But investing in customer experience is tricky because it’s often seen as an abstract thing with little tangible ROI. Companies like USAA, a US insurance company with a strategic focus on customer experience, have spent years re-shaping their entire organizations to think from the outside-in, focusing on the end customer. USAA did this because they believed it was the right thing to do, not because of some compelling business case.
As far as I'm concerned, the best CX presentation by a guest speaker was given this morning by a former CIO, Paul Heller. Paul is now Managing Director of the Retail Investor Group at Vanguard. While his session was energetic and full of humor, it also conveyed his message about the business of delighting clients very clearly. Paul suggests we all need to get in touch with the why, how and who of our business:
Why are customers doing what they do? To answer this question we really need to get to know the reasons for customers doing business with us. Vanguard took the time to ask their customers why they invest and they discovered people want to have more time to do the things they enjoy, they want less stress and to avoid being bored. Trust me, it's way funnier the way Paul describes it.
Where customer experience and analytics meet, in real time
For a while now, I’ve been using Hailo as a European poster child for innovation in the context of big data analytics. Due to the level of interest generated by this example, and the number of questions I’ve received along the way about Hailo, its technology and business model, etc., I decided to put together this blog post rather than write loads of separate emails.
Ironically, I’ve not actually been able to use Hailo myself (much as I would like to), as I have neither an iOS or Android-based smartphone. I have, however, met lots of people who’re using Hailo as customers, and I’ve also spoken to taxi drivers about it. I have yet to meet anybody who isn’t a fan.
For those of you who don’t know Hailo, it’s an app that allows you to hail a registered cab from your smartphone; as it was started in London, it’s often also called “the black cab app.” With the company founders being three London cabbies (black cab drivers), the entire service has been uniquely focused around the needs of the two main participants in a taxi ride: the customer and the driver.
Marketing and customer experience are two sides of the same coin: Marketers are responsible for communicating the brand promise, and customer experience professionals are responsible for making sure that the promise is kept.
It’s that synergy between marketing and CX that led us to invite Jamie Moldafsky, CMO at Wells Fargo, to speak at Forrester’s Forum for Customer Experience Professionals in New York on the morning of June 25. As a run-up to our event, Jamie took the time to answer a few questions about why Wells Fargo cares about customer experience and how its approach to CX has evolved over the years.
Q: When did your company first begin focusing on customer experience? Why?
Treating customers with courtesy and respect has been a core value at Wells Fargo for more than 160 years. Back in 1888, its agents were given the following instructions: “Proper respect must be shown to all — let them be men, women, or children, rich or poor, white or black—it must not be forgotten that the Company is dependent on these same people for its business.”
Watching a recent episode of The Apprentice, I was struck by how completely disorganized they all were. I realized that it didn’t matter who the PM was on the “team”; they all suffered the same problem – there was never enough discussion of goals and objectives, never any discussion of needed responsibilities and the roles that would carry them out, no clarity on ownership of those responsibilities (trust and empowerment). Instead of a consideration of what is needed, there is a rush to action . . . as though just starting will get them to the goal sooner.
As a result, there were always people standing on the sidelines wondering what to do – always people trying to lord it over others, always errors of judgment, missed opportunities, lack of transparency, and a complete failure to meet the goals and objectives (set by Lord Sugar).
Doesn’t that sound familiar?
So many businesses are similarly disorganized. Most organizations struggle to balance a wide range of issues – the differing demands of customers, the need to cut costs, ensure compliance, respond to the actions of competitors, etc. Point is that without an integrating architecture; these conflicting challenges spawn weak execution and organizational thrashing (just like the teams in The Apprentice). The culture in these organizations focuses on appeasing the leaders of the silos, with little thought put into what is needed to achieve the ultimate goals and objectives. And for most commercial businesses it’s the outcomes delivered to customers or external stakeholders that suffer.
At some point after their companies find and fix the low-hanging fruit that creates problems for customers, customer experience leaders hit a wall. That wall is the outdated operational models upon which most companies were built. These models were conceived decades ago, based on the existing capabilities and constraints of the day, when the primary vehicle for value was tied up in the product/service itself. Within these operating models, firms have worked to optimize processes like marketing, sales, and distribution focused on getting to the transaction. Support has been a cost center so limited as much as possible. But this kind of operating model has critical problems. Here are a few that just scratch the surface:
Product lines obstruct customer needs that cross the company. Companies organized by product lines force customers to navigate different marketing messages, sales teams, billing systems, and websites and support organizations to get what they need, while internal staff waste effort and fail to create synergies that could deliver a bigger value proposition.
Channel strategies don’t account for information transparency. Like product lines, firms regularly treat channels as separate P&Ls. This artifact results in disjointed pricing, confusing return policies, botched hand-offs, and assorted other mishaps that undermine the customer experience. Moreover, it leaves little incentive for the fiefdoms to cooperate on behalf of the customer.
There is a staggering amount of customer experience work going on in the healthcare industry these days. From providers (the docs), to pharma companies and payers (health insurers), everyone is trying to figure out what to do and how to do it.
It may come as a surprise to some to hear that technology teams play an important role in the implementation of an effective customer experience strategy, but that's the conclusion from our latest research.
How can your firm deliver great, loyalty-inspiring customer experience – and achieve its efficiency objectives?
Firms that want to boost Return on Equity (ROE) or Return on Capital Employed (ROCE) must improve productivity. And in a very real sense Productivity = value / resources. But too often, the role of IT is to reduce the denominator – resources, and usually leave the numerator – value, to someone else to worry about. So many EA professionals are expected to deliver cost or risk reduction - reducing the resources required for delivery of that value, or the risk associated with that delivery. They usually take an inside-out view with a primary focus on efficiency; and struggle to engage with the value delivery side of the equation.
But if productivity = value / resources, then the challenge is to both reduce resources and deliver enhanced value. The opportunity for Business Architecture and BPM professionals is to connect great customer outcomes and experiences (the value side of the equation) to scalable and efficient back office operations within the organization. That’s “both/and” – not “either/or.”
But how do you do that?
Generally speaking, business people don’t really care too much for efficiency. They come to work for the value they deliver to their customers; not the reductionist philosophy of cutting costs. If you want to engage them on a journey toward performance improvement, leading with the efficiency side of the equation can be a mistake.
YouTube finally announced this week that it would allow channels to charge monthly fees to access content on YouTube. Some have predicted that YouTube’s subscription model would undercut its ad model in an echo of the infamous pay-wall problem that has bedeviled online newspapers as they shifted from ad-supported to paid. Others have suggested that this shows that YouTube is up against an advertising wall of its own making — advertisers will only pay so much to advertise against this amateur and semi-pro content (and to be fair, I am in this camp even though I don’t think this fact is dire). And still others gleefully wait to watch as YouTube learns how hard it is to get people to pay for things online.
In fact, all three of these things are minor asides in YouTube’s decision-making, as I see it. Instead of reacting to these and other constraints, YouTube is proacting on imminent opportunity. YouTube is basically making a grab for more of everything that matters:
More business model options. TV is both ad-supported and subscription-supported, and that works just fine. It gives companies like HBO the creative flexibility to generate content that advertisers may not be ready for, and it gives companies like Scripps the freedom to promise more home-focused entertainment that home-focused advertisers care about. That flexibility is crucial to the ongoing success of those companies, and it will be crucial to YouTube as well. Although in YouTube’s case, I would be surprised if the revenue balance in the one- to two-year time frame exceeded 10% or 15% subscription to advertising.