Customers are demanding digital but not to the exclusion of other channels, which remain critically important
Mapping out the journeys customers follow among the channels reveals the most important opportunities for channels to cooperate
Companies can avoid pitfalls by learning about customer pain points and making gradual changes
In sector after sector, companies are asking how they can adapt to the digital world—how they can build more digital capabilities, create more digital offerings, and even become “digital first” organizations.
But for institutions that have served customers for decades in person and over the phone, digital too often falls short. After the debut of a new app, for example, a jump in sales may not be as big as expected, while hoped-for operational efficiencies—such as a reduction in expensive call-center and in-store customer-support requests—hardly materialize.
Executives naturally wonder why: aren’t customers demanding digital? Without question, they are. But not to the exclusion of other channels, which remain critically important.
For example, as much attention (and fear) as Amazon may generate among traditional retailers, as of early 2016 about 92 percent of retail sales in the United States—the company’s home and largest market—were still taking place in person. Furthermore, our analysis of market research confirms that many customers (including large majorities in some markets and industries) want to move freely from channel to channel in an omnichannel experience. Accordingly, the digital end-to-end offerings and internal capabilities that companies are building are important not only in themselves but also in the way they support the other channels (see Driek Desmet, Ewan Duncan, Jay Scanlan, and Marc Singer, “Six building blocks for creating a high-performing digital enterprise,” September 2015).
Retailers have increasingly recognized this reality, with some folding one-time web-only subsidiaries back into their larger businesses. But in other consumer-facing industries, such as financial services or telecommunications, digital efforts often end up becoming just another channel—in effect, a whole set of subchannels including mobile, social, and chat. Given that channel conflicts have bedeviled large companies for decades, with competition among channels sometimes more intense than with the outside world, adding even more to the list is not ideal. The result? More complexity (and cost) for the company and a less-than-optimal experience for customers.
By contrast, integrating digital into an omnichannel experience breaks down barriers for customers—and for performance, allowing companies to hone their digital skills in a way that takes advantage of their strength in traditional channels. But first, companies must break down their own internal barriers, initially by developing a more sophisticated understanding of how their customers think about all of the channel options. Mapping out the journeys customers follow among the channels reveals the most important opportunities for channels to cooperate, forming a list of changes for the company to roll out. Finally, to ensure the changes last, each major journey will need its own leader and cross-unit team—supported by revamped incentive structures to facilitate cooperation, new performance dashboards, a road map for transformation, and clear communications and governance from top executives.
Getting these steps right provides new opportunities to make customers happy—for instance, by letting them start a loan application on their phone before bed and finish it at a branch the next day after asking a few questions via the call center. Capturing moments such as these turns omnichannel into a major growth platform.
After it tightened the links between its digital and traditional channels, a large regional bank increased sales of current-account and personal-loan products by more than 25 percent across all channels (Exhibit 1). And a European telecommunications company saw a 40 percent increase in usage of its online service channel, reducing its costs by more than 20 percent while increasing customer satisfaction by more than five percentage points.
The obstacles to omnichannel
Companies are starting to understand the omnichannel imperative. But getting there is proving unexpectedly difficult.
A bias toward bigness. Part of the reason is a misplaced belief that omnichannel’s massive implications require equally massive actions, such as an entirely new IT platform or organization structure to bring all channels together. Too often that “silver bullet” mentality leads only to a massive misallocation of resources. Instead, the companies that are most successful in making the digital and omnichannel transition concentrate on a long, prioritized list of pragmatic initiatives that, as they are implemented, unleash the value trapped in the intersections among poorly coordinated channels. Collectively these initiatives counter two larger problems:
Disregarding diversity. In our experience, most companies tend to build their digital and omnichannel experience believing that most customers have basically the same needs and follow basically the same journeys. In reality, customers are far more diverse, not only in their needs but also in how they want to meet those needs. For example, a recent survey of North American mobile customers showed that while approximately 35 percent would turn to digital channels first in dealing with an administrative issue, such as a change of billing information, only 24 percent would use digital channels for solving a technical problem. And, of course, even with administrative issues, more than half of customers preferred either in-person or phone resolution, illustrating how many different pathways are possible within the same basic journey. Accommodating these different behaviors will require organizations to understand their customers better while becoming more flexible in allowing for more options to reach the same end point.
Curbing cooperation. But the need for greater flexibility usually bumps into a hardened reality. Despite decades of discussion about conflicting channels, many companies still operate each channel as a separate organization, expecting it to optimize its own performance and service model while showing its own results. Incentives ostensibly designed to encourage performance unintentionally reinforce the channels’ isolation—such as revenue-generation targets that push each channel to increase its own sales volume regardless of any impact on sister channels. Competition becomes even more brutal internally than with the outside world.
The better breakthrough: Start small, from the customer
A better outcome is possible, but only by taking a more disciplined approach to understand how different customers think and behave at each step of their individual journeys. By revealing customers’ most important pain points, the resulting analysis helps the organization see which changes to make first, gradually making an entire process simpler and more effective for customers from beginning to end.
1. Discovering ‘personas’
The first step, describing how customers act, sounds daunting. But it’s actually less so because customers’ behavior usually coalesces around a few major variables. These become the basis for creating “personas” describing major segments of the customer population in a richer way than traditional demographic-based segmentation allows.
For example, in wireless services, the major variables could include customers’ comfort levels with mobile technology, the role mobile technology plays in their lives, their financial sophistication, their occupation, and the way they shop—how much comparison shopping they do and what information sources they use. A “work and play” persona would be a professional who relies heavily on her mobile phone both for her job—communicating with clients, managing her calendar, and making travel arrangements—and for personal activities, such as paying bills, shopping for groceries, and making investments. Her busy schedule leaves little time for shopping, so for major purchases she relies on quick Internet searches to understand features and prices. Her ideal is to buy online and then pick items up in the store on her lunch break, rather than wait for delivery.
By contrast, a “social enthusiast” is a bit younger, less likely to have a job requiring a mobile device, and instead uses his phone mainly to keep up with friends and play multiplayer games. He may be more likely to be on a tight budget, so he researches purchases extensively, looks to social networks for a consensus on the best option, tests it out in person, and sends victorious tweets when he “scores a great deal.”
The same basic patterns repeat across industries—in small-business banking, for example, technology and financial sophistication both matter, as does a business’s size and its financial goals. Describing four to six major personas is usually enough to cover about 80 percent of the customer base.
2. Charting a journey’s map
The next step is to understand the personas’ different needs and follow the steps, both offline and online, that the each persona takes along a given journey. The crucial requirement is to identify the important (and often hidden) pain points that the persona encounters and the resulting areas of opportunity for redesign.
Some of the opportunities may be visible just by mapping all of the current journeys customers can follow across all channels and displaying them together (Exhibit 2). For the regional bank, two points showed particular problems. In the online channel, about 80 percent of customers dropped out rather than fill in a registration form. And in call centers, more than 98 percent of customers did not ask for an offer. A similar map for the European telco found that regardless of which channel customers started in, if they ended up on the online shop, they abandoned their purchases fully 99 percent of the time. Furthermore, across all channels, 30 percent of orders were never activated.
The reasons for these outcomes tend to differ by persona. The work-and-play user’s main challenges center on time: there’s not enough of it. She may grow impatient at sorting through too many options and give up when a form asks for information that she knows the company already has (“They know where I live—my statement arrives every month like clockwork. This is wasting my time.”) Meanwhile, the social-enthusiast user wants to get the best service and product he can get for the lowest price, without committing to a long contract in case a better option comes along later. He may keep getting timed out of his purchase while looking at his social feeds to figure out if the option he’s considering is really the right one.