Archive for the ‘Channels’ Tag

Maintaining a winning customer experience

A customer experience strategy is an amalgam of practices, systems and values that guide interactions with customers and prospects across different sales channels, platforms and geographies. In an increasingly competitive and commoditized marketplace, creating a ‘wow’ customer experience is one of the few tools left for companies to retain customers, sustain margins and build a long-term competitive advantage.

Elements of a good customer experience strategy include customer-centric process design, passion-driven employee engagement, coherent interactions across multiple touch points and operational integration. Companies as diverse as Nordstrom, Lexus, Disney and Singapore Airlines have built industry-leading market share, profitability and shareholder value by consistently delivering ‘wow’ (i.e., higher than expected) customer experiences at every interaction.

In many cases, however, designing the ideal experience is the easy part, particularly if it is built on a foundation of product, brand and service excellence. The tougher challenge is maintaining this capability over time. Companies can preserve their winning customer experience by (1) developing real-world measurement systems, (2) institutionalizing key values and (3) staying close to changing customer needs and requirements.

Dropping the ball

Ten years ago, my company worked with the functional teams of a large IT solutions company to develop a customer experience strategy for their sales, support and professional services. The model was developed by working backward from their desired client interaction, and tailored to their different segments, customer types and channels. The new customer service strategy embraced every touch point, from the sales teams scripts and customer on-boarding practices to support triaging and billing processes. After only 12 months in market, the new model was credited with boosting loyalty as well as cross selling rates.

Three years out, however, the firm’s growth stalled. The metrics showed declines in customer satisfaction, online engagement and service levels. A deeper analysis indicated that their customer experience had degraded due to a variety of factors: changing client requirements and expectations (they went higher); a lack of organizational continuity (increased turnover of front-line staff prevented the inculcation of customer experience values into new employees); and clumsy integration of new enterprise software (which reduced service levels and complicated processes). Ultimately, a gap had developed between the initial customer experience strategy and its supporting capabilities.

Sustaining your customer experience strategy

Companies can preempt these issues by better institutionalizing their customer experience management practices and values. Some ways to do this include:

  • Frequently research your customers to stay in sync with their dynamic needs and requirements as well as ensuring your customer experience is consistent through new sales and support channels.
  • Make cultural fit and internal alignment a priority. Every customer-facing employee must inculcate customer experience purpose and values (e.g., ‘the customer is always right’). Rotating customer ownership through senior leaders in key departments is a good way of keeping focus and alignment.
  • Develop early warning systems to track progress, identify problems and generate learnings that can improve existing programs. These systems should track actionable metrics that align to each department’s and individual’s performance goals.
    A Canadian leader

One company that does a good job of maintaining a compelling customer experience is Sun Life Financial. The insurance and wealth leader did all the right things when they designed their customer experience in 2012, such as linking the program to key business metrics and adopting a global and holistic business view. Moreover, Sun Life Financial did not leave the program on auto-pilot.

To ensure focus and follow through, Sun Life Financial created a global working group made up of senior leaders from many departments, including marketing, finance and operations. This group meets often to track and review a variety of customer metrics, including net promoter scores and how they are tracking against improvement measures across all lines of business, as well as to review the latest customer and brand research. Importantly, they are not a corporate rubber stamp body: Their strategic mandate includes exploring opportunities for scale economies, sharing learning between regions and businesses and recommending changes in tactics (if necessary) so that customer needs are placed first and foremost.

“Our customer experience program reinforces the philosophy that the customer is at the centre of everything we do,” says Mary De Paoli, Executive Vice-President, Public & Corporate Affairs and Chief Marketing Officer, Sun Life Financial. “Delivering exceptional customer experiences requires a commitment to asking your customers, regularly, how you can improve the products and services they depend on from you. We believe this is the number one driver of the long-term success of our business.” Although it is still early days for the working group, the program has been credited with creating a winning online experience and better enabling the channel (e.g., plan sponsors, brokers and consultants) experience.

For more information on our services and work, please visit the Quanta Consulting Inc. web site.

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Consumer Good’s dilemma

Consumer Packaged Goods (CPG) has always been considered a solid, recession-proof business. After all, people always need to eat, wash and look after their households. However, steady demand does not mean firms can afford to be complacent. A number of developments are producing significant headwinds – and opening up new opportunities for growth. How CPG leaders navigate these waters can make the difference between building or losing market share.

The CPG industry is facing many challenges, including:

  • Weak growth

Times are tough. Unemployment remains high, incomes are flat and a recessionary mindset continues to influence consumer behavior in terms of higher coupon usage, increasing market share of deep discounters and the growing popularity of lower cost private label brands.

  • Margin pressure

Margins are under siege tracing to rising input costs and limited pricing power due to retailer consolidation and pricing pressure from discounters. Emerging market growth was supposed to offset this funk. However, emerging markets have become more competitive due to slowing growth rates and the rise of viable, more competitive local brands. Profit risk comes at the same time as managers need to boost their capital and marketing spend to drive product & manufacturing innovation and next generation IT capabilities.

  • Growing role of regulators and activists

Governments are getting more involved in what goes into our bodies and households. Increased oversight has important implications in terms of regulatory compliance, product development and marketing tactics. Some regulators are trying to levy higher taxes on products that are considered unhealthy, introducing measures to improve product safety, scrutinizing product claims and labels, and discouraging marketing to children. Moreover, there is increasing consumer demands for transparency on how companies perform when it comes to sustainability and corporate social responsibility as well as where products are made.

These are not easy challenges but the future need not be grim. Leaders should consider the following strategies to cope with this ‘new normal’:

  1. Embrace digital transformation

New digital technologies and devices have fundamentally changed consumer behavior in many categories. Winning companies will skillfully embrace digital transformation to more tightly connect their brands to consumers, and demand to their supply chains.

Yet, most firms we have researched have been cautious in embracing digital business. They do so at their own peril. Many companies need to quickly become proficient at digital marketing; adapt to new information gathering & mobile buying practices; leverage Big Data insights and; recognize the role of social networking in driving word of mouth referrals, awareness and community-building.

CPG firms have a variety of emerging technologies at their disposal. They can use location-based services to deliver personalized promotions or content based on their physical location. Companies can also leverage a smartphones or tablet’s camera functionality to directly enhance the customer experience. By scanning QR codes on a product, consumers can get more information, such as advice on how best to use a product or which complementary products to buy.

On the operational side, cloud services plus “agile” development practices give companies the ability to shorten the product innovation cycle, reduce infrastructure costs and rapidly scale functional capabilities.   Mining Big Data insights can help organizations better identify consumer preferences and trends, improve marketing ROI, refine pricing and deepen relationships with retailers.

  1. Refine brand strategies and portfolios

The difficult economic climate requires brand managers to refine their targeting and value propositions while holding down cost. In particular, companies will need to have distinct strategies to address an increasingly stratified market of affluent and lower-income consumers as well as seniors and ethnic groups. Multi-category firms should think about pursuing complexity reduction initiatives to cull poorly performing and costly sizes, variations and brands as well as streamlining operations and maximizing scale economies.

  1. Optimize channels

According to a 2013 Deloitte study, U.S. consumers consider 2.5 channels for their CPG purchases across 28 food, beverage and household goods categories. Consumer migration to both on and offline channels for selling and support creates operational, IT and marketing headaches around integration, alignment and efficiency. To profitably serve consumers with a consistent experience, firms need to balance their reliance on traditional channels like retailers and wholesalers with the need to follow consumers into emerging channels (e.g., mobile computing) and deliver them more personalized service, products and information. In 2014, the ‘holy grail’ of brand strategy has become delivering the omni-channel customer experience.

  1. Tweak supply chains

Many companies can do more to squeeze more flexibility, predictability and efficiency from their supply chains. For example, Big Data and Predictive Analytics combined with advanced IT systems can better match supply and demand in real-time, minimizing inventory levels, improving service performance, and reducing stock-outs.

For more information on our services and work, please visit the Quanta Consulting Inc. web site.

Digital transformation’s first step

Most leaders we speak with are considering how to use digital technologies to improve business and financial performance. Research shows that digitally transforming a customer interaction or operational process can significantly improve bottom-line performance and enhance competitiveness. To exploit the potential of digital technology, the optimal strategy is to identify high-potential/low-risk opportunities, find enterprise-wide technological solutions and learn as you implement.

Digital business can be a game-changer. According to a multi-industry McKinsey study, digitizing the customer experience can boost sales and profits an average 20% over five years. From an operational perspective, leveraging digital technology can drive cost reductions, leading to a 36% improvement in profits after five years.

Digital technology can impact every facet of a company’s business model. Two areas in particular can yield significant value:

  • Improve the customer experience: Digital technology enables customers to get information and tools when they want it, as they want it. For example, the rapid rise of mobile computing has triggered major changes in buyer behaviour. Banks have responded by delivering their products and services through “always on” and data-driven mobile channels — and enabling more targeted and timely cross-selling of complementary products.
  • Automate manual back-office tasks: Digitizing boring, repetitive and error prone tasks can reduce cost and improve cycle times. One of our clients reaped major efficiencies by automating basic-level customer service (through enabling customer self-service) and the review and payment of expense reports.

Every sector can benefit from enabling digital technology. In fact, some of the necessary ingredients are already in place. Specifically, many firms already incorporate digital technologies like Big Data analytics, ERP systems, and cloud services. Unfortunately, these tools are often deployed selectively within a line of business or functional silos with little consideration paid to the bigger enterprise-wide impact, standards etc.

Nominate champions

Digital transformation can be the most difficult business shift many companies face; it is part technology adoption, part process redesign and part behavioural/cultural change. This transformation should be not undertaken without strong leadership at the C-suite and board levels; it is vital that these mission-critical initiatives have senior champions who possess an organization-wide and holistic customer view. Some firms have gone so far as to create the role of a Chief Digital Officers to lead digital efforts.

Understand the impact

The return on your digital investment can be compelling — and difficult to accurately estimate. Firms can not rely only on aggregated numbers like McKinsey’s; they need to undertake a wide-ranging business-case analysis that considers the full range of benefits including cost savings, improvements in customer satisfaction and higher cross-selling rates. The business impact should be measured through digital targets to evaluate progress and influence future investment and roll-out decisions.

Take an end-to-end view

Maximizing the value of digital requires a consideration of scope and scale that cuts across the firm. For example, automating sales activities will have important implications for inventory availability, product design and marketing channels. Managers also need a 360-degree view of organizational issues like available skills, cultural impact and change requirements.

In the above areas, we have found that companies need a detailed view of user needs and behaviour as well as formal and informal workflows. Digital transformation will often precipitate a need to refine processes, the nature of the service, and in some cases, the operating structure.

Carefully choose your opportunity

Leaders need to prioritize what to digitize. Trying to bite off more than you can chew may ruin the business case, quickly bog down implementation, and lead to conflict over scarce resources. On the other hand, having too narrow a focus may leave significant value on the table. Whatever the choice, managers must ensure the potential business value is compelling, the selected initiatives align to business priorities and they have the right resources and partners to execute. Leaders also have to accept that over time, some lines of business, activities or jobs will be displaced by digital technologies; these shifts — often sudden — can have important organizational ramifications.

Going digital is a journey. Hype may turn transformation into a sprint but in reality it should be seen as a marathon. Starting with a digital pilot is prudent for the technologically risk averse or inexperienced. In some cases like iTunes or Netflix, digitally transforming a product may call for a totally new business model. Managers will maximize digital’s value when they: select “low hanging fruit” opportunities, prudently invest based on the right risk/reward profile, get their workflows optimized and ensure the right resources and change methodologies are employed.

For more information on our services and work, please visit the Quanta Consulting Inc. web site.

Optimize the channel experience

Firms competing in channel-intensive markets are regularly challenged to satisfy finicky and value conscious customers without introducing too much cost and complexity.  All too often, however, a firm’s customer experience and value proposition is compromised by channel partners whose objectives, value proposition and capabilities are strategically incongruent.  For example, we worked with an IT equipment manufacturer whose premium brand image was hurt by the actions of a deep-discounting, low service distributor.  In another case, a leading consumer goods company could not satisfy customer service requirements because one of their retailers was unwilling to invest in new capabilities. 

To maximize customer satisfaction, managers should understand how their channel partners – such as resellers, portals, service providers, installers and retailers – interact with buyers through the entire marketing-purchase-service continuum and then work collaboratively with them to enhance that experience.   

This will not be an easy exercise. Many enterprises have thousands of SKUs, work with hundreds of channel partners and use multiple platforms to sell, communicate and serve customers.  There could easily be over 100,000 different physical and digital touch points between consumers, producers and channel partners.  This hodge-podge can only lead to conflicting, poorly integrated and uncoordinated marketing, channel and service programs resulting in failing customer experiences, overly complex operations and lower margins.

The root cause of this problem lies in misalignments between the structure of the channel and how consumers want to get information, purchase products and receive services.  Channels that are underperforming or based on yesterday’s requirements are often unable to accommodate current market needs let alone deal with growing consumer demands, new product launches and emerging digital technologies.

In reality, consumers no longer separate the channel from the product, service and message — the channel is the product. In the era of buyer engagement, customer acquisition and retention is a lot about effective channel management and design. To truly engage consumers through a multi-channel world, companies must do more outside the confines of the traditional channel marketing function.

Improving the channel’s ‘customer experience’ requires three fundamental changes:  1) an agreed understanding of buyer needs across the entire continuum;  2) a commitment and action from the entire channel to satisfy these needs — not just from the company’s marketing and service departments and;  3) a redefined channel management function that links the organization to a desired and brand-compliant channel customer experience.    

We have helped organizations design and implement new channel management programs that have enhanced customer engagement and reduced operational costs while driving higher revenues and service levels.  Some of these principles include:

Expand the channel role beyond just marketing

To better engage buyers whenever and wherever they relate to a firm’s product, companies must expand the channel management role beyond sales and marketing to include input to and co-ownership of all customer-impacted operational, IT, product and service decisions.    

Bring the channel into organization

To improve performance, firms need to bring a rich understanding of channel requirements into the enterprise.  This can be done by creating internal councils with IT, finance and operational representation.   As well, important channel relationships can be managed through integrated, cross-functional teams with P&L responsibility.

Tweak the channel

A good starting point is to think about the channel experience as customers do – a series of related interactions that, added together, make up a ‘moment of truth’ experiences. This approach will naturally identify areas where the channel can be redesigned and better managed to ensure strategic congruency.  This process will usually trigger a discussion of who internally is in the best position to manage these activities and what resources and capabilities are needed to achieve the new vision.

Get everyone on the same page

Channel engagement (at key touch points) and performance should be regularly measured with some of the same metrics that are used to evaluate brand image, operations or marketing effectiveness. All channel partners should align around these metrics and goals

Anticipate challenges

Optimizing the channel experience will not be easy given the business risks and the organizational implications to partners, employees, processes, technology and strategy.  Change will be doomed if management and the channel:  1) do not have a common understanding of their markets, buyers and value proposition and; 2) do not work collaboratively towards the same goals. If companies and partners don’t make the transition, they run the risk of being overtaken by competitors that have mastered the new era of engagement.

For more information on our services and work, please visit the Quanta Consulting Inc. web site.