If you want to improve customer experience, you must use technology to ensure you’re continuously connected to your customers, write Nicolaj Siggelkow and Christian Terwiesch for Harvard Business Review.
Customer service is at the heart of any successful business. New technologies are revolutionising the way in which businesses approach customer service.
THE OLD WAY
Traditionally, you would wait for a customer to highlight a problem before acting to solve it and so improve the customer experience. Nicolaj Siggelkow and Christian Terwiesch, professors at the Wharton School at the University of Pennsylvania and co-directors of the Mack Institute for Innovation Management, label this approach “buy what we have”.
Siggelkow and Terwiesch identify three stages of the buy-what-we-have approach: recognise, request and respond. The customer recognises a problem, the customer requests a solution, the company responds. Simple. But during that process both the company and the customer suffer.
THE NEW WAY
Some of the world’s most successful companies now employ what Siggelkow and Terwiesch label “connected strategies”, harnessing technology to address customer needs instantly or even before they realise they have them.
Disney World’s MagicBands – issued to visitors on admission – incorporate RFID (radio frequency identification) technology, which allows Disney to track visitors’ movements around the park and create bespoke experiences for them.
McGraw-Hill Education’s e-Textbooks use digital technologies to send feedback to the company and teachers in real time – allowing both parties to cater to each individual student’s needs.
Nike uses a range of technologies – including chips embedded in their running shoes – to provide a holistic experience that has helped the company evolve from a sportswear company into a provider of personalised coaching and fitness solutions and health data.
Fear not. It is not too late to embrace a connected strategy.
Siggelkow and Terwiesch have identified four effective connected strategies:
1) Respond to desire. Like the traditional buy-what-we-have approach, this strategy focuses on providing customers with products and services they have requested. The difference is the speed at which you do it. “Speed is critical in a lot of respond-to-desire situations,” write Siggelkow and Terwiesch.
You’re on a deadline. You have to print a document. Your ink cartridge runs out. The last thing you want to do is spend several hours driving to the stationary shop, getting stuck in traffic, finding a parking space, conversing with a sales assistant, finding the correct cartridge, standing in a queue, etc.
The printer manufacturer could help you avoid this painful scenario with a respond-to-desire strategy. Your printer informs you it’s low on ink and directs you to its online store where, because your credit card details are already stored, you are able to order a new cartridge for same-day delivery with a single click. It arrives a couple of hours later and you haven’t even had to leave your desk.
Amazon set about satisfying its customers’ desire to be served as quickly and easily as possible several years ago. Amazon Prime provides next-day delivery; 1-Click allows customers to place an order with a single click; and now users can simply command Alexa to order a particular product and she will take care of the rest.
2) Curated offering. The customer knows what they need but they are not yet sure how you can provide it. This presents you with an opportunity to steer them towards products and services you are already able to provide with a “personalised recommendation process”.
Online shopping is nothing new, and we have probably all done our supermarket shop online at least half a dozen times. This simple “you order, we deliver” respond-to-desire strategy works. It saves us from trudging around the supermarket and allows us to avoid queues. But a curated offering strategy would go one step further.
Meal-kit provider Blue Apron allows you to order your grocery shop online and delivers it to your door, but it also provides personalised recipe recommendations and creates shopping lists, helping you avoid the problem of over ordering.
3) Coach behaviour. Unlike the previous two strategies, this one requires you to highlight and service your customers’ needs.
In order to implement this strategy you’ll have to rely on information customers have previously shared or observe the behaviour of all of your customers over a period of time. It requires a deep understanding of your customers and the ability to collect, analyse and interpret data. What does this customer want? How has this customer behaved in the past?
You need a constant flow of information from your customers. Fortunately, technologies such as wearable devices now make this possible.
Nike employs a coach-behaviour strategy. It’s able to track customers’ behaviour through its Nike+ Run Club app enabling it to create bespoke workouts and training schedules and ‘nudge’ its customers when they slack off. Its customers have grown to think of Nike as a personal trainer and not just the company that made their trainers, so they’re happy to accept this encouragement.
4) Automatic execution. So far the customers have told you what they want. The automatic execution strategy involves you knowing what they want before they do and providing it.
This strategy requires a high level of trust on the part of the customer. They must be certain that you will take care of the information they are providing, keeping it secure and safeguarding their privacy.
Returning to the printer cartridge example, both Brother and HP will ship replacement ink cartridges to their customers when their printers send out a “low ink” signal. The internet of things is set to make an automatic execution strategy possible in more and more cases.
Word of warning. “We’re excited about automatic execution, but we want to stress that we don’t see it as the best solution to all problems – or for all customers,” write Siggelkow and Terwiesch. “People differ in the degree to which they feel comfortable sharing data and in having the companies serving them act on that data.”
DON’T STOP NOW
Whatever connected strategy you choose – and it is likely you will combine more than one to create a “portfolio” to satisfy the differing preferences of your customers – it is sure to benefit your business. If you stick with it, it will continue to do so. You will come to understand your customers and their needs better and better, enabling you to constantly improve your products and services.
“The age of buy what we have is over,” write Siggelkow and Terwiesch. “If you want to achieve sustainable competitive advantage in the years ahead, connected strategies need to be a fundamental part of your business.”