Capture the information flow for this customer experience.
The second part of the workshop helps you to look at the relationships you have with your customers across individual, episodic experiences. Weaving together these episodes and learning from them to customize products or services for a particular customer was the first important element of the repeat dimension discussed in chapter 5. In chapter 5, we also discussed another element of the repeat dimension, the ability to learn at the level of the overall customer population.
The goal of a connected relationship is to move from a transactional relationship with your customer to becoming a trusted partner. Rather than only teaching finance, you help somebody make a career as an investment adviser; rather than only performing surgery, you support health; and rather than trading stocks, you help somebody save for retirement. This involves the following two additional diagnostic steps:
Identify the deeper needs of the customer.
Understand the current relationship with your customer across separate (repeated) customer experiences.
In the third part of the workshop, we help you turn the findings of your diagnosis into new ideas for creating connected relationships:
Identify new opportunities to reduce customer pain points and lower fulfillment costs.
Find ways to utilize information gathered from repeated interactions to improve the recognize-request-respond cycle.
Lastly, since trust is at the core of a connected customer relationship, we ask you to do the following:
Assess your data-protection policies to maintain trust with your customers.
Step 1: Map the Current Customer Journey of One Customer Experience
Just as you would begin any operational improvement project by mapping out your current process, we find it helpful to first map the typical journey your customers are taking when interacting with your organization. This journey starts with the emergence of a latent need, is followed by a customer’s recognition of the need and request for something from your firm, and leads to your firm’s responding to this request. If you have customer segments that experience very different customer journeys, sketch out one journey for each customer segment. Likewise, a customer may have different journeys with you (e.g., “buying insurance” and “dealing with a claim”). In that case, you again need to sketch out several journeys.
You can use worksheet 6-1 as a starting point. On this worksheet, we have outlined the stages of a typical customer journey as we explained them in chapter 4. For each stage, put an explicit description in each box. What does the customer actually do at each stage of the customer journey? Here are some questions you might want to consider for each stage as you fill out the worksheet:
Latent need
What are the underlying needs that the customer wants to fulfill?
What are the underlying problems that the customer is trying to solve?
Awareness of need
When and how does the customer become aware of this need?
Search for options
How does the customer search for options to fulfill the need?
How many of the possible options are within the awareness of the customer?
Decide on options
How does the customer decide on what option to choose?
Who is involved in this decision? What advice does the customer seek?
Order and pay
How does the customer order the option he or she has decided on?
How is the customer being billed?
How does the customer pay for the order?
Receive
How long does it take for the product or service to arrive to the customer once the order is put in?
Does the product or service come to the customer, or does the customer need to travel to the product or service?
Experience good or service
How much effort is required before the customer can use the product?
How does the customer use the product?
Postpurchase experience
What are the postpurchase needs of the customer? Returns? Upgrades? Advice? Maintenance? Service? Replacement parts?
WORKSHEET 6-1
Customer journey
Step 2: Identify Customer Willingness-to-Pay Drivers and Pain Points
In step 1, you documented the actual steps that a customer is going through on the customer journey. Now, let’s focus on the willingness-to-pay drivers and the pain points that the customer encounters along this journey. If you have completed workshop 1, you already have a head start on this step.
Hopefully, the concepts we provided to you in the last two chapters allow your understanding of the willingness-to-pay drivers of your customers to be more encompassing and precise. For instance, in workshop 1 we asked you to think about inconvenience as a factor that could diminish willingness-to-pay. Now, with the tool of a customer journey, you can be more systematic in your analysis of where inconvenience can occur; for example, it is not only in receiving the product (“Where does the customer have to go and how long will it take to receive the product?”) but also in the upfront part of the customer journey, such as in becoming aware of the need.
Many customers have a need but are simply not aware of it. If you just asked customers about their needs, they might not even be able to articulate them. In fact, a need that a customer is unable to express is the very definition of a latent need. We will dig deeper into this early stage of the customer journey in step 4 of this workshop, where we will present you with a tool to identify the deeper underlying needs that a customer might have. For now, we will start the customer journey with the stage of awareness of need.
Many of the examples we use throughout the book are from business-to-consumer settings. If you are in a business-to-business setting, you can ask yourself another overarching question: How can we help our customers create competitive advantage in their markets? Whatever you can do to help your customers become more efficient, or to increase the willingness-to-pay that their products create for their customers, will increase the willingness-to-pay that your customers have for your products.
Whether you are in a business-to-consumer or business-to-business setting, as you are thinking about the various pain points that your customer encounters, consider the following questions. Keep track of the willingness-to-pay drivers and pain points on worksheet 6-2. You will use them later in this workshop as ideas for possible opportunities for improvement.
Awareness of need
How often is the customer entirely unaware of the need (e.g., the customer didn’t realize the computer was at increased risk of being hacked)?
How often does the customer in principle know of the need but fail to act on it at the current time and location (e.g., the customer knows that she should take a pill but simply forgets)?
How often does a firm falsely remind the customer of a need that the customer actually didn’t have or that was already fulfilled, creating customer dissatisfaction?
Search for options
How do customers identify the options that could fulfill their needs? How much time do they spend on the search?
Are customers generally aware of the most relevant options for them, or is the set of options simply too large and complex (e.g., finding the right tile for a bathroom renovation, or the right customer relationship management software)? In the normal search process, are new options being surfaced for the customer that the customer was not aware of, or is the customer mainly contemplating previously used solutions?
How many options do you offer to the customer? What options are offered by competitors?
Decide on options
What factors does the customer take into account in making a decision (beyond price)? How easy is it for the customer to assess each option for each of these factors?
Does the customer use any outside help when deciding on an option (e.g., review sites, reputation scoring)?
What role does trust in the provider play in the
customer’s decision making?
How much effort does it take the customer to figure out which option would fulfill the need in the best way?
How easy is it for the customer to understand how costly each option is (e.g., over the expected lifetime use)?
Order and pay
Once the customer knows what she is looking for, how long does it take her to specify and order the product or service?
How easy and convenient is it for the customer to specify where and when the product is to be delivered or the service is to be performed?
How quickly is the customer being billed? How transparent are all charges that the customer incurs?
How easy is it to pay? What forms of payment are accepted?
Receive
Where will the customer receive the product? Does the customer need to pick it up, or will it be sent to the customer’s desired location?
How long does it take to receive the product after the customer has ordered it?
What happens if the customer is not home when the product is delivered?
Experience good or service
How much effort is required from the customer between receiving the product and deriving a benefit from it (time to unpack and install)?
What are the technical features of the product that drive the customer’s willingness-to-pay?
What are the intangible product features, such as brand, image, and design, that drive the customer’s willingness-to-pay?
How good is the fit between the product or service and the customer’s needs?
Does the customer always get the product in the desired portion size?
Does the product gain the customer access to complementary products and services (e.g., is it compatible with other third-party products, or older, already installed versions)?
Postpurchase experience
How easy is it to reach customer support?
Does the firm reduce the risk that the customer has to bear? How easy is it to return the product?
What is the degree of postpurchase flexibility? The customer’s needs may change after he or she has purchased the product. How easy is it to upgrade or downgrade the product?
WORKSHEET 6-2
Willingness-to-pay drivers and customer pain points at each stage of the customer journey
Step 3: Capture the Information Flow for This Customer Experience
Now consider the information flow between your customers and your firm. Information could be an explicit request for a particular product by the customer (“I want product xyz”), but it could also be just information about the customer’s state, be it the condition of the customer’s printer or the customer’s heart. Thus, information includes everything that the firm may be able to use to deduce and fulfill the needs of the customer.
For each of the steps you identified in the customer journey in worksheet 6-1, first describe the information that flows from the customer to you. Note your answers in the top row of worksheet 6-3. Then, for each information flow that you have identified, ask yourself the following questions:
What or who triggers the information flow? Does the customer have to take the initiative?
What is the frequency of the information flow? Does information flow in one batch or continuously?
How rich is the information flow? Are you just exchanging a few bytes, or do you have access to high-bandwidth, multimedia information flow?
How much customer effort is required? How long would it take for a typical customer to complete this step?
Who is acting on the information at this step? Is it the customer who is primarily making the inference on how to use this information, or is it the firm that acts on this information? For instance, who is translating the customer need into a product or service provided by your firm? Is it primarily the customer who is making the inference on how to fulfill the need, or does the firm help in that decision?
WORKSHEET 6-3
Information flows at each stage of the customer journey
Each question captures one of the five dimensions of the information flow discussed in chapter 4 on the recognize, request, and respond cycle. For now, you can leave the last row of the worksheet (improvement ideas) blank. You will come back to this row in step 6 of this workshop.
Step 4: Identify the Deeper Needs of the Customer
In chapter 5, we discussed the usefulness of the why-how ladder as a tool to discover your customers’ deeper needs. Recall that each of the boxes in the why-how ladder corresponds to a specific way of expressing a customer need. Customer needs at the bottom of the ladder are more focused; they address how a particular need could be fulfilled. We climb up the ladder by asking why: Why is that need relevant in the first place? What would be good about fulfilling this customer need? This is what gets us to the deeper, more fundamental needs of your customer.
Use worksheet 6-4, the why-how ladder, based on the needs of your customers. There is no single right answer here. Answers at different rungs of the ladder correspond to alternative value propositions that your firm can provide to the customer. If you only focus on the how—that is, the lower parts of the ladder—you are at risk of being only in a transactional relationship with the customer. The moment an alternative solution becomes available to the customer, one that is associated with a higher willingness-to-pay or a lower price, your customer will grab it.
On the other hand, there also is a risk of focusing too much on the why. The more often you ask why, the fuzzier the value proposition becomes. You move from “provide me with an appointment” to “see a cardiologist” to “keep my heart healthy” to “have a longer and healthier life” to “be happy.” We propose that the first steps of broadening the problem by asking why are helpful. But be reasonable, because too many whys and you’ll find yourself searching for world peace and eternal bliss (and chances are you will not be able to move the needle on those objectives).
WORKSHEET 6-4
The why-how ladder
In the eyes of the customer, the purpose of the relationship with our firm is to …
Step 5: Understand the Current Relationship with Your Customer across Separate (Repeated) Customer Experiences
As we discussed in chapter 5 (on the repeat dimension), there exists an important difference between a single episode of a customer experience and a connected relationship. In the worst case, your customer only has one experience with your firm and you will never meet again. Not much better is the scenario in which you provide multiple experiences to the same customer, but every time, you treat the customer as if you have never met before. In chapter 5, we laid out four different levels of customization that are enabled by the repeat dimensions. Let’s work through these four levels for your organization.
In order to weave multiple customer experiences together into a connected relationship, the firm has to be able to identify the customer and retrieve information about the previous customer experiences. This is level 1 of customization. Answering the following questions will help you with this step:
How do you identify the customer and connect him or her to prior customer experiences?
Across which domains are you able to identify the customer? (E.g., stores or dealers in different geographies, online activity, or different agents from the same customer firm.)
Is this identification requiring time and effort from the customer?
Is this identification costly to your firm?
What organizational incentives are in place (or what disincentives need to be removed) so that various parts of your organization share the information they have about a particular customer?
Beyond identifying the customer across multiple episodes of interaction, you want to improve the customer experience by learning more about this particular customer from one episode to the next. This is level 2 of customization. Ask yourself the following questions:
How do we improve customization for a particular customer based on information that we have gathered about this cust
omer?
What feedback do we gather from the customer to understand whether a particular solution worked well?
Can the customer make direct suggestions to us for how to improve our product or service?
How do we share this information inside our organization?
As we discussed in chapter 5, learning not only happens at the level of an individual customer but also at the level of the population of customers that you face. Level 3 of customization relates to changing your available products and services to create more value. Ask yourself the following questions:
How do we currently use population- (or market-segment-) level data to improve our product assortment?
How do we currently use population- (or market-segment-) level data to refine features of existing products?
How do we currently use population- (or market-segment-) level data to create entirely new products?
Lastly, use the insights you gathered from step 4 in this workshop, in which you worked on the why-how ladder, and ask how you can become a trusted partner of your customers. This is level 4 of customization.
At what level in the why-how ladder are most of our transactions currently taking place?
What would be alternative value propositions to the customer that are either more focused (how) or broader (why)?
Step 6: Identify New Opportunities to Reduce Customer Pain Points and Lower Fulfillment Costs
Based on the work that you did in the previous steps, the goal of this and the following step is to generate a list of opportunities to improve (a) your current customer experiences and (b) what happens across experiences.
Such opportunities are a combination of the following elements:
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