Friday 13 September 2013

Caught between a digital David and Goliath

On one hand digital has democratised. It has created a level playing field for small, disruptive start-ups to launch a new business fast, leveraging computing power in the cloud and motivating peer-to-peer armies of willing consumers to create vast scale at a remarkably low cost (see my posts “Customer to Customer and the legend of Kachwachi” or “Outsource your marketing, sales & service to your customers”).

On the other hand, digital has created a vastly uneven playing field, concentrating enormous power into the hands of digital mega-vendors with enormous data stores, insight into consumer behavior and often one-click billing relationships with huge chunks of the population. More and more we see the mega-vendors moving into new industries like Financial Services (via mobile wallet offerings, virtual currencies etc), Computer & Telephony Hardware (phones, tablets, netbooks etc), Media (music, movies & sports), Automotive (driverless cars), Software, Groceries, Gaming, Communications, Healthcare and many more…

The challenge for the average FTSE 250 or Fortune 500 Company (that might have been around for say 20-50 years) is that they are neither a lean, disruptive start-up; nor are they a digital mega-vendor. They are, in effect, caught between David and Goliath.

The majority of businesses in this category certainly have considerable assets (e.g. brands, relationships, physical outlets, contact centres, contracts with customers etc), but they also have a considerable legacy (e.g. brands (?!), physical outlets (?!), contact centres (?!), contracts with customers (?!) etc). In addition, they also have to deal with the significant challenge of remnants of technology, mind-sets, route to market and operating models that were quite simply designed for an analogue age (see my post on “CRM for a digital age”).

The majority of FTSE 100 / Fortune 500 businesses therefore face a challenge; namely, how they identify and leverage the assets they have, whilst at the same time removing (or transforming) their legacy, in order to compete against both David and Goliath at the same time.

Tuesday 21 May 2013

Watson, Connected Everything and what it could mean for Customer Service

I read three thought-provoking articles this week. Firstly, an interview with Cisco’s Padmasree Warrior, published by McKinsey Insights . In the interview, Padmasree Warrior argues that despite 20 years of digital revolution we have only reached around 1% of what could be connected in the world. Over the next 10 years Cisco expect that figure to rise significantly as more and more people, devices and sensors connect.

Secondly, I read Wim Rampen’s latest post “Don’t take the customer decision journey for granted”. As ever, Wim cuts through the hype of terms like “big data” and “customer engagement” and grounds our thinking in a service dominant logic mindset. He argues than rather than throwing more technology at Big Data and assuming that predictive analytics will fix every problem, in fact a greater abundance of data should present us with a greater ability to understand the jobs that customers are trying to do and give us better insight to the barriers they face. In turn this should inform investments that are made to give customers the right information, tools and transparency at each step of their decision journey.

Thirdly, I read today that IBM plan to redeploy Watson for Customer Service (see “Putting Watson to Work” ) by launching the Watson Engagement Advisor that key clients like ANZ Bank, Royal Bank of Canada and Malaysia Telecom will be piloting. This announcement follows hot on the heels of the announcement that Watson would be opened up as a service to developers to build applications around.

Bringing these three streams of thought together could be powerful for customer service. The exponential rise in the number of connected devices over the new few years brings an opportunity to infuse real time data from up and down the value chain into business processes to help customer service make smarter decisions. For example, sensing that parts in the supply chain are delayed, traffic conditions are bad, break pads seem to be showing greater wear than usual after 10,000km... can all help inform decision making, whether that be at a macro level (e.g. issuing a product recall) or at a micro level (pro-actively informing a customer of a delay or simply having all the right information to hand to understand what’s causing the customer’s issue).

The evolution of Watson from Jeopardy winning super-computer to an open, service-based platform could allow customer service organisations to put that smarter decision making into the hands of the customers via whatever device or app they want to use. What I like about the potential for Watson in customer service is that it will start by understanding the job the customer is trying to do (“How can Watson help you today?...”). This has always been the promise of voice self service systems, chat-bots and self service knowledge bases, but none have ever quite had the computing power of Watson to make sense of complex queries and compute vast amounts of structured and unstructured data to find the right answer.

Tuesday 12 March 2013

Digital channel shift vs. digital paradigm shift

I had the pleasure of speaking with Bill Hutchison a couple of weeks ago. Bill is a pioneer in smart cities, working in Canada, Russia and Asia to evangelise the concept of the hyper-connected city and the potential for paradigm-shift thinking that hyper-connectivity presents. Bill chaired the Toronto Waterfront development, one of the largest urban regeneration and connected community projects in the world. One thing he said to me which resonated was that the last 20 years of digital innovation and disruption have simply set the foundation for even greater change to come. One of the opportunities of digital disruption is the potential it offers to think about paradigm shifts.

Many clients I have worked with over the years have approached digital as a channel-shift project - "if we could shift 10% of calls from our call centre to our smartphone app we would save x%", "if we could switch x% of loan applications to online we would save y% and acquire z% more clients". There's nothing necessarily wrong with that approach but the history of new technology adoption is littered with examples of people using a new technology to enable an old process or an old way of working. Putting a loan application online is not necessarily going to change the game or protect against a future industry disruptor.

10 years ago Nike has very little idea who purchased their trainers and how they used them. Consumers made anonymous purchases in sports shops and department stores and rarely bothered to fill in a registration card to tell Nike about themselves, let alone how they used their trainers. Nike could have adopted a channel shift mindset and approach to digital, creating an online portal for people to register their purchases and upload information about their training regimes. They could have done that but they chose a paradigm shift strategy. By embedding software into trainers via Nike+ and building a gamified community where users set their training goals or participate in virtual / physical games of "tag", Nike has transformed the information and insight that it has about it's consumers. At the point of writing a staggering 2,146,741,969 miles have been run by the community and automatically uploaded to Nike.

GiffGaff could have launched an MVNO with a channel shift strategy. Instead they chose a paradigm shift by creating a peer to peer business model where customer word of mouth drives acquisition and members fix over 90% of service requests for other members in the support forum with an average time to fix a problem of under 3 minutes.

Zopa could have followed a channel shift approach and launched an online only business selling loans, but they chose a paradigm shift model by creating a peer to peer lending forum.

Threadless, Zappos, Kickstarter, eBay, ZipCar, Nabbesh (client), Netflix,, Amazon, NowTV (client), CDBaby, Spotify, and many others all could have pursued channel shift strategies in their respective industries... but they didn't.

Tuesday 15 January 2013

CRM for a digital age

Most companies invested in CRM software for the first time between 1996 and 2006. That decade saw the CRM boom and bust. Siebel went public in 1996, signed huge multi-million dollar software license deals, peaked at a 45% market share in 2002 and was acquired by Oracle in 2005. The big ERP vendors all entered the market with varying success, Nortel acquired Clarify for $2.1bn in 1999, (before selling for just $200m 2 years later) and was founded in 1999, winning over 20,000 customers by 2006.

The CRM applications that most companies implemented during that decade of 1996-2006 were predominantly Sales Force Automation solutions and Customer Service /Contact Centre software. Solutions designed to support Industrial Age distribution models of large field sales forces and customer service agents. Many projects failed (analyst estimates range greatly from approximately one to two thirds of projects) and many companies experienced long, painful implementations that rarely achieved the anticipated benefits. As many of the CRM projects were so slow and painful to implement, many companies have retained the solutions that they implemented for far longer than intended and the relics of these systems still power a large part of the customer experience today.

Looking back at the wave of digital change we have seen over the last decade or so, I would pick out 2006 as a tipping point. In 2006 worldwide Internet penetration stood at 15.7% (see Since 2006 it has more than doubled to over 30%. During the last 6 years we have seen enormous changes in technology and communications. We have seen the mass roll-out of broadband and mobile broadband, an explosion of connected, smart hardware devices like the iPhone (2007), the iPad (2010) and the seemingly unstoppable rise of social networks like Facebook (founded in 2004 but hitting 500m users in 2010 and 1bn in 2012), Twitter (founded in 2006) and GooglePlus (founded in 2011).

There is a stark reality here. Most companies invested in CRM for an analogue age, designed to support a predominantly field sales force and contact centre-led distribution model. They invested before worldwide Internet penetration reached critical mass, before any of the digital disruption we see today became main stream and before digital became baked into the distribution model. Hence we now see IT departments in a spin, trying to keep up with increasingly frantic demands from the business and trying to bolt on new applications, services and channels to legacy systems that were simply never designed to be used in the way they are today.

CRM for a digital age has to look different. It cannot be the technology-centric, monolithic disaster that plagued some (but certainly not all) of the previous generation of projects. CRM for a digital age is not any particular software or technology and it will vary greatly from business to business but it is likely to display some of the following characteristics:
  • Designed for Customers and front line customer-facing staff, not just for management
  • Focussed on speed to value and positive internal momentum
  • Designed with a core foundation (e.g. data, processes) but able to embrace change at the front-end of customer interaction (i.e. devices, apps, social networks etc)
  • Delivered in an iterative fashion with constant business involvement
  • Open and integratable in nature (often made up of a collection of services rather than a single package)
  • Cross-functional in nature, busting through internal silos
  • Paid for based on value delivered to the business

The challenge most companies face is one of transition. Shifting not only from legacy CRM technologies, but also from legacy mindsets, procurement models, IT delivery models and of course distribution models. Without question, all of those challenges are difficult, but is it really realistic to continue with a CRM solution designed for an analogue age?

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The Customer Revolution Blog by Laurence Buchanan is licensed under a Creative Commons Attribution 3.0 Unported License.
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