Customer experience: Getting beyond table stakes

state of marketing 2013, marketing analyticsThis week, at the Smarter Commerce Summit, “customer experience” is a hot topic. Whether they’re doing anything about it or not, retailers instinctively know experience impacts loyalty, and loyalty keeps customers buying. Forrester Research analyst Harley Manning has long argued it’s the only thing that matters. His premise: “The only source of competitive advantage is the one that can survive technology-fueled disruption: an obsession with customer experience.” 

While there’s a lot of truth in Manning’s assertion, I have a corollary – one reinforced by the research we’ve done at the IBM Center for Applied Insights: The only way to provide a superior customer experience is with technology-fueled delivery. In other words, fight fire with fire.

Take showrooming, for example. Mobile phones have clearly disrupted the traditional shopping experience. And some retailers are still wringing their hands about sales lost from shoppers checking competitors’ prices and assortments via smart phones while in their stores. Meanwhile, other retailers are finding ways to capitalize on all those devices in shoppers’ hands –through real-time analysis of in-store shopping behavior and merging real and virtual experiences.

What will the next retail disruptor be? Will Square and Paypal do away with POS terminals? How will retailers re-imagine the cross- and up-sell process when checkout counters and wrap-stand displays disappear?

Will cognitive systems like Watson sell products and field customer service questions? What about augmented reality? Wearable technology? Rather than view emerging innovations as threats, smart retailers will see these as opportunities to improve the customer’s shopping experience.

Although Manning might consider IT “table stakes,” I disagree. Obviously, there’s a certain technology bar retailers must meet to stay relevant, but IT – executed well – can still be a differentiator when it comes to the retail customer experience. Admittedly, I’m a bit biased (given where I work). But my opinions are backed by a fair amount of evidence too.

imageLast year, IBM’s State of Marketing study – involving more than 500 organizations across 15 industries – showed companies that effectively integrate technology to influence the customer experience are outperforming financially. These leading companies are experiencing 3.4 times the net income growth – and 1.8 times the gross profit growth – of their peers. The study outlines a suite of differentiators that set these leading companies apart, but two fundamental IT capabilities stood out to me.

First, these leaders have tackled the tough job of integrating all their channels. Unlike many of their peers, they’re equipped to deliver a consistent omni-channel experience. This behind-the-scenes plumbing allows them to accomplish the second feat – adjusting those customer experiences as they happen, often based on cloud-enabled data analytics (Listen to IBM Distinguished Engineer Frank DeGilio discuss how cloud is changing the customer experience).

Through integration and contextual insights, these leaders are building the muscle mass they need to tackle technology-fueled disruption. As new possibilities emerge – even when disguised as threats – leading companies will be ready to turn the tables, using technology to reinvent the customer experience.

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