Customer Experience as the next decade competitive battlefield · 1990 1995 2000 2005 2010 2015...

Customer Experience as the next decade competitive battlefieldKaspar Roos

Director of InfoTrends’ Customer Engagement Technology Advisory Service

June, 2015

1

Agenda

1. Introduction

2. Customer Communications – State of the Market

3. Customer Experience: The New Holy Grail

4. Capture, Measure, Grow!

5. Conclusions & Recommendations

2

Introduction

BackgroundIndustry analyst firm focused on the document imaging and customer communications industries

Boston

London

Tokyo

ShanghaiTel Aviv

Focused

Credible

Responsive

Visionary

About myself

• Director at InfoTrends

– Industry Analyst Firm headquartered in Boston, MA

– Key offices in London and Tokyo

– Client base include technology companies, enterprises, and investment firms

• Area of Expertise

– Customer Engagement Technologies

– Digital Marketing & Publishing

– Print Production Workflows

• Technology Analyst

– Market Research, Sizing & Forecasting

– Consulting & Speaking Engagements

@kasparroos

[email protected]

linkedin.com/in/kasparroos

State of the Market

1990 1995 2000 2005 2010 2015 2020 2025

Manual Generation

IT Automation

Line of Business

Self-Service

Mobile, Cloud/SaaS

Customer Engagement

FROM: Communications TO: Customer Engagement

Printed Documents

Structured & Outbound

Regulated & Formal

Interactive, multi-channel messages

Real-time, high frequency, data-driven

Supporting business growth

Less than 30% of documents originate from legacy systems

Marketing/LOB initiate over half of CCM investments

35% of businesses have self-service

Nearly 50% of businesses have mobile app

Customer Communications EvolutionState of the Market

1%

9%

9%

17%

18%

19%

19%

19%

20%

22%

22%

31%

33%

38%

0% 10% 20% 30% 40%

Other

Compliance w/ changing regulatory or legal requirements

Freedom/agility for business users to manage comms

Reduce overall communications cost

Reduce strain on IT

Drive behavioral change in customers

Reduce IT cost

Reduce operational cost

Reduce risk

Increase upsell/cross-sell

Reduce customer churn

Improve customer experience

Better understanding of customer behavior

Increase customer loyalty

N = 400 Respondents Western European Enterprises

Multiple Responses Permitted

Source: Customer Engagement State of the Market Study, InfoTrends, 2015

CCM Investment Drivers Changing from Cost Reduction to EngagementQ: What are the most important business objectives your company wants to achieve by investing in CCM?

Transactional Communications Promotional Communications

Existing customer relationshipCustomer Retention Maximizing life time value

Campaign-driven Customer AcquisitionMaximizing conversion rates

BillsStatements

PoliciesRenewals/CancellationsClaim correspondence

Pension overviewsEtc.

E-mail newslettersDirect mail

Onserts/insertsWelcome kits

Mobile messagesEtc.

Direct mailCataloguesBrochures

E-mailPosters, banners

Etc.

~$15B ~$60B

Communications Overview

Customer Communications Space


Traditional View on Customer Communications Mgmt

Source: CCM Implementation Challenges in Enterprises, InfoTrends, 2013

Customer Communications Life-Cycle

Content Composition

Multi-channel Distribution

Response Management

Data Capture & Customer Analytics

Align Communications around Customer Journey

Customer journey: pre-purchase process Customer journey: post-purchase process Business objectives

Data-driven, personalized, multi-channel communications


Evaluate

AcquireEngage

Advocate

Find

Learn

Buy/Subscribe

Engage

Consume

Retain

Marketing and Structured Communications Are Converging

Customer Lifetime Value

Time

Lead Generation

Lead Nurturing

Conversion Offer

Welcome Kits

ProspectInactive

CustomerActive Customer Lost Customer

Customer Communications Interactions

Onboarding

Statements

Newsletter / Emails

Upsell / Cross Sell

Loyalty Offers

Reminders / Notifications

Renewal Offers

Lost Customer

Returned Customer

Contact CenterCalls


Yes, CMO takes more ownership,

37.1%

Yes, as advisor to

CIO/COO, 33.8%

Yes, as advisor to CXO/CDO,

9.7%

No, 19.4%

Chief Marketing Officer Getting More Important

Q: Who in your company is ultimately responsible for the creation, management and delivery of Customer Communications?

CIO, 26.5%

CMO, 20.5%

COO, 15.0%

CCO, 10.8%

CXO/CDO, 7.8%

Other, 4.5%

Don't know, 15.0%

Q: Do you expect the Chief Marketing Officer (CMO) to play a more important role in how the business engages with existing customers?

N = 340 Enterprises in Western EuropeN = 400 Enterprises in Western Europe


CCM Ownership Future Role of the CMO

France and Germany have somewhat lower share of CMO ownership but not dramatic

Influence of CMO Consistent Across Countries

27%34% 35% 31%

26%16%

24%

21%

20% 16% 21%

18%

25%

23%

42%36% 40% 35%

38% 46%31%

11% 9% 9% 13%19%

13%23%

0%

20%

40%

60%

80%

100%

Western Europe United States Germany Great Britain France Italy Netherlands


Don’t know

Other

CMO

CIO

400 320 80 80 80 80 80N=

Rise of the Marketing Technologist

Source: Adapted from The Rise of the CMT, Harvard Business Review July-August 2014

CMO

Marketing Coms & Legal

Software & Services

Providers

CIO

Chief Marketing Technologist

Customer Experience: The New Holy Grail

Customer Engagement vs. Customer Experience

Customer Interaction



Customer Experience is the perception that customers have of all of their (previous) interactions with an organization.

Customer Engagement is how a business engages with its customers. By engaging, the business provides an experience and builds relationships.

Relational

Loyalty

Advocacy

Product Usage

Lifetime Value

------------------------

Relevancy

Multi-Channel

Synchronization

Ease of Use

Transactional

Customer Satisfaction is the Net Results of all CXs

Unacceptable

Acceptable

More thanacceptable

Dissatisfaction

Satisfaction

Delight

Time

Source: Based on Zone of Tolerance, Robert Johnston & Graham Clark, 2008

Performance Level Customer Experience Level

= Zone of Tolerance = Customer Interaction

The Customer’s “Zone of Tolerance” is Shifting

Unacceptable

Acceptable

More thanacceptable

Dissatisfaction

Satisfaction

Delight

CX = ENGAGEMENT

CX = SERVICE

Shift

Acceptable

More thanacceptable

Satisfaction

Delight

Time

Shift

Source: Based on Zone of Tolerance, Robert Johnston & Graham Clark, 2008

= Zone of Tolerance = Customer Interaction

Performance Level Customer Experience Level

5%

19%

20%

21%

23%

25%

26%

30%

40%

43%

43%

0% 10% 20% 30% 40% 50%

Access improvements for disabled customers, e.g., braille

Better channel preference management

Synchronizing CX across multiple touch points

Proving customer-facing staff with real-time comms history

More billing or payment options, e.g., mobile payments

Offering digital mailboxes

Offering or expanding mobile communications

Better social media monitoring and responding

Better data-driven personalization and relevant comms

Better tailored offerings

Offering or expanding digital self-service capabilities

N = 124 Western European Respondents who invest in CCM to improve customer experience


Relevancy, Personalization & Self-Service Key for CXQ: How does your company plan to improve customer experience as it relates to customer communications?


Importance of Customer Experience

Regional Bank, United States

“That is something that we’re starting to work on. If you call the call center today and would call them tomorrow with the same issue we do tracking on that. But it’s channel specific. You can go to a branch and then to the web, we’ll never know you went to the branch and then to the web. The contact center does not see that. We’re trying to get the look and feel the same. Retail is really driving this. From operations we’re trying to attach ourselves there; we want our inserts to match with what you see at the branch. That the mobile and the internet experience will match the branch experience and the paper experience… that’s two years away. But we’re doing the ground work now. There’s a plan for it. ”

Synchronized Customer Experience

Interview quote:

Complex Communications Are Difficult to Manage

Impacting customer experience & loyalty

• 19% of customer preferences cannot be honoured because of outdated IT systems

1. Managing Risks2. IT/Data Challenges3. Funding4. Legal Restrictions5. Control/Coordination

of Communications

Contact CenterCustomer

?

Customer Experience ObjectivesWhy (and how) do companies focus on optimizing the customer experience?

• Build better & more profitable customer relationships

– Better targeted offerings (e.g. up-sell, cross-sell)

– Personalization (if done well) enables more relevancy in communications

• Put customer in control

– Enabling digital self-service portals

– Provide mobile platforms

– Focus on providing (and honouring!) channel preference management

• Give customers a consistent experience

– Provide consistency in brand, style and messaging

– Provide same experience for offline and online channels

– Create customer loyalty by delivering excellence in customer communications

Capture, Measure, Grow!

5%

6%

6%

8%

8%

11%

15%

15%

17%

19%

20%

21%

22%

0% 10% 20% 30%

Best next-action engagement (real time)

Lead analytics and scoring

Customer service analytics

Predictive modeling

Customer journey mapping

Social media analytics

Location intelligence

Deeper/more sophisticated customer segmentation

Behavioral analytics

Better customer experience analytics

Creation of a single customer view

Better integration of siloed data

Better capture of customer experience data


CX Foundations Are Being LaidQ: What of the following data analytic initiatives are you planning for 2015-2016?

N = 124 Western European Respondents who invest in CCM to improve customer experience


Data Analytics – Capture, Measure (Analyze), Grow

Customer Communications Life-Cycle

Content Composition

Multi-channel Distribution

Response Management

Data Capture & Customer Analytics

3%

5%

8%

8%

13%

15%

17%

17%

17%

17%

21%

24%

25%

33%

0% 10% 20% 30% 40%

Kano model

SERVQUAL/RATER

Customer lifetime value (CLV)

Print error/delivery fault rate

Net Promoter Score (NPS)

Online conversion rate (upsell/cross-sell)

Sales cost per customer

Email click-through-rate (CTR)

Help desk traffic/volume

Customer retention rate

Average Order Value

Number of web visits

Response Rates

Customer satisfaction index (CSI)


N = 400 Western European Respondents

Different KPIs Measuring different Aspects of CE/CXQ: What KPI's do you use to track customer engagement/experience?


CLV and NPS Popular Metrics for Customer Engagement Measurements

Size represents % of respondents

Descriptive Predictive

Sentiment

Performance

Kano Model: 3.0%

ResponseRate: 28.5%

Customer Satisfaction Rate: 30.0%

# Web Visits: 26.4%

Avg OrderValue: 20.8%

Sales Cost / Customer:18.3%

HelpdeskTraffic:17.8%

OnlineConversion

Rate:16.9%

Customer RetentionRate: 16.3%

Net Promotor Score:12.4%

Print / DeliveryError Rate:

10.1%

Customer Lifetime Value: 9.4%

SERVQUAL/Rater: 8.0%

N = 800 Respondents


$0.00

$200.00

$400.00

$600.00

$800.00

$1,000.00

$1,200.00

0.65 0.7 0.75 0.8 0.85 0.9 0.95 1

Customer Retention Rate

0.99

Assumptions:• The customer retention rate is constant over time and across customers• Inactive customers are not reactivated• The period of customers’ cash flows is constant and unaffected by the

cancelation time• The event that a customer cancels in one period is independent of the event

that the customer cancels in any other period

Future Financial Impact (CLV)

CLV Focuses on Future Financial Impact

+60%

+10%

+200%

+5%

Simplified CLV Model

Source: Segmentation and Lifetime Value Models using SAS, Malthouse 2013

Conclusions & Recommendations

Key Observations

• Customer Communications Are in Transition

– Marketing communications and process communications (critical business communications) are converging

– Marketing Getting More Influence

• Customers are getting increasingly in control

– Consumers dictate how business should communicate

– Consumers have channels (e.g. social media) now to have their voices heard

• Customer Experience becoming a battlefield for businesses

– CX becoming competitive differentiator

– Risk of losing businesses when communications are perceived to be under par

New metrics for a new model

The shift from marketing products to cultivating customers demands a shift in metrics as well

Customer profitability

Customer lifetime value

Customer equity

Customerequity share

PRODUCT PROFITABILITY

CURRENT SALES

BRAND EQUALITY

MARKET SHARE

Old approach NEW approach

RecommendationsNew Model Requires Alignment of People, Process and Technology

• CCM Centre of Excellence

• Bus. Enablement

PROCESS

• Data Siloes

• Content Mgmt

• Centralization of Communications

• Data Analytics

• Self-service

• Multi-Channel; Mobile, Social

PEOPLE

TECHNOLOGY

More about this in the next presentation!

Thank You!

Any Questions?

@kasparroos

[email protected]

Customer Experience as the next decade competitive battlefield · 1990 1995 2000 2005 2010 2015...

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