The total impossibility of customer experience management

The Total Impossibility of Customer Experience Management JBoye15| 4 November 2015

Tim Walters | Co-‐Founder twi5er: 7m_walters [email protected] www.digitalclaritygroup.com

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1.  Darkness

2.  Despair

3.  Guilt

4.  Theory

5.  Glimmer of Hope

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Agenda

PART ONE in which

Shit happens

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65 Million Years Ago

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8 Years Ago

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10 @7m_walters

The Four Horsemen of Digital Disrup7on

Social, Mobile, Analy7cs, Cloud

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44% Of the global Facebook popula7on accesses it exclusively via mobile.

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335,000 years

per

month

In the U.S. , people spend

on Facebook via mobile.

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The iPhone A8 chip has

625x more transistors than a 1995 Pen7um chip

Source: Ben Evans, h5p://ben-‐evans.com/benedictevans/2014/10/28/presenta7on-‐mobile-‐is-‐ea7ng-‐the-‐world @7m_walters

“Mobile [means] that you free people from having to decide which device to use. If you sit in your office, mobile means using your laptop. If you sit at home, mobile means

using whatever device happens to be within reach. If you sit on the bus, mobile means

using what’s in your hand.” -- Thomas Baekdal

16 Source: h5p://www.baekdal.com/insights/defining-‐a-‐market-‐in-‐the-‐connected-‐world-‐you-‐are-‐not-‐in-‐kansas-‐anymore

Mobile means ubiquity

FROM SCARCITY TO ADUNDANCE

Information access is immediate, because it is mobile.

It is limitless, because it is connected.

It is trustworthy, because it is social.

Information monopolies are destroyed.

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A cycle of ubiquitous content consumption

@7m_walters

“As the industrial revolu7on was defined by radical

efficiency in produc7on, the digital revolu7on is defined

by radical efficiency in informa7on transmission.”

-‐ Mike Arauz

Source: h5p://www.slideshare.net/mikearauz/mikearauz-‐on-‐digitaltransforma7onmay2014prez

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Whereas the Chicxulub impact produced darkness, the mobile shie produces light, and enlightenment. Whereas the impact released debris that blocked out the sun, mobility (especially combined with social) releases knowledge that parts the clouds. Whereas the first interrupted and effec7vely destroyed the food chain, causing the interrelated and dependent species to topple like one domino aeer another, the second enriches and extends the en7re ecosystem, due largely to a far more profound dynamic of interdependence, networking, and sharing. Due to this sudden abundance of informa7on, the environment we occupy has been fundamentally transformed.

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@7m_walters

§ Mobile Shift

§ Deep Impact

§ Ubiquitous Computing

§ Empowered Consumers

§ Customer Experience Management

To summarize:

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This and other DCG research is available at no cost on

www.digitalclaritygroup.com

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What is na7ve adver7sing?

Is CEM an extinction level event?

PART TWO in which

We all need a stiff drink

@7m_walters

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Now that’s a poten7ally insul7ng ques7on. The very existence of this conference – and of the thousands of other similar but less impressive conferences is proof that we take CEM seriously. “We” – analysts, vendors, service providers, so-‐called end users –we are gathered on a great ba5lefield of the war to improve customer experience, and we are, as something like the CEM industry, dedicated to the proposi7on that experience ma0ers above all else. There is a lot of other evidence to indicate that we’re doing what it takes to survive:

27 Source: Repor7ng on Accenture’s Digital Transforma7on in the Age of the Customer report, 2015.

That damn Sco5 Brinker exponen7al marke7ng

technology slide.

@7m_walters

Also, we know that spending on CEM-‐related technologies has exploded. (Or, at least the investments by VCs in companies that would like to benefit from an explosion in spending on CEM has exploded.)

Also

89% of N.A. marketers said they

expect to compete “mostly on the basis of customer experience” by

2016. (That’s seven weeks from now.)

Source: Gartner, 2015 Marke7ng Spending Survey @7m_walters

30 Source: h5ps://experiencema5ers.wordpress.com/2007/11/27/forresters-‐2007-‐customer-‐experience-‐rankings/

Also We’ve been at it for years.

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So, how are we doing?

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81% of firms in global survey have

seen CX ini7a7ves fail in the last three years.

Source: Avaya global survey 2014, see h5p://www.avaya.com/usa/about-‐avaya/newsroom/news-‐releases/2014/pr-‐140429/

16,000 customers in 32 countries

§ CX index declines from 2013-2015

§ Gen Y most dissatisfied demographic

§ 8 out of 10 with high increases in negative ratings in EU, 5 of these increased more than 10%

§ WW increased likelihood to switch

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CapGemini World Retail Banking Report

Source: h5ps://www.worldretailbankingreport.com/#report-‐highlights

30,000+ consumers worldwide

§  2013: “no CX metric has improved consistently in the last five years”

§  Every metric declined 2012-13

§  2015: in insurance sector, loyalty declines, only 29% are “highly satisfied,” 15% are sure to buy from incumbent provider, $470b in “switching economy”

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Accenture Global Consumer Survey

Source: Accenture: Customer 2020: Are You Future-‐Ready or Reliving the Past?

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Excellent Good OK (aka “mediocre”) Poor Very Poor Consumers rate brands on effectiveness, ease, and emotion

Forrester CX Index – How it Works

Source: h5p://www.slideshare.net/JonathanBrowne/jb-‐iqpc-‐18feb2014

USA: 45,000+ consumers, 299 brands

§ From Q1 to Q3 2015 “good” rating declines from 26% to 15%

§  In that period, 2.3% get better, 28.5% get worse

§  1% of US brands rate “excellent”

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Forrester CX Index, Q3 2015

Source: h5p://blogs.forrester.com/michael_gazala/15-‐10-‐06-‐forresters_customer_experience_index_q3_2015_its_hard_being_an_op7mist; h5p://blogs.forrester.com/joana_van_den_brink_quintanilha/15-‐09-‐28-‐which_french_german_and_uk_brands_create_the_most_loyalty_with_their_customer_expe

FR, UK, DE: 14,000+ consumers, 203 brands

§  In UK, 87% are mediocre or worse

§  In DE 84% are mediocre or worse

§  In FR, 60% are poor or very poor

§  In FR, 0% are (even) “good”

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Forrester CX Index, Q3 2015


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§  1% (or less!) offer “excellent” CX

§  “Mediocre or worse” – USA: 84%

– Germany: 84%

– UK: 87%

– France: 100%

Did I mention we suck?


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PART THREE in which

There is ranting

@7m_walters

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The Great Reluctance?

The Collective Ineptitude?

A Conspiracy of Failure?

La grande illusion?

Four possible reasons for . . . what shall we call it?

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§ A “strategic priority” . . . but no budget

§  Inadequate/insufficient skills

§ Self-delusion: 78% say “we try to differentiate via CX”

1. We don’t do enough

Source: (Econsultancy/Adobe survey, 2015. n=2363) h5p://www.elas7cpath.com/resources/get-‐elas7c-‐blog/what%E2%80%99s-‐wrong-‐customer-‐experience-‐strategy

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§ CEM as “digitally supercharged marketing”

§  Industrial legacy: More efficient processing of prospects/customers

§ CX concepts bastardized

§ Unrealistic scenarios

§ F*#ked up incentives

2. We do too much – of the wrong things

Source: h5ps://www.worldretailbankingreport.com/#report-‐highlights. “Six lessons you can learn from Amazon’s killer email marke7ng

We think tracking a consumer across devices and interrupting her evening with an email is the height of personalized engagement.

In the name of customer experience

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We are incented to collect/acquire as much data on consumers as possible.


Source: h5ps://www.visioncri7cal.de/big-‐data-‐collec7on-‐and-‐privacy-‐concerns/

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We are incented to display ads that consumers ignore.

Average display ad CTR: 0.06% Google Doubleclick, April 2015


Source: h5p://www.smar7nsights.com/internet-‐adver7sing/internet-‐adver7sing-‐analy7cs/display-‐adver7sing-‐clickthrough-‐rates/

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Ads that are hostile to the user experience.


Source: h5p://betanews.com/2015/08/25/ad-‐blocker-‐crystal-‐massively-‐reduces-‐bandwidth-‐usage-‐and-‐page-‐load-‐7mes-‐in-‐ios-‐9/

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Ads which consumers are incented to avoid.


Source: h5p://fortune.com/2015/09/21/apple-‐adblock-‐stats/

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Source: h5p://www.thewire.com/business/2011/06/you-‐are-‐more-‐likely-‐survive-‐plane-‐crash-‐click-‐banner-‐ad/39429/

You’re more likely to: • Get a full house playing poker • Give birth to twins • Summit Mt. Everest • Get admi5ed into MIT • Become a Navy SEAL . . . than to click on a banner ad

Ads which have become a joke.

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Source: h5ps://www.capgemini-‐consul7ng.com/resource-‐file-‐access/resource/pdf/privacy-‐vs-‐personaliza7on_0.pdf

Similar excesses and ineptitude threaten a personalization backlash

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Source: h5p://marke7ngland.com/study-‐finds-‐both-‐widespread-‐programma7c-‐adop7on-‐and-‐lack-‐of-‐understanding-‐how-‐it-‐works-‐143723

In other words . . .

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Half of the virgins we sacrifice don’t help the crop.

Trouble is, we don’t know which half.

We prac7ce customer experience management with

too li5le a5en7on to the customer’s experience #apostrophesma5er

@7m_walters

In short . . .

PART FOUR in which

The Professor speaks

@7m_walters

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3. We can’t change

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In episode 157 of his Cri7cal Path podcast, Horace Dediu says that the Apple/IBM partnership will not cause either company to change their priori6es, processes, or culture. Why? Because, he argues, it is virtually impossible for any company to ever fundamentally change their P, P, or C. I asked him if this meant that most organiza7ons will fail to adapt to and thrive in the radical new business environment created by consumer empowerment. His complete response:

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Dediu isn’t a cynic or curmudgeon. He’s a student (and now colleague) of Clayton Christensen, and he’s drawing on this 2000 ar7cle in the Harvard Business Review.

Here’s a way to understand the argument by (over simplified) analogy. When a company is young, it is like pliable po5ery clay. The founders create a shape, find it inadequate, squish the clay together and start over again, shaping and reshaping.

If the company does not fail, it eventually finds the “correct” shape – i.e. product/market fit. The task is then to regularize and ins7tu7onalize that shape – e.g. to make it reliably repeatable in a efficient manner.

Priori7es, processes, and culture develop (purposefully or subconsciously) to enable, ensure, and sustain the repeatable execu7on of the shape. When they are in place, trying to force a change will break the pot.

(Again: My analogy. There is no clay in Clay’s argument.)

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Organiza7ons are hard to change because they are

organized. They are intended to express and execute a certain form or

(business) model.

In short . . .

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Buy a different pot: •  “Acquire a different organiza7on whose processes and

values closely match the requirements of the new task.”

Start the throwing anew •  “Spin out an independent organiza7on from the exis7ng

organiza7on and develop within it the new processes and values required to solve the new problem.”

Create a new pot with the fragments of the old •  “Create new organiza7onal structures within corporate

boundaries in which new processes can be developed.”

The (only) three ways to change (an inadequate pot)

Source: h5ps://hbr.org/2000/03/mee7ng-‐the-‐challenge-‐of-‐disrup7ve-‐change/ar/1

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A new structure from old fragments. How would that work?

And is it a (or the only) way to avoid CEM extinction?

PART FOUR in which

The Journey Begins

@7m_walters

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“Understanding a problem is the most crucial step in

solving it.” Clayton Christensen & Michael Overdorf

4. We’re trying to solve the wrong problem

Source: h5ps://hbr.org/2000/03/mee7ng-‐the-‐challenge-‐of-‐disrup7ve-‐change/ar/1

We know what CX is:

“A customer’s percep7on of a company or brand, based on all of

their interac7ons during the customer lifecycle.”

@7m_walters

So CEM must be:

“Managing a customer’s percep7on of a company or brand, based on all

of their interac7ons during the customer lifecycle.”

Right?

@7m_walters

Source: h5ps://willscullypower.wordpress.com/2013/10/23/customer-‐lifecycle-‐channel-‐touches/

The comprehensive “customer lifecycle”

Source: h5p://blog.evergegroup.com/?p=1177

Infinity . . . and beyond!

So, all we need to so is manage . . .

1000s of individual interac7ons

Over decades

For every one of your customers (and prospects!)

Across n number of segments, languages, locales

At every stage of the en6re customer lifecycle

And, oh by the way, make that not only mul7channel but transparently omnichannel

@7m_walters

So, all we need to so is manage . . .

1000s of individual interac7ons

Over decades

For every one of your customers (and prospects!)

Across n number of segments, languages, locales

At every stage of the en6re customer lifecycle

And, oh by the way, make that not only mul7channel but transparently omnichannel

And it culminates in an individual’s percep7on, i.e., a mental state.

@7m_walters

In short, the commonly accepted defini7on of CEM leads to an

inescapable conclusion:

CEM is

IMPOSSIBLE

@7m_walters

There is a be5er way.

Instead of the total and totalizing (and poten7ally totalitarian)

customer lifecycle, look at discrete, self-‐contained customer journeys

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Selected journeys (McKinsey)

Source: h5p://www.slideshare.net/McK_CMSOForum/customer-‐experience-‐journey-‐webinar-‐v10-‐091713

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High value journeys

“Indifference”

The journeys are high value because they account for the lion’s share of revenue, as well as harboring most of the opportuni7es to influence customer experiences (emo7ons, memories) and build loyalty.

A new (and better) visualization of CX

Cable on-boarding journey •  Customer makes decision, completes online

form. (website) •  Receives email with instruc7ons for

installa7on (email) •  Calls to make appointment (call center) •  Equipment installed (field team) •  Issues with set-‐up (website, call center) •  Receives and pays first bill (billing, CRM)

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Retail Banking Journeys •  New account onboarding •  Payments and transfers •  Statements and fees •  Loan applica7on/approval/payback •  Managing credit cards •  Investment advice/performance

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Higher Education Journeys •  Researching and selec7ng •  Applica7on (essays, etc) •  Financial aid (parental journey) •  Arrival/star7ng studies •  Changing major •  Study abroad •  Transi7on to work •  Alumni rela7on$ (advocacy)

(Orange = poten7ally USA specific)

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Manage the “hotspots”

Journeys harbor the value in the customer lifecycle. Hotspots are the “moments of truth” within a journey that most influence emo7on, memory, and loyalty

“It’s crucial to iden7fy and select the hotspots that really affect customers’ experience, both posi7vely and nega7vely.” -‐-‐ Larvans Løvlie, Liveworks

Source: h5p://liveworkstudio.com/the-‐customer-‐blah/the-‐changing-‐nature-‐of-‐service-‐experience-‐design/

Customer Lifecycle

§  Traditional isolated touchpoint management is too small to have an impact on CEM.

§  Totalized lifecyle management is too big. (And pointless. And impossible.) And it still relies on touchpoints!

§  Customer journey management is just right.

(Too bad if you don’t know about Goldilocks and the Three Bears.)

83 @7m_walters

The right driver for CX improvements

§ Bring together the resources, skills, data, systems, workflows, infrastructure, insights, strategy, etc. to support, improve, and extend a CJ.

§ This is “Creating a new organizational structures within corporate boundaries in which new processes can be developed.” A new pot from old fragments.

84 @7m_walters

Change is possible

Benefits of CJM

§  Limited in number §  Cross-‐func7onal §  Measurable business impacts §  Manageable §  Provides framework, business jus7fica7on,

and requirements that have been desperately needed by intranet, enterprise social, and managerial change ini7a7ves.

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Benefits of CJM

§  Mapping a CJ determines where personaliza7on is useful and what kind of data is needed.

§  Data-‐for-‐relevance transac7ons are well defined and easier to demonstrate to consumers.

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•  Informa7on revolu7on empowers consumers. •  Resul7ng demand for improved CX an ELE. •  Resistance is fu7le (if you want to live) – but so is

a5emp7ng to manage the en7re customer lifecycle.

•  CJ(HS)M shies a5en7on to the interac7ons that ma5er most – and provide the missing driver for organiza7onal change.

•  Focus on journeys is not a “start small,” “baby steps” strategy. It is precisely what you should be doing – and you can do it today.

Summary

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P.S. Look on the bright side of extinction

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Tim Walters, Ph.D. [email protected] | @tim_walters

Marketing

The total impossibility of customer experience management