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(New) Age Old Question: Does Customer Experience Drive Growth?

I’ve been really busy lately and missed a nice research report from Forrester back in July 2015.  In the report Does Customer Experience Really Drive Business Success?, analyst Harley Manning presented lots of data saying basically yes.

To start with, however, Mr. Manning presented several Customer Experience (CX) leaders who have tanked recently and CX laggards who have soared. Forrester annually ranks companies in terms of overall CX, not just in terms of a company web site.

Borders and JCPenney are two CX Leaders that both had close to -50% return.  Clearly their CX did not lead to business growth.  On the other hand, CX Laggards Cigna and Comcast both had tremendous growth rates well over 50%.  Obviously four samples do not make for a very compelling correlation, so Mr. Manning dug deeper and more broadly.

His team then looked at the growth compared to CX within specific industries and compared leaders to laggards.  What he found is that growth correlates to CX within most industries.  So don’t compare Comcast to JCPenney as they are not in the same industry. Rather compare Comcast (Laggard) to another cable company like ATT Uverse.  Forrester judged ATT to be a CX Leader in cable.  Guess what?  ATT’s growth rate beat Comcast.

Forrester looked at other industries:

  • Airlines:  JetBlue (CX Leader) beat out United (CX Laggard)
  • Investment Firms: CX Leaders Edward Jones and Charles Schwab beat out the CX Laggards
  • Retailers:  Here a superior online experience trumped traditional retail experiences.  CX Leader Amazon clearly beat out CX Laggard Walmart
  • Only in Health Insurance Payers did Forrester call a draw.  They could not correlate CX to growth in this industry.  Perhaps the turmoil of all the changes brought on by the U.S. Affordable Care Act supersede all others.

Forrester presented a CX/Revenue Growth equation to explain the impact potential.  The chart here summarizes the findings across industries using the equation.

CXIndutry

 

The next step is to see if this analysis holds true for other industries.

You can go to Forrester.com to find the full report.

The Segment of Me

shutterstock_249068644Not too long ago I was clearly targeted in an email campaign and banner ads as a 40-something, suburban mom with kids that was preparing for “back-to-school.” I was offered some pretty good deals on sneakers, backpacks and organizational products for my home.

Unfortunately, this retailer couldn’t have been more wrong. I am 40-something, single, live in an urban zip code and have 0 children. They placed me smack dab into the wrong demographic profile. I didn’t feel that this retailer “knew” me.

This experience made me wonder how they were analyzing, segmenting and personalizing the information they had on me. The #1 goal of personalization is to identify a person’s attributes from their purchase intent, understand online behavior and specific profile demographics; then customize that experience by presenting only the most relevant content and provide the right calls–to-action. This retailer clearly had some information right, but missed the mark on others.

The challenge is that they likely couldn’t sift through the data and make it actionable intelligence, because quite simply there is a lot of data! As a frequent shopper of this retailer, they knew a lot about me, but they picked up on the wrong data …maybe a previous purchase of gifts for my best friend’s kids or maybe it was the gift bought for a charity event made them segment me differently.

Whatever happened, it made me think more about analytics, big data and the role it plays in personalizing content for me and as  the volumes of customer data increase, so does the critical nature of getting personalization right. On Thursday, Aug 20th, we will begin the discussion on big data, analytics and how it affects personalization in our next digital transformation webinar on analytics and personalization. Join the session by registering here: Leverage Customer Data to Deliver a Personalized Digital Experience.

“Follow the Leader” and Its Role in Successful Change Management

shutterstock_201679847_350Last week while vacationing with my family at the beach, I came face-to-face with one of the most effective Change Management principles – people will follow the “right” people.

You see, I don’t like crowds – whether it is in an airport, out at a park, or walking down a busy city street. I just don’t like them. Well, the same holds for the kitchen in the beach house! There’s nothing like trying to get to the refrigerator to get the ingredients and condiments to make sandwiches for my wife, three kids and me, the appropriate utensils, the chips, and of course, the drinks, all while trying to navigate five other extended family members who are doing exactly the same thing at precisely the same time. I don’t care how efficient you try to be; it’s a grueling process that I’m ready for a vacation by the end of.

Here’s the thing: It didn’t matter what time I started making lunch or what anyone else was doing prior to that (except NOT making lunch), but as soon as I began the task in the empty kitchen, it was like flies on honey. If I made lunch at noon, the crowd would gather. If I waited until almost 2:00 pm, the same thing! And again, it didn’t matter what these other folks were doing before making sandwiches (often it was reading a book in a rocking chair overlooking the ocean), they would simply be pulled, evidently by some mysterious force, to fix their lunches at precisely the same time I did. By the end of the week, I was going mad!

But it also made me think about effective Change Management, and more specifically, how people tend to gravitate towards what others are doing, especially if those others are well respected within an organization. Now, I’m not sure how well-respected I am in my family, but I will say others naturally gravitated towards what I was doing when I was doing it when it came to making lunch.

When we implement change initiatives on our projects, think about the impact of getting the right, early adopters on board and functioning in the “new way of life.” If we can get these important people bought into our solution, others will naturally follow, and many without being told or convinced to do so (I didn’t tell ANYONE I was going to make lunch or that they should come join me – it just happened).

Whoa, did I just say that people will adopt a new solution without any “Change Management?” Yes! There are always some that will want to be a part of the crowd, the “new thing,” or simply just want to be a part of what others are doing. Take advantage of them! Then beyond that, how much more successful will we be when we perform our normal Change Management activities capture the rest of our target audience? I think you’ll be surprised!

Leveraging Change Champions for Successful Adoption

connected_network_shutterstock_wordpress-600x422Have you ever felt like you’re one person against the world? Or possibly you’ve been overwhelmed trying to turn the battleship single-handedly? If so, take comfort! You’re not alone.

Change managers, those responsible for garnering user adoption and engagement for a new system, tool, platform or process, are challenged with motivating hundreds, thousands, or even tens of thousands to new ways of working. Often, the change team itself can be very small with few personal relationships with the target population.

I’ve found that a really helpful tool to mitigate these challenges are Change Champion Networks. Meeting with the project’s Change Management Lead at a regular cadence throughout the project, these “networks” are comprised of key members of the user community (usually representative of a line of business or geography) who:

  1. act as a ‘champion” or project advocate to their spheres of influence,
  2. help the project’s change team convey key messages to their respective audiences, adding another communication channel to the Change team’s arsenal, and
  3. provide a communication channel BACK to the project team, which can be invaluable when it comes to knowing how messages are landing, what questions the users are having, and as a means to determine overall user readiness.

In addition to the formal functions above, there are side benefits from having a Change Champion Network. The biggest benefit is simply that with a two-way communication channel established, users have a way to feel heard, a key milestone on the road to adoption. On a related note, there have been times where users have brought up issues that the project team had not considered, despite thorough planning. It was much better to have found (and resolved) these items BEFORE go-live than after.

Secondly, messages often land better if they come from a known and trusted source. As good as our change managers may be, they often don’t have the personal relationships or credibility with individual users, which negatively influences the impact their messages may have. A trusted resource can more easily get the attention of the target users, helping to ensure that the message is not only communicated but received.

Finally, Change Champions, while not part of the formal project team but having increased exposure to the project, often become de facto subject matter experts in the new technology or process. This can pay huge dividends during implementation, as these resources can usually answer questions from the users and protect the help desk from a flood of calls that might otherwise come.

The next time you have a significant project that will change the way your users work, consider leveraging a Change Champion Network. You’ll be glad you did.

The Benefits of Service-Oriented Architecture Approach for APIs

shutterstock_279561146_350Perficient’s integration practice is over 15 years old so we have been through the rise of proprietary integration brokers, the hype cycle of SOA, and the hyper growth of APIs and the rising popularity of microservices. These approaches and technologies are related with the common goal of systems interoperability and share a common lineage and evolution of technology and architecture.

SOA has been successful by bringing a focus to standards-based interoperability but often had cost overruns when approached with a heavy top-down methodology. APIs have popularized a more bottom-up approach to interoperability focused on a more lightweight and developer focused governance model and simple semantics. Microservices has introduced an architected way to package and deploy services using containers that scale easily with cloud computing including the popular API interface.

One could at a high level argue that these approaches to interoperability have different goals in that SOA is about reuse, APIs are about integration and microservices are about scale. But, the goals can be complementary across each style, for example it would be great if APIs are reusable with little redundancy and there is often need for SOA services to scale. Read the rest of this post »

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The Importance of Context in the Change Management Decision

shutterstock_233016961_350Context is critical for any big decision, and Change Management is no different. In fact, context is more important for Change Management decisions than many others in business today. One of the biggest struggles that Change Management practitioners face is getting the buy-in from senior leadership that Change Management efforts are worth the investment.

Let’s face it – Change Management isn’t always cheap. It’s not necessarily going to be a $20,000 bolt-on to a $1,000,000 project. To compound this challenge, there’s not a Change Management “product” at the end of the day that can be sold to generate revenue. It can be a hard sell in today’s climate where companies are fighting for every decimal point in the margin calculation. If I told you that the Change aspects of an initiative were going to cost $250,000 on top of the technical and project management aspects, would you do it? Out of context, probably not!

So why should we then invest in Change Management? Ultimately, if we have a competent IT staff or partner, I’m pretty sure they’ll deliver solid, if not outstanding, technical components. Where most projects fail (and more than two-thirds of projects do fail, per a commonly cited IBM Global Services study), is with user adoption, or lack thereof. The investment you make in Change Management may actually be the most important money spent!

In the $1,000,000 project example I mentioned above, let’s say the organization’s leadership is expecting a 3x return on that investment (ROI), or $3,000,000 year-over-year (YOY). The question becomes, “How much of that $3MM is dependent on users actually engaging with and using the new tools effectively?” Typically, the answer to this question is 75-80% (there are ways to calculate this). There may be some value in having the new system in and of itself (e.g., lower maintenance costs, regulation/penalty avoidance costs, etc.), but the real value in the system will be the result of people interacting with the system well.

OK, so if we say 75% of the ROI is achieved with appropriate user engagement, then we’re looking at about $2,250,000 ROI YOY that is dependent on people being ready, willing, and able to engage with the new tools. Said another way, our operational risk is $2.25M! That’s a huge number, and I don’t know too many senior executives who will sleep well at night knowing that this kind of risk is looming on a project they are responsible for. Is there an answer?

Of course there is. Oversimplified, many look at Change Management as an insurance policy to protect their investment. Change Management programs focus on the users, getting their buy-in early, communicating the right messages at the right times to the right audiences, and providing training in the new tools, ultimately ensuring readiness at go-live. Projects with effective Change programs are 95%(!) more likely to be successful than those that don’t (Prosci 2013 Best Practices in Change Management). Without this focused effort, projects are at a severe risk of not generating the required returns because the people will fail to be productive at the desired levels when the switch to the new system occurs, and there are all sorts of side effects to this (low morale, poor customer service, etc.).

Spending a large amount on Change Management out of context is a hard decision to make. However, when looking at the same spend in context, especially financial context, where a solid Change effort will allow you to reap the benefits of the project where you are making a significant investment, it makes all the sense in the world.

Digital Strategy in a Competitive World

Daniel Rabbitt blogged on Competitive Strategy in A Digital Age over on our Oracle Blog.  He makes a lot of great points so it’s worth a read and that’s not just because he mentions my much more famous namesake, Harvard Professor Michael Porter.  Here’s a couple thought provoking quotes

Can leading players (in this case, market-leading companies) expect customer loyalty based on past results?

…..

When a major shift occurred in an industry, such as the decline of a former market leader, often the pundits looked to the five forces for perspective. But in an age when digital transformation impacts every aspect of our economy,

My first thought is that Daniel has it right.  You cannot rely on past results for customer loyalty.  You also will find it difficult to react at the speed of digital without putting in place your own plans to be agile and customer focused in todays marketplace.

Case in point, one client of ours is going through some significant disruption.  When analyzing that disruption and what they should be doing, one quote came to fore, “But our customers love us.  I speak on the phone to them all the time.”  What that misses is the fact that while many existing customers may love them, those that do not are already exiting without leaving a postcard.  New customers may not even find them because they do their research digitally before picking up the phone…… an area where this company has room for improvement.  My point is that without a digital baseline and a go to strategy, major shifts will impact you and they will impact you faster than you expect.

 

Don’t Underestimate The Power of Disruption

Today I received an email from Uber asking me to take an active part in Ubers now public fight with Mayor De Blasio of New York City.

uber

Anyone who knows Uber won’t be surprised at this and at the changes to the app they made for all NYC users.  There’s another trend you can see from a Bloomberg article, How Uber Took Over a City about Portland’s challenges with Uber.

Yet Uber was still Uber, and it began strangling Portland. It launched just to the north, in Vancouver, Wash. “Hey Portland,” Uber taunted on its blog. “We are just across the river.” Soon Uber started operating in several adjacent suburbs. “They basically forced their way into the market and surrounded us, then put the pressure on for us to do likewise,” Hales later told a conference of mayors.

The city told Uber that updating the taxi regulations could, finally, happen soon, but first the transportation department had to fix Portland’s pothole problem, which required finding millions of dollars in new revenue for the street maintenance budget. Around Thanksgiving, Uber was next in the queue. Uber wanted a firm time frame, which Alpert couldn’t give. “I kept telling them: ‘A little bit longer,’ ” Alpert says. “Strangely, at the last minute, when it was in sight, they were like, ‘Well, we’re done.’ ”

You should read the entire Bloomberg article. It’s a bit lengthy but fascinating in the specifics.  Think about this though.  Uber has proved to be one of the most disruptive companies in recent history. They, just like Airbnb, Amazon Business, and a host of other companies are cutting a wide swath through existing billion dollar businesses.  But their disruption lies not only in the new business model but in their ability to use social media and other digital tools to further their business.

In other words, for any single digital disruption, the disrupted should expect an onslaught like an oncoming freight train rather than a moped.  That’s the nature of disruption.  That makes it all the more important to become proactive in your digital strategy rather than reactive…….

 

 

 

Companies That Didn’t Update for Mobile Paying Price

CMO.com has an article outlining the price paid by companies who haven’t updated their sites to support mobile.   They are making reference to the fact that Google updates their algorithms to give preference to sites that support mobile vs those that don’t.

Indeed, companies that weren’t ready for the so-called “Mobilegeddon” have lost up to 10% of traffic, according to ADI.

“While there wasn’t a precipitous drop among non-friendly sites, the effect is pronounced over the 10 weeks after the event,” said Tamara Gaffney, principal at ADI. “Such continued loss of traffic suggests that immediate emphasis would have been placed on paid search as a quick way to recover traffic. But that strategy is not necessarily sustainable.”

10% is a big number these days and while not as significant as the change Google made late last year to give preference to sites that more regularly update their content, it’s still a big deal.  Notice that they reference “continued” loss.  In other words, Google just made a bad trend worse. But that trend was still there.  It’s become a mobile world and if you don’t support it, you become less an annoyance and more someone people won’t visit………

The CMO.com article also goes into detail on impact to ad revenue for Google based on a per click model rather than number of ads per page.  It’s worth reading to gain some insight.

Sharper Picture of Social Media Influence

McKinsey has a great article on recent research defining the impact social media has on consumers.  While I’ll let you go to their article and get the complete picture, I can say I was surprised that they found that 26% of purchases were influenced by social recommendations.  Keep in mind that a social recommendation counts word of mouth and the sneakernet version of social.

 

26% of purchases are influenced by social recommendations. (tweet this)

 

They also found that top influencers accounted for a disproportionate share of the overall influence. The top 5% accounted for 15% of the recommendations.  What does this have to do with digital transformation?  Consider that companies across the world are still trying to figure out their new marketing mix and whether or not social tools have a place in their budget and outreach.   This highlights that for many companies it does and it’s bigger than originally thought.

McKinseySocial

 

 

 

 

 

 

 

 

It’s worth reading the entire article.