The Underlying Foundation for the Customer Experience Edge - The Customer Experience Edge

The Underlying Foundation for the Customer Experience Edge

Companies with tightly integrated applications rate

their customer experience offering at 4.34 on a scale

of 1 to 5, while others rate their customer experience

at a mediocre 3.62. That’s a 20 percent difference in

customer experience for respondents with tightly

integrated applications.

Reza Soudagar, Vinay Iyer, and Dr. Volker G. Hildebrand

—BLOOMBERG BUSINESSWEEK

RESEARCH SERVICES SURVEY, 2010

FOR MANY EXPERTS, improving the customer experience is just a matter of changing the corporate culture and adding passion for customers. And we agree that these are crucial for developing a strong customer experience.

However, there is another less discussed element that no amount of culture change or organizational transformation can replace: technology. Indeed, technology, done right, is the secret ingredient that enables companies to create the customer experience edge in a scalable, lower-cost way that works not just for 10 or 100 customers but for thousands of customers in a profitable and sustainable manner. More specifically, there are two broad categories of technology that are the basis of the customer experience: the foundational information systems that you use to run your business, and the more “disruptive” technologies that allow companies to meet or exceed customer expectations in the new world of networked consumers.

We believe that even if you have the best customer-centric culture and the highest levels of passion for customers, if your technology is working against you—if it’s too complicated, too costly, or designed simply to build products more quickly rather than supporting the four essentials of the customer experience—it just might not allow you to hone the customer experience edge.

“The vast majority of technologies available today are amazing from a capability standpoint,” says Strativity Group’s Lior Arussy, such as customer relationship management (CRM), performance management, and business analytics. “However, the majority of clients have no idea how to maximize those capabilities. It’s like driving a Rolls Royce at 10 miles per hour.”

The business world seems to agree on the core role that technology plays in providing a strong customer experience. In a 2010 survey by Accenture, the majority of CIOs (65 percent) and, importantly, chief marketing officers (50 percent) agreed that technology now underpins and shapes the entire customer experience.

That is what Part III of this book is all about: the role of technology in shaping and delivering a consistent, high-value, profitable customer experience—the customer experience edge. We will explore this from three different standpoints. In this chapter, we will look at the integrated applications that serve as the foundation for the customer experience, enabling your company to work in concert with its customers and supply chain partners, and to empower your customer-facing employees to be responsive to customer needs. As we’ll discuss further, companies with a strong integrated foundation rank their customer experience significantly higher than those without one.

In "Adding Disruptive Technologies to Advance the Game", we will discuss the more leading-edge, or disruptive, technologies that you can integrate with the foundational systems to move up the customer experience curve, including mobile capabilities, Web channels, location awareness, social media, real-time marketing technologies, and new ways of capturing and analyzing customer data for actionable decisions.

WHAT IS: An Integrated Technology Foundation?

An integrated technology foundation consists of core business applications that enable back-office and front-office workers, as well as customers, to easily share up-to-date information about customer transactions and interactions across channels and across business functions (finance, manufacturing, sales, service, and so on).

The applications serve as a “system of record” instead of there being separate, disconnected repositories of information. So, when an event occurs (a problem is logged, an order is made, or some other operation takes place), those data are available to anyone who interacts with the customer. In this way, an integrated technology foundation makes even a large, diverse organization appear as “one” to the customer.

Finally, the third chapter in this section will cover the role of the CIO and the IT organization as change agents for customer centricity. As you’ll read, CIOs who understand how to align technology and business strategy can become key players, even leaders, on the customer experience team, with the opportunity to help safeguard and even forge their companies’ future.

Framework of Excellence

In "The Four Essentials of a Profitable Customer Experience", we defined the four essentials of customer experience (CE) as reliability, responsiveness, relevance, and convenience. We’ve discussed what these essentials look like and the strategies and techniques that enable you to deliver them. Now, we’re ready to discuss how you go about delivering on those essentials through technology.

There are three key technology-related areas in which companies need to excel if they are to deliver on the four CE essentials: operations, customer interaction, and decision making. Companies have been engaged in these three activities for years, but all three need to undergo a transformation to become customer-centric. Let’s further explore what we sometimes refer to as the framework of excellence or the three pillars of customer experience (see Table 7.1).

TABLE 7.1: Three Pillars of Customer Experience

We believe these three pillars are at the core of any company’s customer experience strategy. Each is important on its own, but all three combined elevate the customer experience to a level of excellence that is attainable and offers cost sustainability over time. See Figure 7.1.

FIGURE 7.1: Three Pillars of Customer Experience

Here is an example of these pillars working together, enabled by technology:

• By using a sentiment analysis tool, you can monitor and listen in on social media “buzz.” If you combine this with other customer data and apply business intelligence and text-mining capabilities, you gain valuable insight into what customers are thinking about your products and services, and you may become aware of negative experiences and can take action. This way, you enable decision-making excellence. 
• Your sentiment analysis tool picks up on a negative tweet, which triggers an alert for you to contact the customer. By following up with the customer (either via Twitter or by responding through another channel, such as e-mail or even a phone call), you can react and address the problem; by doing so, you’ve enabled interaction excellence. 
• The customer service representative can immediately create a service request in the CRM system, which then triggers the internal process to resolve the problem. A service ticket is created, spare parts are ordered, and a service person is dispatched. By following through with a solution to the problem and fixing any broken processes or policies that led to the problem, you’ve enabled operational excellence.

The three pillars can be your guide to choosing supporting technologies that enable you to create the customer experience edge. It’s not just about offering a new mobile application (interaction excellence) or implementing a text-mining tool (decision-making excellence)—those are just the first steps. When you bring those capabilities together with the third pillar, operational excellence, you’ve got a more powerful story to tell. After all, if your basic operational processes are broken, increasing your customer interaction will just expose that weakness, and no amount of decision making can make up for that.

“Job one is getting the basics right,” agrees Smith+co’s Shaun Smith. Companies need a greater level of awareness of what their customers’ biggest issues are, and they need to resolve these issues. Smith likens the situation to trying to fill a bucket with a hole in it. “If you’re losing customers because the bucket is broken, the first thing you need to do is fix the hole,” he says. “Only then can you top up with new customers and keep them.”

The Right Foundation

Now, we realize that you can provide a strong customer experience without technology. Think of your favorite small business—your lawn mower repair person, for example—whom you appreciate for his beyond-the-call-of-duty personalized service in which technology does not play a part. From the dawn of commerce, small businesses have thrived on their ability to forge personal connections with their customers. However, these organizations are of a size where the proprietor knows your name without being prompted by a CRM system. He can make a check-in phone call to see how that expensive lawn mower repair worked out without a technology-based reminder. And he might offer to sell you a refurbished riding mower when he hears that you’ve moved to a new house with two acres of property without an event-based marketing system.

TIP 

According to the global Bloomberg Businessweek Research Services survey, a majority of respondents (86 percent) associate improved net income with the timely and accurate insights they could achieve through a connected technology backbone. Those with tight integration also said that it was easy to obtain a consolidated view of enterprise data, and more than half reported a substantial positive impact on net income.

But what happens when the small business owner goes on vacation, and someone else is left to manage the store? With no information technology to enable the new person to access customers’ history of interactions, it is very likely that a loyal longtime customer may not get her usual level of service. Now, imagine that problem multiplied many times over in large organizations, which serve thousands or millions of customers through an ever-increasing array of channels, including the corporate website, the call center, and social media. No matter how customers contact the business, it needs to track orders, respond to requests and complaints, keep its promises, and ensure that information such as pricing and availability is consistent across all channels.

Of course, most large businesses have implemented technology that automates basic business functions and helps sales and service people do their jobs. However, with customer behavior and competitive threats being in an increasing state of flux, it is much more difficult for some of these existing business systems to fulfill the three pillars of customer experience and enable the four customer experience essentials.

An example is a simple price change that needs to be implemented across multiple systems, including the retail outlet, the website, the invoicing department, collections, the field sales force, the call center, and so on. This is an everyday occurrence that can be paralyzing to companies that are unable to make changes quickly because their systems cannot support the changes. For others, it takes too long, resulting in missed opportunity and lost revenues.

The fact is, most businesses, small or large, need a technology foundation that enables them to deliver a consistent, personalized, highvalue customer experience profitably in the multichannel, increasingly digitized world that we live in today. This foundation is necessary for keeping records on all customer activity, making relevant information available to the right people when they need it, and alerting people to exceptions so that prompt action can be taken.

We call this the integrated technology foundation. To be honest, we’re not big fans of the term integrated applications. It’s one of the most overused and misused phrases in the ranks of computer industry jargon. But rather than make matters worse by creating more confusion, we’ve decided to use the term in this book, with the understanding that we mean something very specific when we use it.

To us, an integrated technology foundation—or integrated applications —is a platform that delivers all the core systems that are key to the customer experience and connects the different pieces of your business processes, from start to finish. This integrated foundation serves as the connective tissue that pulls together the many disparate parts of the organization, enabling people throughout the company to serve customers across geographies, channels, and business functions. When a customer interaction triggers a process, such as placing an order, there’s a centralized way to orchestrate the many pieces of the process, including product selection, purchasing, fulfillment, logistics, distribution, billing, payment, product return, after-sales support, and so on. In summary, an integrated foundation is the secret sauce that enables a large, potentially complex organization to seem harmonious and appear as “one” company in the eyes of the customer, not a collection of departments and functions.

The rich interactions, data-based decisions, and excellent operational capabilities that have come to exemplify the modern customer experience are built on a technology foundation that enables cost-effective, reliable, and consistent delivery of personalized, high-value customer experiences. We believe that you can’t profitably deliver on the four essentials of customer experience without it.

The Importance of Agility

When selecting the right integrated technology foundation to support your customer-centric journey, it is important to keep in mind the huge importance of supporting business agility. One of the most difficult business realities today is the constant and continuous change in customer behavior. When you adopt a customer-centric strategy, your company will be challenged to constantly listen, analyze, and respond by quickly adapting its business processes to meet ever-changing customer needs. For instance, with customers flocking to alternative channels like Facebook or Twitter for transactions, service, product recommendations, payments, and other needs, it’s important for you to stay current in your support of these new channels now—not months or years from now—in order to stay relevant. After all, there will always be a next “Twitter-like” trend or disruption, and your organization needs to be prepared to take advantage of it.

However, introducing new channels of customer engagement doesn’t mean that the traditional channels will go away. As has been proven recently, the growth of Facebook and Twitter has not eliminated the need to support your website or call center. So, to ensure consistency of customer engagement, you need an agile technology platform that will let you modify or expand your business processes to handle new channels and business needs. And you need to be able to do this quickly and easily, without fiddling with the underlying “plumbing” for too long. The choice of an agile integrated technology foundation is, therefore, critical to ensure responsiveness.

A Clear Advantage

Of course, a generous percentage of large companies do not have an integrated technology foundation—far from it. In the BBRS global survey, most respondents reported a moderate level of integration among their core business applications, including financial, human resources, talent management, customer relationship management, supply chain management, supplier relationship management, and product life-cycle management. Only a very small group (11 percent) said that they had achieved “tight integration.” Most (89 percent) wanted to change this, however, with the intent of increasing their application integration in the next year.

It’s no wonder. A majority of the respondents (86 percent) associate improved profits with the timely and accurate insights that they could achieve through a connected technology backbone. While less than half of the respondents currently have enterprisewide views of data (45 percent), those with tight integration said that it was easy to obtain a consolidated view. More than half of this tightly integrated group (51 percent) also reported a substantial positive impact on profitability.

In terms of customer experience, the survey findings were even more significant. When respondents were asked to rate the level of the customer experience that they provided, the difference between those with moderate and those with tight integration was remarkable. Those with tightly integrated applications ranked their customer experience 20 percent higher than other respondents (see Figure 7.2). Essentially, most organizations rate their customer experience as mediocre, while those with a tightly integrated application foundation said that their customers had a very good experience.

Another recent survey by BBRS revealed that a strong customer experience simply cannot be delivered without an integrated foundation. When asked to name the top obstacles to delivering customer experience, a majority (71 percent) of respondents named disconnected tools, technologies, and applications (see Figure 4.1). Respondents also named “lack of a complete view of the customer to better understand their needs” (66 percent), which, as noted in the previous survey, is directly tied to integrated applications.

FIGURE 7.2: Integrated Applications Boost Customer Experience

Respondents with tightly integrated applications rated their customer experience

20 percent higher than other respondents.

Q: Please rate the customer experience your company provides, on a scale of 1 to 5, with 1 being “poor” and 5 being “excellent.”

Base: 1,004 respondents in all, with 11 percent reporting “tightly integrated applications.”

Source: Bloomberg Businessweek Research Services, 2010.

Shaking Off the Past

It’s easy to see why an integrated technology foundation is such a rarity. Companies acquire other companies (sometimes dozens of other companies) and very often don’t take the time to standardize their systems as they go. Or, divisions get into the habit of building or buying technology that helps their individual needs, but without thinking of how it affects the organization.

Then, on top of this jumble of business applications, some organizations often add additional systems with specific capabilities, such as an isolated sales force automation system. The result is a classic mishmash of complex systems with a slew of departmental applications that are somehow connected to the main systems using highly complex and expensive technologies.

This type of technology setup creates walls between employees, making it very difficult for them to collaborate or help customers. You could come up with the best customer-centric strategy and exhibit the highest level of passion for customers, but when your business applications keep your employees and processes disconnected, you’ll never achieve true customer centricity.

A large global networking company typifies the problem. This company had one department that was in charge of managing its warranty services, with dozens of different systems feeding into it. All of the systems had been interconnected and extended to do things beyond their original capabilities. Making even the slightest tweak in functionality meant that every one of these systems had to be changed. Just to analyze the impact of a potential change took weeks, and it took the company 18 months to make a significant system overhaul. Since warranties are such a crucial operation for the customer experience, this was clearly no way to operate.

This situation is not uncommon. It might seem like a good idea at the time to just keep adding functionality, such as a self-service application that could be justified on the basis that it would decrease the cost of service. What is missing, though, is the bigger picture. There is certainly a place for single-function applications, such as social media monitoring tools, customer feedback management systems, and sales force automation tools. But they can create strife down the road if they are bought and implemented without the ability to tie them into an integrated foundation that brings all the systems and processes together.

Here’s what a customer experience might look like without an integrated technology foundation. A customer is shopping for a new washing machine at an appliance store. Using his mobile device, he checks out his favorite “social shopping” site to see what others think of a particular model. Encouraged by the recommendations, he visits the store’s website as well to get further information on product specifications. He notices, however, that the listed price online is lower than that in the store. He could purchase the washing machine online, but the shipping costs and delivery times are a showstopper. Tracking down a knowledgeable employee proves impossible, so he stands in the customer service line. When he finally gets to talk with a service rep, he asks if it’s possible to either get the online price in the store or buy online and pick up the washing machine in the store, thus avoiding both the shipping charge and the delivery delay. Since neither is possible, he leaves the store a disgruntled customer, making sure to check back with his favorite social shopping site to remark on his negative experience.

Of course, with an integrated technology foundation, all of this could have been avoided. Pricing would be consistent across the website and the physical store, and multichannel combinations of purchasing and delivery would be available. And even if there were discrepancies in pricing or availability, frontline employees would be empowered to correct any errors or otherwise turn the negative customer experience into a positive one by accommodating an unexpected customer request.

Another example: a major customer is awaiting shipment on crucial material for its manufacturing process. To optimize its own operations, the customer calls the supplier to determine a window of time within which it can expect delivery. The field rep is unavailable, so the customer gets bounced around to various service agents, none of whom can provide an adequate response. When the field agent finally contacts the customer, she has no idea that the customer has already had several unsuccessful interactions, so the conversation that ensues is unpleasant, to say the least. Worse, it takes the field rep several hours to track down the requested information.

If the supplier had had integrated applications, the customer might have been able to quickly verify the delivery time frame through a self-service portal that collected information from the company’s operational processes. Even if that were unavailable, call agents would have been armed with the customer’s information as soon as the call came in. Any agent would have known that this was an important customer and would have had the delivery window information at his fingertips. The field agent would have been notified that all of this had taken place, so her follow-up call would have been seen as an extra sign of the supplier’s taking good care of the customer.

Bringing It All Together

As these examples illustrate, the customer experience is more than what happens in front of the customer—it’s more than productive sales teams, effective marketing campaigns, and efficient call centers. Behind the scenes, orders need to be shipped as promised, field service technicians need to get spare parts in time, sales reps need information about unpaid bills or back orders, and retailers’ shelves need to be stocked when a promotion hits the street. And if you want to know who your most profitable customers are, you will need information from your financial system.

Clearly, organizations can no longer afford to view their front-office, back-office, and supply chain applications as separate functions. Bringing these activities together—marketing, sales, service, finance, human resources, product development, and supply chain management—will help attract and retain customers, fulfill demand, and deliver on service promises. Simply bringing the front and back office together for start-tofinish order management, for example, will shorten order cycle times, increase order accuracy, reduce the number of incomplete orders, decrease billing disputes, reduce order status calls, and lower inventory costs.

Every day, organizations lose revenue and incur unnecessary costs simply because they have failed to connect their front and back offices to close the loop on business processes. Products aren’t available at the times and places needed. Service technicians don’t have the right spare parts. Returns aren’t correctly passed through to accounts payable. Service requests can’t be resolved on the first call. All of these cause customer satisfaction to decline and customer attrition to rise. Furthermore, without an accurate and complete view of customers across the organization, companies may miss important opportunities to increase product quality, improve business processes, and spur product innovation. In addition, they can miss important revenue opportunities that would otherwise become apparent through the connection and analysis of back-office and front-office data.

Avoiding these missed opportunities, costly missteps, and broken processes means breaking down the walls between employees and redefining business processes to span front and back offices, channels, and customer touch points. You want customers to see one company, not a collection of departments or channels.

An integrated technology foundation is also crucial for learning more about your customers. These data need to be brought together from all touch points, departments, and divisions and combined with data from other sources so that they can be connected, consolidated, analyzed, and converted into useful customer knowledge. These insights then need to be embedded into critical planning and decision-making processes such as sales planning, new product development, and marketing investments, as well as resource alignment and supply chain planning.

Increasingly, these insights are needed by employees across all functions before they can even interact with customers, says Ray Wang, CEO of Constellation Research. “For every customer interaction, every worker needs to answer a few key questions,” he says. “Who are you—do we know your identity? What other relationships do you have that I should know about? What have you bought? Are there credit risks? What entitlements do you have—maybe you’re a VIP customer? How did we treat you the last time?” These questions need to be asked for all interactions, not just customers who come through the front door, but also those who interact through customer support or back-end functions like finance.

Furthermore, the answers to these questions need to be served up on whatever device the worker is on, Wang says, whether it’s a cell phone, a tablet PC, or a point-of-sale (POS) device. “Companies have to move from a world of being reactive to being proactive, and that’s a big thing,” he says.

A Multichannel World

In today’s multichannel business world, organizations also need to harmonize the many means of customer interaction (such as telephone, email, fax, voice mail, text messages, Web self-service, Facebook pages, Twitter communiqués, QR bar codes, mobile applications, online requests, and physical presence). Customers use many channels to communicate with companies, and these interaction channels need to share a similar look and feel, offer consistent information capture, and share customer information. Customers should be able to start an interaction over one communication channel (say the phone) and complete it over a different one, such as a follow-up e-mail, according to Forrester Research, Inc.

Here are a few examples of what multichannel harmonization looks like:

• Customer inquiries are intelligently routed in real time to the people with the right skills to best address the questions, no matter which channel the customer is using and no matter where in the world those experts might be. 
• Companies provide customers with a rich choice of touch points that are targeted specifically to their needs. For instance, highly relevant information can be found on the corporate website. A social community can provide a customer network of other people with similar interests and concerns. The social media presence can also include chats with wellknown experts in the field. Virtual “tryout” capabilities enable customers to better understand how a product would fit their needs. Phone or text updates can provide order status information. Mobile capabilities can be used for coupons, product information, price lookup, and reaching out to social media sources for recommendations and advice. 
• When customers take action in one channel, the information on this action is carried over into other channels. For instance, they can buy online or via their mobile device, request delivery to their home or office, and return either online or at the store. After purchasing an airline ticket, they can check in online and use their phone as a boarding pass. They can also buy in the store using digital discounts and digital offer codes that are delivered to their mobile device, obtain accurate product or pricing information via their mobile, or use any other combination of channels that they prefer. The key is that no matter what they do, they get a consistent experience.

TIP

Multichannel harmonization is something that customers today increasingly expect. According to a 2010 survey by Cognizant Technology Solutions and Retail Info Systems News (“2010 Shopper Experience Survey”), 63 percent of respondents favor the flexibility of purchasing a product online, having it delivered to their home, and, if needed, returning it to the store. Overall, respondents said that they are interested in emerging hybrid models like “order online and pick up instore,” “purchase in-store for home delivery,” or “order in one store for pickup at another store.” Preferences shift among different demographic groups. Women prefer free home delivery for out-ofstock items, while men and the millennial population want to make returns at the store and receive a discount voucher for a future purchase.

Clearly, offering hybrid models and catering to customer preferences require flexible and integrated systems. For instance, ordering systems need to ensure that inventory is allocated correctly. Customer service representatives need a cross-channel view of customer purchases that includes their catalog, online, and in-store purchase history. Management needs to see the relationships between cross-channel activities to see how these transactions impact key performance indicators (KPIs). To provide the level of service that customers expect and demand, according to a recent article by Cognizant Technology Solutions, retailers need a single view of inventory, as well as visibility into orders and how best to fulfill them.4 This requires tight connections between order management, warehouse management, customer relationship management, sourcing, logistics, and other supply chain functions.

Getting to “Connected”

To achieve an integrated technology foundation, most companies first develop an application portfolio management strategy. Application portfolio management is a topic that’s too complex to fully treat here, but briefly, your portfolio strategy should give you a picture of your future-state technical architecture, along with a road map for how to get there. This includes an inventory and analysis of your current applications—the good, the bad, and the ugly—and plans to consolidate and retire the systems that are too complex to manage. It may be worthwhile to upgrade your core platform to obtain new capabilities.

Application portfolio management not only reduces your total cost of ownership for technology but also greatly increases your ability to respond quickly to changing customer requirements. And, once you are operating from a somewhat normalized base, you can direct your focus toward using advanced technologies to move ahead in the game, which we’ll explore further in the next chapter.

The complexity of your application portfolio is relevant if you are trying to operate as a company that is unified around the goal of customer centricity. When your core systems are working in concert, you can afford to venture into new technology areas, piecing in new solutions where they make sense as part of your application portfolio.

There are many good examples of companies that are doing just this. One is Colmobil Corp., an automobile importer in Israel. In light of the changing global economy and new types of digitally engaged customers, Colmobil decided that in order to sustain its healthy growth, it needed to shift its focus from the cars it sold to the people who were driving them off the lot. To make this transformation from product centricity to customer centricity, it decided that it was necessary for the company to overhaul its organizational structure and its legacy technical environment, both of which were designed to support more traditional business processes.

“After many years of working this way, we started realizing the customer may touch the company in each and every division, and even in different divisions at the same time,” says Gil Katz, CIO at Colmobil. The company wanted to provide a consistent, personalized experience across all of these interactions.

To make this possible, Colmobil decided that the system should consist of fully integrated components, including enterprise resource planning (ERP), CRM, and industry-specific applications, with a CRM-based front end. Through this front end, sales and service employees record and access all customer transactions and interactions, in addition to following standardized CRM policies and processes when they talk with customers. Because the systems are connected, all customer interactions are recorded through the CRM system and flow to operational systems, enabling sales and service agents to access the entire customer record and history of transactions, across divisions. The result: employees see a complete, unified picture of the customer, for the first time in the company’s history.

Today, returning customers are offered personalized service, including special offers and discounts, based on their transaction history and preferences. Vehicles are also delivered and processed more quickly, thanks to radio frequency ID (RFID)-enhanced streamlined movement of vehicles from warehouse to dealer.

Another example is Synopsys. When it decided to differentiate through the customer experience, it first needed to consolidate its 17 different CRM systems—the result of multiple acquisitions—into a “single system of record.” With customer data separated into multiple systems, it was all but impossible for the company to deliver a consistent experience across its multiple business units. It standardized on a single CRM system offered by its ERP vendor, which enabled additional synergies between these two core business systems. Today, its online portal offers customers a range of selfservice options, including access to an online community. All support cases also come through the central CRM system, which routes calls globally to the person with the right expertise. This provides a personalized experience and minimizes the time that customers would otherwise spend being bounced from one agent to the next.

Because all issues are centralized, the system can notify sales reps when an issue comes in via a different channel. If three individuals from one customer have open issues, the sales rep can call the field application consultant and share relevant information about the account. In this way, Synopsys customers from large global companies sometimes discover things that they did not know about what their own colleagues on the other side of the world are doing. Additionally, customers can use Synopsys’s portal to initiate and check on service requests, which automatically flow into and out of the CRM system. (For a full report on the Synopsys customer experience edge, see the case study in "B2B Customer Experience: Different Animal, Same Spots".)

These examples bolster our belief that the customer experience is not a technology but a customer-centric business strategy. However, an integrated technology foundation and other, more advanced technologies are a mission-critical element of Colmobil’s and Synopsys’s success, as they are integral to any company’s customer experience edge. Not only do integrated applications provide the foundation on which companies can begin to understand each customer’s needs, but they are also at the core of reshaping business processes to meet customer expectations, empower employees to best serve the customer, and determine how to most efficiently and effectively deliver on those needs.

As increased competition drives companies to become more customercentric, they are realizing that their underlying technologies are an inhibitor. If your company has disparate systems and broken processes, you are not well positioned to take advantage of the emerging technologies we will cover in the next chapter, which are designed to increase customer centricity. Until you get your house IT systems in order, you won’t have the necessary agility to embrace these new technologies. Adding ever more isolated applications on top increases complexity and decreases flexibility. Meanwhile, your competitors will be busily thinking up new ways to make customers happy and implementing them the same day—or, at least, a lot more quickly than you can do.

CASE STUDY: COLMOBIL

Customers, Not Cars, Now Drive Auto Importer’s Strategy

As part of its growth strategy, Colmobil transformed

its business from product-facing to people-facing.

The automobile industry tends to be highly traditional, with a decidedly product and service focus. So when Colmobil Corp.—one of Israel’s leading importers and distributors of cars, trucks, and buses—decided to reorganize its business around the customer rather than the vehicle, it was a radical decision.

Colmobil is a 70-year-old family-owned company with an almost 20 percent share of Israel’s automobile market. In 2007, when the global recession hit, Colmobil was facing a range of challenges, including increasing government regulations, a changing retail market, and a technology infrastructure that was highly dependent on older, legacy systems. The company was confident that it was doing a good job of importing, warehousing, selling, delivering, and servicing vehicles for consumers and commercial clients. To continue growing, however, it needed to explore additional opportunities, such as expanding its business interests in other countries (including Eastern Europe) and in other business areas (including the trade-in market).

These realities—combined with a changing retail market, thanks to increasingly knowledgeable customers who were adept at using online resources and social media—drove Colmobil to change its entire organizational structure and business processes. As part of the transformation, it overhauled its legacy technology infrastructure, as well. No longer could Colmobil focus on the cars it sold; it needed to focus on the people who were driving those vehicles off the lot.

CE ESSENTIALS

• Reliability. Colmobil sales and service employees record all customer transactions and interactions in a centralized system and follow standardized policies and processes. 
• Convenience. The automobile importer fitted new cars with RFID tags and placed tag scanners at its entrance gates. When a customer arrives, reception agents can offer a personal greeting rather than a request for identification. When the customer leaves, the exit gate opens automatically. Vehicles are delivered and processed more quickly, thanks to streamlined movement of vehicles from warehouse to dealer. 
• Relevance. Business systems and processes focus on individual customers rather than on vehicles purchased. As a result, sales and service agents can access the entire customer record and history of transactions, across divisions. Returning customers are offered personalized service, including special offers and discounts, based on their transaction history and preferences.

“The way we were structured, we were always leaning toward the vehicle and were never able to understand who the customer was behind the vehicle or the relationship between one customer and many vehicles,” says Gil Katz, CIO at Colmobil, which is headquartered in Rosh Ha’ayin. So, if a customer purchased vehicles or services from more than one of Colmobil’s divisions—in some cases, simultaneously—it had no way to know that, because the systems were not integrated. The divisions focused on vehicle brand—Mercedes-Benz, Mitsubishi Motors, and Hyundai Motors—and after-sales service.

For instance, a business-to-business (B2B) customer might buy dozens of trucks from the Mercedes-Benz unit, but if he bought his daughter a Hyundai or services for his own personal vehicle, “no one knew he was a valued customer of the company,” Katz says. As a result, the customer’s experience as a business client was inconsistent with his experience as a consumer, and agents had no opportunity to individualize his experience based on his preferences or on issues that had arisen during his last few transactions.

CE PILLARS

• Operational excellence. Colmobil implemented a new technology system that consists of fully integrated components, including ERP, CRM, and industry-specific applications, and that revolves around customers, not vehicles.
• Interaction excellence. Colmobil is currently creating business processes to enable sales agents to recognize high-value customers and offer them special discounts.
• Decision-making excellence. In the future, Colmobil will use data analytics to segment customers, enabling the company to better understand the needs of high-value customers and support them using relevant data.

Revolving Around the Customer

To address this issue, Colmobil made the strategic decision to replace the legacy systems that had been built to support the old organizational structure with a new system that revolves around customers, not vehicles. It decided that the system should consist of fully integrated components, including ERP, CRM, and industry-specific applications, with a CRM-based front end. Through this front end, sales and service employees record and access all customer transactions and interactions, in addition to following standardized CRM policies and processes when they talk with customers. Because the systems are integrated, all customer interactions are recorded through the CRM system and flow to operational systems. The result: employees see a complete, unified picture of the customer, for the first time in the company’s history.

“Through the process of replacing our information systems, we laid down the infrastructure for changing from product-centric processes to customer-centric,” Katz says. Tightly integrated applications are a key component of how highly companies rate their ability to provide a strong customer experience, according to a recent survey by Bloomberg Businessweek Research Services (see Figure 7.2).

Colmobil also restructured its formerly brand-centric divisions to a structure that is now focused on how customers view the vehicles, in addition to doubling the size of its service division. A year and a half since going live, “we’re built to face the market and the customers rather than what we’re selling,” Katz says.

COLMOBIL AT A GLANCE

• Business description: Family-owned importer and distributor of passenger cars, commercial vehicles, trucks, and buses, representing Mercedes-Benz, Mitsubishi Motors, and Hyundai Motors

• Location: Rosh Ha’ayin, Israel

• Products and services: Vehicle sales, service, trade-ins, finance, insurance

• Annual revenues: Over $1 billion (private company)

• Number of employees: 790

• Number of customers: Over 350,000 customer records in the corporate database

• Vehicle sales (2010): 42,500—a new record for the company

• Vehicles serviced: 700 daily

The next step, he says, will be to fully capitalize on all the opportunities this new infrastructure presents, in terms of seeing the life cycle of customer interactions. In doing so, Colmobil has overcome some of the most common obstacles to the customer experience, named by respondents in a recent survey by Bloomberg Businessweek Research Services (see Figure 4.1). Katz notes, “It’s a different approach to customers, where it’s not just a financial relationship.”

Phil Reed, an analyst at automotive information website Edmunds.com, says that Colmobil’s approach is targeted at the right goals. Reed states, “Dealerships are known for endless consultant studies that advise them to add parking spaces or valet parking, but it’s pretty clear it starts with respect for the customer,” he says. “People like to be known and remembered.” And with customers increasingly using the Internet to research prices and profit margins, Reed says, the relationship becomes even more important.

Importance of Technology

Customer segmentation through data analytics also will play a role at Colmobil, Katz says. “We want to really focus on those customers who are doing business with us by understanding their needs and better supporting them using relevant data rather than wasting energy on those who are less high-value.” Customer segmentation of this sort is a core principle of customer experience management.

Colmobil also is using RFID to expedite the movement of automobiles as they are brought to port. New cars are fitted with RFID tags as they are being unloaded, and the tag information is combined with the vehicle identification number in Colmobil’s back-end systems. In addition, RFID scanners will be placed at the entrance gates of the service centers, so that when a customer arrives at the gate, his information appears on the monitor at the reception desk. There, the reception agent can offer a personal greeting rather than a request for identification. After the car has been serviced and accounts settled, the exit gate will open automatically without further inquiry. In the future, Colmobil has its sights set on the Web and extending the customer experience to online channels.

Culture Change

The biggest challenge to implementing these processes, Katz says, is changing the organizational culture. “The system can support that already, but we’re working on educating the different lines of business to use what we’ve created and capitalize on it,” he says. “They’re used to taking care of the vehicle, and now they need to take care of how the customer feels, and that when he walks out, he’s satisfied. It’s a different way of thinking, and it takes time to embrace that change.”

Katz is walking a fine line between providing employees with sufficient customer information, but not so much as to overwhelm them. He is also sensitive to customer concerns about privacy. “We don’t want the customer to feel a person he doesn’t know knows too much about him,” Katz says. This insight shows that Colmobil is truly imagining each interaction from the customer’s point of view.

The organizational restructuring has gone a long way toward showing employees that there is a strong commitment to Colmobil’s transformation. Katz says, “People who used to work under one manager now work under another.” He notes further, “People changed assignments of what they do, and they’re now expected to do things that may not come naturally.” Employees were very involved in the process redesign, he says, which has increased the overall level of cooperation.

Employees also are well aware that the experience Colmobil is now able to offer customers is what they themselves—as customers of other businesses—would like to receive and what is often lacking. “It’s part of the cultural change in the world that puts the customer at the center,” Katz says. “They feel we’re doing the right thing.”

It is too early, Katz says, to measure benefits in terms of revenues, profits, and customer retention, but he expects the improved customer experience to lead to profitable outcomes. “When you build a better customer experience, the word gets around, and your reputation gets better,” he says.

The technology infrastructure, Katz says, was crucial to the overall success of the effort, as was a strong level of collaboration between IT and other business functions, such as marketing. Katz is not just CIO but also part of the executive board at Colmobil. In his role as CIO, he says, his job was to pave the road, so that when the company drove down it, it was a smooth ride. “In IT, we have to be one step ahead of the company’s strategy, so that when it wanted to change from product-centric to customercentric, we had a plan and were able to implement the technology to support it.”

Notes

Quoted material that is not referenced is from personal interviews.

1. “The CMO-CIO Alignment Imperative: Driving Revenue through Customer Relevance,” Accenture and the CMO Council, October 2010,

https://microsite.accenture.com/AccentureInteractive_CMOCouncil/Pages/default.aspx.

2. In a recent global survey of 1,004 respondents by Bloomberg Businessweek Research Services, only 11 percent of respondents said that they had achieved “tight integration” among applications, including financial, human resources, talent management, customer relationship management, supply chain management, supplier relationship management, and product life-cycle management. The survey was designed to discover and analyze the views of C-level and line-of-business executives on enterprise application integration. See Appendix B for an extract from this survey.

3. Kate Leggett, “Nine Ways to Enhance the Customer Experience,” Baseline Magazine, January 28, 2011,

http://www.baselinemag.com/c/a/CRM/Nine-Ways-to-Enhance-the-Customer-Experience-687244/.

4. Cognizanti Journal, 2011.

Bibliography

1. Lior Arussy, Customer Experience Strategy: The Complete Guide from Innovation to Execution (Strativity Group, Inc., 2010). 

Arussy provides a practical soup-to-nuts blueprint for understanding what the customer experience is, determining how to measure current experiences, and coming up with an action plan for developing greater customer experiences.

2. Shaun Smith and Joe Wheeler, Managing the Customer Experience: Turning Customers into Advocates (London: FT Press, 2002). 

The authors offer practical advice on how companies can build the power of the brand, not through advertising, but by the experience and value that they offer their customers. The book provides analysis and concrete methods for increasing loyalty and advocacy in customer experience in a targeted way.

3. Shaun Smith and Andy Milligan, Bold: How to Be Brave in Business and Win (Philadelphia: Kogan Page, 2011). 

This book highlights 14 businesses that illustrate what the authors say is necessary to stand out in business today: putting purpose before profit, going beyond what customers expect, and relentlessly differentiating.

4. John A. Goodman, Strategic Customer Service: Managing the Customer Experience to Increase Positive Word of Mouth, Build Loyalty and Maximize Profits (New York: AMACOM, 2009). 

This book focuses on the strategic alignment of customer service with overall corporate strategy. It draws on research from the author’s work with the likes of Chik-Fil-A, USAA, Coca-Cola, FedEx, GE, Cisco, Nieman Marcus, Toyota, and Cisco Systems. It includes both case studies and formal research. Many aspects of conventional wisdom are challenged with hard data that show how any company can increase loyalty, win customers, and improve the bottom line.

5. Patricia Seybold, Outside Innovation: How Your Customers Will Co-Design Your Company’s Future (New York: HarperCollins, 2006). Seybold explores how businesses can unleash innovation by

inviting customers to co-design what they do and make.

6. Denis Pombriant, Hello Ladies: Dispatches from the Social CRM Frontier (lulu.com, 2010).

7. Paul Greenberg, CRM at the Speed of Light, 4th ed. (New York: McGraw-Hill, 2009). 

Greenberg reveals best practices for a successful social CRM implementation and provides examples of the new strategies for customer engagement and collaboration being used by cutting-edge companies, along with expert guidance on how your organization can and should adopt these innovations.

8. Seth Godin, Purple Cow: Transform Your Business by Being Remarkable (New York: Portfolio, 2009). 

Run-of-the-mill TV commercials and newspaper ads are no longer effective for reaching consumers because consumers are tuning them out. So you have to toss everything and do something remarkable, the way a purple cow in a field of Guernseys would be remarkable, according to Godin. He uses examples of companies including HBO, Starbucks, and JetBlue to illustrate new ways of doing standard business with measurable results.

9. Frederick Reichheld, The Ultimate Question: Driving Good Profits and True Growth (Boston: Harvard Business School Press, 2006). 

Reichheld argues that customer satisfaction is more important than any other business criterion except profits and that the best measurement of customer satisfaction is whether you would recommend a business to a friend—the foundation of the widely used net promoter score.

10. Tony Hsieh, Delivering Happiness: A Path to Profits, Passion, and Purpose (New York: Business Plus, 2010). 

The CEO of online shoe giant Zappos, Hsieh details his rise from Harvard student entrepreneur to the creator of a hugely successful brand. Customer service became the focus of the start-up retailer, even when funding dried up. The book recounts how Zappos survived, eventually being acquired by Amazon for more than $1.2 billion in 2009.

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Joseph focuses on how to create “the experience effect,” which is a combination of marketing message, advertising, sales approach, website, interaction with company personnel, and more.

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Solis’s updated primer focuses on how to use social media to succeed in business. Learn about the psychology, behavior, and influence of the new social consumer, and define and measure the success of your social media campaigns. It features a foreword by actor Ashton Kutcher, who has more than five million followers on Twitter.

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Schmitt examines how customer experience management increases growth and revenues and remakes companies’ image and brands. The book offers a five-step approach to customer experience to connect with customers at every touch point, and offers case studies in various B2B and consumer industries.

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Zaltman, a Harvard Business School professor, says that about 80 percent of all new products either fail within six months or fall short of their profit forecast. The reason? A disconnect between the customer experience and the way marketers collect information about how customers view their world. Analysis, success stories, and advice on rethinking marketing approaches are included.

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The authors make a case for focusing on the service economy and learning “to stage a rich, compelling experience” by adding service to differentiate products.

16. Chip Bell and John R. Patterson, Take Their Breath Away: How Imaginative Service Creates Devoted Customers (Hoboken, N.J.: Wiley, 2009).

A comprehensive look at what it takes to keep customers in today’s market as well as gain new customers. The book provides real-world examples of how 12 brands create customer practices leading to “irrational loyalty,” and explains how these techniques work and how to implement them.

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An inside look at world-class customer service strategies at top companies, such as Disney, Nordstrom, and Ritz-Carlton. The book provides steps, best practices, and service standards needed to build a customer service machine that consistently delivers.

18. Jeanne Bliss, Chief Customer Officer: Getting Past Lip Service to Passionate Action (San Francisco: Jossey-Bass, 2006).

The author offers advice to companies that think they’ve committed to customer experience but haven’t.

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