India’s online retail market is on the radar of global investors and eCommerce players, which have announced investments topping $3.6 billion in the past three months, including $2 billion in Amazon, $1 billion in Flipkart, and potentially $650 million in Snapdeal. Growth in India’s online retail market is powered by its fast-growing smartphone penetration, as customers are increasingly using their mobile phones to buy products online. More than half of Snapdeal’s and Flipkart’s sales and nearly 35% of
2014 was a year of massive eCommerce investment in India. Flipkart raised $1 billion; Amazon announced it would invest $2 billion in its Indian subsidiary; and Snapdeal raised $234 million from private equity firms and an undisclosed additional sum from private investors. These three players are spending approximately 2 billion rupees ($33 million) this season on marketing — and a lot more on improving last-mile delivery and adding fulfillment centers to get a bigger piece of the sales pie.
While analyzing the survey results for my recent report on the state of customer experience management in India, I noticed a fundamental flaw in the way that Indian organizations approach reporting structures for their customer experience (CX) teams. About a fifth of the organizations we surveyed rely on their customer service department to lead the charge for CX initiatives.
This is detrimental to the growth of CX, as there are basic differences between the scope of work and the skill sets of the two teams. Specifically, customer service teams have limited capabilities and exposure across:
People. While both CX and customer service teams work toward enhancing the experience across the customer life cycle, the customer service team has a somewhat myopic view of customer engagement, focusing predominantly on handling client complaints and resolving queries.
Processes. Forrester defines customer experience as how customers perceive their interactions with a company. The contribution of customer service teams to this process is limited to supporting customer tasks in a few phases of the journey.
Tools. Customer service professionals are responsible for the experience delivered via multiple touchpoints, such as IVR systems, contact centers, and social media. However, other equally important customer interfaces, such as mobile applications, digital kiosks, and eCommerce platforms, fall outside their purview.
Forrester’s survey data shows that the vast majority of Indian CIOs (87%) consider addressing rising customer expectations and improving customer satisfaction to be their top business priorities. Soaring customer demand is putting pressure on businesses to invest in customer experience (CX) initiatives. For my recently published report, The State Of Customer Experience Management In India, 2014, we surveyed 89 CX professionals in Indian organizations and asked them about their spending plans for 2014. Here's what we found: 60% of them expect to spend more on CX programs this year.
While this increased spending on CX by Indian organizations is encouraging, their initiatives too often lack alignment with business goals. We asked the same set of CX professionals about their key CX practices and found that 44% don’t regularly model the influence of CX metrics on business outcomes, while 49% don’t consistently consider alignment with CX strategy as a criterion for project funding and prioritization decisions.
These findings highlight the disconnect between organizations’ commitment to boosting CX and the impact of these initiatives on business outcomes. In the long run, this disconnect has two implications for organizations and their CX teams:
Lack of business alignment with soaring customer demands will result in dissatisfaction and churn. While business investment in CX is growing in India, initiatives that don't align with desired business goals will fail to result in desired business outcomes, thus creating a gap between market demand and the business offering.
Every business and industry faces digital disruption today. Digitally empowered customers demand a much higher level of customer obsession to win and keep their business, and they are forcing firms to redefine their business models. Whether you are in banking, insurance, financial services, education, media and entertainment — essentially, in any industry — digital technologies will disrupt your business. Nevertheless, our research shows that firms currently favor a bolt-on digital strategy over digital transformation, but this will drive only limited value from their digital investments. Digital strategy is not about adding a new mobile app or building a social media presence. It requires a fundamental shift in business strategy, responsibilities, technology capabilities, and organizational structure.
Against this backdrop, Forrester is holding its third series of CIO Summits across Asia Pacific in August and September. The India summit is on August 21, 2014 in Mumbai with the theme of: "Beyond IT: Empower Digital Business In The Age Of The Customer." Just like last year, we expect around 150 CIOs to attend the event. The Summit will focus on the significant shift we’ve seen in CIOs' traditional focus — from the design and deployment of internal systems focused on process control to digital products and services for their customers. Of particular importance on the digital journey are three domains:
- Customer experience.
- The mobile mind shift.
- The transformation of big data into actionable business insights.
Companies understand the urgency of ramping up their business technology (BT) capabilities to help the business innovate and grow. Increasingly, they realize that they cannot do this alone and firms will require partners that can help deliver agile services that bring fast and predictable outcomes to the business. For instance, Bharat Light and Power (BLP), one of the largest clean energy generation companies in India, signed in late 2013, a 10-year engagement with IBM to build a new business capability that aims at nothing short of transforming the utility sector in India. In a few words (more details are available in this report), BLP and IBM are creating an open energy service platform that will help BLP understand how to optimize the utilization of its wind turbines. The really interesting part for me lies in the way the company intends to leverage the information generated by this platform as the basis of its competitive advantage. The energy service platform will indeed act as an expertise repository that BLP can leverage to:
Increase the value of its own assets. As the company operates, grows, and optimizes its own asset efficiency, it learns how the climate, power grid, and wind turbines influence a vital business metric for a utility company: the plant load factor (PLF). This will allow the company to generate more revenues from its existing assets.
I have just published a report that builds on Forrester's research on CMOs' technology spending plans, focusing on India's banking industry. The Indian banking industry emerged unscathed from the 2008 and 2009 global financial crises, but it will not be immune to the age of the customer. My report outlines how technology will play an increasingly crucial role in implementing differentiated revenue models, a superior customer experience, and an optimized cost structure for banks. The key findings from the report include:
Digitally enabled customers are demanding customer obsession from their banks. Indian banking CMOs' top three business priorities are addressing the rising expectations of customers, improving margins, and acquiring and retaining customers — priorities that are similar to those of their peers in other industries. The experience that other industries offer — such as the compelling content, interactions, and features that consumer product companies provide — are shaping customer expectations, and customers want similar experiences from their banks. And the entry of new players and the tough economic situation are driving CMOs to increase their focus on winning, serving, and retaining customers.
The new Indian government announced its maiden 2014-2015 budget yesterday. Forrester views the latest budget as progressive, pragmatic, and a step toward building a “new” India. We expect the aggressive push on infrastructure and manufacturing as well as the focus on reforms to help lift India out of its economic doldrums. Here, in no particular order, are Forrester’s top five takeaways from the budget from an ICT spending perspective:
A thrust toward clean energy will drive technology investments. The Indian government realizes that it will be difficult for the energy sector to meet rising demand without new power generation capacity. We expect the increased focus on clean energy to drive demand for smart grid technologies and industry specific solutions. Clean generation companies are also likely to look for innovative business models from their service providers.
It’s hard to believe almost a year has passed since our last Summits for CIOs in Asia Pacific. Our team is ramping up preparations to this year’s CIO Summit series and I’m looking forward to meet you at the events which will kick off in Sydney on August 14, Singapore on August 19 and Mumbai on August 21. Themed “Beyond IT: Empower Digital Business in the Age of the Customer”, Forrester’s 2014 Summits will focus on the significant shift we’ve seen in CIO’s traditional focus from the design and deployment of internal systems focused on process control to digital products and services for their customers.
Of particular importance on the digital journey are three domains: customer experience, the mobile mind shift and the transformation of big data into actionable business insights. Each of these topics will feature prominently at the Summits with select analysts flown in to delve deeper into how CIOs can overcome some of these challenges through Forrester guidance.
I recently had a great discussion with TK Kurien, the CEO of Wipro Technologies, at the company’s campus in Bangalore, India. During the discussion, TK shared his thoughts on Wipro’s future. He sees the following as critical to success:
Addressing segment leadership challenges. There are limits to labor arbitrage, automation overriding cost advantages, and the increasing complexity of client requirements. Wipro knows that it has to move beyond showcasing technology capabilities to focus on addressing the challenges that CMOs, CHROs, and other business leaders face today. The first step in this direction is to ensure that the company’s messaging gets aligned to the different ports of call (CMO, CFO, CHRO, etc.) and how this helps to address the challenges for customers.
Developing a culture of performance. TK aims to develop a culture of performance based on improved employee efficiency and productivity. Within a few days of our discussion, the company announced that it is planning to undertake its biggest-ever restructuring exercise to become learner and make the organization look more like an hourglass than a pyramid. The company will take 12 to 18 months to complete this mammoth restructuring effort.