q The bold reset: revolutionising customer experience - Business Reporter

The bold reset: revolutionising customer experience

Kevin Neher McKinsey & Company explains why now is the time for resetting the approach to measuring and transforming customer experience.  

The events of 2020 significantly impacted consumer preferences, behaviour and routines. In turn, digital adoption leaped ahead 10 years in just 90 days. The challenge for businesses is understanding at speed, how customer behaviour changed, what behaviours are sticking and how they will continue to evolve.  It’s requiring a bold reset in how customer experiences can be transformed.  The emphasis is on better understanding customer events right through to notifying frontline teams of actions needed to pre-empt a problem in a customer’s journey.

Currently, companies of all stripes – airlines, banks, department stores – rely on survey-based measurement systems to track customer experience (CX) performance in order to “close the loop” on customer feedback and plot strategic moves. Whilst this approach is effective for acting as a yard stick to measure customer sentiment at a point in time, it is unable to pre-empt a problem in a customer’s journey. Having the abiltity to translate today’s massive volume of data and signals into action can enable organisations to make faster, smarter decisions that drive acquisition, customer satisfaction, market differentiation, and profitability.

This ability to quickly gather and act on customer feedback has become an important lever to revolutionise the customer experience and drive competitive advantage. Organisations must be able to see and react to concerns in as near real-time as possible. This requires a reset in the approach to measuring and transforming customer experience. Businesses are not only needing to listen to their customers, but they need to enlist predictive analytics to draw rapid insight from the vast data sets that they have at their disposal. As companies return to growth, the need to increase confidence in CX measurement is increasing exponentially. 

Increasing confidence in CX measurement

Customer experience leaders recognise that there is a need for a new approach to measurement that better reflects the way customers interact with brands, their purchasing behaviour, and the multiple channels they use. Consumer behaviours have shifted somewhat over the last twelve months. They make decisions quicker and rely on digital channels more than ever before. The McKinsey Customer Experience Leadership Survey, which surveyed 250 customer experience leaders in 2020, asked a range of questions to understand approaches and confidence in CX. It found:

  • Only 13 percent of the CX leaders surveyed expressed full confidence that their CX measurement system provided a representative view of their customer base
  • Nearly two-thirds of respondents ranked the ability to act on CX issues in near real-time as among their top three priorities, but only 13 percent of leaders expressed certainty that their organisation could achieve this level of rapid insight through existing systems
  • Only 16 percent of CX leaders strongly agreed that their existing approaches provide them with granular-enough data to address the root causes of CX performance
  • Only 4 percent strongly agreed that their system lets them calculate the return on investment of CX decisions

Predictive customer insight is the future

A few leading companies are pioneering new approaches that takes full advantage of the wealth of data that is now available through the explosion of data, cloud-based services and connected devices over the past two decades. Today, companies can regularly, lawfully, and seamlessly collect smartphone and interaction data from across their customer, financial, and operations systems, yielding deep insights about their customers. Those with an eye toward the future are boosting their data and analytics capabilities and harnessing predictive insights to connect more closely with their customers, anticipate behaviours, predict interactions, and identify CX issues and opportunities.

The data on offer holds valuable insights that can prompt alerts and guide swift action to improve customer experiences. Some CX leaders have taken the plunge and adopted a data-driven approach to customer insight. While the specifics may vary across companies and industries, this approach centres on a predictive customer experience platform that consists of three key elements:

  • Customer-level data lake: First, the company gathers customer, financial, and operational data—both aggregate data and data on individual customers in a cloud-based platform.  Comprehensive, connected, and dynamic customer-level data sets allow the organisation to map and track customer behaviours across interactions, transactions, and operations
  • Predictive customer scores: Developing analytics – often using several types of machine-learning algorithms – to understand and track the drivers of customer satisfaction and business performance, and to detect specific events in customer journeys
  • Action and insight engine: Information, insights, and suggestions are shared with a broad set of employees (including frontline agents) and tools (such as customer relationship management platforms) through an application programming interface (API) layer. This layer delivers timely insights and drives swift action, both by employees and via digital interfaces.

How to turn data into insight and action

The transition to predictive insight will not take place overnight. Leaders now have the opportunity to take their CX programmes to the next level – starting from where their organisations are now. Based on our research on organisations that have successfully made the transition, we have identified four key steps to jump-start your CX transformation.

  • Work on changing mindsets (including your own): The transition will inevitably involve challenges, not least of which is a shift in mindset. CX leaders may feel that predictive systems are outside of their purview. But times are changing, and today’s leaders need to focus on data as they once zeroed in on a single CX score. Some may point to the fact that their organisation has already done regression analysis on a few key performance indicators. It’s time to think bigger and bolder, and to build a system – not dabble in data.
  • Break down the silos and build cross-functional teams: CX functions often fall into the trap of creating their own silos within a company. Creating predictive systems takes real collaboration across functions. Data owners will inevitably span operations, marketing, finance, and technology functions, so convening across senior leadership will be vital to ensure efficient data access and management.
  • Start with a core journey data set and build to improve accuracy: Most organisations face challenges with data quality and availability – and without data, this transition is a non-starter. The good news is that organisations can get started even with basic customer-level data, even if the data sets are not perfect. The first step is to collect individual customer-level operational and financial data. A combination of customer profiles and digital and analogue interactions is usually a solid jumping-off point.
  • Focus first on the use cases that can drive quick value: In the early days, it is important to have a clear view for how the insights will be applied and focus on a few specific use cases that will create immediate return.

Embrace the new CX

The CX programmes of the future will be holistic, predictive, precise, and clearly tied to business outcomes. It is time for a bold reset on customer experience – companies that start building the capabilities, talent, and organisational structure needed for this transition stand to reap substantial benefits. The pace of change in CX technology has accelerated; those that do not embrace it will be left behind while competitors gain ground and steal a charge with the competitive advantage it creates for them.

Kevin Neher is Senior Partner at McKinsey & Company.

Main image courtesy of iStockPhoto.com

© Business Reporter 2021

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