BAI Beacon 2018 Manish Grover

Building The Connected Customer Journeys of the Future

It was a privilege to speak at the BAI Beacon conference in Orlando a few weeks ago. The topic of the day was digital (of course) and what banks should be doing to improve customer experience and make operations more efficient.

My session was on “creating connected customer journeys of the future” – based on my book Connected! I felt that even as we all examine the more immediate need to launch new digital capabilities such as mobile, analytics & AI, there had to be a longer term view of what the overall landscape of customer engagement looks like. So in this session tailored for banking I linked the need for these immediate capabilities to that future vision – how can we build a customer engagement powerhouse to by looking at our customers as people, instead of just account holders? How can banks be the center point of customer interactions, orchestrating instead of just providing the money rails?

Given the significant presence of community banks and credit unions, this need was even more prominent. The trust and strong customer relationships were front and center, but the roadmap to enhance those, and to maintain key business metrics almost always came down to technology upgrade imperatives. Technology drives everything today so it wasn’t a surprise. But I didn’t want to make this vision dependent on large technology investments.

So, here’s how we (the audience and I) analyzed this important topic.

  1. First we looked at all the top priorities facing us today and so much in the vogue – all of the new digital stuff we need to do such as analytics, AI, mobile etc. For the lack of a better term I called it the “inside-out” plan.
  2. Then we looked at what “outside-in” is and it turns out that’s the top down strategy making – looking at product portfolio evolution, branch network optimization, customer satisfaction, distribution etc.
  3. But something was missing. We realized that both of these views did not cater to the tremendous disruption we are seeing in the marketplace today. Could both these views help counter the expanding ambitions of new entrants into the banking sector, and changing customer preferences that go beyond a better mousetrap?
  4. Turns out there is a key ingredient that needs to be added in to make this work – connected customer journeys. There’s a big difference in mindset between traditional and new businesses (or born online companies). The difference is that the new entrants we are worried about don’t have a mindset of core domain competency. E.g. define Amazon’s business, or Google’s, or Facebook’s. And that’s forcing everyone to re-examine their own models, e.g PayPal, Apple, WalMart, Uber, Marriott etc.
  5. So, to get out of the trap of domain competency, we needed to focus on what’s important – the customer and what they want, not how we want to serve them. It follows that our product and service portfolio must expand, and the most optimal way for a traditional business (e.g. banking) to expand its product portfolio that maps to the customers is not to become a new business but to become a networked organization – complementing it’s portfolio with those of other companies. In short, we needed to think about building the right ecosystem.
  6. Then, we looked at what it might take to do this. For example, we saw that we did not have an underlying connecting thread that integrates customer interactions across industries that are enabled by the bank but not orchestrated by the bank – financial advice, retail, restaurants, hotels, recreational activities and so on. This business ecosystem structure led us to focus on the purpose of our business – to improve our customers’ financial well being and make life easier for them – rather than getting trapped in the narrow identity defined by our products. We discussed a few examples of how this is being done slowly but surely in banking. We also saw that big banks with deep pockets are not the only ones doing the innovative stuff. And we looked at the analogy of how ecosystems have evolved from small stores to superstores to online conglomerates and now towards a network of businesses.
  7. Finally with this ecosystem structure and examples in mind, we put a new lens of connected customer journeys on the roadmap of building digital capabilities. For example, what should be in a mobile app for the bank, or what additional considerations must a core system upgrade look at, and how can the conversation of branch network optimization be given a new perspective. And while we were at it, I could not resist a primer on blockchain/DLT which is of course what I do now. As we went through the primer, the concept of an ecosystem operator surfaced which is – surprise – the bank!

It is unlikely that this ecosystem or connected customer journeys based structure will take center-stage in day to day business operations in the short term. But I would like to think it provided a very useful model to evaluate and shape investment strategies, partnership discussions, and execution roadmaps for the medium to long term. More importantly, I hope it helped augment in a tangible way the concept of what it takes to be a customer centric business, and the associated slogans that go with it. Last but not the least, thanks to BAI for seeding the beginnings of some great friendships with emerging leaders who will define what 2.0 looks like!

PS:

  1. Refer to the Customer Interaction Index to see the difference between businesses that have a sticky relationship versus that don’t.
  2. You can download the summary eBook here to review all of the 5 building blocks including 3-Tier loyalty and CX focused org design

 

The Failure of Plenti And The Return to the Stone Ages for Loyalty

Plenti loyalty rewards

The coalition loyalty rewards program Plenti has wrapped up operations as of July 2018. Plenti was a cross-industry loyalty network where customers could earn points and spend at multiple places. Partners included American Express (creator), Macy’s, Netflix, Hulu, Exxon, RiteAid, Chilli’s, Enterprise, Winn Dixie and others.

Why did such an exciting proposition fail? Was Plenti a bad idea or were the issues more tactical? What does it mean for cross-industry loyalty programs?

Here’s my humble take:

1. Giving up on Plenti was a blow for customer engagement

Through Plenti the partnering brands had this amazing shot at becoming a company of the future. But it is now just a familiar story of missed opportunities for both consumers and brands. With Plenti each company could begin a new journey to becoming customer centric. They could create ultimate customer engagement by expanding the customer journeys they examined and addressed beyond their own corporate silos. Because of its cross-industry nature, Plenti would have given purpose and a larger box to guide analytics and AI based customer experiences. The relationship with customers could have been driven by context like never before. The Plenti platform could have become a customer’s platform and not the sponsors’ marketing vehicle. The issues of privacy violations could have been a thing of the past for those customers who willingly participated.

But sticking to traditional metrics of success measurement and execution did the program in. Instead of advancing the standards of customer engagement, the sponsors now have to go back to the traditional method of buying customer behavior and loyalty. We are back to a failing loyalty model of the stone age because it provides immediate “quantification of effort”. Together brands could have acted like a conglomerate such as Amazon without being one in this new digital, connected world.

2. The failure of Plenti was tactical

Even as the Plenti participants chose to withdraw, we can see airlines expanding their programs to be cross industry, Uber and Airbnb expanding to cover expanding customer journeys, and big retailers such as Amazon and Walmart morphing their original identities to cover new offerings through Plenti like loyalty and subscription programs.

The failures therefore are not a strategic market indication but were rather tactical in my view. As a Plenti customer, I felt that Plenti was a little clunky. I never easily knew where I was with my points and what my redemption options were, the customer experience model was very big company driven – instead of simply sending me texts and emails they just kept getting lost in privacy and consent issues, redeeming points needed a pin which was a pain to reset, and so on.

Short term rewards were excellent and it was a delightful experience when the cashiers announced them. But I had to rely on the store to tell me how much I had. Yes, I could have been more active with my online account but they could have also sent it by email or text and made it easier? In addition, the spending was cross-industry but the rewards were still pretty traditional. Overall, the CX layer of the program – especially cross-industry – should have been more deliberate and obvious.

3. The move to experiential & aspirational loyalty was slow

Overall the program was slow in driving customers from being points focused to being experiences and aspiration driven. That evolution would have made customers consciously look forward to using Plenti in new ways rather than the POS discount expectation that every other loyalty program sets.

The Plenti partners did create some nice innovations. I remember fitness related discounts at RiteAid that engaged customers with a broader brand messaging focused on long term goals. But for the most part, the best practices of the top brands of the world were not able to come to Plenti. If you have worked in a large organization and tried to bridge functional or product boundaries, that should not come as a surprise to you. The simplest way to put it is: we did ourselves in.

To be fair, most loyalty program don’t do experiences and aspirations today. A reasonable analogy of what an aspiration based loyalty program looks like is the airlines loyalty programs where people engage with a goal to save miles & points towards a family vacation. Another examples is when you get exclusive access to an upcoming concert, or priority reservations at a popular restaurant. These are things that “money can’t buy” to borrow from Mastercard’s awesome campaign.

Plenti was the perfect vehicle to create amazing experiences and aspiration based rewards because it was such a broad coalition – hotels, gas, grocery, etc. But it probably became hard. Balancing short term goals of each brand getting its share of increased spending was not easy. In addition, coming together to think in terms of “customer first across industry boundaries” is not in our business training DNA. So the transition to this 3 tiered loyalty model did not happen in time.

4. The “new Plenti” might be more open and ecosystem driven

The fact that Plenti got wrapped up in their own centrally managed coalition model & brand was not their fault but perhaps it did not allow them to scale quicker. Instead of focusing on on-boarding partners to Plenti, they could have become a white labeled platform allowing any company to join, brand their own program and explore coalitions of their own.

For example, Target & Starbucks could have created a joint program called RedGreen. Or Walgreens, Cigna and YMCA could have created a custom program for themselves. Other companies may have chosen to migrate their grossly complicated and expensive-to-run programs on to this platform. What’s more, such a platform can put customers in charge of selecting and customizing their own rewards across the entire ecosystem!

Technology is at a point today where this is easily possible. Especially with Distributed Ledger Technology (DLT) these coalitions are an excellent candidate because they provide high efficiency with all the benefits plus much more.  The trick is to think in terms of becoming a conglomerate by leveraging those around you.

So there you have it – my armchair analysis of this problem of Plenti. I’m sure it must have been a massively complex and difficult program to operate – and extremely painful to end for those close to it. So I do apologize for my simplistic treatment. Let me know what you think about Plenti and what the future has in store for us.

 

Efficient Commerce is NOT Omni Channel Customer Engagement

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Omni Channel customer engagement has been a hot topic for the past several years. But despite all the buzz the real status of Omni Channel has been lagging at best. The question to ask is: Are organizations themselves integrated enough to be capable of initiating and delivering Omni Channel customer engagement initiatives?

Instead of looking at third party reports and statistics, we only need to look back at our own experience. As a customer, ask yourself these questions:

  • How many times has a retailer, bank or insurer followed up with me with the full context of my relationship with them?
  • How many times do I receive advice on what not to buy, and how to achieve what I’m trying to using their product?
  • Once I buy, how often do they positively reinforce my choice?
  • Are the thick paper catalogs I receive at home aligned with my what I’ve done or want to do, or are they just better designed coupons? Do I receive relevant coupons or offers by email?
  • Why doesn’t the contact center rep or the store associate know what I’ve browsed online?
  • How is it that everyone seems to be blind to my other identities as a person – athlete, social worker, dad, mom, business person, organic food buff, fashion pro, etc.?

Why have not even the basics of Omni Channel customer engagement been met?  Lets look at some reasons first and then examine a simple approach to achieving this important objective.

Mistaking Omni Channel engagement for analytics and promotions

A lot of what we read about digital technology – mobile, IOT, social, etc. – is centered around trying to reach customers at the right moment. Whether its location based alerts or smart signage, these are single channel promotional innovations disguised as digital engagement tools. Using a digital medium such as smart signage in the store doesn’t make it Omni Channel. Moreover, these initiatives don’t create long term customer engagement. All they try to do is target and sell.

In addition, privacy concerns arise from his approach. This was amply demonstrated by Target’s gaffe, the recent Facebook fiasco, the general mistrust of Google, nervousness about Amazon’s Alexa – in general spooking customers out by trying to know too much about them without engaging them in that conversation.

These are NOT examples of an Omni Channel strategy gone bad. Instead what these stories demonstrate is that Omni Channel engagement is lacking. These issues arise from trying to improve the uplift rates of campaigns through analytics and business logic gone awry.

Focusing on commerce, not engagement

Commerce is different from engagement. Features such as order online and pick up from store, mobile payment, retargeting, shopping cart campaigns etc. are all about commerce and conversion, not Omni Channel customer engagement. Taking a user transaction and providing better options to complete it are commerce enablers, not an Omni Channel customer engagement strategy. To move beyond the faceless commodity war that we’ve got used to fighting, it is important to differentiate between commerce enablers and customer engagement. What we need in addition to commerce competitiveness is to engage the customer so we create a relationship beyond the transaction. Commerce is often the last step.

We seem to be missing the entire run up to the commerce transaction, and also the run up to the next one. Think about it.

Focusing on digital features instead of supporting the journey

Digital transformation is closely linked with digital innovation. Survey after survey is reporting how organizations are faring in leveraging digital features. Charts are laid out with adoption and maturity statistics of an entire slew of innovative features. However, there are very few reports that map out a customer journey alongside how the features are integrated to support that journey. Moreover, doing even that would be supporting a commerce journey, and not really engaging the customers to bring them into the realm of commerce. We still rely on advertisements, coupons and promotions to bring customers in, and then try to provide a great commerce experience.

Fine…but how to focus on Omni-Channel Customer Engagement?

So commerce and customer engagement are 2 different sides of the coin. But how should we get started then on creating long term customer engagement and converting customers to be brand advocates? Here’s the approach:

  1. First, given the explosion of content, and the fact that the power of information asymmetry has weakened considerably, we need to think of customer journeys from the perspective of customer partnership. This means that customers journeys cannot just be thought of in terms of the traditional awareness-research-decision-purchase-support cycle. At all stages customers are looking for reinforcement and education, not just a one way sales dialog. As early as possible we need to anchor ourselves in the minds of our customers as someone who understands why customers are looking to transact, and then can help customers make the right decision. More than 50% of the customers would be glad if someone helped with the available options and would prefer to buy from the person / website who creates this relationship with them (other factors like price etc. being suitable of course).  This is also crucial because it helps on three critical fronts. First, it helps customers go through a phase of self selection improving retention and customer service costs. Second, it results in creating a platform that yields distinct customer segments allowing competition not on price and promotions, but on value (both physical or emotional). And finally, it results in a conscious evolution of products and offerings aligned with this positioning. This is a strategic decision because it defines all the marketing, operations and technology decisions. The self-service calculators, product how-to’s, customer reviews and other mechanisms on  many consumer websites are meant to solve this very problem by engaging the customer and creating stronger affinity to buy. These efforts would have greater success if they continued to keep the focus on the customer instead of jumping straight to sales. The content marketing revolution is enhancing this model tremendously.
  2. Often, the sum of parts is greater than the individual parts. A bank is more profitable when customers subscribe to multiple products. Similarly a retailer makes more profit when the shopping cart is more distributed. The customer engagement strategy must bring together products in a complimentary fashion, instead of clamoring for attention in isolation. Summer attires, back to school supplies, recipes and financial planning are some common ways for retailers and financial services to achieve this herculean task. Such an approach keeps the focus on the customer, instead of having to rely heavily on product wise outbound promotions with a focus on product features.
  3. Customers have requirements that are beyond what we are selling. These needs are often met by many different companies. Connecting these brands is a great way to embed ourselves in the underlying purpose of the customer, and create multiple entry points. the partnership of Horizon Blue Shield Blue Cross with LifeTime Fitness is a great example of rewarding exercise with reduced insurance premiums. A customer in a grocery supermarket may have been referred by a fitness center to buy organic food. Similarly a banking or mortgage transaction will lead to insurance needs…creating such digital ecosystems allows each business to create entries into other businesses, and vice versa.
  4. The right technology integration is important to enable this customer engagement platform. An enterprise is like a car. Many different parts come together in an interconnected way for the car to be able to run. Similarly, a technology architecture aligned with the customer engagement approach is very intuitively created once the focus is on educating and keeping the customer engagement during the run up to the transaction, the transaction itself and then the run up to the next transaction. The example of Retail Clienteling software solutions being sold by many technology vendors comes to mind. Such a concept allows us to have our channels be aware of each other, score the customer’s need based on constantly evolving qualification criteria, and empower the touch-points with the right analytics. We never have to worry about sending an embarrassing message because instead of a blind approach, we are now working with the customers to send them what they have consciously requested.

In summary, customer engagement must be thought of as a strong driver of, but distinct from commerce and brand awareness. In today’s environment, partnering with customers, educating them, presenting the full combined power of our products, and working with complimentary businesses to create mutual benefits, will go a long way. Finally, other than the right org design, technology is critical to support and drive these initiatives. Marketing technology and core technology choices must never be thought of in terms of products or a single do-it-all platforms. Instead its better to think of the approach in terms of simplifying and bringing together the different parts of the enterprise machinery, and aligning them to the customer engagement charter.

Let me know what you think. And do connect with me on Twitter @manishgrover. Image Credit : Pixabay

More Resources on This Topic

  1. Download the abridged e-version of my book Connected! here to learn more about building ecosystems and customer loyalty.
  2. Read the 5 Principles here – eliminate the need for external reinforcement to create strong customer engagement

 

The Future of Payments – Setting The Right Frame

ecommerce-2140603_640There’s a lot of ongoing debate regarding future of payments which includes a discussion on credit cards, wallets, loyalty, banking, among other related topics.

Meanwhile, we need to ask if the current financial services players have really made progress preparing themselves for the future of payments (or banking for that matter). I believe we still need to work on “setting the right frame” for the changes in the industry. The context is similar to the red herring I pointed to in the case of Amazon and physical retail. The real battle there is not between physical stores and online. It’s about engaging customers by being able to provide a broader set of services that helps create an ecosystem.

Similarly, there are several similar issues with setting the right frame for various issues in payments. Let’s look at a couple of examples:

1. Will Credit & Debit Cards Fade Away?

There is a fierce debate underway about the death of credit cards when we discuss the future of payments. However, to make any headway on this debate we need to change the frame of evaluation from “credit card as plastic” to “credit card as a spending pattern”.

The solution to this innovation problem is to think of how most people with access to banks use credit cards – to earn loyalty points (or airline miles and cash back), get purchase insurance (among many other types of coverage), receive exclusive concierge services, and for the ability to maintain a balance month to month in times of crunch. In fact, almost 44% of US households carry credit card balances, a trend that is catching on in emerging economies such as India & China too.

In addition, the solution to prepaid plastic cards has nothing to do with the plastic itself, but with the fact that it is an instrument (digital or physical) to make cash accessible to scenarios (and customers) that don’t fit a credit card.

However, none of the current innovations even come close to addressing these popular reasons for using credit or prepaid cards. Even if customers had a bank payment or digital wallet facility ubiquitous around the world, most will still use “cards” to make payments – whether they are hidden behind PayPal or Apple Pay.

When friction in customer experience is low, customers will maximize the value they can receive. So innovation in payments need to more actively start addressing these real world use cases to fully realize the future of payments. Most of these problems are not hard to solve with digital alternatives. We just need to set the right frame for the problem so we can look for the right solutions. Consumer behavior and habits will not be easy to change (or predict) – a risk for those with inertia, and an opportunity for innovators.

2. Applying Digital Innovation To Connect Experiences

A similar issue with defining the right problem is with the advances in digital. Banks are busy making changes to their digital properties such as websites and mobile apps. They have been experimenting with chatbots and AI. These provide great value, but we still can’t get a personalized experience either online or in the mail.  Even amazon has been reportedly trying to upsell burial urns to customers for months because of its “You bought that so you’d like this” algorithm. While there are many nice changes and technology innovations (e.g. asking Alexa to make a payment for me), they fall far behind when it comes to emerging customer use cases.

The solution to this innovation issue is to understand the change that digital is bringing. The customers of tomorrow don’t want to look at their banks as just their “financial money holder and transaction facilitator” – or at least the banks shouldn’t consider themselves to be just that. Because that game is over. Instead customers want to be able to service multiple needs with one account including retail shopping, travel, services etc. Banks have all the right capabilities – bill pay, card-linked offers, co-branded cards, PFM, branches, retirement services, and so on. But if they can’t bring them together, then Amazon Cash might gladly pick up the slack, especially when it’s linked to the Amazon Prime Store Card, and is now going to offer white labeled checking accounts too.

How to Set The Right Frame

The future of payments will not be determined by the mode of payment alone or where it is held. It will be driven by the broader ecosystem enabling the connected customer experience. We just need to think in terms of how connected customers will behave in a connected world. And we need to start building those supporting ecosystems.

In short, instead of building a “digital strategy”, we should build a “strategy for a digital world”. Download the principles in Connected! to see how to think in terms of cross-industry customer journeys and loyalty models.

 

Moving Your Artificial Intelligence Strategy Forward

The artificial intelligence strategy buzz is everywhere. But now we need to move beyond rule based personalization and predictive analytics based recommendations. That kind of AI has been going on for 20 years if not more. Calling every analytics based project AI using a lot of jargon is definitely fashionable. But it also adversely affects the maturity of your artificial intelligence strategy.

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Our Artificial intelligence strategy should be about traditional statistical approaches plus much more. That “much more” comes from creating conditions that allow your system to learn from data on its own. This learning includes making decisions based on information about both good and bad outcomes. For example, your system monitors commerce data and notes that a purchase is a good thing to have – “a win”. It also figures out that this “win” is positively influenced by offering promotions. And it then figures out when to offer someone a promotion that results in a purchase – a win. And it keeps updating its strategy based on “wins” and “losses”.

In short the ability of your system – not you manually – to figure this out, and learn by itself is already the current frontier in artificial intelligence strategy.  We can sometimes help move this process quicker through “supervised learning”. And our goal should be to constantly expand the boundaries of what’s possible.

So here are 3 tips that I hope will help you advance your artificial intelligence strategy:

1. Always be feeding

Not all good outcomes are actually good – especially outcomes that are limited by channel or product. For example, in the previous paragraph I noted that a purchase on the website or through a chatbot is a “win”. What if I told you that this specific type of customer has an overall negative lifetime value unless other conditions are also satisfied? In addition, what if the product that the customer is browsing is not a good fit for them? In that case even if a sale is good for us in the short term, should we continue to push that product to the customer?

Thinking about the big picture helps you improve your artificial intelligence strategy by constantly feeding updated definitions of what good outcomes are. It can also help integrate the pockets of AI that mushroom everywhere. As this field evolves, narrow applications are natural to implement – such as an NLP based chatbot for customer service. However, the incentives in the artificial intelligence strategy roadmap should be aligned to the goals of constant “expansion of context”. It’s like feeding insights into a central superpower, however menacing that may sound.

2. Always be rewarding

Your artificial intelligence strategy will depend on how well you provide the notion of rewards to your algorithms. After all, to decide what to do, the algorithm must know what happened the last time it did something. And that means that the rewards and penalties should be easy to come by.

Contrast this with how we implemented analytics in the past – we ran regressions, figured out what would influence an outcome, and baked those into rules for our processes to follow. And then we repeated the process often. But now you must build your data and technology strategy around the artificial intelligence strategy. How would you transmit those rewards and penalties to your algorithms?  For example, automatically re-balancing a wealth portfolio based on market triggers is good, but we must also let the AI algorithm know whether this was a “win” or “loss”. That way it can learn and improve. Otherwise it’s just old wine in a new bottle.

3. Always be connecting

As I have outlined in my book “Connected! How #platforms of today will become apps of tomorrow“, the customer experience spectrum is way bigger than our own products and channels. Every company today must be connected to others that serve the same customers. For example, we should think of feeding our algorithms with data – with customer consent of course – about the customer’s overall identity, intent and interactions. This data can come from interaction in retail, fitness, travel etc. And we should be building two way connections between companies to help customers make better decisions.

If we don’t think of connecting with partners to enable cross-industry customer journeys, our artificial intelligence strategy will only partially succeed. We cannot be building jazzy gizmos and expect to survive when competitors (especially the new entrants) are creating customer ecosystems and expanding their product offerings. In fact most innovations today bring together customer interactions across industries. Customers receive tremendous value from these cross-industry customer journeys. We should become better partners to customers too.

In summary

AI is an evolving field but the business landscape is changing at an even faster pace. Your artificial intelligence strategy should look to get beyond its own buzz and complexity. I hope these 3 simple tips provided some perspective so you can give your artificial intelligence strategy a boost. The first step is to not lose sight of defining the right customer experiences and journeys in an increasingly connected world. This definition of purpose and outcomes will automatically help you get ahead of the quest for data as well.

PS:

  1. Image by Geralt. Also I apologize in advance to AI experts for my simplistic treatment of this topic but some good old grounding was due.
  2. Please download the principles of how to define cross-industry customer experiences and personas here, or just get them for free in your inbox.