Posted: Dec 06, 2018
Before we get into my fifth annual piece on customer experience predictions, let me introduce myself to new readers. I started writing about customer experience for Forbes in 2014, simply because I thought it was interesting--I was fascinated by human behavior and by the idea of a brand. I've been lucky enough to work in some type of "customer" area since 2007, starting off in the conference industry, then media about customer management (that's what we called it), moving on to work in customer service for a Fortune 100 tech company for two years and focusing purely on customer experience thought leadership for the last three years. I've watched as the word "customer" has gained increasing influence--from the time when Tony Hsieh, CEO and founder of Zappos, was the only person talking about customer service, to now when everyone is talking about customer experience all the time. The phrase "customer experience" gets a lot more play than it did in the business world in the past, when people would simply throw it around synonymously with the phrase "customer service." We've established these two things are definitely not the same. Customer experience is now seen as a key business strategy for every brand.
Most of those changes are driven by consumer demand. Customers crave personalized, frictionless experiences, and companies are sprinting to deliver them. But this idea of constant transformation can present a seemingly insurmountable challenge for companies that are struggling in today’s complex business environment.
We’re at a tipping point for many transformation triggers, including globalization, digital growth, regulatory compliance and a changing economy. Each of these things has the power to dramatically impact customers and change how they interact with brands. The combination could completely change the face of customer experience moving forward. Buckle your seat belts because we’re in for a bumpy (and exciting) transformation journey heading into the new year.
With that in mind, here are my five predictions of things to look for in customer experience in 2019:
1. Companies Realize No One Can Own Customer Experience
It’s ridiculous for companies to give lip service to customer experience by simply assigning a few people to it and thinking they’re done. Everyone wants a customer experience like Amazon without realizing what actually goes into making it happen. The secret about Amazon is that there is no secret. I visited Amazon headquarters in November and saw for myself that employees are just insanely focused on customers. The entire company has a customer experience mindset.
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A customer-first mindset is much different than hiring a chief customer officer and thinking your work is done. That’s almost as egregious as thinking that customer experience is simply something handled by the customer service team. Today, companies are thinking about customer experience in everything they do, from hiring and leadership development to marketing, supply chain, logistics, IT infrastructure, product design and continuous improvement for the entire business.
Companies like Ritz Carlton, Trader Joe’s and Virgin America are known for their amazing customer experiences because they involve every employee in the process. Every person in the organization knows how their work impacts customers and is empowered to help solve any customer issue and provide the best experience possible. Customer experience is truly a company-wide focus, and the results are evident.
Companies that have a small team dedicated to customer experience could be in trouble. Every single department must by completely focused on customers, no questions asked.
2. A Business Willing To Transcend Itself And Shed Its Old Skin
Digital transformation has generated a lot of interest in the last few years as companies scramble to become more digital and solve various problems with technology. However, it’s often not just the framework of the company that needs to transform. According to David Clarke, Global CXO, Experience Consulting & Digital Consumer Markets Leader at PwC, it takes transcendence for some companies to truly pivot.
Clarke told me in a phone interview that today’s businesses must be willing to shed their old skin to fully transform into a new business. This occurs when a company is willing to completely transcend into an entirely new business model. It happens when a car company decides to leave the gas business or when a mattress company that only sold products online decides to open retail store to showcase its products. It happens when companies completely change their offering, like moving from retail to 100% digital, or changing the sales model to offer subscription models rather than traditional offerings. The iconic guitar company Fender created a subscription-based video service to teach customers how to play guitar after it realized 90% of customers quit the guitar within a year of buying one (I was a teenager who did this).
Going forward, we’ll continue to see business transcendence as companies blur the lines between the digital and physical worlds. According to Gartner, more than 66% of CEOs say they plan to change their business model in the next three years. Some companies completely clean house with a major transformation that alters nearly everything about the company, while others take a more tactical approach and only address small areas within the organization. You cannot talk about transcendence without talking about Amazon. An older but still relevant book that details their rise is “The Everything Store: Jeff Bezos and the Age Of Amazon” by Brad Stone, who was given exclusive access at Amazon. Amazon has pivoted from modestly selling books, riding the wave of the late 1990’s dot-com boom to sell music, movies, electronics and toys, while avoiding disaster in the 2000 bust. I never had heard of Amazon until around the time I graduated college, and I became a customer in 2009 when I was living in Brooklyn, NY. Throughout this period Amazon “mastered the physics of its own complex distribution network” and expanded into everything. After earning the spot of top retailer, it redefined itself again as an unstoppable technology firm that sold cloud computing infrastructure as Amazon Web Services. In addition to the Kindle e-reader and tablet. The purchase of The Washington Post in 2013 for $250 million and Whole Foods for $13.7 billion in 2017 continued to shock the world, but as time goes on these purchases make increasingly more sense. Amazon’s customer experience mindset, coupled with its focus on constant innovation, and lack of fear of being misunderstood for long periods of time makes them powerful. What might surprise people is Jeff Bezos is himself rooted in reality and the unavoidable vicissitudes of business. Jeff Bezos does believe one day Amazon could go bankrupt and fail. Most people would be shocked to know this guy talks that way. And as I said, I visited Amazon a few weeks ago, and what I found surprised me - normal, hard working, thoughtful and service-oriented people. I met a VP of Logistics who does ride-alongs with delivery drivers at 2 am, simply so he can get honest feedback of what life is like making deliveries, and how they can make the process better. Most companies are not willing to commit to the customer in the way pretty much any Amazon employee is.
What Amazon has done is so unique, the world is still in shock. Retailers are scared, because Amazon has changed the game for so many of them, but admit: you use Amazon, you love it and you cannot imagine life without it. So before you talk about how evil it is, tell me first if you use it. But back to the point--like digital transformation, transcendence is never really done. It needs to tie into the overall strategy and be a continual change in how the company operates. Although the vision is there, the execution can be a struggle, with some experts estimating that more than half of companies that try to transform don’t end up hitting the desired business result.
Successful companies transcend. They don’t get complacent with their current model, even if it appears to be working. Continually re-evaluating processes, products and business models is what keeps companies alive and successful in the ever-changing minds of customers.
3. Companies Realize A Digital Transformation Doesn’t Have An End Date
We’ve talked about business transformation, or transcendence--but we haven’t addressed digital transformation, which is different. Digital transformation has been a major focus for companies across all industries, and the idea won’t expire anytime soon. In one recent survey, 87% of senior business leaders said digitizing is their top business priority. In many cases, it’s a do-or-die initiative. But too many people think digital transformation is something you go through and then you’re done, like a short term diet. That’s not the case. Digital transformation is the new normal, as every company must be able to evolve and pivot as the customer changes, and so does the digital environment. Companies are very slow to not only achieve one digital transformation, but embrace it as a permanent state of mind.
Digital transformation is here to stay because it works. According to Harvard Business School, digital leaders have a three-year average gross margin of 55%, compared to 37% for digital laggards. But in order for digital transformation to be effective, it must be long term and involve every employee. This isn’t a short-term initiative that will be replaced by another trend next year—this is the new normal.
Digital transformation at Porsche is a company-wide effort that involves every employee and every luxury car the company creates. Its Car Connect app controls everything about the digitally connected cars, from navigation and real-time traffic to music and social media updates. To make the system as effective as possible, every Porsche car and driver has a unique ID to track their driving habits and experiences and provide personalized feedback. The company realizes that such a large change can’t be handled in a single department and relies on the skills, experience and knowledge base of all employees.
Digital technology is now the responsibility of all organizational leaders, which means they must also lead re-skilling efforts for employees. Changing technology leads to a new skillset for employees to grow the company and their careers. Leaders should also focus on strategic clarity so employees know whether to focus their digital efforts on speed, quality or innovation. With a clear vision and the right skills, every employee can contribute to the digital future.
4. Robotic Process Automation Gains Ground
Robotic process automation, or RPA, helps businesses automate repetitive tasks to increase efficiency and decrease costs. When machines control the mundane tasks, humans have more time to dedicate to the uniquely human tasks, like strategy, creativity, innovation, problem solving, connecting with customers and developing a strong customer experience.
Companies can use RPA tools to develop software programs to manipulate data, interpret transactions and communicate with other digital systems. The beauty of RPA is that it can be customized to exactly what each company needs, from actions as simple as automatically responding to emails to things as involved as controlling a large group of bots to strategically automate work. One bank redesigned its claims process to use bots to handle 1.5 million requests each year. The work of 85 bots was equal to the output of 200 full-time human employees but was only 30% of the cost.
Allstate uses a chatbot named Amelia to assist its employees in their customer interactions. Contact center agents can use Amelia to access the latest insurance regulations and protocol while they’re on the phone with a customer. This tactic is the best of both worlds: customers still get the personal interaction they crave, but they also get the speed and efficiency of a chatbot and don’t have to wait for agents to manually look through huge amounts of constantly changing insurance information. To be clear, the chatbot Amelia serves the employee, who is still serving the customer. In the future, it is likely the insurance agency would simply provide Amelia to customers, without the employee needing to be there.
We will need to focus on reskilling workers, and finding other jobs for them to do. Automated systems can work much faster and cheaper. But that doesn’t mean we can simply replace people with robots and fire them. This brings a human and ethical question which I will not try to solve in this particular article, but it's one worth discussing. I do recommend the book “Rise Of The Robots: Technology and the Threat Of A Jobless Future” by Martin Ford, although I am an optimist and I believe we can figure something out, it is good to know the cautionary tale, and remember it. But back to 2019, in sum, many companies are taking advantage of RPA and trying to re-skill their employees to move them to other areas. Even with the effort, Forrester predicts that RPA software will threaten the livelihood of at least 230 million workers, or about 9% of the global workforce. I believe in efficiency, but I also believe in making thoughtful strategic decisions that don’t make your company look like a heartless and apathetic demon (insert smiley winking emoji here).
5. Data Ethics Comes To The Forefront
2018 was a banner year for data ethics with the start of the General Data Protection Regulation, or GDPR. The law gives customers power over their personal data and allows all EU citizens to choose what information of theirs companies have and remove their data from company databases for any reason. As you probably know already, companies not in compliance with GDPR risk being fined millions of dollars.
GDPR changed how companies around the world handle their customer data and transitioned data from a business asset to a customer’s property. After the rollout of GDPR in Europe, other countries are expected to follow suit in some degree.
Facebook was front and center in the data ethics debate this year with accusations that it was selling customer data. Although executives claimed that wasn’t the case, court filings found that the company at one point considered selling access to user data. For years, it appears Facebook gathered user data to share with outside companies and make a profit. Now that the revelations are coming (and continue to come), users are clamoring for improved privacy and moving to other social networks. The Facebook incident shows how a data ethics scandal can hurt a company’s image in the public eye and lose the trust of customers.
As data breaches become more common, including the recent breach of 500 million Marriott guest reservations and personal information, companies need to focus on cybersecurity. Data is becoming more important than ever, and customers are demanding to be in control of their own data to ensure it stays safe.
A few months ago I spent one hour on a video call with Norm Judah, Microsoft’s CTO, who was helping me with some research for a book. He was the one to identify ethics and data privacy as a huge issue for me to look at. He told me in an emailed interview, “As we have seen recently, perceived ethical failures can deprecate brands in an instant,” noting that in the future companies will need to have a better understanding of AI and the impacts of data security. “We used to say that every company would become a software company, but that has quickly morphed into not only is every company a software company, but every one is also an AI company. A consequence of this is that every company will have to develop an AI Manifesto, which is an expression of their beliefs and behaviors in the ethical use of data and AI technologies. In 2019, we will see a few companies start to differentiate by publishing their AI manifestos to their employees, customers, partners and shareholders.”
At this point it’s hard to imagine how any of this will affect our lives, but key technology visionaries have been talking about it for years. Perhaps now it will finally come into the mainstream, first in Europe and abroad, and soon in the U.S.
In conclusion, we’re entering a time of great transition in customer experience. Customers have the power and want great customer experiences from brands they can trust. These trends will undoubtedly shape the world of customer experience in 2019.
December 5, 2018
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