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Forrester Research, Inc., 60 Acorn Park Drive, Cambridge, MA 02140 USA Tel: +1 617.613.6000 | Fax: +1 617.613.5000 | www.forrester.com Customer Experience Innovation Demystified by Kerry Bodine, June 27, 2013 For: Customer Experience Professionals KEY TAKEAWAYS Companies Thirst For Customer Experience Innovation But Don’t Know How To Get It Companies are throwing time, money, and resources at customer experience innovation. But most simply copy their competition or pray that the shiny technology du jour will put them ahead. e result is scattershot experiences that provide no lasting value to either the customer or the business. Customer Experience Innovation Differs From Typical Improvement Processes Customer experience improvements enhance interactions that already meet customer needs and drive immediate business value. In contrast, customer experience innovations solve for unmet customer needs, create new types of interactions and/or significantly change the qualities of interactions, as well as drive long-term differentiation. Successful Innovations Encompass Customer Needs, Business Model, And Brand New customer touchpoints and interactions that don’t solve a real customer problem are just innovations for innovation’s sake. Once customer needs are uncovered, potential innovations must be vetted within the context of the business model and brand to ensure business relevance and longevity.

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Page 1: Customer Experience Innovation DemystiThedmimage.opentext.com/.../Forrester-Customer-Experience-Innovation-… · Customer experience innovation Demystied 2 2013, Forrester research,

Forrester Research, Inc., 60 Acorn Park Drive, Cambridge, MA 02140 USA

Tel: +1 617.613.6000 | Fax: +1 617.613.5000 | www.forrester.com

Customer Experience Innovation Demystifiedby Kerry Bodine, June 27, 2013

For: Customer Experience Professionals

Key TaKeaways

Companies Thirst For Customer experience Innovation But Don’t Know How To Get ItCompanies are throwing time, money, and resources at customer experience innovation. But most simply copy their competition or pray that the shiny technology du jour will put them ahead. The result is scattershot experiences that provide no lasting value to either the customer or the business.

Customer experience Innovation Differs From Typical Improvement ProcessesCustomer experience improvements enhance interactions that already meet customer needs and drive immediate business value. In contrast, customer experience innovations solve for unmet customer needs, create new types of interactions and/or significantly change the qualities of interactions, as well as drive long-term differentiation.

successful Innovations encompass Customer Needs, Business Model, and BrandNew customer touchpoints and interactions that don’t solve a real customer problem are just innovations for innovation’s sake. Once customer needs are uncovered, potential innovations must be vetted within the context of the business model and brand to ensure business relevance and longevity.

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© 2013, Forrester Research, Inc. All rights reserved. Unauthorized reproduction is strictly prohibited. Information is based on best available resources. Opinions reflect judgment at the time and are subject to change. Forrester®, Technographics®, Forrester Wave, RoleView, TechRadar, and Total Economic Impact are trademarks of Forrester Research, Inc. All other trademarks are the property of their respective companies. To purchase reprints of this document, please email [email protected]. For additional information, go to www.forrester.com.

For Customer experienCe proFessionals

wHy ReaD THIs RePoRT

“Innovation” has become a buzzword in the customer experience field. Everyone talks about it, but no one knows quite what it is or how to attain it. In fact, most firms that believe that they’re innovating are actually thwarting differentiation and wasting massive amounts of time and money in the process. This report provides a framework that will help customer experience professionals create true innovations: new experiences that drive differentiation and long-term value.

table of Contents

The Customer experience Innovation Bandwagon Rolls Into Town

the Hype Doesn’t match reality

timidity and Blind Faith Hamper efforts

Customer experience Innovation: you’re Doing It wrong

and the pressure is rising

Customer experience Innovation Done Right

reframe innovation opportunities

Ground innovations in the ecosystem

infuse innovations With the Brand

reCommenDations

amp Up Idea Generation To support Innovation efforts

WHat it means

Lust For Innovation will Force organizational shakeups

supplemental Material

notes & resources

Forrester interviewed 22 companies, universities, and individuals including 3m, Bruce nussbaum, frog design, Ge Healthcare, Hasso plattner institute for Design at stanford university, and intuit.

related research Documents

the path to Customer experience maturityJune 25, 2013

Customer experience in the post-pC eraapril 12, 2013

the Customer experience ecosystemFebruary 28, 2013

executive Q&a: Customer experience DesignJune 22, 2012

Customer experience Innovation DemystifiedFrame innovations With Customer needs, Business model, and Brandby Kerry Bodinewith John Dalton, amelia sizemore, and molly murphy

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June 27, 2013

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Customer experience innovation Demystified 2

© 2013, Forrester Research, Inc. Reproduction Prohibited June 27, 2013

THe CUsToMeR exPeRIeNCe INNovaTIoN BaNDwaGoN RoLLs INTo TowN

Forrester recently asked a panel of 100 customer experience professionals about their approaches to customer experience innovation. Our research finds that firms:

■ Seek differentiation through customer experience. Forty-seven percent of respondents say that their executive team’s strategy for customer experience is market differentiation. And an ambitious 13% will settle for nothing less than having the best customer experience across every industry (see Figure 1).

■ Believe innovation will get them there. Sixty-nine percent of our respondents report that their companies have dedicated personnel for customer experience innovation. Sixty-four percent allocated time to innovation activities. Fifty-five percent have dedicated innovation budgets (see Figure 2).

■ Trust that their efforts are paying off. A whopping 73% of interviewees plan to launch innovative customer experiences in the upcoming year. Two-thirds claim to have already delivered such experiences in the past year.

Figure 1 Companies’ Overall Strategy For Customer Experience

Source: Forrester Research, Inc.94182

“How would you describe your executive team’s strategy for customer experience?”

Base: 100 customer experience professionals at B2C and B2B companies

Source: Q4 2012 Global Customer Experience Peer Research Panel Online Survey

To distinguish ourselves from other leaders in our industry

13%To di�erentiate ourselves from all �rms across any industry

47%

To be equivalent with leaders in our industry 12%

To stay slightly behind the mainstream in our industry

9%

Our executive team doesn’t have explicit goalsrelated to customer experience

2%

To stay in the mainstream in our industry

12%

Don’t know 5%

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Customer experience innovation Demystified 3

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Figure 2 Companies’ Customer Experience Innovation Activities

Source: Forrester Research, Inc.94182

“Does your organization have the following customer experienceinnovation resources and/or capabilities?”

Base: 100 customer experience professionals at B2C and B2B companies

Source: Q4 2012 Global Customer Experience Peer Research Panel Online Survey

We have dedicated personnel forcustomer experience innovation

67%We have dedicated physical space forcustomer experience innovation

2%

We have dedicated budget for customerexperience innovation

32%

We launched one or more innovative customerexperiences during the past 12 months 1%

We plan to launch one or more innovativecustomer experiences in the next 12 months 8%

We have dedicated time for customerexperience innovation

51%

38%

We have worked with an outside innovationconsultancy during the past 12 months

We plan to work with an outside innovationconsultancy in the next 12 months

39%

66%

26%36%

11%38%

19%73%

33%

4%64%

6%55%

29%69%

5%28%

Yes No Don’t know

A majority of �rms believe they’re innovating already.

The Hype Doesn’t Match Reality

Despite their ambition, a closer look at our respondents’ activities reveals that haphazard processes consume their energies. Panelists acknowledge that their firms:

■ Remain focused on incremental fixes. Seventy-two percent of our respondents say that their companies’ approach to customer experience centers on making incremental improvements — not radical innovations (see Figure 3).

■ Mismanage the basics. Innovations that are incompatible with customer needs are unlikely to gain traction.1 Even so, fewer than a third of our panelists said that their companies conduct observational research with customers, and a paltry 15% said that they follow a defined customer experience design process (see Figure 4 and see Figure 5). A mere 14% are confident that they have a customer experience strategy, while a sobering 40% are rudderless (see Figure 6).

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Customer experience innovation Demystified 4

© 2013, Forrester Research, Inc. Reproduction Prohibited June 27, 2013

■ Fail to make the business case. Without evidence of how customer experience improvements affect revenues, cut costs, or improve customer loyalty, customer experience efforts risk losing credibility.2 Yet only 29% of our panelists said that their organizations consistently model the influence of customer experience metrics on business outcomes (see Figure 7).

Figure 3 Companies’ Focus On Customer Experience

Source: Forrester Research, Inc.94182

“Please select the options that describe your company’s approach to customer experience.”

Base: 100 customer experience professionals at B2C and B2B companies(multiple responses accepted)

Source: Q4 2012 Global Customer Experience Peer Research Panel Online Survey

Focused on making incremental improvementsto the customer experience

Not focused on customer experience

Focused on creating radical customerexperience innovations

Focused on changing our business model toalign with customer experience innovations

Don’t know

1%

80%

20%

17%

1%

Eight percent are focusedon both of these activities.

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Figure 4 Adoption Levels For Customer Understanding Principles

Source: Forrester Research, Inc.94182

“To what extent does your company do the following practices related to customer understanding?”

Base: 100 customer experience professionals at B2C and B2B companies(percentages may not total 100 because “don’t know” responses were not included)

Source: Q4 2012 Global Customer Experience Peer Research Panel Online Survey

We don’t do this at all We do this sporadically or inconsistently We do this consistently

38% 60%

12% 62% 26%

23% 42% 31%

19% 62% 19%

Gather input from employees about theirinteractions with customers

Conduct observational researchstudies with customers

Map customers’ interactions with our companyfrom the customers’ perspective

Gather customers’ feedback about theirinteractions with our company

19% 45% 33%

21% 47% 31%Document customer insights to make it easyfor employees to understand (e.g., personas)

Share what we know about customers withemployees at all levels of the company

26% 46% 27%

2%

Analyze customer insight acrossorganizational boundaries

Customer understanding is practiced inconsistently — or not at all — at most �rms.

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Figure 5 Adoption Levels For Customer Experience Design Practices

Source: Forrester Research, Inc.94182

Base: 100 customer experience professionals at B2C and B2B companies(percentages may not total 100 because “don’t know” responses were not included)

Source: Q4 2012 Global Customer Experience Peer Research Panel Online Survey

We don’t do this at all We do this sporadically or inconsistently We do this consistently

Engage customers, partners, and employeesthroughout the experience design process

(not just for testing)

Follow a de�ned customer experience designprocess for all new or revised experiences

Use prototyping and frequent iteration in theexperience design (and redesign) process

Use customer research as input tocustomer experience design projects

Proactively adjust the design of the customerexperience when we change things that a�ect it

(e.g., a policy, business process, product,or technology system)

“To what extent does your company do the following practices related to design?”

12% 51% 35%

14% 63% 23%

27% 53% 15%

21% 54% 16%

19% 57% 20%

Customer experience design is an immature discipline at most �rms.

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Figure 6 Adoption Levels For Customer Experience Strategy Practices

Source: Forrester Research, Inc.94182

“How much do you agree or disagree with the following statementsabout your �rm’s customer experience strategy?”

(On a scale of 1 [completely disagree] to 5 [completely agree])

Base: 100 customer experience professionals at B2C and B2B companies

Source: Q4 2012 Global Customer Experience Peer Research Panel Online Survey

Our customer experience strategy �owsfrom our overall company strategy

Our customer experience strategyaligns with our brand attributes

Our customer experience strategy aligns withour understanding of what customers need

Our company has a de�ned customerexperience strategy 19% 27% 14%

25% 23% 16%

12% 27% 17%

9% 33% 15%

28%12%

11% 25%

21% 23%

21% 22%

1 2 3 54

Only a minority approach customer experience strategically.

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Customer experience innovation Demystified 8

© 2013, Forrester Research, Inc. Reproduction Prohibited June 27, 2013

Figure 7 Adoption Levels For Measurement Practices

Source: Forrester Research, Inc.94182

“To what extent does your company do the following practices related to measurement?”

Base: 100 customer experience professionals at B2C and B2B companies(percentages may not total 100 because of rounding)

Source: Q4 2012 Global Customer Experience Peer Research Panel Online Survey

We don’t do this at all We do this sporadically or inconsistently We do this consistently

6% 40% 53%

13% 45% 40%

18% 46% 34%

20% 47% 29%

Track what happens during customer interactions(e.g., call transfers, web page views)

Use a consistent framework for measuringcustomer experience quality across channels

Compare customer experience metricsacross organizational boundaries

Measure how customers perceive theirinteractions with our company

20% 47% 29%

20% 47% 29%Model the in�uence of customer experiencemetrics on our business outcomes

Share customer experience metricsand models with all employees

Most �rms aren’t consistently measuring the quality of business impact of customer interactions.

Timidity and Blind Faith Hamper efforts

Though firms crave differentiation, the truth is that even companies with dedicated time and budget for innovation:

■ Try to keep up with the Joneses. Fifty-eight percent of our respondents said that their firms drive customer experience innovations by watching what their direct competitors are doing. A full 72% look to copy companies in other industries (see Figure 8).

■ Pray that technology can save them. Sixty-two percent of our panelists report that technology advancements drive their firms’ innovation activities.

■ Discount customer understanding. Relative to their zeal for competitive analysis and new technology, a modest 53% say that conducting ethnographic research and developing customer empathy dominate their approach.

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Figure 8 How Do Companies Drive Customer Experience Innovations?

Source: Forrester Research, Inc.94182

“How much do you agree or disagree with the following statements aboutyour company’s overall customer experience innovation e�orts?”

(On a scale of 1 [completely disagree] to 5 [completely agree])

Base: 53 customer experience professionals at B2C and B2B companies thathave dedicated time and budget for customer experience innovation

(percentages may not total 100 because of rounding)

Source: Q4 2012 Global Customer Experience Peer Research Panel Online Survey

1 2 3

We drive our customer experience innovations bywatching what other companies in other

industries are doing

We drive our customer experience innovationsthrough technology advancements

We drive our customer experience innovationsthrough ethnographic research and deep

customer empathy

We drive our customer experience innovations bywatching what other companies in our

industry are doing17% 11%47%

2%

25%47%

28% 9%53%

4%

17%36%

23%

11%15%

9%

11% 32%

2%

54

CUsToMeR exPeRIeNCe INNovaTIoN: yoU’Re DoING IT wRoNG

Let’s face it: The market is confused. Everyone wants to innovate, but only a minority has mastered customer experience basics. Worse still, our respondents pursue their innovations from a weak position, engaging in activities that:

■ Scuttle dreams of differentiation. The scores in Forrester’s annual Customer Experience Index have plateaued — there’s been no major migration toward “good” or “excellent” scores over the past six years (see Figure 9). Even in the three industries with brands that received “excellent” scores in 2013 — retailers, hotels, and banks — there are no runaway winners and only a few points separate the top handful of companies.3 The dominant trend is not differentiation, but parity.

■ Waste time and money. Companies that blindly add shiny new features or trendy technologies to their mix of customer experiences put the cart before the horse. Consider the auto insurance company that invested in a new mobile app and back-end integration to connect customers in an emergency with a call center agent. While it looked good on paper, the plan failed to account for the fact that drivers didn’t download the app in anticipation of getting into a car crash — and had more pressing things on their minds than browsing an app store once an accident occurred. Result? Another failed “innovation.”

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■ Jeopardize the customer experience discipline. Scattershot innovation initiatives can’t go on forever without some kind of verifiable value. Customer experience professionals that over-promise — but can’t deliver the goods or model the business impact of innovation investments — cannot expect to receive continued resources.

Figure 9 Distribution Of Customer Experience Index Scores, 2007 To 2013

Source: Forrester Research, Inc.94182

Base: 154 large North American brands scored in Forrester’s Customer Experience Index, 2013;160 large North American brands scored in Forrester’s Customer Experience Index, 2012;153 large North American brands scored in Forrester’s Customer Experience Index, 2011;133 large North American brands scored in Forrester’s Customer Experience Index, 2010;113 large North American brands scored in Forrester’s Customer Experience Index, 2008;

and 112 large North American brands scored in Forrester’s Customer Experience Index, 2007

Source: North American Technographics® Customer Experience Online Survey, Q3 2007, Q4 2008, Q4 2009 (US),Q4 2010 (US), Q4 2011 (US), and Q4 2012 (US)

Poor(score: 55 to 64)

OK(score: 65 to 74)

Good(score: 75 to 84)

Excellent(score: 85+)

Very poor(score: <55)

201320122011201020082007

8%3%

6%10%

11%0%

31%34%

29%26%

25%25%

36%31%

35%30%

26%40%

17%23%

18%21%

24%23%

8%10%

11%13%

14%12%

In 2013, nine companiestiptoed over the line from“good” to “excellent” withtwo- to seven-point increases.

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© 2013, Forrester Research, Inc. Reproduction Prohibited June 27, 2013

and The Pressure Is Rising

And yet, firms are right to rally around innovating the experiences they deliver because:

■ Customers’ expectations are skyrocketing. People innately want variety and novelty.4 And now, digital tools give people unprecedented access to what they want, whenever they want it, leading consumers to believe that their needs can and should be met at all times.5 In 2012, the average US smartphone user had downloaded more than 40 apps that performed specialized functions.6 Among them: Google Now, an app that provides information about flights, nearby attractions, sports scores, weather, appointments, and traffic throughout the day — “before you even ask.”7

■ The field of competition is widening. The competitive barriers of the past — manufacturing strength, distribution power, and access to information — have been commoditized.8 This shift has enabled upstarts to gain market share in every conceivable business category. Newcomers like thermostat manufacturer Nest Labs and eyewear manufacturer Warby Parker now compete head-to-head with established industry giants like Honeywell International and LensCrafters. And online financial services provider Simple Finance Technology offers consumers a wholly new banking relationship. The common thread among these companies is a laser-sharp focus on customer experience.

■ Any competitive advantage is short-lived. As development cycle times get shorter and shorter, the luster associated with any given experience innovation — and therefore the brand that introduced it — fades fast.9 USAA had a brief leg up on its competition when it launched its mobile check deposit app in 2009.10 But the feature has since been copied by a slew of companies including Bank of America, Wells Fargo, Chase, Charles Schwab, and State Farm — turning mobile check deposit into table stakes for any financial services provider.

CUsToMeR exPeRIeNCe INNovaTIoN DoNe RIGHT

In order to change their approach to customer experience innovation, companies must first have a clear understanding of what it is they’re aiming for. Forrester defines customer experience innovation as:

The creation of new customer experiences that drive differentiation and long-term value.

Customer experience innovation differs from typical improvement processes (see Figure 10). As a process, it requires a structured approach that goes beyond traditional find-and-fix methods and helps firms identify and create experiences that really matter. To put their innovation efforts on the right track, customer experience professionals must:

1. Reframe innovation opportunities. Start with an outside-in approach that frames your business challenges within the context of understanding customers’ unmet needs.

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2. Ground innovations in the ecosystem. To sustain new types of interactions and ward off copycats, connect innovations to the mechanics of your customer experience ecosystem.11

3. Infuse innovations with the brand. Qualities that reflect key brand attributes must permeate new customer interactions in order to make the innovation authentic.

Figure 10 What Is Customer Experience Innovation?

Source: Forrester Research, Inc.94182

Enhances interactions that already meetcustomer needs

CX improvement CX innovation

Makes existing interactions incrementally moreuseful, easy, and enjoyable

Drives immediate business value

Scope

Impact onexperience

Businessobjective

Solves for unmet customer needs

Creates new types of interactions and/orsigni�cantly changes the qualities of interactions

Drives long-term di�erentiation

Reframe Innovation opportunities

To shed scattershot innovation efforts, customer experience professionals must examine their business challenges and associated opportunities in a different way — from the outside in. This first and vital step in the innovation process requires immersion in customers’ lives to discover their unmet needs — and removal of the guardrails that typically constrain brainstorming and problem solving. To achieve this, customer experience professionals need to:

■ Adopt explorative research techniques to develop empathy. Surveys and focus groups won’t uncover the insights required to guide true innovation efforts — they’re too constrained in the questions they ask and the answers they elicit.12 To uncover new opportunities that resonate with innate customer needs, more comprehensive methods are required. For example, researchers at Intuit solicited captioned photographs from a target group of customers to see how they were saving money. One photo stood out — a picture of an empty cupboard with the note: “I’m buying less food.” That single photo enabled the team to connect to customers’ real problems — and prompted Intuit to focus its strategy on putting more money in people’s pockets.

■ Take themselves out of customer journey maps to broaden horizons. Most companies use journey maps to illustrate the problematic interactions that customers have with them today. This model inherently forces teams into a find-and-fix mindset — and does little to stimulate “what if . . . ?” thinking. To identify new opportunities, Philips Healthcare mapped out a typical day in the life of a radiologist, regardless of whether those activities involved Philips. This approach enabled the team to identify a key pain point in radiologists’ daily work — an inability

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to compare one patient’s scan with those of others — that Philips already had the data for and capability to solve but hadn’t considered productizing.13

■ Define a smarter problem than they started with. Holiday Inn executives knew that they had a food problem: The hotel’s restaurants didn’t have the atmosphere customers were looking for, and the food itself was mediocre and overpriced. They also thought their competition for breakfast was other hotels. Examination of consumer needs and behaviors, corporate financials, and cultural trends led to an epiphany: Denny’s and McDonald’s were the real competition. Says Craig LaRosa, principal, brand experience at Continuum, “Holiday Inn thought it was in the heads and beds business and needed to start thinking about being in the fast casual-dining business.” That insight catalyzed the development of a more social restaurant and bar experience that seamlessly integrated with new entertainment activities in the hotel lobby.

Ground Innovations In The ecosystem

Customer experience professionals need to determine if new types of interactions have the potential to create lasting value for the organization. This means analyzing innovation ideas within the context of the core business mechanics. To add structure to this process, customer experience professionals must:

■ Connect new touchpoints to the broader ecosystem. Innovations that involve only a single touchpoint or channel put companies at high risk for copycats. To ward off imitators, customer experience professionals should map out how the people, processes, policies, and technologies that surround new touchpoints must also change to support new scenarios. For example, Citibank hired the same architects responsible for the Apple store to design its bank of the future. Not surprisingly, it wound up with a bank that looks like an Apple store. Citibank neglected the fact that Apple’s hiring, training, and in-store technology — its ecosystem — are the lifeblood of its unique in-store experience.

■ Define new business models to discover new interactions. New customer journeys are often the expression of innovative business models. Mobile operator giffgaff ’s customers discover, evaluate, buy, and get support online and in social forums — the direct result of a cost structure that includes only a handful of employees. Zipcar’s car-sharing business model drove a need for keycard (and then mobile phone) vehicle entry — new types of interactions that traditional rental companies never envisioned. Customer experience professionals should explicitly map out the mechanics of possible new business models — like resources, activities, and revenue structure — using a tool like the business model canvas (see Figure 11).14 This visualization can help teams see how core business activities can fuel new interactions — and support them in the long run.

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© 2013, Forrester Research, Inc. Reproduction Prohibited June 27, 2013

Figure 11 The Business Model Canvas Helps Companies Visualize Business Mechanics

Source: Forrester Research, Inc.94182

Source: Business Model Generation website

Infuse Innovations with The Brand

The brand is a company’s genetic material — a powerful code that enables the organization to express itself appropriately in an infinite number of customer interactions. To wield this power for innovation initiatives, customer experience professionals must:

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■ Transfer brand qualities to new customer interactions. Ikea’s cartoon furniture assembly instructions, Mini Cooper’s retro-inspired dashboard, and the cheerful chirp of a Zappos.com customer service rep — the qualities of these customer experiences create strong associations with their brands. And the more a new interaction looks, feels, smells, sounds, and tastes like a specific brand, the harder it will be for competitors to copy. That’s why Continuum Innovation created mood boards when developing a new restaurant concept for Bertuccis called 2ovens. Carefully chosen photos depicted the desired 2ovens vibe, helped align internal Bertuccis stakeholders, and guided the design of touchpoints as diverse as the dining space, menu, and website (see Figure 12).

■ Make brand a source of innovation inspiration. Brand should never be an afterthought when it comes to customer experience innovation. In fact, it can be an effective driver. After all, it was JetBlue Airways’ mission to “bring humanity back to travel” that inspired the airline to create in-flight innovations like extra leg room, seatback TVs, and snacks that people actually want to eat. To tap the brand’s potential, CX teams should create visual models that articulate their brand’s distinctiveness as well as customer needs (see Figure 13).15 They can then use these models to ideate products, services, and entire customer journeys that resonate with each core aspect of the brand.

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Source: Forrester Research, Inc.94182Source: Continuum; Bertuccis

Figure 12 Continuum Innovation Created Mood Boards For The Bertuccis 2ovens Restaurant

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Figure 13 Zilver Innovation’s Visual Brand Diagram For Dutch Kitchen Appliance Brand Etna

Source: Forrester Research, Inc.94182

The outer ring describesrational and emotionalcustomer needs: dailyorder and routine, plusritual and meaning.

The innermost wedgescombine brand attributesand customer needs andform the input forinnovation exploration.

Photos show Etnacustomers and productsin their home contexts.

The inner ring describesrational and emotionalattributes of the brand: asober no-nonsenseattitude, plus enthusiasmand passion.

Source: Zilver Innovation; Etna

R e c o m m e n d at i o n s

aMP UP IDea GeNeRaTIoN To sUPPoRT INNovaTIoN eFFoRTs

Ideas aren’t cheap — and effective ideation is actually quite challenging. Companies need structured methods for increasing the total pool — and the variety — of ideas. To generate more ideas more quickly, customer experience professionals should:

■ Temporarily ditch reality. To get to solutions that qualify as true leaps forward, innovation teams need the freedom to generate possibilities without the burden of real-world business constraints. As Frederick Leichter, chief customer experience officer at Fidelity Investments, explains, “It’s easier to make a profound idea reasonable than to make a reasonable idea

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profound. We start with stuff that’s out there, wild, and aggressive and figure out if it has merit. Smart people will figure out how to get great ideas implemented.”16

■ Include adjacent perspectives. At legendary innovator 3M, it’s standard operating procedure to bring together experts from across business units — like engineers from the pet and automotive groups — to riff off each other’s ideas. Customer experience professionals should follow suit by including product managers, developers, finance managers, and human resources staff on innovation teams. Employees from different disciplines will approach each problem with a unique perspective, spark new ideas, and help others make connections they couldn’t otherwise see.

■ Examine the needs of extreme users. Customer experience professionals have been trained to understand and solve for the needs of key customer segments. But during ideation, examining the needs of edge-case customers can be more enlightening. For example, a bank might consider a person who stores money under his mattress or a teenager who’s opening her first account. The needs of these extreme users are similar to those in the mainstream, just amplified. This amplification makes it easier for innovation teams to spot novel ways of solving common problems.

■ Co-create with customers and partners. Ideas can come from anyone. When Stockholm-headquartered design firm Doberman began a government-funded initiative to help urban families engage with nearby parks and wilderness areas, the design team members gave participants small blocks of wood. Then they asked them to head to the great outdoors and keep diaries of how they’d use these “devices.” Participants reported wanting to ask their blocks questions like how long a rain shower would last, whether pond ice was a safe thickness for skating, and whether a particular wild mushroom was safe to eat. These ideas spurred new mobile app functionality.

■ Play! People are more creative when they’re playing.17 To create a playful atmosphere for ideation, customer experience professionals should develop visual, nonlinear, and participatory group exercises — anything that gets employees out of their day-to-day work mode. For example, the ThinkCube innovation kit, often utilized by Cynergy in its digital strategy work, provides a set of cards that contain random concepts like

“Frisbee,” “cryogenics,” and “cuneiform script.”18 Team members randomly draw cards and then combine them to trigger new ideas. Books such as Innovation Games: Creating Breakthrough Products Through Collaborative Play and Gamestorming: A Playbook for Innovators, Rulebreakers, and Changemakers provide dozens of additional playful innovation exercises.19

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W h at i t m e a n s

LUsT FoR INNovaTIoN wILL FoRCe oRGaNIzaTIoNaL sHaKeUPs

The need for innovation will soon force companies to change the way they do business. In the coming years, we’ll experience a future where:

■ Customer experience design agencies will be gobbled up. According to Roger Martin, dean of the Rotman School of Management at the University of Toronto, “Designers may not be able to prove that something ‘is’ or ‘must be,’ but they nevertheless reason that it ‘may be.’ This style of thinking is critical to the creative process.” It’s also critical to innovation. As the business world wakes up to the value of design, many companies find it easier to buy design resources than to develop them. 2013 has already seen two big acquisitions in this space: Facebook acquired customer experience design firm Hot Studio, and management consulting firm Accenture acquired service design firm Fjord.

■ Millennials will gain top innovation positions at traditional companies. When working on incremental customer experience improvements, it’s dangerous to believe that your customers are just like you.20 But it’s actually an effective strategy for getting innovations off the ground. Warby Parker co-founder Andrew Hunt started his business “after repeatedly losing my glasses and being forced to pay astronomical prices for uninspired frames.”21 Similarly, retired Apple engineer Tony Fadell started Nest Labs because he couldn’t find a thermostat that was worthy of his beautiful Bay Area home and finely-tuned aesthetic. As middle-aged executives seek to develop new experiences that are relevant for younger consumers, they’ll need to rely on insiders who know what makes this generation tick — and Millennials will quickly rise from low-paid entry-level positions to top strategic advisors.

■ Customers will expect to be part of the innovation process. Innovation is no longer an activity that can — or should — be confined within your company’s four walls. Customer communities like Communispace, ideation websites like mystarbucksidea.com, and crowd-funding sites like Kickstarter enable consumers to contribute their time, brain power, and hard-earned money to innovation initiatives that they believe in. As consumers become more empowered by these platforms, their view on participation will shift from being a nice-to-have to standard operating procedure. Ongoing participatory interactions will in turn create a new step in the standard customer journey — one that customer experience professionals will need to manage, improve, and (yes) innovate.22

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No RULe aT THe eND oF THe FIRsT “BLUe Box seCTIoN” wHeN THaT seCTIoN Is FoLLoweD By a seCoND “BLUe Box seCTIoN”

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sUPPLeMeNTaL MaTeRIaL

Forrester fielded its Q4 2012 Global Customer Experience Peer Research Panel Online Survey to 100 CX professionals from our ongoing Marketing & Strategy Research Panel. The panel consists of volunteers who join on the basis of interest and familiarity with specific marketing and strategy topics. For quality assurance, panelists are required to provide contact information and answer basic questions about their firms’ revenue and budgets.

Forrester fielded the survey from October 2012 to December 2012. Respondent incentives included a copy of a report resulting from this data.

Exact sample sizes are provided in this report on a question-by-question basis. Panels are not guaranteed to be representative of the population. Unless otherwise noted, statistical data is intended to be used for descriptive and not inferential purposes.

Forrester fielded its Q4 2011 Global Customer Experience Peer Research Panel Online Survey to 86 CX professionals from our ongoing Marketing & Strategy Research Panel. The panel consists of volunteers who join on the basis of interest and familiarity with specific marketing and strategy topics. For quality assurance, panelists are required to provide contact information and answer basic questions about their firms’ revenue and budgets.

Forrester fielded the survey from November 2011 to January 2012. Respondent incentives included a copy of a report resulting from this data.

Exact sample sizes are provided in this report on a question-by-question basis. Panels are not guaranteed to be representative of the population. Unless otherwise noted, statistical data is intended to be used for descriptive and not inferential purposes.

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organizations and Individuals Interviewed For This Report

3M

Andrew Reise Consulting

BlueCross BlueShield of Illinois

Bruce Nussbaum

Continuum Innovation

Cynergy Systems

ExperiaHealth

Fit Associates

frog design

GE Healthcare

Hasso Plattner Institute for Design at Stanford University

Intuit

Invoyent

Kaiser Permanente

Nest Labs

Orange

Parallel Design Labs

Philips

Portigal Consulting

Rotman School of Management

Storyline

Tesco

eNDNoTes1 Among those factors that boost the likelihood of an innovation’s adoption, compatability with cultural

values, past experiences, and needs of potential users are crucial. Source: Everett Rogers, Diffusion of Innovations, Free Press, 2003.

2 For guidance in building an effective business case for customer experience efforts, see the March 26, 2012, “The Business Impact Of Customer Experience, 2012” report.

3 In the retail category, only four points separate the top 10 brands. In the hotel category, Choice Hotels International and Hampton Inn/Suites trail top-scoring Courtyard by Marriott by a mere four points and five points, respectively. And in the bank category, customer experience darling USAA beats out SunTrust Banks and TD Bank by just seven points and eight points, respectively.

4 “The fact that people like variety is no secret. New research from Duke University’s Fuqua School of Business points to the extent to which we may even be hardwired to desire it . . . They found that the monkeys, when given a token to ‘spend’ on their favorite foods or a buffet, chose the buffet. This correlates with earlier research done on human subjects, such as one experiment finding that participants ate 43 percent more M&Ms when there were 10 colors in the bowl as opposed to seven.” Source: Stacy Blackman,

“Duke Research: Monkeys, Like Humans, Want Variety,” CBS Interactive, April 1, 2010 (http://www.cbsnews.com/8301-505125_162-31042083/duke-research-monkeys-like-humans-want-variety/).

Humans’ need for novelty exists “to help us adapt to, learn about, and create the new things that matter, while dismissing the rest as distractions.” Source: Winifred Gallagher, New: Understanding Our Need for Novelty and Change, Brilliance Audio, 2012.

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5 “What has changed is consumers’ ability to get what they want. This has led them to expect that their needs can and should be met — more often and more completely than ever before in human history.” Source: James McQuivey, Digital Disruption: Unleashing the Next Wave of Innovation, Amazon Publishing, 2013 (http://www.forrester.com/marketing/books/digital-disruption.html).

6 Source: Paul Sawers, “Nielsen: US smartphones have an average of 41 apps installed, up from 32 last year,” The Next Web, May 16, 2012 (http://thenextweb.com/insider/2012/05/16/nielsen-us-smartphones-have-an-average-of-41-apps-installed-up-from-32-last-year/).

7 Source: Google (http://www.google.com/landing/now/).

8 Now every company — and even enterprising individuals with smartphones — can tap into global factories and supply chains. Digital distribution alleviates the need to establish cumbersome distribution networks. And after huge IT investments, companies are realizing that the cloud provides all of the computing resources they need. See the February 26, 2013, “Why Customer Experience? Why Now?” report.

9 “Total manufacturing output in the United States is increasing (by 15 percent in the last decade) . . . In effect, the huge productivity increases made possible by modern management and technology have created more productive capacity than firms know what to do with.” Source: Eric Ries, The Lean Startup: How Today’s Entrepreneurs Use Continuous Innovation to Create Successful Businesses, Crown Publishing Group, 2011 (http://theleanstartup.com/).

In the past few years, Agile processes have not only gained increasing adoption levels but also rapidly joined the mainstream of development approaches. See the January 20, 2010, “Agile Development: Mainstream Adoption Has Changed Agility” report.

“Organizations are continuing to scale agile beyond single teams and single projects. This year we saw a 15% jump in the number of respondents who work where there are at least 5 agile teams, and a 9% increase in those working with up to 5 agile projects. In addition, agile momentum is up; those who plan to implement agile development in future projects has increased from 59% last year to 83% this year.” Source: “7th Annual State of Agile Development Survey,” VersionOne, 2013 (http://www.versionone.com/pdf/7th-Annual-State-of-Agile-Development-Survey.pdf).

10 Source: Susan Stellin, “Bank Will Allow Customers to Deposit Checks by iPhone,” The New York Times, August 9, 2009 (http://www.nytimes.com/2009/08/10/technology/10check.html?_r=0).

11 The customer experience ecosystem is the complex set of relationships among a company’s employees, partners, and customers that determines the quality of all customer interactions. See the February 28, 2013,

“The Customer Experience Ecosystem” report.

12 Multiple-choice surveys require that you know the range of possible answers before you ask the question. Both surveys and focus groups assume that respondents know what they will do or plan to do and whether they like/dislike or want/don’t want something. While those are all important things to know, most people aren’t fully aware of, don’t remember, or are not able to predict their own behaviors in situations that they haven’t been in before. Source: Vidya Drego, “Why Surveys Aren’t The Best Tool For Designing Experiences,” Vidya Drego’s Blog, May 17, 2011 (http://blogs.forrester.com/vidya_drego/11-05-17-why_surveys_arent_the_best_tool_for_designing_experiences).

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13 As Werner Satter, general manager of ambient experience at Philips Healthcare, says, “We look at the issues that people are facing. It’s not that we have a tech or a solution, and we’re trying to find a need for it.” And Philips doesn’t just look for hotspots in which it can intervene itself. If certain insights are relevant for the hospital or a partner agency, design researchers pass their insights on to those organizations.

14 The business model canvas helps companies identify the relationships among key partners, resources, activities, value proposition, customer segments, customer relationships, channels, cost structure, and revenue structure. An interactive version of this tool is available on Strategyzer’s website. Source: Strategyzer (https://strategyzer.com/).

15 Source: Eric Roscam Abbing, Brand Driven Innovation: Strategies for Development and Design, AVA Publishing, 2010 (http://www.branddriveninnovation.com/).

16 Source: Harley Manning and Kerry Bodine, Outside In: The Power of Putting Customers at the Center of Your Business, New Harvest, 2012 (http://outsidein.forrester.com).

17 Source: Stuart Brown and Christopher Vaughan, Play: How it Shapes the Brain, Opens the Imagination, and Invigorates the Soul, Avery Trade, 2010.

“We think playfulness helps us get to better creative solutions, helps us do our jobs better, and helps us feel better when we do them,” said Tim Brown, CEO of innovation firm Ideo. Source: “Tim Brown: Tales of creativity and play,” TED Conferences, November 2008 (http://www.ted.com/talks/tim_brown_on_creativity_and_play.html).

18 Source: Amazon.com (http://www.amazon.com/ThinkCube-A-Professional-Innovation-Tool/dp/097920500X).

19 Source: Luke Hohmann, Innovation Games: Creating Breakthrough Products Through Collaborative Play, Addison-Wesley Professional, 2006; Dave Gray, Sunni Brown, and James Macanufo, Gamestorming: A Playbook for Innovators, Rulebreakers, and Changemakers, O’Reilly Media, 2010.

20 “People who make a product think and talk about it fundamentally differently than people who don’t. While both groups may use the same product, their context — understanding, language, expectations, and so on — is completely different.” Source: Steve Portigal, Interviewing Users: How to Uncover Compelling Insights, Rosenfeld Media, 2013.

21 Source: Genevieve Bahrenburg, “In Focus: Warby Parker Eyewear,” Vogue, February 22, 2010 (http://www.vogue.com/vogue-daily/article/vd-in-focus-warby-parker-eyewear/#1).

22 Forrester currently defines the steps in a standard customer journey as: discover, evaluate, buy, access, use, get support, reengage, and leave.

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