Archive for the ‘Customer Experience’ 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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Delivering the omni-channel experience

New technology-based “channels” are giving firms the opportunity to more deeply interact with customers.  However, adding new channels to a traditional business can trigger marketing misalignments, internal strife and significantly higher cost.  Managers who can overcome these challenges to deliver an omni-channel experience can grow revenues, enhance customer value and improve margins.

A channel can be any intermediary between a customer and the manufacturer of a product or service. Traditional channel partners include retailers, outsourced call center and wholesalers.  New channels – handheld devices, apps and soon, wearable computers – are enabling a host of activities including mobile commerce, information gathering and social interaction. Entering this brave new world poses significant risks for a company.  Consider these three areas:

  1. Marketing

Programs designed for different channels can easily work at cross purposes, leading to reduced marketing efficiency and effectiveness.

  1. Information Technology

Adding new technology to heterogeneous infrastructures is not simple or inexpensive.  Furthermore, channel must operate reliably and securely across different platforms, networks and geographies.

  1. Organization

Channel managed in divisional silos hinders operational integration and drives up complexity, resulting in higher administrative costs and conflict.

All of nothing

To overcome these challenges, many firms are pursuing an Omni (meaning “all” or “every” in Latin) Channel strategy, whereby all sales and support channels work synergistically to seamlessly deliver a firm’s brand promise to each customer segment. In turn, the operating and IT model is organized to deliver on a consistent experience at every customer interaction.

A way forward

Some companies we have researched are meeting the omni-channel test – but many are not.  Successful firms recognize the strategic importance of their channels and share some key attributes, including:  a customer-centric philosophy; an emphasis on organizational and technical integration and a collaborative mind set inside and externally.

New software can help enable customer centricity across every channel.  As an example, NexJ Systems, a leading software provider, developed an enterprise-wide solution that gives managers the information and tools to manage all their channels for maximum performance.  According to CEO and Founder Bill Tatham, “At one of our large insurance customers, a single view of the customer and every interaction with that customer is shared by head office, the contact center and the field agents, allowing collaboration in selling and customer value maximization.”

One firm that is getting it right is TD, which is no small achievement in the complex retail banking space. At the core of TD’s effort are three key principles:

  1. Put the customer first

TD launches and manages channels & services based on what the customer wants, not just what their technology can provide.  The firm receives a daily flow of usage data across each channel generating real time insights on a user’s behaviour as well as needs states.   This customer-centric philosophy ensures each channel maximizes the value delivered at the lowest possible cost.

  1. Have a supportive organization

TD understands that consistent leadership, a clear ethos and engaged workforce can make or break the omnichannel experience. Their unique “Better Bank” culture emphasizes continuous improvement, collaboration and a longer view of program payback.  TD’s digital channels are not managed as siloed businesses.  Instead, they reside in a horizontal, enterprise-wide structure, which helps drive marketing & operational integration, rapid execution and higher system ROI.

  1. Be bold but implement prudently

Though keen to adding new technology, TD takes a prudent approach to introducing new services.  The Company adopts an end-to-end operating view and a “continuous improvement” approach to designing and implementing the right technology.  Before launching any capabilities, multi-functional teams carefully evaluate their options and select the ones that best fit their brand and IT strategies.

“Customers want us to know them, and we’re continually evolving our notion of convenience to make their journey with us more comfortable, no matter when, where or how they choose to bank with TD,” says Teri Currie, Group Head, Direct Channels, Marketing, Corporate Shared Services and People Strategies. “We are leveraging TD’s strong North American brand and scale to develop connections with our customers by focusing on their needs, looking specifically at their journey with us to understand how we can make their lives better.”

TD’s approach is working.  The Company is rated number one in customer satisfaction (according to J.D. Power) among the Big 5 Canadian Banks for In-person, ATM, Online, Automated and Live Phone.  This accomplishment is not merely a function of the company’s strong bank network.  TD is also number one Canadian bank for mobile banking according to Commscore.

Providing an omni-channel customer experience can generate significant rewards, though it might not be an easy journey.  Nonetheless, managers have little choice. In a low growth world, failing to prioritize an omni-channel strategy can result in missed growth opportunities, higher customer attrition and increased operating costs.

For more information on our services or 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.

Marketer as anthropologist

Many companies prioritize learning customer needs above any other marketing activity so that they can create better products and service experiences. Typically, marketers will use traditional qualitative techniques like focus groups, surveys and one-on-one interviews. Unfortunately, these tools often fail to generate breakthrough insights. Standard qualitative methods are good at telling firms what is happening but not the why it’s happening. To get to the root cause of a consumer’s actions, marketers need to explore the recesses of their mind to identify subconscious drivers of behaviour. Anthropology is a very effective way to do this.

Simply put, anthropology is the study of people and civilization, past and present. It incorporates teachings from a wide range of disciplines, from psychology and biology, to the humanities and sociology. Anthropology is increasingly being used by companies (Starbucks, Lego, Herman Miller and Nokia are pacesetters) to better understand latent consumer needs and as well as societal and religious influences on their behavior.

In action

The following example shows anthropology in practice. A firm in the spa industry engaged us to help redesign its customer experience and service offering for female patrons. The client wanted to address any unmet customer needs and better differentiate their customer experience. Conventional research techniques regularly produced muted feedback, which led to copycat store designs and products. We wanted to go deeper into the consumer’s subconscious to find unmet needs and drivers that triggers behaviour. To get there, we employed anthropology to probe fundamental beliefs and values around their body image and wellness as well cultural influences. For example, how do women define beauty?  What role does human touch play? And, how can a spa experience help satisfy a women’s intrinsic needs? Our findings upended conventional thinking and led to a revamping of how the facilities were designed and how the services and benefits were communicated, resulting in higher client retention, an enhanced brand image and increased rates of cross selling.

Conventional qualitative research techniques take people at their word. This can be risky for brands.  At their core, consumers are often irrational, driven by motives or external influences that are unseen even to themselves. Using anthropology as complementary research can produce a more holistic and penetrating view of the consumer in their real life condition. Likewise, anthropology’s rigorous, academic-driven methodology preempts the emergence of erroneous assumptions around a customers’ behaviour that could have been shaped by a firm’s culture, the bias of its managers, or increasingly, the large but imperfect data stream flowing in.

Anthropologist have a number of data-collection instruments at their disposal including artifact analysis, quotidian diaries, and observational studies. Importantly, practitioners approach their research without hypotheses, gather­ing large quantities of information in an open-ended way, with no preconceptions about what they will find. The collected data is raw, personal, and first­hand — not the incomplete or artificial version of reality that is generated by most market research tools.

Anthropology is particularly helpful in understanding the dynamic world of social media. “Companies are beginning to use anthropology to understand the stream of consciousness within social medial that flows with ‘here’s what I’m doing/thinking/wanting now,’” says Lynn Coles a leading marketer. “Anthropological research helps us better understand and inhabit the social communities to identify behavioral patterns as well as the emerging dialect within a particular community so we can better communicate with our target consumers.”

Basic approach

1. Frame the issue

Anthropology requires the marketer to frame the problem in human — not business — terms. Doing so gets to the core of how a customer experiences a service or product. For example, a business problem could be:  How can a wireless provider reduce churn? The corresponding anthropological issue would be: How do our customers experience our service, and why are they leaving?

2. Assemble the data

The raw data is codified in a form of carefully organized diaries, videos, photographs, field notes, and objects such as packages. Although this open-ended data collection casts a very wide net, it requires a disciplined and structured pro­cess that needs to be overseen by anthropologists skilled in research design and organization.

3. Find patterns, insights

The anthropologist then undertakes a careful analysis of the data to uncover themes or patterns. When organized in themes, a variety of insights will emerge about how a customer feels, their goals and what drives their actions.

Of course, traditional quantitative and qualitative research methods have their place and should remain part of a marketer’s analytical tool kit. However, anthropology will play an increasing role in uncovering the consumer’s subconscious needs as well as societal/religious behavioral drivers, areas that are largely impervious to standard qualitative techniques. Producing this holistic view will allow marketers to design more relevant products and services that deliver higher value.

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

Creating great customer experiences

Creating great customer experiences — what leaders like Disney, Zappos and Nordstrom do on a consistent basis — is one of the few areas left for companies to differentiate and generate good margins. Making it happen, however, is easier said than done; fundamentally, it is a people issue.  How do you get employees to go beyond the call of duty to regularly exceed customer expectations? By empowering them to develop emotional connections with each customer.

A great client experience can happen wherever an organization interacts with a customer. And, it is not limited to face-to-face interactions or front-line staff.  Zappos, an online retailer, provides great experiences through call centres and online dealings. A great customer experience is hard to pin down because the definition of “great” and “experience” are tough to define.

“Clients see good service as table stakes,” says Kathy Kenny, assistant vice-president of product management information delivery at investment-servicing company CIBC Mellon. “They expect us to consistently go above and beyond, anticipate their needs and turn every request into a value-added interaction.”

In general, a wonderful experience has many elements including proactively solving a customer’s problem, delivering unique value and exceeding their expectations.

Here’s an example. A modestly sized client of a private bank was on vacation during a massive rainstorm that had pummeled the city. On his own accord, a representative of the bank did a drive-by of the house and found a large tree was poised to fall on it. The bank employee, on his own, engaged a tree service to fix the problem, informing the client after he returned home. The employee didn’t consult a script or seek advice from a manager. He went the extra mile because it came naturally to him and that was the organizational expectation. The bank’s management believes creating these kinds of experiences — and not financial returns — is the key reason why it enjoys virtually 100% client retention even with above-average management fees.

The difference between a successful transaction and a great experience is the presence of an emotional connection — a happy, content and trusting feeling — between the parties. These connections should occur across the entire customer journey — not just at selected touch points. Research, cited in the Harvard Business Review, found emotionally engaged customers are typically three times more likely to recommend a product and to remain brand loyal (though this is debatable). How do you develop customer-pleasing staff?

Hire for attitude

Emotionally engaging and passionate workers do not materialize out of thin air; they emerge through a strong recruiting process that provides a regular stream of suitable employees. Experiential leaders like Apple and Southwest Airlines use psychological testing and group interviews to see how people treat each other and communicate.

Set lofty expectations, and reinforce them

Management should set high expectations for how they want their customers treated. However, employees won’t take care of customers if they are not trusted, treated with respect or listened to through formal and informal mechanisms. Importantly, management also needs to regularly and visibly reinforce these expectations and positive behaviors.

Encourage emotional connectedness

Despite advances in technology, engaging customers and solving their problems is still largely undertaken through personal contact. Emotion is the grease that more easily facilitates this interaction. Staff members have many ways to introduce emotion including taking ownership of issues (rather than blaming others), displaying empathy, being proactive and always exhibiting good interpersonal habits (e.g., shaking hands, keeping eye contact, and being active listeners).  Organizations should also look toincorporate tenets of behavioural psychology in their service models.

Get out of the way

When people have clear expectations and are trusted to do their jobs, they feel valued and empowered.  As a result, they are more likely to connect emotionally with the customer.  Rules and metrics are helpful but can be detrimental, especially if they stifle creativity and skew behavior.

Capture and share best practices

Great experiences often arise from creative problem solving at the front lines.  These learnings should be captured and shared to improve overall corporate performance.

Of course, motivated employees need supporting technology and operational systems to fulfill their promise. In some cases, companies may need to redesign their service models. However, these can only go so far in delighting customers and producing an experiential advantage. However, firms need to empower motivated front-line staff so they can emotionally connect with customers at every touch point to achieve this end.

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

Guaranteeing integrated marketing

Many marketing departments resemble the Tower of Babel:  disparate teams, speaking different languages, working at cross paths and often not getting along.  In business parlance, this is called an integration problem.  Like the challenges facing the denizens of Babel, poor integration can wreak havoc on a company’s marketing effectiveness and brand image. Luckily, CMOs can overcome these problems by tweaking their structures, processes and practices and driving tighter strategic alignment.

Loose integration occurs when different customer-facing groups (e.g., marketing, sales, customer service) pursue different institutional (or personal) agendas. We have seen the implications of weak integration in dozens of our clients and the firms we benchmark.  Symptoms include: schizophrenic brand messages; tactics that run counter to the marketing strategy; duplication of effort and; in-fighting around who controls the priorities and budget.

The root causes of loose integration often arise unintentionally.  For example, programs are implemented unevenly; customer and channel fragmentation leads to a plethora of conflicting messages and tactics and; the growth of marketing outsourcing increases the odds of misalignment.  Not to be minimized is the personal dimension where department heads or employees purposely pursue agendas that are not aligned with the marketing strategy.

An almost fully integrated company  (complete integration is probably unrealistic) stands a good chance of delivering superior marketing performance as defined by lower cost and higher levels of customer acquisition and retention, higher levels of innovation and a stronger brand image. Examples of highly ‘integrated’ firms include: Apple, Four Seasons, Nike, Coca-Cola, McDonald’s and Victoria’s Secret.

Leaders can preempt and overcome the harmful effects of low integration by considering three, interrelated, approaches:

1.  Drive strategic congruence across the company

Brand internally

Your employees are market ambassadors as well as influencers within their organizations. Getting them to read and execute off the same marketing script will minimize integration issues.  Some management action items include evangelizing the marketing mission and strategy across the company, regularly communicating the firm’s value proposition and point of difference, and quickly updating stakeholders with any important changes to the program, partners, etc.

Make planning visible

A transparent and inclusive planning process increases integration and alignment by ensuring all views are aired, promoting fact-driven decision making, exposing management bias and reducing organizational uncertainty.

In-source more activities

The more marketing agencies and contractors are used, the greater the chance of integration problems, tracing to complexity-induced errors and strategy-execution gaps. Bringing more work and functions in house (and ensuring they are properly managed) will improve integration.

2.  Break down silos

Revamp the structure

A business maxim says that structure should follow strategy.  Often the structure gets out of sync and needs to be corrected.  Some ways to do this include organizing around capabilities or strategic goals like customer acquisition and retention, and introducing a shared service-delivery model that centralizes program execution.

Rogers Communications uses a couple of different structures to drive integration. “We bring people from across the organization and regardless of reporting relationships on teams to focus around common goals such as retention or acquisition,” says John Boynton, chief marketing officer. “Another approach is around execution. For example, with social media executions we have a hub-and-spoke model with experts in the hub giving advice and assistance to those in the spoke trying to use social media for varying different objectives.”

Clarify roles and responsibilities

Unclear accountability and decision rights naturally lead to conflicting programs and duplication of effort, not to mention internal strife. One way to address this problem is to clarify and formalize roles and responsibilities with charters and circulate them to key stakeholders.

3.  Use one playbook

Fine-tune the management systems & culture

Employees often work at cross-purposes when their goals, metrics and incentives are not aligned.  Leaders need to ensure there is a shared marketing mission, lexicon and performance measurement systems that is congruent with corporate priorities and integrates every activity up and across the organization.

When formal systems are lacking, companies need to be pragmatic. “Our goal is to define and create a marketing culture where it is okay to have discussions at the outset to establish decision makers and inputers,” says Boynton. “This can save a lot of time and avoid disparate executions and decisions.”

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

Reinventing customer service

These days, regularly delivering a great customer service experience is table stakes. Poor performance in this area has been linked to higher customer turnover, lower margins and hidden revenue leakage.  Not surprisingly, service concerns are rising to the top of the corporate agenda.  However, addressing these issues has never been so difficult due to the systematic nature of the problem.  In particular, customers have become more demanding and fickle; channels have proliferated triggering coordination and integration challenges and; operations are groaning under the weight of product and supply-chain complexity.  A recent article in the Harvard Business Review outlines a new innovation framework that seeks to reinvent service delivery by challenging basic operating assumptions.

Prudent leaders can no longer ignore the potential gains in improving customer-service performance.  Enhancing service delivery (especially for profitable customers) can deliver “more value for less,” by: driving revenues (increased loyalty, cross-selling rates), reducing costs (lower customer acquisition costs, increased operating efficiencies) and improving the brand image (increased market differentiation, support premium pricing).  Many firms like Nordstrom, Zappos and Apple have used customer service strategies to outflank competition and drive superior financial results.

Time to innovate?

The authors of the study, Kamalini Ramdas, Elizabeth Teisberg and Amy Tucker, spent four years studying innovation in financial services and health care — two American industries that have substantially redefined service delivery.    They identified four customer-service warning signs that catalyze the need for reinvention:  1) a backlog of paperwork; 2) scapegoating IT; 3) the use of humour or satire to describe the service experience and; 4) a lack of service-related content within informal employee communications.

To trigger breakthrough innovation, the authors developed an analytical framework around how service is defined and delivered, based on the following four dimensions.  Considering each dimension requires a detailed analysis of customer, partner and end-user needs, internal skills & processes and partner roles & responsibilities.

The structure of the interaction
Service is usually delivered in one of four different ways:  by a single or many (internal or external) providers to a single or many customers. Managers will need to understand the trade-offs between these four approaches and design the optimal interaction that maximizes delivered value (as defined by internal metrics and external validation) at the lowest cost.  Service redesign should be guided by two factors: the degree to which sharing information adds value for customers (e.g. reduces cost and service time, drives consistency) and the need for coordination among individual or group providers (e.g. share best practices, ensure integration).

The service boundary
In many sectors, service is not delivered according to customer needs but rather to what is defined by formal service boundaries.  Many banks, for example, deliver wealth management services through branches, asset managers, and commercial bankers.  This “siloed” delivery is often burdensome and expensive for customers and frequently cumbersome for providers.  Defining where those boundaries exist internally and with partners — and the degree of integration and coordination it entails — has major implications on service levels, costs and performance.  To find the right service boundary, managers need to consider two questions: do many customers use the same complementary services? And, do problems with those services significantly hamper their outcomes?

The allocation of service tasks
Service delivery can be dramatically improved when there are requirements to add or change the service responsibility.   These triggers could occur when internal ownership shifts, capabilities and skills are benchmarked or new products are launched.  The optimal task ownership should depend on the fit between employees’ tasks and their expertise and the prevalence of tacit assumptions about who does what, when and how.

The delivery location
The location of a service has an important bearing on the quality and timeliness of that service.  For example, diabetes care providers often operate out of different physical locations.  Although each centre and individual can deliver excellent care, in totality, it can be a hassle for the patient. The optimal location profile may require relocation, co-locating with complementary services or a shift to more web-based delivery.  Key questions to consider are: does the location hinder access or outcomes for customers? Have their communication and information needs changed?

In our consulting experience, reinventing service delivery works.  However, the four dimensions of innovation cannot be considered in isolation as they are often interdependent.  In general, the more wide-ranging the service redesign the more likely it is to involve changes along multiple dimensions.  Furthermore, managers need to pay as much attention to change managementbehavioural psychology and linking service to business metrics as they do task realignment and process redesign.

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

Brand building without marketing

Companies who think that a strong brand can only be developed through marketing are missing out on other ways to improve their image.   While marketing is vital, we take the view that the brand is impacted by the entire business.  Many functions like sales, customer support and facilities management play a key role in creating customer perceptions.  While this is not an original idea, most companies still rely on traditional marketing activities like advertising, packaging and promotion to build their image. Our research suggests that other factors are equally if not more important in influencing a brand.  Companies who can identify these key brand drivers will be able to improve their brand execution, not to mention business and financial performance.

No logo

Loads of research confirms that trust in brands has declined.  People view brands with a jaded eye and consumers are uncomfortable with a brands’ desire to control the message. The market research firm Young & Rubicam found that the percentage of brands that consumers consider trustworthy plunged from 52% in 1997 to 22% in 2008. This skepticism is being amplified by the power of social media which now give consumers and influencers as much power as the marketer to influence the brand.

A new branding paradigm

Enlightened organizations understand that building a trustworthy branding is a process that is too important to be left only to the marketing department. These companies recognize that brand communication is the responsibility of all employees, involves every department and is a participatory process. As a result, some firms are moving away from a marketing-led, push-based communications strategy towards a more holistic approach that seeks to rebuild consumer trust and communicate the brand promise at every external touch point.  This new paradigm integrates corporate strategy, employees as branding ambassadors and regular engagement with external stakeholders.

Keeping it real

Implementing this new approach is part marketing program, part operational strategy and part cultural change.  Below are a few ways managers can build their brand without traditional marketing:

Employees as brand ambassadors

We have seen many companies spend millions of dollars on advertising but neglect to effectively communicate their value proposition to their employee base – many of whom deal with customers on a regular basis. Marketing one thing and having your employees believe something else is a recipe for poor brand execution and wasted spending. Getting everyone aligned takes time but will pay dividends through reinforcing branding messages and increasing clarity.   

Optimize the customer experience

A compelling brand strategy will flounder if the customer experience is not supportive of the brand promise.  Our client experience bears this out. We have seen a service-focused hospitality brand stumble (and witness declines in loyalty and up-sells) when the front line staff was not consistently friendly, responsive and knowledgeable.  In another case, we witnessed how ignoring channel needs and product documentation compromised the brand equity of a leading software product.  Ultimately, this helped contribute to lower market share and margins.

Open up the brand

One way to garner trust is to open up your brand to your stakeholders.   In essence, customers, employees and influencers contribute to your brand message through social media and other marketing vehicles.  Although the likelihood of frank discussions – warts and all – is high, this strategy can reduce skepticism and mistrust by portraying the company as an honest, open, credible and authentic corporate citizen.

The Danish toy company, Lego Group, is a good example of well-known brand that has gotten even stronger through open branding.  Lego recognized early on that its brand was not created by the marketing department, but instead by the entire company through its interactions with its community – retailers, consumers, media and other stakeholders.

Open branding is a great way to reinforce your brand building blocks.  To best leverage this new construct while minimizing risk, marketers should-

  1. Deliver value not communication – Typical marketing communications is a turnoff to customers as well as employees.  Increasingly, consumers want valuable, objective and timely content – not just slogans – that helps them and respects their time.    
  2. Share control – If brands want to be seen as credible, authentic and compelling, firms must accept that their image is no longer solely controlled by its managers.  With the emergence of social media and other new Web 3.0 technologies, brands are now being molded by a diverse group of people whose opinions should be heard.
  3. Open up – A brand manager’s role must go beyond traditional marketing to fully engage – listen, absorb, facilitate and share – consumers and influencers.  The key organizational shift here is to stop seeing consumers as an object or transaction and to start seeing them as a source of creativity and co-creation in areas like branding, product design and support. Many successful brands like Harley Davidson and Apple nurture communities of passionate users who evangelize the brand and provide vital market and product information. 

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.

In retail, are you experienced?

Now more than ever, creating a rich shopping “experience” is de rigueur for retailers seeking to be a destination of choice.  Competing on the basis of the shopping experience – for example, delivering useful education, ‘best n class’ service, welcoming aesthetics and engaging entertainment – is not a novel idea.  Many world class firms like Walt Disney, Southwest Airlines and Hard Rock Hotels have built significant businesses by leveraging an experiential-based business and marketing model. Its now the retail sector’s turn.

The evolving landscape

Recent market, technological and consumer developments have put the shopping experience at the center stage of retail marketing and operations. Stores and chains are increasingly seen by buyers as undifferentiated and unexciting; consumer spending has stalled and; pure-play Web retailers and online shopping tools have come into their own.  At the same time, social networking’s popularity is exploding while bored, confused or fickle customers increasingly demand education, aesthetics and entertainment as part of their retail experience.  To stay relevant and competitive particularly in the mid-market and premium segments, merchants will need to regularly orchestrate and promote compelling on and offline shopping memories.  That memory itself will become the one of the products – i.e. the “experience.” 

Evolving consumer behavior is a major factor impacting the customer experience. For one thing, sales channels are changing.  Online sales, already 7% of all transactions, are forecasted to hit 15% by 2019 (source:  Google).  Although in its infancy, mobile commerce is expected to explode over the next few years.  Increasingly, buying decisions are being made before the consumer visits the web or traditional store.  Twenty years ago, 70-80% of all grocery purchasing decisions were made at a store.  Today, it is less than 50% according to Joel Rubinson, former chief research officer of the Advertising Research Foundation.  Typically, consumers will first research products online or canvas their friends and then decide what they will buy before going to a store.  Or, they may forego a trip to the store altogether and make purchases via the Internet. 

Moreover, social networking is enabling consumers to take control of how marketing messages are distributed and consumed – at the expense of company-sponsored sites.  Buyers now attach significant value to online reviews and often spend more money online after reading product recommendations by other consumers.  Facebook, for example, accounts for 38% of social media page referrals online (source: MDC Partners, a marketing firm).  According to pundits, reviews like these are trusted some 12 times more than advertising messages.

These changes have important consequences. When shoppers think about a brand, they now consider their entire buying and service experience.  To be successful, marketing campaigns will now have to encompass and integrate all of the touch points of a company’s relationship with a consumer, including the first moment of contact when a product search begins, through the sale and service, and eventual product disposal and replacement. Though consumers have far more control over marketing messages than they ever have, retailers still have plenty of scope to guide opinions. That’s where experiential marketing comes in.

Who is getting it

Recently, a number of retailers have pushed marketing boundaries to create innovative experiences that integrate entertainment, social media, information and traditional advertising. Two examples were highlighted in a recent issue of the Knowledge@Wharton newsletter:

Macy’s

In 2010, Macy’s hit the mark with a couple of highly successful marketing programs that integrated a number of different experiential elements.   During New York’s Fashion Week, the retailer provided customers with a “magic fitting booth,” which allowed them to “try on” virtual outfits and post images of themselves in their new clothes on Facebook. All year round, shoppers were able to use their phones to watch videos for fashion tips from designers and makeup artists. For the holiday season, Macy’s launched an animated website with an online tool enabling customers to send letters to Santa Claus. The site, which received more than 1M letters, was combined with a fundraising drive for a children’s charity and a mail order guide.

Bloomingdale’s

This merchant understands the critical role of human contact in delivering powerful retail experiences.  Bloomingdale’s 8,000 in-store “associates” play a key role in delivering and enabling experiences.  Their responsibilities include collecting customer information in databases.  This information is then used for marketing programs such as birthday alerts or shopping recommendations based on previous purchases. “What we don’t want to lose is the assurance and authenticity of human contact: the touch, the feel, the laugh, the personal knowledge” says Tony Spring, President and COO of Bloomingdale’s.

Making it real

Incorporating the above elements – plus emerging mobile and location-based services – into the marketing and operational model will lead to further evolution of the shopping experience. To remain competitive and efficient, retailers will need to develop a holistic “customer experience” vision and strategy that integrates both traditional and new media, while addressing every point of the purchase/service continuum.  Making this vision a reality will requires firms to revamp their organizational structure in order to bridge functional silos like digital marketing, public relations, store design, advertising and merchandising.

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