need them. Services become cyclical in nature, following an organisation’s natural ebb and flow, to deliver direct quantitative value.
Time-to-value in a cloud environment is also quicker. Once an organisation has identified an opportunity, the cloud provider can provide assets – a platform, specific services and apps, or capacity – to deliver that value. A flexible pay-for-what-you-use costing model further removes risk from the process, which is important in a fast-changing environment where market opportunities can shift quickly.
In the long term, we may see cloud providers adopting a pay-for-outcome model that places tangible business outcomes at the centre of its customer offerings, although they’ll have to overcome several obstacles to achieve this.
In the immediate term, the opportunity sits with proactively identifying value opportunities in collaboration with customers and building offerings that take advantage of those opportunities.
This is where the customer experience becomes paramount. A technology provider’s ability to closely collaborate with customers, jointly identify value opportunities and co-create solutions that capitalise on those opportunities, rests on the quality of the experience it can offer its customers. And this depends heavily on its ability to drive a customer-first culture within its organisation.
The new business battlefield
Today, end-customers are only loyal to a perfect total experience. Until recently, it was nearly impossible to prove the business impact of customer experience through quantifiable data. Part of the issue was confusion around measures, metrics and value – all of which contribute to the success of customer experience initiatives.
MEASURES include anything you can count; for example, the number of feet through the door or the amount of time a customer spends with the call centre to resolve an issue.
VALUE points to the financial levers that are influenced by customer experience; for example, profit-per-customer or total revenue.
METRICS are outcomes of something that has happened; for example, customer satisfaction scores following the implementation of a new initiative.
The underlying technologies that enable positive, seamless customer experiences were introduced to companies through an at-times painful process of digital transformation. A wave of digital transformation that has swept across industries globally over the past decade left in its wake a new generation of modern, nimble, effective and customer-centric organisations. If you think of digital transformation as only a buzzword, consider this: cumulative spending on digital transformation will reach US$2.1-trillion this year, according to an Industrial Development Corporation study.
Today, digitally transformed organisations are extending their evolution to becoming intelligent enterprises. Intelligent enterprises operate with visibility, focus and agility to deliver best-in-class customer experiences.
Using technology, intelligent enterprises collect and connect previously disparate data to uncover hidden patterns, direct scarce resources to areas of maximum impact, and respond quicker to changes and opportunities in their markets.
Data is the key: customers want to enjoy experiences that are tuned to their needs and expectations throughout their engagement with a brand. They want value-driven outcomes that are delivered via a harmonised experience; in other words, they want to gain something from their interactions with a brand or organisation, and they want those interactions to be consistently good. Really great brands make those interactions memorable too, prompting positive word-of-mouth.
The DNA of a customer-first culture
Organisations can no longer consider it ‘a job well done’ when a sale closes or a project is implemented. The ongoing disruption wrought by technology requires constant change and adaptation. Businesses must constantly evolve, change, improve and optimise their systems and services. A once-off implementation or acquisition is not going to deliver the competitive advantage needed to succeed. A single innovation or disruptive technology could reshape entire industries overnight.
What organisations should strive for in the age of customer experience is an unwavering commitment to customer success. By creating a unified and outcome-focused experience for customers, organisations can more easily become business or innovation partners to their customers. This shifts the dynamic away from once-off sales and lengthy deployment projects, to ongoing transformational support as the customer travels along the path of their innovation journey.
The objective here is to provide guidance and support to customers to ensure they utilise their technology tools to their full potential. Technology providers need to instil a customer-first culture throughout their organisation to provide a positive experience to customers. This, in turn, builds trust; when there is trust, the quality of collaboration improves and it becomes easier to deliver value consistently.
Customer experience is not the sole reserve of the CEO or the chief marketing officer (or even the newly created position of customer experience executive); it is the responsibility of every person within the organisation. Tools such as Qualtrics support businesses by generating quantifiable data that point to deficient experiences and highlight opportunities for deepening brand affection and loyalty among customers that enjoy positive experiences. With the support of a team working in a customer-first culture, this can turn customers into fanatics, products into obsessions and employees into ambassadors.
Bringing Intelligence to Experience
In the Experience Economy, having intelligent enterprise capabilities provides organisations with the best tools and platforms from which to consistently deliver excellent experiences to customers. But there’s a catch: how do you measure customer experience success? How do you quantify the business outcomes of delivering consistent experiences to customers? And how do you make sure your investments into digital transformation and customer experience reap the rewards you want? Do you even know what rewards you’re after?
One aspect that adds complexity to measuring CX success is how we define value. Aspects such as customer experience have become critical to businesses’ success. But quantifying the value of a CX-inspired digital transformation project is tricky. Our assumptions about why we conduct digital transformation projects aimed at improving the customer experience is part of the problem of how we measure the value of those projects. We boldly claim that digital transformation is what customers want. We assume it will deliver better experiences or replace existing experiences. We make the dangerous assumption that digital transformation will increase the amount of value the organisation can deliver to its end-customers.
These assumptions are broadly driven by our view of value as something that is measured in cost. But cost is one-dimensional; value in the modern sense of the word is multi-dimensional and focuses more on qualitative aspects such as customer affinity.
“Customer experience will overtake price and product as the key brand differentiator by 2020”
Key performance indicators such as “improve customer subscription renewals by X%” or “reduce inventory costs by X%” remain prevalent. But they don’t always speak to the deeper challenges faced by CEOs and the organisations they lead. They take a static view of value: the outcome of their projects becomes a destination – better experiences, happier customers, more revenue – where value is delivered as a windfall.
Very few – if any – organisations will find success in this model. In fact, McKinsey estimates that 70% of large-scale change programmes never reach their stated goals. The pace of disruption and the need to innovate have placed immense pressure on organisations to transform and build intelligent enterprise capabilities. The risks a business faces at the onset of a project may be completely different by the time the project concludes. How then do you illustrate value?
The first step is to change your own thinking about value and move away from business value (an internal measurement that focuses on what the organisation gains from a CX or digital transformation project) to customer value, which forces you to think along customer-centric lines. This gives you a better chance to affect deep change within the organisation and continuously deliver value throughout each iterative step of the project. Instead of creating outcomes that meet only internal expectations, you create products and services that your customers want to use. It’s a win-win no-brainer.
The second step is to move away from cost measurement to value measurement. In other words, stop thinking about rands and cents and instead try to measure the success of a project or initiative by gauging its benefit to your customers. Admittedly this is difficult. Assessing costs is easy, as organisations’ accounting practices are set up to track costs. A value-driven measurement forces organisations to become adept at finding value metrics for smaller iterations of work. How, you ask? With data.
Many organisations can’t even tell if they are delivering value because there’s no benchmark from which to work. And data sets the benchmark. If an organisation can articulate its current-state metrics and then match each iterative step of the customer experience project to an improvement in those metrics, it’s far easier to illustrate value.
When the organisation then collaborates with a global partner that specialises in measuring and analysing customer experience data, also gains visibility over trends among similar organisations and makes appropriate adjustments along the way to ensure each iteration of the project delivers optimal value.
Why settle for less?