Transforming your business’s customer relationships starts with understanding their experiences.
In theory, digital technologies make it possible for every business to create fantastic customer experiences and achieve the goal of becoming truly customer centric. The reality is often very different. Consider this statistic: according to 2022 data from the Baymard Institute, 68.8% of all online shopping carts are abandoned. For every 100 people interested enough to put an item in their shopping basket, close to 70 of them will leave without consummating their purchase. Think about that. You’ve spent the money on a great website design. You’ve done the marketing to get that potential customer to visit. You’ve arranged what you think is a pleasing assortment of options for them to buy. You’ve connected with a credit card provider to make the checkout experience seamless. You’ve invested in securing your systems. You have people standing by to man the online chat should a customer have questions. It seems to be working: people are popping items into their digital shopping carts and getting tantalizingly close to the checkout stage. And then something happens. That something, which you may not even know about, causes them to decide, “Oh, never mind.” Maybe you are asking them to set up a user profile, when all they want to do is buy the damn thing. Maybe something about the way you present the payment options looks sketchy. Maybe your shipping fees are a big and nasty surprise. Maybe you can’t get the purchase delivered within the customer’s required window. Maybe they can’t figure out how to navigate from A to B during the checkout process and just give up. Maybe you don’t accept the payment option of the customer’s choice. Or maybe your website is buggy. Whatever the reason, the customer has fled.
The customer consumption chain
To analyse what’s going wrong here, a useful framework is one I call a customer consumption chain. Customers are enmeshed in a whole series of behavioural activities, which you can think of as links in the chain. It starts off with them becoming aware that they might need something you can supply. There’s a search for a solution, then a consideration of alternatives. Then, perhaps, a decision to buy, to make payments, to sign contracts, and so on. You can think of these behavioural links as representing your organization’s relationship with the customer. The consumption chain graphic (below) shows how this might look for a service business. Even a high-level mapping of the consumption experience involves quite a few links.
Here’s the problem, from a customer point of view. They are experiencing the journey as an integrated whole, with one step leading more or less naturally to the next. Your people, on the other hand, are typically focused on the particular step that has been entrusted to them. Because it is efficient, we clump similar activities in similar work units, called ‘functions’. Finance knows all about things like credit-worthiness and the time it takes a customer to pay. Marketing may well have zero knowledge about what customers might have to do to use the product or service. Legal might be whiz-bang at protecting you from future liabilities, but totally unaware of how unfriendly their legalese sounds to customers. Your web designers and programmers may understand your brand and positioning, but have never looked at your sites from a customer point of view.
Using digital to create a customer-centric organizational response
With digital technologies, you can re-imagine how you do things. Sensors can be used to monitor customers’ progress through the consumption chain and throw up red flags. Metrics can get your organization focused on the right leading indicators, letting you take corrective action. Take Amazon – a born-digital company famous for its true customer centricity – and an example offered by Colin Bryar and Bill Carr, authors of a book on the retail giant, called Working Backwards. In it, they explain how the firm uses metrics to get its customers through the consumption chain. Take the ‘selection’ link in the chain, in which a customer picks a product and puts it in the virtual shopping cart. In the early days of Amazon’s expansion from books into other categories, the company made the assumption that more product detail pages on the website meant more choice for customers, and more sales. The result was an explosion of new detail pages as the retail teams responded to the metric. Unfortunately, all that extra choice did not result in more sales (the output metric). Even worse, the metrics team found that the retail teams were adding items that were not in high demand, just to increase the number of pages. They shifted what they measured to the number of detail page views. But this wasn’t perfect either, as a customer might well get to a page, view the item, try to buy it, and then find it was out of stock. That led to the next iteration of the metric, which was pages that were viewed with the items in stock. That was better, but it left out something that was thought to be key to Amazon’s success; namely, that they could deliver lots of things within a 48-hour delivery window. The metric that was finally put into place was the percentage of detail page views in which the products were both in stock and immediately ready for two-day shipping. This ended up being called “Fast Track In Stock”. Note that this doesn’t require management reporting or any interpretation of what the data means – employees can self-manage their tasks and provide a great customer experience without any of that. If you can eliminate the need to tell people what to do, you create a ‘permissionless’ perspective for your people on how to do well by the customer. No management controls needed!
Jobs to be done
A companion idea to the customer consumption chain is that of customer “jobs to be done”. The theory, attributed to Tony Ulwick and the late Clayton Christensen, suggests that instead of thinking of customers buying (or not buying) your offerings, you should think instead about customers hiring (and firing) your offerings to get jobs done in their lives. For example, if the main job I want to get done on your website is to complete my purchase in a short window of time before my next Zoom meeting starts, and you delay me by forcing me to fill out a registration form, I might well fire your website. By using the jobs-to-be-done lens, you will find that the competition you face is probably not even in your industry; that the assumptions you were making about customer behaviour are probably wrong; and even that non-consumption, doing nothing at all, is a viable option for many customers. Let’s take a job that occupies a big place in many people’s lives: getting married. The wedding business is booming – according to the New York Times, 2.5 million weddings are planned in the US for 2022, the most since 1984. While this is happy news for the prospective brides and grooms, every wedding involves some level of expense. If you’re trying to sell anything to people in their peak wedding guest years (probably anyone between about 25-35), you’re competing with weddings.
Behavioural, not demographic, segments
A third idea to refresh your customer relationships is to reconsider your customer segmentation. For decades, it was typical to segment customers on the basis of demographics: age, income, marital status, geographic location and so on. Here’s the problem – the point of segmentation is to be able to target your offerings to specific customer jobs, yet demographic segmentation tells you very little about what the main jobs are. This insight led Paul LeBlanc, president of Southern New Hampshire University, to completely overhaul his university’s operations. The students attending in-person, he realized, were really there for the ‘coming of age’ experience. When prospective students visited the campus, what they wanted to understand wasn’t the detail of the curriculum. Rather, it was questions such as “What social clubs might I want to join?” and “What will the other students here be like?” On-line students, in contrast, have had just about all the ‘coming of age’ they can handle! They are often people whose education was interrupted by life getting in the way: an unexpected job loss, parenthood, or family emergencies that prevented them from getting a degree. For many, not having that degree is the single biggest barrier to their advancement. LeBlanc defined their primary job to be done as “completion”. LeBlanc realized that the enrolment experience had to be completely different for these busy, on-line, mature students. For example, a financial aid discussion with a high school junior could drag on for months. With a busy on-line applicant, it needed to be wrapped up within minutes.
The practical implication of these three ideas is to become a customer insight detective. Pick a couple of customer personas, ideally on the basis of their main behaviours with respect to your offering. Spell out what you think that person’s key behaviours are likely to be, in jobs-to-be-done terms. Then map out their consumption chain as best you can, making sure to capture each moment of transition between one step and the next. Note which trigger events lead a customer to move to the next step, and keep an especially sharp eye out for obstacles that stop them from moving forward. My guess is that you will be surprised at how many people and units in your organization you need to contact to get a complete picture of your customers’ experiences. That’s the experience you’re offering your customer! For each link in the chain, you want to understand what the customer is trying to accomplish, whether there are any obstacles in their way, and how you might make the experience faster, better, less expensive, more convenient, easier – or even make it disappear entirely. With these insights, conduct a candid assessment of how you might use digital technologies to create a much better, more complete, customer experience. Creating a truly customer-centric business in the digital era doesn’t start with the technology – nor even with your product or service offerings. It starts, and ends, with customer experience. As consumers we know this, because we are hiring and firing products and services all the time. Gathering insight about the whole consumption chain, digging deeply into the jobs customers want to get done and looking at customers through a behavioural lens are rich pathways to insight – no IT required! Rita Gunther McGrath is professor of management at Columbia Business School and teaches on Duke CE’s Building Strategic Agility course.