Companies often know where they want to go when it comes to Strategy Development. Companies want to be more agile, quicker to react, and more effective. They want to deliver great customer experience, take advantage of new technologies to cut costs, improve quality and transparency, and build value.
Yet, while most companies are trying to get better, the results tend to fall short. One-off initiatives in separate units do not deliver big enterprise-wide impact. Improvement methods that were adopted almost invariably yield disappointing results.
Senior leaders have a crucial role to take in making things happen. Business Transformation cannot be a siloed effort. A Next-generation Operating Model is essential to break through organizational inertia and trigger step-change improvements.
Understanding the Next-gen Operating Model
Companies need to commit to a Next-gen Operating Model if they want to build value and provide compelling customer experiences at a lower cost.
- Integrated, Organization-wide Operational Improvement Program. This approach is focused on Customer Journeys and distinctive customer experience. The Integrated, Organization-wide Operational Improvement Program is a holistic approach towards how operations can contribute to delivering distinctive customer experience. It cuts across organizational siloes in both customer-facing and end-to-end processes. This approach is a preferred organizing principle. Having multiple independent initiatives within separate organizational groups can deliver incremental gains. However, the overall impact can be underwhelming.
- Holistic Customer Journey. This is an approach that makes use of multiple capabilities instead of individual capabilities to achieve greater impact.
The holistic Customer Journey is achieved when the 5 core capabilities are utilized.
Discovering the 5 Core Capabilities
There are 5 core capabilities essential in unlocking the most value in the shortest possible time. Two of the 5 capabilities are Digitization and Advanced Analytics.
Digitization is the process of using tools and technology to improve journeys. It has the capacity to transform customer-facing journeys by creating the potential for self-service. It has the power to reshape time-consuming transactional and manual tasks that are part of internal journeys more so when multiple systems are involved.
Another core capability worth knowing is Advanced Analytics. This is the autonomous processing of data using sophisticated tools to discover insights and make recommendations. It provides intelligence to improve decision making and enhance journeys when nonlinear thinking is required. This is very useful in claims triage, fraud management, and pricing.
There are 3 other core capabilities that are essentially important in these days of Digital Transformation. These are Intelligent Process Automation, Business Process Outsourcing, and Lean Process Design.
Intelligent Process Automation is an emerging set of new technologies that combine fundamental process redesign with process automation and machine learning. It can replace human effort in processes that involve aggregating data from multiple systems taking a piece of information from a written document and entering it as standardized data input.
Business Process Outsourcing works best for processes that are manual. It uses resources outside the main business to complete specific tasks or functions. Back-office processing of documents and correspondence is an example of BPO.
The Lean process Design is one capability that helps companies streamline processes, eliminate waste, and foster a culture of Continuous Improvement. It is considered a versatile methodology as it can be applied in multiple processes.
Organizations can use these capabilities to achieve the greatest impact. The maximum effect, however, can be achieved when specific implementation guiding principles are followed.
Interested in gaining more understanding of the Next-gen Operating Model within the context of Digital Transformation? You can learn more and download an editable PowerPoint about Digital Transformation: Next-gen Operating Model here on the Flevy documents marketplace.
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Digital-savvy startups are disrupting markets and threatening conventional businesses. They are doing this by utilizing technology to offer new products and services and providing tailored yet uncomplicated experiences for their customers.
Likewise, large traditionally-run firms will have to keep evolving their Customer Experience approaches to secure additional avenues of revenue and to stay competitive. To accomplish this, they will need to develop capabilities to effectively utilize insights on customer preferences and design offerings as per the customers’ preferences.
Many organizations, today, are undertaking Digital Transformation programs to improve their Customer Experiences. However, a majority of these Digital Transformation initiatives fall short of securing their maximum value potential due to focusing only on improving specific touchpoints instead of confronting the entire customer journeys—spanning across several departments and channels.
To make their Customer Experience sustainable and to become Customer-centric Organizations need to clearly transform their ways of doing business, operations, and employee behaviors. It is critical to improve these fundamental support processes before embarking on initiating any Customer Experience optimization initiatives.
Customer Experience optimization facilitates in gaining more satisfied/paying customers, additional value, and better retention rates. Research reveals that the companies that have higher Customer Satisfaction levels can achieve four times growth in value compare to those that rank lower in Customer Satisfaction.
Customer Experience (CX) Approach to Value Creation
The following pragmatic 5-phase approach to Customer Experience Management and Value Creation is of great benefit to organizations aspiring to enrich their Customer Experience, achieve clear-cut differentiation, and capture the most potential value:
- Understand What Customers Value
- Simplify and Streamline Offerings
- Link Customer Value to Operational Drivers
- Focus on Most Important Customer Journeys
- Adopt Continuous Improvement (CI) Thinking
Let’s now delve deeper into the first 3 phases of the approach.
Understand What Customers Value
Ascertaining the key drivers of Customer Satisfaction is the foremost step in improving Customer Experience. A flawed approach—that many companies still employ—at the onset of a Customer Experience optimization initiative is to reduce costs associated with internal processes and exploring customer pain points. This doesn’t assist in maximizing Value Creation.
Customer-centric organizations, on the other hand, devote their time in developing a clear understanding of what really matters to their customers. This helps in deciding where to focus, rationalizing their processes, and creating new experiences for the customers to generate additional value.
Great Customer Experience necessitates much more than just satisfactory interactions. Customer Satisfaction should be mapped along the entire customer journey—spanning multiple functions and channels—as customers use various channels to communicate with companies before making a transaction.
Simplify and Streamline Offerings
Alongside rationalizing the processes, it is equally important to carry out a detailed analysis of the brands, offerings, and price structures is essential to tap value from Customer Experience. After all, even the most pleasing Customer Experience cannot offset an unpredictable or exorbitantly expensive product.
Once these fundamentals are in order, organizations should investigate which interactions and Customer Journeys carry the most significance in a Customer Experience; evaluate how the organization is rated in each journey; identify and focus on the operations that need to be overhauled to improve the overall Customer Experience.
Link Customer Value to Operational Drivers
Technology and customer input provides the stimulus to streamline offerings and Customer Experience. However, the real value comes from linking the Customer Experience to core operational processes. Seeing journeys from the customer perspective aids in focusing on what they need and linking internal processes, structures, and KPIs to customer facilitation.
This necessitates deeper insights on elements that are of most value to the customer across a journey, pinpointing drivers of business costs and revenues, and—most importantly—inculcating the right mindsets across the organization. This detailed evaluation of customer journeys facilitates in determining operational improvements that bear the most positive effect on Customer Experience.
Interested in learning more about the other phases of the approach to managing Customer Experience? You can download an editable PowerPoint on the Customer Experience (CX) Approach to Create Value here on the Flevy documents marketplace.