Improving the Customer Experience Takes More Than Technology Innovation

Ron Exler Research Alert

What is Happening?

Over the past few weeks, Customer Experience (CX) has been in the limelight because of publicized airline incidents as well as CX technology announcements from major providers. As enterprises focus on improving the experiences of their customers, it’s important to recognize the complexities of serving them. Customer expectations and experiences vary but in some industries satisfaction is high, while in others frustrations continue to mount. While it’s tempting to lean on technology to address CX shortcomings, working solutions can include technology but can’t rely solely on it. Enterprises also need the right policies, organization structure and methodologies. For example, airlines are longtime users of advanced technologies – especially for reservation systems – but recent events show it’s often the human element that determines the most critical customer experiences.

On the technology front, several recent announcements highlight the expanding focus on CX. Oracle held a conference called Modern Customer Experience 2017 April 25-27. At the conference, Oracle added to its Customer Experience (CX) Cloud Suite. The goal is to reduce IT complexity, improve customer experiences, and better business outcomes. Oracle’s technology innovations come in the form of chatbots and artificial intelligence as well as enhanced messaging, mobile, and video capabilities.

Another indicator of focus on CX amongst technology companies is mergers and acquisitions. This week Deloitte said it would acquire Web Decisions LLC, an omni-channel data management and marketing services company. Deloitte Digital plans to add this to its Customer Experience Value (CXv) offering that is both a solution and a set of services that provides marketers with a customer strategy that is aligned with their business strategy. Other services providers are adding CX-focused capabilities via acquisition or partnerships.

Yet the path to improved CX runs through Digital Transformation, which relies on changing processes and methods. The use of Agile methods intend for team sizes to be smaller and allow those teams to deploy more features into production earlier – many of which can improve CX – which can increase revenue. For example, Australia and New Zealand Banking Group (ANZ) recently said it will be adopting Agile methods to quickly respond to changing customer expectations, engage and empower staff, and to improve efficiency within the bank.

So technology has a role in CX across industries. In healthcare there’s much action around improving the patient experience by evaluating the entire patient journey. As they were grilled in Congressional hearings this week about recent events, several airline executives touted that they offer “in-the-moment” apps for mobile devices that assist employees to help solve issues on the spot. Such digital workplace solutions that empower the workforce and treat employees as individuals can improve CX.

Why is it Happening?

Today’s customers expect new ways of engaging, and digital technologies have raised the stakes and the bar for the customer experience. These pressures are driving change within enterprise business models, forcing creation of new customer-centric operating models, and make dramatic shifts in technology investment strategies. These strategies connect and cross customers, the supply chain, and enterprise departments, forming a Digital Fabric (Figure 1).

Figure 1: ISG Digital Fabric

ISG Digital Fabric

Source: ISG

We think several realities contribute to the confluence of technology and customer experience.

  • Competition. There’s increasing competition for customers in some industries, decreasing competition in others – both affect CX.
  • Customer expectations. Expectations change for a variety of reasons. We see more digital experiences with instant information and on-demand capabilities from some services. Those experiences raise the bar for all businesses.
  • Recent incidents. Highly visible incidents shine a spotlight on poor CX, while the ability to record and report incidents becomes ubiquitous.
  • Agile methods. There’s a growing acceptance of Agile methods, for IT as well as other parts of business – even in large enterprises.
  • Maturing technology. Customer Experience Management (CEM) solutions include sentiment analysis deriving insights from enterprise systems combined with data from social media and contact center interactions.
  • Emerging technology. Newer technology advances include some innovations that can scale and integrate with existing systems, e.g. cognitive computing, video, virtual reality / augmented reality, and wearables.

CX is a 360-degree model of engagement with many linked elements. Technology has an important and growing role in capturing and measuring those experiences; however, it can only supplement an underlying culture of service.

Net Impact

Because of mobile phones, brands are on display 24x7x365 with global reach within minutes. So while most enterprises do a good job most of the time, social media can highlight rare disconnects to overshadow those positive experiences. Enterprises need to recognize the new digital reality and plan accordingly.

An integrated approach to CX should include asking and answering these questions:

  • Which technologies help and in what parts of the customer journey? Do customers want or need all these technologies?
  • What’s the right combination of technology, policies, processes, and training to address ongoing problems affecting CX?
  • What’s the best approach to prevent problems by having systems not only enforce policies but also predict issues?
  • How can Agile approaches improve how the enterprise deliver services?
  • How can the enterprise use CEM to better gauge customer sentiment while also supporting marketing initiatives?
  • How can the enterprise help its customers feel better about their brands and improve CX with personalization?
  • How can the enterprise prepare for the inevitable viral video and follow-on backlash?

Enterprise might be willing, but are not yet ready, to address all elements of improving CX. Empowering employees is tricky but necessary. Often a customer service department is disconnected from the department responsible for employee training, for example. Outsourcing of such functions can lead to further disconnects, requiring oversight to ensure common focus on customer needs and desires across the customer engagement value-chain. Integrating CX with marketing seems obvious, but very few companies — perhaps as few as one in ten — are currently equipped to blend their marketing and customer experience processes, according to a recent observation from Oracle CEO Mark Hurd.

In summary, enterprises should focus on understanding the experience that the customer wants delivered. Do not get distracted or focused solely about what various technology solutions can accomplish. In other words, focus on the problem from all perspectives – that 360-degree view. The tools that might be available to help fix the problems will naturally follow suit.