Key Ingredient for CX Innovation: Love

How can you create value for your customers and your organization? Innovate around your customer experience. Here are some examples of different ways to uncover CX innovation ideas:

Look for opportunities to add value around customer lifecycle events.

  • Sovereign Assurance NZ’s research showed that many new parents don’t have the time to review their life insurance, but after having a new baby, it’s more important than ever to have some life insurance. The company developed a program called “Choose Precious” that offers new parents $10,000 free life insurance up until their baby’s first birthday. New parents just need to register at chooseprecious.co.nz before their baby is six‐months old. The company also rolled out its “Breathing Space” offering. Recognizing that buying a home is a big deal and that it’s difficult to get the attention of home buyers, the company offered them $25,000 free life cover for 90 days to provide interim protection until they have the time to consider their longer term protection needs.

Think about your customer’s journey before and after they interact with you.

  • If a USAA member calls in to change his address, the reps are trained to understand why and deal with bigger issues. For example, if the call is from a soldier who is about to be deployed, then the rep might check to see if the member has thought about items such as a will, power of attorney, and life insurance. The USAA employee might even put a hold on the member’s car insurance, so the soldier doesn’t have to pay for an unused car while he’s deployed.

Identify problems related to how customers use your product, even if they’re not issues with your product.

  • An insight into how people take medication helped Walgreens roll out a system called GlowCaps, which puts a glowing cap on pill bottles. It lights up when the bottle isn’t opened at the right time, then gives an auditory warning, then triggers an automatic phone call to remind the patient. It can also send reports to the patient’s doctors and remind the patient when it’s time to refill.

Use analytics to predict next steps and proactively help customers.

  • Sprint uses a technique called Next Call Prevention. Here’s how it’s described in a 1to1 Blog: “Regardless of why a customer calls the telecom’s contact center, a customer service agent can offer to help with something else that the customer might call about in the near future–based on prompts queued from predictive analytics. If, for instance, someone whose contract is about to expire calls about a billing question, once the issue is resolved the agent could offer to arrange an upgrade to a new handset. This not only delivers a better customer experience, it also reduces costs and potentially increases sales and retention.”

Solicit ideas from employees, especially those who interact with customers.

  • Telus created a platform for internal collaboration and idea exchange called “Habitat Social,” which combines micro-blogging (“Buzz”), blogging, video sharing (“Habitat Video”), personal profile pages, and a virtual world environment. The platform brings together a mix of employee-created content that supports learning efforts, company culture, and employee experience. Within Habitat Social, team members also engage in company-wide conversations about customer issues, share ideas and best practices, and identify ways to delight customers by delivering on the company’s Customers First promise.

Examine how customers actually behave.

  • Supermarket chain Ralphs installed technology called QueVision, which uses infrared cameras to measure foot traffic in its markets. The system tracks body heat  to figure out how many customers are shopping at any given time. This information helps managers cut down on lines by redeploying workers to the cash registers when things get busy. The technology has trimmed the average time it takes to get to the front of the line to roughly 30 seconds from the national average of four minutes.

Look at experiences through the eyes of specific customers.

  • CVS uses a technology called AGNES (developed by the MIT AgeLab) which stands for stands for “Age Gain Now Empathy System.” It’s a jumpsuit that allows the person wearing it to feel what it’s like to be in your mid-70s. Bungee cords anchored to the helmet and hip restrict movement and rotation of the spine, and elastic bands from hip to wrist reduce shoulder mobility. Based on what it learned form AGNES, CVS will be making store design changes such as putting carpeting on the floors in stores to reduce slick-floor slipping and adjusting the height of checkout counters to require less bending and lifting.

No matter what approach you use to spot CX innovation ideas, it’s important that you nurture them along the way. Here are the steps that I recommend you follow to raise the likelihood of success: Who/Want/Love/Fit/Test.

  • CXInnovation3 140bWho: Have a clear picture of the exact type of person you are focusing on with your innovation effort. Without this clarity, you may end up making decision that compromise the ultimate experience. Design personas can be a very useful tool in this stage.
  • Want. The innovation should meet some unmet need, whether the customer knows he or she has it or not. To make sure you’ve found something real, articulate what the customer wants by completing these types of sentences: “I would really like to…”
  • Love. As you develop different options and prototypes, identify specific elements of the experience that you think the target customers will absolutely love. Complete statements like this, “Our customer will love…” You will need to deliver on these elements in order to help drive adoption.
  • Fit. Just because customers want something doesn’t make it a good thing to do. Only move ahead with options that fit with your business. How can you tell? Pick the efforts where you can say “yes” to all of the following questions: 1) Can you deliver it consistently? 2) Does it make financial sense? 3) Can you outperform the competition? 4) Is it consistent with your brand?
  • Test. I can’t urge you enough to prototype as early and as often as possible. This allows you to crystalize your thinking and incorporate feedback along the way. But the key thing to test for is the love. Make sure that your target customers don’t just like what they see, but they love at least parts of it. Keep iterating until you find the love. Sometimes it just takes a few little things.

The bottom line: Make sure there’s love in your CX innovations

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This post is part of the Customer Experience Professionals Association’s Blog Carnival “Celebrating Customer Experience.” It is part of a broader celebration of Customer Experience Day. Check out posts from other bloggers here.

Report: Innovation Equity Quotient

We just published a new Temkin Group report, Innovation Equity Quotient. Here’s the executive summary:

Companies focus on innovating new products and services, but how willing are consumers to accept these offerings? The Innovation Equity Quotient measures the readiness of consumers to try something new from a company. Led by Hershey and Kraft Foods, six consumer packaged goods (CPG) firms came out at the top of the ratings. In some head-to-head comparisons, Google leads technology companies, Coke beats Pepsi, and Walgreen’s beats CVS. We also examined the data across age, income, gender, and ethnic groups. Income levels appear to have the least impact on the Innovation Equity Quotient, but there were considerable gaps in the other areas. Nintendo and Google have the largest age gaps, Revlon and L’Oreal have the largest gender gaps, Apple has the largest income gap, and Nike has the largest ethnicity gap.

Download report for $195

To understand this demand-side component of innovation, we created the Innovation Equity Quotient (IEQ) that gauges consumers’ openness to trying new products and services. IEQ is based on a simple question: “If <COMPANY> announced a new product or service, how likely would you be try it right away?” We asked this question to 5,000 US consumers and calculated IEQ for Forbes 50 most valuable brands. Here’s how they fared:

The report includes data charts that highlight the 25 brands with the largest IEQ gaps across age groups, ethnic groups, gender, and income levels.

Download report for $195

The bottom line: Innovation is more successful when customers want to try new offerings

McDonald’s Showcases Glocal Strategy

If you’ve dined in both the UK and the US, then you don’t need any focus groups to figure out that Brits and Americans have different culinary palettes. So it’s no surprise that a global food company might need a slightly different strategy in each country.

An article called McDonald’s: The World’s Local Restaurant pointed out how McDonald’s business has grown significantly from introducing products tailored to the specific customer tastes in other parts of the world like Little Chorizo Melt in Britain, McItaly burger in Italy, Maharaja Mac in India, McLobster in Canada and an Ebi Filit-O in Japan.

This is similar to what Macy’s found when it tailored its local merchandising as part of its My Macy’s strategy. In Macy’s case, the local changes affected different parts of the US.

These efforts are not isolated, but represent a move to a strategy called Glocalisation. While the term was originally used by Japanese businesses in the 1980s (thanks for the reference Deepak), here’s my spin on a definition:

Tailoring products and merchandising to meet local needs while supporting global brands

Here are some differences between Glocalisation and the typical approach of just translating a global strategy into local markets:

  • Corporate marketing and merchandising groups will need to rethink their efforts. Rather than just setting strict global standards, they will also need to define parameters for local innovation.
  • Local leaders will need to take on more responsibility for innovation, and not just operate in conformance with corporate standards.
  • Innovation will need to be funded at both the global and local levels.

The bottom line: Is your strategy Glocal enough?

Don’t Listen To Customers, Understand Them

There’s an interesting article in BusinessWeek about how innovation requires executives to periodically step back from three things: “decision attitudes,” “users,” and “your assumptions.” I really like this quote from Sir Denys Lasdun, the English architect, saying that the architect’s job is to give a client:

Not what he wants but what he never dreamed that he wanted; and when he gets it, he recognizes it as something he wanted all the time.

My take: In a previous post, I discussed the power of an approach called “deliberation without attention.” The idea is similar; step back and let your mind process information in a different way. It’s particularly valuable technique for complex situations. Executives definitely need to learn when to step back and reassess a situation or a decision.

While stepping back from “decision attitudes” and “your assumptions” makes intuitive sense, the idea of stepping back from “users” may seem to conflict with customer-centric behavior. But it really doesn’t.

Breakthrough innovations often address needs that customers can’t articulate with solutions that customers can’t imagine. So customers feedback can not be used to define the requirements. Does this mean that innovation is devoid of customers? No!

Instead of looking at direct responses to questions, breakthrough innovations often require a different type of customer input: Observation. Companies need to understand the core needs and desires of target customers through ethnographic techniques and through observations about larger trends in society (like the rise in social networking) to extrapolate (and hypothesize) what type of offering may “click” with those customers.

Customer feedback plays a very important role in fine-tuning the offering. Once prototypes of the solutions exist, companies need to observe (not just survey) how target customers use them. Keep in mind that customers’ first reaction to those offerings may not be nearly as important as their feelings after using them for a while.

The bottom line: Breakthrough innovations require understanding customers, not listening to them.

Practicing Continuous Innovation, IDEO Style

Tim Brown, the CEO of design firm IDEO, has a new book called “Change By Design.” It talks about how large organizations can infuse “design thinking” into the company’s DNA. Who can practice design thinking? Everyone. According to Brown

The design thinkers I have described here are not minimalist, esoteric members of an elite priesthood, and they do not wear black turtlenecks. They are creative innovators who can bridge the chasm between thinking and doing because they are passionately committed to the goal of a better life and a better world around them.

One of the examples that Brown uses is Kaiser Permanente. Guided by IDEO’s support, a Kaiser team redesign the nursing staff shift change at hospitals. The internal group followed a design process, including videotaping, brainstorming, role playing, and prototyping. The redesigned shift change process enabled nurses to visit with patients twice as fast and raised satisfaction rates for both nurses and patients.

My take: I agree with Brown’s focus on infusing the elements of design into an organization’s DNA. One of the 6 New Management Imperatives that I’ve defined is: Turn innovation into a continuous process. Innovation shouldn’t be left to a handful of people or focus only on big-bang events.

There’s a strong overlap with these concepts and customer experience as well. A correctly implemented Voice Of The Customer program represents a form of continuous “Design Thinking.”

The bottom line: Either innovate continuously or fall behind consistently.

USAA’s Mobile App Showcases Innovation

For years, there’s been a lot of hype about mobile banking. It turns out, however, that most people are not ready to abandon their branch visits, phone calls, or Web browsing for a mobile window into their bank. But that doesn’t mean that mobile can’t play an important role in banking.

Source: New York Times

USAA introduced an innovative iPhone applicationremote check depositing. Customers that qualify for the service can take pictures of their checks and deposit them into their accounts as if they were handing the paper check over to a teller.

My take: This application makes a ton of sense for USAA, especially since many of its military customers are stationed around the world. Companies can find opportunities like this by following my three steps for customer experience innovation:

  1. Uncover the needs. Many USAA customers do not have an easy way to deposit checks.
  2. Design a disruptive strategy. The mobile app is a great example of a strategy called online infusion.
  3. Evaluate the opportunity. Given USAA’s focus on making it as easy as possible for their customers, this new application makes strategic sense. And the company’s rules for qualifying help keep the risks low. 

The bottom line: Everything starts with customers’ needs.

Recession And Innovation From Wool To Hulu

I just read a very interesting article in the New York Times called Why Bad Times Nurture New Inventions which combines some of my major interests: customer experience, innovation, and managing in the recession. It’s a series of short commentaries by five people:

  • Amar Bhidé, professor of business at Columbia and author of book “The Venturesome Economy.”
  • Scott Reynolds Nelson, history professor at the College of William and Mary and author of the forthcoming “Crash: An Uncommon History of America’s Financial Panics.”
  • Rita Gunther McGrath, professor of management at Columbia University and author of “Discovery Driven Growth: A Breakthrough Process to Reduce Risk and Seize Opportunity.”
  • Don Kelly, patent agent and former chief of staff for the United States Patent and Trademark Office
  • Martin Lindstrom, marketing consultant and author of “Buyology: The Truth and Lies About Why We Buy.”

Here is my take on the key items in the article:

Bhide: “The deck gets reshuffled in a recession as habits are re-examined and patterns of behavior are broken, perhaps to greater degree than when things are humming along at a steady state. And that’s what creates business opportunities.” Bhide discusses Kindles, iPods, and computers and the 1980s.

Nelson: “America’s financial panics have often been the periods of its most interesting commercial and logistical innovations. Plummeting commodity prices combined with new observations about manufacturing or trade often suggest new solutions to old problems.” Nelson discusses wool manufacturers circa 1815, industrial food canners circa 1873, and integrated circuits in the 1970s.

McGrath: “With business as usual off the table in a recession, people become more open to new and efficient ways of doing things. And they’re forced to show more entrepreneurial discipline – you have to expend imagination before spending money.” McGrath discusses recent companies Kiva Systems and Hulu.

Kelly: “Inventors and innovative entrepreneurs should be smiling. That timeworn proverb about “an ill wind that blows no good” truly applies in an economic downturn. No doubt, in garages across the country, innovators are hard at work as opportunity bangs on the doors. Answering the call, however, will require them to step back and take a hard look at the current environment.” Kelly discusses small entrepreneurs.

Lindstrom: “What do Lindt chocolate, the Rubik’s Cube, French perfumes and a pair of Wellies have in common? They’ve all had increased profits during this recession. The number of products getting these results, however, is small and getting smaller by the day. These brands, which may weather the storm, offer some hints for start-up businesses.” Lindstrom describes two concepts: 1) don’t ask consumers what they want; figure out what they need; and 2) practical features give consumers a reason to make a purchase.

The bottom line: It’s time to ask yourself if you’re keeping up with shifting customer needs

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