Empowerment of customers has required almost every business to transform, whether they know it or not, and customer journeys need to be ex-examined if true CX transformation is to be achieved.
So says Stefan Schmelcher, Kantar’s global director of customer experience transformation, who caught up with CMO during a recent visit to Australia from Germany. The global expert and thought leader advises on customer experience (CX), and says customer centricity is easily talked about, but rarely achieved.
Thanks to the digital revolution, the way customers behave has changed. Consumers are much more empowered when it comes to purchasing, and before customers have even thought about a brand, they are already informed about what they want.
“Kantar recently did a survey of millennials, and more than 70 per cent said they would prefer to spend money on experiences, rather than material things,” Schmelcher told CMO.
In addition, a recently undertaken pilot study on CX in the UK around retail banking found 91 per cent of CEOs believe customer centricity is absolutely crucial for the success of a business. However, only 19 per cent of customers in retail banking rate their brands as customer-centric. It’s this gap which is the growing problem, Schmelcher said.
“As companies, we have a lot less control over consumers. In addition, customers want to have experiences and events, rather than a product and features. That means we have to change to better understand customers and understand the increasingly complex customer journey,” he said.
“As a consequence, every business finds itself in transformation. Some have recognised this need and have been very proactive, others are more reactive when their business is placed under pressure, and some companies don’t even know yet they have to transform.”
Schmelcher reiterated customer centricity is easily talked about but very rarely achieved. While many companies create customer journey maps, for example, they tend to feature how a company would like the customer to go through their journeys, rather than what the customers would actually like.
This is not because companies haven’t asked customers, it’s because of the traditional ways companies are managed, he claimed.
“Many are not prepared for a customer that makes a completely different decision in a different way,” Schmelcher continued. “Say you’re looking for something online, but you want to touch it before you buy it. You go into a store, but you don’t have the intention to buy there. In the store, however, they’re incentivized by sales, but you have more customers just wanting to touch before buying online.
“So you have the store, which recognizes this and doesn’t treat these customers very well, and as a result the customer ends up buying a different brand altogether.
“What you want is for them to buy online from you. So we need to incentivize the store in different ways. We can find many of these examples, so we need to manage customer touchpoints and journeys in a different way.”
Redefine the customer journey
Schmelcher recommended redefining the customer journey map from a series of touchpoints companies want the customer to go through to a series of customer decisions instead.
“A customer journey is a customer decision pathway. In this way, we take into account different buying behaviors, usage behaviors, use of technologies, and we can segment customers in a different way,” he said. “It’s a different way of thinking. To achieve this you don’t have to change that much, but you have to change really significant things in the way you work with customers.”
Organizations also need to measure success and manage performance differently. For Schmelcher, this means changing the accountability of some senior people in an organization to ensure your business operates in a customer-centric way.
“Assuming you have that change of thinking at board level, you then need to implement a new type of governance, and everything else falls from there. This is where the change needs to happen to achieve CX transformation,” he said.
“Find new accountabilities in your c-suite, then this change is transferred to middle management, and then it moves to front-line staff. Businesses need to distinguish between accountability, where you empower your front-line staff to make decisions for the customers, while still executing well so you can perform as a business.”
Another building block to CX transformation is technology. “In order to become truly customer-centric, we have to change the usage of technology, even within the organization,” Schmelcher said. “Many companies need to create an experience around a relatively boring product, and the role of the employee is crucial in this. They must be engaged and empowered and motivated to take that role on, then use technology to enable them. This involves a cultural transformation.”
Empowerment of CMOs
As awareness for the need for CX transformation grows, CMOs are increasingly getting a seat at the executive table, Schmelcher said. However, the role of marketing is changing so rapidly and encompassing so much, he advised CMOs to partner with chief customer officers (CCO).
“We’re seeing new accountabilities in the CMO role and this will continue to change,” he commented. “Two approaches I’m seeing now. One is these new accountabilities could be an extension of the CMO role, with marketers becoming more like chief growth officers (CGO) by taking more accountability for sales as well as more traditional functions of marketing. The other view is that it’s too much for one function or person, so this where the CCO is going to be vital. There will be a new power partnership in c-levels of business to CEO, CMO, CCO, rather than the traditional CEO, COO, and CFO.”
Whatever approach, avoid doing too much, too soon and boiling the ocean, Schmelcher said.
“Go step-by-step, identify clear priorities and execute one at a time, one after the other. Employees and customers will feel and perceive these smaller changes, and that is what changes CX. If you try to turn the entire organization upside-down, everyone will just become distracted,” he said.
“Ultimately, it comes down to this: What is CX? Using behavioral psychology, think about how customers make decisions – they are not based on actual experiences, they are based on how they remember experiences. So businesses need to distinguish between actual experiences and a memory of an experience.
“The end-to-end-experience is what’s left behind with the customers. What creates memories is emotions. If you have an emotional experience, positive or negative, it sticks with you longer than a neutral experience. And again, that’s your front-line staff.”