Can experimentation unlock awesome ways of engaging customers?
The technological advancements in the past few decades and their swift adoptions have not only revolutionized the business world, but also compelled senior executives to think tactically about how to prepare their organizations in meeting the expectations of digital customers.
In this new digital world, large and successful companies in every vertical are being challenged by hundreds of startups. In fact, there’s always the possibility that a Facebook, WhatsApp, Apple or a Netflix may arrive and completely disrupt their traditional business model, or their industry. To survive in this dynamic, competitive marketplace, businesses must disrupt themselves and explore uncharted territories to unlock new ways to engage with customers and improve loyalty. This could only be done through business experimentation.
There’s no alternative but accepting and adapting new technologies to fight off the attacks of leaner challengers. But this transformation is not so easy for the large organizations because customers keep changing preferences and adopting technologies at a rapid pace.
In her post “Beyond the contact center – catering for the Z” Teresa Cottam suggests how drastically different customers can be in what they want from their service providers. While enterprises are working on giving more control to their customers, it is evident that there are no pre-defined, right ways in which customers will interact with brands.
This will require enterprises to search for new business models, fundamentally rethink their operating models, and rethink the strategy to win customer loyalty.
Most organizations realize this, but are lost on the ways and means to build lasting relationships with their customers. This task is made more challenging by the digital customer’s fast-paced changing interests and preferences to research, buy, use, and communicate with organizations. Furthermore, the new mediums of interaction being added with connected homes, cars, watches etc. are widening the gap between you and your customers. Of course, there is lot of data about millions of your customers hidden in myriad of your IT systems that if made use of sensibly and applied rightly can help you befriend your customers. But huge investments and long drawn digital transformation projects to analyze customer behavior as a post event activity to establish patterns, have had limited success.
According to Harvard Business School professor John Kotter, almost 70 percent of large-scale change programs didn’t meet their objectives. And there are many more surveys to that confirm his statement.
To truly drive innovation, we need to explore and experiment the myriad ways in which customers take their journey through multiple digital and offline channels. Experimentation is a core part of the innovation process, which plays an important role in identifying important journeys at various stages of customer lifecycle, right from exploring offers, buying, and using. For example it is very likely that at the early stage of exploring options of purchase, customers might research websites, seek opinions through social channels, rather than actually go to a physical store or call customer support. With two thirds of the buying cycle now happening even before Sales gets involved, it is important that customer engagement through digital channels is carefully crafted to cater to customers in the exploratory phase.
There is also an increasing trend of customers using social channels for registering complaints, requesting changes in subscription models and expect prompt response. Experimentation plays an important role in rolling-out new ways of customer interactions and optimizing different channels for most appropriate intended use by the customer.
Unlock the potential of innovative contextual experiences with experimentation.
Will there be significant increase in sales if in-app, contextual promotional messages are sent or will it lead to customers complaining of bias? How will customers react to changes in UX, will they find it more convenient or will it confuse them? Those companies that continuously experiment and alter or rollback changes based on the results of those experiments imbibe a culture of innovation and are better prepared for digital disruption.
Why then are companies reluctant or unable to increase their experimentation activities?
Data and process silos impede experimentation:
In a perfect business experiment, managers separate an independent variable (the presumed “cause”) from the dependent variable (the “effect”) and then manipulate the former to observe changes in the latter. In the real world, however, things are much more complex: Environments are constantly changing, linkages between variables are across multiple disjoint business processes, and data about variables is present in multiple systems. Especially when it comes to experimenting with personalization of customer journey, enterprises face immense challenges as every digital channel is governed by different software applications like CRM, Self-service, or mobile applications, each having its own databases to store customer information. Complexity increases when a conglomerate business has separate instances of these applications functioning across different lines of business, while
customers expect seamless transition across multiple services form the same brand.
This overall process of unifying silos, so as to be able to conduct an experiment, can be daunting, and that explains why so many companies have chosen instead to rely on the intuitions of executives and other so-called experts. But managerial intuition can often be misleading and is simply no substitute to rigorous experimentation. And experimentation need not be an overwhelming task if companies follow some basic principles.
Principles of good experimentation
Create a culture of innovation
It is important to note that good experimentation goes well beyond the individual tests and their protocols. Some sources of competitive edge can be:
• Does your customer have to repeat his concern every time he interacts about it through a different channel (does this lead to customer churn?)
• Does the customer get recommendations based on his transaction history about the most suitable plan when he is about to renew his contract (does it lead to increase in revenue to service providers?)
• Can it be ensured that customers who have raised trouble tickets are not sent promotional offers? (does it have an impact on NPS?)
• Can there be a proactive intimation to the customer about an outage (will it improve customer life time value?)
• Only by exploring and experimentation can companies unlock their capacity for innovation in interacting with customers. Indeed, experimentation is inextricably connected to innovation, and managers need to understand that fundamental link and promote a culture of innovation.
Related links:
https://hbr.org/2014/12/the-discipline-of-business-experimentation
https://hbr.org/2011/03/a-step-by-step-guide-to-smart-business-experiments
https://www.youtube.com/watch?v=D_vK9n5QuPg&list=PL93Q4ZD_4z4rwUn1-nsbRZ2jMzmozzCnr&index=9
ConclusionValue is created not through what most companies equate with “innovation”, i.e. generation of new ideas that redefine companies’ offers, products and business models. Value is created by executing those ideas and being able to adapt them and make customers experience their effects.
This can only be achieved by driving agility into every single function and being able to drive decisions and investments through the use of real world experience. Business experimentation is essential in generating opportunities to test the ideas and their execution, and provide the opportunity to adapt and pivot them before making large scale commitments.
Business experimentation is hard work, it requires an evolution from only focusing on efficiency driven processes and people, to exploratory and scientific ways to advance the organization forward in this age of fast paced rapid shifts in customer expectations.
And, finally, this shift needs new partners who can help bring these concepts to life by bringing a new perspective organizationally, technologically, and culturally.
Has your company or brand engaged in experimentation to innovate customer experience? How has the experience changed your company? Let us know by commenting!
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