Author Archives: Howard Tiersky

About Howard Tiersky

Howard Tiersky is an inspiring and passionate speaker, the Founder and CEO of FROM, The Digital Transformation Agency, innovation consultant, serial entrepreneur, and the Wall Street Journal bestselling author of Winning Digital Customers: The Antidote to Irrelevance. IDG named him one of the “10 Digital Transformation Influencers to Follow Today”, and Enterprise Management 360 named Howard “One of the Top 10 Digital Transformation Influencers That Will Change Your World.”

Digital Customer Experience Drives Bottom Line Results

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Digital Customer Experience Drives Bottom Line Results

GUEST POST from Howard Tiersky

Several years ago, Jake Sorofman, from Gartner, Inc. wrote that “Customer Experience is the new battleground.”

This has been requoted numerous times by companies including Forbes, Altimeter and, McKinsey, etc. And now it looks like FROM.

Not to beat a dead horse, but are CEO’s convinced? In our experience, clients whose leadership is on board with investing in a great experience report greater financial advantages vs. those companies who are not focused on Customer Experience (CX) or are dabbling in it.

In fact, the Aberdeen Group conducted a detailed study on Aligning the Business Around a Customer. In the report, the Best in Class (BIC: defined as the top 20% of participants by reported performance) reported significant financial advantages. For example, the Year over Year (YoY) change in Company revenue is 35.4% for the BIC and 7.7% for all rest.

Other interesting findings include Customer Retention Rate: BIC 85% the rest 40%. YoY change in Customer profitability: BIC 18.2% the rest 2.9%.

Aberdeen Group Aligning Around the Customer

How do companies get results like these? Our clients don’t just fix touchpoints but use Journey Management to Innovate Exceptional Experiences that Customers Love. A simple 6 step process works:

  1. Know your customers and their behaviors
  2. Map their journey and identify friction points, gaps and enabling systems
  3. Establish metrics and analytics based on your business strategy
  4. Ideate and innovate based on new technologies, analytics, and trends
  5. Blueprint the new experiences using a service design based method
  6. Deploy new capabilities and implement the new journeys

6 Step Customer Journey Map Process

Of course, measurement against the metrics set up in step 3 allows us to optimize over time and keep the journey fresh. It also allows us to see potential new friction points that should be resolved. Many companies are looking at personalizing the experience, really understanding their customer behavior and building an environment for co-creation. Powered by ethnographic research, user-centered design can help to focus on what the customer wants to accomplish and how best to get the desired outcome.

So, this works for the rest of the companies, but what about the Best in Class group? Yep, the true innovation to deliver exceptional experiences is never really done. There will always be new tech, and of course, competitors and other companies are investing in their experiences and creating the next big thing.

Need more detail on the benefits of implementing a CX Operating Model and using journey management to deliver Exceptional Experiences? Here is another study that is about 15 months old, also by the Aberdeen group, that details some of the most common areas of value companies are reporting.

The Employee Engagement comparison is staggering. Companies that use Journey Management get almost 15% more employees engaged than companies who work on their journeys, but do not have a cross-silo mature management program. As you may know, engaged employees have a profound impact on the Customer experience. ROMI, Referrals and Sales Cycle Times are also areas that carry large financial rewards.

This article originally appeared on the Howard Tiersky blog

Image Credits: Pexels

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Motivate Innovation with These Three Frames

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Motivate Innovation with These Three Frames

GUEST POST from Howard Tiersky

You want to innovate, to drive change in your organization. New products, new processes, new markets, new technologies, new ways of working together.

People in any organization have a tendency to resist change. This is for many reasons including fear of the unknown, fear about how it might impact their role or their empire, or their job security, and the natural tendency that people get comfortable with and attached to the way things are.

More often than not, change requires buy-in from others in your organization, and you will need to be able to communicate a strong reason to change. It’s important to identify the outcome you are seeking, of course. Let’s say you want to improve customer satisfaction. Great! In order for people to really be ready to change, they have to see that outcome as important. Ideally, as essential. If we want people to focus on getting from Point A to Point B, we need to help them understand why that change is so important that it overcomes their natural resistance. Just improving the share price or reducing turnover might not be enough to get someone to be willing to embrace what they may perceive as the personal pain of change.

The question is, “Why is making this change absolutely essential?” Of course, there are an unlimited number of reasons, but in our experience they fall into three primary strategies. The individual details are going to vary situationally, but these are the three basic strategies for igniting that burning platform for change.

If you’ve driven change before or been part of an organization going through change, most likely the change was communicated using one of these three frames. We present them here to make you aware of these three diverse approaches and to give you the opportunity before you communicate your next change to step back and decide deliberately which frame you will choose because each one had its own power and its own drawbacks. Let’s introduce the three frames, and then we’ll explain them. The three frames are number one, we suck. Number two, constant improvement. Number three, environmental change. Let’s review these.

1. The “We Suck” Frame

Let’s start with we suck. That’s a fun one. A company is at the bottom of its industry in sales or share price or both. Customer satisfaction scores are through the floor. The new product which will change the game in the marketplace is three years late. Who am I talking about? Doesn’t matter. When things are bleak, sometimes it seems necessary to just tell the truth and admit that the results you’re getting are bad, unacceptable, and must change. Holding up an honest mirror and pointing out the reality of the situation can create a strong motivation for some kind of change. As I said, everyone wants to get out of a situation where they’re failing. It’s highly motivating to get away from suckiness. It doesn’t have to be the entire company that’s going down the tubes like in my example. It might just be one capability, one product, one process, one geography.

If the facts are on your side, using the frame that, “We have to improve customer satisfaction because right now our customers hate us,” will probably get people’s attention. Often, the pain of failure is enough to overcome resistance to change. The problem with the we suck approach, however, is not hard to guess. It can be highly demotivating, even depressing. It can drive people away from your company. It can be hard to get excited about change when building on a belief that we suck. If we suck so much, how will we be able to improve? How will we make this change successful?

In order for the we suck frame not to backfire, you have to combine it with a strong hope of victory. The team needs to have faith that they can correct the situation. A few tactics. First, highlight the problem in a measurable way and set clear goals. “Our satisfaction scores are at a 6 and they should be at least an 8.” That gives people a clear sense of where the line of victory is. Second, if things used to be better and then they got worse, be sure to highlight that. It creates hope that the organization is capable of better.

A third tactic, highlight the areas the organization is doing well as part of the message. If we’re doing great in four out of five areas, but we suck in the fifth area, be sure to make that point. Not just to be positive, to give sugar with the medicine, but to put the problem in context. “We’re a high-quality organization. We excel in many areas, but in this one respect, we aren’t operating at our own standard.” The key is to show the gap, but also to create confidence that it can be solved.

A fourth tactic, highlight recent changes in circumstance that can also increase confidence. Especially if the problem has existed for a long time. It’s easy for people to feel it’s unsolvable, so make sure part of the message conveys what is change that makes it solvable now? Whether it’s new leadership, a new technology, increased budget, or something else.

2. The “Constant Improvement” Frame

The second frame is constant improvement, an alternative to the we suck frame. This frame emphasizes the need to constantly strive to be better as a value in and of itself. It says, “We’re already at X level, but we can do more. We can drive even more value for our customers. We can lower our costs even more.” This is, of course, a much more positive message than the we suck frame. It doesn’t really on any admission that the current state is any form of failure. However, in order to be motivating, it relies on a certain alignment with the values of your audience.

In some corporate cultures, the value of constant improvement is embodied into the psyche. Places like Apple and Amazon hire people who love to constantly improve, but if your organization does not have this value in its DNA, it’s tough to create it overnight. The downside of the constant improvement frame, therefore, is that it might not be sufficiently powerful in many cultures. People might think, “Yeah, it’s nice to improve, but I kind of like my organization the way it is now.” If the change is not seen as a must, just a nice to have, and if it requires some pain or a scary change, people might not be sufficiently motivated. They’ll tend to embrace small-scale change that doesn’t upset the apple cart, but may still have significant resistance to significant change.

3. The “Environmental Change” Frame

The third and last frame is environmental change. This is my personal favorite frame. The environmental frame says, “Something major in our business environment has changed and we must respond and change in order to survive or thrive. Our customers have all gone mobile. Competitive pricing has dropped our price in half. The population is aging. The Asian market is opening up.” What’s great about this frame is that it excuses the past. We can say, “Hey, what we did in the past was great for the circumstances that existed then, but now we need to change to what will work now and in the future.” In this frame, we don’t suck, we’re just becoming a bit out-of-date and need to adjust to the external change, but the changes are truly a must. Not just to meet the standard of constant improvement as in frame two, but in order to survive. This sort of example is, of course, where the phrase “burning platform” comes from. Your house is all of a sudden on fire. The environment has changed. You have to move.

As I mentioned, I like this third one the best since it can be a positive message and still have urgency, but it may at first appear that this really only relevant in certain circumstances. Those where there really has obviously been a significant environmental change, but you can really leverage this frame or, in fact, any of these frames in almost any situation. The key to using this frame is to do one or both of two things. Either find an environmental change that you can focus on to justify the change, and usually there is almost always some form of environmental change or forecasted change that you can use to create change based on an environmental frame, or create an environmental change.

For example, a new boss coming in can be an environmental change. The new boss has new expectations. We as a department need to deliver in a different way than we have before. There are many other ways to create environmental change. A new brand promise, a new performance management protocol, even a new goal or initiative that the company has that must be met.

Here at FROM, we work with clients all the time to make change successful and part of the work we do is about developing the frame for and communication about the change. I can assure you that there are lots of ways to apply creativity, to utilize the best frame in just about any circumstance with all your digital innovation, for change, for innovation.

This article originally appeared on the Howard Tiersky blog

Image Credits: Pexels

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Why CIOs Should Co-Lead Customer Experience

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https://www.forrester.com/report/The-ROI-Of-CX-Transformation/RES136233

GUEST POST from Howard Tiersky

Forrester recently gathered top Customer Experience (CX) professionals from around the world for the Forrester CX Forum in New York. For the uninitiated, CX is the discipline of defining the step-by-step customer journey from marketing through sales and service. It defines the key capabilities, content, and interfaces that need to be present at each customer touchpoint and how those touchpoints work together to form a cohesive experience.

At the conference, extensive data was presented to support the argument that delivering a seamless customer experience is more important than ever. In fact, it’s the primary way digital disruptors, like Uber and Amazon, are taking share from more traditional brands.

Forrester found that from 2011 to 2015, revenues for companies that scored near the top of the Forrester CX Index™ outgrew that from a group of companies who scored poorly (CX laggards in Forrester’s terminology) by more than five to one.

But who is actually in charge of CX, and who should be? Many CIOs classically would respond that these types of matters―the design of the website, its features, and generally how we interact with the customer―is the responsibility of marketing or other areas of “the business.” Once “business” decides what they want, IT will build and support it – that’s the breakdown of responsibilities. For the CIO, this may seem to be the most efficient arrangement, as they have plenty to worry about and sometimes it’s nice to be able to identify something they don’t have to focus on.

But in testing this classic mindset through conversations with many of the CX experts at the Forrester Summit, I heard a strong, unanimous dissent with this traditional view. The view of the CX community is that to deliver great results in customer experience, senior IT leadership must be intensively involved in the full CX lifecycle, not merely a recipient of requirements when it’s time to write some code, and not merely kept apprised in an “FYI” type fashion. For example, Ori Soen, General Manager of Medallia Digital, a leading provider of CX software, offered, “We clearly see that when CIOs and their IT teams are customer-centric and focused on CX, the organization is able to generate much better business outcomes from its CX investment.”

These experts point to successful CX companies, such as Google, Facebook, and Airbnb, where the development teams and business teams are working as one unit, making decisions about the experience, and implementing it together.

As Daniel Davenport, Managing Director of Liquid Hub, an agency that focuses on customer engagement, articulated, “I think it is important for the CIO to have a voice at the table and co-create the ultimate solution.”

But as busy as enterprise CIOs and their key lieutenants are, I pressed the CX experts at the Forrester Forum as to exactly why it’s truly essential that the CIO be so aggressively involved in CX and what the specific areas of value are. After speaking with some CX professionals, I derived five key areas of significant value that are derived from CIO involvement in the CX process.

1. Art of the Possible

CX innovation sits at the intersection of customer need and the ever-changing landscape of what is technically possible. It’s too abstract for CX professionals to define requirements and ask IT to figure out how to make them work if the CX teams don’t have a good sense of what they have to work with. New technologies from Artificial Intelligence (AI) to Virtual Reality to In-memory computing make it possible to do things today that were impractical just a year or two ago. But IT can’t be expected to “brief” CX professionals on every technology in the world. Instead, the process needs to be a collaboration of those studying what customers need and those studying what technology is newly enabling so that they can pool their knowledge and find new intersections where value can be created for the customer and the company. That only happens when IT is intimately involved in the ongoing process of considering the next generation CX.

2. Understanding Level of Effort and Dependencies for Prioritization and Planning

In an enterprise, there are typically many systems and many simultaneous programs going on that impact what can be implemented, when it can be implemented and with what level of effort. CX teams need to be constantly considering how their visions intersect with the technical reality of enterprise IT to develop CX roadmaps that aggressively bring new capabilities to market, but don’t crash headlong into other initiatives, system upgrades, or compliance issues.

Furthermore, CX design requires the continuous balancing of the customer’s optimal experience and various business considerations, including the cost of implementing new capabilities and the cost of supporting them. A significant component of these cost factors is IT. Therefore, there is a constant and ongoing need to both understand from IT what the level of effort might be for any given enhancement, and perhaps even more importantly, IT should be a creative collaborator in thinking about how to optimize technical approaches so that great CX ideas can be implemented with a sensible value equation. To do this effectively, IT can’t just “cost out” requirements provided by the business, but needs to be “on the inside” to understand what is really trying to be accomplished. Sometimes the answer that works economically relies on a different set of requirements than that which was initially envisioned, and an engaged senior IT partner can get creative with their colleagues to search for the best value equation.

3. Measuring CX

Measurement is a huge component of CX. The goal of CX is to move the customer through a journey from awareness to consideration to purchase to advocacy and loyalty. Many discreet components make up this journey across various touchpoints: the emails sent to customers, individual features of an app, the information available to call center representatives, and the way returns are handled. The constant obsession of CX professionals is, “How do we make this process better so the customer is more delighted and the business outcome is even more robust?” But to do so, it is essential to constantly measure the impact of each individual component of the customer’s mindset and behavior. Measuring these many interactions is often complex because it requires collecting data across many different touchpoints and then being able to correlate it so as to figure out the puzzle of causality. That requires understanding enterprise data and how to connect it across very diverse systems ― an expertise that IT needs to bring to the table.

In addition to the enterprise systems themselves, there are many excellent and deeply technical tools that support the CX measurement process. CIOs need to be deeply involved in these systems just as they would in finance or HR systems. I spoke with David McBride, a CX expert and Director of Product Management at IBM who argued, “CIOs have long been focused on creating technology to help businesses operate; when they participate in the CX process, they get to see data or even videos of customers and how they may be struggling to move through the current customer journey.” IBM’s Behavioral Analytics tool (formerly known as Tealeaf), for example, offers tools that record user sessions for analytical purposes. McBride notes, “There is nothing like seeing a session replayed to illustrate the extent of a particular struggle.”

4. True End-to-End Perspective

Lastly, in enterprises very often there isn’t just one CX initiative, but many, focused on different products, channels, touchpoints, or customer segments. The office of the CIO can often make sure that the ultimate customer experience is achieved by making sure that there is cohesion to both the technology and also the management of data across these different initiatives.

I spoke with Angela Wells, Senior Director, CX at Oracle about this, “At Oracle, what we have seen is that the CIO can and should be essential to CX decisions. What has happened at a lot of bigger companies is that they have made many ‘one-off’ decisions about what they thought were best-in-breed solutions in separate [areas of the business], and then the data didn’t talk to each other. It all got pretty sporadic and expensive, and it didn’t really deliver the customer experience [desired]. So, what we have found is that CIOs have become a centralized source for thinking about what’s going to happen to that data. They are thinking more of an umbrella; what’s best for the whole company, not just what’s best for my little niche?”

As small steps in customer experience grow into a larger program, you run the risk of chaos if there isn’t someone with the broader perspective. Dimitry Grenader, VP Product Marketing at Luminoso, a leading player in the AI arena, expressed this passionately, “In this day and age, CX should not just be left to marketers. Software is eating the world, and being able to put together the right platform will ultimately determine the success or failure of the efforts. Everything in today’s world starts as a feature, then becomes a product, which in turn becomes a platform, and finally becomes the operating system. If you don’t have the right operating system, you are building a castle on the sand.”

“I believe that a CIO must at the very least be a strong stakeholder, if not the driver of the CX process.”

Oracle’s Wells summed up this shift in terms of the evolving role of the CIO in our new digitally transformed world, “If you are thinking of the CIO as that straight tech-minded person, you are going to miss out on that more modern CIO that is a Chief Innovation Officer who takes responsibility to figure out how we make the most of what we are spending on technology to deliver the best customer experience.”

5. Changing the Way IT Operates

Finally, the level of transformation required to enable enterprises to deliver on their customer’s digital expectations may require a significant transformation in many facets of how IT operates, so it’s important for the CIO to deeply understand this difference.

As Forrester Vice President and Research Group Director Sharyn Leaver summed it up, “Compelling experiences, delivered digitally, separate CX winners from laggards. Firms that lead their industries to customer experience aggressively embrace business technologies to help win, serve, and retain customers — and they do so at rapid pace. This requires intense involvement from CIOs and their teams. Not at an arm’s length. But through ongoing collaboration and innovation.

“CX brings new prominence to technology’s role, but also new pressures on CIOs. The pervasive need for digital experiences exposes old systems, static organizations, and especially outmoded cultures that cannot deliver at the speed of the customer. For the CIO, this is much more daunting than merely spinning up a digital or mobile team. For many, success will require an overhaul of their organization – the people, processes, governance, and technology itself.”

This article originally appeared on the Howard Tiersky blog

Image Credits: Unsplash

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The Two Main Opponents of Digital Success

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The Two Main Opponents of Digital Success

GUEST POST from Howard Tiersky

I have written before about the importance of the role that emotion plays in driving your customer’s or audience’s behavior in digital channels.

When creating digital touch points, it is natural to focus on the capabilities and content that we believe customers will want, need, and hopefully love. This is essential as your digital touchpoint must have a strong core value proposition to the visitor in order to be viable.

However, it’s important to be aware of a psychological factor called Negativity Bias. What Negativity Bias says is basically that our negative emotions are more powerful in our psyche than our positive emotions. We might be excited about going on vacation, but if we are worried it might rain, those negative feelings can outweigh the positive ones.

At FROM we spend a lot of time testing websites, mobile apps and other digital experiences with real end-users and we get to observe their emotional reactions first-hand. After watching hundreds of these tests, I would have to say that our research confirms this idea of negativity bias. Simply put, no matter how promising or worthwhile a site is when it starts to trigger negative reactions in users, they usually abandon it quickly, no matter how initially interested they may have been. Note there is an exception to this rule which we call the Bruce Springsteen Rule – perhaps showing our age. For many years the TicketMaster site was quite terrible and yet when the moment came that a new Bruce Springsteen concert opened up for sale, tens of thousands of people would flock to the site and frankly just suffer through the purchase experience in order to get those tickets. So if your site experience is the digital equivalent of a Bruce Springsteen ticket (Millennials, please substitute Justin Bieber), then you may have found a way to neutralize negativity bias. Otherwise, read on.

So what are these negative reactions we get from users? There are a variety of possibilities, but there are two primary emotional villains that lead the pack: confusion and frustration.

Confusion is usually the first emotion we see. A user begins perhaps looking for a product or researching a topic, but he/she doesn’t fully understand the interface, the results they are getting or the labeling or language used. They start to feel confused. Confusion is a harmful emotion because it tends to make people feel that they are at fault. They are perhaps too stupid to figure out how to use the site or app. You might think,” Well that’s better than them blaming us!” but in fact, it’s not. They say the best thing you can do to have a great first date with someone is to leave them feeling great about themselves, and so it goes with digital experiences. If a user feels they aren’t smart enough to figure out your site or app, they may not blame you, but they leave nevertheless, so the outcome is basically the same.

And by the way they may in fact subconsciously blame you for making them feel dumb.

So how to avoid confusion? Study users’ paths through the site via task analysis, as we do here at FROM. Anytime we test a site, even a very successful one, we always find many points of confusion. It’s a matter of basic hygiene: sites are constantly changing, and it’s hard to make sure that every tweak is totally clear to everyone. Doing quarterly or at least annual user tests to make sure you are aware of any confusion “bombs” that may have been planted on your site is just good business. Furthermore, confusion-related problems are often inexpensive to fix. Sometimes it’s simply about rewording a button or moving a call to action. Sometimes it’s about just removing a feature that’s causing more confusion than benefit.

The second emotional villain is frustration. When you are frustrated you aren’t feeling at all confused — generally, you know exactly what the site is supposed to do; it just isn’t doing it! Frustration can be triggered by site defects, slow performance, check out process that are more steps than the user feels they “should be,” policies that don’t give the user the outcome they want, or missing features that the user perceives “everybody else has” which may actually just mean that Uber and Amazon have them. It’s quite easy to frustrate users today as their expectations are so incredibly high. Creating frustration in digital users is super-damaging to your brand because many users create a meaning around the frustration which is that the brand just doesn’t care. Users believe that brands should know what they expect and that if they aren’t providing it, there can be only reason: they just aren’t bothering. This, of course, may be a completely erroneous conclusion… in our experience very often clients don’t realize the points in their customer experience that are creating frustration until we conduct the user tests that reveal these problems.

Frustration problems are often easy to fix, but sometimes they can be very challenging because they may stem from underlying technology issues that are expensive to remediate. Nevertheless, it’s essential to understand where these problems exist and gauge the impact they are having on your business results, so that you can make an informed decision about whether or when to invest in addressing them.

In our experience, sites that offer something of value and manage to avoid creating confusion or frustration for their visitors are winners. The first step to getting there is a user-research focused assessment so that you can face the reality of the emotional reactions you are creating. Once that is understood, a roadmap to improvement can be developed and results measured along the way.

This article originally appeared on the Howard Tiersky blog

Image Credits: Pixabay

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Growing Your Conversational Commerce Capability

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How to Optimize the Latest Major Digital Touchpoint

Growing Your Conversational Commerce Capability

GUEST POST from Howard Tiersky

Conversational commerce means interacting with your customer in an automated dialog via voice or text.

Usage of voice-based conversational interfaces such as Alexa and Siri have been exploding for years. Meanwhile, over 100,000 active bots were created on FaceBook’s messenger platform during its first year several years ago.

“Digital” began to truly scale with the web, then expanded even further via apps and social. Is conversational commerce (CC) the next major touchpoint? Conversational commerce is defined as interacting with your customer in an automated dialog via voice or text. Based on our experience consulting large brands on the implementation of their digital innovations, and given trends on consumer adoption and technology-readiness, it is fair to say that we are at the dawn of the first wave of the broad implementation of conversational commerce.

For several years, IBM has been painting a fanciful picture of its Watson technology’s ability to digest volumes of information, understand questions, and provide truly insightful answers. Meanwhile, consumers are becoming more and more comfortable with dialog-style interactions via Siri, Google voice search, and Alexa.

In fact:

  • The number of commands (“skills”) that Alexa can respond has increased past 100,000
  • 34 percent of all smartphone users say they turn to Siri and Google voice search at least weekly.

But conversational commerce does not necessarily have to involve voice recognition.

2017 represented the one-year anniversary of the launch of Facebook’s chatbots, which enable brands to engage in text-based automated interactions with their customers and audience. In 2017 its Messenger platform alone had already reached about 100,000 active bots, and a survey then found that nearly 80 percent of companies use or plan to use chatbots by 2020.

At the Shoptalk conference a few years ago, eBay President and CEO Devin Wenig announced the launch of eBay’s new chatbot called ShopBot, which advises customers on items they might like to buy via automated chat dialog.

This pattern makes sense, as we see that millennials — 38 percent of whom prefer texting as their number one form of interaction, according to a study from Think with Google — have elevated this type of communication to an art form.

Will Siri or SMS-like automated dialog with your brand become the next big consumer touchpoint? If so, what do you need to do to prepare?

The answer, as some of the stats above suggest, is that conversational commerce is poised to be a major and preferred interaction model for many future brand interactions.

The good news is that if your brand has built a reasonably flexible and integrated digital stack, it can often be quickly leveraged to enable high-value CC capabilities without requiring that you install “Deep Blue” in your data center.

Here are five key things to know about getting started with conversational commerce:

1. The Core of Conversational Commerce is Very Similar to Search.

If you already have a strong search platform that permits parametrization, you can use it to drive a key portion of your chat experience. When you tell eBay’s chatbot you are looking to buy a voice recorder; it asks you questions such as the size and memory capacity you need. These questions are simply the metadata parameters eBay has available for voice recorders. You can utilize the product metadata in your existing catalog to make your chatbot appear to ask smart questions, and even more importantly help the customer find what they need, but in reality, the results are very similar to what they would experience if they simply entered structured search queries.

Of course, not all queries involve the quest for a product. Some may be asking a question, such as about your return or cancellation policies, but this too is very similar to search. You can parse chat questions against your full-text index and return intelligent answers by, again, leveraging your search engine.

2. The Next Step of Conversational Commerce is About Enabling Transactions.

Once a customer has found what they are looking for, they may wish to buy, reserve, add to a wish list, or take some other action. Your chat flow needs to know when to pivot from searching to asking the customer to take action. In many cases, or in your initial releases, you may simply choose to branch to existing web screens to complete transactions, as eBay is doing with ShopBot. More sophisticated conversational commerce implementations allow the customer to take action via voice or text, such as Domino’s, which allows the customer to order a pizza by text.

3. In Text Conversations, You Generally Know Your Customer.

One of the advantages of most forms of conversational commerce, such as SMS or Facebook Messenger, is that your customer is identifiable. If the customer has a profile in your system, you can use this knowledge to make the conversational interaction simpler — and also smarter. Picking up again on our Domino’s example, when the customer texts them a pizza emoji, the bot matches their telephone number to its database and confirms that it will be placing the order with toppings based on their past preferences, and will deliver it to their home address on file. The customer will then have the opportunity to override any of these defaults if they are in the mood for Hawaiian pizza that day.

4. You Can Make the Language Parsing Easier by Giving Multiple-choice Options.

Many successful chatbots are more of a string of multiple-choice questions than a free-form dialog. This substantially reduces the challenge of “comprehending” the customer and furthermore reduces typing for users on mobile devices. Naturally, you will want to support customer-entered text strings, but a considerable number of interactions can be handled via a series of multiple-choice questions. In some ways, chat is similar to IVR systems at call centers, and can often use similar types of decision trees.

5. It Doesn’t Have to be Perfect.

There is still some novelty to automated interactions, so customers don’t expect them to be perfect. Furthermore, as with any digital platform, you have the opportunity to improve it over time iteratively. Siri has grown tremendously over the last few years in the range of queries it can handle.

A fantastic resource to help guide your prioritization of new capabilities are the chat logs themselves, which will give you a sense of the types of interactions that your customers are attempting that may not yet be supported by your platform. And in the meantime, as you become aware of such chat or voice requests, you can create short text responses to those categories of inquiries, letting the customer know what other touchpoints currently support that action. So if a customer, for example, uses a chatbot to check their account balance but then wants to transfer funds, and that is not yet supported via conversational commerce, you can supply the URL for the website or app and the toll-free number to call, so they know where to go next.

6. Develop a Core Conversational Engine, and Leverage it Across Many Different Touchpoints

It makes sense to invest in conversational commerce platforms and tie them to your existing catalog, customer data, business logic and transaction capabilities. In doing so, think of creating one central CC “engine” that will connect to a variety of conversational endpoints. To begin with, you may want to focus on enabling a chatbot on your website(s) and in your apps, and integrating with the Facebook chatbot API to allow customers to chat with your automated system via Messenger the same way they would chat with their friends. But in future iterations, it makes sense to support SMS, Skype, WeChat (if you do business in Asia), and possibly other similar platforms. Longer term, as Apple’s Siri, Google Voice, Microsoft’s Cortana, and Amazon’s Alexa continue to open up their APIs, the same conversational engine you created for text can be leveraged with relatively small modifications to support voice interactions.

Conversational commerce is already here, and most major brands have either implemented or are in some stage of planning around an implementation. You can probably leverage existing systems and data sets to create a reasonable starting point for conversational interaction without requiring sophisticated AI or language parsing. Over time, you can learn from your customers’ queries how they want to interact with you and evolve your conversational capabilities accordingly.

This article originally appeared on the Howard Tiersky blog

Image Credits: Pixabay

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Five Key Digital Transformation Challenges

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Five Key Digital Transformation Challenges

GUEST POST from Howard Tiersky

Each year, I sit through dozens of hours of research sessions with consumers.

If there is one theme, I hear consistently it’s that consumers expect the brands they engage with to provide a flawless digital experience in their interactions. And though that’s a notion that is consistent across all age groups, it’s a theme we hear unanimously from millennials. It only takes a quick look around various industries to see that the companies that are delivering a strong, digitally-centric value proposition make up a substantial portion of the growth.

Meanwhile, we’ve recently witnessed that many legacy brands are shrinking (i.e., The Limited) or going out of business entirely (i.e., Sports Authority). The bottom line is that companies born before the digital age must substantially transform in order to remain relevant. As Jack Welch said in the year 2000 “If the rate of change on the outside exceeds the rate of change on the inside, the end is near.” Many great brands today are in just this situation.

It takes five miles for an aircraft carrier to turn itself around 180 degrees. If you are on that aircraft carrier while it’s engaging in that ‘quick turn,’ you better hold on to something solid because you’ll soon be tilting at a 30-degree angle. Many large companies are not comfortable with making the difficult and rapid hard left required to align themselves with how the world has changed.

Being in the business of helping companies through their digital transformations, I have observed that many of the companies that struggle digitally do employ super-sharp and visionary executives who see what needs to be done. However, those executives face massive challenges when it comes to enacting the kinds of changes that are necessary in order to make that digital leap. Most of the work I do involves partnering with heroic innovators trying to change large enterprises from within. As a result, I have an insider’s perspective on the biggest challenges these companies face when taking on transformation projects and, in fact, spend most of my time working to try to overcome them.

Based on first-hand experience, here are the top five challenges to digital transformation. If you are facing any of these challenges, the list below may, if nothing else, give you comfort that you are not alone.

1. Organizational Resistance to Change

My rough guesstimate is that perhaps 10-15% of people in the world love change. They are excited by constantly having new challenges to tackle and new things to learn. But for the other 85-90%, change equals pain. It means uncertainty, a challenge to their role or identity, and, worst-case scenario, possibly the loss of a job and their family’s security. After all, once you’ve got a good thing going, its natural not to want to see your apple cart overturned. Digital transformation, by its very nature, upsets a lot of apple carts.

However the truth is that in times of change, not changing is far more risky than taking the leap. It just doesn’t always feel that way.

The consequences of resistance to change manifest itself in a myriad of ways. Digital projects vital to a company’s future success can have trouble getting funded, resourced, or marketed. These projects may be modified so as not to threaten retail or partner brands. They are held back by concerns about cannibalizing other revenue sources. They are asked to justify ROI to an unreasonable level of certainty. They are sent through endless legal reviews.

Kodak invented the digital camera, but it was the internal resistance to change that led the company to bury it because it threatened the company’s legacy film business. Imagine what Kodak could have been had it done what Bell Atlantic did when it realized how bleak the future of landlines looked — it became Verizon, which is now a dominant figure in the broadband, wireless and cable television industries. Did mobile phones decimate the landline business? Yep. But Bell Atlantic “protected” itself by accepting that change was on the horizon, and transformed by making the difficult decisions required to adapt to that change.

The great architect and innovator Matt Taylor once said, “The future is rationale only in hindsight.” When Bell Atlantic was making those critical decisions that fundamentally transformed what it was as a company, the outcome was far from clear or free of risk.

2. Lack of a Clear Vision for a Digital Customer Journey

Companies that succeed in creating a digital customer value proposition don’t get there by accident. They develop a clear vision of how they will meet their customers’ digital needs, set objectives against that vision, and execute — often over the course of multiple years. Often times, companies that are not succeeding simply haven’t painted a clear picture of what they want — or need — to be when they digitally “grow up.” While clarifying this vision doesn’t get you there by itself, in fact its only one of many steps, not having a vision is like going on a road trip without a destination. It’s always possible you could stumble into something great, but probably not.

Companies still in the dark need to do four things:

  1. Take stock of your assets – your brand, your customers, your intellectual property, and the strengths and talents of your organization.
  2. Study your market to understand your customers’ unmet needs and what your competitors are doing.
  3. Be on top of technology trends, which includes keeping apprised of relevant emerging technology and shifts in consumer behavior as it pertains to technology.
  4. Establish processes designed to generate portfolios of potential ideas for the future state of the customer journey. These processes should allow your company to create business hypotheses and vet and test them via customer research. In turn, new ideas can be aligned to the vision for how the customer of the future should interact with the brand, iterating along the way as more learnings come in.

3. Ineffective Gathering and Leveraging of Customer Data

The root of digital success is customer data. There’s more to the tree than the root, to be sure, but whether it’s Facebook, Amazon, Netflix or Uber, digital success stories have the effective gathering, storing and leveraging of customer data at the core. Many organizations today have a myriad of siloed systems containing various scraps of data about customer interactions, but no clear way to pull them together. Others have petabytes of data centralized in an information warehouse that they may use for reporting. However, they haven’t figured out what to do with all that data in a manner that provides value to the customer.

Fixing this in the most efficient way often requires starting fresh, to a degree. Determine what are the ten to fifteen key attributes of a customer that would allow us to serve and sell to them more effectively. Of course, these attributes are different depending on the sector that a company operates in, but once they have been identified, the key is to figure out how to most effectively gather and store that data in a centralized place that can be easily accessed via any touch point.

When you take a simplistic approach to creating value at the outset, you are then in a good position to start looking at more complex pockets of customer data and considering how some of that data might enable you to enhance the experience further and how to link it in.

4. Inflexible Technology Stack and Development Processes

Successful digital experiences are achieved through iteration. Successful digital properties almost always iterate to success via the “test and learn” approach — where new features are being regularly added, measured, adjusted and pruned, based on user feedback and usage data. However, it is impossible to take this approach if your development process involves quarterly release cycles. Leveraging agile processes and technologies that support frequent, if not continuous, integration and product releases are critical behaviors that lead to effective digital results.

Additionally, part of the iteration process involves the need to adjust workflows, business rules, content presentation, and (potentially) leverage data in different ways than were originally envisioned when systems were built. Companies trying to build flexible and elegant digital experiences on top of out-dated technology stacks are tilting at windmills. You don’t necessarily have to discard the mainframe, but modern enterprises must make their data read/write accessible via robust and secure APIs, and provide access to their business logic in a way that’s independent of presentation layers. If your core systems were designed more than five years ago, they probably need major refactoring in order to support effective digital execution.

5. Married to Legacy Business Model

Lastly, real success in digital is rarely about providing the exact same products and services, just through a digital pipe. Netflix shifted from DVDs to streaming. Uber created the world’s largest car service without buying any vehicles or hiring any drivers, and similarly, eBay and Alibaba created the world’s biggest retail channels without buying any inventory.

Companies that successfully “cross the chasm” to digital effectiveness often discover they need to provide for free what they used to charge for, sell as a subscription what used to be “a la carte,” monetize via advertising things that used to be paid for in other ways, and re-think how they derive revenue from the value that they create. Those that do so flexibly can often find that the adoption of a digital strategy offers more scale, revenue and profit than the legacy approach, but it takes experimentation, an assumption of risk, and — to be blunt — some failure along the way. Whereas this approach is widely accepted among startups, it is one that the management and investors in mature companies generally fear. Yet, this is the gauntlet they must run in order to achieve digital success.

This article originally appeared on the Howard Tiersky blog

Image Credits: FreePik

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Components of a Good Digital Strategy

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Components of a Good Digital Strategy

GUEST POST from Howard Tiersky

If I told you I had a document in my hand that was the new digital strategy for your company, what would you expect it to contain?

A list of projects? A “mission” statement? A technology vision? A competitive market analysis? A financial forecast?

One of the problems with the label “digital strategy” is that there’s not a common understanding of what it actually means or should contain. Naturally, the needs vary by company, but what if I said I had one menu for a Chinese restaurant and one for an Italian restaurant? Of course, there would be some differences, but there would also be some similarities: both would contain a list of foods you can order and their prices.

While we know what to expect to see in a menu, what should we expect to find in a digital strategy?

We develop digital strategies for companies from media to retail to financial services, and we use a ten-chapter outline for our digital strategy documents. Starting from this point, we often customize, and I’d encourage you to do that as well. Consider this a cheat-sheet that, if it works for your organization, can form the basis for your digital strategy.

Chapter One: Our Current Situation

Describe your company’s current situation vis a vis digital. Outline the digital touchpoints that currently exist, how recently they have been “remodeled,” how you measure their performance and what feedback you receive from both customers and stakeholders. Neither exaggerate the problems nor sweep them under the rug. The idea is to present a clear, objective, and fact-based description of the current state. Ideally, cite specific stats such as conversion, ad revenue, usability testing results or other data-driven “evidence” for your position. Also, describe any obvious gaps in your digital landscape. If you have clarity on the reasons for some of the problems or gaps (technical issues, business process issues, etc.), then state these as well.

Chapter Two: The Customer and Competitive Landscape

Describe your customer segments succinctly. What is understood about their current needs? How have they changed? Ideally, cite evidence from market research. In particular, how have their channel/touchpoint preference and expectations been evolving? What does that suggest about what your brand needs to do to stay relevant? If you have data to support it, describe how the current digital ecosystem for your company impacts your customer’s perception, behavior and purchase decisions (either positively or negatively — you may have examples of both). Now take a look at competitors. Your customers are evaluating you against your competitive set; what are they offering regarding a digital experience? How does it differ from what your brand is doing? What success metrics do you have available to indicate how successful competitive efforts are? (remember not everything your competitor is doing differently is necessarily successful). Remember to look not just at your traditional large competitors, but also at smaller competitors who may not be taking a significant market share (yet) but who might be more nimble or creative. Look also at “comparative” brands. If you are a hotel, what are airlines doing? What is Uber or Amazon doing? And how are their latest innovations both creating new expectations your customers have for you and also highlighting opportunities for your industry to do something similar?

Chapter Three: Trends

Chapters One and Two describe the current state. Chapter Three is your space to forecast the future. What trends are likely to impact your customer and your industry over the next few years? I suggest focusing on a 2-3 year time horizon. In today’s fast-moving world trying to forecast farther than that is too inaccurate. What kind of trends should you focus on? Certainly focus on digital trends, such as the shift to mobile or other digital technologies that may be relevant to your industry (wearables, VR, AR, chatbots, etc.). But also focus on trends that may not be inherently digital but which may have a significant impact in your industry over the next few years. These could be growth in China, the different priorities of the millennial generation, etc.

Chapter Four: Our Assets

Nothing in the outline of the first three chapters is inherently good news or bad news — it’s just a journalistic perspective on your brand, your customers, and competitors- where they are today and where they are going. It’s not uncommon for it to be an inventory of all the ways you are behind and that can be a bit of a downer. This chapter is your opportunity to remind the reader of any untapped assets you may have that might be able to help you leap ahead. What kind of asset should you describe? Here are some ideas. Consider which apply in your situation:

  1. Your brand — How is your brand viewed by customers? Even if you are behind the curve in digital, it takes a long time to build a trusted brand. That’s worth a lot, and if you catch up, that brand may be a huge competitive weapon even against companies who seem to be ahead of you today.
  2. Your content — Perhaps you have a backlog of content that is not being fully leveraged. A new digital strategy may enable you to tap value that is currently latent.
  3. Technology — You might have some proprietary technology that, if connected to a stronger digital touchpoint, could enable you to bring capabilities to the market that would be difficult for others to match.
  4. Your people and their skills — Your organization may be uniquely good at something. Perhaps there is a way to leverage that strength. Or you may have specific individuals whose talents aren’t fully leveraged but who could make a major difference if given the opportunity to drive new digital strategies.

Your scale, financial resources, partnership relationships, network of stores, licensed IP, etc. Companies have many other assets, far too many to list here. Try to inventory everything you have to work with and consider which other assets might have a place in developing a strategy that provides sustainable competitive differentiation.

Chapter Five: The Future Customer Journey

Chapter Five is where you describe your vision of the future. You have been setting up the rationale for change in the previous four chapters; this is where you propose your solution. Describe how the customer will interact with your brand differently in the future — what changes will be made to the different touchpoints? How does their journey play out from initial introduction to your brand, through the phases of initial interest and research, through their purchase decisions, experience of your product or service, problem resolution, and future re-purchase? Describe your customer, their situation, and their priorities and tell a compelling story that rings the intuitive bell of the user that this future journey will be both far better for the customer and also lead to better business outcomes for the brand. Support the alignment with customer needs via research data where available. One format for describing the customer journey is a roadmap.

However you describe it, your strategy should align with the three key priorities of a successful digital business.

Chapter Six: Money and Business Model

If you have done a good job in Chapter Five, you now have your reader or listener (if it’s a presentation) thinking, “Sounds great, but how much is this going to cost??” Chapter Six is where you lay out three things — roughly what implementing this strategy will cost, what your projections are for financial return, and how the business model under the new strategy changes, if at all. Clarity around investment and returns is what separates digital strategies that sound good from ones that actually get done. After all, an ambitious digital strategy for a major brand is likely to be a substantial investment. Most of the time those at the CFO and CEO level making investment decisions of hat scale are not doing it because of the inherent “good” of digital, but because they expect a return that justifies the decision. You must help them see your story in the kind of financial language that they use to make all of their other decisions. Be sure to describe not only the total budget but how much you anticipate will be capital vs operating budget and what the cash flow timing looks like. You’ll want someone from your finance department to be involved in modeling this in spreadsheet form.

Chapter Seven: Technology

It’s quite likely that your new strategy will be closely tied to technology. In Chapter Seven describe the technologies that are needed. It’s not essential to describe hardcore “tech” details or reference specific software tools. Rather, the idea here is to describe the key requirements you will have of technology to achieve the strategy.

Chapter Eight: Business Process and Organization

Often a substantial digital transformation will change the way you do business. If so, then no doubt you will need to reconsider various business processes or parts of your organizational structure. Chapter Eight should describe the types of changes that may be needed.

Chapter Nine: Timeline and Challenges

In Chapter Nine, you lay out a detailed quarter by quarter plan of how you intend to proceed. In addition, be upfront about the assumptions, risks and anticipated challenges your strategy will face. It may seem like it would be better to keep quiet about possible risks, but actually, the opposite is true for two reasons. First, it adds credibility to your plan and process to show you’re realistic about the possible roadblocks and are already thinking about how to avoid them. And second, when you get funded, and your project actually does encounter challenges it won’t be a shock to your stakeholders. Most major transformations encounter a lot of twists and turns, and you need not only the initial support but the sustained support of your key stakeholders. Having a frank conversation about the things that could go wrong in advance is planting the seeds for their support when you need it in the future.

Chapter Ten: The Cost of Failure

The last chapter addresses the question of what if we don’t do it? Or what if we do it half-heartedly? Digital transformation projects inevitably involve risks. And really wouldn’t we all rather avoid risk? This last chapter is the time to describe the risks of not proceeding or not fully proceeding. How will this impact sales? How will it impact your brand? If you just delay a year or two and then proceed, how will that impact your ability to catch up to the market?

So there you are: ten chapters of your digital strategy (or at least a starting point). One final suggestion is to make the development of your strategy an inclusive process. These days an effective digital strategy touches every part of an organization, and people can be quite resistant to an outside “digital team” deciding their fate for them. Furthermore, I suggest you create an inclusive process around the finalization of your digital strategy outline before you begin the process of developing the strategy. To the point I began with, there is a risk that when you come back to your CMO or your CEO with “The Digital Strategy” they may be surprised by what is and what isn’t covered. You can use this outline as a starting discussion point to gauge their expectations and jointly agree on what the strategy actually needs to address so that the scope and structure of the strategy meets their expectations and you can focus on the substance. Good luck strategizing and as always let us know if we can be of any help!

This article originally appeared on the Howard Tiersky blog

Image Credits: FreePik

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The Most Successful Innovation Approach is …

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The Most Successful Innovation Approach

GUEST POST from Howard Tiersky

There are three primary approaches to innovation. In our work with large brands focused on digital transformation, we have observed that the most effective of the three is also the least common. Which approach do you use?

Approach #1: The Artist

“I create for myself. I hope my customers like it.”

Georgia O’Keeffe said of art, “Whether you succeed or not is irrelevant; there is no such thing. Making your unknown known is the important thing.” And this philosophy of creating from one’s own mind and heart, of bringing to the world your unique and individual expression, is a powerful driving force for many innovators. Steve Jobs was the penultimate artist innovator. When asked what type of market research he had conducted in creating the Macintosh he replied, “Did Alexander Graham Bell do any market research before he invented the phone?” He also said, “Some people say, ‘Give customers what they want.’ But that’s not my approach. Our job is to figure out what they’re going to want before they do. I think Henry Ford once said, ‘If I’d have asked customers what they wanted, they would have told me they wanted a faster horse!’ People don’t know what they want until you show it to them. That’s why I never rely on market research. Our task is to read things that are not yet on the page. Great art resonates with people–it inspires and moves them to action. This is true of Georgia O’Keeffe’s paintings as well as Steve Jobs’ creations. They create from their instinct and their passion, and their work has been wildly successful commercially. However, there is a key challenge with the artist approach to innovation: Are you Steve Jobs? How many Georgia O’Keeffe’s do you have on your team? Because for every Jobs or O’Keeffe, there are thousands of others who have followed their gut to create an endless myriad of technology projects that have not resonated. For each Georgia O’Keeffe, there are vast numbers of aspiring painters following their hearts but who never achieve commercial success. Now if what O’Keeffe says is really true for you–if success does not matter if the mere expression of your idea in the real world is sufficient to satisfy you– then this may be an effective path. But if you are seeking commercial success, the reality is that only a small percentage of the personal expressions of people’s hearts will reach out to and resonate with a mass audience. So unless you are an innovator with a proven track record of doing that, or willing to take that chance, this is a highly unpredictable approach to innovation. We often see companies designing products, be they physical or digital, by getting a small team in a room with a whiteboard. Or there is an executive who has a vision he has imagined for a product that he wants his team to bring to life. This is, in fact, probably the most common method of corporate innovation, and it very often fails.

Approach #2 The Researcher

“Give people what they want. What you want is unimportant.” – Pete Waterman, record producer
Commercial success in innovation comes from creating something new that resonates with the customer– that solves a problem for the customer or empowers them in a new and exciting way, like the Post-it or Uber. So the research approach to innovation involves simply asking the customer what they want and giving it to them. The classic focus group is an example of this; however, there are several problems with this approach to innovation. First, Steve Jobs was right: Customers often don’t know what they want. They may tell you what they think they want, but in fact, their real-world behavior after a product is launched is often inconsistent with what they have told you in a focus group. There is probably no better example of this than the disastrous launch of New Coke in 1985. Prior to the launch, Coca-Cola spent $4 Million (in 1985 dollars!) on conducting over 190,000 taste tests of different formulations to find the one that customers would like best. Based on that research they changed the taste of Coke and then spent considerably more on a massive launch of New Coke, only to be followed by massive public backlash and the eventual need to restore “Classic” Coke. How could research lead us so disastrously astray? We see all the time in our own work that when customers are asked for the features, they would like to see in an app or for ideas for new products, the results are often weak. Also, when customers passionately identify innovations they would like to see, it’s common to discover that those same customers don’t actually use the innovations they requested. In fact, customers like to be artists too, and they like to share their personal vision of what a product could be. That doesn’t mean, though, that they are Steve Jobs any more than you are, and they often have poor insight into their own future behaviors. This “researcher” approach in some form is the second most common approach we see taken to innovation projects. It can be successful to some degree for incremental changes. For example, if many users of your product are clamoring for a different sorting option in a reporting application, then sure, listening to their feedback and integrating those priorities is probably a path to incremental improvement. But that is quite different from wholesale innovation. In that area, asking users what they want rarely proves to be a useful activity.

Approach #3: The Research-Ideation Cycle

The most successful approach that we see used is what we call the research-ideation cycle, an approach that blends science and art. Customer research is core to this approach. However, the goal of the customer research is not to ask customers what they want, but rather to understand their current experiences, goals, and points of pain or inefficiencies. Uber effectively understood that the moment when a customer arrives at their destination and has to wait to get out of the car to deal with paying the driver was a small point of pain, that once removed, creates a far better experience. In the research-ideation cycle, we first create a detailed picture of the different customer segments and use techniques like ethnography to truly understand how they are accomplishing the tasks we are targeting with our innovation, whether it’s vacation planning, home decorating or rebuilding a diesel engine. Once that research is complete we can access our inner artists, but not for the purpose of self-expression, but with the goal of problem solving. In fact, creativity is usually at its greatest when a problem is brought into clear focus via detailed customer research and anecdotes. Ideation cycles involve inventing a number of solutions to the customer problems identified through the initial research. Once those ideas are generated, they can be tested with customers. But unlike the New Coke research, the goal of the testing is not to ask users what they think. It’s nice to ask because it’s polite, but it’s not the primary data source. Rather, we observe users using prototypes of our ideated solutions and use that data to gauge the effectiveness of our solutions in solving the previously identified problems. Very often we have partial success in initial rounds and use the insights from the research to further ideate ways to improve the solution. Then the cycle goes back to research, and so on between ideation and research until we have a solution that appears market-worthy. Even then typically there is a small market test or beta test, with research to understand the actual usage patterns, and the iteration process continues.

“You’re not supposed to give people what they want, you’re supposed to give them what they don’t know that they want yet.” -Diana Vreeland, Editor-in-chief of Vogue
When we understand the problems and challenges users face, creative teams can invent novel solutions that the users may never have dreamed of or suggested directly.

This article originally appeared on the Howard Tiersky blog

Image Credits: Dall-E

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Creating More Digital Value for Customers

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Creating more value for customers is how highly successful digital companies like Uber, Amazon, Netflix, and Apple got to where they are today.

Creating More Digital Value for Customers

GUEST POST from Howard Tiersky

So how do you improve your customer value? Think of customer value as an equation — how much do you give me in exchange for how much I give you? There’s the “cost” side of the equation for the customer, and there’s the “benefits” side. Great customer value engineering innovates on both sides of that equation.

Cost

An important part of the “cost” is the money the consumer spends, but it is also measured in time, convenience and level of effort. If the customer has to work harder to extract the value from your offering, this is a perceived increase in cost.

Let’s take the example of Netflix. They have always been aggressive about providing access to large volumes of content for an accessible monthly charge. Their current lowest price is $6.99 per month, less than the cost of a single movie ticket. Netflix also works hard to use personalization to lower the effort it takes to find and play content on any device.

Here are four key ways to reduce the “cost” side of your value proposition. Consider which of these might apply to your offering.

1. Charge less. This is the most obvious step. The danger is that competing on price alone can be a dangerous game and take both you and your competitors into a place where it can be difficult to make money or run a sustainable business. However, we see many of the most successful companies in the digital space not necessarily “discounting” their offer but finding ways to re-engineer their entire cost model via innovative approaches that leverage this new digital world in order to offer more for less. For example, Amazon is able to undercut the prices of many brick and mortar retailers because they don’t have the cost of retail stores and because of the large scale of their operation. Google is able to offer email for free because they have devised a way to make money via advertising rather than charging for the service.

2. Change your payment model. Blockbuster rented videos on a “per video” basis. Netflix’s first innovation was not streaming or House of Cards but rather the subscription model for video “rental.” Similarly, Amazon created a major innovation with Amazon Prime when they offered subscription 2-day shipping services. But subscription is not the only way to change the game. Disaggregation is another. Apple changed the music industry by focusing on selling individual tracks of music rather than entire albums. They then applied this same approach to episodic TV episodes which were previously only available to be purchased in “full season” DVD sets.

3. Reduce the customer’s effort. Uber takes the effort out of getting around. They extremely simplified the process of ordering a car service, paying, talking to the driver about where you are headed and managing your expense records. These may be small things, but they add up. Just like we are willing to pay more for milk at 7-11 to avoid the grocery store if your offering is less effort for the user it reduces the overall “cost.”

4. Reduce unexpected costs. Look for opportunities to save a user money that they would be paying to someone else. If a user can drive less or avoid shipping costs, you have saved them money, and they may not mind giving you a little more. An old-school example, AAA sells roadside assistance but included with this subscription are discounts to most hotels and some other travel-related services. These discounts cost AAA nothing and add value to the membership.

Benefits

Now that we’ve removed some of the “cost,” how can we augment the benefits? Here are five techniques to increase the benefits side of the equation.

1. Offer more stuff. HBO recently partnered with Sesame Workshop to add over 20 seasons of Sesame Street to their on-demand offering. Dropbox continues to increase the storage they will give you for your $9.99 monthly subscription. Consider cost-effective ways to simply give the user more of what they are coming to you for.

2. Add features. Google office massively increased the value of their “PowerPoint” competitor by enabling cloud-based real-time collaboration. Consider how to expand the features your product offers to add value.

3. Increase shareability. The more people that can utilize a single purchase, the more value it has. Apple created their family plan so that apps purchased from their App store can be used by anyone in the family. Amazon created a way to “lend” a Kindle book to a friend.

4. Increase durability or longevity. Extending the realistic lifespan of your product extends the value. For example demonstrating the “future-proofing” you have included in your solution so that it will be forward-compatible with the “next generation” of technology adds value to your offer.

5. Add flexibility. If customers can use your product in different ways, apply it to more “needs” in their life, this increases the value. You may have subscribed to Dropbox to share files with clients, but Dropbox has added and promotes features also to make it a great place to sync and store your personal photos and act as a “backup” in case of hard drive failure. Apple constantly markets the diverse ways their products can be used. iPhones are also cameras, calculators, GPS devices, musical instruments, word processors, currency converters and presentation tools. Every additional way your iPhone can be used potentially replaces another product you would have to buy and adds value.

Which of these opportunities to enhance the value equation for your customer best fit your business? For those that don’t seem to “fit,” try a thought experiment for each and consider if it did fit, how would you apply it? You might discover a breakthrough that would transform your whole value proposition.

This article originally appeared on the Howard Tiersky blog

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Is Your Organization Digital Transformation Ready?

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Is Your Organization Digital Transformation Ready?

GUEST POST from Howard Tiersky

Our team at FROM has worked with dozens of global brands helping advise their leaders about digital transformation. Across all that experience we’ve seen the things that cause companies to struggle to achieve successful transformation and those who set themselves up for success.

We recently assembled our most experienced consultants to distill down the ten key factors that influence a company’s achievement at driving successful digital transformation. You don’t necessarily have to be a perfect 10 in every one of these to be successful, but the more of them you score highly on, the greater your odds. The fewer, the greater the risk.

As we are wrapping up 2024, we are considering where each of our clients score in these areas and what steps we can help them take to move towards optimizing them further.

So, drum roll please; these are the ten factors that are indicators of likely success at digital transformation:

1. Leadership Prioritization: If an organization does not feel that its leader is truly behind digital transformation, getting teams aligned will be a challenge. Transformation often requires risk, and the organization needs to know that its leaders support exploring game-changing ideas.

2. Digital Vision: Success does not happen by accident. Although a vision can evolve over time, companies that succeed in major transformations always start with a clear picture of where they want to go.

3. Iterative Development Process: Many studies have shown that iterative development processes based on Agile frameworks are the methodology used by almost every single successful digital enterprise. Agile approaches get short-term releases into production so that teams can learn from customer feedback and real-world usage and then iterate the product vision based on those learnings.

This process of rapid iteration between design/development and customer usage is the cornerstone of all successful digital products.

4. Flexible Platforms: You can have the best vision and business model, but if you can’t build solutions rapidly and bring them to market, you cannot compete in a fast-changing world. Companies who are trying to innovate and be “digital” but who’s transactional and delivery/service capabilities are tied to inflexible legacy systems are innovating with a 300-pound anchor around their neck.

5. APIs and Ecosystem: Crowdsourcing, open innovation, and extended partner ecosystems are the foundation of most digital business models. Digital businesses that allow others to build on top of their platforms grow much faster than those that don’t. Salesforce, Amazon, Facebook, Apple and Major League Baseball all expose massive amounts of data and functionality through publicly available APIs and have large numbers of companies and individual entrepreneurs extending and adding additional value to their offerings.

6. Customer Insight & Metrics: Success comes from driving desired customer behaviors – sales, loyalty, self-service, referrals, etc. Teams that are successful at conceiving products or marketing programs that drive desired behaviors do so because they have insight into their customers: their desires, their fears, and their unmet needs.

7. Culture of Innovation: The best way to have a good idea is to have a lot of ideas. Companies with a consistent track record of innovation don’t do it by having a few geniuses who have all the ideas. Everyone in your organization has a different perspective on the customer, your supply chain and your business process and everyone has different life experiences that may serve as points of inspiration for the next big idea. Companies that succeed at digital transformation engage the entire enterprise to generate and evaluate ideas, resulting in higher quality ideas as well as increased ownership across the organization.

8. Experimentation: The world is changing fast. What worked yesterday may not work tomorrow. Companies that are successful don’t get there by always being right; they do it by trying a lot of things, measuring results and seeing what works. Ideas more often fail than succeed, but that’s fine as long as you have a process for identifying the winners. By contrast, many companies that struggle with innovation and transformation reward success and punish failure. Teams who are driven to avoid failure are by definition is driven to avoid experimentation. No experimentation, no success.

9. Customer Data and Personalization: We live in the age of “big data.” Many of the best opportunities in the digital space come as a result of gathering detailed data about each customer and personalizing their experience based on that data. Customers who do this have decreased cost of sales and increased loyalty.

10. Readiness to Invent New Business Models around Digital: Digital isn’t just about new ways of doing things, in most cases, it up-ends existing business models and cost structures. Netflix delivers unlimited videos for $20 a month. Skype lets you talk to anyone in the world for one cent per minute or less. Companies who are overly concerned about sticking to their existing business model tend to miss the biggest opportunities they have to serve their customers in ways that compete in the digital world.

How did you score? We’d love to know and let us know if we can be of help in your efforts at successful digital transformation.

This article originally appeared on the Howard Tiersky blog

Image Credits: Unsplash

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