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This presentation, including any supporting materials, is owned by Gartner, Inc. and/or its affiliates and is for the sole use of the intended Gartner audience or other authorized recipients. This presentation may contain information that is confidential, proprietary or otherwise legally protected, and it may not be further copied, distributed or publicly displayed without the express written permission of Gartner, Inc. or its affiliates. © 2013 Gartner, Inc. and/or its affiliates. All rights reserved.
Partha Iyengar
Managing Customer Experience — The Next Competitive Frontier
Based on Interviews With
• Dr. Donald Norman, Co-Founder, Consultant
Nielsen Norman Group (U.S.)
• Dr. Eric Schaffer, CEO
Human Factors International (U.S.)
• Dr. Donald Lessard, Deputy Dean
MIT Sloan School of Management (U.S.)
• Irene Au, Head of User Experience
Google (U.S.)
• Kevin Cai, CIO
China Eastern Airlines (China)
• Willie Stegman, Program Director, Core Banking Transformation
Standard Bank (South Africa)
• Tsukasa Makino, CIO
Tokio Marine & Nichido Fire Insurance (Japan)
Definition of "Customer Experience"
The customer experience (CX) is the customer's perceptions and related feelings caused by the one-off and cumulative effect of interactions with a supplier's employees, channels, systems, or products.
Key Issues
1. Why is the focus on managing the "customer
experience" increasing?
2. What are the challenges in addressing this issue?
3. What are the approaches CIOs should use to
enhance the customer experience?
Key Issues
1. Why is the focus on managing the "customer
experience" increasing?
2. What are the challenges in addressing this issue?
3. What are the approaches CIOs should use to
enhance the customer experience?
The Quality of CX Increasingly Determines Enterprise Success
• The percentage of people who discontinued their business with a company
after a negative CX climbed from 68% in 2006 to 89% in 2011.
• 86% of consumers would pay more for a better CX.
• 73% of consumers would expand their purchases with a vendor by 10% or more if a
superior CX was delivered.
• 44% of consumers would pay a premium of 5% or more for a superior CX.
• 58% of consumers would recommend companies that deliver a superior CX.
Source: Harris's "2011 Customer Experience Impact Report" and Strativity's "2010 Customer Experience Consumer Study"
The CX defines the interaction with the enterprise
Extremely likely
Extremely unlikely Neutral
Promoter Passive Detractor
NPS = Promoters - Detractors
10 9 8 7 6 5 4 3 2 1 0
Strengths Challenges
High response rates
Exec. understanding
Captures emotion
Frequency
Immediacy
B2C
Root cause lacking
Not "clearly superior"
Best question?
Causation
Anonymity
Integrity
Proxy Measure of CX: The Net Promoter Score (NPS)
Net Promoter Score (NPS) was introduced in 2003 by a Bain & Company consultant Fred Reichheld in an
influential article in the Harvard Business Review. Since that time, many Global 500 companies have
adopted this metric, both to gauge customer experience and to focus and motivate employees to deliver a
better experience. Reference: http://en.wikipedia.org/wiki/Net_Promoter
"Apple's stock price has risen 500% over the last five years and more than 4,500% since 2002, soon after Steve Jobs introduced the iPod, the first of his path-breaking trio of mobile devices that later included the iPhone and the iPad. The company posted revenue of $46.3 billion in the quarter ended 31 Dec, one of the largest quarterly hauls
ever for a technology firm." — LA Times, 29 Feb 2012.
Strong Correlation of CX Excellence and Enterprise Success
NPS used as a proxy measure of the CX quality
14
-5
18
-5
3
1
102
1
62
107
33
23
32
32
32
38
56
114
128
224
328
382
-50 0 50 100 150 200 250 300 350 400 450
Kaiser Permamente-Health Insurance
USAA-Homeowners Insurance
USAA-Banking
USAA-Auto Insurance
Costco-Department/Speciality Stroes
Safelite AutoGlass-Auto Service/repair
TripAdvisor-Travel Websites
Google-Online Search/Information
Amazon.com-Online Shopping
Apple-Computer Software
Apple-Computer Hardware
Revenue Growth ComparisonNPS Leader vs. Industry Average (%)
Industry Average
NPS Leader
CIOs See Customer Experience as Greatest Opportunity for IT Innovation
Source: Gartner CIO Survey, 2012
Ranked First Ranked Last
35%
32%
24%
18%
15%
16%
12%
6%
13%
9%
10%
11 %
Customer engagement, marketing and sales
The manufacturing and service creation process
How we learn and change as a business
The way we get ideas and make decisions
The way we extract value from customers
Distribution of Respondents
Customer experience (products, services, etc.)
Case Study: Recognition of the Problem — Standard Bank (South Africa)
• High levels of competition and regulatory pressures in
the retail banking space
• Review of operating and business model in light of
declining revenue and market share
• Conclusion: The bank had "lost touch" with customer
expectations
• Facing challenges from new competitors with simpler
products and pricing models...
• ...Which forced a strategic focus on the customer
experience
— Willie Stegman, Program Director, Core Banking Transformation, Standard Bank
Key Issues
1. Why is the focus on managing the "customer
experience" increasing?
2. What are the challenges in addressing this issue?
3. What are the approaches CIOs should use to
enhance the customer experience?
Traditional Enterprise
Enterprise decision processes Enterprise decision processes
CX-focused Enterprise
IT Strategy
IT Processes
Applications
Architecture
Infrastructure
Organization Structure
Organization Culture/Mindset
Governance
Business Purpose
Business Strategy
Products/Services
IT Strategy
IT Processes
Applications
Architecture
Infrastructure
Organization Structure
Organization Culture/Mindset
Governance
Business Purpose
Business Strategy
Products/Services
"Truly" Putting the Customer at the Center of the Enterprise…
Customer Customer
Transformation of Organizational Structure/Value Chain
Transformation
Michael Porter’s product/service-oriented value chain
The customer-experience-focused value chain
Source: Michael Porter (1985).
Key Issues
1. Why is the focus on managing the "customer
experience" increasing?
2. What are the challenges in addressing this issue?
3. What are the approaches CIOs should use to
enhance the customer experience?
Case Study: The Solution Standard Bank (South Africa)
• Drove transformation from a product-centric retail bank to a
customer-centric retail bank.
• The transition has taken a combined team of business and IT people to
assist the CEO in transforming the bank across people, process,
and infrastructure.
• The first key outcome was a (revamped customer-centric) business
and operating model that helped drive competitive differentiation.
• Took five years to come to terms with changing the business model
externally and even internally into a (customer-focused) "value
chain“ approach.
• Difficult for bankers to come to terms with this as opposed to the earlier
siloed product approach.
• The end result is a customer-centric organization with process-centric
overlays driven by customer need, with delivery that is
product-agnostic. — Willie Stegman, Program Director, Core Banking Transformation, Standard Bank
Standard Bank: Customer-centric Value Chain
Product Manufacturing
Customer Interaction
Fulfillment and Infrastructure
Customer Value Proposition/
Segment
Governance
• Customer Segments
• Marketing
Generic sales/ service forces
Specialist CVP and
product knowledge to support sales/service
Third-party sales/ service forces
Specialist
sales forces
Save
Transact
Borrow
Protect
Value Creation Simplification Effectiveness Efficiency
Growth through profitable and customer-centric value
propositions
Increase sales and service revenue by converting leads
and deepening CVP penetration
Highly efficient/ low-cost
operations
Standardized products with reusable building blocks
and configurable features
Sales fulfillment with exacting SLAs
Transaction processing and administration
Infrastructure run
Business Model Viewed Along the Value Chain
Seven Competencies for CX Success
• Organizational mindset and culture
• Aligning the organizational structure
• Adapting the governance model
• Developing customer-centric products, services,
and pricing
• Developing customer-centric research capability
• Implementing customer-centric IT design
and development
• Using new measures of business success
Recommendations
Objectively assess your role and "business credibility" in
the organization.
Position IT as an effective partner in the CX journey of the
enterprise based on the appropriate "CX approach."
Actively participate in building the "seven competencies for
CX" within the enterprise.
Proactively build CX-centric capabilities within IT:
- Skills
- Methodologies
- Technologies
Build an effective partnership with the CMO.
Recommended Gartner Research
The Gartner Customer Experience Management
Maturity Model
Ed Thompson (G00217544)
Getting Better Metrics: Five Principles For
CIOs: Toolkit
Andy Rowsell-Jones and others (G00164615)
The Emerging User Experience Platform
Gene Phifer (G00211625)
Competitive Landscape: Digital Marketing
Service Providers
Richard Fouts (G00214389)
The Consumerization of Application Development
Ian Finley (G00216625) For more information, stop by Experience Gartner Research Zone.