By The Open Group
With more technology in the hands of consumers than ever before, customers have become increasingly demanding in terms of not only the service they receive from companies but also the experience they have with your company or brand. Today, companies must be aware of and respond to what customers are looking for in terms of what they get from a company and how they interact—or they risk losing those customers.
This is leaving many companies in a very vulnerable position, particularly when it comes to digital customer experiences. In advance of The Open Group San Francisco 2017, we spoke with David Cannon, Vice President and Group Director, and David Wheable, Vice President and Principle Consultant, both of Forrester Research, about what customer expectations look like today and what companies need to be aware of so that they can survive in an ever-changing digital landscape. Both will be keynote speakers at The Open Group event on January 30.
The customer experience is something that’s been talked about for many years. What’s different now about customers that make their experiences with companies an even more urgent matter than in the past?
David Cannon (DC): The single most important thing that’s changed is that customers have more choice and the ability to change suppliers within literally seconds. And this is not limited to individual consumers. Enterprises can switch key systems with minimal disruption. The key to retaining customers today is to make sure their experience with you is good—if not there’s no reason to stay.
David Wheable (DW): Building on that is the way we talk about digital business; many of those interactions occur digitally now. The role of technology in that experience now is key. If you don’t deliver a good digital customer experience, as Dave Cannon said, the next one in the line will get the business. I actually did that the other day—one site would not let me log in, so they lost my business and the next one got my business instantly.
DC: David’s right, with digitization, we’re not actually dealing with individuals and human beings, we’re dealing with simple, digital interfaces. This reduces any potential sense of loyalty—we just want what we want, when we want it and that’s it.
That takes away a huge part of how businesses have traditionally run—it’s that relationship they have with the customer that has often set businesses apart. Are there ways that companies can better personalize experience and counteract that loss of human interaction or do they need to also make sure they are continuing to work person-to-person?
DW: That’s an interesting question because particularly when I talk to technical people, they really don’t actually understand what the customer experience is. Forrester defines it in terms of three Es—ease, effectiveness and emotion. Technical people have generally dealt with the ease and effectiveness for many years, so that’s no problem, but what they’re really bad at thinking about is designing for emotion. So if you are trying to have a digital customer experience, digital touch points, and you still have to include the emotion side in it, that’s where the loyalty comes from. Where we see that driven is when organizations look at how the positive, painless, frictionless kinds of experiences drive that kind of loyalty. What we see now is that those companies that are thinking about this are moving away from thinking about products and services and moving toward thinking about the customer in terms of experiences, desires and outcomes, and they might only be a small part of an ecosystem that generates that experience or outcome.
DC: I’ll add to that. One of the secrets to understanding how you’re impacting that emotion is to be able to gather more information about what the customer is doing, how they’re doing it, when they’re doing it and why they’re doing it. We have tools that can do this better than we’ve ever done it before—without even interviewing or surveying our customers. We have to be able to infer from whatever they’re doing digitally whether that equates to a good emotion or a negative emotion. The whole area of analytics becomes more important than ever—but it’s also different than before.
To give an example, sites like Yelp or TripAdvisor, give you a history of people’s experiences with a restaurant or service provider. But they don’t provide real time information if the thing that upset a customer two years ago is still there. Unless the customer provides constructive feedback that’s visible to all, they don’t help the service provider understand what they can do to make the customer’s experience better. Customer satisfaction ratings are also limited, because they are just a snapshot of a customer at a moment. They don’t always tell us why the customer was (dis)satisfied, or whether they would have the same rating with that service today.
We’re getting better at looking at real-time analytics that tell us, in real-time, what is the context, where are customers using this, why are they using this and how does that impact their experience at that time? Is there a way that we can detect a negative experience and determine exactly what’s causing it and how to change it immediately?
One technique we use is Touchpoint Analysis, which breaks down what a customer does in individual interactions and individual contexts and then figures out how to measure their experience with each touchpoint. To identify each touchpoint and then instrument it for real time experience was a huge ask, but technology is making it possible.
Personalization and customization have been talked about for at least 20 years now. At this point are there still concerns about privacy and knowing too much about customers? And on the flip side, if companies are relying on data to determine customer interactions rather than personal contact or relationships—and granted large companies can’t rely on personal interactions with thousands of people—does that reliance on data continue the problem of taking away from the human interaction?
DC: It’s kind of a paradox. On the one hand, you’re inventing technology and you’re putting that technology in the hands of users and that distances them from you. At the same time, you’re making them more capable of engaging with you. The very technology that allows you to be more remote (work from home, etc.) is being used to create online communities, friends, go shopping, run a political campaign, etc. So technology is not only changing patterns of customer behavior, it’s changing how society works. This is neither good news nor bad (or perhaps it’s a bit of both)—it’s just what’s happening.
On the other hand, by participating in this online society, you are sacrificing privacy. Many people demand better customer experience, fully understanding that that means that companies know more about them. We’re starting to see some awareness of how ‘creepy’ this can be (being stalked by advertisers in one app because you searched for something in a different app). But at this stage the search for better customer experience is still more powerful than the need for privacy. Will the pendulum swing the other way? Definitely, but it will take some time and a more serious revelation of how privacy has been abused than those that have already emerged.
DW: I also thing that one of the drivers of loyalty that customers are looking for from a brand is that trust in that brand to look after their data appropriately and use it appropriately. What we see again is that is a business imperative to respect privacy, to use data appropriately and obscure data appropriately and if the customers of that organization feel that is happening, they will be more loyal to that organization or company than one that they don’t trust their approach to data.
DC: I totally agree with that. I’d say though that in some cases, the realization that a company has not dealt with my data appropriately comes too late. We’re starting to see a shift to companies being more proactive in communicating how they’re safeguarding your privacy so it becomes more of a selling point for the services they provide. Not only are they going to give you a better experience, they’re going to give you a safer experience as well. Up until now that need for customers to know that up front has not really been as urgent. I think based on what David just said, that’s changing.
With all the high profile security breaches over the past few years, that’s important. On the other hand, if companies have poor service and do things that anger people, it’s as simple as if you’re waiting too long at the airport for your flight and you start tweeting about it, then you’re helping to damage the reputation of the airline.
DC: And what we’ve seen is that some of these companies are monitoring that kind of traffic and recording who those users are that make those statements. Using social media to communicate your experience with a company can also act against your relationship with that company. Some customers have reported negative experiences after they tweet bad things and positive experiences after they tweet good things
I think the only thing that we can deduce from this is that every type of human interaction that existed before all this technology is now happening using the technology. Just as you were careful in the real world, you have to be careful in the online world. You have to be careful about what you say, about whom and to whom—and that goes for whether you’re a consumer or a company.
Technical people still have to catch up with this a bit. Some think as long as there’s anti-virus or intrusion control on our major systems, we’re OK. What they’re not looking at is the business risk associated with, for example, a privacy breach — we’re not talking about a technical threat here, we’re talking about your business being able to survive or not.
We’re really exploring very new ethical and legislative ground here and the whole customer experience is really going to test that in the coming years. Just how much information is too much? Just what constitutes private information? Different countries have different views of what constitutes private information and my ability as a company to place my base of operation in one of those countries that is less responsible is that I can do more, but it makes me less responsible to my customers—how is that going to impact my business? These questions are still being tested.
When David and I will be talking in San Francisco, we’re not just talking about how do you get more friendly with your customers and get better service, what we’re really talking about is how do you survive as business in a changing world where the rules are changing every day? That’s a much bigger conversation than how technical people give better customer service—which is what the discussion was before.
You mention that there’s been gap among companies between those that “look” digital and those that are actually “being” digital. What does that gap look like and how can companies bridge that gap?
DW: Effectively, the way that I try to describe it to people is that a lot of the work on digital up to now has been really about automation. It’s been taking the same approach to business and just using technology to make that more efficient. Whether that’s faster or cheaper, that’s the fundamental role that technology has driven in those organizations. But now the technology has hit the point where it’s fundamentally changing the business, so those organizations that are looking digital are the ones that are putting this thin veneer over their existing business structure. Quite often if you dig beneath the scenes, what you’ll find is there are still bits of paper going on, there are still people looking at a form that was entered on a website and doing something with it.
Those companies that are truly digital are actually using those digital capabilities to change the way that they do the business. If you look at some of the examples that we use—like John Deere or Burberry—all of them have really gone back to their roots, looked at what their business actually is and then figured out how they can use digital technology to change their interactions with customers, change their outcome and restructure their business completely. You see that with companies like GE standing up and saying ‘we may have been a manufacturing company but now we’re a software and analytics company.’ That whole understanding of what the change means is significant. Those that are looking digital are the ones that are saying ‘we have an e-commerce site, therefore we’re digital.’ That’s not the story.
Why has it traditionally been so difficult for IT departments to execute on technology strategies?
DW: Dave and I spend a lot of time talking to these organizations. The majority of organizations feel stuck in a very operational frame of mind. Very few of them really have a strong ability to understand the context of technology strategy within the business. They tend to think of technology as this abstract and separate item rather than something that’s used to deliver most business results.
That sounds like a case for Enterprise Architecture and for architects to be that bridge between IT and the business.
DW: The challenge is it shouldn’t be a bridge, the idea is that it should be a fundamental part of the business strategy not a joining up, not something that you have to interpret. How does that technology deliver the business? It’s not how to back up the business. That’s where we see the real challenge of being digital—those business people who actually understand the digital part and can execute and come up with a digital strategy not necessarily having Enterprise Architects (EA) who try to interpret that and come up with technology.
DC: This is correct only when architects were ‘enterprise’ architects rather than solution or technology architects. We find that many organizations limit their architects to simply translating from the enterprise strategy to the technical solutions. As long as this remains the case, architects will continue to be focused on operational issues, by reacting to business demands instead of working with business to jointly architect the strategy. Enterprise architecture has started to change into something being called “Business Architecture” where an EA looks at both sides of the fence at the same time (and in fact doesn’t see it as two sides) and asks what we have to all do together to make the organization successful—whether it’s operational or strategic.
To put it slightly more bluntly, the traditional IT model is when the business says ‘we need this,’ and IT builds and delivers it. That mindset has to change. IT is part of the business, and it has to be embedded in those frontline customer-facing parts of the business, not just be a technical service provider that just does whatever it’s told. To be honest, we’re in a situation now where the new technology that’s emerging is not really understood. If IT is buried in the basement somewhere, it’s going to be more difficult to make that technology work for the company. They really need to be on the frontline. What that means is that IT people have to become more business-like and more strategic.
How can technologists, customers and business work together to help solve their mutual problems?
DW: This is an interesting question, and it’s something we get asked all the time. We deal a lot with those companies being challenged with that. A lot of it comes down to culture—it comes down to understanding the difference between how a business will look at prod ops and how IT still looks at projects for example. This is why Dave says that DevOps is a start but it needs to go further. We’re constantly talking about how to start applying the similar techniques that people use for product development into the IT, technology and digital solutions as well. Design thinking, doing ethnographic work up front, doing actual feedback with customers, AB testing—you create those strong testing and feedback mechanisms, what works, what doesn’t work, and not just assume that everything’s understood and you can just write a system that does everything it can. What we see now is those techniques—DevOps, Agile, customer mapping experience, personas—all started coming together and really are creating that overall structure of how you understand the customer, how you understand employees and how you start delivering those solutions that actually give the right outcome and right experience to achieve what they want.
Is there a role for standards in all of this and what would that be?
DW: Very much so. One of the points we want to make is that now when you have effectively a digitally connected ecosystem and businesses form parts of that ecosystem, all the services that consumed are not under your control. In the old days of IT, you’d buy the hardware, you’d buy the software licenses, you’d build it and put it in a building and that would be your interaction, even in the old web days, with your customers. Now your customers link together with services or other businesses electronically. So in terms of the levels of connection, trust and understanding, that has now become very important in terms of the technical communications standards but equally the skills and how you approach that from a business standpoint. Looking at what IT4IT does, for example, is important because you need ways to talk about how the organizations should be constructed, what competencies you need and how they’re put together. Without some form of structure, you just get chaos. The idea of standards from my point of view is to try to find that chaos and give some sense of order to what’s going on.
DC: I agree with David. I would say also that we’re still going to see the importance of best practices as well as standards. To put it bluntly: Standards are established and agreed ways of doing something. But much of the technology emerging today is testing the relevance of standards. Best practices (not the best name, they should be called Tested Practices or Good Practices) are those emerging practices that have been shown to work somewhere in the industry. What may be an appropriate standard for what you did five years ago may not be appropriate for what’s going to emerge next year. There’s always going to be this tension between the established standard, what we know to be true, and the emerging standard or best practice—the things that are working that aren’t necessarily in the standard or are beyond where it is today.
I think the industry has to become a little better at understanding the differences between standards and best practices and using them appropriately. I think what we’ve also seen is a lack of investment in best practices. We’re seeing a lot of people in the industry coming up with suggested best practices and frameworks. But it’s been awhile since we’ve seen a truly independent best practice. IT4IT, is a really good ramping point for some new best practices to emerge. But just like any proposed practice, it will have its limitations. Instead of following it blindly, we should keep monitoring it to figure out what those limitations are and how to overcome them.
Standards will continue to be really important to keep the Wild West at bay, but at the same time you’ve got to be pushing things forward and best practices (sponsored by independent organizations) are a good way to do that.
David provides research-based consulting services to BT Professionals, helping them leverage Forrester’s proprietary research and expertise to meet the ever-changing needs and expectations of their stakeholders.
David specializes in helping clients create effective and efficient strategies for their IT Service Management challenges including integrating cloud services, bring your own device (BYOD), and mobility.
Prior to joining Forrester, David worked at HP, where he served as the professional services innovation lead for the software and professional services organization, as worldwide solution lead, and as a consulting manager.
David serves Infrastructure & Operations Professionals. He is a leader in the fields of IT and service strategy and has led consulting practices for BMC Software and Hewlett-Packard. He is the coauthor of the ITIL 2007 service operation book and author of the ITIL 2011 service strategy book. He is also a founder and past chairman of both itSMF South Africa and itSMF International and a past president of itSMF USA.
Prior to joining Forrester, David led the IT service management (ITSM) practice of BMC Software Global Services and led the ITSM consulting practice at Hewlett-Packard. He has educated and consulted within a broad range of organizations in the private and public sectors over the past 20 years. He has consulted in virtually every area of IT management, but he specializes in the integration of business and technology management.
David has degrees in industrial sociology and psychology from the University of South Africa and holds the ITIL Expert certificate. He is also a fellow of service management and double recipient of the itSMF Lifetime Achievement Award.