Winning Customers in the Experience Economy
- June 25, 2019
Welcome to the experience economy
SAP CEO Bill McDermott minced no words setting the stage for 2019 SAPPHIRE NOW: “Experience is now the organizing principle of the global economy.” The foremost determining factor in business success or failure, McDermott posited, is “the experience gap” – the difference between customers’ expectation and the experience they actually receive. In today’s experience economy, organizations that provide a truly great experience are richly rewarded. Those that fail to do so are absolutely crushed.
While the customers’ experience is primary, customer-centric organizations understand that every facet of their business impacts all customer interactions. As such, the four core experiences of business — customer, employee, product and brand, must all be gap free to win in the experience economy. Experience gaps are the weakness competitors exploit and the opening through which disruption gains a stranglehold.
The onus is on businesses – B2B and B2C – to quickly identify and rapidly close any experience gaps, end-to-end, in their organization. As today’s unprecedented and unforgiving disruption has proven, failure to do so is pure folly.
The root cause of experience gaps
Experience gaps appear and are widening across all sectors of business at an unprecedented scope and pace. Fundamentally, the root cause of experience gaps is the blistering scope and speed of technological advancements and the failure, borne of inertia and complacency, of most businesses to keep up.
Technology has empowered consumers to choose how, where and when to buy products and services. Customer-friendly digital leaders such as Amazon and Apple steadily raise our expectations for a superior, personalized, fast-and-efficient experience; Uber has made hailing a taxi nearly effortless; Airbnb has redefined travel lodging; Netflix has revolutionized discovering and watching movies… The list goes on and on.
No one likes wasting time on mindless, repetitive tasks. Like consumers, employees expect technology to make their lives easier, more productive and more fulfilling. Clearly, expectations have risen sharply over the past several years. Consumers crave immersion in their world, not the world as defined by staid business practices. They want to participate with a brand that knows them, shares their values, and makes transacting business a natural activity, one that is as engaging as it is helpful, as enjoyable as it is practical, as honest and safe as it is easy, memorable and fun. Consumers crave experiences that are both effortless and satisfying.
Regrettably, this ideal experience is a far cry from the reality we see every day.
The high price of experience gaps
As the cloud, mobility, big-data analytics, AI, IoT and automation collide to spawn a wealth of possibilities and opportunities for improving experiences, businesses face the undeniable, unavoidable truth — the status quo is no longer an option. Whether we call it disruption or evolution, businesses that fail close experience gaps — top-to-bottom, backend-to-frontend, core-to-consumer — are not long for this world.
It’s difficult, if not impossible, to determine the cost of a bad experience, but according to McDermott, en toto, businesses lose out on a $1.6 trillion opportunity by allowing experience gaps to leach potential revenue. Closing gaps and winning in today’s experience economy, McDermott heralds, is a “once-in-a-generation opportunity.”
Here are a few eye-opening stats on the prevalence and price of customer experience gaps:
- According to the recent Salesforce State of the Connected Customer report, 80% of customers say that the experience a company provides is as important as its products or services, and 57% have stopped buying from a company because a competitor provided a better experience.
- According to the PwC and SAP joint study, only 50% of consumers feel they get a consistent and superior experience.
- 67% of customers say their standard for good experiences is higher than they’ve ever been. (Salesforce)
- 76% of customers say they expect companies to understand their needs and expectations. (Salesforce)
- 64% find customer experience more important than price when purchasing something. (Gartner)
- 67% of customers say the will pay more for a great experience. (Salesforce)
- 74% of consumers will likely switch brands if they find the purchasing experience too difficult. (Salesforce)
- VisionCritical estimates the overall impact of bad customer experiences in the United States is more than $537 billion.
- Since acquiring a new customer costs 5X-25X times more than selling to your existing base, poor customer experiences can easily keep your business from growing. Moreover, even a 5% increase in customer retention can increase profits by 25%-95% (HBR).
Closing the experience gap with intelligent technologies from SAP and NTT DATA
In their most recent report, Customers 2020: A Progress Report, the CX exerts at Walker estimate that by 2020 customer experience will be the most important differentiator between brands, overtaking both price and product.
Improving customer experience is the No. 1 driver of IT investments, according to CIO’s State of the CIO study. It is not incidental that improving the customer experience is also the prime objective of any intelligently- conceived digital transformation initiative.
At bottom, digital transformation is about much more than wielding the latest technology. True transformation is about capitalizing on the relationship between technology and customer behavior, and leveraging disruptive technologies to close the gap between businesses and their customers. Closing this experience gap with customers should always be the critical lens through which all transformation projects are evaluated and measured.
The secret sauce for closing this gap is melding operational data (O-data) and experience data (X-data). To this end, SAP has introduced Experience Management to the SAP C/4HANA suite.
Unveiled last June, the SAP C/4HANA vision came to fruition this year at SAPPHIRE NOW with the introduction of SAP Experience Management to the SAP C/4HANA suite.
As part of SAP’s end-to-end business solutions, the SAP C/4HANA suite offers full integration with SAP’s business applications portfolio, led by its market-leading ERP suite, SAP S/4HANA. The combination of assets features new machine learning capabilities from SAP Leonardo, a set of intelligent technologies the company introduced last year, as well as the new SAP HANA Data Management Suite, which enables companies to gain visibility and control of their highly distributed data.
The SAP C/4HANA portfolio includes SAP Marketing Cloud, SAP Commerce Cloud, SAP Service Cloud, SAP Customer Data Cloud and SAP Sales Cloud.
At SAPPHIRE NOW this year—just three months after completing its acquisition of Qualtrics—SAP rolled out its Experience Management (XM) platform—10 new offerings that combine experience data (X-data) with operational data (O-data) to measure and improve the four core experiences of business — customer, employee, product and brand.
Experience management is how organizations compete and win in this experience economy. The XM platform provides the machinery to operationalize experience management and close experience gaps by empowering businesses.
Combining X-data and O-data enables organizations to listen, understand and act on insights that will attract, engage and retain customers, employees, suppliers, partners and other stakeholders.
These new offerings — four for customer experience (CX), three for employee experience and three in market research — embed X-data directly into an enterprise’s applications, such as its CRM, ERP or HCM systems, to drive continuous action and improvement.
The consumer experience now spreads across the internet, apps, email, social media, and brick-and-mortar. Customer experience management is becoming increasingly about crafting a complete, unified customer journey. More than ever before, businesses must take a hard and close look at entire customer journey, clearly identify where they’re falling short, and redesign an experience today’s customers will love, time and time again.
Combined with C/4HANA, the SAP Experience Management platform empowers your organization to:
- Centralize X-data from customers, employees or any other stakeholder at every meaningful touchpoint on a single, enterprise-wide system. This makes it simple for organizations to listen.
- Connect X-data to the operations and processes of their business to understand why things are happening, spot hidden trends and then automatically make recommendations to help correct what doesn’t work and magnify what does.
- Act, which leads to customers who stay longer, buy more and share with friends; and employees who deliver more, build a positive culture and advocate for their brand.
As a recognized "Leader" for the second year in a row in Gartner's Magic Quadrant for CRM and CX Services, Worldwide, NTT DATA is passionate about helping our customers attract and retain today’s digitally-connected customers.
To help our customers better understand the challenges their customers face in doing business with them, NTT DATA takes a pragmatic, holistic approach. We begin with close analysis of the multiple touch points, interactions, functions and processes the customer experiences (directly or indirectly) in doing business with your organization. Armed with this honest and thorough insight, we work with you to re-imagine, in precise detail, what your customer experience should be. Only then do we re-design and implement a feasible, cost-effective, iterative plan comprised of innovative technologies and best practices to reduce customer friction and increase customer loyalty.
Through customer data management, context-driven marketing tools, unified commerce processes and experience management capabilities, SAP solutions delivered by NTT DATA have helped some of the world’s leading businesses to attract, retain and grow a profitable customer base.
Contact NTT DATA today to learn more about how our CX experts and SAP expertise can help you close gaps and win customers in the experience economy.