Digital disruption is a fairly well understood dynamic: new entrant uses technology in new ways to upend existing business models and disrupt markets. In other words, digital disruption is a distinct force with a distinct life span that is mostly external to traditional markets and businesses.
But what if it is more than that? What if it is the canary in the coal mine representing the first signals of a shift in our economy and society? Consider the following:
7% of jobs will exit the economy due to automation even if one considers the jobs created specifically by automation. Without the creation of different products or markets (think of the app economy), automation can cause a major shock to developed economies.
We are already seeing early indications of how high-performing, highly liquid platforms (think Facebook) can extend services and experiences into different industries (e.g. banking and peer-to-peer lending) to blur or pummel traditional industry lines and norms.
The next step in Uber is self-driving cars which are moving from a cool idea to a reality – and will cause duress or change in automotive, transportation, and insurance markets (let alone public safety norms).
Artificial intelligence offers up the opportunity to change the health of populations, changing life expectancy, the very nature of diagnostic, surgical, and hospital care, and the economics of health insurance.
The fact that human beings make affinity and spend decisions based in large part on emotion is not new news. It is the underlying logic of advertising – heartstrings are the early sparks of revenue. But there is a reason that most companies have not baked emotion into experience design and into the day-to-day engagement with customers. It's hard to do.
Emotions are situational, dynamic, and hard to read. Yet the gulf between the science of emotion and the business of emotion is closing, creating a set of new tools to convert great experiences into sustained growth.
Last week during an online event, I brought together thought leaders, Anjali Lai, Harley Manning, and Roxie Strohmenger, to translate the science of emotion to the pragmatic business application of emotion. If you were unable to watch it live, here is the replay – and for good measure, here are key takeaways from our discussion:
Emotion is the next step in getting to know your customer.
The customer is now the center of the universe, and to win in this market, companies need to know – really know – their customer. Beyond satisfaction, advocacy, and journeys, companies must understand what makes customers tick and how to influence affinity and spend. Emotion is not the next thing "just because"; it gets to the heart and soul of operating in a customer-led market.
Human beings are emotional. The chemical reactions that trigger emotions determine our feelings toward a brand and our likelihood to spend. This fundamental, primal relationship is baked into how humans operate; however, it is not yet baked into how most companies operate.
Initial CX efforts gave us better insights into customer journeys across digital, physical, and human touchpoints. That opened a window into what causes emotional responses and provided an early warning system for emotions that provoke actions. But we’ve only begun to uncover the profound relationship between emotion and revenue. For example:
In the hotel industry, among customers who felt valued, 90% will advocate for the brand, 67% plan to increase their spending with the brand, and 87% plan to stay with the brand, per Forrester’s Customer Experience (CX) Index.
According to CX Index data, the TV service provider industry had the largest percentage of customers who felt annoyed compared with any other industry in our study. The result is that just 8% will advocate for the brand, only 13% plan to increase their spending with the brand, and barely 15% plan to stay with the brand.
Users can abandon digital sites and purchase paths within 50 milliseconds if the experience does not meet their (ever-increasing) expectations.
On the negative side, customers are more willing and able to move spend when they encounter poor experiences, meaning companies are facing the risk of confronting a 10% churn reality if they underperform in CX.
Leading through change requires that right mix of imagination, inspiration, and gritty execution. And we are in a world of change. Empowered customers and the constant and rapid wave of digital innovation are changing market fundamentals. Leaders are now challenged to respond.
I had the pleasure of hosting a discussion with James McQuivey, Carl Doty, and Sam Stern to talk leadership in the age of the customer. Our conversation covered a range of topics from having the wisdom to see the market for what it is versus how we would like the market to act to putting in motion strategic and operational change that is necessary, new, and risky. Here are the five takeaways:
The customer is in motion. Customers rapidly adopt — and rapidly abandon — technologies, services, and brands. That is wonderful and scary thing. It creates new possibilities. But it also redefines the norms for churn where a decision to shift spend is made by a single experience — good or bad. This dynamic can represent a major threat to growth if companies need to absorb 10%+ churn.
It is often said that campaigns work in poetry (beautiful language with lofty ideals), but one governs in prose (the pragmatic workings of the day). If we are in a poetic state, this is one strange poem with little rhyme or reason.
However, there are common threads that are meaningful that tell us something about not only the election but also the business climate.
The transfer of power from companies to the customer is driving a wide variety of changes: some small and targeted and some that are far-reaching and fundamentally change the trajectory of companies (and careers, I may add).
I had the pleasure of moderating a video webinar last week that explored the customer dynamic, specifically looking at how it will play out in 2016. We also looked at how companies sense and respond to this dynamic change: how well companies are reading the tea leaves and taking action and what actions seem to matter to compete and win in a customer-led market.
I had a blast moderating this panel with Sharyn Leaver, Michelle Moorehead, and Harley Manning. If you saw it live or on-demand, I hope you had a blast as well and took something away that can make a difference for your company and yourself.
We captured the webinar through a thought-illustration that provides an artistic touch to a great conversation.
It’s complex, right? There are a lot of moving pieces, big ideas, and really big decisions. So let’s break it down:
It’s not news that the digitally empowered customer is changing our world. What is news is 1) the pace needed to catch up to an extremely dynamic and impatient customer and 2) the magnitude of real change needed to meet the challenges (and opportunities) of a customer-led market.
The magnitude and pace of change driven by customers, competitors, and innovation can be dizzying:
As loyalty structures erode, customers are conditioned to rapidly adopt and abandon services.
I’m not alone. Creating a superior and differentiated customer experience is a core strategy for most companies — a pillar of who you want to be. It’s likely in your mission statement, annual report, 10-K, strategy deck, or company culture declaration. In a Forrester survey, “improving the customer experience” was tied with “growing revenue” as the No. 1 business priority over the coming year. Great CX is the big ambition in the sky.
For many, it remains an ambition.
The feedback I get from executives is consistent with my own thinking and Forrester’s body of research in this area. CX can’t be an attitude, tagline, or one-time corporate initiative. It has to be a different way of doing business, a new kind of operating model.
That means addressing the complex areas like people, process, and culture.
At Forrester, I keep returning to the basics to help us take simple but important steps forward. Here are five observations from the frontlines:
Change your perspective. We have a sense of how customers are supposed to traverse different touchpoints and a sense of the experiences we want them to have. But that’s not the starting point. CX is about the customers, on their terms and in their voice. Sounds basic, but that fundamental reorientation requires a surprising level of tenacity and discipline.