Next Stop In Digital Transformation: Experience 2.0

It’s unmistakably clear to anyone running a business that all roads lead to customer experience. How people perceive your products and services—and how they view your brand—determines whether they buy from you and remain customers.

The challenge is to understand what factors define a great experience and deliver on the proposition. For some people, a great experience may revolve around a product or service that’s cool or fun to use. For others, a great experience involves convenience, including saving time or simplifying life in some way. Of course, the same person can have different expectations for different products—and at different times. But know this: Even a single interaction can alter thinking, feelings, and buying decisions.

“All these experiences become memories—and memories, both good and bad, become brands,” said Brian Solis, principal analyst at Altimeter Group and author of “X: The Experience Where Business Meets Design.”

Smartly, some businesses already have established the foundation for providing great experiences, with the right people, process, and technology in place. What’s next? Experience 2.0, which optimizes these elements and takes experience to the next level.

Experience Counts
But before you can get there, it’s important to consider the many factors that impact today’s customer experience. First and foremost, consumers have enormous and growing expectations, partly due to smartphones and the instant gratification of the Internet and mobile apps. With smartphones, “they are in control of their journeys and experiences,” Solis pointed out.

In addition, technology is changing rapidly and rewiring connection points. What worked last year may fail today. And there’s yet another challenge: “You have to know what appeals to a customer before you can deliver a great experience,” said Peter Fader, a professor of marketing at the Wharton School, University of Pennsylvania, and co-author of “The Customer Centricity Playbook: Implement a Winning Strategy Driven by Customer Lifetime Value.”

Companies like Amazon, Airbnb, and Uber have changed attitudes, perspectives, and expectations. These companies have redefined what a good customer experience is—and there’s no going back.

“A major challenge for business leaders today revolves around cognitive science. Oftentimes, leaders don’t recognize the changes that need to take place,” noted Nigel Fenwick, vice president and principal analyst at Forrester Research. He argues that business leaders frequently view digital transformation as “simply as a way to sell more stuff.”

But this isn’t digital transformation. “It may transform marketing or sales, but truly transformative companies create new sources of perceived value for customers,” Fenwick told CMO by Adobe. “This, in turn, drives a great experience and new revenue models.”

Solis described the difference in these approaches as iteration versus innovation. He likened the former to adding a new engine and new suspension to an old car and believing it can complete with a modern race car built for speed.

“Business leaders believe they can keep doing the same thing better versus reinventing things. In truth, both iteration and innovation are necessary. It’s a balancing act,” Solis said. “But it’s important to recognize that at a certain point, products and services that are profitable will reach a dead end. The experiences you deliver may be based on compromise and protecting existing products, domains, and jobs rather than creating value for customers.”

Another problem, according to Marcie Merriman, America’s cultural insights and strategy leader at EY, is the abstraction layers that technology creates. Automated systems allow companies to handle processes—from marketing and sales to service support—faster and more efficiently, but they also reduce the human contact that solidifies relationships and creates brand loyalty. Minding the gap requires smarter marketing and sales methods, along with a better recognition of when and where humans should enter the picture.

“People desire better connections with companies, on the terms they desire,” Merriman told CMO by Adobe. “At a certain point, technology and automation hinder this. They can create a burden for customers.”

It’s a sentiment shared by Donna Tuths, senior vice president and global head, Cognizant Interactive. Getting to Experience 2.0 requires a rethinking of every touch point with customers and a focus on the entire product and service life cycle, she said.

“It’s incredibly difficult to create simplicity and elegance,” Tuths told CMO by Adobe. “It takes a certain type of brilliance and a deep understanding of customers. You have to bring together a tremendous number of consumer and human insights to create the right experience.”

Values Matter
The challenge of meeting customer expectations will only grow in the years ahead. According to Cognizant, 90% of companies now compete primarily on the experiences they deliver. Yet many websites lack critical usability and functionality, content is difficult to find, marketing and advertising campaigns are frequently off-target, apps are clunky or lack critical functionality, consumers may find it difficult to install or set up products, and people cannot reach a human being when one is needed.

As a result, consumers wind up disappointed, frustrated, or angry—and then they post negative reviews and comments on social media. They also look elsewhere for products and services.

How can organizations put people, process, and technology into play in the most effective way possible? How can they take the customer experience to a 2.0 level? A starting point, according to the Wharton School’s Fader, is to focus on the right technology and processes. The intersection of customer experience and customer lifetime value (CLV) is at the core of this proposition.

“When you truly understand your customers, you can make decisions more effectively. You can tap technology and innovative ideas to transform the customer experience,” he said. “You can delight people in a way that matters to them.”

Formal systems and metrics unleash innovation and lead to Experience 2.0. “You can’t just keep doubling down on marketing with the hopes that money will rain down from the sky,” Fader explained.

Fader is a big proponent of analytics and data-driven scoring systems, which, when put to work effectively, can help organizations allocate resources more strategically and provide an experience that better matches customers’ thinking and feelings. “You devote your budget to the people who matter and avoid dropping marketing dollars into a black hole trying to snare customers that will never be loyal,” he said.

Yet at the same time, it is important to think creatively about how to make stores and online environments more enjoyable, Fader added. When this happens, people spend more time shopping, submit email addresses and phone numbers, post on social media, and provide data points for understanding them better.

They also buy more things. For example, Fader said he recently ventured into an REI store that had set up a green screen with a camera. Shoppers could stand in front of the screen and snap pictures that depicted them in different parts of the world.

“It was a really interesting and creative way to create a better shopping experience,” he explained, “and I ended up spending much more time there and telling many people about it.”

That’s how customer experience turns into customer value. But in addition to sheer data and creative ideas, it’s also important to continue investing in the people part of the equation—namely talent, Solis pointed out. This includes data scientists, sociologists, psychologists, and anthropologists who can make sense of things.

“It’s important to recognize that the way you see customer experience and the way customers’ see it are often night and day,” he said.  

According to Fenwick, the foundation for Experience 2.0 starts with the C-suite. Today, virtually everyone has the same types of tools at their disposal, and most organizations are familiar with open innovation, AB testing, agile development, and other digital frameworks. “You really have to drive innovation into the culture,” he said. “Above all, this means truly understanding the outcomes their customers desire and how they use products and services to get there.”

Organizations that are unable to differentiate between iteration and innovation—and continue to rely on metrics and measure that aren’t as relevant in the digital age—will have a tough time getting to Experience 2.0, Solis added. There’s a need to move toward a model that transcends reach, views, and conversions and toward model that incorporate business measures, including CLV and net present value (NPV).

“Customer experience is all about the emotional reaction to a product, service, or moment. It may not have to do with marketing, sales, or service. It may be the way a product installs or works, or a moment on the Web or in an app that strikes a chord,” he said. “You feel something special at that moment. And that’s what creates a lasting impression and creates buy-in with a brand.”

In the end, navigating today’s digital environment requires finesse and an ability to cut through the noise and tap into all of the latest signals, clues, and touch points.

“If marketers want to win, if they want to grow, they have to do better than just chase intent based on demographics and remarketing,” Solis explained. “That’s not enough anymore. With the right mindset, customer data, and machine learning, brands can tap into real intent via search, across the funnel, across media, at any touch point.”

And that, he contends, is the most direct route to Experience 2.0.

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