A Latin American bank wanted to know what its customers thought of its products. So it broke away from the tradition of outsourcing customer research to a third-party and instead began interacting with them directly. Each week, the bank showed sketches, wire-frames, and functional prototypes of new models to customers and collect their feedback.
The result was redesign in the account-opening process. New customers now had to input just four fields out of twenty-five – the rest would either auto-populate or were excluded.
The bank went beyond delivering good customer service; it delivered a superior customer experience.
Customer Experience is the New Black
Most business leaders complain about the finicky and unfaithful nature of customers today. This is often because they fail to notice how the landscape has changed. Customers no longer crave just service; they crave an experience.
Customer service is a reactive process, which occurs when customers reach out to a brand. Customer experience, on the other hand, is a proactive process that occurs when the brand reaches out to the customer. From being a good-to-have, Customer Experience has turned into a must-have for businesses and brands that want to thrive in the new economy.
In an insightful column, CIO of Yes Bank Anup Rajpurohit wrote, “Digital is disrupting value chains and compelling organizations to redesign their business models… Technology is now the bedrock of everything from customer sourcing to enhancing customer service at reduced costs.”
This technology is the most important tool when it comes to improving customer experience. Some of the ways it helps brands streamline and improve their functioning are:
1. Identifying creditworthiness of customers: Brands can analyze purchase amount and frequency, payment cycles, and other relevant data to set credit limits for their vendors, suppliers and customers, especially in the B2B sector.
2. Identifying effective lead generation platforms: Brands can use data to figure out which platforms are effective in generating qualified leads for them. They can increase focus on such platforms and reduce resources on others.
3. Providing accurate recommendations to customers: Brands can also use data to provide accurate recommendations that cater to customers’ specific needs. They can also upsell according to these needs. For instance, Target analyzed shopper data to assign shoppers with a “pregnancy prediction score” and sent them relevant coupons at specific stages of the pregnancy. If customers purchased baby products from their stores, Target reasoned, they would start purchasing everything else too. This upselling was one of the key reasons for Target’s revenue to increase from $44 billion in 2002 to $67 billion in 2010.
4. Reducing customer churn: By identifying points where customers abandon a purchase and understanding reasons why brands can not only reduce churn but also shorten the purchase cycle.
5. Increasing turnover and profitability: According to research by Google, brands integrating advanced digital technologies and data to personalize customer experience witness up to two to three time’s faster improvement in their bottom line.
The Most Pressing Reason to Digitize Customer Data
Since early days, industries have been disrupted not from within, but by external forces. Automobiles disrupted the horse carriage, the digital cameras were disrupted by mobile phones, television and radio lost their lustre to social media, and so on.
Such industries turned obsolete because they focused on a technology rather than a market. They built technologies and then searched for markets to fit them rather than looking at markets and developing technologies to fulfil those needs.
Digitization doesn’t just keep customer data safe and consolidated. It also equips brands to analyze buying patterns and identify red flags when changes are en route. Proactive companies like Apple and Amazon go a step further to introduce such changes that revolutionize the market and use data to study how customers respond to it.
A New Playing Field
Companies that want to thrive can no longer afford to function on yesteryear’s business models. Questions have changed and so have answers. From “what are we selling?” to “what do customers need?” From “how should we maintain relations with them?” to “what value are they looking for?”
Answers to these questions will decide the success of businesses in the future. Effective implementation of digital technologies and analysis of relevant data captured will play a major role in serving businesses with these answers.