How to build the Data Foundation to enable Customer and Digital Experience Excellence
An essay on why your data itself doesn’t create any value unless you nail the purpose of its usage and connect the dots.
“Data is the new oil” is an often quoted sentence you probably have read a million times over the past few years, but what does the comparison actually mean? Just as oil is the core enabler for any industrial product that requires the input of fuel, any digital product is enabled by data. Furthermore the success of digital products grows exponentially with the level its underlaying data is managed. But how does something so seemingly dull like data play such an important role for a digital product’s success? The key to this questions lies in understanding what disruptive feature makes some digital products incredibly successful while others are failing miserably.
The disruptive feature: Digital experience excellence
If we take a look at the businesses who have disrupted entire industries lately, we will find that they all have one thing in common, and while you can guess that I will argue that their data management plays an important role here— it’s not their excellent controlling nor their super accurate cookie tracking. Although both are quite important hygiene factors that should not be neglected, controlling and performance monitoring have an introverted perspective on data, telling them about how well the company is doing, while disruptive businesses also use their data to cater to the customer.
If we consider the success of disrupters like Spotify, Netflix or Uber its gets pretty clear that they differentiate themselves from traditional entertainment or driving service suppliers through an outstanding excellence in their digital customer experience. Convenience in experiencing their products is in their very DNA, and putting the customer and his individual preferences into the center of all product design decisions is a must. With a continuous shift towards digitalization of traditional industries, excellent customer experience can no longer exist without an excellent digital experience as well.
A survey from the Kellogg University has shown, that 80% of customers believe Customer and Digital Experience Excellence (C/D XE) to be equally as important as the product itself, while 66% claim that they are even willing to pay more for a product which is enjoyable to use *. The Mannheim School of Management has further conducted a quantitative study, which illustrates a strong correlation between perceived C/D XE and brand loyalty**, which means nothing less than that customer retention is much less of a problem when your customers enjoy using your products — common sense, right?
A higher willingness to pay and an increased brand loyalty should make C/ D XE centric business design a no-brainer. However my time in the Management Consulting industry has unfortunately taught me, that a lot of businesses, though claiming to develop products for the users first, don’t really put the customer experience in the center of all their decisions, but compromise an excellent experience for short-term revenue goals. However, even if an organization is willing to invest in long term innovation strategies, it might not be able to achieve the level of excellence they aspire, due to scarcity of resources. And while I have mentioned data as a valuable resource earlier, it’s not the data that is scarce in most organizations.
If we stick to the analogy of oil as resource to create value in the form of usable energy to fuel our industrialized and digitalized world, we understand that this oil has different states of being. From a production perspective, its first state is the form of crude oil, which has to be acquired, processed and transported to different locations where it can be supplied to the end user. The very same thing has to be done to the raw data that either is intentionally acquired or a natural by-product in the software development process. So much for understanding that raw data itself doesn’t provide value to the end user. To demonstrate how we need to process the available raw data resources the next chapter will provide you with a concrete example how data can be used to enable C/ D XE.
How data enables C/ D XE
Without going too deep into detail, let me briefly summarize what the above image shows: A customer has different needs in different stages during his digital journey, that can and should be addressed by a business that aims to cater to these needs. The digital journey usually starts way before the customer visits your business’ website for the first time (and way before the first cookie is accepted). A very common digital journey starts with a problem or a need that an individual may have, for which he is looking for inspiration or advice on let’s say a search engine (no cookie yet, only a anonymous search query), he further may find an ad (third party cookie) for a relevant product or a relevant blog post that solves his problem (website visitor). He may then be convinced, that the product or service he has found is the best solution for the need he is facing and purchase it ( hits on content and product pages, product add to cart and finally: The transaction). From a sales funnel point of view, the customer journey normally ends here — they have closed the transaction and happy may the customer be.
But from the customer perspective the experience journey may just have started. He may have had a pleasant experience with the purchase experience itself, but he is yet to receive the item (shipping flagged in database), use it and be happy with its usage. If he is not satisfied with the product at all, because what the digital display of the product has promised, did not reflect the actual features of the product, he may return it (return flagged in database). Thereby all cost to close the transaction (ad spending, shipping etc.) are negative revenue and worse — the customer may never purchase another item from this supplier and may leave a negative review (anonymous on third party website), which will also keep others from buying. This demonstrates that the customer journey after the transaction closing, is just as important as every funnel step before.
As you may have noticed, I have put some examples for data points into brackets. These data points combined provide the possibility to analyze the entire digital journey of a customer and cater to needs on the foundation these insights provide. However, not all these data points are collected in the same system nor do they underlay the same structure, dimensionality or information depth. This provides businesses with the challenge to connect different systems, harmonize data structures and transform the data into a usable application that applies business logical insights and processes along the entire digital journey of a customer.
Connecting the dots
Experts who can perform those kind of tasks are Data Engineers, who can build big data infrastructure, Data Scientist who can make sense of unstructured and unconnected data sets and Data Analysts who can monitor shifts in user behavior to steer product development and user experience initiatives, perform tests and experiments and catalyze a data driven mindset into the rest of the organization.
Are you missing any of these skills in your team or are you an expert yourself seeking challenging projects? You are very welcome to visit me and my team at www.img.ag and get in touch!
* Kellog School of Management, „Marketing in a Digital World“ (2018)
** Prof. Dr. Florian Stahl, Maximilian Beichert, Andreas Bayerl (Universität Mannheim) & img, “The Impact of Customer Experience Excellence on Company Success Measures” (2018)