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
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
Source: Customer Engagement State of the Market Study, InfoTrends, 2015
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
Source: Customer Engagement State of the Market Study, InfoTrends, 2015
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
Source: Customer Engagement State of the Market Study, InfoTrends, 2015
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
Source: Customer Engagement State of the Market Study, InfoTrends, 2015
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
Source: Customer Engagement State of the Market Study, InfoTrends, 2015
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 Interaction
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
Multiple Responses Permitted
Relevancy, Personalization & Self-Service Key for CXQ: How does your company plan to improve customer experience as it relates to customer communications?
Source: Customer Engagement State of the Market Study, InfoTrends, 2015
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
Multiple Responses Permitted
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
Source: Customer Engagement State of the Market Study, InfoTrends, 2015
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)
Multiple Responses Permitted
N = 400 Western European Respondents
Different KPIs Measuring different Aspects of CE/CXQ: What KPI's do you use to track customer engagement/experience?
Source: Customer Engagement State of the Market Study, InfoTrends, 2015
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
Source: Customer Engagement State of the Market Study, InfoTrends, 2015
$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!
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