Tag Archives: customer experience

To save the retail store, think about real customer engagement

It’s human nature. We try to protect what we have even though we know that change is coming. In this post I’ll bring out some real drivers of customer engagement, and provide some tactics to get ahead.

There has been lots of buzz that the store can never die (Amazon is also getting into physical now), and how customer experience must be enhanced instead to make the store a place of enjoyment and social interaction. That’s all very true. However the fact is that if we think of retail as a store, we’ll be in deep trouble. We need to think of deep customer engagement instead, and that starts with knowing who our customers are.

All the analytics so far hasn’t gotten us any closer and I’ll explain why here. You’ll see that the analytics needs to be directed differently.

Plain vanilla eCommerce won’t help either. Because eCommerce itself is changing as the world is connected. The game is not about channels, its about the customers and creating context aware visibility. “20% other customers also bought a tent” was a great model when it came out, but is not the way of the future.

What you need is tcustomer engagement anywhere retail o think beyond the store, about how the store stocks items, how we run promotions, what amazing digital technology we have,  and how the supply chain feeds into the store.

Instead let’s turn the entire paradigm on its head.

Ignore the store, and just think of who our customers are, what they want, and why they want it?

Because thinking of the  store and our catalog is like looking inward. Instead, let’s look from the outside at what our business looks like – from the customer’s eyes.

When we start thinking like that we’ll notice that we don’t really know that much about the customers. What we really need is to think like a “marketplace” from the vantage point of our customers so that we can embark on a customer engagement strategy.

Here’s a supermarket example which will carry well to other scenarios as well:

1. What are customers thinking? Why do they pick up a Lean Cuisine meal?  Why are they buying 3 packs of Tofu when they normally buy one? Why did they pick up both soy and dairy yogurt?

2. Then let’s go back to the drawing board for our business. How can we meet their needs better? We’ll find that they are buying for a party they’re hosting, they are on a diet trying to prepare for that upcoming full marathon, and they have a kid at home with food allergies.

3a. Then let’s bring together all the actors who will make our retail business aka “marketplace” thrive? Perhaps the local fitness center, the local nutritionist,  a local restaurant, and the list will go on depending on what you want your business to be. You must engage customers in context, and tie in the places they go to.

3b. Then we establish a relationship with customers by finding a way to get in touch, and begin to address the core issue of customer engagement. It’s amazing how many retailers have no way to contact their customers?

3c. Finally let’s think of context every time we get in touch. Context means that we toss the catalog aside and begin the communication template with the customer – who are they? What did they buy before? Is there a pattern or anomaly in the latest behavior or transactions? Is there an intelligent guess we can make? Can we know something more about them by asking them? These questions lead to real customer engagement.

Because, capital, size, infrastructure, technology, and presence are not the real constraints. Those who have those things are not engaging customers any better either. But once you begin to think of your business as a customer engagement powerhouse, not a physical store or website, the momentum you generate will provide the solution to the constraints you face for customer engagement, and hence growth & commerce.

Photo credit: oliva732000 / Foter / Creative Commons Attribution 2.0 Generic (CC BY 2.0)

Based on the principals from my book Connected! How Platforms of Today Will Become Apps of Tomorrow. Get the models in your inbox for FREE by signing up.

PayPal, Visa and MasterCard Collaborate – For Now.

In a turn of events that demonstrates how rapidly the financial payments market is evolving, Visa and MasterCard have both entered into separate deals with PayPal. (ref 1 and 2 below)


Image courtesy

It was puzzling. Didn’t PayPal already accept both Visa and MasterCard? Yes it did, but the growth of PayPal (and now Stripe), also posed a very real risk of dis-intermediation of the card networks we both love and hate (depending on if you’re a consumer or merchant). PayPal had been promoting the use of direct bank transfers (ACH) to users by encouraging them to enroll their bank accounts for payments. That meant that while it allowed free payment transfers to friends and family, it also saved on fees when the same source of funds was used to pay merchants.

This rising trend caused a problem for the networks. The solution they came up with was to:

  1. Get PayPal to not encourage users to use bank accounts as source of funds
  2. Allow PayPal access to their mobile payment wallets

PayPal may lose a little margin on its online transactions, but it now has a real chance at speeding up adoption of physical payments, an area where PayPal was clearly lagging behind.

Why did the consumers sign up for direct bank payments when they stand lose their credit card reward points? Its simple – PayPal charged almost a 2.9% fee for payments to friends and family. So it was beneficial to set up a bank account for the payment where PayPal would charge zero fees. With that major hurdle cleared, PayPal was obviously seeing the cheaper payment sources being used for goods and services as well.

PayPal, and now Stripe, Authorize.net and many others, have created a nice position for themselves in the online, small business payments world. It was a pain area that wasn’t addressed by banks and the card networks for a long time (and still isn’t). So it was just a matter of time that their intimacy with the customer had to threaten the underlying, commoditized service provider (the card networks). And if PayPal decides to become a bank (or ties up with a bank like Simple and Moven did), that’ll spell trouble for banks as well.

All said and done, I see this as an agreement born out of convenience, and with a focus on short terms gains and survival. We can expect big changes soon, at least from the networks. But with the rise of Dwolla, PayPal should be on its toes too.

Ref 1: PayPal and Visa ink partnership agreement

Ref 2: PayPal Strikes Deal with MasterCard to Allow Payments in Stores


The Banking API Leapfrog

fishbowl-the API leap for banking - 3883340152_76313f70ef_o

In a recent article on American Banker (Don’t Give Away the Store When Enabling APIs), I brought out three best practices for banks to adopt as they think of leveraging the Fintech and Banking API phenomenon.

Even as Banking API are being touted as a must for banks, the common position of argument is from the perspective of emerging companies and Neobanks who are trying to reach the customer in a world that has apparently just opened up. Banks are widely being positioned as too slow, expensive and unwilling to innovate with the customer in mind. While the API trend for open banking cannot be ignored, I’m summarizing the 3 key points of the American Banker article that highlight a 3-pronged approach:

  • A more open ecosystem does need to be created, but banks should be looking to improve, rather than letting the innovation defragment the customer experience. Banks should be looking at the innovations that meet the niche or fringe needs, and also build upon the customer 360, rather than destroy the integrated CX. The App store model that Fidor bank in Germany has initiated is a great way to do that. Citi is embarking on this too.
  • The benefits of Banking API should go both ways. Even as emerging players seek to leverage the bank’s data, the banks should be building a data pipe back into the bank as well. That will help build increased customer context (e.g. transaction detail) which has not been fully available as of now due to regulatory and privacy concerns. Citi’s Price Rewind program is a step in that direction that can be enhanced through such 2 way models with the consent of the customer.
  • Enable rapid innovation by engaging in white-labeled partnerships and perhaps acquisitions to accelerate technology innovation. Banks have been doing white-labeled offers for decades so this is nothing new. Services such as identity monitoring, and online retail marketplaces have existed for years. BBVA’s acquisition of Simple, and their real time payments service based on Dwolla are also examples of the acquisitions and partnership approaches. The key will of course be the pace at which banks can internalize these innovations.

Approaching the new digital world the right way is crucial to be able to maintain the customer front end. Its easy to be dis-intermediated. While being a provider of the banking and payments backbone is a viable option, the real risks may be about missing out on innovative revenue and business models that arising.

Thoughts are welcome. Photo credit: Kay Kim(김기웅) via Foter.com / CC BY

Read the full article on American Banker here...

A new(er) way to look at innovation in customer experience

Customer Experience design is often considered to be at the point of interaction. That’s why we see so many customer service trainings being conducted for customer facing teams. Some common scenarios are:

  • Handle a customer’s call
  • Process service requests at a branch
  • Deliver a product and orient customers
  • Train customers on how to use a product
  • Provide a personalized website or mobile experience
  • Set up a proactive email automation program

These bottom-up approaches are indeed required. They are important for innovation and individual enterprise to grow and flourish. They make employees passionate about the work they are doing. And initiatives such as these keep the ball rolling by making incremental innovations, instead of trying to execute a grand old strategy.

However, these initiatives must be supported by a grand old strategy to prevent us from running into inconsistent customer experiences between the multiple touch-points we all have with our customers. That’s true even for small businesses where the biggest limitation is time and resources.

he Principle of Customer interactionIn my book, I laid out 5 core principle of competing in a digital world. Of these, the principle of customer interaction can be used effectively to create the right CX framework. Other principles are important too but our grand old strategy can be reasonably jump-started by the use of this principle alone.

Basically, the principle states that since we interact with customers at both emotional (advertising) and physical (product performance and interactions) level, our approach must be oriented to complement the two ends of the customer interaction spectrum. And to be able to do that, we must think of:

  1. The life cycle – from awareness to purchase to post purchase engagement
  2. The mediums – through advertisements to education to promotions to customer service
  3. The channels – phone, email, in-person, in-store etc.

It looks complicated. But its as simple as taking the brand message and weaving it in with the customer expectation at the right stage in life cycle, medium and channel. Here are some examples:

  • A cable company competing with incumbent DSL services touts its network of wi-fi hot spots. But customers  struggle to use the wi-fi in many locations (various reasons). And their telecom provider constantly tells customers about the slow browsing speed at home. This is a classic case of CX dissonance, and how customers believe what they constantly hear. What we claim is not being reinforced by the physical experience. How do we mitigate this by messaging, CX changes and even strategic developments of the product?
  • When we visit a branch, we often finish our transaction at the teller, and then we’re off. And if they do initiate a dialog after that, its to sell a product or service, and hand us a brochure. Although, our financial well-being is something that banks have always touted on billboards, advertisements and on signs inside the branch.  it’s so surprising that they don’t try to help us with our financial management without the strong sales push. How should we try to resolve this CX dissonance?

Its obvious that CX initiatives at both individual interactions as well as at the corporate level are needed to support each other. The individual initiatives can only do so much. They can resolve a “known pain” with a business scenario. Every business scenario has exceptional flows when things don’t go as expected. And that’s where the human enterprise and empathy really shines. Think of the associate who goes out of the way to help you with a return or a claim. Individual initiatives create a lasting impact here.

However, individual initiatives cannot be the anchor for our CX strategy. CX is to be enabled by a top down agenda of the right positioning, and enabling of touch points to support that positioning. And realizing the CX vision often needs product improvements and other overreaching corporate changes too. A simple step towards that journey may be to educate all our touch-points on how they are all working together to create the desired effect, and how interconnected they are.


The new principles of customer experience design

It’s pretty common now to think of user experience (website or mobile design) in terms of customer experience design (how customers experience your overall brand). The Omni Chanel trends have made this even more necessary in today’s world.

Values to customer needs


The way I think about it is that customers (on the right hand side) have both primary and secondary needs. Traditionally we focused on their primary needs which was about the products’ direct value proposition – basically costs, features and customer service. In the new connected world, the secondary needs become really important as well – ability to share, being part of a community, reinforcement of choices, motivations for buying, education, ability to track orientation to personal life goals, safety, and security among others.

From this, we can easily see that conventional marketing and customer engagement when it comes to customer experience design have been very “projection focused”: who we are , what our products are, how great we have done, what we have done, who we work with etc. In other words, we rely on a brain dump on the customer and expect them to decide. We put the burden of choosing us on them.

I outlined these aspects more directly in my post on the The Principle of External Reinforcement. Here, I’ll discuss the following framework which is more focused on assessing how current channels are meeting these emerging needs.

Analysis of channels to meet customer needs


Part A is very familiar. The way we have always analyzed our channels (web, mobile etc.). This traditional channels analysis wants to push content to customers, and make it easy to navigate. And that content is all about us, the seller.

Part B is the new way. It focuses on being a partner to the customer, not a seller. It seems very counter-intuitive but if you think about your own journey as a customer, you’ll see why this method is fast becoming the bulwark of customer engagement.

  • We no longer want to have to figure out how a company’s various products play with each other. We know its important, but we’d appreciate if they would do it for us, instead of just making sales pitches.
  • We’d like to know whether the products are even applicable to us. And if yes, how exactly will we benefit. We’d love to be advised rather sold the biggest possible deal.
  • For once, we’d appreciate tools that don’t sell, just help.
  • We’d like the seller to understand and sell us in context of what we already do, or have done with them. Otherwise, we have to go back and research this on our own anyway.

The reason behind the new way to engage customers is obvious. As humans, we trust and connect with channels that lead us to the “right” decision. Channels that successfully accomplish this become our go-to partners. And in this social world, that positioning also results in customers themselves becoming a contributor to that advice. We love to get, and we also love to help. It’s just human nature.

I thought of these following simple industry scenarios to support this emerging model for customer experience design:


There’s a reason that when we have to get a new credit card or an account, we look to third party sites and opinion to give us feedback. But if the banks get rid of their marketing and try to educate us on what fits us best, and given the fact that the products are largely commoditized, my guess is that the first bank to do this will win big. And more so, when I already have a product from a bank. The effect will be to become a reference anchor in our minds, something that many banks are failing to do today.


Sending me coupons and promotions is great, but it’s only half the job done. How about if retailers help me decide what I should buy and what I should stay away from – even if they don’t sell what I really need.  By entering in to a partnership with me, they might cut down dramatically on costs, and by knowing what I want (and my shopping basket), they may also be able to transform their inventory management.


The biggest things I look for as a customer is credibility (familiarity, expertise, experience, past results). In addition to spending money on jazzy marketing and taking me to ball games, how about focusing on educating me better on my needs. Helping me meet other customers like me, and sharing best practices and means to achieve my goals will make me  more likely to bring you in.

Evaluating your channels and customer experience by using the new model will throw up insights that will bring you closer to your customers. You’ll be thinking about what they need, rather that about how to present more about yourself.


 Based on the principles in my book Dancing The Digital Tune: The 5 Principles of Competing in a Digital World.