Analyst Perspectives

Advertising and marketers tell us we now live in a “digital economy.” That implies the economy is based on and depends on digital technologies. It certainly is true that many consumers, especially younger ones, have changed the ways they interact with each other and businesses; they are now more likely to use digital channels of communication, particularly email, websites, text messaging, instant messaging and social media. In this digital world, where customers can search globally for products and services and change suppliers instantly, it is critical for companies to focus on the customer experience.

Some years ago, customer relationship management (CRM) was supposed to produce better customer relationships and therefore more business. But CRM mostly managed internal marketing, sales and customer service activities and didn’t address the company’s actual interactions with customers. Customer experience management targets those interactions and focuses on influencing customer behavior. In simple terms the customer experience includes interactions between companies and customers, the outcomes of those interactions and critically how customers feel about the interaction and their willingness to have further dealings with the company. To succeed in the digital economy businesses thus need to understand how to deal most effectively with customer interactions and the customer experience.

Some aspects of the digital economy are well known. More people get their news online than from newspapers, and they shop for products the same way. Digital transactions are replacing many that used to be done by postal mail or in person. People increasingly use mobile devices instead of deskbound computers for activities ranging from email to social media, and mobile apps are invented to cover seemingly every conceivable thing. All of these changes impact the way customers do business, and they are ever less patient with old-fashioned, inefficient business practices.

Faced with the ubiquity of digital communications, companies can’t just update their contact centers – they have to reassess their marketing, sales and service processes as well. And to be efficient they have to connect all these functions and all the channels of interaction. Our recent benchmark research into next-generation customer engagement reveals the breadth of these issues. As many as 17 channels of interaction are in play, and companies on average support seven. In addition research participants told us they expect the volumes of interactions to grow in all channels. Not surprisingly the smallest rates of growth are for postal mail (3%) and retail outlets (4%), and the highest rates of growth are for social media (30%) and Web-based self-service (25%). Regardless of growth rates organizations have to support ever more channels of interactions, and none is about to disappear.

The research also shows change in who handles customer interactions. The top five functions are predictable, led by contact center agents, but significant percentages of mobile workers (in 34% of companies), finance departments (30%), home-based workers (25%) and even HR departments (23%) are involved in handling interactions; the only business unit not interacting with customers is IT. The research also shows that this pattern is changing: 12 percent of companies said they expect in the next 12 months to add customer service outside the contact center and mobile workers, 11 percent expect to add home-based agents, and 10 percent expect to add marketing and other business units. This diversity of roles interacting with customers demonstrates that handling interactions and thus managing the customer experience are enterprise issues. To address them as such, companies face three big issues: integrating systems, managing multiple interaction channels so they appear as one, and providing consistent information regardless of who handles the interaction or the channel of interaction.

Not long ago I discussed some of the technologies organizations should evaluate as they work to provide customers with easy-to-use, personalized, in-context and consistent experiences, but technology alone cannot do that. I recommend six steps toward achieving optimal customer experiences in this digital economy:

• Stop thinking of interactions as isolated, one-off encounters. Instead think of the customer journey as people moving from being prospects, through sales to becoming customers who need support through an extended range of interaction channels.
• Customers don’t think in terms of marketing, sales and service departments, so connect these and other business units in a seamless, consistent experience. This applies wherever people are in the customer journey and within each interaction. Processes should flow across organizational boundaries, and for this to happen everyone must share the same data.
• Rethink the usability of all channels of interaction, and redesign them with the customer and the interaction in mind. This applies to every channel: call flows, IVR menus, self-service Web pages, mobile apps, social forums, voice-activated mobile apps, virtual agents and any others that may develop going forward.
• As people use more digital channels, it becomes harder to differentiate among companies. Thus content is the key, so think carefully about the design of your website, the attractiveness of email marketing approaches and other text-based interactions, and of course social content.
• Employees are key, so prepare and treat them well. The best plans can go badly wrong if employees who execute them are poorly trained, unhappy or unmotivated.
• Rethink the metrics you use to monitor and assess the success of customer-related activities. Our research shows that many companies still focus on internal operational metrics like average handling times and not enough on business-related metrics such as customer lifetime value.

I don’t think organizations can complete any of these steps if they don’t know their customers and their thoughts about the company. In all but the smallest companies, advanced analytics systems can produce a single, comprehensive view of customers that includes maps showing the customer journey and the outcomes of interactions. Our recent research regularly shows that most executives understand the importance of the customer experience in the digital era. Getting it right is harder than many appreciate, so I wish you well in your endeavors and look forward to hearing your views on this critical topic.

Regards,

Richard J. Snow

VP & Research Director