Digitization is key to meet customer expectations and protect core businesses today.
To not only stay in the game but capture new sources of value, companies will need to reinvent their customer experience.
That begins with bringing in data and analytics-based insights about what really matters to customers and how best to deliver it to them. Some companies fail to capture the full benefits of their improvement efforts because they concentrate on optimizing individual touchpoints rather than tackling the customer experience as customers actually experience it—a complete journey that cuts across multiple functions and channels.
Digital is reshaping customer experience in almost every sector.
Think of how consumers behave in the digital world.
Customers search, download, pay, and listen to music all in one go, so why should their electrical service or car insurance still make them go through separate steps for searching, price quotation, purchasing, invoicing, delivery, payment, and activation?
Customers interact and setting a high bar for simplicity, personalization, and interactivity.
To create a great customer journey, you need more than great touchpoints.
According to Mckinsey research, companies that are achieving digitization at scale have developed a distinct structure that enables them to digitize their most important customer experiences at scale and at speed—in a consistent way, with consistent resources, to produce consistent results.
In doing so they transform much of the rest of their organizations, from product and process design through to technology and culture, becoming truly digital businesses.
Watch Christopher Paquette on how to scale and accelerate a digital transformation.
Digital is not a temporary thing. It’s not a one-time program. It’s a change that is affecting the whole industry, and getting better at it has become a permanent ambition for us.
The CIO of ING Bank, Ron van Kemenade, discusses the importance of top talent and agility when it comes to digitizing products and processes.
Understanding what matters
Before rethinking your customer experience, look first at your product, price, service, and brand.
If a product is unreliable or its price is too high, not even the most delightful customer experience will redeem it.
Once these essentials are in place, work out which journeys matter most to customer experience and assess how you perform in each one so that you can prioritize what to fix to get the most impact from your improvement effort.
Banking is one industry where customer experience offers enormous scope for differentiation.
Mckinsey analyzed the main customer journeys to expose bottlenecks where banks consistently underperform and explore opportunities to address them.
Calculated how much each customer journey contributed to overall satisfaction and found that the most critical journeys were using a product or service (which contributed 23 percent to customer satisfaction) and resolving problems (20 percent). Onboarding new customers—signing up, setting up services, and opening new accounts—was also extremely important.
When companies rethink their customer experience, digitization allows them to work backward from what customers would like to see instead of getting bogged down in incremental improvements.
To create distinctive customer experiences, companies need to push the boundaries and adopt next-generation digital thinking and practices which involves applying creative, nonlinear approaches to reinvent how customers interact with businesses, to agile, which calls for fast prototyping, gaining early customer input, and then iterating continually.
McKinsey research reveals that improving a customer experience from merely average to something that wows the consumer can lead to a 30 to 50 percent increase in measures such as likelihood to renew or to buy another product.
Top-performing companies also develop a clear vision of the entire customer ecosystem, understanding relevant interactions that extend beyond the core journey the company controls. Such an approach allows companies to uncover new insights that allow them to design and deliver truly transformative customer experiences.
True customer-experience design involves crafting each interaction customers have with a company along the path that runs from the minute they consider a purchase through their entire relationship with the product or service.
As Steve Jobs said, “[Design is] not just what it looks like and feels like. Design is how it works.”
Example: Disney’s MagicBands
After a five-year effort to root out pain points in the experience of visitors to its theme parks, Disney introduced MagicBands. These brightly colored wristbands allow visitors to board rides, pay for meals and gifts, and even unlock the doors of their hotel rooms. More important, the bands and the technology behind them—which is stitched into every part of the park—allow visitors to select exactly what they want to see and do in advance. That has helped turn a day at Disney from a series of highlight attractions interrupted by waiting in line to a magical end-to-end experience.
The focus is addressing customer needs, not improving a process. Bringing in people who are not normally involved in the process can be a great way to encourage fresh thinking. Assessing the best digital experiences employed in other industries can also be useful inspiration.
Example: Amazon Dash
Online retailers recognize that customers often forget to order household items when they run out, resulting in lost sales. Most deal with this problem using solutions that reside online: standing orders delivered on a periodic basis or checklists on the company website to jog customers’ memories. But Amazon bridged this gap by wholly transforming the order experience.
Amazon’s pivotal insight was that the moment when people want and are most inclined to reorder is when they’re using an item and realize they’re about to run out. So it created Amazon Dash, a small Wi-Fi-connected device the size of a USB drive, decorated with the logo of a common household item such as laundry detergent, plastic wrap, or coffee. Customers place these “order buttons” around their home on appliances or cupboards and simply press them when they realize they are running low on an item.
Any comprehensive customer-engagement program needs to start with a clear vision of what a complete digital experience looks like, and building the technology and organizational capabilities that deliver on the customer’s increasingly high expectations.
McKinsey research puts forward a quick roadmap:
- Start with a clear understanding of what customers value and use it to decide where to focus;
- Guided by these priorities, simplify and streamline your underlying product and services;
- Link customer value to the operational drivers that underpin it, then design a new operating model based on these linkages, working back from the customer and using digital tools to streamline or automate your processes in line with what customers care about;
- Tackle the most important customer journeys one by one and support the effort with operational changes to improve efficiency and speed;
- Embed agile, cross-functional ways of working and reengineer your management system to support continuous improvement.
Organizations that take these steps can turn customer experience into a source of delight for customers and a new and sustainable source of differentiation for themselves.
