Digital Transformation Guide 2

UNDERSTAND THE IMPACT OF CUSTOMER EXPERIENCEON DIGITAL TRANSFORMATION

WHEN CUSTOMERS ARE NOT HAPPY, BUSINESSES ARE NOT HAPPY. That’s why, when considering a digital transformation journey, companies should be mindful of four key considerations:

1. Customer experience impact2. The role of customer experience in digital

transformation3. Finding rational case studies for guidance4. The optimum starting points for a

digital transformation

CUSTOMER EXPERIENCE IMPACTCustomer experience, or CX, is the sum of all interactions a customer can have with a brand. What a customer thinks of a brand becomes the overall brand perception and trumps the company’s view of itself.

Josh Bernoff of Forrester Research described it this way:

“MORE THAN ANY OTHER FACTOR, CUSTOMER EXPERIENCES DETERMINE WHETHER COMPANIES THRIVE AND PROFIT, OR STRUGGLE AND FADE.”

The result is that CX has become the principal area where businesses compete, because it offers the best chance for brand differentiation and affords companies the highest reward when they get it right.

For more and more organizations, digital transformation is the process that drives customer experience advancement. Digital transformation is a means of modernizing the systems used to create, deliver and sustain meaningful customer experiences, and to ensure the business is attuned to its most digitally savvy customers. Companies that fail to address the needs of customers – especially in digital channels – risk getting left behind as the pace of change quickens and customer needs evolve.

LOOKING DEEPER INTO CX, PERFICIENT SEES FOUR TRENDS EVOLVING:

RISING CUSTOMER EXPECTATIONS Responsive companies such as Amazon, Apple, Facebook and Zappos are redefining speed of service and ease of use. They have reshaped marketplace expectations so much that customers expect similar experiences from their interactions with other companies as well.

CONTINUAL CONNECTIVITY Adopting digital channels drives demand for choice and connectivity. Our digital, mobile world has made data and information available wherever we go. That has altered customers’ perceptions of control and choice.

ORGANIZATIONAL VELOCITY Technology has lowered barriers in many sectors, allowing upstarts to creep in and disrupt the status quo. Established companies must be agile to stay in front of potential disruption.

ABUNDANT CUSTOMER DATAInformation bombards us daily, but this data deluge is useless to companies that fail to draw upon insights, develop skills or make useful decisions with those insights.

According to a 2014 Temkin Group report, only 10 percent of companies possess a CX maturity that can boost their values, and 31 percent are unable to maximize CX to any beneficial degree. One explanation: Most organizations lack the business models necessary for today’s pace of change and are suffering as a result.

10% OF COMPANIES POSSESS THE MATURITY CX THAT CAN BOOST THEIR VALUES

AND

31%ARE UNABLE TO MAXIMIZE CX TO ANY BENEFICIAL DEGREE

Research by Gartner shows companies that grasp the latest digital trends and are focused on CX (Amazon, Apple, Marriott Courtyard, National Car Rental, USAA financial services group, State Farm Insurance and Southwest Airlines, to name a few) reap big benefits – in some instances 60 percent higher profits compared to those that lag in both. These companies examined customer engagement and found a clear relationship between retention and company value.

Central to that relationship are customer journeys — the experience across branded touch points where companies and customers interact. Two studies by the management consulting firm McKinsey & Co. show that:

• More than 50 percent of experiences occur during a multi-event, multi-channel journey.

• The sheer number of digital touch points is increasing by about 20 percent annually.

Another key to a lasting relationship: consistent CX across those touch points. The management consultancy Accenture found that 65 percent

of consumers become frustrated with a company if the experience between touch points is inconsistent. The frustration persists if one or two touch points are improved but not others.

Market power and influence have slipped from the hands of businesses into the hands of customers. This influence will pass along to companies that understand and meet customers’ needs. This is not new thinking; “old guard” firms are doing this (Amazon, iTunes, Netflix) and “new guard” firms are stepping up (Airbnb, BuzzFeed, Uber). Companies that accept this will make rapid, consistent progress with digital transformation.

The research and strategy development consultancy Altimeter defines digital transformation this way:

“THE REALIGNMENT OF, OR NEW INVESTMENT IN, TECHNOLOGY AND BUSINESS MODELS TO MORE EFFECTIVELY ENGAGE DIGITAL CUSTOMERS AT EVERY POINT IN THE CUSTOMER EXPERIENCE LIFECYCLE.”

THE ROLE OF CUSTOMER EXPERIENCEIf CX truly matters to a company, it should adopt an “outside-in” view and encourage customer empathy among teams. The company must learn from customers and develop assets and capabilities necessary for creating differentiated customer experiences. In other words, teams must be willing to walk in the customers’ shoes throughout the entire engagement process.

Taking that journey defines a company’s customer experience maturity – using customer insights to create, deliver and sustain differentiating experiences. Measuring that maturity starts by asking, “How do you gauge transformation?” The maturity can be measured four ways:

• Differentiated companies, such as Amazon and Zappos, possess deep capabilities across several dimensions. They use CX to put their brand in front of other brands.

• Dynamic companies are purposeful in how they address CX capability. They may not have everything working, but they have a clear strategy toward maturity.

• Engaged companies have made moves toward maturity but reside in the early stages.

• Uncommitted companies have not prioritized investment or discussed the benefits of a CX-oriented organization. They may not even know where to start, but they must be made aware how quickly they can become dynamic or better.

Transformation, then, is the result of advancing to the next level of customer experience maturity. Determining how to acquire that maturity requires a CXIQ maturity model, which has seven distinct dimensions:

CUSTOMER INSIGHTSTRATEGYDESIGN PROCESSESENABLING TECHNOLOGYMEASUREMENTOPERATIONSCUSTOMER-CENTRIC CULTURE

The first three dimensions create effective customer experiences, the second three deliver those experiences, and the last one is the environment in which the first six live.

Consider a mid-size company that is strong strategically but needs improvement with customer insight, measurement, and enabling technology. Before beginning a digital transformation, this company should develop customer personas – illustrative yet accurate depictions of typical customers – and use them to design and evaluate customer experience solutions.

To summarize, the CX transformation is the process of making systemic, lasting changes to a business to improve its interactions with customers and to better align those interactions with its brand. The key steps toward any transformation are:

• Determining CX maturity• Addressing the seven dimensions of CX• Setting a strategy to close gaps and reach the next level of

maturity

LEVEL 1: UNCOMMITTEDLEVEL 2: ENGAGEDLEVEL 3: DYNAMICLEVEL 4: DIFFERENTIATED

CXIQ MATURITY MODEL

OPTIMUM STARTING POINTSEven with clear goals, companies can fail at transformation after asking the first question: Where do we begin? Regardless of CX maturity, these three approaches represent the best starting points:

1 Conduct a customer experience maturity assessment – This helps evaluate strengths and gaps across the seven dimensions of maturity, and addresses:• How effective the experiences are to customers• The maturity level of the capabilities used to deliver these

experiences• How the experiences compare to those of competitors

Uncommitted companies should prioritize customer insight, strategy and goal-setting. Engaged companies should establish design and

operational processes, and maybe technology. Dynamic companies should develop their CX cultures to measure results and outcomes. Differentiated companies should refocus on insight, strategy and technology to put more distance between themselves and competitors.

Suggestions on how to streamline these priority-setting approaches include:

• Ensuring the assessment team has the access it needs• Exploring the full context in which CX exists (This may

encompass every level of the company.)• Establishing benchmarks that are based in reality, rather than in

unrealistic, idealized scenarios• Using CX maturity scores to evaluate and prioritize proposed

initiatives

LEVEL 1: UNCOMMITTEDFocus first on:Customer InsightExperience StrategyGoal-setting

LEVEL 2: ENGAGEDFocus first on:Design ProcessesTechnologyOperations

LEVEL 3: DYNAMICFocus first on:Customer-centric cultureMeasurement/Results

LEVEL 4: DIFFERENTIATEDFocus first on:Strategy & InnovationCustomer InsightBreakthrough technologies

Starting down the path toward customer-focused digital transformation, or carving a new one, can be tricky. Analyzing case studies puts the reality of meeting CX goals in perspective. In the case of Leviev, a London-based boutique jeweler, the goal was growing their upscale base – customers who demand a relationship with their jewelers – in a market filled with mid- and high-end competitors already trying to do the same. Leviev also had to be mindful of the political, social and economic ramifications of the diamonds they mined and sold.

Granted, CX is not all about technology, but Leviev figured out how technology could improve CX and introduced:

• Customer jewelry boxes that allow visitors to Leviev’s site to see high-resolution photos of pieces in stock and of pieces they planned to acquire or were in the design process.

• Sharable sketches between designers and customers.

• Tracking of customer events such as birthdays and anniversaries and of customer jewelry preferences.

• An inventory display of finished pieces available at every location.

To do all of this requires distinct tools for:• Customer relationship management (CRM) that tracks

preferences but is mindful of reputation.• Sales and billing integration.• Real-time social interaction that also allows proactive

communication.• Storing high-res photos.• Web and mobile interactivity.• Client interface and access outside of the store.

CASE STUDIES

Everything has to advance a consistent CX no matter the customers’ locations.

In another case study, a watch retailer with a legacy website that was disjointed and dealing in multiple brands sought to create a CX that tracked seamlessly across all inputs and channels. Their goals:

• Recreate the brand’s entire CX• Create uniform experiences across web, mobile• Make the CX location-agnostic• Provide a personalized experience

THE IMPLICATIONS:

CX HAS MANY MOVING PARTS• Commerce tools• Embedded commerce in personalized web content• Marketing management to push messages and

track success• Improved analytics

CX CUTS ACROSS THE BUSINESS• Marketing• Multiple tool management• Traffic across multiple brands• Lead generation and lead tracking

INFORMATION TECHNOLOGY (IT)• Smaller team with a global footprint• Brand consistency

Even the implications of creating a uniform CX have implications. Companies need to think through not only what they want to accomplish, but also consider the extent that accomplishment reaches across the company.

2 Map one or two of your most important customer

journeys – This suits companies with some CX maturity but still suffering gaps that can be filled by adding clarity to CX. Each customer has objectives yet experiences a brand in a unique way. Meanwhile, companies are trying to drive awareness and consideration. Understanding the journey that customers take through the company’s interfaces is essential to innovation.

It used to make sense to divide an organization into silos because customer interaction was either limited or non-existent across each of them. Now, as the numbers of touch points and transactions increase, customers try to cut across those silos to find what they need.

This provides impetus for journey-led transformations that bring customers into organizations through the experience of the journey itself. Companies that have succeeded at this have seen, according to McKinsey research, a 20 percent improvement in customer satisfaction, a 15-20 percent increase in revenue growth, a 15-20 percent reduction in costs, and a 20-30 percent increase in employee engagement.

Suggestions on how to start on a mapping journey include:• Starting with the most important customers or the ones who

can be helped the most• Clear objectives; knowing which problems to solve

• Following an ethnographic approach; coupling quantitative and qualitative analysis

• Soliciting input from customer-facing employees• Journey-mapping in visual ways, so everyone can see where

they are going

3 Estimate the potential impact on investment and results – Perhaps a company has identified opportunity areas and conducted initial research but still lacks executive buy-in to move

forward. An examination of the economic benefit of CX improvement for the company may be necessary.

Another exercise involves aligning the company strategy with the customer experience strategy. For example, companies that are cost leaders and are all about low prices should look for ways to implement self-help optimization and to simplify their product offering to improve ease of access. They could also solicit improvement ideas directly from the crowd.

Suggestions on how to estimate CX impact include:• Assembling a multidisciplinary team• Driving for consensus; making sure everyone is clear about

what they are trying to achieve

• Distinguishing one-time costs from recurring costs• Mapping business value to customer value• Looking to attribution programs for proof

Digital transformation is neither easy nor quick; the journey may take years. Lacking a strategy to bring customers into the process, however, ensures that journey is fruitless. By understanding where customers fit into the process of transformation and catering to their needs, companies can chart a clear course toward transformation that ensures their customers are not left behind.

OTHER CONSIDERATIONSWhen thinking about digital transformation, also consider:

DIFFERENT CONSTITUENCIES AND AUDIENCE Partners will have a vested interest in what is being done. So will field service technicians. Transformation is not only about customers, but also the people who deliver services to them.

EASY, FREQUENT COLLABORATION BETWEEN EMPLOYEES Employees drive cost reductions and process changes and are the people who know what data is available and understand what questions to ask of the data, understand how to interpret it, and understand how it can be used to push change from within.

THE PROPER STEPS IN THE RIGHT DIRECTION CAN ENSURE THE RELEVANCE OF ANY BUSINESS ENGAGED IN DIGITAL TRANSFORMATION AND SEND IT DOWN A PATH TOWARD PROSPERITY.

Let Perficient help you on your digital transformation journey:

DOWNLOAD GUIDES AND ADDITIONAL DIGITAL TRANSFORMATION RESOURCES AT:perficient.com/digital-transformation

ABOUT PERFICIENT Perficient is the leading digital transformation consulting firm serving Global 2000® and enterprise customers throughout North America. With unparalleled information technology, management consulting and creative capabilities, Perficient and its Perficient Digital agency deliver vision, execution and value with outstanding digital experience, business optimization and industry solutions.

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