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HOME NRI JOURNAL The Key to succeed CX strategy

NRI JOURNAL

Innovation magazine that generates hints for the future

The Key to succeed CX strategy

Takashi Jumonji, Principal, Corporate Innovation Consulting Department

Apr. 11, 2018

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With “CX” or “Customer Experience” grabbing companies’ attention these days, efforts are underway in myriad industries to significantly overhaul customer strategies and contact points. CX refers to the psychological and emotional value experienced by customers through the products and services they buy. Although based on conventional CS (customer satisfaction) and CRM (customer relationship management) policies, CX promotion activities are meant to enhance customer satisfaction within a broader range that includes customers’ latent wants and needs. With regard to the key points of CX policies, NRI’s Takashi Jumonji, who have been involved in marketing-related work ever since joining the company, says that “The important thing is to design them fully from the customer’s perspective, so you not only achieve a reasonable raise in customer satisfaction, but create ‘fans’.”

The Three Trends Underlying the Focus on CX

—Could you define CX for us, and tell us about the underlying reasons that it’s receiving so much focus?

CX is a marketing concept that’s about delivering not just the physical value of products and services, like their functionality or performance, but also an “experience” felt through their consumption and use. It’s about providing value in a way that thoroughly accounts for the customer’s perspective, and in terms of Japanese customs it corresponds to what’s known as omotenashi, or hospitality. I think there are three reasons that CX is garnering so much attention these days.

The first is the difficulty involved in differentiating your products or services with their physical value once they’ve been commoditized. The second is something we’re seeing with the manufacturing industry for example, where manufacturers seek additional profits by investing their energies into after-sales services, the result being that companies are staying in close contact with their customers for longer than ever before. The third is that the spread of smartphones and other devices, and technological advances like big data and AI, have made it possible to deliver services that previously could not be provided. As a result, more and more companies are thinking hard about what they must do to keep their customers satisfied and loyal, and to have the customers introduce others to their products and services.

Observing Your Customers and Studying Them In-Depth2

—How is it different from conventional customer relationship policies?

The aim of CX promotion activities is to provide experiences that fulfill customers’ needs, including ones that they aren’t consciously aware of. I’ll explain what I mean with an example of how a U.S. financial institution used the principles of CX to resolve a customer complaint about the difficulty of using its service for finding ATMs in a city.
With a conventional CS improvement measure, you’d enhance your search service to make ATM locations easier to find.
If you then observe your customers further and think more deeply based on your observations, you’ll realize that when customers search for ATM locations, their goal isn’t really to go to an ATM, it’s ultimately to do things like send money or make a payment. If that’s the case, an even better thing to do than improving your search services would be to think of a new service that saves customers a trip to the ATM. This led to the creation of solutions like smartphone payments and other new services. Thinking that far ahead is what makes CX—you’re not just responding to what customers say overtly, you’re observing and thinking about your customers so you can grasp their latent wants and needs, and what they’re truly looking for. The aim is to provide solutions that get right to the heart of the customers’ true needs even if they themselves weren’t consciously aware of them.

Something that’s useful in probing your customer’s latent needs is a framework called “STPD”. The first step is to thoroughly observe your customers (See) and reflect on them (Think). Then, you move on to planning (Plan) and taking action (Do). The “S” and “T” come into play before the “Plan” portion of the typical PDCA process. It’s in learning your customers’ expectations, and then providing experiences that meet or exceed those expectations, that you can really move them.

 fig1

The Challenge Lies in Defining Your Customers and Implementing Your Policies

—What sorts of hurdles do you face in CX promotion projects?

Where many companies initially stumble is with the “See” and “Think” actions. First of all, it’s difficult to define your customers to whom you’re providing value. There are so many factors to consider, like are you going to target all your customers or select certain segments? And in the latter case how will you differentiate them, remembering to account for any characteristics that may not be obvious? Another challenge is ensuring that all your workers who interact with customers understand the CX philosophy and what they’re supposed to do individually, and that they’re consciously putting this concept into practice during their daily operations. And once they’re fully aware of this and ready to implement it, there’s the additional challenge of choosing how much latitude to give your workers for providing services in order to enhance your CX—that is, delineating how much they should do by-the-book, and where they can exercise their own discretion and be flexible. You have to build a strategy that includes things like employee authority, evaluation systems, and KPI (Key Performance Indicators).

The “Plan” and “Do” portions tend to fall under an IT framework, and even if a company has carefully observed and thought about its customers, there will still be some uncertainty about the effectiveness of the measures being taken, so companies often hesitate to alter their large-scale internal information systems. The corporate world has this deep-rooted belief that even if you have to sacrifice customer satisfaction to some degree, short-term earnings are more important, and thus the question becomes where to draw the line in prioritizing CX.

CX is a Company-Level Undertaking

—Breaking through these challenges must require you to be creative when you’re consulting.

Most companies are probably pursuing CX activities in some form or other, or conducting activities included in the STPD elements in some way. These kinds of initiatives are being undertaken in various departments and in a variety of forms. Our aim is to use these efforts as a base while ensuring that all the various actors involved are providing a consistent experience to customers, following a shared strategy and objective. We make sure to create a space where the relevant persons can get together to think about and discuss things, while also identifying what activities are currently underway at the client company. And because each and every person at the company needs to practice CX in their daily work, we also conduct training to teach them what CX means, how it should be defined at that company, what the company’s workers are supposed to do, and how they can exceed customers’ expectations. If we’re providing solutions using information systems, methods like PoC (Proof of Concept) and agile development also come into play. We recommend creating a simple customer interface on a smartphone app, for instance, and actually testing it out while you’re developing it, because it provides insights that you can actually put into practice without fiddling around with large-scale systems. This work requires a wide range of knowledge, including everything from understanding the customer to building a system. So, now we’re often creating mixed teams comprising members from our consulting, solutions, and IT platform headquarters to harness the full capabilities of NRI.

—Lastly, where do you believe the core of a CX project lies?

CX promotion activities don’t pertain only to some industries or company departments, and they also aren’t fragmentary activities where you adopt a certain theory and create a customer journey map*1. You have to ask yourself the big-picture questions, like: what are you providing to your customers? What do you want your relationship with them to be? What do all those responsible need to do to make that happen? And what needs to be changed? The crucial thing is for the members of your company to have a shared awareness, and then ensure that the entire company acts as one in defining its version of CX and moves forward as a unified enterprise.

The key is having everyone involved sharing in and implementing the STPD process, and linking your CX promotion activities to your organizational management. It needs to become the norm for everyone to have an awareness of CX. That’s what I’d like to see happen.

 

  • *1:

    Customer Journey Map: A visualized “snapshot” depicting the behavior of a preset imagined customer, used for launching a plan or business project etc.

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NRI boasts its Principals holding high level of expertise in specific markets or solutions. NRI Principals, also as leading consultants, have played roles to lead innovations for society and clients to success. NRI Principals create new businesses, ensure unwavering commitment to projects and have responsibilities to solve the client's issues.

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Nomura Research Institute, Ltd.
Corporate Communications Department
E-mail: kouhou@nri.co.jp

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