COMPETING ON CUSTOMER JOURNEYS
The explosion of digital technologies over the
past decade has created “empowered” consumers so expert in their use of tools
and information that they can call the shots, hunting down what they want when
they want it and getting it delivered to their doorsteps at a rock-bottom
price. In response, retailers and service providers have scrambled to develop
big data and analytics capabilities in order to understand their customers and
wrest back control. For much of this time, companies have been reacting to
customers, trying to anticipate their next moves and position themselves in
shoppers’ paths as they navigate the decision journey from consideration to
purchase. Now, leveraging emerging technologies,
processes, and organizational structures, companies are restoring the balance
of power and creating new value for brands and buyers alike. Central to this
shift is a fresh way of thinking: Rather than merely reacting to the journeys
that consumers themselves devise, companies are shaping their paths, leading
rather than following. Marketers are increasingly managing journeys as they
would any product. Journeys are thus becoming central to the customer’s
experience of a brand—and as important as the products themselves in providing
competitive advantage.
Consider how one company, Oakland-based
Sungevity, competes on its ability to shape the journey. At first glance,
Sungevity looks like a typical residential solar panel provider. But closer
inspection reveals that the company’s business is to manage the end-to-end
process of sales and custom installation, coordinating the work of an ecosystem
of companies that supply, finance, install, and service the panels. Sungevity’s
“product” is a seamless, personalized digital customer journey, based on
innovative management of data about the solar potential of each home or
business. Sungevity makes the journey so compelling that once customers
encounter it, many never even consider competitors.
One of us (David) experienced the Sungevity
journey firsthand. The process began when he received a mailing with the
message “Open this to find out how much the Edelman family can save on energy costs
with solar panels.” The letter within contained a unique URL that led to a
Google Earth image of David’s house with solar panels superimposed on the roof.
The next click led to a page with custom calculations of energy savings,
developed from Sungevity’s estimates of the family’s energy use, the roof
angle, the presence of nearby trees, and the energy-generation potential of the
23 panels the company expected the roof to hold.
Another click connected David through his
desktop to a live sales rep looking at the same pages David was. The rep
expertly answered his questions and instantly sent him links to videos that
explained the installation process and the economics of leasing versus buying.
Two days later, Sungevity e‑mailed David with the names and numbers of nearby
homeowners who used its system and had agreed to serve as references. After
checking these references, David returned to Sungevity’s site, where a single
click connected him to a rep who knew precisely where he was on the journey and
had a tailored lease ready for him. The rep e‑mailed it and walked David
through it, and then David e‑signed. When he next visited the website, the
landing page had changed to track the progress of the permitting and
installation, with fresh alerts arriving as the process proceeded. Now, as a
Sungevity customer, David receives regular reports on his panels’ energy
generation and the resulting savings, along with tips on ways to conserve
energy, based on his household’s characteristics.
Starting with its initial outreach and
continuing to the installation and ongoing management of David’s panels,
Sungevity customized and automated each step of the journey, making it so
simple—and so compelling—for him to move from one step to the next that he
never actively considered alternative providers. In essence, the company
reconfigured the classic model of the consumer decision journey, immediately
paring the consideration set to one brand, streamlining the evaluation phase,
and delivering David directly into a “loyalty loop,” where he remains in a
monogamous and open-ended engagement with the firm. Sungevity’s journey
strategy is working. Sales have doubled in the past year to more than
$65 million, exceeding growth targets and making Sungevity the fastest-growing
player in the residential solar business.
Getting
Proactive
McKinsey’s marketing and sales practice has
spent more than six years studying consumers’ decision journeys. The term broadly describes how people move from
initially considering a product or service to purchasing it and then bonding
with the brand. More narrowly, the term can refer to the sequence of
interactions consumers have before they achieve a certain aim—for instance, transferring
cable service to a new address, or even discovering and buying the right
mascara. Many firms have become competent at understanding the journeys their
customers take and optimizing their experience with individual touchpoints
along the way. The more sophisticated companies have redesigned their
operations and organizations to support integrated journeys. Still, firms have
largely been reactive, improving the efficiency of existing journeys or
identifying and fixing pain points in them.
We’re now seeing a significant shift in
strategy, from primarily reactive to aggressively proactive. Across retail,
banking, travel, home services, and other industries, companies are designing
and refining journeys to attract shoppers and keep them, creating customized
experiences so finely tuned that once consumers get on the path, they are
irresistibly and permanently engaged. Unlike the coercive strategies companies
used a decade ago to lock in customers (think cellular service contracts),
cutting-edge journeys succeed because they create new value for customers:
Customers stay because they benefit from the journey itself.
Through our experience advising more than 50
companies on journey architecture, infrastructure, and organizational design;
our deep engagement with dozens of chief digital officers and more than 100
digital-business leaders worldwide; and our research involving more than 200
companies on best practices for building digital capabilities, we have seen
this shift unfold. And although it is still early, we believe that an ability
to shape customer journeys will become a decisive source of competitive
advantage.
Four
Key Capabilities
Companies building the most effective journeys
master four interconnected capabilities: automation, proactive personalization,
contextual interaction, and journey innovation. Each of these makes journeys
“stickier”—more likely to draw in and permanently capture customers. And
although the capabilities all rely on sophisticated IT (see the sidebar “New
Journey Technologies”), they depend equally on creative design thinking and
novel managerial approaches, as we’ll explore later.
Automation involves the digitization and
streamlining of steps in the journey that were formerly done manually. Consider
the analog process of depositing a check, which used to require a trip to the
bank or ATM. With digital automation, you simply photograph the check with your
smartphone and deposit it via an app. Similarly, researching, buying, and
arranging delivery of, say, a new TV can now be a one-stop digital process. By
allowing consumers to execute formerly complex journey processes quickly and
easily, automation creates the essential foundation for sticky journeys. This
may seem self-evident, but companies have only recently started to build robust
automation platforms expressly designed to enhance journeys. And consumers can
readily see who does it well. Superior automation, while highly technical, is
something of an art, turning complex back-end operations into simple, engaging,
increasingly app-based front-end experiences.
Consider how Sonos, the intelligent connected
music system, automates setup. The process used to involve threading wires
throughout the house, hooking up speakers to a computer, and creating separate
online accounts with music providers. Sonos streamlines setup with wireless
speakers (just press a button to connect them) and an app that adds
music-streaming sources with a few taps and allows users to select music,
control volume, and choose what plays in which room—all from a mobile device.
Proactive
personalization.
Building on the automation capability,
companies should take information gleaned either from past interactions with a customer
or from existing sources and use it to instantaneously customize the shopper’s
experience. Amazon’s recommendation engine and intelligent reordering algorithm
(it knows what printer ink you need) are familiar examples. But remembering
customer preferences is only the beginning; the personalization capability
extends to optimizing the next steps in a customer’s journey. At the moment a
customer engages (for example, by responding to a message or launching an app),
the firm must analyze the customer’s behavior and tailor its next interaction
accordingly. Companies such as Pega and ClickFox (a firm in which McKinsey has
an ownership stake) offer applications that track customers across many
channels, blending data from multiple sources (such as transaction and browsing
histories, customer service interactions, and product usage) to create a single
view of what customers are doing and what happens as a result. This allows
real-time insights about their behavior—in effect, isolating moments when the
company can influence the journey—and permits customized messaging or
functionality (for example, immediately putting a valued traveler on an upgrade
list). The retailer Kenneth Cole reconfigures elements on its website according
to a visitor’s interaction with the site over time: Some people see more
product reviews, while others see more images, videos, or special offers. The
company’s algorithm constantly learns which content and configuration work best
for each visitor and renders the site accordingly, in real time.
New Journey Technologies
Underpinning the rise of competitive
journeys is the emergence of new programming, data-access, and user-interface
technologies that enable unprecedented tracking of customer behavior and
personalized interaction. Attribution tools, for example, can reveal which
channels most strongly influence consumers’ decisions and lead to a purchase.
Other technologies can discern when and why customers jump across channels and
devices as they shop; the programs can then deliver personalized messaging that
follows shoppers accordingly. Interface design tools allow a mobile app or a
website to change its function or appearance, depending on where a customer is
in his or her journey.
Three core technology developments in
particular have redefined how companies connect with their customers:
Continuous
connection capability.
Smart, connected products create a
permanently open link between company and customer, providing companies with a
continuous stream of data about how individuals use the products and thereby
helping firms customize and upgrade them—for example, by fixing problems or
adding capabilities.
New
journey analysis and management tools.
ClickFox and similar systems track
customer behavior across online and off-line touchpoints, helping companies to
map and optimize journeys. Platforms such as Cloudera allow companies to
analyze unstructured data, while machine learning software such as R can mine
huge amounts of customer data and predict behaviors. Pega and similar tools
enable consistent, personalized communication across channels. And Adobe and
other companies offer tools to manage and execute more complex workflows.
Widespread
adoption of APIs.
Application programming interfaces
permit disparate applications, including those from different companies, to
communicate. APIs have been around for a while, but companies are only now
starting to embrace them to build integrated cross-company customer journeys.
For example, APIs allow Delta Air Lines’ travel management app to seamlessly connect
its customers with Uber.
L’Oréal’s
Makeup Genius app takes these capabilities a step further, allowing customers
to try on makeup virtually and delivering ever-more-personalized real-time
responses. The app photographs a customer’s face, analyzes more than 60
characteristics, and then displays images showing how various products and
shade mixes achieve different looks. Customers can select a look they like and
instantly order the right products online or pick them up in a store. As the
app tracks how the customer uses it and what she buys, it learns her
preferences, makes inferences based on similar customers’ choices, and tailors
its responses. L’Oréal has created an enjoyable experience that quickly and
seamlessly leads the customer along the path from consideration to purchase
and, as the degree of personalization increases, into the loyalty loop. With
14 million users already, the app has become a critical asset both as a branded
channel for engaging with customers and as a fire hose of incoming information
on how customers engage.
L’Oréal App Keeps Customers
Coming Back—and Buying
The Makeup Genius app, which allows
users to virtually test makeup, has been downloaded 14 million times since its
launch in 2014 and has driven more than 250 million virtual product trials. By
making experimenting, sharing, and purchasing seamless and fun, the company is
rolling out a highly sticky journey that builds loyalty to L’Oréal products.
1. Leah’s friend texts her a link to
L’Oréal’s cool new app, Makeup Genius. She downloads it to her tablet, and her
screen becomes a mirror reflecting her face.
2. Leah allows the app to scan her
image.
3. The app asks if she’d like to “try
on” individual products or a complete look. She opts for the latter, and the
app instantly displays a gallery of photos showing made-up models.
4. She taps on each look to see it
overlaid on her own face. Another tap shows the products needed to achieve it.
5. When she decides to buy, buttons
offer her a choice of retailers. She selects Amazon and places an order. When
her order arrives and she reopens the app, it has proactively reconfigured to
give her instructions on applying the makeup.
6. A few days later, the app alerts
Leah to a new style she might like, basing its recommendation on her
preferences and those of similar users. She considers a picture of herself with
that look. The app tells her what additional products she needs to achieve it.
She taps to buy.
7. Aware of her preferences and
previous makeup purchases, the app sends periodic recommendations for other
looks. Leah continues to try out new looks and buy products. Appreciating how
simple and useful the app is, Leah becomes a loyal customer and advocate,
sending app links to a growing group of friends who share favorite looks and
advice.
Contextual
interaction.
Another key capability involves using
knowledge about where a customer is in a journey physically (entering a hotel)
or virtually (reading product reviews) to draw him forward into the next
interactions the company wants him to pursue. This may mean changing the look
of a screen that follows a key step, or serving up a relevant message triggered
by the customer’s current context. For example, an airline app may display your
boarding pass as you enter the airport, or a retail site may tell you the
status of your recent order the moment you land on the home page.
More-sophisticated versions enable a series of
interactions that further shape and strengthen the journey experience. Starwood
Hotels, for example, is rolling out an app that texts a guest with her room
number as she enters the hotel, checks her in with a thumbprint scan on her
smartphone, and, as she approaches her room, turns her phone into a virtual key
that opens the door. The app then sends well-timed and personalized
recommendations for entertainment and dining.
Journey
innovation.
Innovation, the last of the four required
capabilities, occurs through ongoing experimentation and active analysis of
customer needs, technologies, and services in order to spot opportunities to
extend the relationship with the customer. Ultimately, the goal is to identify
new sources of value for both the company and consumers.
Best practitioners design journey software to
enable open-ended testing. They continually do A/B testing to compare
alternative versions of message copy and interface design to see which works
better. And they prototype new services and analyze the results, aiming not
just to improve the existing journey but to expand it, adding useful steps or
features.
A journey innovation may be as simple as
Starwood’s introducing a prompt for ordering room service after a guest uses a
key, remembering previous orders and using those as the initial options. Or it
may be more sophisticated, expanding a journey by integrating multiple services
into a single straight-through customer experience. Delta Air Lines’ mobile
app, for example, has become a travel management tool for almost every aspect
of an airplane trip, from booking and boarding to reviewing in-flight
entertainment to ordering an Uber car upon landing. Kraft has expanded its
recipe app to become a pantry management tool, generating a shopping list that
seamlessly connects with the grocery delivery service Peapod. Key to these
expanded journeys is often their integration with other service providers.
Because this increases the value of the journey, carefully handing customers
off to another firm can actually enhance the journey’s stickiness.
Capabilities
in Practice
Let’s return to Sungevity to see how it
combines these four capabilities to create a valuable and evolving journey.
From initial customer contact to installation
and beyond, Sungevity has automated most steps of the journey, including
collecting and integrating customer data, calculating energy use, and creating
personalized visualizations of the panels on a roof. Crucial here is sophisticated
use of APIs (application interfaces) to pull data from other providers, such as
Google Earth and the real estate service Trulia, to assemble a picture of the
customer. Data analysis allowed proactive personalization that targeted David
with customized information such as costs, timeline, and anticipated breakeven
and savings, all available across multiple channels, including e‑mail,
Sungevity’s site, and customer reps. Contextual interaction capabilities
allowed Sungevity to serve the right content in the right channel for each of
David’s interactions—for example, using APIs to track the panel installation by
the company’s local contractor and then regularly updating David’s landing page
with the latest status.
Sungevity is continuing to pursue journey innovation,
using what it knows about its customers to extend the journey into energy
storage and conservation services. Not long ago, such activity might have been
a generic upsell, blanketing a customer segment with pitches for a new
offering. Today the outreach can be to a single individual, and the strategy
not simply to sell another product but to invite customers to take the next
step on their personalized journeys. With granular data on each household’s
energy use and habits, Sungevity can advise people one-on-one about managing
their energy consumption, and it can recommend a tailored package of products
and services to help them reduce their dependence on the grid and reap savings.
To this end, the firm will soon offer batteries from the German supplier
Sonnenbatterie to store surplus electricity generated by the solar panels. It
is also creating customer dashboards that track energy production and use.
Ultimately, the firm plans to integrate its services with home-management
networks that can automate energy conservation (adjusting lights and heating,
for example) according to decision rules that Sungevity develops with each
customer. Another project is to create conservation-oriented customer
communities.
The
Rise of the Journey Product Manager
Technology smarts are necessary but not
sufficient for designing competitive, continuously improving journeys;
companies also need new organizational structures and types of management. We
have worked with many “digital native” firms that have had the luxury of building
organizations optimized from the outset for creating effective journeys—and
their experience offers lessons for traditional firms. We have found that
traditional companies are most successful when they focus on selected
high-value journeys and create dedicated teams to support them, drawing from
across the firm’s functions.
While we’ve seen many different organizational
models for product-managing journeys (and an array of titles for the executives
involved), they generally have a similar structure.
Overseeing all of a firm’s interactions with
customers is someone in the role of chief experience officer, a relatively new
position in the C-suite. Chief digital officers are also starting to have this
top-level responsibility. Typically reporting to this executive is a
journey-focused strategist who helps guide decisions on which journey
investments and customer segments to focus on; he or she prioritizes current
journeys for digital development and spots opportunities for new ones.
Sitting at the center of the action for a
given journey is new type of leader, the “journey product manager.” People in
this role (more commonly called “solution managers,” “experience managers,” or
“segment managers”) are the journey’s economic and creative stewards. They have
ultimate accountability for its business performance, managing it as they would
any product. And like other product managers, they are judged according to how
well they meet an array of product-specific measures, including journey ROI
(see the sidebar “Holding Journey Managers Accountable”).
Guided by the firm’s business priorities (for
example, growing market share, increasing revenue, and improving customer
satisfaction), they explore ways to expand and optimize the journeys they’re
responsible for, increase their stickiness, engage new partners, fend off
competitors, and cut costs, particularly through digitizing manual processes.
More operationally, it’s their job to understand how customers move through the
journey, to spot unusual customer behaviors (such as detouring or abandonment
at a critical touchpoint), and to discern what attracts new customers—or
dissuades them from engaging.
To build successful journeys, these managers
rely on “scrum teams” of specialists from across IT, analytics, operations,
marketing, and other functions. The teams are execution-oriented, fast, and
agile, constantly testing and iterating improvements. Collectively, the team
members work to understand customers’ wants and needs at each step of the
journey and make taking the next step worthwhile. They ask questions such as
“What types of functionality, look and feel, and message will propel customers
to the next step?” and “How does the timing of prompts affect customers’
responses?” Pursuing answers to questions like these, teams enter into rounds
of development, piloting iterative digital-journey prototypes, analyzing
operational and customer-use data, and then measuring the impact on customer
behavior produced by each tweak to the journey.
Holding Journey Managers Accountable
Just as conventional product management
depends on close tracking of carefully chosen metrics, “product managing” a
journey requires tracking both familiar and specialized metrics that gauge
progress and performance. In addition to providing an array of information
about journey investments and ROI, the right metrics permit accountability.
Journey managers must be able to answer
financial questions: What can we afford to invest in journey development? What
new sales or revenue do we need to generate? What is the variable cost per
customer or action that we can afford for each journey? They also need to
assess customer satisfaction with the entire journey and with interactions at
specific touchpoints.
Because individual touchpoints may be
handled by different functions or partners (for example, an appliance sale
could involve an affiliate store agent, a call-center sales rep, credit
underwriters, and installers), the performance of these players must be
measured and tracked so that they, too, can be held accountable. Other metrics
should track the journey’s ROI by calculating the ongoing costs of delivering
the journey, the revenue and profits it generates, and the impact of continual
innovations to the journey.
One airline we work with measures its
effectiveness in helping customers navigate the journey for rebooking and
resuming travel when a flight is canceled. The airline gathers an abundance of
data about rebooked customers, including the percentage who have downloaded its
mobile app, and of those, the percentage who boarded their new flight without
any live help. It also ascertains the percentage who provided a mobile phone
number or e‑mail address, and of those, the percentage who opened their
notification of a rebooked flight, and of that subgroup, the
percentage who boarded without help. In addition, the airline calculates the
percentage of passengers who boarded the first alternative flight suggested to
them. The team analyzes each of these metrics across tiers of frequent-flier value
and ticket price in order to optimize the costs and revenue associated with
this journey for each customer.
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Nordstrom is one company that has used this
scrum-team approach. To enhance the journey around shopping for sunglasses, for
example, a team set up temporary camp in the retailer’s flagship store and
launched a series of weeklong experiments to perfect a new app. The app was
envisioned to guide customers through the selection process by matching
sunglasses styles with their facial characteristics and preferences. Right in
the store, team members mocked up paper prototypes of the app and studied how
shoppers tapped on them, as if using a live version. Throughout the process,
they asked customers which app features seemed helpful, unnecessary, or
distracting. On the basis of that feedback, the team’s coders built a live
version of the app for customers to test, making real-time adjustments as they
received more input. After a week of tweaking, they released it on tablets to
the store’s sales associates, who use it alongside customers to help them
choose sunglasses.
Typically, journey managers bring scrum teams
together on-site (as Nordstrom did) or in war rooms for design sprints, in
which teams pitch new journey paths and features and then develop, test, and
scale prototypes. Experiments may focus on anything from designing landing
pages and devising live chats with reps to optimizing back-end processes and
improving “experience flow” (how a customer moves from one journey step to
another).
While the best journey product managers work
in this way to continually refine existing journeys, they’re also looking at
the bigger picture, introducing larger-scale innovations that extend the
journey and increase its value and stickiness. Consider, for example, how one
of our clients, a global consumer electronics company, is developing and
marketing a new countertop cooker. The product has programmable compartments
that can be controlled by an app, allowing customers to simultaneously cook
different parts of a meal. This creates opportunities to build an array of
services that help customers get the most from the cooker.
Although the firm had long experience with
product design, as it began adding connectivity to its products, management
realized that it knew relatively little about creating services to enhance
them. Recognizing that it would need a new structure for designing and managing
such services, the company created a global experience-innovation team, led by
a new-business-development executive and supported by a product design
executive. Essentially serving together as chief experience officers for the
new services envisioned, these executives oversee all of the firm’s
connected-product initiatives and supervise the journey product managers (or
“innovation leaders”) in charge of these programs.
The cooker’s journey product manager was
tasked with creating various related services (help with meal planning,
ingredient purchasing, and meal prep) and building the journeys that would
deliver them. With his scrum team of designers, programmers, operations
managers, and marketers, the manager has led the development of a service that
provides recipes through the cooker app, tracks what customers make, and then
personalizes suggestions over time. The team is now developing weekly
meal-planning apps, and it has partnered with food producers to create recipes
and offer discount coupons for key ingredients. Ultimately, the team plans to
support a customer community whose members create and share their own recipes.
To do all this, the team scrutinizes data
flowing from the app: what percentage of customers download it, how many
register, how (and how often) they use it, how cooker use and meal type vary by
geography, and, for those who stop using the app, at what point they defect.
This data informs the team’s tuning of the app’s navigation and prompts, along
with the meal ideas and incentives the firm provides customers to keep them
engaged. Analysts within the broader work group focus on narrow segments of the
user base, typically zooming in on different countries to understand how usage
patterns vary. This tracking extends to the level of the individual, revealing
what recipes a given customer tries, how often she uses the cooker and the app,
and which app features she uses—all of which allows continuing innovation and
personalization of the journey.
The move from selling products to managing a
permanent customer journey has required mastering the four capabilities that
all companies will need to compete: automation (in this case, the ability to
control the cooker from an app); personalization (offering tailored recipes);
contextual interaction (changing the app interface as customers move from
purchasing ingredients to cooking); and journey innovation (adding new recipes,
online purchase capabilities, and community).
In perfecting these capabilities, the firm has
made the continuing customer journey as much a part of the brand as the cooker
itself—and as important a source of value. Leveraging its new journey-focused managerial
structure, the company is now developing service-based journeys for other home
health and household management products.
Thinking about the customer journey as a
product is leading to a major shift in how product investments are determined,
prioritized, funded, and measured. Increasingly, firms will be focusing on how
an investment improves the economics of delivering products and journeys to a
customer segment—and how powerfully it reinforces engagement—rather than just
how it drives sales or reduces costs. Particularly for companies that are
somewhat distant from customer transactions, such as consumer-goods makers and
B2B firms, this requires developing fundamentally new skills and structures for
gathering and analyzing customer data, interacting with customers, and focusing
on the experience design along with product and creative design. Today, winning
brands owe their success not just to the quality and value of what they sell,
but to the superiority of the journeys they create.
https://hbr.org/2015/11/competing-on-customer-journeys
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