Delivering right customer experience needs innovation
In the experience economy that we are in, every marketer worth his or her name talks of customer experience management. Their intentions are simple: Ensure different experiences for customers so that they stick with the company or brand and thereby increase their lifetime value (LTV).The idea that my friend Joe Pine II floated a few years ago is finally coming of age. Most companies who want to drive a strategy of customer intimacy or customer solutions look at a simple cycle: Selection of customer segments that best suit the value they are proposing; acquisition of customers as a starting point with entry level product or service from amongst the selected segments; retention of the most profitable customers with higher value adding products or services; and finally, building relationships with the higher LTV customers by providing great customer experiences. Many companies find it tough to find the right segments when no obvious segments are visible that correlate with customer preferences. Advanced statistical techniques can be used to find the right segments. For instance, cluster analysis will help in finding homogenous customer segments. Conjoint analysis will help measure customer preferences and needs. Discriminant analysis will separate customers into distinct segments.
Every customer has a different set of expectations and perceptions and in each buying cycle, whether in B2B or B2C, the unexpected can always happen. In the digital age, it gets more complicated with omni channels and experiences that are not entirely in the hands of the marketer. Marketers who do not understand this truth will miss many great opportunities to serve customers. Adapting to these changes starts from the inside, at a cultural level.
Every customer goes through a "purchase route". To some extent companies have shaped this route by controlling the shopping environment. That was when the marketers had control of the media with ads in traditional media such as TV, print, direct mailers and outdoor ads. Products and services, too, had limited channels such as shops and perhaps door-to-door salesmen to reach the customers. With the advent of digital media and omni channels, the old route does not work perfectly for marketers. Most marketers refuse to accept this change and are continuing on the simple route for creating experiences at customer touch points. Today, information and purchasing are at the fingertips of customers and they control the entire shopping situation and routes. A retail outlet can plan a grand in-store experience but many customers simply skip that store and buy from the smartphone or iPad while standing in the same store! This reality is very real, and companies should realise sooner than later that trying to control the customers in the earlier-assumed purchase route is futile.
New research across categories, ranging from soaps to automobiles to fast food, indicates that customers do not move in a linear fashion from point P to point Q. They seem to circle around their decision as they gather information, and go further to narrow their consideration set before they take the final step of purchasing. Research is finding is that if 500 customers are surveyed for a certain category, there will be 500 different "routes" taken. This is because each customer can today choose a different permutation and combination of websites, customer reviews and social media sites to check out the brand or service and make his or her selection. There is no consensus on how many different sites or connection points a customer visits before she decides. Given the infinite number of different combinations it is easy to see that very few actually follow a specific purchase route today.
How can a marketer manage this humongous maze of choices? No company can have the resources to be present at all the places at al the times. The choices consumers have will only multiply in the months and years to come. Those companies or brands that can adapt quickly to changes will succeed in this disruptive era. Marketers need to focus on a few strategies to stay ahead of the curve and deliver the right experiences to customers:
One of the first things they should ensure is that different departments and functions should come together to drive success. Most organisations having silos will dilute the efforts in creating great experiences for the customers in their chosen purchase route. With many of our clients, we frequently find that marketing or sales do not know many folks in their supply chain department. Unless each department clearly understands what it takes to create the right experience for the customers in the new era, companies will not be staying on top for long.
Companies will have to constantly look at their customer segmentation and decide on the shifting preferences and modify and select the right segments on an ongoing basis. They cannot do a segmentation study and be content with it for the next few years. Segments of tomorrow will constantly evolve just as the trending data. Companies should also be willing to experiment with different models and plans to serve customer segments by frequently moving resources between options.
A strategy that worked before may not work in the next three months. Companies that constantly experiment with innovation will indeed overtake companies that are cautious with experimentation. It is best to fail cheap and fast in this case. And the culture should encourage employees to take risks and tolerate failures. However, this does not mean that too expensive a failure is fine. Keep an eye on risk versus reward and be conservative. Set a stage gate process and options with an assumptions checklist in order to minimise risks.
(The writer is CEO and managing director of CustomerLab Solutions)
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