Friday, October 5, 2018

Digital Transformation: No Pain, No Gain

Is there any business catchphrase more ubiquitous nowadays than "digital transformation"? Everyone craves the agility, innovation, relevance, engagement, reputation, loyalty, and brand advocacy that digital transformation promises. But how many are willing to do what it takes to achieve the sort of digital transformation that matters? If your organization wants a meaningful digital transformation, then it must be willing to do enough to make it worthwhile; otherwise, you are just putting band-aids on a gaping wound.

What does "doing enough" mean? That depends on many factors, such as your category, legacy systems, culture, the frequency of acquisitions, disparate systems, centralization, global footprint, and other attributes, but the most important factors are your openness to risk and your willingness to invest what it takes. In short: No pain, no gain.

Today, many traditional organizations cast a desiring eye upon their upstart competition having "benefits" such as agility, private equity, and newer technology unburdened by legacy systems. (Few, however, would take the corresponding drawbacks of cashflow urgency, bootstrap mentality, and--ironically enough--the lack of legacy reputation, customer base, and institutional knowledge.) The difference is that startups are permitted (in fact, encouraged ) to take business risks, invest heavily in building the right tech stack, and take losses against future gains. Meanwhile, traditional public companies are beholden to Wall Street expectations for consistent quarterly results.

This is why the key to digital transformation isn't going to be found in your IT department but in the C-suite. What risks are you willing to take? Can you put a portion of today's business model at risk to create tomorrow's? How much are you willing to invest? Can you tell your shareholders that transforming your company for success tomorrow will involve increased costs today?

I regularly speak with business leaders who tell me they want to emulate Amazon, but Amazon lost almost $3 billion before turning its first profit. And well after Amazon established itself, it continued to prioritize innovation and market share over margin. And Amazon took risks—significant risks. It launched Amazon Prime and AWS and won; and it lost on the Amazon Fire Phone, which Amazon pulled little more than a year after it debuted. Of course, few want to emulate Amazon's losses, its purposeful reduced margin, its considerable R&D costs, and its risks. They want to be Amazon without doing Amazon.

Wednesday, September 12, 2018

Customer Experience and the "Next Best Action" Dilemma

Understand your next best action before you leap!
Photo by Shane Rounce on Unsplash
As an analyst covering customer experience, I am often briefed by multichannel, personalization, and marketing automation platforms. Many promise to help brands improve their customer experience by identifying and executing the "next best action" for each of their individual customers. The idea, in theory, is that your brand can improve its customer experiences and relationships by performing the one next best action at the best time in the best channel, providing one-to-one, personalized brand experiences at scale. But the reality is often quite a bit different.

The challenge with the concept of "next best action" lies in a simple dilemma: Who is that action designed to help most--the customer or the brand? This challenge is easy to see from the outside looking in but difficult to recognize when your performance appraisal, raise, bonus or job depends on you producing rapid business or economic outcomes. To uncover and resolve the dilemma of "next best action," ask three simple questions:
  • The next best action to what end?
  • The next best action to produce what measurable outcome?
  • And, finally, the next best action for whom?
By using these three questions, you may find that the goal of these platforms and their "next best action" functionality is not to improve customer experience but to lift brands' short-term sales and marketing results. The two are not mutually exclusive, but as we explore these three questions, it becomes easy to see how prioritizing the former before the latter can do more to undermine than enhance your brand's customer experience.

Why do it: To what end?  

Rarely in life is there a single "next best action" that fits every possible end. Consider your Monday morning as the alarm goes off. Sleeping in may leave you feeling fresher and more rested throughout your day; getting up early to exercise will improve both your mood and your health; and taking your early hours to rehearse your big presentation may reduce your stress and enhance job performance. So, which is the proper "next best action"? That depends on which of your priorities is most important.

So, when your brand invests six or seven figures in a platform and program to produce "next best actions," why do you do it? What is your priority? Is it to provide immediate business outcomes? To convince customers your brand cares? To enhance and improve your customers' lives? Your next best action will be quite a bit different depending on which of these you elect to emphasize.

To explore the next two questions (What do you want: To produce what measurable outcome? and Who benefits: For whom?) and to recognize how to flip the perspective of "next best action," please continue reading the post on my blog at Gartner.com. 

Wednesday, August 1, 2018

Effortless Experience Is A Tool In Your Customer Experience (CX) Toolkit, Not A Goal

Photo by jesse orrico on Unsplash
The business world loves easy answers, but the secret to success is often shrouded in nuance. Take the current trend in customer experience (CX): Effortless and frictionless experiences. In a world of “unexpectedly high call volumes,” complicated return policies, and mobile apps that make us want to hurl our phones, it’s pretty clear that most brands tend to make it unnecessarily difficult for customers. It is also evident that brands that remove unnecessary friction improve their ability to foster strong customer relationships. But take note of those qualifiers in those last two sentences—“unnecessarily difficult” and “unnecessary friction”—because the proper CX for your brand demands you make smart decisions about where and when customer effort is not only necessary but even a good thing for the customer and your brand.

Being effortless is not a simple goal for you to strive for in every touchpoint of your customer journey. There are times effort is good. Effort sometimes produces feelings of pride and accomplishment. Effort can imbue a product or brand with emotion. Effort can reduce risk and costs. And one customer's effort can add value for other customers. There are times when the customer and brand both benefit by having the customers get their hands (metaphorically) a little dirty.

For example, which is more effortless: Buying a teddy bear off the shelf or spending an hour crafting your own at a Build-A-Bear Workshop? The reason children (and parents) love their Happy Hugs Teddies Bears and Kabu Catlynns is that they take the time to personalize the product, adding clothes, shoes, sounds, and scents. Each bear is special, like no one else’s, and that is thanks to the customer's effort. A completely tricked-out Build-A-Bear plush will cost you time, effort, and a 300% or more premium on the teddy bears sitting waiting on the shelf, but your kids will treasure it forever.

Which is more effortless: Having a TV stand delivered to your home or spending two hours making an IKEA BESTÃ…? The “IKEA effect” is so well known, it even has its own Wikipedia entry. It is described as “a cognitive bias in which consumers place a disproportionately high value on products they partially created.” IKEA has said that having customers build their own furniture is a reason for their attractive pricing, but it is also true that your effort constructing IKEA furniture provides a sense of “stolthet” (which is Swedish for pride), and it’s a big part of IKEA’s success. In one study of the Ikea effect, researchers found people who built their own products were willing to pay 63% more for the product than would non-builders. (Of course, not everyone wants to put in that effort, so IKEA has partnered with TaskRabbit to provide assembly services—an important reminder of the need to understand your personas and craft different journeys for different needs.)

Which is more effortless: Being done with your transaction once you get out of a cab or taking time to rate and review your rideshare driver’s friendliness, cleanliness, and skill? While transportation network companies like Uber and Lyft have been effective at removing friction from the on-demand transit experience, there are key moments when they add, rather than subtract, effort. Rating your driver gives you a sense of control, makes you feel valued, and encourages a sense of community where every rider helps out everyone else to weed out bad drivers. The Lyft experience would be less without the customer effort required to rate each driver.

The problem with effort isn’t that effort is inherently bad; it is that brands add effort for the wrong, often careless reasons. To learn more about the science of effort, why brands often get effort wrong, and how CEB's pioneering research helps brands understand why and where to be effortless, please read the complete blog post on Gartner.com.