deep dive customer centricity

Conversations on the Future of Business

Deep Dive Customer CentricityEmbracing the New Paradigm

futureofbusinesssapcom


Customer Centricity

There are more connected devicesthan people on earth

Challenges

Source Cisco

2


The transformation seems to have happened overnight Yet like all market revolutions it was driven not by a single event but through the convergence of long-term trends that reached a dramatic tipping point

Todayrsquos customers are different They exhibit different behaviors different needs different expectations

Customers interact with brands in novel ways They want customized products and personalized service They extend the sales cycle across channels They demand that the companies they do business with respond when they want where they want and how they want They desire to share their values with you and their opinions with other customers They can be your absolute dreammdashor your worst nightmare

What happened A shift in demographics The emer-gence of mobility The power of networks A meteoric rise in expectations

The customer has changed Now itrsquos your turn

It all adds up to a single imperative Embrace the new customer-centric paradigmmdashor step aside as your customers race to competitors

Demographics

Around the world a new generation is coming of age The so-called millennialsmdashthose born in the two de-cades before 2000mdashwill make up the most powerful market force in half a century

At 80 million strong in the United States alone the millennials outstrip the boomers by millions US millennials already spend more than $170 billion a year a number that will only rise with their influence

Don Tapscott Best-Selling Author and Business Consultant on Digital Consumers

3


Millennials are digital natives Theyrsquove never known a world that doesnrsquot run on IT Their lives transition seamlessly between real and virtual And they ex-pect companies to do the samemdashfrom storefront to web front from mobile to social

Mobility

Millennials are relentlessly mobile But so are the rest of your customersmdashincluding those who never used a computer before their 50th birthday

Today there are nearly 68 billion mobile subscrip-tions worldwide Some 15 billion smartphones At least 173 billion consumers on social media

Your customers are now always connected always onmdashand increasingly accustomed to anywhere any-time satisfaction If they donrsquot get it from you they can quickly find it somewhere else If yoursquore not de-signing for mobile yoursquore already losing customers

Networks

Welcome to the Network Economy an era of unprecedented connectivity and interaction New connections and social platforms shift the balance of power from provider to consumer

Social media disrupts the way companies interact with customers and places a new premium on any-time anywhere contact Customer passivity is long past Consumers now actively share their likes and

7 Strategies for Customer Centricity

Focus on high value Understand what your customers want to achieve A bank branch for instance may need fewer tellers but more financial advisors to serve high-value customers

Let customers choose the channel Consumers who shop both online and in stores spend more Make it easy for customers to do business when how and where they want

Embrace mobile Consumers across industries conduct more and more mobile business Mobile customers can cost less in the long run so understand what they want and create incentives for mobile channels

Help customers use your products Home-improvement stores offer do-it-yourself classes and installation services Car dealers let customers know when itrsquos time for a tune-up How can your company take a similar approach

Let customers benefit from loyalty Merchants provide frequent shoppers with perks from discounts to partner promotions to better service Many industries can leverage similar tactics

Make customers your cocreators Engage customers so they feel they have a stake in your brand Open an ongoing dialogue so customers not only offer feedback but actually help you meet their needs

Tailor offerings to individuals Collect customer informationmdashand analyze it for better insights Seventy percent of bank customers would provide more personal data if it drove better service says Ernst amp Young

1

2

3

4

5

6

7

4


dislikes with fellow shoppers across the street and across the globemdashall in an instant

Companies too are increasingly networked re-or-dering the way theyrsquore organized and how they go to market New paradigms in manufacturing distri-bution and transactions mean costs are falling and capabilities emerging Old competitors surge to the lead while new competitors appear overnight

Even machines are networked with machine-to-machine (M2M) connectivity linking 15 billion devices today and 50 billion by 2020 The result is a world that never sleeps with multiplying intelligencemdashand escalating customer demands

Expectations

With greater market force mobility and connectivity customers have ever-higher expectations for service They seek personalized experiences tailored to their unique needs And they expect experiential consistency across every channel and touch point

Todayrsquos customers want to be valued and they want you to share their values They need to feel theyrsquore collaborators in designing your products and meet-ing their own demands When theyrsquore pleased they can become your strongest allies Disappointed they can rapidly damage your brand

ldquoMarketing needs to become a champion for the customer expe-rience across all channelshellipMarketing canrsquot own all the customer experience channels but it can make the experience consistent through counsel rather than direct managementrdquo Jonathan Becher CMO SAP

No longer limited by geography or even time customers know theyrsquore in the driverrsquos seat Fail to respond and theyrsquoll abandon you in an instantmdashto your loss and your competitorrsquos gain

Over half of consumers would consider ending their relationship with a retailer if they are not given tailor-made relevant content and offers

54Source CMO Council

5

Customer Centricity Opportunities

3 out of 4 consumersrely on social networks to guide purchase decisions


Source ODMGroup

6


Therersquos something peculiar about market transformation The same forces that leave behind last weekrsquos losers simultaneously shape the champions of tomorrow For the closed-minded companies that resist change the consequence can be lost customers dwindling profits and shrinking market share For the forward-thinking enterprises that embrace the new paradigm the rewards are greater mindshare wallet share and wealth

Demographics

As the largest demographic since the boomers millennials represent tremendous opportunities for companies to win new business and grow market share The digital natives have the potential to be more engaged and responsive welcoming new in-novations and market entrants Theyrsquore open to new

Mindshare Wallet Share and Wealth

ways of doing businessmdashmodels you could create that your competitors havenrsquot even thought of yet

Mobility

With proliferating mobile technologies you have ac-cess to customers wherever they happen to be You can find new markets

Millennials are 3x as likelyto follow brands rather than a family member on social networks

and extend your reach far beyond what was feasible even a few years ago You can leverage new technol-ogies for first-mover advantage outflanking your competitors before they even know what hit them

Source Brian Solis

7


Be the voice of the market Most employees see no tangible benefit to listening to the market But Marketing should Marketing must be the cultural catalyst to get the company tuned in to the customer

Champion the customer experience Most customerbrand interactions are still fragmented from in-store to website from mobile to social But that last channel social media means customers can broadcast inconsistencies far and wide

Tend the brand Companies no longer control their brand Instead marketers should take a more subtle approach working with internal departments to humanize the brand and with external constituencies to influence brand perception

Capitalize on insights Customer market and social data analytics can give marketers a macro and micro view of the customer in real time Use this unprecedented knowledge to your advantage That means personalized content instant offers on-the-fly account planning and more

Be an integrator and force multiplier Large organizations tend to be siloed by function product and geography Marketing needs to bridge these divides Understand your companyrsquos overall value proposition and communicate that message enterprisewide

Marketingrsquos New Mandate 5 Business Drivers

Networks

Social platforms offer opportunities for engaging customers like never before Companies that use social media to their advantage can recruit countless ambassadors to carry the brand forward They can take the pulse of customer sentiment in real time respond in kind and instantly understand whether new strategies are successful

A more networked organization means you can bet-ter capture customer and market information Share those insights across the enterprise And continually push that knowledge out to customer-facing func-tions M2M will allow your physical assets to do

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Whatrsquos the role of marketing departments in todayrsquos hyper-connected highly competitive marketplace Going forward marketers must to embrace five core responsibilities

Josh Linkner Best-Selling Author and Entrepreneur on Becoming Customer-Centric

Read more about modern consumers and companiesrsquo business models in What Every CEO Should Expect From Their CMO

8


ldquoTwo words define the pathway to customer experience improvement engagement enhancement This can be physical (activating more of their senses) mental (soliciting their ideas and influence) or emotional (providing peace of mind laughter or some other positive feeling) and often a combination of the three Viewed through this lens therersquos no end to what we can dordquo Steve McKee President McKee Wallwork amp Co Author When Growth Stalls and Power Branding

some of that work for you becoming a self-learn-ing infrastructure that can continuously sense and respond

Expectations

Meeting new customer demands across location channel and touch point offers tremendous oppor-tunity to strengthen your brand Companies that grasp market-of-one thinking and crack the code on personalization will be far more effective at delight-ing current customers and attracting new prospects

9


Customer Centricity

Acquiring a new customer is 6x to 7x more expensivethan keeping a current one

Imperatives

$ $ $

$ $ $

Source White House Office of Consumer Affairs

10


A famous hockey player once said ldquoI skate to where the puck is going to be not to where it wasrdquo Customer centricity is all about anticipating where customers are heading tomorrow not where they happen to be today

Customer centricity can give you first-mover advan-tage It can also position you to energize the custom-er experience by delivering products and services that meet customer needsmdashbefore customers are even aware of those desires

But to realize those objectives you need to take proactive transformative steps These are the im-peratives to achieving customer centricity Among other strategies you need to target each customer as a market of one Engage customers as codesign-ers of your products services and brand value And leverage emerging technologies including Big Data mobile and social

Skate to Where the Puck Will Be

Understand Aspirations

As part of the creative process artists sometimes ask ldquoWhat does this piece want to becomerdquo Com-panies can take a valuable lesson from this practice as they engage with customers

What are your customers trying to achieve What are their aspirations Meeting needs today is important but competitors can beat you at that game Under-standing desires tomorrow is much more compel-lingmdashand far more likely to deliver value both to your customer and to your organization

Understanding customer aspirations starts with insights gained through Big Data Fine-grained customer knowledge and predictive analytics can give you powerful tools in understanding and fore-shadowing customer behaviors and needs

But meeting customer aspirations also requires innovation and risk taking What models will sustain your business going forward Can you deliver better customer experience through unique products Personalized service during the sale Additional services after the sale

11

Read more in How to Make Consumers Love Their Banks


Some of your experiments will fail But for any of your bets to pay off yoursquoll need to keep innovating and taking risksmdashwith rapid prototyping and im-plementation so that you can quickly identify what succeeds

Target a Market of One

The concept of one-to-one marketing was established nearly two decades ago when Don Peppers and Martha Rogers released their best-selling One-to-One Future That vision has at last become reality through advances in Big Data and cloud solutions

But now mobile and social technologies are shifting the locus of marketing In the past marketers had the ldquofour Psrdquo product place promotion and price Today thatrsquos no longer sufficient What companies require today are what management guru Don Tapscott calls the ABCDE of Marketing anyplace brand collaboration discovery and experience

Whatrsquos more targeting a market of one goes be-yond mere one-to-one marketing Customers want not just a personalized channel but also a person-alized product and a personalized experience That requires continual feedback loops to ensure yoursquore capturing customer sentiments and using them to drive your value proposition

Industry Focus Banking for the Love of CustomersFor some industries the customer cen-tricity tenets are a natural fit For others they might not seem so obvious Banks for example tend to lack the emotional connection with consumers that drives trust and loyalty So how can they fight back against powerful new competitors like PayPal and Google The same way organizations in any industry can by focusing on customer experience

Too many banks are run for bankers with a focus on processing transactions and containing risk To consumers a bank is little more than a place for storing and transferring money

Now Internet-only banks mobile pay-ment services and nonbank transaction providers like Google Wallet and PayPal are eating into banksrsquo core business But

banks with their mix of branch online mobile and ATM services have a strong foundation for becoming one-stop shopsmdashand more important trusted advisorsmdashfor all financial needs

The way to capitalize on these channels is to optimize the customer experience across touch points But for many indus-tries such customer centricity requires a transformation one that reimagines channels and processes to enable fast response to new market possibilities

Banks like many companies are at a crossroads They know they need to transform to remain competitive And a transformation that makes companies more customer centric offers them the best opportunity to thrive

12


Engage Customers as Codesigners

In the past companies churned out products and customers either bought them or they didnrsquot Organizations that hit on the right product mix suc-ceeded and all things being equal those that didnrsquot failed

But customers are no longer satisfied to be passive recipients of a corporationrsquos conception of what they want Instead they expect to be partners in the of-ferings you bring to market and the value your brand represents

That starts with their ability to broadcast opinions through social mediamdashon a real-time global basis For companies that ignore this reality the conse-quences can be dire For those that embrace it therersquos an opportunity to better engage customers and glean valuable customer insights

Some companies are taking this a step furthermdashlike Starbucks with its My Starbucks Ideamdashcreating their own social platforms to collaborate with customers Such strategies reflect the emergence of the ldquoprosumerrdquomdashconsumers who are engaged to the point of creating content and even intellectual capital in a symbiotic relationship with your brand

Leverage Untapped Technologies

Mobile and social technologies have revolutionized the way consumers interact with their friends and families their governments and societies Those innovations are having the same transformative effects on consumersrsquo connections to brands And as customers rove from channel to channel they leave an invaluable digital trail Companies that gather analyze and act on these omni-channel activities can better understand customer desires and better fulfill their needs

Yet most companies still view customer data from the wrong end of the telescope They track past behaviormdashonly to create yesterdayrsquos customer expe-rience Instead companies must capture emerging customer sentiment to truly understand customer motivations That will enable them to craft a cus-tomer experience thatrsquos unique to the individualmdash and a differentiator in the marketplace

Doing so requires careful investment in technology capabilities The fact is many organizations are overwhelmed with the sheer volume of data avail-able to them To realize the promise of Big Data they need to avail themselves of in-memory databases and state-of-the-art analytics to turn information into actionable insights

Energize Customer Experience

Ultimately the objective is for your organization to provide a unique value proposition to customers that makes your brand and offerings irresistible to them To achieve that goal you need to offer a superior customer experience And you need to do it again and again for every customer across every channel and touch point

Several trends raise the bar on such customer experience First consumer technologies increasingly blur the line between the real and the digital From gaming and video environments like Xbox Kinect to personal fitness devices like Fitbit to Internet-enabled home-management solutions like the Nest line products and services integrate the physical with the virtual at every turn

Whatrsquos more the legions of mobile consumers expect instant gratification from connectivity to content from productivity to products The expanding universe of mobile solutionsmdashfrom productivity apps like Evernote to reality-bending games like Ingress to mobileevent integrators like DoubleDutchmdashdrives higher and higher customer expectations

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The good news is that innovative companies can leverage these technologies to their advantage They can better engage prospects offer personal-ized content and promotions complete frictionless transactions and fine-tune their offerings based on real-time insights Organizations that wield these tools effectively can gain a customer-experience edge

Todayrsquos customers have choice They want what they want when where and how they want it And they flock to the companies that give it to them It is in fact a new paradigm But for those savvy enough to embrace it the rewards will be rich indeed

T-Mobile on Engaging Customers Like Never Before

ldquoThe best companies are always a little bit ahead of their customers You have to simultaneously be in touch with your customer and know them in the present while always trying to understand where theyrsquore going to go in the futurerdquo Bill Foulkes Professor of Business Rhode Island School of Design

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The secret could be its loyal customers But LEGO didnrsquot attract legions of avid fans simply by chance Instead the Danish company has carefully cultivated relationships with each customer type

The company segments customers based on brand affinity At the top of the pyramid are ldquolead usersrdquo who engage with LEGO to the point of helping to create new products Next are ldquoone-to-onesrdquo with whom LEGO maintains an ongoing dialogue Third are a ldquoconnec-tive communityrdquo who spend time on LEGOrsquos collaborative online platform And finally are ldquoactive householdsrdquo that have purchased a LEGO product

Moving up the Pyramid

LEGOrsquos goal is to move customers up the pyr-amid It achieves that by engaging consumers and optimizing their experience in as many ways as possible

For starters the company runs a robust loyalty program both online and in stores in 24 coun-tries that lets customers earn rewards It also encourages the development of LEGO-themed communities There are now more than 50 such groups including the LEGO Club which boasts more than 4 million users

LEGO wasnrsquot always so customer-centric But after suffering a $191 million loss in 2004 the company began to reorganize with greater cus-tomer focus Today all departments that have direct contact with customers are centralized to ensure an optimum customer experience

The company also invested in enterprise soft-ware to support its customer centricity includ-ing SAP ERP SAP CRM and tightly integrated loyalty-management software Such integration is key Companies that closely integrate their applications achieve a 20 percent improve-ment in customer experience according to Bloomberg Businessweek Research Update

Ultimately the technology helps LEGO respond to customer desiresmdashand drive customer loy-alty and value ldquoBy involving consumers in the things they are really passionate about they will become ambassadors for the brandrdquo concludes Conny Kalcher LEGOrsquos vice president of con-sumer experiences ldquoThat is really powerfulrdquo

Read more about LEGOrsquos success in Through Engagement and Interaction The LEGO Group Nurtures Loyalty Among Consumers

LEGO Group must be doing something right The worldrsquos fourth-largest toymaker earned $1 billion on $42 billion in revenues in 2012 Revenues were up 25 percent that year and another 13 percent in the first half of 2013

LEGO Group Building a Bridge to the Customer

15

Learn More bull Conversations on the Future of Business bull Conversations on Customer Centricitybull SAP Center for Business Insight bull SAP Business Innovation Blog Customer Centricity

copy 2014 SAP AG or an SAP affiliate company

All rights reserved No part of this publication may be reproduced or transmitted in any form or for any purpose without the express permission of SAP AG The information contained herein may be changed without prior notice

Some software products marketed by SAP AG and its distributors contain proprietary software components of other software vendors National product specifications may vary

These materials are provided by SAP AG and its affiliated companies (ldquoSAP Grouprdquo) for informational purposes only without representation or warranty of any kind and SAP Group shall not be liable for errors or omissions with respect to the materials The only warranties for SAP Group products and services are those that are set forth in the express warranty statements accompanying such products and services if any Nothing herein should be construed as constituting an additional warranty

SAP and other SAP products and services mentioned herein as well as their respective logos are trademarks or registered trademarks of SAP AG in Germany and other countries Please see httpwwwsapcomcorporate-enlegalcopyrightindexepxtrademark for additional trademark information and notices



Customer Centricity

There are more connected devicesthan people on earth

Challenges

Source Cisco

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Demographics




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Mobility




Networks











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Expectations







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Source ODMGroup

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Demographics




Mobility




Source Brian Solis

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Networks



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Expectations


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Customer Centricity


Imperatives

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Demographics




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Mobility




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Expectations







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Source ODMGroup

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Demographics




Mobility




Source Brian Solis

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Expectations


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Customer Centricity


Imperatives

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Source ODMGroup

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Demographics




Mobility




Source Brian Solis

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Customer Centricity


Imperatives

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Expectations







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Source ODMGroup

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Demographics




Mobility




Source Brian Solis

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Networks



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Expectations


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Customer Centricity


Imperatives

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Source ODMGroup

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Demographics




Mobility




Source Brian Solis

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Networks



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Expectations


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Customer Centricity


Imperatives

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Demographics




Mobility




Source Brian Solis

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Customer Centricity


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Expectations


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Customer Centricity


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Customer Centricity


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deep dive customer centricity

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