Next up in this transformations series is the fourth enabler: next generation experiences. As we are now deep into this transformation series, some of the drivers and tactics are similar across the various enablers, so you will start to see some redundancy across posts. The issues of customer experience, customer-centricity, and customer intimacy are top-of-mind and dominate many executive discussions and conference agendas. According to Forrester, only 3% of companies manage to succeed at delivering an excellent customer experience, but 60% intend to use customer experience as a strategic differentiator. Driven by the rapid commoditization of products and services, the speed at which new market entrants emerge, and the rise of consumerization, experience is now the new battle ground – and sustainable competitive advantage is the prize. But as Forrester concludes in their book Outside-in, customer experience remains the most misunderstood element of corporate strategy today.

By raising the bar, consumerization has driven the expectation that an experience with a company is consistent with experiences in our personal lives. When I talk of experience, I mean stakeholder experience. Ultimately, it’s about creating differentiated customer experiences – but to get there, the experience we create for our employees and partners is critical to that end goal. A next generation experience is anchored in how customers think about it, not the way functional silos do. These experiences are delivered by the stakeholder ecosystem and require experience strategies to include all stakeholders whether internal or external.

Increasingly, companies will pursue differentiation through compelling consumer-like experiences, but most will struggle to deliver them due to structural issues (organization, process, policy, systems, etc.). In addition, many companies are stuck in an ERP-centric mindset where the back-office is used to create the intended experience.  Traditional ERP and CRM environments were not designed to deliver these experiences – future road maps excluded. Instead, readers of my Blog know that I believe in emerging systems of engagement that handle the needs of the experience, with systems of record participating where required. More on that in a minute, but first, here are some of the drivers behind this key enabler:

• Rapid commoditization and new consumer needs in mature markets – offerings commoditize at an accelerated pace, and consumer needs are changing. This is driving the need for new forms of differentiation in an effort to drive competitive advantage. Differentiation will come via new market offerings that address the changing needs of the consumer and create the type of experience that is anchored in the way the customer thinks about it

• The shift of power to the individual – “The customer manages the relationship now, so it’s about customer managed relationships.” That’s a quote from Ovum analyst Gary Barnett in this recent White Paper on customer experience. This connected world with its easy access to information has shifted the power to the individual and is driving many customer-centric agendas. Companies now talk of personalization and the segment of one, having learned from the many stories that describe the consequence of ignoring the individual. One of my favorites is this now famous incident where United Broke a Guitar. The YouTube video included in the article is great

• The speed at which new market entrants emerge – barriers to entry are falling. Today, start-ups can enter a market quickly, as you have ten times the number of innovators innovating at 1/10th the cost. This according to Forrester means you have 100 Times the disruptive power of the past. In addition, entrants from other Industries are disrupting the core business of industry mainstays. Differentiation therefore is critical, and companies will differentiate by finding new customer needs to satisfy, while delivering consumer-like experiences

• The rise of Consumerization – the shift in the origin of technology innovation that began with the growth of the Internet is widely referred to as consumerization. Innovation now comes from consumer markets first, reversing the decades old direction driven by business and government. This shift is having a profound effect on the enterprise and is radically altering customer and employee expectations. We now all expect our experiences – whether as an employee or customer – to be much like the experience we enjoy in our personal lives

• Interaction point proliferation – digital is at the heart of interaction point expansion. The way in which we can engage with a company is expanding faster than a company can respond. This proliferation further complicates the delivery of seamless experiences and puts increasing pressure on the experience initiatives of the enterprise

• Transition from traditional media to digital engagement – “By 2009, Google’s revenue was equal to the entire newspaper industry.” This quote from an article on Digital Transition talks about the first period of digital transformation. The second period will see an emphasis on engagement; delivering content wherever and whenever the consumer wants. Engagement is the experience foundation, for through engagement we build trust and customer advocacy

• The customer interaction shift to a multi-channel journey – the needs of the customer drive their interaction with a company, and these interactions represent the customer journey. Individual interactions – even those that are highly successful – do not necessarily create an experience that leads to advocacy and loyalty. This shift from interaction to journey will drive many next generation experience agendas. This Mckinsey Study does an excellent job of describing this paradigm shift

• Customer experience extends across multiple owners in a sharing (collaborative) economy – products in the emerging sharing economy will have multiple owners. Customers in this economy will purchase goods and share them multiple times. This will pose interesting challenges for companies, as the experience is extended past the first sale. This Collaborative Economy  report from the Altimeter group describes this emerging economy in detail

Delivering experience-based differentiation will demand that companies exhibit the Digital DNA articulated through this Blog, making tactics associated with delivering those characteristics critical to next generation experience programs. A strategy that articulates the attributes of the intended experience and ensures that it is aligned with corporate vision and brand is the next step. Other key tactics to consider for experience programs are:

• Understand the customer: focus on the customer journey, not individual interactions – to understand the customer, companies must start from the outside-in to appreciate their interaction experience and needs. This critical shift in the design paradigm was reflected in the previous post on Edge-Driven Design. Understanding the customer journey is the starting point. The Mckinsey study above found that over 70 percent of very satisfied customers build a favorable impression when their needs are met over three or more touch points. Yet according to the white paper referenced above, only 28 percent of survey participants said that they have a fully documented end-to-end customer journey. Taking a customer journey approach positions a company to create experience-based differentiation, but it must start with understanding and documenting the journey

• Understand and define the experience ecosystem – creating the intended customer experience involves multiple functions and units from within a company, and likely involves external stakeholders. All stakeholders involved in delivering a differentiated experience should be identified and the experience ecosystem defined

• Co-create experience with all stakeholders – once defined, the stakeholder ecosystem should be involved in co-creating the intended experience and innovating around customer intimacy. In creating the intended experience, companies should strive to make them consumer-like, using experimentation, rapid prototyping, and visualization as a means to envision the experience and drive stakeholder understanding

• Drive structural change and alignment – customer experience excellence requires a change in the way most businesses are run. The policies, procedures, processes, systems, management and organization of companies do not enable the creation of next generation experiences.  Structural change is required if companies seek to differentiate based on experience. Customer journeys are cross-functional in nature; whereas companies are made up of different units and functions. Some companies are creating a new Customer Experience Officer role to start the change process. This is the success or failure tactic that must be addressed. Removing barriers, aligning structurally behind customer journeys, and coordinating the experience ecosystem are all critical to creating the intended experience

• Make experience a core competence and hire and groom design thinkers – experience cannot be something we define as important, but do not build into the fabric of the business. Stakeholder experience must be a core competency enabled by design thinkers and lived by the organization. Design thinking was covered as part of the Edge-Driven Design enabler

• Eliminate interaction fragmentation and leverage customer insight – silos are the enemy. I won’t repeat the tired 360 degree view of the customer mantra; I’ll simply state that to succeed in creating next generation experiences, knowing all there is to know about a given customer (not segment) is critical. Yet our customer interaction is fragmented. This inhibits the ability to provide context to support the customer journey and prevents us from delivering meaningful customer insights that drive our actions and decisions. A key tactic within the program is to deal with this issue. With the advancements and rapidly declining costs of analytics, big data, computing power, and storage, this issue can be addressed in a cost effective manner

• Measure return on customer experience – first, when defining value, customer value and company value must be distinguished. Measuring value strictly on the basis of what it means to the company is common, but flawed. Metrics should be defined around the Journey in addition to the touch point, and should quantify customer experience quality in a consistent manner. Once defined, companies should measure and manage their Return on Customer Experience (RoCX)

That’s a look at the fourth enabler. For a review of this transformation series to date, here are the links to each of the prior posts:

Forcing Functions:

• Growth
• Effectiveness and Efficiency
• Differentiation
• Societal Change
• Digital DNA

Enablers:

• Structural Change
• Edge-Driven Design
• Value Ecosystems