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Customer Strategist Journal
Innovative strategies for building more profitable customer relationships. Published quarterly online and in print.
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The Innovation Effect

The DNA of CX Innovation

Innovating around the customer experience is one of the few ways that companies today can stay ahead of competitors and disruptive forces. But what does it take to truly drive successful innovation? To find out, we asked analysts and industry experts to deconstruct the DNA of innovative customer experiences. Here are the insights, lessons, and cautionary tales that they shared. 

How do you define innovation in relation to the customer experience? 

Megan Burns: I think CX innovation happens when you give the customer a fundamentally different way to accomplish one or more of their goals. Getting e-receipts from a store gives me proof of purchase (goal) but I don’t have to keep track of any paper (experience). I use Uber to get to the airport, but only ride with licensed livery drivers (a service called Uber Black). Uber’s business model innovation of letting anyone play driver-for-a-day is of no interest to me. What I love about the service is the easier, app-enabled process for hiring, waiting on, and paying a professional driver.

Mila D’Antonio: I think innovation starts within organizations. So many enterprises say they’re innovative because they’ve deployed contemporary tools and digitally disruptive technologies to enable customer experience transformation, or they have slick digital interfaces or chatbots that can answer customer queries. All that is important in the quest to be innovative, but if, behind the scenes, data remains siloed, processes are broken, and key customer stakeholders are not operating interdependently, then the externally facing innovations will ultimately be ineffective in the long term. 

Bruce Temkin: There are three types of customer experience innovations. The first one is any new or novel way to design an interaction that elicits positive emotions from customers. For example, it would be an innovation if an insurance company finds a visual treatment combined with a sound that makes customers feel more comforted and confident at the end of an online process for starting a claim. 

The second form of innovation is the practice of customer experience. For example, if a company gains deep insights from tracking a customer’s online behaviors in a new way, then that’s an innovation. The third area of innovation is the largest—it’s how an organization uses the insights about customers to make smarter business and product decisions. If you think about it, most innovations in a company should be fueled by a deeper insight about customers.

Is an innovative CX idea valuable only if it changes customer behavior? 

Keith Dawson: The goal of CX is to create an environment where what the customers want to do and what you want them to do are as harmonious as possible. And if you can innovate some way to maximize that in the Venn diagram of what you want and what the customer wants, that’s a valuable use of innovation. An innovative CX is also valuable if it changes corporate behavior to create a more influential environment in which you can offer to customers your product in a way that minimizes friction. In other words, innovation is as valuable if it changes internal processes as if it changes customer behavior. 

D’Antonio: For me, changing behavior like increasing web click-through or driving in-store sales is the end result of any CX strategy. Innovative CX is innovative if it provides enterprises with intelligent insights about their customers. The saying, “You can’t see the forest through the trees,” applies here. If a CX idea succeeds at linking, integrating, analyzing, and visualizing customer data so that organizations can see end-to-end customer journeys in real time so that then they can communicate at the right time, right place, or send relevant offers with the goal of changing behavior, then that serves as an innovative CX strategy.

TJ Keitt: The point is to improve the customer’s ability to achieve their goal. I wouldn’t focus so much on whether you need to change customer behavior. Instead, focus on what the customer tells you they’re trying to achieve and whether that behavior is desirable on behalf of the customer. 

Liz Miller: I would argue that the most valuable CX idea is not one that “changes customer behavior,” but in fact one that changes corporate behavior to deliver more precisely on the wants, needs, and expectations of the customer. Innovation in CX is not about making the customer buy more, faster. It is about better tailoring experiences and journeys to create a syncopation between the rhythms of the customer to the rhythms of the brand. Once those two paths align, moments can be created or altered to accelerate the journey or even widen the path. For too many years we have tried to force the customer to adjust in order to meet the pace of the brand. Innovation in CX shifts that view today so that the brand syncopates rhythm to the customer.

Burns: If it doesn’t change what customers do to accomplish their goals, I don’t consider it a CX innovation. There’s a difference in my mind between technology innovation that makes existing experiences better or cheaper and an innovation that changes the experience at a structural level. 

Here are two examples of the former. 

• If I get help from a company via chat I have no idea if the responding party is a human or a bot. What determines the quality of my experience is their knowledge and communication skill, not their species. A firm can get value from using machines in place of humans as long as the two are equally good at answering my questions. Nothing I do as the customer changes. 

• Several companies I know are using technology-driven, personality-based call routing. The core experience for their customers is to call and talk to a person. If the routing works, they are more likely to have good rapport with the employee and therefore a more enjoyable experience. The customer’s loyalty will probably increase. The experience is better, but not structurally different.

What should be the priority of an innovation project—disruption, constant evolution, incremental improvements? Something else?

Dawson: There are one-off things like Uber disrupting the taxi industry, which not every company can aspire to. That’s a once-in-a-generation industry event. If you happen upon a disruptive innovation, good on you, but I wouldn’t waste my precious resources trying to do it. Especially if you already have customers and a business model, you should audit your own processes, tool sets, and capabilities in a market against your competitors and figure out where the opportunities lie. Looking hard at the processes and eliminating the friction points in incremental innovation is smarter for most businesses than trying to redo an entire CX infrastructure. 

Burns: The priority should be finding better ways for customers to accomplish their goals. As for whether to go big or small, I recommend what my friend and former colleague James McQuivey calls “innovating the adjacent possible”—finding the next adjacent possibility that’s useful to customers and giving it to them as quickly as possible. The idea of a single, life-altering breakthrough from one genius inventor or company is exciting, but not the norm. 

What’s the biggest mistake companies make when trying to innovate the customer experience?

Dawson: The biggest mistake isn’t following the shiny object, but rather not putting the shiny object in the context of those who will be affected by it. If the shiny object this year is chatbots or conversational commerce, for example, making sure that everyone in the organization not only buys in, but also understands what’s going to be measured and how it’s going to be justified, is crucial. 

I think another big mistake generally is the inadvertent creation of silos when trying to break down silos. Say you’re adding a new contact center channel like chatbots or Facebook Messenger; if you don’t work on tying that data into existing data and processes transparently, you’re creating another silo that you’ll have to knit together later.

Keitt: A big mistake is becoming too wedded to one customer routine. For instance, Borders was wedded to the idea that the way book lovers discover and acquire books is wandering through a bookstore. So they optimized the customer experience of bookstores and failed to realize that valuable customers were also acquiring books online. 
Borders passed up that opportunity by letting Amazon be its e-commerce channel and then it was too late to reclaim the experience. The lesson is to understand how customers embed things in their lives, what they support, and what you support for the customer without being tied to one pathway.

D’Antonio: Success relies on having a unifying strategy in place—one that is communicated regularly to all employees involved and gets the buy-in regarding any technology investments from a cross-section of the organization. I’ve seen so many organizations over the years make decisions in a vacuum. Also, individual departments often don’t consult the wider organization or even IT before embarking on a new CX initiative. These companies ultimately end up with ubiquitous technologies and more siloed information and strategies. 

To build momentum and create long-term sustainability for a CX initiative requires ongoing communication and cross-enterprise collaboration. Enterprises that have found success have deployed cross-organizational departmental ambassadors to communicate ideas and updates across their organizations; place executives on the front lines to understand firsthand what the customers are experiencing and then weigh in on CX investments; establish multi-disciplinary teams with various skillsets; and instill passion in employees by encouraging their innovative ideas toward the CX initiative.

Temkin: Companies often depend too much on traditional feedback as the basis for innovation. Some of the best innovations come from examining customers’ implicit, unstated needs—the things they don’t even think about telling you when you ask them about your existing products, services, and interactions. You often need to use more qualitative research approaches to uncover the really powerful opportunities for innovation.

Burns: Trying too hard. The best innovations are often so simple you can’t believe no one thought of them, but they kick-start a chain of new possibilities. 
Take the pharmacy startup PillPack, acquired by Amazon in mid-2018. It offers a much better experience than traditional pharmacies because it pre-sorts and groups all of your pills (including vitamins) ahead of time using dosage instructions from prescriptions. No need to fill plastic, day-of-the-week containers on Sunday nights. 

Each PillPack is labeled with the day and time it’s meant to be taken, so if you’re on auto-pilot in the morning (as many of us are these days) the PillPack dispenser helps you know if you’ve taken your pills or not. Add Amazon into the mix, and the possibilities explode. Alexa can remind you when to take your pills, and just by telling her you took your pills she can keep a log that your doctors look at to see how you’re adhering to a treatment plan. Need medications that require refrigeration? No problem. Just send the PillPacks along with the refrigerated portion of your weekly grocery delivery from Whole Foods. None of these ideas are complex, but the combined impact of all of them on the business of healthcare will no doubt be huge. 

Miller: It’s a mistake when rather than innovating for the customer, brands innovate for the sake of innovation…it is lip service to a trend versus an earnest step toward change and growth. Consider the “innovation” of digital advertising. We took ad messages once delivered on TV and just made the files smaller and pushed them out online in a less expensive format and called it innovation. But TRUE digital innovators looked at HOW the customer was engaging across TV and online…understood how and when their customers were engaging and actually shifted content and experience strategies to meet the customer with dedicated and intentional content in the channels the customer expected. That shift is the innovation. That strategy is the innovation.