The way customers interact with companies is evolving dramatically. As convenience continues to outrank quality, customer loyalty is becoming a thing of the past in many sectors. To survive, legacy companies must rethink the customer experience and shift the focus toward the relevance of the business model in the new environment.
According to a recent survey of 188 public company board members—conducted by Corporate Board Member and RSM US LLP—28 percent say their companies are planning to utilize digital technologies to change the core business model and redefine the company within the next five years. That is far ahead of those who are looking at digital technology merely as a way to stay competitive (20 percent) or to gain efficiencies (13 percent)—and a stark difference from where companies were 5 years ago with their digital strategy.
The new era has ushered in a pressing need for companies to become much more consumer-centric in order to improve the customer’s overall experience with the brand. According to George Corbin, director at Edgewell and a participant in the research, awareness of your customers’ pain points is the starting point to understanding your innovation inflection points and where the company is—and should be—heading next.
“We went from Gillette and Edgewell basically dominating the shaving industry to, for instance, seeing Gillette go from 70 percent market share to 50 percent market share because of these insurgent brands, like Harry’s, The Dollar Shave Club and others coming in—and not because they had a better product, but because they solved the customer’s problem better for the customer at the time.”
“It wasn’t the speed of the blade because Gillette has 2,600 patents on blades alone. You’re not going to make a lot of incursion there,” he says. “But what they tackled are these other friction points, ‘Do I have to go to the store? Can I just get it delivered to my doorstep? Can I just schedule that? Can I just pay this amount per month for that privilege?’ Yes, to all of those things. And that’s where companies tend to get blinded by doing what they’ve always done.”
Directors are walking a challenging line in this area, with 34 percent of those surveyed saying they do not feel confident regarding their understanding of the strategic customer insights, including customer experience—and 24 percent saying the same of their company’s possible innovation inflection points—only 15 percent report feeling “very confident” in either of these aspects.
It takes a new type of thinking to think about the customer journey, what they’re going through, how they’re buying a product, what they’re experiencing at every step of the process. It is probably the reason why 70 percent of the directors participating in the study listed data analytics as most important to their company’s future success—far ahead of AI (40 percent), automation (26 percent), smart products (26 percent) and many other technologies.
But data collection and analysis alone is not a strategy. Data alone is not insight. Boards need to be ensuring leadership has the insights they need to drive the business. They need to understand what they’re collecting and be able to make sense of the data. Knowing what’s going on in terms of sales, costs and service, for instance, is only half the battle. The real value comes from the ‘why’ analytics and, ultimately, the ‘how.’ Where are customers falling off on their journey? What could cause the company to become obsolete or disintermediate itself? Who/what could be a source of disruptive innovation, coming in to improve the customer experience?
Digital-native companies understand the wants and needs of their customers, and they take calculated risks toward boosting that performance by concretely testing various what-ifs to validate hypotheses, even if only temporary. Board members should be inquisitive about analytics and how they are using them to accomplish the things that are going to keep the company competitive—like expanding into new markets and remaining focused on the customer journey. Looking at cost efficiencies should be straightforward with the metrics companies already have, but the customer experience requires a whole different way of thinking.
Ultimately, and as with almost every other issue in the board’s purview, thorough oversight and preparedness begins with asking the right questions.
“The more questions we can ask of the management, the more effective we can be as directors,” says Dr. Latham Ramchand, director at Insperity and executive vice chancellor and provost at the University of Missouri.