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In order to prepare for the upcoming travel and hospitality Blueprint, I decided I needed to do some “field research” (ahem) by taking a vacation of my own to sunny Puerto Rico to get the experience of an end consumer. This was fortuitous timing as RFI responses were trickling in, and I couldn’t help but relate my experiences to what I’m hearing from the service providers and buyers in this space. As analysts, we tend to travel a bit here and there, but often have the luxury of travel plans being made for us with group coordinators. Having planned this trip out myself with the help of some great references, I thought about travel in a more selfish way—one that made me think very much about all the things T&H service buyers and service providers could be doing better to think of ME, the traveler, at the core of their operations.
As a consumer, these themes resonated with me the most:
- Word of mouth matters more than ever: So many decisions to make; where to stay, eat and what to do. Review sites like Yelp and TripAdvisor are ubiquitous, and travelers really rely on these sites for decision making. The downside is information overload and credibility; I read scores of reviews with a skeptical mind, thinking this could have been written by someone with totally different vacation priorities or motivations. Now if a good friend recommends a tour, combined with a raving review on TripAdvisor, I’m sold! Service providers should be thinking about how to help hospitality clients maximize loyalty and advocacy among visiting customers. Those who represent the travel intermediaries and review sites should think about how to make the personas more “real” – think of the possibilities for gamification (i.e. giving people badges or discounts if their reviews are well liked or validated.) This could go a long way to make these review sites and intermediaries more valuable for customers. Intermediaries are also more important than ever for local tour companies whose websites are wildly out of date and impossible to navigate—so knowing the local businesses is more important than ever.
- Self-service is fantastic—but make sure you have the processes and training to bring it all together. It’s pretty cool that JetBlue has started a system of printing and applying your own tags to baggage. But, as someone who doesn’t normally check a bag, this caught me by surprise at Boston Logan as I was reluctantly checking my vacation + business attire luggage to accommodate all the shoes I needed for these two incongruous journeys. I was confused, but all that the woman at the kiosk could do was repeat in a saccharine cheerful voice, “You need to print out a tag at the kiosk.” Literally, that’s all she could say. I would have felt more comfortable with a robot. When there are process and technology changes, especially those that affect your loyal customers, make sure your employees are trained to be empathetic and helpful and that you use all the relevant communication channels to update customers. Plus, preemptive outreach can prevent incoming calls to customer service and confusion in the field.
- It all comes back to making it easier for the customer. This is true in every business model, but the hotel industry seems to be closer to cracking the code on seamless experiences despite juggling many balls in the air at the same time—dealing with disgruntled, tired travelers, unexpected issues like broken elevators, cancelled flights or storms closing the coveted beach, and handling countless travel intermediaries like Expedia and the like. This requires a lot of connection between front, middle and back office—as we describe in our OneOffice framework—it seems that hotels are getting closer to connecting these siloes to create omnichannel experiences, but what I’m hearing from buyers and service providers is that there’s a lot of disconnect behind the scenes and making up for it at the front end. Despite sometimes glossy front end experiences (think the swanky hotel lobby with fantastic, quick check-in service), there is still much opportunity to streamline processes behind the scenes. The notions of service experiences are also evolving, keeping T&H clients on their toes. Today you introduced mobile self-check-ins; do you need to integrate tours & activities scheduling into your app next?
The Bottom Line: competition has pushed the travel and hospitality industry to live and breathe the “customer-first” mentality, but the fast-paced nature of the industry and customer expectations will continue to create opportunity and challenge services buyers to think about “what’s next?”
Differentiation is the name of the game--- and more than anything, services buyers in the travel and hospitality space need flexibility and innovation from their providers. Between M&A activity, regulatory and compliance changes, disruptors from the “sharing economy” and the volatile nature of travel itself, having the customer constantly at the center of the universe is no easy feat. Always being that step ahead, with automation and innovation, is where service providers can step in to support those memorable experiences.
While we wait for the new Obamacare “replacement” bill to sink or swim, we can’t help but ponder the implications of whatever outcome on the healthcare industry and the services ecosystem that supports it (especially since we get asked!). Amid all this uncertainty, one thing that is sure not to change is the consumerism that has taken a strong hold within the healthcare industry, which would be the case with or without the ACA. As consumers, we are wondering, if I can order merchandise from many different suppliers on amazon and pay in one place, why can’t I see all my clinical data and lab images and send them from one doctor or clinic to another? If I can send the record of my dog’s shots to a boarding kennel electronically, why not send my children’s immunization record to schools and summer camps just as easily? Yes, we know about interoperability and security issues. However, we have come to expect the same access and convenience in our healthcare experiences as we do in all the other aspects of our lives.
Healthcare providers and payers are challenged to meet these increasing expectations—and are investing accordingly in digital enablement. HfS’ recent state of business operations survey indicated that 42% of healthcare companies are planning a significant investment in analytics to better understand what are the issues for whom, what are the opportunities to interact and impact members and patients and administrative support; and 36% are investing in social/mobile/interactive enablement to redefine, “modernize,” or create the customer experience. Despite all this planning and rhetoric, dealing with the healthcare system often feels like the dark ages rather than a modern customer experience. Our recent research found several examples of service providers and buyers working together that are hopeful of experiences to come:
- Creating the digital customer experience by connecting front and back office: Due to ACA regulations, healthcare payers have needed to adjust to dealing with consumers (versus employers’ HR departments.) Many have set up retail storefronts including mobile centers where people can come in for enrollment (majority), questions and paying bills. Teleperformance uses a proprietary software, TLSContact, to manage the process and workflow of the customer retail journey. Representatives are able to access the initial app that the customer started online, and the workflow software helps identify the bottlenecks and how to better staff these centers. For example, they can look at and analyze the processes to find out why there are long wait times—enabling clients to improve the process and better staff to meet demand.
- Developing customer journeys that look “outside the hospital walls” and building solutions that support the journey: Approaching healthcare in a consumer-centric economy drives healthcare organizations to look at how to initiate and keep the customer relationship over an extended period of time, not a point in time. Emergency rooms are designed to address a “point in time,” but we know that a health incident starts before a person arrives at the ER. VCU Health neurologist Dr. Sherita Chapman Smith is championing an effort to use telemedicine as a way to do assessments on stroke patients while they are in the ambulance, on their way to the hospital. (link). In pilot simulations underway, the hospital is using trained actors to simulate stroke symptoms to test out the platform during ambulance rides to the hospital. “Patients” are picked up in an ambulance and connected via teleconference to the neurologist in the hospital, who conducts a remote assessment; and when they get to the hospital, they are quickly advanced to the next stage of treatment. The approach creates faster interactions between the points of care and speeds the time to treatment.
- Using digital technology to make the users life easier and more real-time interactive with support systems: A healthcare organization that has partnered with NTT DATA Services described a consulting-led project which was aimed at the total redesign of the patient’s journey in various medical use cases (i.e. bariatric surgery, knee or hip replacement) in order to personalize that patient’s journey whenever he/she logs into the mobile app or accesses the website. This means drawing together an understanding of that patient’s journey from start to finish, and knowing what stages they are in throughout their course of treatment, and what their needs might be. This hospital relied on the provider’s experience mapping expertise.
It’s clear that healthcare isn’t getting less complicated any time soon. Whatever the fate of the ACA, the current political tone is foreshadowing more complexity and anxiety. Whether people are going to be uninsured or underinsured as critics of the current bill claim, or need to switch plans or providers, we can be sure that activity in the healthcare systems will increase. We can also be sure that that emotion will be at an all-time high, with the anxiety and fear that comes with people uncertain about what the changes mean for their lives and their loved ones: all the more reason that healthcare organizations need to be more nimble, intuitive and empathetic to that customer experience. Unfortunately, examples like the ones we highlighted above are the exception rather than the norm.
Bottom line: It’s time to think of and treat patients and members as customers you want to attract and retain, whether you are a health care provider or payer or a third party service provider partnering with a healthcare organization. Now we need to roll up our sleeves and partner in the effort to create a healthcare experience that puts the customer at its center.
I recently caught up with Wendy Shlensky of HGS to talk about customer service trends on her blog. Here’s what we talked about:
Today’s companies are challenged to meet everyday customer service pressures while also building for the future. They must provide optimized customer service across various digital channels while also using new tools to better understand customer demographics and preferences, to deliver more personalized service. The ability to simultaneously achieve these goals is really a differentiator in a world where many products and services are commoditized.
Wendy: Can you share the trends you’ve seen in customer service?
Melissa: Today’s customer service trends are being driven by customer expectations for really simple and straightforward communication. In many cases, this means self-service tools, although customers also sometimes need to pick up the phone and speak with a person. Depending on objectives and available channels, customers will use various ways to communicate with companies to ask a question or give feedback.
Balancing self-service and digital—including human assistance, when needed—is a significant customer service focus area. Customer service solutions that pre-empt and solve customer inquiries—before requiring agent assistance—are driving self-service as a solution to decrease customer effort. Improving self-service is frequently put forward as a cost savings mechanism, but often has the most immediate impact on service quality and consistency. Most importantly, weaving all of the potential touchpoints to support an omnichannel customer experience is a design challenge for most organizations to undertake.
Wendy: How essential are digital CX tools in today’s marketplace?
Melissa: These digital tools are critical. At HfS, we have been working on the concept of a digitally enabled contact center. We have produced a competitive assessment of service providers in this space. Essentially, this means that a contact center is equipped to service today’s digital customer, who, as we all know, has increasing expectations in terms of communication channels. At the most basic level, the start of the digitally enabled contact center means embracing “digital” channels: social media; web self-service, including mobile apps and visual IVR; video kiosks; and chat. Also important is seeking to use automation to create efficiencies and the really smart contact center operators are trying to figure out how to involve increasingly intelligent automation into the mix.
However, it’s more than just implementing these channels, it’s the design of how each channel fits into the overall customer journey, and the understanding of how talent fits into the equation. This talent should not only be able to handle communication on varied channels that demand different styles (yet be consistent), but can also take contextual information from multiple sources and use that in a way that benefits the customer. From an analytics perspective, it’s all about using the data to better understand customers, enable personalization, and be more predictive.
Wendy: How is this changing BPO services engagements?
Melissa: Digital channels and the underlying technology will fundamentally change the way that service providers and buyers of BPO services engage. We have learned from our recent Intelligent Operations study that almost half of senior leadership buyers are using a “customer first” strategy to drive their sourcing models. This means embracing the change and solution ideals of “As-a-Service,” including design thinking. We see opportunity for service providers to use design thinking to help their clients develop better processes, especially around “customer journey maps.” Rethinking customer journey design is absolutely essential to the digital customer experience.
For example, HfS recently spoke with a retailer that was struggling with efficient scheduling processes for an in-store service. The service provider took the approach of interviewing the staff members fulfilling the services to understand the areas where they saw inefficiencies and problems. The results included a scheduling process redesign that blended the digital self-service channels and those that were human assisted. Often, design thinking projects will involve an employee-centric approach—recognizing that employees are customers, too, who often hold the key to improving customer experience.
The service provider-buyer relationship is also affected by buyers’ expectations of greater flexibility and value. Some service providers are looking to their BPOs to be really nimble, and scale, as needed. Additionally, they want their service providers to be thought leaders and help them figure out this puzzle of digital customer interactions.
Wendy: What do you see as the future of digital BPO?
Melissa: In a customer-first digital economy, BPOs will strive to find the right balance of technology and talent, and deliver that as effortlessly as possible to clients. Contact center service providers’ strategies must be multi-fold—they must provide something more valuable in conjunction with traditional operations that addresses automation and self-service, built in with exceptional support (with a great talent strategy) to address the changing contact center model to derive more value out of clients’ investments.
What’s one of the biggest wild cards, with the biggest impact? It’s artificial Intelligence, or the development of “intelligent” virtual assistants. While right now most contact center automation is augmenting agent talent, we are seeing virtual agent pilots and POCs that can replace some contact center talent. Regardless of how quickly this evolves, eventually artificial intelligence will have a material impact on contact centers. Service providers, together with their clients, will need to figure out how to blend the best of human and artificial intelligence, and most importantly have a greater sense of urgency to understand how this will impact the customer experience.
HfS has been spending the past several months talking about the Digital OneOffice – a business model focused on placing the customer at the center of every internal operation, even those not normally considered customer-facing. Whether you consider your firm a “traditional” business or a digital native, you need better customer centricity.
Recently I saw evidence of how this new focus on customer centricity is affecting the retail industry. Retail is rife with brick and mortar giants struggling to pivot their operations to support omnichannel shopping, and online upstarts vying to make their voices heard amid the e-commerce din. After hearing yesterday’s news that Target’s Goldfish project -- its mysterious Silicon valley digital startup -- now swims with the fishes, I started thinking about the tales I heard at the recent NRF conference. From both retail giants and small retail innovators, moving to OneOffice is about enabling the ability to support heightened customer expectations and often strengthening business fundamentals in order to do so.
Stepping into the Customer’s Shoes
Target’s stated reasoning behind abandoning the potential e-commerce spinoff was to renew a focus on the brick and mortar business, strengthening the personalization of the in-store shopping experience with greater personalization and payment options on its shopping app. In doing so, Target is putting a stake in the ground about where it wants -- and doesn’t want -- to compete. In the case of this retail giant, leaders see greater value in digitizing and optimizing the experience of its in-store customers than in creating something new that doesn’t necessarily jive with what customers want from Target. It seems counter-intuitive that focusing on brick-and-mortar stores helps in Target’s Digital OneOffice transformation, but this move shows that the retailer is honing in on its customers’ experiences where the customers want it.
This strategy had plenty of examples at NRF. I saw providers demonstrating solutions which have the potential for retailers to take their traditional businesses to the next level. These solutions ranged from getting real-time information from the store to engaging the shopper around product education to promoting promotions or specials while they’re making the product decision were top of the list for this kind of optimization. Specifically, here are some exhibitor examples:
- Wipro Intelligent Displays: Wipro had a retail in-store demo which featured the use of sensors to allow the shopper to get more information about the product on a display screen in the store. For example, the shopper could pick up two items and compare them side by side as they would online or in a mobile app. This could also be reconfigured with near field communication (NFC) to connect to the app for greater personalization. I think this would be even more effective.
- Infosys Home-to-Store Journeys: Infosys took a real customer-journey-centric approach with its immersive demo of a full home-to-store shopping experience. The journey demonstration begins in the customer’s living room, with the customer shopping on a mobile app and noting preferences and upcoming events (birthdays, vacations). The journey then moves to the store, and demo participants were greeted by name by the store employee who knew what items the customer shopped for at home. The comprehensive booth also featured a demo of the possibilities for augmented reality in store. Infosys is using a combination of technology and services to customize these journeys for its retail clients and showing what’s possible for the future of retail.
- Sutherland’s Predictive Chat: A demo at the Sutherland booth highlighted a chat solution which originated with a design thinking approach to bridging store and online experience. The platform enabled more proactive engagement with customers by drawing customer data from various external and internal retailer sources, feeding insights into the chat which could pre-empt customer questions and concerns.
- Honeywell Employee Tools: There were also interesting products at NRF. I popped by the Honeywell booth where I saw demos of plenty of tools aimed at making the customer experience better through improving the employee experience. This ranged from a software infused headset enabling pick and pack staff to more efficiently sort items in the warehouse (and move away from manual tracking!) to light, durable wearable scanners that employees can wear on the wrist or finger to enable more swift customer check out; all pointing toward creating better efficiencies in the entire process behind a shopping experience.
The bottom line: being customer-focused means improving the customer’s experience in store as well as online. Remember that in store sales still represent the bulk of revenues in the retail sector. Optimizing legacy systems to make them complement new business initiatives in a way that supports customer experience is how retailers will successfully move to DigitalOne Office.
PS: If you’d like to know even more about Digital OneOffice, come to our New York City Summit on March 30!
Everywhere I turn, service providers are talking about how they’re going to enable services clients to delight end customers. There’s nothing wrong with aspiring to delight customers; in fact it’s an admirable goal. But let’s take a step back and talk about what really matters when it comes to customer experience. Partly due to increased expectations set by our more digital world, customers want and expect things to be simple and easy. When I order an Uber or an Amazon package, it arrives at my door in the time predicted. Am I delighted? Not really. Am I really loyal customer who spends increasingly more money with these companies? Yes.
Full disclosure, we talk about delighting customers in our OneOffice concept of using a customer focus to align business operations. After all, in a customer-centric utopia, smiling, happy, loyal customers are the ultimate goal. But right now, I think it’s time to talk more realistically and focus on the basics. As a customer, I want to get my package on time, my question answered simply and easily.
Here are some service provider promises in marketing materials out there now:
“Elegant creative designs that go beyond average usability to deliver individualized experiences that charm, delight and engage”
“Utilizing the science of data and a unique approach and focus on the art of the possible, (we are) leading the way in designing transformative customer experiences that delight and engage”
“Our vision is to make our customers experience the delight of their customers”
It all sounds wonderful, but let’s get a bit more realistic. Think about the last time you as a customer felt really thrilled by the service you received.
We should take a good look at how we can start preventing bad customer experiences, which have a much greater potential to do business damage than great experiences do to have a positive impact. I recently participated in 4- literally 4- online chat conversations regarding an order that arrived damaged. None of the chats had record of the previous, or of the initial order. It was the most anti-omnichannel experience I’ve ever had. It seems everyone has one or more of these stories. For many companies, there’s a lot of work to be done to improve basic customer service.
Take this as food for thought. Satmetrix, the company which owns NPS (net promoter score) benchmarks customer satisfaction annually, using Net Promoter Score (NPS) which reports that the industry with the highest NPS is retail, with a 58 average. That’s the highest. The lowest is internet service providers at 2. The standard for “world class service”? 75. Even the top-rated customer service companies (i.e. USAA, Nordstrom, Apple) are hardly close.
Aspire to delight, but focus on the results that really matter.
Let’s face it, as much as it’s a cheerful concept and inherently the right thing to do, how does delightful customer service translate to business value? The business goals are to increase loyalty and repeat sales, and reduce churn in retail; lower admissions/re-admissions in hospitals and improve patient health in healthcare; reduce claims leakage in insurance, improve regulatory compliance in BFSI. So, the idea is you want to engage your consumers in order to impact these types of outcomes.
I do believe customer delight exists, and it’s certainly relevant and valuable. But to try and put delight into some systematic, algorithmically programmed process is a waste of time if you don’t have the right design and talent. So, yes, set everything up – connect the front and back end systems so that employees have the information they need – set up digital channels for customers to communicate and then, the most important piece-- hire the right people who are empowered to act on it. Make the goal to simplify communication and the ease of doing business to generate loyalty with your customers.
Bottom line: Make life simpler for your customers, and loyalty (and hopefully delight!) will follow
As I said about forgetting omnichannel when your basic customer service sucks, make the customer experience goals about personalizing, consistency and simplicity. If delight follows, fantastic! Look to pivot operations toward OneOffice to become nimbler, more intelligent digital organizations that deliver on customer needs. Now that would be delightful.
As we discussed in Part 1 of the digital marketing operations Blueprint blog, marketers are upping their spend and re-thinking the way they spend on services as a result of digital consumer needs. The market landscape for these services includes BPO/ITO providers, marketing technology companies, traditional agencies as well as a vast array of digital and niche agencies. This is a fast-evolving space that requires multiple players to come together and create an ecosystem for business changing solutions. Many buyer organizations (e.g., PepsiCo) have been very vocal about their dissatisfaction with the traditional agency model and are taking marketing work back in-house, or instead of consolidating providers they’re distributing work to several specialty providers. The opportunity for BPO providers to disrupt in this space is increasing; while it is critical for BPO service providers to partner with agencies, which still have and will continue to have a prominent place in the ecosystem, there is much more opportunity for BPOs to provide strategic level work than in the past. In addition, technology has disrupted the way companies go to market. “Martech” has grown exponentially in the last few years, and managing an increasingly complex stack is the norm while companies struggle with the pace of change to manage these varied systems.
So traditional ad agencies have not kept pace with market changes and thus have opened up opportunities for consultancies and BPO organizations to enter the market in some unexpected ways. The part where BPO service providers play in this ecosystem is often in a paradigm referred to as a “de-coupling” strategy: separating the creative from the production. In this model, agencies set the big picture tone for the campaign but can’t meet the needs for reduced cost and speed that BPO service providers can for services such as localization, translation, regulatory/compliance and re-imaging. The service provider takes the agency campaign assets and reworks them for specific markets, devices, etc.
Sample Content Production Engagement Model
However, many of these services involve elements of creative design and require a blend of talent and automation to execute well. And services buyers are increasingly looking to providers to have more strategic capabilities, especially where the convergence of marketing, sales and customer service happens in customer experience design. Almost every services buyer we spoke to expressed an interest in more strategic, higher value services from their providers.
As in almost every market, buyers are increasingly looking to BPO service providers to get more innovative and hungry for their business. Most buyer references said their providers “do what I ask them to do well,” but these same references admitted there is much potential in the future for handling more strategic services: and many service providers have the capability. Even larger enterprise buyers see potential in moving away from the arrogant and set-in-its-ways agency model and embracing services with a fresher-thinking provider. As one client reference commented: “When you go with a big agency, you’re going to get their B team.”
So how are service providers coming to the table?
Players with smaller practices, such as EXL and Tech Mahindra, have some interesting vertically focused offerings and have the advantage of being able to give clients lots of attention and thought leadership. Customer experience management-focused companies (i.e., HGS, Concentrix, Aegis, Revana Digital) have the advantage of knowing their end customer’s requirements best through the connection of their contact center businesses. While these providers aren’t known as a marketing brand for new logos, with the convergence of service and marketing can often sell bespoke or smaller campaigns with an interesting value proposition to customer experience focused stakeholders. The same goes for ITO focused providers (i.e., HCL, NTT DATA Services), where these providers have solid operations engagements elsewhere in the organization, can leverage the strength of those relationships in the growing digital marketing space.
Companies like Genpact, Infosys and TCS have approached digital marketing operations with a strong stance around automation and analytics. And clients seeking alternatives to the traditional agency model have enabled providers like Cognizant, Wipro and Accenture to excel at an overall vision for digital marketing operations– these providers are acquiring and integrating digital expertise– unlike the traditional agencies who buy up digital agencies and run them as separate entities without as much thought to leveraging the assets of each piece across the organization.
The Bottom-Line: In the rapidly changing marketing services landscape driven by the digital consumer, there is tremendous opportunity for service providers bringing their A team … and it’s anyone’s game
The HfS 2016 Digital Marketing Operations Blueprint covers market trends and direction as well as the analysis of 14 service providers: Accenture, Aegis, Cognizant, Concentrix, EXL, Genpact, HCL, HGS, Infosys, NTT DATA Services, Revana Digital, TCS, Tech Mahindra, Wipro. For more detail—including analyses and individual profiles of the service providers—click here to access and download the Blueprint.
Arvato just announced its acquisition of Bangalore-based Ramyam Innovation Lab, whose stated mantra is to make customers “raving fans” by enabling contact center staff to have valuable customer information at their fingertips. Ramyam’s key asset is its omnichannel platform, Enliven CEM. The platform integrates various communication channels such as email, chat, voice and social media, and uses interaction information to generate individual customer profiles. This is layered with analytics and dashboards; the analytics model aspires to manage customer journeys with “context-based decisioning” in real time, helping agents more proactively solve customer problems.
Our research shows that in this race toward providing digital customer experience, most of the leading customer experience management companies are taking a stab at providing omnichannel customer services. Major CEM providers are starting to/have figured out their strategies for developing 360 customer views that would provide insights to improve contact center effectiveness. To provide progressive omnichannel service support, a CEM service provider needs a strong framework for the underlying data and technology, and that’s what this acquisition is about. Most are taking a third-party approach to enabling the technology, but Arvato’s move provides it an opportunity to have better integration and perhaps move towards providing CEM As-a-Service in the future.
Arvato’s approach is admirable, especially where it affords the company an inroad to one of its key growth markets in India. Ramyam’s highlighted consumer-facing verticals of telecom, retail, banking and travel are key industries for omnichannel customer communication. This also is some much-needed publicity for Arvato, which has fallen behind its customer experience management competitors in thought leadership and demonstrated investment in innovation.
However, all of these buzzwords around omnichannel are used so often and heavily (i.e. “next generation analytics-driven actionability, enabling service providers to deliver superior experience and engagement to their customers”) that they are becoming diluted, making it harder for service providers to carve out a real differentiator with these platforms. Arvato’s assertion that this capability creates “a distinct competitive advantage” is disillusioned. To create differentiation, it will need to use this acquisition to craft and articulate an As-a-Service on-demand, flexible strategy for providing customer experience management—one that provides a single contract with well-defined business outcomes by leveraging technology platforms, data and insights and omnichannel customer support functions.
The bottom line: Kudos to Arvato for making an investment in a young, emerging tech startup with some solid customer experience thinking. But the messaging needs some maturing to really highlight the differentiation that Ramyam can bring to the table.
Whether the combination can help turn Arvato’s end customers into raving fans, we’ll wait and see.
Just before the holiday break we released our first HfS Blueprint focused solely on the Digital Marketing Operations market. In the past, we have covered customer experience management along with marketing in the same report, and this year decided to break out the front office processes and look at them in a narrower scope, including our Contact Center and Digitally Enabled Contact Center blueprints, and this most recent endeavor in digital marketing services. It quickly became obvious that while service providers have varied strengths and value propositions across each of these areas, the blurring lines between front office functions is creating confusion- and opportunity- in this quickly changing market.
Digital is all about realigning to the customer
Changing customer demands are driving companies to up their investment in digital marketing. The way customers prefer to communicate and consume information is forcing marketers to rethink their strategies, as well as collaborate with other business units for a greater holistic customer view. Whether it’s advertising on social platforms, understanding customer segments on the web or mobile apps, or putting out relevant content for greater personalization and sales conversion, the need for speed and efficiency is top-of-mind for marketers. Because these expectations and preferences are constantly changing, marketers are tasked with becoming nimbler and more efficient organizations in order to be increasingly competitive. Some of the buyer-service provider dynamics include:
- Maturing digital marketing operations are driving investment: The maturity of digital marketing services buyers falls across a broad spectrum. We spoke with some buyers at the very beginning of their journeys, converting paper-based materials to digital formats. Others already have a solid digital marketing strategy in place, and are looking to further optimize and create efficiencies in their operations. As buyers mature, the burgeoning volume of digital assets becomes a greater challenge to manage—which often falls upon their service providers.
- “Better, faster, cheaper” is table stakes: Not surprisingly, cost reduction still ranks as a top driver for digital marketing operations services. Buyers have ever-increasing expectations for speed and efficiency with reduced budgets. The need to reduce turnaround time and time-to-market for campaigns is common. Many clients view their service providers as an extension of their teams that they can often use in off hours when timelines are tight. On top of these increasing pressures, most buyers are also looking to their service providers to deliver market insight, thought leadership and innovation.
- Customer experience is impacting governance models: While the front office traditionally operated in siloes, digital is driving a convergence of traditionally disparate departments. Often under the purview of an “engagement or experience officer,” leaders are learning to reach across functional siloes, between IT and lines of business, to deliver on a more holistic experience for their end customer. This, in turn, increases the complexity that service providers deal with when setting expectations and delivering on services to their client stakeholders.
It became very apparent while doing this research exercise that it’s getting harder and harder to draw a line between “marketing” and other front office functions like customer service and sales as we move to a more holistic customer experience viewpoint. As the edges of front office services continue to blur, the services that providers offer overlap and the competitive landscape will get more complex, with more niche/specialty service providers entering the mix. Many providers not included in this report were on the periphery of digital marketing operations because of their approach to customer experience; the coming year will see greater development of their value propositions and emergence into this competitive landscape in the coming year.
Also, a shift in the way that buyers and providers work together: the need for higher value services from buyers is often easily expressed but not as easily adopted by various stakeholders within client organizations. The combination of embracing the ideals of design thinking and brokers of capability within client organizations will help to enable a better reception of new ideas and strategic thinking with digital marketing operations service providers. Buyers need to be willing to work with service providers on this type of end-to-end CX initiatives. This often involves using service providers as change agents to bring together multiple internal stakeholders across the front office in their siloed organizations.
The bottom line: service providers have a big opportunity to continue moving into the realm of strategic and cause disruption in this market.
This is not only an opportunity for new entrants, but also really an opportunity for service providers which have a greater breadth of services to grow their existing relationships, evolving beyond isolated engagement to more comprehensive marketing operations services. Right now services in this market are often consumed in a more piecemeal fashion, but buyers are interested in adopting services from providers where they have trusted relationships. The majority of buyers interviewed for this report were interested in expanding the scope of the relationships with their current service providers and experiment on new platforms (i.e. social media platforms as they arise). Service providers which are focused on thought leadership will win these expansions. For some, digital marketing operations will mature into another commoditized, race-to-the bottom BPO service for cost takeout. But the smart service providers with a well-planned talent strategy and plans for intelligent automation have a real opportunity to disrupt the agency model and gain a greater chunk of marketing spend.
The Work At Home Agent (WAHA) model of contact center outsourcing is increasing in adoption. My colleague Melissa O’Brien is set to release some interesting findings of the growth of the WAHA model in the coming weeks. The growth that WAHA is set to enjoy, however, has been hard fought as there are key inhibitors (often perceived as opposed to actual) to the model. These include lack of control, service consistency, and most notably security.
For regulated industries, the idea of having a completely virtual workforce dealing with customer payment and other sensitive data fills them with dread. But what is the real story? Well, according to numerous service providers I’ve spoken to there is a lower average instance of security incidents from the WAHA environment as opposed to the traditional brick and mortar equivalent. We recently spoke to home based agent pure play BPO Granada’s new CEO Felix Serano and CTO AJ Flores. When asked about on the issue of security it turns out that Granada has not had a single security breach from its WAHA population over the last 12 months. Given the frequency of cyber threats we see in the news at present, this is encouraging.
So, what are service providers doing to address the security needs of clients in the WAHA environment?
- Hiring the right people: Ultimately security needs to start with the right people. Due to the nature of the working model, at home programs are typically able to recruit a more seasoned and experienced type of candidate (the majority of WAHA hires are 35 years and up in age), enabling the potential for more sophisticated and more importantly trustworthy contact center support. Also, service providers generally tailor hiring approaches to target individuals with a university qualification.
- Train: Next is to train agents on security protocols. Clean desk policies, not repeating information out loud when speaking to a customer-- all these measures need to be reinforced to the agent, even in the work at home environment. Training is just as important in a brick and mortar facility, but from a cultural perspective is critical to ensure the concepts are digested with the absence of physical “team huddles” and the like.
- Physical security measures: There are two overarching categories to look at from a WAHA physical security perspective. One is the Bring Your Own Device (BYOD) model and the other is using a service provider supplied thin client device. For the sake of this discussion we will look at the BYOD model as this has been gaining traction in recent years and is, by and large, the most cost effective WAHA model. In 2013 I did a report on the WAHA market, at that time we were seeing some extreme physical security measures rolled out by service providers. These included keyboards with integrated keyboard entry analysis, multi-layer biometric analysis, etc. These measures were all extremely costly and often not that effective due to limitations in the technology. Now what we are more commonly seeing is simple fish-eye cameras, installed at an agent’s home workstation, through which service providers can perform randomized audits. Another interesting side note is that brick and mortar service providers are seeing cyber thieves targeting call center agents outside of physical centers and extorting them to steal credit card information; in this sense, the physical security risk is heightened in a home agent model.
- Software: This is where we have seen the biggest advances in security measures and hence why many of the more extreme physical security measures are no longer needed. A desktop layer, such as Citrix ZenDesktop, is used to replicate in-center desktops. This is then locked down to prevent cut and paste, print screen, etc. Payments and sensitive information are handled by an IVR system to exclude the agent. VOIP is often embedded into the desktop to provide continuity when transferring to IVR systems. Interestingly, Granada tracks the internet latency of agents and can automatically remove them from the workflow if internet speed drops below predefined parameters.
As I’ve mentioned, many of the security measures used in WAHA today seem much less extreme compared to what we saw a few years ago, however they are considerably more effective. With WAHA expected to grow rapidly over the next five years, it seems service providers have finally cracked the code for security and can now provide extended track records of fraudulent free delivery from this model. Service providers offering the WAHA delivery model seem to get it now that the key to security is as much about intelligent and foolproof software as it is finding and developing the right people.
Like many Americans, I’ll spend this coming “Black Friday” nursing a turkey hangover and shopping the Amazon iPhone app from the couch instead of battling mall crowds. By most accounts, this year’s seasonal retail projections are better than last, but surviving in an increasingly intense competitive environment is no easy feat for retailers. At the heart of the issue is a clear call to arms to understand and satisfy a digitally savvy shopper. So how can retailers and their service providers rise to the challenge of supporting the digital end customer?
Retailers have to embrace disruption or risk replacement
The retail industry is in the midst of monumentous disruption, with the advent of ecommerce and rapidly increasing shopper expectations for an easy, seamless experience. It isn’t just about the shiny front end experience with sexy websites and mobile apps, it’s about an integrated back and middle office that supports those experiences, much like the OneOffice endgame we’ve been talking about.
Most important for retailers now is bridging online and in-store experiences. While online sales are still a relatively small percentage of retail revenues today, smart retail organizations are paying close attention to ecommerce trends in order to avoid a slip into obsolescence, “Blockbuster style.” Traditional retailer bankruptcies and store closing announcements seem constant, while competition among brick and mortar and online shopping sites alike is fierce. Some traditional retailers are betting on unique in-store experiences to revitalize flagging sales, while others are leveraging their vast physical presences to bolster omnichannel sales as points of pick-up or shopping of online purchases. Traditional retail giants like Walmart are betting big on competing in the online shopping space, with its recent acquisition of Jet.com, and it seems like all business are trying to live up to the expectations of the quick, seamless, personalized experience—the “Amazonization” of consumer culture. Meanwhile, the need to support customers who expect to shop using mobile apps on their smartphones and tablets adds another dimension to ensuring competitive relevance.
Automation and cognitive at the front of retail’s journey to OneOffice
Recent survey data shows that the vast majority of retail buyers agree that the impact of cognitive and automation is going to be a critical component of future operations, as well as the necessity to leverage new technologies in order to become more effective. Retailers (along with banking and travel) are leading in experimentation with some of these pilots. For example, the Watson- powered “Macy’s on call” is a pilot in several Macy’s stores allowing customers to type in questions while in store to help them navigate products and facilities. Staples is using IBM’s Watson for ”on-demand ordering”(which by the way, could really impact some outsourcing contracts which are heavily dependent on faxed B2B orders and manual data entry). Banking/ credit card use of bots will also impact the space, for example, Mastercard’s foray into bots which allows shopping on messenger apps.
Use of bots is aimed at improving the customer experience, but creating a simpler, more personalized experience. While bots are changing how retailers communicate with customers, the human touch becomes even more relevant. Even as bots continue to mature, their role is often to simplify the self-service process and/or augment the agent’s work, rather than completely replace it. HGS’ DigiCX platform is an example of a service provider working on an app that “pivots” between agent and bot, a solution which is archetypical for for retail customers.
What this means for service providers:
- Greater requirements for service providers: Engagements may be insourced due to decreased volume as a result of automation/ self-service, placing a greater focus on more complex engagements requiring more from providers. As the data above shows, 83% of retail buyers are expecting their service providers to deliver both technology and process expertise. Areas such as planogramming, supply chain analytics, storefront operations support, core marketing operations, and ecommerce support may often be outside of the traditional definition of BPO skills but will become requirements to do business with retailers. Successful service providers will stitch together a multidisciplinary band of skillsets to successfully target retail operations.
- Flexibility is still a key requirement. Ultimately what will continue to drive a lot of the outsourcing of customer service in retail is the requirement for flexibility, where retail has a unique need for seasonal ramping and flexing. Retail clients we speak to look to service providers as “uber when we need a ride.” We are seeing certain service providers try to address this with alternate delivery models. Examples include relying on a much higher percentage of work-from-home agents that are retained long term and leveraging part-time university talent pools at nearshore destinations (i.e. Jamaica). The challenge of seasonality is not going to go away, and cracking the code on it has the potential to impact revenues at peak times—making retailers particularly amenable to working with innovative service providers in this area.
The Bottom Line: Creating an intelligent retail operation is critical for survival
There is so much more on the horizon for retail today, given the potential capabilities around IoT, augmented reality and other advancing technologies to be used in store and for mobile shopping. For an industry awash in data-- review data, social data, shipping data, etc.—the retail industry still has many more opportunities to get to know its customers, which will only get more complex with time. Given the pace of development and technology, being students of observation and having flexibility to change is critical for retailers to remain in business.