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By Don Peppers, and Founding Partner, Peppers & Rogers Group
In 1906, British physicist J.J. Thomson was awarded the Nobel Prize for his discovery that the electron is a particle. In 1937, J.J. Thomson’s son George Thomson, also a physicist, was awarded the Nobel Prize for showing that the electron is a wave. So which is it, a particle or a wave?
The correct answer, of course, is “both.” Wave-particle duality is one of the bedrock principles of quantum physics, and quantum physics explains how transistors work, making it possible to have computers and iPhones, word processing, GPS, and Facebook. Quantum physics, in fact, is the only reason CIO Review Magazine even exists.
"When you automate the customer experience, not only will your customers be happier, but you’ll waste less time and effort yourself, as well"
I only bring this up because it reminds me of a conversation I had more than 15 years ago with executives at Australia’s St. George Bank, now part of the West pac Group. At the time, St. George had just reprogrammed its cash machines so that when you inserted your card and entered your PIN code, the ATM would ask, “Would you like your usual $100 cash withdrawal, no receipt?” The bank’s marketing executives loved this innovation and considered it to be a much improved customer experience. But when I met later with the bank’s senior IT executive, he scoffed at the very notion that it had anything to do with improving service. He said the real reason they’d done it was that real estate for ATMs in Sydney was costly and difficult to come by, but with this innovation each ATM could serve more customers in the same amount of time. So which is it? A better customer experience or increased business efficiency?
The correct answer, of course, is "both." When you automate the customer experience, not only will your customers be happier, but you’ll waste less time and effort yourself, as well. It might mean better asset utilization (as St. George Bank found), or perhaps reduced inventory carrying costs (if, for instance, you were mass customizing a manufactured product). But in most situations, by automating more of the customer experience you can both improve your customer service and reduce your costs.
The problem, however, is that many IT projects that involve automating some aspect of the customer experience are actually planned and justified almost entirely in terms of cost reduction and efficiency, with the result that new technologies are often introduced in ways that actually erode the level of customer service. But research shows that when automation does n't’t work flawlessly for the customer, even though there might be a slight reduction in costs, the overall quality of the customer experience can actually plummet.
“Customer experience” is somewhat of a business buzzword these days.
► It should be reliable. Your product or service should work as advertised, your website should work, service should be performed on time, and so forth. In other words, your production and service processes must be straightforward and competent. The truth is customers actually prefer to deal with automated systems, because well designed self-service channels provide a nearly frictionless experience. Unfortunately, automation that is designed entirely by software engineers, with little input from customer experience experts, is usually not so frictionless for the customer. And any automation that requires human intervention is not reliable.
► A frictionless customer experience should also be valuable, which means the value-for money relationship should be appropriate. Often, however, this value-for-money equation is tilted in the company’s favor. When automation reduces your company’s costs, it makes no sense to the customer that you should charge them more for the experience. Customers aren’t stupid. They know, for instance, that it costs a bank considerably less to process a transaction at an ATM than it does to process it at a teller window. So why do banks charge customers for the “privilege” of doing something that is far less costly to the bank?
► A frictionless experience must be relevant to the customer. Unfortunately, the overwhelming majority of companies operating today simply don’t go to the trouble of ensuring that the customer experience is relevant to each customer. For instance, more than half of inbound customer phone calls to a business in the US are preceded by the customer having visited the company’s website to find the answer or solve the problem that they’re now calling in about. But in the vast majority of cases, when the customer finally talks with an associate, they have to start by explaining all over again what they just spent the last 20 minutes trying to do on the website. There are several readily available solutions to this problem, from online chat windows to “call me” buttons or temporal phone numbers, but the problem persists because while the money saved by automation can easily be counted, the value created by delivering a more relevant experience to individual customers is not so easily quantified.
► And finally, a frictionless experience must be trustable. In today’s hyper-interactive world, mere trustworthiness–that is, doing what you say you’re going to do and not violating the law–is no longer sufficient to deliver a frictionless customer experience. Increasingly, customers expect you to be proactively trustworthy, or “trustable.” So use your automation to anticipate customer needs and to act in the customer’s interest. Consider how Amazon processes refunds and credits, for example. It used to be that a customer would call in if their video didn’t stream well, or if the product wasn’t sold at the lowest price, and the first thing the associate would do is check the computer. The computer would know that the video didn’t stream well, so the associate would confirm it and issue a refund. But in 2013, Amazon changed its policy, reasoning that if the computer knows a refund is due, then why wait for the customer to call in? So today they email the credit to the customer, proactively. Increasingly, the information technology leaders at a business are playing roles that involve strategic planning and resource allocation. We need to ensure that these decisions aren’t based simply on short-term cost-benefit analyses, but take into account the long-term value of delivering a better customer experience, as well.