Why innovation is not enough in a CX-driven economy

By Cameron Beveridge, Regional Director: Southern Africa at SAP Africa.


Johannesburg, 14 May 2019
Read time 6min 00sec
Cameron Beveridge, Regional Director: Southern Africa at SAP Africa.
Cameron Beveridge, Regional Director: Southern Africa at SAP Africa.

Let's start with a provocative thought: the new battle lines between successful and failing businesses are defined by customer experience, also known as CX. You don't believe me? A Walker study predicts customer experience will overtake price and product as the key brand differentiator by 2020. I would argue that the future has already arrived, says Cameron Beveridge, Regional Director: Southern Africa at SAP Africa.

Gartner expects more than 50% of organisations to redirect their investment towards customer experience innovations in 2019. As many as 89% of organisations already compete primarily on the basis of customer experience, up from a mere 36% in 2010.

Most think they're doing a great job. Organisations are self-rating their customer experience efforts highly: a Bain study found 80% of companies believe they deliver super experiences. Only 8% of customers agree.

This disconnect between expectation and experience is driving a divide between organisations on the path to success, and those on the road to obsolescence. A battle is playing out between organisations that can capture data and produce insights, leading to improvements in customer experience (those with so-called intelligent enterprise capabilities), and those that still rely on outdated best-guess approaches to deliver great experiences.

This battle is intensifying.

New business battlefield

Today, end-customers are only loyal to a perfect total experience. Until recently, it was nearly impossible to prove the business effect of customer experience through quantifiable data. Part of the issue was confusion regarding measures, metrics and value, all of which contribute to the success of customer experience initiatives.

* Measures include anything you can count; for example, the number of feet through the door, or the amount of time a customer spends with the call centre to resolve an issue.
* Metrics are outcomes of something that has happened; for example, customer satisfaction scores following the implementation of a new initiative.
* Value points to the financial levers that are influenced by customer experience; for example, profit-per-customer or total revenue.

Intelligent enterprises operate with visibility, focus and agility to deliver best-in-class customer experiences. Using technology, intelligent enterprises collect and connect previously disparate data to uncover hidden patterns, direct scarce resources to areas of maximum impact, and respond more quickly to changes and opportunities in their markets.

Businesses that adopt intelligent enterprise capabilities can also anticipate and proactively respond to customer needs to ensure a positive experience throughout every step of the customer journey. In an Experience Economy, having intelligent enterprise capabilities provides organisations with the best tools and platform from which to consistently deliver excellent experiences to customers.

Cloud reshapes customer expectations

Customer experience is also reshaping how technology firms provide services and solutions to their customers. Traditional vendors would develop software solutions, sell them to customers, implement the solution directly or via partners, and then maintain those environments. This was often a costly and time-consuming process that left organisations without the ability to make massive changes or to innovate with agility in those environments. Inevitably, further investment would be required to maintain the organisation's competitiveness.

This dynamic completely changes in a cloud-first world. Cloud providers run core parts of their customers' business environments on their behalf. Because the vendors manage important aspects of the organisation's business, they become intrinsic parts of the customer's business.

The way cloud services are provisioned has elevated business expectations for how those services are consumed and charged for. Companies want to consume services and apps only at the rate at which they need them. Services become cyclical in nature, following an organisation's natural ebbs and flows to deliver direct quantitative value.

Time to value in a cloud environment is also quicker. Once an organisation has identified an opportunity, the cloud provider can provide assets, be they in the form of a platform, specific services and apps, and/or capacity, to deliver that value. A flexible pay-for-what-you-use costing model further removes risk from the process, which is important in a fast-changing environment where market opportunities can shift quickly.

In the long term, we may see cloud providers adopting a pay-for-outcome model that places tangible business outcomes at the centre of its customer offerings, although they'll have to overcome several obstacles to achieve this. In the immediate term, the opportunity sits with proactively identifying value opportunities in collaboration with customers, and building offerings that take advantage of those opportunities.

This is where the customer experience becomes paramount. A technology provider's ability to closely collaborate with customers, jointly identify value opportunities, and co-create solutions that capitalise on those opportunities rests on the quality of the experience they can offer their customers.

And this depends heavily on their ability to drive a customer-first culture within their organisations.

DNA of 'customer first' culture

Organisations can no longer consider it "job done" when a sale closes or a project is implemented. The ongoing disruption wrought by technology requires constant change and adaptation. Organisations must constantly evolve, change, improve and optimise their systems and services. A once-off implementation or acquisition is not going to deliver the competitive advantage needed to succeed. A single innovation or disruptive technology could reshape entire industries overnight.

What organisations should strive for in the age of customer experience is an unwavering commitment to customer success. By creating a unified and outcome-focused experience for customers, organisations can more easily become business or innovation partners to their customers. This shifts the dynamic away from once-off sales and lengthy deployment projects, to ongoing transformational support as the customer travels along the path of their innovation journey.

The objective here is to provide guidance and support to customers to ensure that they use their technology tools to their full potential. Technology providers need to instil a customer-first culture throughout their organisation to provide a positive experience to customers. This, in turn, builds trust, and when there is trust, the quality of collaboration improves, and it becomes easier to consistently deliver value.

Customer experience is not the sole reserve of the CEO or the chief marketing officer (or even the newly created position of customer experience executive); it is the responsibility of every person within the organisation. Using tools such as Qualtrics supports businesses by generating quantifiable data that point to deficient experiences and highlight opportunities for deepening brand affection and loyalty among customers who enjoy positive experiences. With the support of a team working in a customer-first culture, this can turn customers into fanatics, products into obsessions, and employees into ambassadors.

Why settle for less?

SAP

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Editorial contacts
Adam Hunter (+27) 11 787 035 adam.hunter@sap.com
SAP Africa Delia Sieff (+27) 11 235 6000 delia.sieff@sap.com