Resolving conflicts with customers is not easy. But over time, you will learn the ways on how to control the situation. Know the source of the problem and what triggers your clients to be angry. It can help you understand your customers and appease their needs.
Understand the reasons why your customers are angry and know what you can do help them solve their problems.
Across the business landscape, savvy executives are increasingly asking the same question: What do my customers want? They are coming to realize that, whatever they offer, they are in the customer-experience business. Technology has handed consumers growing power to choose how and where to buy products and services, and customer-friendly leaders such as Amazon and Apple steadily raise customer expectations for superior service ever higher. How an organization delivers for customers is beginning to be as important as what it delivers. Companies that systematically put customers first create inroads against competitors, build cultures that benefit employees as well as customers, and improve the bottom line from both the revenue and cost sides.
Every leading customer-experience company has motivated employees who embody the customer and brand promise in their interactions with consumers and are empowered to do the right thing. Companies centered on customers engage them at every level of the organization; employees work directly with them in retail settings, take calls, and get out into the field. In the early years, for example, Amazon famously staged “all hands on deck” sessions during the year-end holidays, a tradition that lives on in the employee-onboarding experience.10 Some organizations create boards or panels of customers to provide a formal feedback mechanism.
From leading practitioners, we’ve distilled four simple rules for building a sense of frontline engagement. First, listen to employees and establish mechanisms to address their issues and needs. Next, hire for attitude, not aptitude; in other words, if you want to provide friendly service, hire friendly people. Interviewing prospective employees in groups, as JetBlue Airways does, is one way to observe how they interact. Then give your people a purpose, not rules, so the company sets clear expectations and lets employees know that it trusts them to do their jobs. Finally, tap into the creativity of your frontline employees by giving them the autonomy to do whatever they can to improve the citizen experience and fix problems themselves.
The key to satisfying customers is not just to measure what happens but also to use the data to drive action throughout the organization. Leading practitioners start at the top, with a metric to measure the customer experience, and then cascade downward into their key customer journeys and performance indicators. To move from knowledge to action, companies need proper governance and leadership. Best-in-class organizations have governance structures that include a sponsor—a chief customer officer—and an executive champion for each major kind of cross-functional customer journey. Full-time teams carry out their day-to-day work in the existing organization, because to succeed, the transformation must take place within normal operations. To foster understanding and conviction, leaders at all levels must serve as role models for the behavior they expect from these teams, constantly communicating the changes needed. Formal reinforcement mechanisms and skill-building activities at multiple levels of the organization support the transformation as well.
The benefits of improved customer experience can be fleeting unless changes to supporting back-end operations are made, as well. Digital is reshaping customer experience in almost every sector. Digital first attackers are entering markets with radically new offers, disrupting the ways that companies and customers interact and setting a high bar for simplicity, personalization, and interactivity.
To not only stay in the game but capture new sources of value, incumbents will need to reinvent their customer experience. That begins with bringing in data and analytics-based insights about what really matters to customers and how best to deliver it to them. Some companies fail to capture the full benefits of their improvement efforts because they concentrate on optimizing individual touchpoints rather than tackling the customer experience as customers actually experience it—a complete journey that cuts across multiple functions and channels.
The other imperative for companies is to explicitly tie the reinvented customer experience to their operations. If they focus only on the front-end experience and don’t change the back-end operations that support it, the new experience is unlikely to be sustainable. Changes will be needed in both underlying processes and the way employees work.
Enhancing the customer experience can bring rich rewards. Across industries, satisfied customers spend more and stay more loyal over time. In banking, customers are seven times more likely to increase their deposits and twice as likely to open an additional account if they rate a bank as excellent (with a customer-satisfaction score of nine or ten out of ten) rather than average (six to eight out of ten). Similarly, pay-TV customers who rate their provider as excellent tend to stay with it for up to twice as long as they would a provider they rate as average or below.
More broadly, the effect of customer satisfaction on total return to shareholders (TRS) is dramatic. If we compare the TRS of companies with above- and below-average customer satisfaction scores, the leaders achieve four times the growth in value of the laggards over a ten-year period, according to data from the American Customer Satisfaction Index and the Medallia Institute.
First, how do you find out what really matters to customers? Companies that excel at this do two things: they streamline their operations and take out cost, and they create new experiences and tap new sources of value. Many organizations simply take a problem view—treating internal processes as a cost that needs to be reduced, and looking for customer pain points that need to be eliminated. That’s a good place to start, but if it’s the only view, it misses out on the idea of creating additional customer value.
One insurance company invested time in deepening its understanding of the distress customers suffer when they have an automobile accident and make a claim. The insurer found customers were extremely dissatisfied with the lengthy process of filing a claim over the phone, especially the number of back-and-forth calls with the loss adjuster and the lack of transparency on the status of the claim. The insurer used this understanding of customer pain points to create a new mobile app that enables a claim to be filed within a couple of minutes, sends messages to update customers on the status of their claim, and provides real-time processing and cash payout. To create additional value for customers, the insurer went a step further and created a function that allows customers to make appointments with a repair shop directly via the app.
Another insurer, the start-up Lemonade, allows distressed customers who have lost property to submit a claim via a video message on their mobile phone. The company reviews the message using anti-fraud algorithms, cross-references it against the customer’s policy, and then transfers the appropriate funds to the customer’s bank account. While these are still early days for the start-up, it is declaring speeds for processing claims in matters of seconds.
By showing empathy with customers and helping to fix their problems (and even delighting them in the process), companies like these can tap into a source of tremendous value, find new business opportunities, and shift their operating model over time.
Once a company has found out what its customers value, it faces the second big question: how do you link customer experience to operational improvements? Most organizations manage operations, track performance, and measure customer satisfaction along functional lines. Yet the best way to tackle customer experience is to follow it from the customer’s point of view, along a journey that cuts across functions and channels. That’s because customers frequently use multiple channels to interact with their service provider, and need multiple interactions to complete a transaction.
Imagine you are a customer trying to resolve an issue. You may need to visit a retail outlet, phone a call center, visit a website, use an app, or any combination of these. Even if you are satisfied with each of these interactions individually, rating them at 85 to 90 percent, your satisfaction with the whole customer journey from beginning to end—calculated as the product of all four interactions—can still be low, just 60 percent in this case. To create a great customer journey, you need more than great touchpoints.
Before rethinking your customer experience, look first at your product, price, service, and brand. If a product is unreliable or its price is too high, not even the most delightful customer experience will redeem it. Once these essentials are in place, work out which journeys matter most to customer experience and assess how you perform in each one so that you can prioritize what to fix to get the most impact from your improvement effort.
Banking is one industry where customer experience offers enormous scope for differentiation. We analyzed the main customer journeys at a sample of US financial institutions to expose choke points where banks consistently underperform and explore opportunities to address them. We calculated how much each customer journey contributed to overall satisfaction and found that the most critical journeys were using a product or service and resolving problems. Onboarding new customers—signing up, setting up services, and opening new accounts—was also extremely important.
US banks as a group underperform on customer satisfaction for the two journeys that matter most: product use and problem resolution. The journeys for signing up and opening a new account also rank among the worst, often requiring customers to enter vast quantities of data and navigate numerous application forms and fields.
A successful improvement effort begins not by taking an existing portfolio and digitizing it wholesale, but by radically simplifying both the customer experience and the product or service at its heart. One telecom provider reduced its product portfolio by 80 percent before streamlining its digital experience and supporting platform. After rationalizing its offerings, eliminating some process steps, and using readily available tools to automate others, it managed to cut its sign-up time for new customers by two-thirds.
Resolving problems is an area that many customer-facing businesses struggle to get right. Given self-serve options and simple guidance, customers can often fix problems for themselves, but companies don’t always provide enough of this support, or communicate it clearly enough when they do. Another stumbling block is having customer care that mimics a company’s broader organizational set-up, complete with product silos. Customers dealing with a credit-card issue and a mortgage issue can often experience two entirely different processes at the same bank, and find themselves being transferred from one function to another because each group can help with only one aspect of their problem.
When companies rethink their customer experience, digitization allows them to work backward from what customers would like to see instead of getting bogged down in incremental improvements. This clean-sheet approach encourages greater ambition, not shaving 20 percent off the time it takes to open an account, say, but slashing it by 80 percent or more. When one major North American bank revamped its deposit-account journey, it managed to reduce the time from sign-up to working account from two weeks to less than ten minutes.
Eliminating problems or saving customers—and the business—time and effort is only the beginning, though. Much more value can be created when we understand what else we can do to satisfy an unmet need or spark delight. To do that requires working much more closely and directly with customers: observing them during interactions, asking how they are feeling, and mapping their emotional state at every touchpoint in the journey.
The insurance company mentioned earlier found that taking care of an anxious customer who had suffered an auto accident was a great opportunity to make a friend, build loyalty, and reduce claims payouts by recommending preferred repair services. In an industry where differentiation is hard to achieve through products alone, providing a turnkey service that spans the whole process from identifying the cause of damage to finding a repair provider to paying the bill proved to be a valuable new business opportunity.
Digital innovation and user feedback provide a catalyst to simplify products and customer experience, but to capture economic value, you need to take a further step: link the new experience to underlying operational processes. That requires an understanding of two things: what creates value across a given journey from the customer’s point of view (faster cycle time, personalization, cross-channel functionality, and so on) and what drives business costs and revenues (number of manual touches, extent of customer fallout, additional product sales, and so on).
When businesses are trying to see journeys as customers see them, it can be hard to shake off a frame of mind that revolves around internal processes, structures, and KPIs. It may take a deliberate effort to stop thinking “this change might be difficult to implement” or “that cost has to be reduced” and start thinking what the customer wants instead. Small changes can help to create the right mind-set, such as the insurance company’s decision to stop referring to customers by their claims numbers.
Describing journeys from the customer’s perspective—“I wait in line” or “I receive a bill”—is also helpful in exploring what can go wrong and how to put it right. When an airport realized that customers queuing for security checks often worried they might miss their flights, it introduced new signs giving a rough indication of waiting times. Another company investigating customers’ experience of repairs found they preferred knowing when a technician would arrive to having a shorter wait with more approximate timing. This insight led the company to improve its control over scheduling and start tracking the whereabouts of field staff in real time—which in turn meant investing in GPS and dynamic dispatch technology, overhauling staffing levels and costs, and rethinking the operating model.
We also investigated which parts of banking journeys had the biggest impact on satisfaction, and how well banks performed in them. In the sign-up journey, for instance, what mattered most to customers was the smooth completion of the application, followed by the availability of information to help in choosing and comparing products and services; the choice of products and services; the ease of understanding interest rates, account fees, and other features; the simplicity of signing up online; and finally knowing the customer representative and the quality of his or her service. Among these factors, customers tended to be most satisfied with the availability of information and least satisfied with the ease of signing up online.
As well as scoring poorly for customer satisfaction in general, sign-up is also the journey that exhibits the widest gap between top performers and the industry average. Leading banks make it easy and quick, like the bank mentioned earlier that enables customers to open a functioning deposit account in under ten minutes. Any bank seeking to improve its sign-up journey should diagnose how its performance compares with industry benchmarks, customer expectations, and best practices within and beyond the industry. Then it can focus its improvement efforts on the drivers that should deliver the most impact.
Delivering a great customer experience calls for disciplined execution and consistent service delivery. By analyzing customer journeys, companies can pinpoint the operational improvements that will have the biggest effect on customer experience. A North American bank examined how satisfaction among deposit-account customers was affected by the time it took to apply for an account, activate it, and receive the account card.
If applications took more than 20 minutes to complete, the net promoter score (NPS) declined; if activating the new account took more than a day, or receiving the debit card and PIN took more than five days, the NPS fell sharply.
An understanding of break points like these helps companies focus their operational improvements and target their investments pragmatically, without reaching the stage of diminishing returns. Once the desired operational improvements have been identified, organizations can implement them by activating five key capabilities and approaches from their next-generation operating model:
- Digitization: the process of using technology to automate and improve journeys directly.
- Advanced analytics: the autonomous processing of data using sophisticated tools to discover insights and make recommendations.
- Intelligent process automation: a suite of business-process improvements that combines process redesign with automation and machine learning to eliminate repetitive routine tasks.
- Business-process outsourcing: using resources outside the main business to complete specific tasks of functions.
- Lean: a systematic approach to streamlining processes, eliminating waste, and fostering a culture of continuous improvement.
How much companies can achieve by redesigning customer journeys is demonstrated by a leading global bank that sought to improve its customer-satisfaction ranking from average to top three in three years. To identify priorities, the team worked out how much value could flow to customers and the bank if various journeys were reimagined and digitized. It determined that onboarding journeys for all products were of most value, followed by credit-card journeys involving disputes, issuance, and fraud handling.
The work began with the transformation of just one credit-card onboarding journey. As the organization gained experience, the next wave included onboarding journeys for two products, with four in the wave after that, and so on. The choice and sequencing of the journeys to transform were always linked to value creation. Over the course of three years, and after the transformation of multiple journeys, the bank was able to boost its customer-satisfaction score by 25 percent and generate $1 billion a year in additional customer spending from its credit-card business.
- Start with a clear understanding of what customers value and use it to decide where to focus (and what to deemphasize).
- Guided by these priorities, simplify and streamline your underlying product and services; if you don’t, you’re likely to digitize existing complexity.
- Link customer value to the operational drivers that underpin it, then design a new operating model based on these linkages, working back from the customer and using digital tools to streamline or automate your processes in line with what customers care about.
- Tackle the most important customer journeys one by one and support the effort with operational changes to improve efficiency and speed.
- Embed agile, cross-functional ways of working and reengineer your management system to support continuous improvement.
Organizations that take these steps can turn customer experience into a source of delight for customers and a new and sustainable source of differentiation for themselves.
Personalization is causing a seismic shift across the landscape of consumer-facing brands, and we are only starting to feel the shocks. Already brands that create personalized experiences by integrating advanced digital technologies and proprietary data for customers are seeing revenue increase by 6% to 10%, according to our research—two to three times faster than those that don’t. As a result, personalization leaders stand to capture a disproportionate share of category profits in the new age of individualized brands while slow movers will lose customers, share, and profits. Over the next five years in three sectors alone—retail, health care, and financial services—personalization will push a revenue shift of some $800 billion to the 15% of companies that get it right.
Digital natives have a head start because they have built their business models around collecting data and responding to customer needs. These companies build strong customer loyalty using both traditional vehicles, such as loyalty programs, and new models, like “free” and short-notice delivery, automatic replenishment, and other forms of convenience. The deeper direct connection enables digital natives to more fully understand what customers need and create new ways to serve them, both independently and by working with suppliers. Personalization will take another big evolutionary step as voice recognition and cognitive-computing systems gain mainstream traction.
In many consumer categories, high-value customers drive 70% or more of the value for companies. Brand individualization unlocks the ability to enhance loyalty with these (and other) customers by tailoring the brand experience to each contextual user journey. Even before Netflix made the jump from mailing DVDs to streaming movies and TV shows online, for example, the company was collecting data and using it to engage with customers about their viewing preferences. In March 2017, Amazon asked customers to choose its next online original series for production from five video pilots. Leading e-commerce players such as Amazon and Alibaba use customer data to continually tailor interactions and create powerful feedback loops.
Starbucks is in the coffee business, but since 2014, the company has had its customers playing games. Starbucks sends interactive games to loyalty program members through email and its mobile app. The games provide a fun way to reward loyalists and motivate them to try new products and visit stores more often. Since 2016, the games have been personalized—one customer at a time, using data gathered from past visits and digital interactions.
It’s a smart move and a profitable way to engage customers with the brand. The personalized games have helped to triple Starbucks’s marketing campaign results, double email redemptions, and generate a threefold increase in the incremental spending of customers who redeem offers. The results come with increased marketing effectiveness, enabling Starbucks to reduce its mass-marketing spending and invest more-personalized marketing dollars with the right customers, thus incentivizing the right behaviors. But Starbucks has bigger plans: it is developing one-on-one relationships at scale. It is individualizing its brand by giving each customer his or her own personalized experience that encompasses in-store visits, digital interactions, and even, potentially, products offered.
Starbucks is not alone. At Walt Disney’s Orlando resort, visitors use MagicBands to reserve rides, unlock hotel rooms, and make purchases; guests at Disney’s new Shanghai resort can do the same things with their smartphones. Disney gathers data from every interaction and uses it to serve up targeted offers to guests. Carnival is introducing “smart medallions” that use similar technology on its hundred-plus cruise ships.
Personalized marketing is a good starting point, but ultimately personalization is more than a marketing challenge. For incumbents to defend—and expand—share, they need to reimagine their business with an individualized value proposition at the core, merging physical and digital experiences to deepen their customer connections. They need to put brand individualization at the forefront of their strategy agenda to influence everything that they do, including marketing, operations, merchandising, and product development. Many incumbents have significant strategic advantages over many digital players: they can merge digital and physical channels to deliver an integrated personalized experience, as Starbucks, Disney, and others are doing. (This is one reason why digital natives such as Amazon and Bonobos are establishing outposts in the brick-and-mortar world.) Brand individualization is about the future, but it’s taking place in the present; companies that are slow to act will see customer loyalty and sales decline.
Expectations from personalization run high, and some companies are achieving eye-opening results—and establishing big leads of their own. Because personalization is about establishing individualized brand relationships, early leaders tend to lock in customers, heightening the barriers for those that try to follow.
Companies do face significant hurdles to realizing the full potential of personalization. These include the technical barriers that one might expect, such as poor data centralization (companies collect ample data, but struggle to aggregate it and form one universal view of each customer), legacy technology that doesn’t support one-to-one communication at scale, and insufficient measurement capabilities. Almost 60% of companies struggle to effectively measure and attribute the impact of campaigns, limiting their ability to learn from customer feedback and adapt accordingly—which is at the core of individualizing the brand experience.
A lack of dedicated personnel is the most-oft-cited barrier (74%), but the majority of companies also face hurdles that are organizational and cultural in nature. These include insufficient cross-functional coordination (61%), inadequate creative processes (57%), lack of talent and knowledge (54%), and cultures that are not conducive to innovation (52%). More than 60% feel that they lack a clear roadmap, and half cite the absence of a clear business case and objectives.
Our experience working with a number of personalization leaders shows that companies can overcome the hurdles and develop the ability to personalize at scale by executing an integrated personalization approach that is built on four pillars.
Adopt strategic design. Personalization is not a series of fancy tech tricks to prove that things can be done differently; it is a solution to improve the customer experience. Disney’s MagicBands and Carnival’s smart medallions address customer pain points, such as long lines and slow company response times. Sephora offers a lipstick app that helps a customer find the best shade before going to the store and without actually having to try dozens of colors. True brand individualization requires an approach that is data-driven, consumer-centric—and grounded in everyday customer experiences.
Personalization leaders apply design thinking, a solution-based approach that looks beyond data insights to define customer value propositions that can be executed at scale; the fact that these are enabled by artificial intelligence, the cloud, and mobile technologies is secondary (although important). These leaders think across the full customer journey to identify opportunities for personalized offers or assistance. They use design thinking to help surface latent unmet needs and combine insights with analysis of the data behind behavioral and economic drivers. They can then employ the resulting synthesis to shape a differentiating set of customer value propositions that are reflected in their product and service offerings, customer experience, marketing, and membership and loyalty models. They ask questions such as, How do we reinvent the customer experience to radically reduce friction? What needs do customers have that they may not even be aware of? How should we have conversations with customers across their journey instead of pushing static campaigns? As answers to these questions accumulate, leaders prioritize opportunities for intervention based on pain points, need, or opportunity. They make sure that they are delivering personalization with a purpose, that each intervention delights or adds value for the customer.
Build data and analytics capabilities. To personalize at scale, it is essential to have the ability to both access and process large amounts of disparate data—including customer, transaction, and third-party data—on an ongoing, reliable, repeatable basis. However, harnessing data from internal and external sources and developing the necessary machine-learning algorithms to drive the right customer-level interactions are beyond most organizations’ current capabilities. More than half of the companies we surveyed believe that they collect the data they need but, to paraphrase many of the executives we surveyed, “We have the data, but integrating and using it—that’s the hard part.”
Most companies need to bolster their ability to extract value from their data assets by building proprietary data sets, securing permission from customers to collect and use their data, and entering partnerships to acquire complementary data assets. In addition, they have to build or acquire the tool sets, talent, and processes to extract signals from this data to drive personalized interactions. The lack of timely data use is also a major shortcoming: more than half of the companies we surveyed make limited or no use of real-time data. Successful companies commit significant staff and budget to multiyear projects to develop their analytics capabilities. They build internal knowledge and talent, and they work with external resources and partners across an ecosystem.
Transform technology. Part and parcel of developing the requisite data and analytics capabilities is building or acquiring a scalable technology platform. It should include a robust layer of application-programming interfaces that provide the flexibility to support existing and emerging technologies, such as voice recognition and augmented reality, and enable personalization in any channel or on any device.
This is a tough and time-consuming task, one that requires the collaboration of marketing, IT, and others. Plenty of help is available as new vendors proliferate; in the past two years alone, tech entrepreneurs have started several hundred personalization software companies. In addition, traditional tech companies continue to acquire startups and expand the roster of features they offer. The established cloud-based providers of marketing software and services are the most commonly used vendors, but no one leading player has emerged. And integration remains an issue. One retail executive told us, “We’ve ended up with technical soup—Franken-systems that don’t play well together.”
Enable new ways of working. Personalization is an inherently collaborative venture. As one marketing vice president put it, “You need to make sure the organization doesn’t get in the way.” Yet at 60% of companies, no one team is responsible for personalized cross-channel communication to consumers, and 54% of companies say they have no or low cross-functional coordination for personalization efforts. In addition, in a field where speed is essential, 57% of companies take three to six weeks to create a campaign (another 22% take several months) and up to four weeks to measure the results. More than half take one to four weeks or more to make changes based on the lessons learned.
Leading companies share some common ways of working: they collapse silos, create dedicated cross-functional personalization teams, locate all team members together, and work fast. Leaders also develop test-and-learn cultures, aligning marketing, IT development, and other functions in an agile model. Top performers run more than 20 sets of personalized-communication experiments per month and hone processes that execute and measure rapidly so that campaigns can be created in days and assessed in real time.
Brand individualization offers companies the chance to engage consumers one-on-one and to build enduring—and self-reinforcing— relationships. The data and the technologies are already at work, and the quality of both will only improve. Leaders are showing what can be achieved and how to do it. The hurdles are significant, but the stakes are even higher. Companies that don’t want to be left behind should move quickly, before they discover that their best customers—the ones that drive the most value—have struck up a serious relationship with a rival.
Lines between products, services, and user environments are blurring. The ability to craft an integrated customer experience will open enormous opportunities to build new businesses.
Time was, a company could rely on a superior product’s features and functions to coast for a year or more before competitors could catch up. Or a well-honed service advantage could single-handedly buffer a company from start-up challengers looking to nip at its heels. No more. As digitization drives more and faster disruptions—and as customers increasingly desire the immediacy, personalization, and convenience of dealing with digital-marketing leaders—the business landscape is undergoing an upheaval.
Products, services, and environments—both physical and online—are converging to anticipate and meet rising customer expectations. That’s giving birth to a proliferation of new products, often from unexpected sources. It is also stirring up a storm of new, unanticipated competitors. In this novel mix, product companies will be pushed to create services and service providers to incorporate products into their offerings. Both will face the challenge of developing great user environments as part of customer-centric strategies.
The signs have been apparent for some time. Technologies regularly compound each other’s effects, with a dynamism and speed of innovation that has become unpredictable: for example, the combination of global positioning systems (GPS), radar, video object recognition, and infrared sensors gave birth to the development of self-driving cars. In smartphones, manufacturers once focused on features and functions as selling points. Today that emphasis has shifted completely to style, lifestyle, and simplicity of use. These permeate the customer experience and define the value proposition for such products.
This evolving convergence of products, services, and environments affects some industries more than others. Telecommunications, automotive, and consumer-product companies, for example, have already embarked on a convergence journey; other industries, such as insurance, banking, and energy, lag behind them. Understanding the way this phenomenon is taking shape can help companies prepare for the competitive opportunities and challenges. In this article, we explore some of the places where the convergence is taking shape today and some key principles for designing integrated, end-to-end customer experiences.
Traditional product companies are transforming themselves into providers of services and ecosystems. Some innovators, such as Rolls-Royce, some time ago moved beyond merely selling jet engines to selling engine hours in a lifetime service relationship with customers. Elevator operators, such as KONE, emphasize the number of floors their products will serve over time, not just their physical products. Microsoft Azure sells computing as a service, not as software; Philips is transforming the home-lighting business into a “connected business” to improve sustainability, cost of ownership, and smart control by integrating applications such as scene personalization, home automation, security services, and sleep quality into its core product.
Service companies are integrating physical products into their customer experience. Amazon’s Echo, for example, provides quick access to the company’s services. Evernote and Moleskine have collaborated to create notebooks that seamlessly integrate physical notes; capturing handwritten ones with the Evernote camera allows you to search and organize them digitally. Progressive Insurance’s connected-car devices allow the company to charge drivers according to their driving behavior.
Companies are investing to create a customer environment that builds a connection with their products. Online players such as Amazon open physical stores; car manufacturers (Tesla, for example) open fancy showrooms in shopping malls and prime locations, with a completely transformed customer experience. Electronics companies, like Apple, stage the customer experience with open-space concepts, a sprawling Genius Bar, and diverse sales staffs.
In essence, highly successful companies have realized that the boundaries between products, services, and environments have blurred. They know as well that they need an integrated view to design end-to-end experiences that are truly valuable to consumers and successful in the market. It’s not just about designing the best product or service but rather about striking the right combination and making sure the integrated customer experience is compelling. This kind of successful, convergence-designed strategy can deliver a durable competitive advantage. Done well, the strategy will also make implementation more intuitive for the company and more seamless for the customers who engage with the product or service. In this evolving environment, maintaining an integrated customer-experience perspective is necessary right from the beginning of any improvement or transformation effort.
Today’s consumers do not buy just products or services—more and more, their purchase decisions revolve around buying into an idea and an experience. This change in expectations will give product and service businesses opportunities to create new revenue streams by expanding into adjacent territories. Given these complexities, the shift also requires an innovative approach to business models and a new look at how companies provide value to customers.
To better understand how some companies are grasping the opportunity to design end-to-end experiences, it’s useful to explore some examples of cutting-edge approaches and the techniques and principles that underpin them:
Raising the temperature in thermostats
For much of this decade the smart-home-thermostat market has been under assault by new entrants using world-class design approaches. Incumbents, largely embedded in professional-installer sales channels, were left with little access to end consumers.
Ecobee, which embarked on a design-led strategy against competitors such as Nest from the standpoint of aesthetics, usability, and features, believed that its technology was superior. But it was missing a major component the company felt customers cared about—design. To Ecobee executives, it was not just a matter of the product’s color and shape. Rather, they believed that consumers would see value in the overall experience of interacting with the device itself, its mobile app, and its Internet presence. The “squaricle” shape of the device was decided in part by the need to differentiate it from competitors’ round or square thermostats and to pair up with Ecobee’s remote sensors, which have the same shape. Black was chosen as the color for its practicality, unobtrusiveness, and understated high-tech signaling.
Ecobee’s approach was to redesign the thermostat with sensors that work over Wi-Fi systems, so it can moderate the temperature where the user (as opposed to the thermostat) is located. The new design made it possible to launch the product in new channels, such as Apple stores, Best Buy, and Home Depot, gaining direct access to new customers. Ecobee won PC Magazine’s Editor’s Choice Award for smart thermostats in 2015.
In late 2015, the Swedish public-transport provider Skånetrafiken aimed to enhance the value of bus transportation. The idea was to explore extending the travel experience beyond the bus with new technologies. Designers thought about that experience from an end-to-end perspective—before, during, and after travel.
The company’s approach took the form of a design lab on wheels.2 A multidisciplinary group of technologists and designers, with support from transport companies Transdev and Volvo, prototyped and infused a bus with new technologies. The team employed an agile approach, with iterative prototyping to generate more than 40 innovative ideas (based on interviews with customers) in less than six months. Every two weeks, new ideas were conceived, prototyped, and tested with users in a number of iterations. New design concepts transformed the space, made seating more flexible, and integrated technology into the bus. One example: a specific spot for standing passengers—an integrated space divider with cup holders, phone chargers, and shelf space. Another, based on the preferences of bacteria-wary passengers, is a sensor system that lets riders send a stop signal to the driver without touching a traditional button.3
Skånetrafiken’s concept bus took a major step toward reinventing the urban-travel experience. Although it continues to be an ongoing lab and project, it is also now ready to transport riders in southern Sweden, who will provide ongoing feedback to inspire future work redesigning urban-travel options.
A leading Nordic telecommunications company needed to replace its legacy technology infrastructure. It therefore launched an extensive transformation program to develop more relevant and valuable offers for customers and ways to meet their future expectations about the end-to-end experience of service upgrades and changes. Better technology would then serve these new needs in the most efficient manner.
The central question: What will customers want in the future? Is it even possible to tell? In this case, design specialists combined their experience with prototyping and “futuring” techniques to project future scenarios and make them tangible for consumers to explore. The team understood that some aspects of the customer’s behavior, habits, and values tend not to change as much as technology or other solutions do. Encouraging consumers to play around with prototypes and to cocreate ideas with the team provided crucial insights about people’s functional and emotional needs, dreams, aspirations, and views of the future. This highly collaborative approach also made it possible to engage key internal stakeholders and to bring in a diverse assortment of capabilities throughout the development process. By listening, providing transformation tools, and engaging with stakeholders, the company persuaded them to contribute their personal experiences and ideas to the creation of end products.
Through such interactions between consumers and the company, the transformation team developed a deep understanding of what customers might expect from products and services five years down the road. That became the focal point of the company’s vision of its role in creating lifetime customer value. New investments and other decisions to advance the company’s technology-infrastructure-related transformation flowed from these insights.
A key focus of IKEA’s effort to develop its Home Smart line, which introduced technology-infused furniture, was exploring the experience of integrated wireless charging of mobile phones in homes. The ultimate goal was to design a solution that would eliminate charging entirely. IKEA’s design team had to reinvent the research process to explore how people would react to these new features in furniture. To support the vision of a simpler, more human-centered home life, it was important that the result not look like technology but still be understood as more than just furniture.
The team launched an immersive process: simple prototypes helped show where people would actually prefer to charge their devices in their homes (users could place stickers anywhere). An extensive, in-home testing process in several countries pinpointed the times and situations when charging becomes an issue. The team expected new technology to pave the way for completely new kinds of behavior, so it paid particular attention to understanding whether consumers would intuitively understand the underlying functionality of the products.
Home testing, which allowed families to try products for several weeks rather than only during workshop sessions, helped the company to see how the concept would fit into everyday life and influence current habits and routines. In parallel, the team spent time with consumers in stores to learn about the retail experience and the environment where the new products were sold. To create the right store experience, it was critical to get insights on how consumers would understand and perceive this new integrated-charging feature.
The result was the world’s first line of furniture with integrated wireless-charging capabilities—part of a successful initiative to bring smartness into homes and make it accessible to the mass consumer market.
Each company’s efforts to shape design-led experiences will unfold differently. But it is possible to draw lessons—several principles for shaping a design-led customer-experience strategy—from these examples, unique as they are. As companies increasingly turn to design strategies, it is helpful to keep the principles in mind to guide their efforts.
- Understand the customer’s needs and perspectives. Companies often approach innovation from a technological point of view and already, at the outset, have strong ideas about what the solution should be. To arrive at a new, integrated solution that taps into the power of convergence, it’s better to start from a people perspective. Companies can begin to study key aspects of the customer’s experience and try to understand and resolve core pain points by answering a few questions:
What do customers really need, desire, and aspire to?
What are they trying to achieve by consuming a product or service?
What kinds of behavior are connected to the experience, natural or constructed?
What do customers think about the product, the service, and the experience? And why do they think the way they do?
Often a company ought to consider shifting its mind-set: away from a technological solution (“what product or service can we provide to the market?”) to a consumer-oriented one (“what customer needs do we aim to fulfill through this integrated solution?”). An unmet need, even if for the most part unexpressed, frequently turns out to be a company’s next business opportunity.
- Draw inspiration from other industries. Companies increasingly look beyond existing industry boundaries and try to adopt better approaches from unrelated contexts. Some examples:
A hotel company that wanted to improve its customer experience drew inspiration from the world of senior-executive assistants. The company reasoned that the best assistants anticipate the needs of their executives, sometimes even before the executives are aware of those needs. By applying that principle to its customers, the hotel company emphasized service that anticipated their needs, as though it already knew even first-time visitors.
A software provider of e-trading platforms wanted to redesign its core product. When it decided which information to place centrally and which could be relegated to a peripheral view, it took a hard look at airplane cockpits.
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- Get a glimpse of what’s on the horizon. By definition, design is a creative and exploratory process. Looking into the future allows a team to project an industry’s circumstances as far as 15 to 20 years away by framing the landscape of products and services. The primary elements to consider are typically societal shifts, such as changes in behavior, demographics, and social norms, as well as technological improvements.
The exercise can also be useful with a much shorter time frame by projecting emergent trends that can already be observed to a certain degree: for example, the new EU payment directives in banking—PSD2—will remove the banks’ monopoly and allow nonbanking players to initiate payments and access account information. How will this change the landscape of the banking industry? What if you could use Facebook or Google to pay your bills? What about the effects on other industries? What new business opportunities could be created when these developments combine with other shifts that happen simultaneously?
- Empower multidisciplinary teams. Designing a convergent, end-to-end customer experience requires the broad involvement of stakeholders across the organization and beyond. They will have expertise in fields such as design research, anthropology, and business, and spheres of influence, such as product development, marketing, or finance. Creating a multilayered experience requires a variety of design capabilities, such as designing products, services, user experiences, and interactivity. Such multidisciplinary teams can break through silos and foster cross-disciplinary collaboration. Decision makers from all stakeholder groups should align together and embrace uncertainty together, developing capabilities throughout the entire design process. The use of existing resources can keep the investment in time and costs low.
- Use agile techniques to prototype experiences and business models. The challenge of mastering many convergent opportunities is that solutions often reside in complex ecosystems that either stand alone or depend on other, related systems. Think of air travel, for instance, as a combined experience of products, services, and environments. Despite this level of complexity, companies can achieve rapid progress through prototyping, which quickly brings to life new opportunities and perspectives for effective implementation.
An experience can be prototyped through simple cardboard models, role playing, or clickable digital prototypes. This approach focuses on eliminating mistakes and highlighting possibilities for further development. Alternative business models can be visualized and prototyped to explore where value is added, costs occur, and efficiencies or new revenue streams lie in wait. We find that it’s most efficient to iterate a prototype of the customer experience and the business model—these pilot efforts can secure the best outcomes before scaling. The goal should be managing prototypes in an agile way, through sprints and frequent feedback from users, with a focus on developing business value.
The convergence of products, services, and user environments is just taking flight. In this environment, large and unexpected business opportunities will appear, along with unlikely competitors. To prosper, companies must balance agile, design-led development processes with the continual redesign of customer journeys.
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