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N° 06 AUGUST 2014 
Crafting a Compelling Digital Customer Experience 
• Zappos: The Digital Age Benchmark on Customer Service - Darrin Shamo • Nissan: Steering a Path to the 
Digital Customer - Andy Palmer • Where Digital Meets Physical: Mercedes-Benz and the Seamless Customer 
Experience - Ola Källenius • When Amazon Meets Facebook: Social Shopping with a Twist - Nathalie Gaveau 
• Remixing the Customer Experience for a Digital World - Renée Gosline • Lithium Technologies: RIP for 
Traditional CRM as the New World of C2C Kicks in - Rob Tarkoff • Rewired: Crafting a Digital Customer 
Experience For Today’s Connected Customer by Capgemini Consulting • Surviving and Thriving in an Age of 
Digital Disruption: An Interview with Tim O’Reilly
N° 06 AUGUST 2014 
Crafting a Compelling Digital 
Customer Experience 
Capgemini Consulting’s Editorial Board 
Xavier Hochet CEO 
xavier.hochet@capgemini.com 
Ken Toombs Deputy CEO and USA Regional Head 
ken.toombs@capgemini.com 
Didier Bonnet Global Head of Practices 
didier.bonnet@capgemini.com, 
@didiebon 
Jerome Buvat Head of Research 
The Digital Transformation 
jerome.buvat@capgemini.com, 
@jeromebuvat 
DI G I TAL TRANSFORMATION REVIEW N° 06 
dtri.in@capgemini.com 
Research Institute 
www.capgemini-consulting.com 
@capgeminiconsul 
www.linkedin.com/company/capgemini-consulting
Contents 
6 
12 
20 
26 
34 
Rebooting the Digital Customer Experience 
Introduction by Capgemini Consulting’s Editorial Board 
Delivering Compelling Customer Experiences, Digitally 
Zappos: The Digital Age Benchmark 
on Customer Service 
Nissan: Steering a Path to the Digital Customer 
Where Digital Meets Physical: 
Mercedes-Benz and the Seamless Customer Experience 
When Amazon meets Facebook: 
Social Shopping with a Twist
Lithium Technologies: RIP for Traditional CRM as the 42 
New World of C2C Kicks in 
50 Remixing the Customer Experience for a Digital World: 
An Interview with Renée Gosline, 
MIT Sloan School of Management 
58 
68 
Marketing Reinvented for the Digital Age 
Rewired: Crafting a Digital Customer Experience 
by Capgemini Consulting 
Special Guest 
Surviving and Thriving in an Age of 
Digital Disruption: An Interview with Tim O’Reilly
Rebooting the Digital Customer Experience 
Rebooting the Digital Customer Experience 
Introduction By Capgemini Consulting’s Editorial Board 
The significance of the customer 
experience is not in doubt. In 
a survey, 70% of respondents 
said that good service had a 
considerable influence on 
their loyalty and 69% would 
recommend the company to 
othersi. The reverse is also true. 
Poor customer experience drives 
customers away. Research shows 
that nearly 89% of customers 
walk away from a company after a 
single poor customer experienceii. 
And this can have a significant 
impact. Businesses are estimated 
to lose as much as 20% of revenue 
from poor customer experiencesiii. 
So, given the importance of 
the customer experience, are 
organizations doing enough to create 
a compelling experience for their 
customers in the digital domain? 
Unfortunately, it would appear not. 
While 91% of organizations wish 
to be considered a customer 
experience leader in their 
industry, only 37% are 
getting started with 
a formal customer 
experience initiativeiv. 
6 DI G I TA L TR ANS F O RM 
Getting the digital customer 
experience right is critical. In 
the pre-digital world, a poor 
experience posed less risk in terms 
of volume of loss or widespread 
reputational damage, as the poor 
experience of the customer was 
limited to his or her immediate 
social network. In recent years, 
however, this has changed 
radically. The explosive spread 
of digital social platforms means 
that customers have scale — they 
can create a wave of negative 
noise in a way that was previously 
unimaginable. 
So, where does this leave 
organizations? How can they 
create compelling digital customer 
experiences that work? In this 
sixth edition of the Digital 
Transformation Review, we posed 
this very question to a diverse 
panel from around the world. Our 
panel for this edition includes 
industry leaders, academics, startup 
founders, platform vendors and 
technology gurus. They come from 
all over the world, including the 
home of innovation in the digital 
age — Silicon Valley (see Figure 1). 
While 91% of 
organizations wish 
to be considered a 
customer experience 
leader in their 
industry, only 37% 
are getting started 
with a formal 
customer experience 
initiative. 
i New Voice Media, “A nation of serial switchers : The multibillion dollar cost of 
poor customer service”, January 2014 
ii CMO, “Just How High Is The Price For Delivering A Poor Customer Experience?”, 
September 2013 
iii Oracle, “Global Insights on Succeeding in the Customer Experience Era”, 2013 
iv Oracle, “Global Insights on Succeeding in the Customer Experience Era”, 2013
What’s New in Digital: The 
View from the Academic and 
Cutting-Edge Startups 
Where should organizations 
start? A good first step in creating 
a compelling digital customer 
experience is to understand what’s 
new with digital. Renée Gosline, 
from the MIT Sloan School of 
Management, spoke to us about 
the impact of technological shifts 
on customer experience and how 
organizations can connect with 
customers in a digital world. 
She highlights how Consumer-to- 
Consumer (C2C) interactions 
influence customer perceptions 
in a digital world, and what this 
means for CMOs. She puts the 
importance of C2C like this, “Until 
CMOs realize that consumers 
co-create their brand, they are 
really not grasping what it takes 
to form deep relationships with 
consumers.” 
Startups are increasingly breaking 
the mould of customer engagement. 
In many ways, they can serve as an 
inspiration to those seeking to meet 
and exceed the expectations of 
the digital consumer. Shopcade, a 
social commerce startup that could 
be described as a cross between 
DIGITAL TRANSFORMATION REVIEW 
Amazon and Facebook, has focused 
its efforts on delivering a lean and 
simple online shopping experience, 
bolstered by rich, personalized 
content. We spoke with Nathalie 
Gaveau, Founder and CEO of 
Shopcade, to understand how 
the startup leverages social and 
mobile technologies to do so. 
Nathalie’s view that “Content is 
trumping advertising when it 
comes to effective interaction and 
engagement with consumers” 
embodies an important lesson for 
traditional marketers. 
7 
Figure 1: Map of Guest Contributors for the Digital Transformation Review VI
Rebooting the Digital Customer Experience 
8 DI G I TA L TR ANS F O RMAT I ON RE V I EW N° 06 
Making It Real: How Lithium 
Technologies is Transforming 
Customer Engagement 
“Not all those who wander are 
lost,” observed author J.R.R. 
Tolkien. And this aphorism holds 
true for creating compelling 
digital customer experiences: 
there are many paths to creating 
a compelling experience. Lithium 
Technologies, for instance, helps 
organizations transform the way 
they manage customer engagement 
and brand management through 
C2C interaction and online 
social communities. At the core, 
they enable companies to create 
communities of highly engaged 
customers so that they can help 
one another. If 43% of customers 
expect a response within an hour 
of posting a problem, they are 
best addressed by the wisdom of 
the crowds, rather than dedicated 
customer service agents. As Rob 
Tarkoff, the President and CEO 
of the company, says, “Brand-specific 
communities enable 
customers to interact with the 
organization directly and this level 
of engagement fosters customer 
loyalty.” 
with Ola Källenius, Member of the 
Divisional Board of Mercedes- 
Benz Cars responsible for 
Marketing & Sales, to understand 
how the marquee brand is adapting 
its approach to customer experience 
in the wake of digital disruptions. 
Ola describes the organizational 
changes that Mercedes-Benz 
implemented in order to enhance 
the digital customer experience, 
saying: “We created a customer 
experience function with a project 
and organizational leadership 
model that is based entirely around 
the customer journey.” 
It is clear that the automotive 
industry faces significant digital 
change in the customer sphere. For 
example, customer comfort with 
online purchase of items, such as 
a car, is growing. Our latest Cars 
Online study indicates that as 
many as 44% of people surveyed 
were likely to purchase a vehicle 
online. It is behaviors like these 
that are shaping the industry’s 
response to the digital customer 
experience. Andy Palmer, Chief 
Planning Officer and Member 
of the Board at Nissan Motor 
Co., highlights the impact of 
evolving customer preferences on 
automotive marketing. Andy sets 
out the context for the discussion 
when he says, “We are on the cusp 
of one of the most radical changes 
in the way that you buy cars in 
125 years.” 
Amazon-owned online retailer 
Zappos has a different take on 
how customer experience needs 
to be addressed in the digital 
age. The company encourages 
customers to dial into its call 
center and engages them in 
extensive conversations, which 
in one case has stretched to, as 
long as, ten hours! As Darrin 
Shamo, the Director of Direct 
and Online Marketing at Zappos 
explains, “We do not follow any 
productivity metrics that are 
designed to reduce the volume of 
calls coming into our call center 
or the time spent on the call.” 
Digital Convergence: A 
Driver’s-Seat Perspective from 
the Auto Industry 
However, the realm of exceptional 
customer experience is not limited 
to startups. In this issue, we also 
shine a light on some of the leading 
brands in the automotive industry 
that have made significant strides 
in bridging the online and offline 
worlds. The automotive industry 
offers an interesting example of 
an area where multiple technology 
trends are coming to fruition at 
around the same time. Intelligent 
highways embedded with sensors, 
autonomous vehicles, and digital 
showrooms are all converging to 
create new challenges for large 
automotive players in managing 
customer experience. We spoke
DIGITAL TRANSFORMATION REVIEW 
place the insights of our panel, is to 
shed some light on these very areas. 
We have urged our readers to create 
customer experiences that are 
compelling, and we hope you find the 
contents of this Review compelling 
reading. If you would like to discuss 
the ideas raised here in more detail, 
then please do get in touch. 
As this edition of the Review shows, 
getting digital customer experience 
right is a journey. There is no one secret 
recipe for getting it right the first time. 
Organizations will need a forensic 
understanding of customer behavior, 
smart investments in digital channels, 
the ability to harness customer data 
and, finally, the ability to creatively 
mesh physical and digital experiences. 
Our aim, by gathering together in one 
DI G I TAL TRANSFORMATION REVIEW N° 06 9 
Crafting a Compelling Customer 
Experience: The View from 
Capgemini Consulting 
Capgemini Consulting’s own 
view on customer experience 
is that it needs to be totally 
rewired for the digital age. We 
believe organizations need to 
take an outside-in approach 
in understanding customer 
interactions, invest smartly in 
digital channels focusing on 
impact, become data-driven and 
mesh the physical with the digital 
to create a continuum of experience 
(see Figure 2). 
Digital Revolution: The View 
from Tim O’Reilly 
Silicon Valley has embedded 
itself at the heart of the world’s 
digital revolutions. The range of 
companies that have sprung up 
from the valley, and their impact, 
are already the subject matter of 
case studies in business schools 
around the world. And who better 
to close this edition of the Review 
than Tim O’Reilly, leading Silicon 
Valley intellectual, technology icon 
and venture capitalist. Tim speaks 
on the importance of platforms, the 
latest wave of digital disruptions 
and how companies can and should 
react. In closing, Tim provides what 
can indeed appear as counter-intuitive 
to traditional companies 
across sectors, “Organizations 
should actively resist winner-takes- 
all strategies.” 
Figure 2: Creating a Digital Customer Experience 
Source: Capgemini Consulting Analysis 
For more information, please contact: 
Digital Transformation: 
Didier Bonnet (didier.bonnet@capgemini.com, @didiebon) 
Digital Customer Experience: 
Steffen Elsaesser (steffen.elsaesser@capgemini.com, @SElsaesser) 
Patrick Ferraris (patrick.ferraris@capgemini.com, @pgferrar) 
Scott Clarke (scott.clarke@capgemini.com, @ScottDClarke)
10 DI G I TA L TR ANS F O RMAT I ON RE V I EW N° 06
Delivering Compelling 
Customer Experiences, Digitally 
DI G I TAL TRANSFORMATION REVIEW N° 06 11
Zappos: The Digital Age Benchmark on Customer Service 
Zappos: The Digital Age 
Benchmark on 
Customer Service 
Interview with 
Darrin Shamo 
– Director of Direct and Online 
Marketing at Zappos 
Zappos is an online shoe and clothing retailer based out of Las Vegas, 
Nevada. Started in 1999, the company achieved $1 billion in annual 
sales in 2008 and was acquired by Amazon in 2009 for an all-stock 
deal worth $1.2 billion. Zappos has continually been rated amongst the best 
customer service providers, banking significantly on word-of-mouth publicity 
from its consumers. Capgemini Consulting spoke with Darrin Shamo, Director 
of Direct and Online Marketing at Zappos, to understand more about their 
approach towards customer service. 
12 DI G I TA L TR ANS F O RMAT I ON RE V I EW N° 06
Making Customer Service a 
Key Element of Zappos' DNA 
Zappos’ tagline says “Powered 
by Service”. Zappos has 
been praised many times for 
the quality of its customer 
experience. How has Zappos 
been able to make customer 
service an integral part of its 
organizational culture? 
Our obsession with customer 
experience started long time ago. 
We determined that we wanted to 
be the absolute best when it came 
to customer service and many of 
our decisions in the early days 
were built around this vision, 
even if they came at a significant 
loss in the short term. For 
instance, we decided to control 
our entire inventory and own 
the entire customer experience 
from start to finish. While every 
other pure play retailer was drop-shipping, 
we went against the 
flow and moved our inventory in-house. 
Anything that was on the 
website for sale was available in 
our warehouse. This prevented the 
need for placing back-orders and 
enabled a stable delivery window 
that our customers could depend 
on. 
We wanted to be 
the absolute best in 
customer service, 
even if that came at 
a significant loss in 
the short term. 
We further invested in people 
to develop an organizational 
culture around customer service. 
All employees go through a 
four-week call center training 
course before they start in their 
official position, and each holiday 
season the entire work force, 
even the CEO, goes back to the 
phones to handle the volume. 
Once employees near the end of 
their training, we offer successful 
candidates up to $4,000 to quit. 
The idea behind this is to weed 
out people who are not a match 
to the customer service culture 
at Zappos. Those that choose to 
stay are more committed and 
passionate. 
DIGITAL TRANSFORMATION REVIEW 
How has this focus on customer 
service been beneficial for 
Zappos? 
Many publications put together 
lists of companies that are rated the 
best in customer service and every 
year we — along with our parent 
company, Amazon — feature near 
the top of that list. It is surprising to 
see that two companies — Amazon 
and Zappos — with very differing 
approaches to customer service, 
come out on top every year. The 
Amazon approach is technology-centric 
while the Zappos approach 
is people-centric. 
We invest in 
people to develop 
an organizational 
culture around 
customer service. 
All employees go 
through a four-week 
call center training 
course. 
DI G I TAL TRANSFORMATION REVIEW N° 06 13
For instance, Amazon employs 
call center usage as a customer 
service metric. If call volume 
increases, there is likely a process 
breakdown and technology is 
employed to correct it. Zappos, on 
the other hand, tries to increase 
call center volume as a means to 
enhance the customer experience. 
We have our phone number listed 
prominently in the global header 
of the website, which makes it 
visible on every page of the site, 
to encourage people to call in. 
Apart from being rated as one of 
the best companies in delivering 
customer service, we have been 
able to retain our consumers’ 
loyalty. In fact, 75% of our business 
comes from repeat consumers. 
We do not follow 
any productivity 
metrics that are 
designed to reduce 
the volume of calls 
coming into our call 
center or the time 
spent on the call. 
You mentioned that you 
encourage customers to call 
you. What is the role of the 
call center in building a great 
customer experience? 
As an organization focused on 
delivering exemplary customer 
service, Zappos is on a continual 
quest to create a 1-to-1 connection 
with our customers. In fact, we feel 
that our biggest competitors are 
not online retailers but rather brick-and- 
mortar companies because 
they have the opportunity to greet 
their consumers at the door. While 
various technical developments, 
such as personalized retargeting, 
triggered communication and 
master data management, help us 
reach customers in a personalized 
and relevant way, we believe that 
person-to-person connections are 
still the most effective method of 
interaction. Our call center aids us in 
achieving this — it helps us connect 
with consumers on a personal level 
and leaves them feeling heard and 
ultimately WOWed. 
We try to get as close to the 
consumer as possible by 
controlling the whole process of 
communication and incentivizing 
it. For instance, we do not follow 
any productivity metrics that are 
designed to reduce the volume of 
calls coming into our call center 
or the time spent on the call. In 
fact, we encourage our employees 
across the organization to spend 
more time interacting with 
consumers. We try to focus on 
long-term health measurements 
rather than looking at short-term 
costs. We have found that if you 
can deliver a better experience 
to consumers coming through 
the call centers, you can expect a 
higher lifetime value. 
Every year, both 
Amazon and Zappos 
are rated among the 
best in customer 
service, despite very 
different approaches 
to customer service. 
14 DI G I TA L TR ANS F O RMAT I ON RE V I EW N° 06 
We feel that our 
biggest competitors 
are not online 
retailers but rather 
brick-and-mortar 
companies because 
they have the 
opportunity to greet 
their consumers at 
the door. 
Zappos: The Digital Age Benchmark on Customer Service
Innovating for an Enhanced 
Customer Experience 
How has innovation helped 
Zappos deliver an enhanced 
customer experience? 
Zappos, as an organization, is 
built very differently from other 
companies and this has helped 
us foster innovation. At Zappos, 
we believe in stepping back 
and allowing people to be who 
they need to be. I spoke about 
how rigorous our selection and 
training criteria are. For the 
people who make it through this 
process, we give them autonomy 
to really impact things the way 
they see it. We don’t hire all Ivy 
League students. We hire above 
average people but then we give 
them the room to self-actualize. 
Currently, we are rolling out 
a new management style at 
Zappos termed “Holacracy”. It 
is a unique management style 
that distributes the authority of 
leadership to influence various 
decisions. Managers are replaced 
by a concept of lead links. These 
lead links are given a great deal of 
authority to take control of their 
circles and all the accountabilities 
that fall into their sphere of 
influence. This concept of lead 
links results in the formation 
of small groups of independent 
and entrepreneurial employees, 
impacting specific areas of the 
business in an autonomous way. 
We are rolling out 
a new management 
style at Zappos 
termed “Holacracy”. 
It is a unique 
management style 
that distributes 
the authority 
of leadership to 
influence various 
decisions. 
As most businesses grow, the 
productivity per individual 
employee decreases and a large 
part of this can be attributed 
to bureaucratic governance 
structures. In a way, the idea 
behind “Holacracy” is to 
distribute that authority and put 
it in the hands of entrepreneurial 
people who can take decisions for 
their domain. Currently, we are 
around 1,500 employees strong, 
and in order to scale without 
DIGITAL TRANSFORMATION REVIEW 
compromising our core goals, we 
need a management structure that 
will allow our teams to continue 
to grow. This can only happen if 
we can eliminate the bureaucracy 
inherent in other large businesses. 
We try to focus on 
long-term health 
measurements rather 
than looking at 
short-term costs. 
DI G I TAL TRANSFORMATION REVIEW N° 06 15
Digital transformation review no 6   dtr - capgemini consulting - digitaltransformation
DIGITAL TRANSFORMATION REVIEW 
There’s a lot 
of information 
available on 
consumers, though 
we’re very selective 
with what we use 
and how we use it. 
DI G I TAL TRANSFORMATION REVIEW N° 06 17 
Customizing the Digital 
Customer Experience 
How does Zappos deliver a 
personalized experience to 
customers? 
We know what people have viewed 
over the Web, what works for 
them and what they like. We take 
all this information and factor in 
certain predictors of intent, such as 
weather, and use all of this to create 
a relevant experience without 
crossing over to becoming creepy. 
These results are then mapped to 
our product catalogue and used 
to deliver customized products. 
This leads to an increased positive 
utility and enhanced shopping 
experience for the consumer. 
A similar process is used for 
personalized retargeting. We have 
the ability to take information on 
what has worked for them on site — 
or is similar to what they like — and 
use this to share relevant products 
throughout the open Web. 
We a r e a l s o d e l i v e r i n g 
personalized experiences through 
our advertisements. For instance, 
we have created weather-based 
ad units. These ad units integrate 
local weather information with 
existing details of a customer’s 
preferred products. The end result 
is a personalized experience based 
on the user’s preference and 
weather conditions. So, if Boston 
were to expect snow on Saturday, 
the advertisement to the customer 
would read — “18” of snow this 
Saturday, here are some boots to 
help you dig yourself out”. The 
ad unit ultimately enables us to 
provide utility to the customer 
while acting on the intent with 
relevant products. 
How do you use available 
customer information to deliver 
an experience that is different 
from others? 
There’s a lot of information 
available on consumers, though 
we’re very selective with what 
we use and how we use it. We 
take great care to ensure that the 
ultimate experience is relevant 
rather than creepy. We want 
our customers to feel that we 
understand them and their needs 
rather than feeling stalked. We 
try to take subtle cues rather than 
ingest all the information that 
is available. In some instances, 
this selected information is then 
passed through a platform like a 
recommendation engine before it 
is delivered back to the consumer. 
Marketing in the Digital Age 
Many CMOs are calling for 
reinvention of marketing. What 
are your views on it? 
I would agree that it is time for 
marketing to be reinvented. It 
has become too channel-focused. 
A siloed channel approach does 
not look into various events or 
aspects affecting the purchase; 
it only focuses on whether the 
organization was able to generate 
revenues in the short-term from 
the consumer.
Zappos: The Digital Age Benchmark on Customer Service 
Marketing strategies have to 
become more customer-centric. 
Organizations should move 
towards assessing the value and 
needs at the customer level. This is 
not just from a dollar standpoint, 
but how likely are they to engage 
with the organization over a 
longer period of time. In order 
to achieve this, they need to 
develop a comprehensive view of 
their consumers across various 
touch points and interact with 
them through the entire shopping 
journey. 
How do you see the role of 
technology in the future of 
marketing? 
The future of marketing lies in the 
development of systems to better 
understand the causal effects 
of customer happiness and the 
predictive value of customers. If 
you have a good understanding of 
the motivators for your consumers 
and their causal effects, it is easier 
for you to employ a successful 
marketing strategy. Technology 
and math can help organizations 
with this. This places additional 
pressure on marketers to be 
more aware of technology. The 
future marketeer will have a 
stronger focus on technology and 
consumer behavior than they do 
today. 
The future of 
marketing lies in 
the development of 
systems to better 
understand the 
causal effects of 
customer happiness 
and the predictive 
value of customers. 
18 DI G I TA L TR ANS F O RMAT I ON RE V I EW N° 06
Digital transformation review no 6   dtr - capgemini consulting - digitaltransformation
Nissan: Steering a Path to the Digital Customer 
Nissan: Steering a Path to 
the Digital Customer 
Interview with 
Andy Palmer 
– Chief Planning Officer and 
Member of the Executive Committee 
of Nissan Motor Co., Ltd. 
Nissan Motor Co., Ltd. is one of the leading global automotive 
manufacturers. The company is based in Yokohama, Japan and offers 
products and services in approx. 170 markets worldwide. In 2013, 
Nissan sold nearly 5.2 million vehicles, generating net revenue of $105 billion. 
Capgemini Consulting spoke with Andy Palmer — Chief Planning Officer and 
Member of the Executive Committee of Nissan — to understand Nissan’s view 
on the digital customer and how it affects traditional marketing. Andy also 
handles Global Marketing Communications for Nissan. 
20 DI G I TA L TR ANS F O RMAT I ON RE V I EW N° 06
The Changing Digital 
Customer Relationship 
How do you think digital 
technology is changing the 
traditional manufacturer-customer 
relationship in the 
automotive sector? 
I think we are on the cusp of one 
of the most radical changes in the 
way that you buy cars in 125 years. 
Historically, it took customers 
around 7 trips amongst various 
dealers before they finalized a car 
purchase. In recent years, post the 
advent of digital technologies, that 
number is down to 1.5. That means, 
by the time the customer comes to 
the dealer, they are coming down 
to the selection of two competitors. 
They are either coming for a test 
drive or they are coming to make 
a transaction. They have already 
looked at reviews, peer group 
comparison sites, and consumer 
reports, all online. So they come 
highly empowered. And in markets 
such as the US, they also know the 
typical transaction price, leaving 
little room for negotiation either. 
In previous times, 
the customer journey 
began the first time 
a customer walked 
into a dealer. Now, 
it is 6 to 12 months 
before purchase 
intention. 
Once the transaction is completed, 
it’s very important that we 
continue that digital journey. The 
car that a customer is buying today 
or in the future is likely connected 
to the Internet. Therefore, it’s 
important that we continue the 
relationship with the customer 
and the car. In previous times, the 
customer journey began the first 
time a customer walked into a 
dealer. Now, it is probably 6 to 12 
months before purchase intention, 
and that continues throughout the 
life of vehicle ownership. 
DIGITAL TRANSFORMATION REVIEW 
You talked about your 
willingness to continue the 
relationship with the customer 
after the purchase of the car. 
Can you give us some examples 
on how you are doing that? 
Let’s look at a couple of our 
products, the Leaf and the Infiniti 
Q50, which are both permanently 
connected to the Internet. 
With the Leaf, we are continuously 
monitoring the state of the battery 
and, if there is a problem, we can 
immediately contact the customer 
to highlight the concern. With 
the Infiniti Q50, we have two 
categories of applications. One is 
embedded apps and the other is 
downloadable apps. With one set 
of applications, you can download 
information and update them 
directly. So, bugs in software can 
be updated remotely, as opposed to 
recalling the car as you would have 
done in the past. In this case, we 
are using digital communication 
to ease the experience that the 
customer has after a purchase. 
How does such an evolving 
customer relationship impact 
the traditional role of a dealer? 
Historically, visiting the 
dealership is not always the most 
enjoyable experience and therein 
lies where we, as an industry, have 
to change. The role of the dealer 
obviously becomes different 
when the traffic is basically 
DI G I TAL TRANSFORMATION REVIEW N° 06 21 
We are on the cusp 
of one of the most 
radical changes in 
the way that you buy 
cars in 125 years.
Nissan: Steering a Path to the Digital Customer 
Looking forward, I would say 
that making the deal is less 
significant. However, attracting 
the customer into the dealership 
using digital channels is what 
gains in importance. The brand 
attribute and the behavior of the 
dealership become extraordinarily 
important. And then, in after-sales, 
there needs to be a more 
proactive relationship that is 
based on the data that we now 
have access to. 
Driving Around with Data 
The growing number of sensors 
inside cars is giving rise to a 
lot of data. How do you intend 
to use this data going forward? 
I think it was around ten years 
or so ago when the value of 
electronics in the car exceeded 
the value of the engine. That’s 
evermore true. Electronics in the 
vehicle informatics, in particular, 
will become a greater proportion 
of the value of the car as we go 
forward. Every time a customer 
presses “OK” on their Leaf 
vehicle, the vehicle will basically 
transmit the journey that the 
vehicle has done, the state of the 
battery, and various other pieces 
of information. We discard all of 
the owner experiences and use 
the essential data. That gives us, 
for example, traffic patterns. So 
we can go and look at a particular 
city. We can then deep dive and 
look at the usage of our vehicles 
there and see data over a period 
of time. This helps us understand 
typically what type of journey has 
been undertaken, what kind of 
charging patterns have been used, 
and when people are charging the 
car. We can use this information to 
work with city planners to identify 
where traffic jams are and where 
we can put additional charging 
stations to make the customer’s 
life easier. 
coming down for deal closure. 
The dealer needs to very much 
be the brand ambassador in the 
digital age; it needs to carry the 
brand. Remember that when your 
customers come to your dealer, 
you basically have one shot at 
impressing them and impressing 
upon them the meaning of the 
brand. If you mess it up then 
that’s basically going to be the 
lasting impression. You don’t get 
a second bite of the cherry. So, I 
would say that the dealer becomes 
more of a brand ambassador 
going forward. They also become 
much more important in terms 
of the ongoing relationship that 
you have with the customer. So, 
through CRM systems, you need 
to know who your customer is. 
You need to be able to recognize 
them when they come into the 
dealership. You need to be able to 
communicate with them not only 
through flyers, but using digital 
channels. 
Dealers need to 
turn into brand 
ambassadors in the 
digital age. 
22 DI G I TA L TR ANS F O RMAT I ON RE V I EW N° 06 
The biggest 
commercial 
opportunity we 
have around Big 
Data right now is in 
marketing. 
Our customers 
today come highly 
empowered, armed 
with significant 
information.
Within the company, we try to 
focus our data crunching efforts 
on where the biggest business 
opportunities exist. In the first 
instance, we were using data to 
largely monitor the health of the 
car. I would say that the biggest 
commercial opportunity we have 
around Big Data right now is 
probably in marketing — how to 
market to our customers and how 
to improve retention through 
enhanced user experience. 
How easy or challenging is it 
to encourage a data-driven 
culture in the organization? 
Typically, Japanese companies are 
usually data-driven. Therefore, the 
idea of having more data resonates 
reasonably well within this 
company. However, the challenge 
is that there is too much data. 
Basically, we have to make difficult 
decisions on what analysis to do 
with the huge amount of data that 
we have in front of us. If we took 
everybody’s requests, we would be 
cutting the data a million different 
ways. 
Where should an organization 
like Nissan draw the line when 
it comes to data privacy? 
The trust that your customers 
have in you entirely drives the 
brand reputation of organizations. 
Privacy needs to be as defined by 
the customer, not the company. 
And it has to be protected at all 
costs. And this protection comes 
at two levels. One is to ensure we 
separate all customer data specifics 
from the data we collect so we 
only have patterns to analyze. 
The other is to protect this data 
from cyberattacks. We have to be, 
I think, more guarded particularly 
in terms of cyber theft at the levels 
of the server, the smartphone and 
the car. 
DIGITAL TRANSFORMATION REVIEW 
DI G I TAL TRANSFORMATION REVIEW N° 06 23 
The challenge with 
Big Data is that we 
have too much data. 
Privacy needs to be 
as defined by the 
customer, not the 
company. 
The Advent of the Digital 
Marketing Offi cer 
Do you see the traditional 
boundaries of marketing being 
redefined? 
In Nissan, I am responsible 
for product planning, product 
marketing, and sales. So, my 
own responsibilities reflect the 
changing scope of the modern-day 
marketing professional. 
There is a huge blurring of roles 
between what is the traditionally 
engineering-led product planning 
type of activity and marketing. 
And more importantly, they need 
to talk to each other and not sit in 
separate buckets. Our organization 
brings marketing and sales four to 
five years upstream from where 
a typical marketing organization 
lies today. By doing so, we have 
a greater control over all of the 
attributes that typically make up 
an internal contract. For instance, 
for a new car, our marketing 
department has already made the 
mood video in a way that we are 
going to advertise the car, the PR 
department has already written 
the press release, our assessment 
engineers have already analyzed 
what the road test and group 
reports will say about the car.
The Future of Technology 
and Automotive 
What are the biggest 
challenges that you foresee 
in greater adoption of digital 
technologies? 
There are numerous examples of 
putting digital technology into 
cars that just make the lives of 
customers harder. I think the key 
is to strip out complexity from our 
customers’ lives. We already have 
extremely complicated lives. This 
is all the more true when we look 
at Gen Y and Gen Z consumers, 
particularly, the millennials. 
They’re looking forward to finding 
more time to experience social 
media and interact with their 
friends online. They’re looking for 
the machine to take the problem 
away from them rather than give 
them more problems. 
Nissan: Steering a Path to the Digital Customer 
We've already started planning 
out the digital interfaces. The sales 
department is already thinking 
about how you sell that car, both 
online and offline. So, that blurring 
is most definitely happening. You 
very much have to work out of 
your functional chimneys. 
There is a huge 
blurring of roles 
between what is 
the traditionally 
engineering-led 
product planning 
type of activity and 
marketing. 
How do you manage to create 
internal governance structures 
in such a scenario? 
Traditionally, automotive companies 
such as Nissan have program 
directors for each physical platform 
on which car models are built. These 
program directors typically manage 
the different models from start 
to finish. However, at Nissan we 
realized that beyond the platform 
approach there are new megatrends 
driven by digital technologies 
that we need to address across the 
company. The three megatrends 
we identified were connected cars, 
autonomous car and zero emissions. 
Now, each of these megatrends, 
CMOs need to 
have a grasp of 
mathematics, 
statistics, data 
technology as 
well as digital 
technology. 
24 DI G I TA L TR ANS F O RMAT I ON RE V I EW N° 06 
The key is to strip 
out complexity from 
our customers’ lives. 
which are inherently interconnected, 
has its own program director. 
What kind of an impact does 
this have on CMOs, and their 
traditional role? 
I think it’s very important that 
the CMO is first and foremost 
mathematically driven. It’s not 
the only question of having great 
creative ideas or thinking of the 
next creative ad. Because the 
data is there, you are no longer 
mass marketing. In fact, what big 
data allows you to do is move 
from mass marketing to personal 
marketing. Today, the CMO can 
reach their target customer with 
pinpoint accuracy and could 
start talking to individuals, rather 
than clusters. So, I think it’s a 
prerequisite of CMOs looking to 
the future that they have to have 
a grasp of mathematics, statistics, 
data technology as well as digital 
technology. Otherwise, you just 
can’t keep up.
Digital transformation review no 6   dtr - capgemini consulting - digitaltransformation
Nissan: Steering a Path to the Digital Customer 
What is your vision of the 
future customer journey? 
A lot of the focus is going to be 
on the pre-purchase experience. 
I think the marketing job has moved 
from advertise on a Tuesday and 
transact on a Saturday, to a much 
longer journey. A journey where 
the brand is much more important 
and where the customer, when 
they finally come to the dealer, 
is much more empowered. In 
such a scenario, what automotive 
companies need to do is to create 
a mental model of what the brand 
stands for in the mind of the 
potential customer. So, we are 
seeing a lot more use of long-term 
marketing assets, be they online 
or offline. Nissan has transformed 
its spend on experiential and 
sponsorship type of marketing. For 
instance, sponsoring the Olympics 
— which is in 2016 — doesn’t bring 
customers necessarily tomorrow to 
the dealer. What it does do is it starts 
to show potential customers what 
Nissan stands for. We are talking 
about a lifetime engagement 
involving personalized marketing. 
And, I think that transforms the 
way the marketers have to think 
about doing business. 
Visualizing the Car of the Future 
26 DI G I TA L TR ANS F O RMAT I ON RE V I EW N° 06 
About Nissan Motor Co. Ltd. 
Nissan Motor Co., Ltd., Japan’s 
second-largest automotive company, 
is headquartered in Yokohama, Japan, 
and is part of the Renault-Nissan 
Alliance. Operating with more than 
244,500 employees globally, Nissan 
sold almost 5.2 million vehicles and 
generated revenue of 10.5 trillion Yen 
(USD 105 billion) in fiscal 2013. Nissan 
delivers a comprehensive range of 
more than 60 models under the Nissan, 
Infiniti and Datsun brands. In 2010, 
Nissan introduced the Nissan LEAF, 
and continues to lead in zero-emission 
mobility. The LEAF, the first mass-market, 
pure-electric vehicle launched 
globally, is now the best-selling EV in 
history with almost 50% share of the 
zero-emission vehicle segment. 
Nissan has pledged to bring the autonomous car to market by 2020. Here, we talk to Andy Palmer about the exciting 
possibilities for the car of the future. 
A part of my job is also to imagine the car of the future. Let’s do that. The car of the future will have no engine as it 
will run on battery power. If we no longer put the engine in the front of the car, what can we do with that space. If the 
electric motors are going within the wheels, effectively anything above platform height of, say, 12 inches is free for the 
designer to play with. 
Once you start thinking without traditional constraints, it can lead to interesting outcomes. For instance, where do you 
seat the driver? You no longer have to seat the driver on the left or the right. You no longer need to put them in the 
front. They can be in the rear. They can be in the middle. We can think about the whole configuration of how you use the 
car. We have not yet reached the true driverless car but we are certainly very deeply into the path of autonomous. So, 
the driver no longer needs to have their eyes permanently fixed on the road. This means that we could imagine younger 
customers coming to buy cars and indeed older people driving cars so much later in their lives. “Eyes-off” cars mean 
that we can transform what people do in the car. And that’s where the connected elements start to work. 
For example, we can imagine having head-up displays that basically observe things going on around you much more 
quickly than you can. Since the computer can work much more rapidly than the brain, it can override in dangerous 
situations. The passengers though can focus on their social media newsfeeds and other entertainment. The windscreen 
can become a display for video streaming. The possibilities are virtually unlimited.
DIGITAL TRANSFORMATION REVIEW 
DI G I TAL TRANSFORMATION REVIEW N° 06 27
Where Digital Meets Physical: Mercedes-Benz and the Seamless Customer Experience 
Where Digital Meets 
Physical: Mercedes- 
Benz and the Seamless 
Customer Experience 
Interview with 
Ola Källenius 
– Member of the Divisional Board 
Mercedes-Benz Cars, responsible 
for Marketing & Sales 
Mercedes-Benz Cars is the passenger cars’ division of Daimler AG and 
manufactures products ranging from the premium automobiles of the 
Mercedes-Benz brand to the small cars of the “smart” brand. In 2013, 
Mercedes-Benz and smart sold more than 1.5 million vehicles and recorded 
revenues of more than €64 billion. Mercedes-Benz is ranked at number 16 on 
Forbes’ list of the most valuable brands in the world. Capgemini Consulting 
spoke with Ola Källenius, Member of the Divisional Board Mercedes-Benz 
Cars, responsible for Marketing & Sales, to understand the company’s 
approach to customer experience in the wake of digital disruptions. 
28 DI G I TA L TR ANS F O RMAT I ON RE V I EW N° 06
Driving Customer Experience 
to New Levels 
How do you see the role 
of customer experience in 
Mercedes-Benz Cars? 
Customer experience is one of the 
three key pillars of our long-term 
growth strategy — along with 
brand and product. We launched 
the “Mercedes-Benz 2020 — Best 
Customer Experience” initiative 
in 2013 with the aim of providing 
our customers with a consistent 
premium brand experience across 
all touch points — physical as well 
as digital. With “Best Customer 
Experience”, we want to raise the 
relationship with the customer to 
a new level. Our goal is twofold 
— to create special moments for 
the customer at every step in the 
customer journey, and to connect 
the dots across all customer touch 
points. From our perspective, one 
thing is absolutely clear — the 
integration between the digital 
and the physical world has to be 
and will be a seamless one. 
What are some of the key 
initiatives that you have taken 
to provide a seamless customer 
experience? 
One key initiative that we 
launched is a new service brand 
called “Mercedes me” as part of 
our “Best Customer Experience” 
initiative (see insert for details). 
Through “Mercedes me”, we intend 
to comprehensively address our 
customers’ product purchasing, 
financing, and servicing needs 
both in the digital and physical 
worlds. All of the “Mercedes me” 
services are available via a unified 
digital platform. To ensure a 
seamless experience, we have also 
introduced a new city store format 
— the “Mercedes me” store — that 
offers an interactive brand and 
product experience in a relaxed 
atmosphere. Touch screens, 
configuration tools or a talk with 
our product experts help 
DIGITAL TRANSFORMATION REVIEW 
customers and persons interested 
to get to know our brand, products 
and services better. In essence, 
our objective in introducing all of 
these different formats is to ensure 
that our customers have access to 
us anytime, anywhere. 
Our customer 
experience strategy 
centers around 
providing our 
customers with a 
consistent premium 
brand experience 
across all touch 
points, digital and 
physical. 
DI G I TA L TR ANS F O RMAT I ON RE V I EW N° 06 29
'Mercedes me': Accelerating Mercedes-Benz Services 
Mercedes-Benz Cars launched its “Mercedes me” brand of services in early 
2014. “Mercedes me” is the umbrella brand for all of the company’s current 
and future services. It covers five service areas under the sub-brands “Move 
me”, “Connect me”, “Assist me”, “Finance me” and “Inspire me”. The services 
are offered via an online portal and include a range of solutions to help 
customers with their purchase, financing and service requirements. 
“Move me” comprises intelligent mobility solutions such as the car2go car 
sharing service and the Park2gether peer-to-peer parking service. 
“Connect me” offers remote monitoring, remote diagnostics, accident, 
maintenance, and breakdown management services. 
“Assist me” enables online access to customer service functions such as 
automated appointment booking. 
“Finance me” offers personalized financing, leasing and insurance solutions 
to customers. 
“Inspire me” allows customers to contribute their own ideas and suggestions 
towards the development of new technologies and services. 
Source: Daimler, ““Mercedes me” – a new benchmark for service”, March 2014 
30 DI G I TA L TR ANS F O RMAT I ON RE V I EW N° 06 
How do you manage the 
expectations of a generation 
of customers that are digitally 
native? 
Indeed, Gen-Y customers have 
a greater bias towards a digital 
experience. They are more likely to 
search for information online than 
visit a dealership. We have learnt 
that relationships with Gen-Y 
customers need to be nurtured 
for longer in the digital world. We 
focus on ensuring that we don’t lose 
them after the online experience. 
We make sure that we offer them 
a variety of options online. For 
instance, they can have a chat with 
somebody to understand more 
about the car, book a test drive, 
or set up a meeting with the sales 
person. We are currently running 
pilots in Hamburg and Warsaw 
to sell our cars online. In most 
cases, the online experience acts 
as a catalyst for customers to visit 
dealerships. 
itself doesn’t matter, because 
even the online sale at the very 
end is processed by our own retail 
dealerships or our distribution 
partners. 
It holds true in case of service as 
well. Customers need a physical 
place to service their cars. They 
don’t want to pick it up in some 
random place. They want to 
have a relationship with a person 
that they can speak to about the 
features of the car. For us, it is 
always physical and digital, rather 
than digital instead of physical. 
What do you think is the role 
of the dealer in the digital age? 
The dealer relationship continues 
to be extremely important to 
us. In our business, digital can 
complement and enhance the 
physical experience, but not 
replace it. Customers value the 
human element involved in the 
purchase process. This is true for 
most luxury product categories. 
Customers want to be able to 
speak with a person about the 
product before they purchase it. 
Whether the customer ultimately 
buys it online, in one of our new 
city stores, or in the dealership 
In our business, 
digital can 
complement and 
enhance the physical 
experience, but not 
replace it. 
Where Digital Meets Physical: Mercedes-Benz and the Seamless Customer Experience
car can automatically detect and 
prompt the owner when it is due 
for a service. So, connectivity 
certainly opens up new 
opportunities for us to provide 
more value to our customers. 
Beyond enhancing customer 
experience, how do you think 
connected cars can help large 
automobile companies such as 
Mercedes-Benz? 
One of the big opportunities 
created through connected cars 
is using data generated by the 
car itself. Our mobility services 
generate a lot of data on vehicle 
location, customer profiles, and 
other parameters. We have used 
Big Data analytics to improve our 
mobility services. Take car2go for 
instance — our car rental service — 
that lets users locate and pick up 
cars on hire through a smartphone 
app. We need to ensure that our 
vehicles run as many trips as 
possible through the day. As such, 
we analyze real-time vehicle 
location data to optimize vehicle 
DIGITAL TRANSFORMATION REVIEW 
DI G I TAL TRANSFORMATION REVIEW N° 06 31 
Customers value 
the human element 
involved in the 
purchase process. 
We look at 
connected cars as an 
opportunity to create 
a seamless world 
of services for our 
customers. 
I think we are at the 
beginning of using 
data from connected 
cars in the auto 
industry. 
Customer Experience in a 
Connected Environment: The 
Rise of Connected Cars 
How do you see the rise of 
connected cars impacting on 
the customer experience? 
Connected cars are an opportunity 
for us to create a seamless world 
of services for our customers. We 
see connectivity at two levels. 
One is the standard bought-in 
category where the customers 
bring in their smartphones and 
use all of the apps that they are 
already used to having inside the 
car. We are at the forefront of such 
services, and other car makers 
are also pushing towards that. 
“Mercedes me” though brings 
connectivity to a whole new level 
through the “Connect me” service. 
“Connect me” lets customers 
remotely view and control various 
vehicle parameters. For instance, 
customers can view fuel levels or 
tire pressure, turn on the preheat 
function, or even locate a car 
remotely. With the “Assist me” 
service, which is again a part of 
our “Mercedes me” portfolio, the 
availability. There is a wealth 
of such opportunities opening 
up as we gather more data. Tech 
companies such as Amazon 
and Google have focused their 
entire business model around 
the use of data. I think we are 
at the beginning of using data 
from connected cars in the auto 
industry. At the same time data 
protection and information 
security are of central importance 
to Daimler, and this also applies 
to the increasing networking of 
vehicles. For us it is a matter of 
course that the customer always 
has full transparency and self-determination 
over the data — 
either by contract, consent or the 
touch of a button.
Digital transformation review no 6   dtr - capgemini consulting - digitaltransformation
DIGITAL TRANSFORMATION REVIEW 
DI G I TA L TR ANS F O RMAT I ON RE V I EW N° 06 33 
Creating an Organization 
Geared to Delivering 
Seamless Experiences 
How did you adapt your 
organization to deliver a 
superior and seamless customer 
experience? 
We created a customer experience 
function with a project and 
organizational leadership model 
that is based entirely around 
the customer journey. So, we 
took departments dealing with 
different aspects of the customer 
journey, which were spread across 
the company, and brought them 
under a single leadership. The 
customer experience function is 
tasked with creating the blueprint 
for a consistent global Mercedes- 
Benz brand experience. For 
instance, the customer experience 
function set the standards, 
developed the digital platform, 
and defined processes for the 
launch of the “Mercedes me” 
service brand. While there may be 
some market-specific differences 
in service rollout, the customer 
experience function ensures that 
the overall experience is the same 
across geographies. 
How do you ensure that local 
units are aligned with the 
global vision for customer 
experience? 
In order to develop a stronger 
customer focus, the Daimler 
Group launched an 
organizational 
restructuring initiative last year 
under the banner of “Customer 
Dedication”. The objective of the 
initiative was to build a leaner 
and more flexible organization, 
so that each division within the 
Group could focus its activities 
more sharply around customer 
needs. Under the initiative, the 
responsibility for the main sales 
functions was anchored directly in 
each of the Group’s five divisions, 
of which Mercedes-Benz Cars is 
one. Within Mercedes-Benz Cars, 
we then developed a regionally 
focused marketing and sales 
organization. We address six 
major regions and each of these 
is represented directly in my 
management team. In each of the 
management team meetings in 
sales and marketing, we ensure 
that we have regional as well as 
central Group level functions for 
sales, marketing, services and 
other areas represented. During 
these meetings, we discuss and 
arrive at an agreement on various 
strategic issues. This ensures that 
while the execution is handled by 
the regional units, we are aligned 
with the overall Group vision on 
customer experience. 
We created a 
customer experience 
function with 
a project and 
organizational 
leadership model 
that is based entirely 
around the customer 
journey.
How are you developing 
the talent required to 
deliver integrated customer 
experiences? 
I often say that the ability to meet 
the challenges of a digital world 
is not a function of biological 
age, but a function of mindset. 
Consequently, we have built a 
diverse talent pool with people 
from different backgrounds 
who have embraced digital very 
quickly. We have focused skill-set 
development around ramping up 
our services expertise, and also 
on making our in-car experience 
intuitive and easy-to-use. In 
addition to growing our own talent 
pool, we also leverage external 
agencies. We try to use the best 
that the market has to offer. 
Finally, are there companies 
that you look up to for 
inspiration as you seek to 
enhance customer experience? 
In the last few years, we have started 
to look outside of the automotive 
industry for inspiration. We look at 
high-end hotels, fashion retailers 
and restaurants. For instance, we 
benchmarked ourselves against 
the Mandarin Oriental Hotel. We 
looked at their concierge service 
and I remember a quote from one 
of their head concierges, which 
reflects the hotel’s attitude towards 
customer experience. He said, “Our 
motto is simple. The answer is yes, 
but what’s the question?” We also 
benchmarked ourselves against 
a three-star Michelin restaurant 
in the US. So, we believe that 
it is critical to look beyond the 
automotive industry as we seek 
to create the most compelling 
experiences for our customers. 
We believe that it 
is critical to look 
beyond our own 
industry as we 
seek to create the 
most compelling 
experiences for our 
customers. 
34 DI G I TA L TR ANS F O RMAT I ON RE V I EW N° 06 
We drew inspiration 
for our customer 
experience 
initiatives from 
one of the head 
concierges at the 
Mandarin Oriental 
Hotel who told 
us, “Our motto is 
simple. The answer 
is yes, but what’s the 
question?” 
Where Digital Meets Physical: Mercedes-Benz and the Seamless Customer Experience
Digital transformation review no 6   dtr - capgemini consulting - digitaltransformation
When Amazon meets Facebook: Social Shopping with a Twist 
When Amazon Meets 
Facebook: Social Shopping 
with a Twist 
Interview with 
Nathalie Gaveau 
– Founder and CEO of Shopcade 
Nathalie Gaveau is the founder and CEO of Shopcade, the world’s 
leading social shopping app, which positions itself as the first 
shoppable mobile fashion magazine with content curated by users and 
brands. Shopcade was recently crowned the “Coolest App in Europe” at the GP 
Bullhound Summit and the 2014 Media Momentum Awards in Paris. The app 
was launched in December 2011 and currently includes more than 150,000 
brands and 1 million products for sale. We interviewed Nathalie to understand 
how Shopcade is revolutionizing mobile customer experience through 
personalization and social. 
36 DI G I TA L TR ANS F O RMAT I ON RE V I EW N° 06
A Glimpse into Shopcade 
Could you start by helping 
us understand how Shopcade 
works, and how it all started? 
There is a large gap nowadays 
between what content a young 
mobile consumer desires when 
purchasing a product and what 
information companies provide. 
The idea behind Shopcade came 
about when I wanted to shop 
online and didn’t find really good 
quality content to inspire me to 
shop. Online stores provided a 
good way to search for products 
and deals. Social networks and 
magazines were a source of 
inspiration. However, none of 
these sites bridged the gap. That is 
when I decided to start Shopcade 
— an app that would showcase all 
the latest fashion shopping trends 
on mobile as well as the Web and 
enable users to shop these items 
easily. 
A typical Shopcade user keenly 
follows brands, celebrity trends 
and is abreast of the latest 
fashion trends. So, when they 
find a look they like, they 
research it extensively. Shopcade 
simplifies the process for them by 
showcasing everyday trends from 
retailers, bloggers and celebrities. 
We like to describe ourselves 
as the first shoppable fashion 
magazine that resides in a mobile 
phone. The difference between us 
and traditional magazines is that 
the content is created by users or 
brands. 
What kind of content does 
Shopcade feature? 
We have a mix of content from 
two major directions. One is a 
constantly evolving trending feed 
that is curated by the app itself. 
The content we showcase includes 
celebrity trends, summer fashion 
and beauty trends, community 
ratings of top products, and 
exclusive deals that are driven 
directly by over 150,000 brands 
that we host on Shopcade. 
The other set of content comes 
from a community of bloggers, 
DIGITAL TRANSFORMATION REVIEW 
editors and users. We have 
partner bloggers who showcase 
their favorite looks, make lists of 
trending items they like and then 
we curate them and put them 
into a personalized feed based 
on people’s location and gender. 
Only activities that are the most 
popular or the most interesting 
get featured on our feeds. 
DI G I TAL TRANSFORMATION REVIEW N° 06 37 
Shopcade showcases 
everyday trends 
from retailers, 
bloggers and 
celebrities. 
We are a shoppable 
fashion magazine 
that resides in a 
mobile phone. 
Customers are 
increasingly 
expecting a simpler, 
leaner experience 
that is adapted to 
mobile. 
How important is the social 
dimension for Shopcade? 
For us, it is a key part of the platform. 
We enable people to identify whom 
they like to follow and what trends 
they want to stay on top of. All 
Shopcade users also have a public 
profile on the app, where they can 
publish their blog and save all 
brands, products, and looks they 
like. All our content is based on what 
is popular on the app and being a 
social platform makes it more real-time. 
Our vision is that everyone 
is an editor today and has a share 
of voice on trends. We are similar 
to Facebook or Instagram, except 
that people are sharing looks and 
products they like. In essence, we are 
like a fashion shopping network.
When Amazon meets Facebook: Social Shopping with a Twist 
Content is trumping 
advertising when it 
comes to effective 
interaction and 
engagement with 
consumers. 
How do you make money — 
what is your business model 
and what are some of the 
brands you associate with? 
We called our business “Shopcade” 
— which means “Shopping 
Arcade” — so we can host and 
sell various brands in one place. 
We are generating revenue based 
on affiliate commissions, brands 
advertising and direct sales. All 
sales that are generated by the 
platform are affiliated to merchants 
and we get a commission from 
these sales. We also work with 
different brands, featuring 
engaging fashion content about 
their products on the app. Out of 
the existing 150,000 brands on our 
site, we have direct contacts with 
a few thousand, and are working 
very closely with our top 200. For 
these 200 brands, we get exclusive 
deals and we feature their 
products. In return, the brands 
promote native ad content on our 
newsletter, on social media, as part 
of key trends on the trending feed 
on the main page of the app. 
Towards a Leaner Customer 
Experience 
How do you think customer 
expectations are evolving? 
Customers are increasingly expecting 
a simpler, leaner experience that is 
adapted to mobile. Some startups 
that are clearly doing this well are 
Instagram and Airbnb; their apps 
are pretty lean and easy to use. Our 
experience also suggests that content 
is trumping advertising when it 
comes to effective interaction and 
engagement with consumers. 
What do you think is holding 
companies back from creating 
and delivering such an 
experience? 
It’s a very new requirement and not 
many people have this expertise 
yet. But I also think that when 
companies focus on too many 
aspects, they lose out on their unique 
selling proposition, their key selling 
point. If you don’t have a singular 
vision on the end-objective from an 
improved customer experience, you 
can end up doing too many things. 
That’s when companies start to 
clutter the user experience. 
38 DI G I TA L TR ANS F O RMAT I ON RE V I EW N° 06
What type of data do you 
collect and how do you 
use analytics in enhancing 
customer experience? 
We collect a wide range of data from 
our users. We have data around ‘likes’ 
and what users want, and trending 
brands. And since we are inherently 
social, we have a whole layer of 
data from each user’s network. We 
use all of this data to create highly 
personalized experiences through a 
robust recommendation system for 
each product. This enables people 
to endlessly navigate from one 
product to another inside our app. 
And our users appreciate that. We 
also use analytics to improve cross-selling. 
For instance, depending 
on which products or brands users 
have favorited or liked, we send 
them recommendations on potential 
products that may interest them. 
Our analytics system enables us to 
see straightaway the top-performing 
channels and most trending brands 
as well as the most influential users. 
We then invite these brands and 
influencers to be featured on the 
platform, either through exclusive 
deals or through extra content. 
Lack of a singular 
vision can result in 
companies doing too 
many things that 
start to clutter the 
user experience. 
The Startup View: Challenges 
and Advantages 
How are startups geared to 
deliver a superior digital 
customer experience 
compared to large, traditional 
corporations? 
Startups have to be more focused 
since they tend to have fewer 
resources compared to larger 
organizations. Also, startups don’t 
have a lot of business requirements 
from different units of the company. 
This helps them focus on one 
crucial aspect and follow it up to 
completion. This also ties in with 
the challenge around not having a 
singular vision that I was referring 
to earlier. 
DIGITAL TRANSFORMATION REVIEW 
What are some of the key 
challenges that are typical to 
startups such as Shopcade? 
A large part of the challenge boils 
down to the ability to prioritize 
scarce resources. It’s all about being 
able to understand what is going to 
pull most growth and profit in the 
quickest way. At the same time, it’s 
important to focus on the long-term 
product and the user experience to 
deliver a superior positioning for the 
business. 
The other challenges include keeping 
things really simple from a data 
analysis perspective and making 
sure that you have outstanding and 
committed people to deliver a high-quality 
product. 
We essentially want 
to start transforming 
our app into more of 
a platform play and 
keep simplifying the 
user experience. 
DI G I TAL TRANSFORMATION REVIEW N° 06 39
When Amazon meets Facebook: Social Shopping with a Twist 
40 DI G I TA L TR ANS F O RMAT I ON RE V I EW N° 06
Looking into the Future 
How do you see Shopcade 
evolve? 
Shopcade will be one of the 
biggest social shopping apps on 
mobile. There has been a rapid 
increase in the number of brands 
and users that are engaging with 
Shopcade. We are going to start 
transforming our app into more 
of a platform play and integrate 
a global payment system. I am 
keen to partner with people who 
have complementary services that 
can let us grow, and I am keen 
to develop the awareness of the 
platform, and the model, in the 
UK and in Asia. 
What do you think the future 
of shopping will look like? 
I think mobile and curation 
are going to play a significant 
role in driving the personalized 
shopping experience of the 
future. Businesses who get data 
analytics are going to be leading 
the pack, whereas those who 
don’t know how to build a good 
user experience, understand data 
analytics and present products or 
content in the best way possible, 
are just going to miss out. The 
future of retail is clearly digital – 
just in clothing, more than 13% 
of sales are already happening 
online in the US and e-commerce 
is the only retail growth segment. 
Having said that, I think that 
some retailers like Zara, who have 
a real product differentiation or 
value proposition, can gain a 
real competitive advantage from 
their store network. But digital 
will help connect inventories 
with customer preferences and 
manage better merchandising 
analytics and customer trends. 
For example, on Shopcade, we see 
trends happening very quickly, 
before they hit magazines or the 
high street. Mobile will play a 
big role in payments and services 
around stores, not just on a 
standalone basis. 
DIGITAL TRANSFORMATION REVIEW 
DI G I TAL TRANSFORMATION REVIEW N° 06 41 
Those who don’t 
know how to 
build a good 
user experience, 
understand data 
analytics and 
present products or 
content in the best 
way possible, are 
just going to miss 
out in the future of 
retail. 
Curation is going to 
play a significant 
role in driving 
the personalized 
shopping experience 
of the future.
Digital transformation review no 6   dtr - capgemini consulting - digitaltransformation
Marketing Reinvented 
for the Digital Age 
DI G I TAL TRANSFORMATION REVIEW N° 06 43
Lithium Technologies: RIP for traditional CRM as the new world of C2C kicks in 
Lithium Technologies: RIP 
for Traditional CRM as the 
New World of C2C Kicks in 
Interview with 
Rob Tarkoff 
– President and CEO, Lithium 
Technologies 
Rob Tarkoff is CEO and President of Lithium Technologies. Lithium 
Technologies helps organizations transform the way they manage 
customer engagement and brand management through consumer-to-consumer 
interaction and online social communities. Its customers include 
the likes of HP, Research in Motion, Best Buy, Symantec, Comcast and Sony. 
Recently, the company acquired Klout — a website and mobile app that 
uses social media analytics to rank users — for around $200 million. The 
acquisition means Lithium can integrate its C2C social community capability 
with Klout’s scoring system for rank and profile. 
44 DI G I TA L TR ANS F O RMAT I ON RE V I EW N° 06
Driving Social Business: 
Lithium's Journey, Then and 
Now 
Can you give us a quick 
overview of how Lithium 
Technologies started? 
Even before people were talking 
about social networking, Lithium 
was pioneering a concept that 
sprung from the online gaming 
world. Some gamers were so good 
at multiplayer games that they 
were sponsored by companies 
such as Nvidia and Microsoft to 
test the limits of games. From 
those origins, we developed the 
idea of building the same sort of 
gamified experience in a corporate 
context. If we could get online 
domain experts to help others, we 
could change the economics of 
the customer service industry. We 
then started to move the company 
from just this service and support 
area, looking at how online word-of- 
mouth from peer to peer could 
really change the economics of a 
brand’s marketing efforts. 
Could you explain the concept 
of social communities? 
Studies show that more customers 
trust recommendations from peers 
as opposed to direct advertising. 
These ‘peers’ are people who are 
considered experts but who have 
no direct affiliation with the brand. 
Customers tend to trust the opinion 
and recommendations of such 
experts because of their domain 
knowledge, and online reputation 
and rank. Online social communities 
have arisen as an extension of this 
trend. Social communities enable 
customers to ask questions and 
get answers from experts, voice 
their concerns and discuss specific 
issues. Brand-specific communities 
enable customers to interact with 
the organization directly and 
this level of engagement fosters 
customer loyalty. 
We saw that the 
dynamic of word-of- 
mouth from 
people with strong 
reputation to other 
customers could 
really change the 
economics of a 
brand’s marketing 
efforts. 
What are some ways in 
which social communities add 
more value over traditional 
channels? 
Typically, traditional channels follow 
a broadcast style of communication 
with their customers. So, if you look 
at contact centers, Short Message 
DIGITAL TRANSFORMATION REVIEW 
Service (SMS) or CRM tools, they 
are used predominantly for making 
company-wide announcements 
or to resolve customer concerns 
in a linear, one-way fashion. In 
comparison, social communities 
online are more fluid and organic. 
Conversations are dynamic and 
brands are able to gauge customer 
sentiment and pulse by listening 
in to these communities. Brands 
can listen in on conversations 
to resolve issues, understand 
changing customer preferences 
and to unearth potential business 
opportunities. Google, which is one 
of our customers, runs its AdWords 
community on Lithium. By listening 
in, Google has been able to discover 
which elements of the Adwords 
products people are talking about. 
Brand-specific 
communities 
enable customers 
to interact with the 
organization directly 
and this level of 
engagement fosters 
customer loyalty. 
DI G I TAL TRANSFORMATION REVIEW N° 06 45
Lithium Technologies: RIP for traditional CRM as the new world of C2C kicks in 
46 DI G I TA L TR ANS F O RMAT I ON RE V I EW N° 06
DIGITAL TRANSFORMATION REVIEW 
Lithium Technologies – A Primer 
How Does Lithium Technologies Foster Social Communities? 
Lithium enables brands to convert their website into a social destination 
through online social communities, offering brands a platform to create 
dedicated communities. Take the case of Cortal Consors — a European broker in 
personal investing and online trading — which worked with Lithium to launch a 
banking social community. The community allows financial services customers 
to interact and network with each other. So, when a customer has a question 
or is facing an issue, they can simply search for similar questions posted by 
other users. Users can post replies, like a post, ask questions, post multimedia 
content relevant to the topic and receive “kudos” from other users based on 
their levels of activity on the platform. 
How is Lithium Different from Generic Social Networks? 
Most large brands engage with social customers by meeting them where the 
concentration of customers is the highest — the social Web. However, the 
true value for these brands is to have engagement via dedicated hubs. For 
a start, this means peer-to-peer interactions are based on specific interests. 
General social networking sites fail to offer such depth of focus. Dedicated 
social communities also facilitate customers helping each other out. This way, 
the brand ends up spending less on support costs. Lithium also uses behavioral 
science to analyze how social communities influence brand loyalty and drive 
repeat sales. 
How Can Lithium Drive Up Sales for Organizations Through 
Customer Engagement? 
Engaged consumers tend to purchase more frequently from the same brand. 
According to Lithium’s research, 79% of visitors to a Lithium community 
have said they would purchase again from the company in future1. To build 
that engagement, Lithium uses gamification concepts that give contributors 
badges, ranks and “kudos” counts. These elements help to drive more active 
contribution. Lithium also analyzes customers’ preferences for how they wish 
to interact. Finally, Lithium opens up the social communities to the broader 
social Web. This helps bring in customers from public social networking sites, 
where they are happy to find the kind of in-depth engagement they are looking 
for. This creates a wide and engaged community, and when brands target 
people who are truly engaged with specific offers, there is uplift. 
DI G I TAL TRANSFORMATION REVIEW N° 06 47 
Social communities also drive 
better brand engagement, because 
customers feel they are being 
responded to and in a timely way. 
We found that when provided 
with a timely response, 43% of 
American customers were more 
likely to encourage their friends 
and family to buy their products 
and 38% were more receptive to 
advertisements from the brandi. 
This is how you create loyal 
advocates. When such brand 
loyalty comes at a much lower cost 
to the organization — via online 
platforms as opposed to traditional 
channels — the result is a win-win 
situation. 
43% of American 
customers expect a 
response within the 
hour. 
What are some of the typical 
challenges organizations face in 
adopting a community-based 
solution such as yours? 
One of the biggest challenges 
is in hiring the right kind of 
professionals. Typically, most 
organizations hire professionals 
who create content and then 
broadcast it. However, when it 
comes to creating a platform that 
can support highly engaged
social communities, the hiring 
process needs to be very different. 
It means hiring people who have 
prior knowledge of curating 
and aggregating user-generated 
content, which requires a diverse set 
of skills. Then the other challenge 
is around anticipating and dealing 
with the kind of dramatic changes 
a social community platform 
brings — whether it is around 
processes or infrastructure. It 
requires a complete re-think of 
existing Web properties as well 
as social marketing and social 
support infrastructure. 
Peer-to-Peer Interactions: A 
Cornerstone of Customer 
Engagement 
How are digital technologies 
disrupting the customer 
experience? 
Our view is that the disruption is 
being driven by what we call an era 
of extreme customer expectations. 
Customers expect the experience 
to be easy, personalized, shareable 
and seamless. We found that 66% 
of Americans expect a same-day 
response to their online 
requests and 43% customers 
expect a response within the 
hourii! However, companies are 
not ready for this kind of change. 
Organizations are experiencing 
massive disruption in their brand-building 
efforts over digital. 
For instance, when a customer 
of British Airways, took out 
advertisements on Twitter to 
complain about inability to find 
his baggage, the company dealt 
with it ineffectively. This led to 
the advent of a category called 
'complainvertizing', wherein 
consumers can take to the social 
media channels and dramatically 
alter brand perception in a way 
that companies like British 
Airways never thought possible. 
We found that a significant part 
of this happens from younger 
folks, with 46% going online to 
complain about a brandiii. Most 
companies are failing to scale 
up to such changing customer 
expectations and this is causing 
massive deterioration of brands; 
it's causing losses of millions of 
dollars in brand reputation repair. 
Organizations 
are experiencing 
massive disruption 
in their brand-building 
efforts over 
digital. 
48 DI G I TA L TR ANS F O RMAT I ON RE V I EW N° 06 
Why do you think Customer-to- 
Customer (C2C) interactions 
are becoming so important 
now? 
It's not as though there is suddenly 
a big revolution in C2C. It is 
more to do with the fact that a 
behavior that typically used to 
be offline and based on word-of-mouth 
has now been amplified to 
a massive degree because of the 
availability of digital channels 
and social media networks. From 
the data we have gathered, we 
found that people prefer to get 
recommendations through peer-to- 
peer interactions; people look 
for expertise. Experientially, in our 
consumer lives, we are completely 
immersed in the C2C digital 
experience. Before making a 
purchase, consumers look at online 
reviews or do a search to look for 
answers. Product comparison and 
seeking the opinions of peers are 
very common activities socially. 
For instance, we found that 81% 
of Americans use online resources 
to research a big purchase. This 
behavior is very pronounced in the 
younger demographic — one out of 
every ten people aged between 18 
and 34 use as many as six different 
sources when researching for a 
purchaseiv. Once brands are able 
to harness the information from 
customer interactions, they will 
be able to capture a lot of uplift 
relative to their competitors. 
Lithium Technologies: RIP for traditional CRM as the new world of C2C kicks in
DIGITAL TRANSFORMATION REVIEW 
DI G I TAL TRANSFORMATION REVIEW N° 06 49 
Brands are finding 
it difficult to figure 
out how to take 
advantage of all 
the data from C2C 
interactions. 
As customers increasingly 
engage themselves in 
conversations with one 
another, what is the role of 
organizations? 
The role of the organization is 
shifting from that of a promoter 
and declarer, to that of curating 
conversations, and participating 
and enabling a dialog. Customers 
see how brands really are because it 
is all in the open on social networks. 
There are no secrets anymore. 
Transparency is the norm and trust 
is the new currency; and you build 
trust by being in a conversation, 
not telling customers what to do. 
Companies who are successful 
are the ones who use digital 
technologies to uplift the customer 
experience in a way that converts 
to dollars. 
You’ve recently acquired Klout. 
What is the link between 
social reputation and customer 
experience? 
A few months ago, we announced 
the acquisition of Klout — a 
company that scores people’s 
profiles based on their presence 
and expertise on social networks. 
The acquisition enabled us to tie in 
Klout’s scoring system for rank and 
reputation mechanism with our 
own database on brand-specific 
communities. We are now able 
to provide a very broad platform 
that not only offers community 
building, but also provides 
profile reputation and expertise 
across diverse topic areas, with a 
consumer angle to it. So, again, 
we are sort of creating this concept 
where brands are able to refine the 
customer experience on their own. 
Rather than being disrupted by a 
third party, brands can now be the 
disrupters themselves. 
How do you visualize an ideal 
customer-centric organization 
to look like? 
When community-speak becomes 
an important action item on the 
agenda of C-level executives, that’s 
when an organization is bringing 
in real change towards customer-centricity. 
It’s when organizations 
start treating consumer interactions 
as important pieces of data for 
market research or brand studies 
that they will become more 
successful than their competitors. 
The brands we are talking to now 
are brands that have always prided 
themselves on setting the bar for 
customer experience. They are now 
coming to us and saying, “We are 
not exactly sure we know what to 
do.” So, it’s pretty interesting to 
see that brands that thought they 
were the hallmark of customer 
experience now think they don’t 
really know the consumer. They 
are asking, “How do we activate 
consumers to tell us more about 
themselves than we are able to 
get today.” I think that is the big 
change. 
The role of the 
organization is 
shifting from that 
of a promoter to 
that of a curator 
and enabler of 
conversations.
Future Steps: Peering into 
the Crystal Ball 
How do you see peer-to-peer 
communities evolve over time, 
in the coming years? 
Well, I think peer-to-peer 
communities have been the single 
biggest disruption to CRM. So, my 
view is that the CRM industry is 
going to get abandoned over the 
next 5 to 10 years. Instead, you are 
going to see systems like ours that 
are about curating conversation and 
understanding customer opinion, 
more than trying to orchestrate 
around one customer as an item in a 
database. Peer-to-peer communities 
have changed the dynamics of 
managing customers, providing 
service, marketing techniques 
and sales tactics. It’s similar to the 
way e-commerce disrupted brick-and- 
mortar stores. I think we have 
a similar phenomenon wherein 
C2C conversations are becoming 
an engine of change for the way 
technology is deployed, data is 
gathered and incorporated in this 
decision-making. 
50 DI G I TA L TR ANS F O RMAT I ON RE V I EW N° 06 
What does the future look like 
for community-based platforms 
such as Lithium? 
Community-based platforms are 
going to dramatically alter the way 
we market products and provide 
support to customers. There is 
going to be less focus on internal 
production of content and projecting 
that outward. Instead, it will be all 
about organizations tapping into 
external conversations. Customers 
are far more empowered today than 
they were a couple of years ago, and 
they have multiple outlets to ensure 
they are heard and in turn impact the 
brand’s sales and reputation. In fact, 
we have found that when brands 
provide customers with timely 
responses, 34% of customers are 
more likely to purchase more from 
the companyv. I think customers are 
willing to tell you what they think of 
your brand provided you structure 
the experience in the right way. The 
companies that get it right will be the 
successful ones. 
Lithium Technologies: RIP for traditional CRM as the new world of C2C kicks in 
Brands need to build 
trust by being in a 
conversation, not 
telling customers 
what to do. 
i Lithium Technologies and Millward Brown 
DigitalSurvey, October 2013 
ii Lithium Customer Expectations Survey, 
May 2014 
iii Lithium Customer Expectations Survey, 
May 2014 
iv Lithium Customer Expectations Survey, 
May 2014 
v Lithium Technologies and Millward Brown 
Digital Survey, October 2013 
Digital ROI: Measuring and 
Monitoring Progress 
How does Lithium help enable 
ROI improvements? Do you 
have any examples to share? 
The challenge with digital is 
that if I am going to make big 
investments, I need to see returns 
— uplift in purchase, dramatic 
decrease in cost to service, and 
overall improved experience 
with customers, which results 
in greater loyalty and share of 
wallet. We have customers that 
are routinely saving between 10 
and 50 million dollars a year. For 
instance, Autodesk, a customer 
of ours, achieved ROI of USD 
12 million within the very first 
year of being with us. Every year 
since, they have reached the USD 
10 million USD mark. Another 
example is that of CrowdSource, 
a platform Lithium operates for 
Telstra. CrowdSource has been 
able to resolve 50% of Telstra’s 
customer support issues right 
on the very first query. Due to 
the success of our platform and 
the Telstra social community, 
the company is closing their 
traditional contact centers 
because their customers prefer 
engaging online. I think this also 
resonates with the findings from 
our survey. We found that two-thirds 
of Americans (67%) tend to 
call an “800” or toll free number 
for help only as a last resort.
Digital transformation review no 6   dtr - capgemini consulting - digitaltransformation
Remixing the Customer Experience for a Digital World 
Remixing the Customer 
Experience for a 
Digital World 
Interview with 
Renée Gosline 
– Assistant Professor MIT Sloan 
School of Management 
Renée Richardson Gosline is Assistant Professor of Marketing in the 
Management Science Group at the MIT Sloan School of Management. 
She has been named one of the World’s Top 40 Professors under 40, 
and is a member of the MIT Center for Digital Business. Her expertise includes 
Consumer Behavior, Social Media, and Social Status Influence. Prior to 
academia, she was a Marketing practitioner at LVMH Moet Hennessy and Leo 
Burnett. Capgemini Consulting spoke with Professor Gosline to understand the 
impact of technological shifts on customer experience and how organizations 
can connect with customers in a digital world. 
52 DI G I TA L TR ANS F O RMAT I ON RE V I EW N° 06
A New Customer Experience 
for the Digital Generation 
Over the last few years, how 
has technology impacted 
customer experience? What has 
changed? 
Consumers are exposed to constant 
stimulus from different forms of 
media, both traditional and digital, 
throughout the day. You can 
imagine them watching television 
while also simultaneously using 
a second or third screen, such 
as a PDA or an iPad. This “lived 
experience” with technology is 
now transforming the customer 
experience to a place where there 
is no longer a division between old 
and new media. It is really more 
about “how can the experience be 
integrated across all these different 
forms of media”? 
What are the implications of 
this change? What does it mean 
for brands? 
I see two key outcomes emerging 
from these changes. Research 
shows that when faced with too 
many alternatives, people seek 
familiarity and tend to choose 
default options. The volume 
of information that consumers 
are exposed to today can be 
overwhelming. As a result, they 
are more likely to choose brands 
that they are familiar with. 
Strong brands act as heuristics 
or shortcuts that help consumers 
make sense of all the information 
around them. 
The sensory 
experience is not 
diminished in the 
digital age, and there 
are, in fact, new 
ways to stimulate it. 
The second key outcome is the 
growing importance of the sensory 
experience. People tend to think 
that digital results in a reduction 
of the sensory experience since 
you cannot touch and feel a digital 
product. However, we are learning 
that the sensory experience is not 
diminished in the digital age. 
There are, in fact, new ways to 
stimulate it. For instance, recent 
research has shown that users 
develop a completely different 
attachment to a brand when they 
use a touchpad to interact with a 
brand website, than if they just 
click through the website with 
a mouse. In this case, touchpad 
technology is allowing us to 
have a proxy interaction with 
customers, where touching the 
screen is giving them a sensory 
experience that they could not 
have had before. 
DIGITAL TRANSFORMATION REVIEW 
Are these changes only 
affecting the younger 
generation or does their impact 
extend to a wider group? 
Our research has shown that the 
younger generations are more 
comfortable with this multi-sensory 
experience. While older 
generations can sometimes 
feel overwhelmed, the younger 
generation is less prone to that. 
Because of their ability to use 
multiple devices with ease, their 
brains are mapped differently. In 
a very real cognitive sense, they 
have higher fluency. In fact, we 
are now increasingly finding a 
two-way flow of influence so that 
content on traditional media is 
being remixed by consumers, and 
then discovered and promoted by 
brands. But while we are finding 
that millennials have a different 
orientation towards digital 
media, it is also true that people 
from older age-groups are also 
increasingly adopting it. 
How do you see the role of the 
traditional CMO evolving in 
response to these changes? 
I think it is time that we rethink 
the role of the CMO. Perhaps to 
the extent that the phrase “CMO” 
itself needs to be rethought. 
Perhaps it should really be CXO, 
Chief Experience Officer, or CRO, 
Chief Relationship Officer. I use 
those labels quite deliberately, 
DI G I TAL TRANSFORMATION REVIEW N° 06 53
This blending of traditional 
television with social media 
enhances the utility that viewers 
get from a rerun. Watching their 
tweets broadcast along with the 
rerun enhances a viewer’s sense 
of satisfaction. Ultimately, this 
cements their interest in the show 
and increases their attachment to 
the program. 
Should marketers continue to 
use focus groups? 
In my opinion, focus groups 
are not appropriate if you want 
to dive deep into consumer 
needs, because people tend to 
converge towards the dominant 
opinion in the group. I would 
instead recommend being 
more experiential and using 
experimentation. The beauty of 
experiments is that they teach us 
about causal factors. Marketers 
should conduct experiments 
where they vary social cues and 
observe their effect on an online 
or social media group. This is a 
rich way of seeing how people 
interact with your brand and to 
observe changes in behavior, and 
not just in attitude. Attitudinal 
responses can be inaccurate as 
people often tell you what they 
think you want to hear. This is 
why I think experimentation is 
really crucial to understanding 
consumer behavior. 
Remixing the Customer Experience for a Digital World 
Until CMOs realize 
that consumers co-create 
their brand, 
they are really not 
grasping what it 
takes to form deep 
relationships with 
consumers. 
Engaging the Digital 
Generation: New 
Approaches 
How can marketers blend 
traditional and new media 
to enhance the customer 
experience? 
Let me give you an example. Many 
popular television shows are 
expanding the digital experience 
they provide by integrating 
content with social media. While 
watching the Oscars, for instance, 
viewers can post tweets on 
winners or losers, or on the outfits 
worn by the attendees. In addition, 
television shows are integrating 
social media by repeating their 
shows with what is called the 
“social edition”. A social edition is 
a rerun with added content in the 
form of tweets posted by viewers 
during the original broadcast. 
so let me explain why. It is 
important for CMOs to constantly 
try and cultivate an experience 
based on the relationship 
that they wish to have with 
the consumer. This requires 
stepping out of the traditional 
marketing mindset that revolves 
around commercials, spots and 
agencies, and really thinking 
about the consumer experience 
and relationship. The traditional 
notion of a CMO presupposes a 
downward flow of influence from 
the company to the consumers. 
But until CMOs realize that 
consumers co-create their brand, 
they are really not grasping what 
it takes to form deep relationships 
with consumers. Taco Bell, 
for instance, understands that 
customers do not perceive it as 
health food. It has, therefore, 
consciously developed a playful 
and irreverent relationship with 
its customers. The company has 
cultivated this relationship by 
responding to customer tweets in 
a deliberately tongue-in-cheek 
manner. So, it’s important for 
CMOs to start thinking about the 
kind of relationship they want 
to develop with customers, and 
then deliver an experience that 
matches the relationship. 
54 DI G I TA L TR ANS F O RMAT I ON RE V I EW N° 06
Does this also mean that 
marketers will need more 
statistical knowledge? 
No, I don’t think so. The problem 
with statistics is that they often 
mask the cognitive processes that 
drive consumer behavior. For 
instance, we know from research 
on consumer-brand relationships 
that repeat purchase does not 
necessarily mean loyalty. The 
causes of repeat purchase could 
be factors other than loyalty, such 
as a lack of suitable alternatives. 
Therefore, relying on statistics 
alone is not sufficient. I think 
what marketers will need is a 
more nuanced understanding of 
what statistics represent, or the 
causal factors behind them. And 
they will only know that by being 
experimental, and by presenting 
customers with different scenarios 
and seeing how they behave. 
What are your views on 
personalization? Is it still a 
buzzword? 
For consumers today, 
personalization really comes 
from the ability to use a brand or 
brand experience as a means of 
social signaling. For instance, in 
social media, people like discovering 
a unique experience and displaying 
it in their social group. In a sense 
they are saying, “I am not just 
experiencing what everybody 
experiences. I am displaying an 
experience that is unique to me.” 
We find that this is really driving a 
lot of purchase behavior. Therefore, 
brands should bear in mind that the 
goal of personalization should not be 
to create the same level of intimacy 
with every consumer. That might 
not be appropriate and might not be 
what the consumer wants or needs. 
The goal should be to ascertain what 
kind of relationship the consumer 
wants with the brand. Then it is 
about cultivating that relationship 
on the consumer’s terms; that is the 
kind of personalization that I think 
we will see happen. 
DIGITAL TRANSFORMATION REVIEW 
DI G I TAL TRANSFORMATION REVIEW N° 06 55 
The beauty of 
experiments is that 
they teach us about 
causal factors. 
Personalization 
really comes from 
the ability to use 
the brand or the 
brand experience 
as a means of social 
signaling.
Digital transformation review no 6   dtr - capgemini consulting - digitaltransformation
Mastering Customer 
Engagement: The Rise of 
C2C Marketing 
How do you rate the impact of 
C2C marketing? 
C2C marketing is becoming 
extremely powerful. In a digital 
world, everyone has a voice and 
consumers influence each other’s 
judgments. There have been 
incidents where consumers tell 
businesses how they feel and, not 
feeling heard, vent their feelings 
on a C2C platform. The incident 
then gets blown up, re-blogged, 
and assumes a life of its own. So, 
it is essential that we understand 
C2C dynamics; otherwise, we are 
really losing the filter through 
which many people are receiving 
messages. C2C is also important 
because people like to tell others 
when they have discovered 
something. And people have 
a bias toward things that are 
controversial, entertaining, or 
new. I think it is important for 
CMOs to keep that in mind while 
crafting the brand experience. 
Can CMOs influence C2C 
dynamics? 
Yes, CMOs can influence the C2C 
interaction. While CMOs cannot 
control what people say to one 
another, they can control the 
brand narrative at its origin, and 
they must be deliberate about that. 
A good example of this would be 
Dominos Pizza. When Dominos 
experienced a sharp decline in 
sales, it launched research to find 
out why. It emerged that consumers 
were dissatisfied with the quality 
of ingredients in the pizzas, among 
other things. So, Dominos created 
a Twitter hashtag campaign that 
incorporated these findings into 
its overall brand narrative. The 
campaign was called “What is 
wrong with the Dominos Pizza?” 
and the company asked people to 
give honest feedback on how it 
could improve. Dominos got really 
good feedback from this. People 
felt that Dominos was honest and 
really trying to hear them, which 
built trust. So, this is a way in 
which CMOs can help shape the 
brand narrative. 
Would this not be risky 
considering customers could 
react unpredictably? 
True! But the risk also comes 
from not doing anything and not 
connecting with the consumer. 
Take the case of Wheat Thins — 
the whole wheat snack brand that 
decided to use humor as a way 
of connecting with consumers. 
They did that by creating a set of 
humorous guidelines that required 
sponsors to not feature people 
eating more than 16 Wheat Thins. 
They then roped in Stephen Colbert, 
the satirical comedian, who joked 
about the product saying he was 
going to try and eat 17 Wheat 
Thins, which was like telling 
consumers “We can eat Wheat 
Thins the way we want.” The joke 
went viral and people who would 
never think about Wheat Thins 
started talking about it. Yes, there 
was a bit of risk involved here, but 
there is risk in inaction as well. 
While CMOs cannot 
control what people 
say to one another, 
they can control the 
brand narrative at its 
origin. 
In a digital world, 
everyone has a voice 
and consumers 
influence each 
other’s judgments. 
DI G I TAL TRANSFORMATION REVIEW N° 06 57
What role do you see agencies 
playing in the co-creation of 
content? 
Agencies are in an unenviable 
position because to a certain extent 
they can only go where the client 
allows them to go. Not many 
companies or CMOs are thinking in 
terms of co-creation because there 
is a certain amount of risk involved 
in abdicating some of the control 
in content creation to consumers. 
Companies that can strongly 
control what their brand essence is, 
but also abdicate control to embrace 
consumer empowerment will be 
well-positioned to really go to this 
new frontier of co-creation. Their 
agency partners will enable them 
to co-create experiences that are 
really unique. 
The Digital Future: The Brave 
New World of Co-Creation 
In your opinion, what is the 
next frontier for the marketing 
community? 
I think what we need to understand 
next is how to integrate brand-produced 
content with consumer-produced 
content. The question is: 
How will co-authorship happen? 
How can we have a situation 
where we have the brand and 
the consumer creating content 
together? I think cracking that nut 
is the next big thing. When you 
have that kind of collaborative 
effort, it builds a whole new level 
of trust and investment, because 
when I feel like I have been an 
architect of an entity, then I am 
far more likely to keep up with 
it, and to have a connection to it. 
Right now, we do not really have 
good examples of that kind of co-creation. 
The closest thing we have 
is a brand saying, “Make your 
own video and we will feature 
the winner.” That is not quite a 
true integration. If you can create 
a joint narrative, where both the 
brand and the consumer share 
the story, then I think that you 
can really differentiate in a digital 
world from people who are just 
having their agency create content 
or just sitting back passively and 
seeing what consumers are talking 
about today. 
58 
Right now, we do 
not really have 
good examples 
of co-creation 
between brands 
and consumers. 
Remixing the Customer Experience for a Digital World
DIGITAL TRANSFORMATION REVIEW 
DI G I TA L TR ANS F O RMAT I ON RE V I EW N° 06 59
Rewired: Crafting a Compelling Digital Customer Experience 
Rewired: Crafting a Compelling Digital 
Customer Experience 
By Didier Bonnet, Jerome Buvat and Subrahmanyam KVJ 
didier.bonnet@capgemini.com jerome.buvat@capgemini.com subrahmanyam.kvj@capgemini.com 
In 2008, Dominos Pizza was staring 
at a difficult future. The company 
faced plummetting sales, falling 
stock prices and a lacklustre brand 
image. Customer dissatisfaction 
was running high with customers 
complaining about the poor quality 
of Domino’s Pizzas1. By November 
2008, the company’s stock price 
was at a record low of $2.832. That 
is when Dominos decided to chart 
a new path for itself. From that 
position, the company has scripted 
a historic turnaround making its 
entire customer experience digital. 
The company focused on making 
easy-to-order and easy-to-track 
the foundations of its overall 
customer experience. And they did 
this across the key channels of PC/ 
mobile/social. Dominos launched 
a social media campaign — “What 
is wrong with the Dominos Pizza?” 
— where it sought feedback from 
customers to help improve its 
pizzas. Customers appreciated the 
company’s sincerity in reaching out 
to them and as a result, the strategy 
proved to be highly successful (see 
interview with Professor Renée 
Gosline on page 50). Dominos 
streamlined the ordering process 
by introducing “Pizza Tracker” — 
an online tracking mechanism to 
let customers view the progress 
of their pizza from order to 
delivery. They also let customers 
build online profiles, with their 
location and other preferences, 
thereby reducing order placement 
time to as low as 30 seconds. The 
results have been remarkable, to 
say the least. From $2.83 a share 
in November 2008, Dominos has 
seen its stock price rise to over $70 
a share in June 20143. Domino’s 
mobile sales accounted for 22% 
of online sales in 2012, which was 
larger than the entire company’s 
sales in 19994. 
60 DI G I TA L TR ANS F O RMAT I ON RE V I EW N° 06 
Less than half 
of organizations 
have a company-wide 
program for 
customer experience, 
and only 30% 
have a dedicated 
budget to fund the 
transformation. 
Such transformative impacts 
do not come by accident. They 
happen as a result of carefully 
coordinated and orchestrated 
use of digital technologies and 
platforms such as social media 
and mobile. However, while the 
opportunities for driving a great 
customer experience using digital 
technologies are significant, 
so are the challenges. First, 
organizations need to manage an 
ever-increasing tide of customer
DIGITAL TRANSFORMATION REVIEW 
of agility that companies from the 
Internet sector are bringing. In 
short, what has worked in the past 
is not guaranteed to work in the 
future. 
So, how can organizations 
master the new rules that will 
help them drive lasting customer 
engagement in a digital world? 
Our research revealed that four 
key actions play a defining role in 
delivering compelling customer 
experiences — and differentiate 
digital leaders from their peers 
(see Figure 1). We examine each 
of these actions in the sections 
that follow. 
click attribution model rather 
than more sophisticated cross-channel 
attribution models that 
are more relevant in the digital 
age5. Third, digitally transforming 
the customer experience requires 
an overhaul of organizational 
culture and traditional ways of 
managing customer relationships. 
56% of marketers in a survey 
described their organizations as 
customer-centric, but only 12% 
of their customers agreed with 
their assessment6. This shows that 
the promise of customer centricity 
still has a long way to go. Finally, 
the pace of decision-making has 
hastened and there is a new sense 
DI G I TAL TRANSFORMATION REVIEW N° 06 61 
expectations. As Rob Tarkoff, 
CEO of Lithium Technologies, 
a provider of social customer 
community software, says in 
our interview (see interview 
on page 42), “We are living in 
an age of extreme customer 
expectations.” Second, the 
complexities of integrating new 
digital channels with existing 
operations can be daunting. A 
recent survey indicates that 
over 38% of marketers feel 
the technology to build an 
integrated digital marketing 
strategy is too complicated. Over 
58% of marketers still use basic 
methodologies such as last- 
Figure 1: Creating a Digital Customer Experience 
Source: Capgemini Consulting Analysis
Digital leaders look 
at technology as a 
means to an end, 
and not an end in 
itself. 
Look Outside to Transform 
Inside 
Digital leaders look at technology 
as a means to an end, and not 
an end in itself. The end-state is 
defined by the kind of experience 
that the customer desires at each 
touch point. Digital leaders design 
experiences based on a forensic 
understanding of customer 
expectations, and actively seek to 
understand and alleviate customer 
pain points. They ensure that 
their knowledge of customer 
interactions extends across all 
touch points. Barclay’s Bank for 
instance, has set up a website 
dedicated to gathering the voice 
of the customer. The website 
called “Your Bank” encourages 
customers to publicly share their 
views, concerns and complaints 
regarding the bank’s products and 
services. In addition, the bank puts 
future changes to its offerings to 
vote on the website, in order to 
gauge customer reactions prior 
to rollout7. Organizations are 
beginning to realize the importance 
of customer experience. Research 
indicates that over 86% of 
executives consider customer 
experience to be a top strategic 
priority. However, less than half 
have a company-wide program 
for customer experience, and only 
30% have a dedicated budget to 
fund the transformation8. 
Customers 
increasingly see 
their interactions 
with organizations 
as a continuum of 
physical and digital 
experiences. 
Focus on Smart Investments 
in Digital Channels to Enhance 
Reach and Drive Engagement 
Digital leaders approach digital 
investments differently. Rather 
than the size of the investment, 
they focus on its impact. Sephora, 
the global cosmetics major, has 
shown how smart investments 
in digital channels can deliver 
extraordinary results. Sephora 
has closely tied its social media 
strategy to the way that customers 
use various social media platforms. 
Research suggests that Pinterest is 
better than Facebook in inspiring 
purchases9, and that its users tend 
to spend more on every purchase 
than users of other social media 
62 DI G I TA L TR ANS F O RMAT I ON RE V I EW N° 06 
platforms10. Sephora has focused 
its customer engagement efforts 
primarily on Pinterest and it 
was among the first retailers to 
integrate the “Pin It” button on 
its website11. Sephora curates lists 
of popular products on Pinterest 
and launched a Pinterest-centric 
email marketing campaign, where 
users can pin products directly 
from emails. Sephora’s social 
media strategy has proved to be 
highly successful. The company 
saw a 60% increase in traffic 
from Pinterest following its email 
campaign. Its average Pinterest 
follower spends 15 times more 
money on Sephora.com than its 
average Facebook fan12. 
Sephora has seen similar success 
with its investments on mobile 
channels. The company was 
among the earliest to extend 
mobile payment services to its 
customers by integrating loyalty 
data with Apple’s Passbook 
application. As a result, customers 
that used the Passbook application 
were found to purchase twice as 
frequently and spend twice as 
much annually as the average 
customer13. Sephora introduced 
new features for its mobile app 
that allowed customers to create 
online shopping lists and access 
their online and in-store purchase 
history14. The company also offers 
free digital content, such as music, 
magazines and apps, through the 
“Sephora Shares” program15. The 
Rewired: Crafting a Compelling Digital Customer Experience
company’s continued focus on its 
mobile strategy has contributed 
significantly to spurring sales. As 
the director for mobile and digital 
store marketing at Sephora puts it, 
“We’ve seen 150% growth in the 
mobile space this past year, and 
we’re seeing that continue, which 
is really outpacing the industry.16” 
Use Data to Create Engaging 
Customer Experiences 
A compelling customer experience 
is often underpinned by a good 
grasp of data and customer 
insights. Digital leaders such 
as Amazon and Macy’s are 
applying analytics to substantially 
enhance their understanding of 
customer behavior, preferences 
and motivations. Macy’s analyzes 
several million Terabytes of 
data every day including store 
transaction data and social media 
feeds. This is used to personalize 
the customer experience in various 
ways, including for instance, by 
offering customized promotions 
to customers at checkout. The 
retailer’s analytics capabilities now 
enable it to create 500,000 unique 
versions of a single direct mail 
catalog17. As a result of its focus 
on advanced analytics, Macy’s has 
been able to boost store sales by 
10%18. Similarly, Amazon’s ability 
to harness data allows it to help 
customers find products that are 
most relevant to them. The online 
retailing giant’s analytics-driven 
recommendations engine accounts 
for 29% of its overall sales19. 
U.S. Bank improved 
its lead conversion 
rates by 100% using 
Big Data analytics. 
Several banks have also reaped the 
rewards of leveraging customer 
insights to enhance customer 
experience. For instance, U.S. 
Bank, the fifth largest commercial 
bank in the US, integrates data 
from online and offline channels 
in order to create a unified view 
of the customer. This data is then 
used to target prospects with 
personalized offers. As a result, 
the bank has been able to improve 
its lead conversion rates by 100%. 
The bank even tailors the content 
on its website, based on data 
analytics. For instance, products 
and services featured on the website 
vary based on the profile of the 
customer visiting the website20. 
Organizations across industries are 
faced with a deluge of structured 
and unstructured data. However, 
the ability to translate this data to 
meaningful insights and deliver 
superior customer experiences sets 
digital leaders apart. 
DIGITAL TRANSFORMATION REVIEW 
Integrate Physical with Digital 
to Create Unending Experiences 
Customers increasingly see their 
interactions with organizations 
as a continuum — a continuum of 
physical and digital experiences. They 
don’t necessarily understand and 
appreciate internal organizational 
barriers between physical and 
digital. Organizations will need to 
understand that this is not about 
old vs. new, or physical on one side 
and digital on the other. It is about 
creatively integrating their digital and 
physical experiences so they blend 
in a seamless customer experience. 
Digital technologies offer powerful 
ways of amplifying the impact of a 
physical experience. 
Macy’s has been able 
to boost store sales 
by 10% using Big 
Data. 
DI G I TAL TRANSFORMATION REVIEW N° 06 63
US financial services major Capital 
One is experimenting with a café 
format for its bank branches, 
designed primarily to drive 
services offered by their online 
bank — Capital One 360. Across the 
US, the bank has opened nine café 
styled branches that provide high 
levels of customer intimacy along 
with complimentary services21. The 
branches also provide access to 
financial and digital tools. Bankers 
within the café give personalized 
advice on saving and investing 
strategies while also providing 
detailed information on Capital 
One 360 products. As such, the 
café format allows Capital One 
to combine the personal touch 
of the physical branch with the 
convenience of online banking – 
ultimately providing customers 
with the best of both worlds. 
Automobile giant Audi’s 
showroom in London is another 
example of digital blending with 
physical to create a great customer 
experience (see Figure 2). The new 
showroom — called “Audi City” — 
houses just one car, the company’s 
most exclusive model. In addition, 
it has an array of large screens 
where Audi’s complete range of 
models can be viewed, customized, 
repainted and accessorized. In 
its first ten months of operation, 
Audi’s digital showroom saw a 
70% increase in car sales compared 
to prior retail format22, and a 
higher average sales price than its 
average UK dealership23. 
Figure 2: Audi’s Digital Showroom 
Source: Company website 
64 DI G I TA L TR ANS F O RMAT I ON RE V I EW N° 06 
Audi’s Digital Car 
Showroom reported 
a 70% increase in 
new car sales and 
higher average sales 
price than traditional 
dealers. 
Rewired: Crafting a Compelling Digital Customer Experience
Figure 3: Build-A-Bear Workshop Store 
Build-A-Bear Workshop Inc, 
the US-based do-it-yourself 
retailer of stuffed animals, is 
another great example of the 
power of such an integrated 
physical-digital approach. The 
company undertook a two-year 
modernization program aimed 
at providing a more immersive 
in-store experience to its target 
customers — young children 
accustomed to using smartphones 
and tablets. As part of the program, 
Build-A-Bear remodeled some of 
its stores using touch, object and 
gesture recognition technology. 
Digital storefront installations 
enabled with Microsoft’s Kinect 
technology allow customers to 
use gestures to play games and 
interact with Build-A-Bear’s 
latest product offerings as they 
enter the store. Within the store, 
a series of kiosks with interactive 
touch screens digitally enhance 
each step in the process of making 
the toys. For instance, children 
can choose personality traits for 
their toys, which are represented 
by a set of emoticons on the touch 
screens. They can also choose from 
an assortment of digital music and 
sounds to add a “voice” to their 
toys. Such tactile experiences 
were introduced to help children 
form deeper connections with 
their chosen toys24 (see Figure 3). 
The remodeled stores met with 
DIGITAL TRANSFORMATION REVIEW 
strong positive reception from 
customers, with sales increasing 
by an average of 25%, compared 
with an 8% average increase in 
company-wide store sales. Driven 
by the success of the program, 
the company plans to extend the 
same experience to many more 
stores25. 
Organizations can 
lose as much as 
20% of their annual 
revenues due to poor 
customer experience. 
DI G I TAL TRANSFORMATION REVIEW N° 06 65 
Source: Company press release 
Digital leaders such as Capital 
One, Audi and Build-A-Bear 
have successfully understood the 
amplifying effect that they can 
achieve by meshing physical with 
digital experiences in order to 
help differentiate themselves.
Rewired: Crafting a Compelling Digital Customer Experience 
Can traditional organizations 
create a rewired digital 
customer experience? 
Many Born-Digital companies 
have set a high entry bar for 
compelling customer experiences. 
Companies such as Zappos (see 
interview on page 12) go to great 
lengths to create a compelling 
customer experience. Zappos 
has also shown that they are 
willing to work around 
traditional organizational 
governance models. For instance, 
the company replaced its 
traditional management style 
with ‘Holacracy’ - a model that 
distributes authority amongst 
various circles of employees. Such 
a model empowers employees 
enabling them to assign top 
priority to customer experience. 
Some traditional organizations 
have been quick to adapt. 
Mercedes-Benz for instance, 
launched an organizational 
restructuring initiative — aptly 
titled “Customer Dedication” — to 
focus its activities more sharply 
around customer needs (see 
interview on page 26). For most 
other organizations however, it is 
time to play catch-up rapidly. Not 
doing so will expose organizations 
to the perils of a poor customer 
experience, which can indeed be 
significant. 
Research indicates that organizations 
can lose as much as 20% of their 
revenue due to poor customer 
experience26. So, why don’t many 
companies try creating great 
customer experiences? One obvious 
reason - it is very challenging to do 
so. Organizational constraints are 
usually the biggest reason. There is 
very little coordination between the 
front-end of the organization and 
the back-end. Customer experience, 
while being everybody’s priority is 
no one’s job. Delivering a compelling 
customer experience requires the 
careful orchestration of people, 
data, IT, processes and customer 
behavior. It requires an exhaustive 
understanding of customer behavior, 
smart investments in digital channels, 
the ability to harness customer 
data, and finally, the ability to 
creatively mesh physical and digital 
experiences. 
Many Born-Digital 
companies have set 
a high entry bar for 
compelling customer 
experiences. 
66 DI G I TA L TR ANS F O RMAT I ON RE V I EW N° 06
DIGITAL TRANSFORMATION REVIEW 
1 TIME.com, “Domino’s Mea Culpa and America’s Pizza Passions”, January 2010 
2 Fastcocreate, “How Domino’s Became a Tech Company”, May 2014 
3 Stock price as of 17th June 2014 
4 MobileMarketing, “Domino’s Mobile Sales Larger Than its Entire Business in 1999”, June 2013 
5 IgnitionOne, “Integrated Marketing Survey 2013”, November 2013 
6 Informa.com.au, “Customer Centricity: The Key to a Sustainable Future”, 2012 
7 CustomerCentric.info, “Barclays Bank Working Smart and Gathering VoC Data”, September 2013 
8 Forrester Research inc, “The State Of Customer Experience 2011”, February 17, 2011 
9 Bizrate Insights, “Pinterest vs. Facebook: Which Social Sharing Site Wins at Shopping Engagement?”, October 2012 
10 Internet Retailer, “How Pinterest tops Facebook in e-commerce”, January 2014 
11 Venturebeat, “Sephora: Our Pinterest followers spend 15X more than our Facebook fans”, February 2013 
12 Social Media Delivered, “Pinterest Case Study: Sephora”, September 2013 
13 Internetretailer, “Apple Passbook users are among Sephora’s best customers”, April 2013 
14 Sephora.com, “My Beauty Bag” 
15 Mobilemarketer, “Sephora borrows from Starbucks with app recommendation program”, January 2014 
16 eMarketer, “At Sephora, Mobile-First Means ‘Connecting’ the Customer’s Experiences”, November 2013 
17 Direct Marketing News, “Macy’s CMO shares loyalty insights at NRF Big Show”, January 2013 
18 CNBC, “Retail Goes Shopping Through Big Data”, April 2013 
19 Yahoo, “Retailers Using Big Data: The Secret Behind Amazon and Nordstrom’s Success”, March 2014 
20 Adobe Digital Marketing Suite Success Story, “U.S. Bank”, 2012 
21 Company website, accessed in May 2014 
22 Audi MediaInfo Release on “Audi City” 
23 Financial Times, “Online showrooms and digital dealerships revolutionise car buying”, December 2013 
24 Samsung.com, “Case Study: Build-A-Bear Workshop®”, June 2013 
25 Marketwatch.com, “Build-A-Bear gets a big bear hug; shares surge 30%”, May 2013 
26 Oracle, “Global Insights on Succeeding in the Customer Experience Era”, February 2013 
DI G I TAL TRANSFORMATION REVIEW N° 06 67
Digital transformation review no 6   dtr - capgemini consulting - digitaltransformation
Special Guest 
DI G I TAL TRANSFORMATION REVIEW N° 06 69
Surviving and Thriving in an Age of Digital Disruption 
Surviving and Thriving 
in an Age of Digital 
Disruption: An Interview 
with Tim O’Reilly 
Interview with 
Tim O’Reilly 
– Founder and CEO of 
O’Reilly Media 
Tim O’Reilly is a leading Silicon Valley intellectual, technology icon 
and venture capitalist. Tim has chronicled technology trends since 
1978, and is the founder and CEO of O’Reilly Media, one of the world’s 
most respected publishers of technology books and producer of cutting-edge 
technology conferences. He has been a key spokesperson for the original 
commercialization of the Internet, for open source software, for Web 2.0, open 
government (and open data in general), and the Maker movement. Capgemini 
Consulting spoke with him to understand more about the latest wave of digital 
disruptions and how companies can and should react. 
70 DI G I TA L TR ANS F O RMAT I ON RE V I EW N° 06
In your opinion, what is 
driving the current era of 
digital disruptions? Have we 
reached an inflection point? 
There has been steady advancement 
in transformative technologies 
right from the birth of computing 
to the smartphone era. But we’re 
now at that start of something that 
is arguably even bigger, as digital 
technology interacts with the 
physical world. Some people refer 
to it as the “Internet of Things” or 
the “Internet of Everything”. 
At the heart of it, this new 
technology revolution is being 
driven by sensors that are making 
physical objects more responsive 
and seemingly “intelligent” than 
ever. We need to expand our earlier 
definition of robots, which referred 
only to autonomous humanoid 
robots. In fact, there are many so-called 
special purpose robots in 
our homes today, such as the Nest 
Thermostat. Even our dishwashers 
and washing machines have all 
become much more intelligent 
over time. As they become more 
connected with the Web, these 
devices will become even more 
capable of seemingly independent 
action. 
A major part of the 
current revolution is 
the manner in which 
intelligent machines 
augment humans in 
new ways. 
However, I think the notion of an 
autonomous, purely machine-based 
revolution misses the 
point. A major part of the current 
revolution is the manner in which 
intelligent machines augment 
humans in new ways. Take the case 
of Uber — the on-demand car hire 
service. Uber connects passengers 
and drivers much more efficiently, 
and in real-time, using the GPS 
functionality in smartphones. You 
don’t normally think of this as an 
“Internet of Things” application, 
yet it is made possible by one very 
smart thing — the location-enabled 
phones of both the driver and the 
passenger. But those things aren’t 
operating autonomously. They are 
a tool for augmenting humans. 
It’s important to realize that the 
Internet of things is not just for 
things! It is the beginning of a 
DIGITAL TRANSFORMATION REVIEW 
massive change in the way that 
people and “things” relate to one 
another. 
What are the industry sectors 
that are going to be the most 
affected by these digital 
disruptions? 
They don’t call it “the internet of 
everything” for nothing. Agriculture 
and manufacturing are already 
in the throes of transformation. 
But for consumer impact, look to 
the automotive, transportation, 
and healthcare industries. I see 
the automotive sector poised for 
massive change given the ability to 
understand where every vehicle is 
at any moment. New applications 
become possible, leading us 
ultimately to self-driven cars. (I 
should point out that robotic tractors 
and mining equipment is already 
commonplace.) This ability to track 
and control will affect all forms of 
transportation and logistics. 
In the healthcare sector, I believe 
advancements in our ability to 
monitor bodily functions and track 
medication adherence will have a 
powerful impact on patient care. 
DI G I TAL TRANSFORMATION REVIEW N° 06 71
Managing Digital Disruption: 
A New Mindset for CxOs 
What advice would you give to 
CXOs who are trying to cope 
with digital disruptions? 
First, I would advise CXOs not to 
fight the future. Trying to prevent 
disruptions from taking shape 
is a losing strategy. If you think 
you are going to be disrupted, 
then the first and most powerful 
alternative is to adapt to get ahead 
of a disruption and not solely 
focus on “what I should do to 
preserve the business.” Second, 
CXOs need to step away from the 
way they do business today and 
ask themselves the question — 
“what will the consumer expect?” 
At O’Reilly Media, for instance, 
we decided to go DRM-free for 
our digital products because we 
realized that is what consumers 
want. It is important to benchmark 
yourself against a broader range 
of consumer services and not 
just against other companies 
like yourself. Take the case of 
government services. They 
routinely accept wait times of 
months or years, when consumer 
services now provide almost 
instant turnaround! Government 
officials must understand that in an 
age where consumers have near-immediate 
access to information 
through their televisions, tablets or 
smartphones, government services 
need to be much more responsive 
than before. 
Who would you recommend 
that organizations benchmark 
themselves against? 
I think of Amazon as one of 
the great companies to observe 
because, in many ways, they have 
been in a fairly traditional industry. 
However, they have broken out and 
not only disrupted retail and book 
stores, but also become one of the 
largest infrastructure providers 
for the next generation of cloud 
applications. 
What are the lessons that 
organizations can learn from 
the success of Amazon? 
There are two key lessons. Amazon 
understood more than anybody 
else that they had to organize 
themselves around technology 
rather than organize technology 
around their business. Very early 
on, Amazon mandated an internal 
API culture where all teams were 
required to encapsulate their work 
with service interfaces, so that 
they could be consumed easily by 
others. In other words, Amazon 
organized itself internally around 
a service-oriented architecture. 
This made it much easier for them 
to open up their services to the 
external world. 
Another idea that Jeff Bezos got 
early on was to design Amazon 
as a platform that would enable 
an ecosystem in numerous ways. 
A lot of companies forget how 
they can actually enable others. 
Platforms are a great way of doing 
this. In fact, a platform beats an 
application every time. 
Unlocking Innovation: The 
Need for Collaborative 
Ecosystems 
It appears that most 
innovations are coming from 
small firms. Even Gartner 
says that 50% of the value 
in the “Internet of Things” 
will come from startups. How 
should large companies unlock 
innovation? 
Well, first of all, I think that’s just 
the way of the world. It’s very 
difficult when you are a large 
72 DI G I TA L TR ANS F O RMAT I ON RE V I EW N° 06 
A platform beats an 
application every 
time. 
Surviving and Thriving in an Age of Digital Disruption
company to pay attention to 
things that are still small and put 
emphasis on small bets. Venture 
capitalists place many small bets 
and most of them fail. I think it’s a 
fool’s errand for a large company 
to try and become a great early-stage 
innovation company. It 
is more important to be able to 
recognize innovation and become 
a fast follower. Cisco, Microsoft, 
Adobe and Google are all 
examples of companies that have 
grown successfully through an 
aggressive acquisition strategy. 
Being a great partner is another 
crucial element of unlocking 
innovation. Large organizations 
need to understand the ecosystem 
of companies that are disrupting 
their industries, identify ways 
of working more closely with 
them and making them more 
successful. I preach this all the 
time and I think really successful 
companies understand this — you 
succeed when you make other 
people successful. And if you play 
a zero-sum game — where if you 
win, everybody else loses — then 
you lose as well. 
What differentiates great 
companies from others in 
terms of the way in which they 
approach innovation? 
I think great companies enable 
strong ecosystems. Consider how 
Apple has created value for its 
App Store developer ecosystem. 
Ironically, the value that you 
create for others need not even 
be very high. For instance, while 
the App Store ecosystem made 
some really big winners, the share 
of App Store revenues that go to 
outside developers are only a tiny 
slice of Apple’s overall revenues. 
But still, you must have a sense 
that you are creating value for 
other people because that will 
eventually drive your success. So, 
my advice to companies would 
be to seriously consider how they 
can help others and how they can 
all grow stronger together. The 
focus should be on making the pie 
bigger. 
If you were the CEO of a major 
hotel chain, how would you 
respond to the disruption 
caused by Airbnb, for example? 
What would you do? 
I would explore options to partner 
with Airbnb and create a win-win 
situation for both companies. I 
would ask myself how I could 
make Airbnb more successful by 
having them affiliate with my 
DIGITAL TRANSFORMATION REVIEW 
DI G I TAL TRANSFORMATION REVIEW N° 06 73 
You succeed when 
you make other 
people successful. 
brand. As a platform provider, I 
would look at how I could really 
deliver value to them. There’s 
certainly some value in branding, 
but also in directing customers to 
them and potentially giving them 
cover from legal issues. For that 
matter, if I were a hotel chain, I 
might acquire Airbnb. 
Looking Ahead: The Trends 
That Will Shape The Future 
What are your three best 
bets on technologies that will 
reshape industries over the 
next five years? 
The deep technology trends that I 
see are the merging of hardware 
and software, Big Data, and the 
fact that everything is becoming 
a service. It is important to 
understand how these things come 
together into a kind of “collective 
intelligence” in which people 
and machines work together 
in new and innovative ways. 
Our collective data gathered by 
sensors goes is part of a powerful 
feedback loop that makes our 
machines smarter. I would advise 
organizations to look at these 
trends and open their minds to 
what they could transform. I 
would like to specifically mention 
Big Data, because I think that is 
going to be a major part of the 
sensor revolution. In order to
Surviving and Thriving in an Age of Digital Disruption 
necessary if organizations want 
to preserve and expand value at a 
higher level. That is how Google 
challenged Apple’s dominance 
in the smartphone market, even 
though it required letting Samsung 
take a significant share of market 
value. In the end, Google’s actions 
pushed the industry forward. 
Who do you think will emerge 
as winners in this space? 
It is probably too early to tell but 
I think Google and GE appear to 
be well placed to play a leading 
role in the evolution of the 
Internet of Things. GE is doing 
some very interesting work in the 
area with their Industrial Internet 
and frictionless manufacturing 
initiatives. And if we look at 
Google’s acquisition strategy, 
where they have acquired almost all 
of the interesting robotics startups, 
it appears that they are making a 
major long-term bet on the Internet 
of Things. 
build sensor-based applications, 
organizations need to be able 
to effectively use the data from 
sensors. They will also need to 
redesign workflows based on 
the various types of machine 
intelligence that will be generated. 
Great companies 
enable strong 
ecosystems. 
74 DI G I TA L TR ANS F O RMAT I ON RE V I EW N° 06 
If you were to invest $1 
million, what are the 
technologies you would 
consider for your investment? 
I would consider low-cost 
lightweight sensors, drones, 
quantified-self technologies, mobile 
interfaces, government services 
and corporate IT as key areas for 
investment. At O’Reilly AlphaTech 
Ventures (OATV), we are investing in 
many of these themes. For instance, 
we have invested in Planet Labs, 
which is developing low-cost sensors 
for satellites that will enable more 
complete coverage of the Earth’s 
surface at more affordable costs. We 
see strong commercial opportunities 
for drones and consequently, we 
have invested in 3D Robotics, a 
startup specializing in Unmanned 
Aerial Vehicles (UAVs). 
If we consider the “Internet 
of Things”, is a winner-takes-all 
approach inevitable in its 
evolution? 
No, I don’t think it is inevitable. 
In fact, I think organizations 
should actively resist winner-takes- 
all strategies. To my mind, 
a winning strategy is about 
building partnerships and striving 
for interoperability through open 
source, open standards, and an 
open data strategy. Consider GE’s 
Industrial Internet initiative for 
instance. There is value in creating 
a truly interoperable Industrial 
Internet where, in addition to 
GE’s own suppliers and partners, 
other industrial manufacturers 
such as Siemens and Philips can 
also participate. This may require 
consciously giving up a part 
of the market value that might 
otherwise be secured by directly 
competing in a market. But it is 
Organizations 
should actively resist 
winner-takes-all 
strategies.
DIGITAL TRANSFORMATION REVIEW 
We invested in Sight Machines, 
which provides machine vision and 
other kinds of sensor applications 
for factory automation. We 
have invested in a range of 
startups as part of our focus on 
quantified self technologies that 
combine wearable sensors and 
computing to measure aspects 
of our daily life. These include 
Misfit Wearables, which develops 
wearable devices for wellness and 
medical applications, as well as 
FitnessKeeper. We also believe that 
innovative mobile interfaces will 
DI G I TA L TR ANS F O RMAT I ON RE V I EW N° 06 75 
I would consider 
low-cost lightweight 
sensors, drones, 
quantified-self 
technologies, 
mobile interfaces, 
government services 
and corporate IT 
as key areas for 
investment. 
change the way people interact 
in the real world. So, we have 
invested in Cover, which is an 
Uber-like application for making 
restaurant payments. 
I also see a huge opportunity in 
transforming government services, 
where, given the backdrop of 
budget deficits, there is a strong 
need for cost reduction. And 
finally, I would definitely invest in 
new types of companies that are 
disruptive for corporate IT.
76 DI G I TA L TR ANS F O RMAT I ON RE V I EW N° 06
About Capgemini Consulting 
Capgemini Consulting is the global strategy and transformation 
consulting organization of the Capgemini Group, specializing in 
advising and supporting enterprises in significant transformation, 
from innovative strategy to execution and with an unstinting focus on 
results. With the new digital economy creating significant disruptions 
and opportunities, our global team of over 3,600 talented individuals 
work with leading companies and governments to master Digital 
Transformation, drawing on our understanding of the digital economy 
and our leadership in business transformation and organizational 
change. 
Find out more at: www.capgemini-consulting.com 
About Capgemini 
With more than 130,000 people in over 40 countries, Capgemini is one 
of the world's foremost providers of consulting, technology and 
outsourcing services. The Group reported 2013 global revenues of 
EUR 10.1 billion. Together with its clients, Capgemini creates and 
delivers business and technology solutions that fit their needs and 
drive the results they want. A deeply multicultural organization, 
Capgemini has developed its own way of working, the Collaborative 
Business ExperienceTM, and draws on Rightshore®, its worldwide 
delivery model. 
Learn more about us at: www.capgemini.com
Nathalie Gaveau, 
Digital Transformation Review 
Founder and CEO of Shopcade 
Ola Källenius, Member of the 
Divisional Board Mercedes-Benz Cars, 
responsible for Marketing & Sales 
Guest Contributors 
Andy Palmer, Chief Planning Officer 
and Member of the Executive 
Committee of Nissan Motor Co., Ltd. 
Darrin Shamo, Director of Direct 
and Online Marketing at Zappos 
Renée Gosline, Assistant 
Professor MIT Sloan School 
of Management 
Rob Tarkoff , 
President and CEO, 
Lithium Technologies 
Tim O’Reilly, Founder and 
CEO of O’Reilly Media

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Digital transformation review no 6 dtr - capgemini consulting - digitaltransformation

  • 1. N° 06 AUGUST 2014 Crafting a Compelling Digital Customer Experience • Zappos: The Digital Age Benchmark on Customer Service - Darrin Shamo • Nissan: Steering a Path to the Digital Customer - Andy Palmer • Where Digital Meets Physical: Mercedes-Benz and the Seamless Customer Experience - Ola Källenius • When Amazon Meets Facebook: Social Shopping with a Twist - Nathalie Gaveau • Remixing the Customer Experience for a Digital World - Renée Gosline • Lithium Technologies: RIP for Traditional CRM as the New World of C2C Kicks in - Rob Tarkoff • Rewired: Crafting a Digital Customer Experience For Today’s Connected Customer by Capgemini Consulting • Surviving and Thriving in an Age of Digital Disruption: An Interview with Tim O’Reilly
  • 2. N° 06 AUGUST 2014 Crafting a Compelling Digital Customer Experience Capgemini Consulting’s Editorial Board Xavier Hochet CEO xavier.hochet@capgemini.com Ken Toombs Deputy CEO and USA Regional Head ken.toombs@capgemini.com Didier Bonnet Global Head of Practices didier.bonnet@capgemini.com, @didiebon Jerome Buvat Head of Research The Digital Transformation jerome.buvat@capgemini.com, @jeromebuvat DI G I TAL TRANSFORMATION REVIEW N° 06 dtri.in@capgemini.com Research Institute www.capgemini-consulting.com @capgeminiconsul www.linkedin.com/company/capgemini-consulting
  • 3. Contents 6 12 20 26 34 Rebooting the Digital Customer Experience Introduction by Capgemini Consulting’s Editorial Board Delivering Compelling Customer Experiences, Digitally Zappos: The Digital Age Benchmark on Customer Service Nissan: Steering a Path to the Digital Customer Where Digital Meets Physical: Mercedes-Benz and the Seamless Customer Experience When Amazon meets Facebook: Social Shopping with a Twist
  • 4. Lithium Technologies: RIP for Traditional CRM as the 42 New World of C2C Kicks in 50 Remixing the Customer Experience for a Digital World: An Interview with Renée Gosline, MIT Sloan School of Management 58 68 Marketing Reinvented for the Digital Age Rewired: Crafting a Digital Customer Experience by Capgemini Consulting Special Guest Surviving and Thriving in an Age of Digital Disruption: An Interview with Tim O’Reilly
  • 5. Rebooting the Digital Customer Experience Rebooting the Digital Customer Experience Introduction By Capgemini Consulting’s Editorial Board The significance of the customer experience is not in doubt. In a survey, 70% of respondents said that good service had a considerable influence on their loyalty and 69% would recommend the company to othersi. The reverse is also true. Poor customer experience drives customers away. Research shows that nearly 89% of customers walk away from a company after a single poor customer experienceii. And this can have a significant impact. Businesses are estimated to lose as much as 20% of revenue from poor customer experiencesiii. So, given the importance of the customer experience, are organizations doing enough to create a compelling experience for their customers in the digital domain? Unfortunately, it would appear not. While 91% of organizations wish to be considered a customer experience leader in their industry, only 37% are getting started with a formal customer experience initiativeiv. 6 DI G I TA L TR ANS F O RM Getting the digital customer experience right is critical. In the pre-digital world, a poor experience posed less risk in terms of volume of loss or widespread reputational damage, as the poor experience of the customer was limited to his or her immediate social network. In recent years, however, this has changed radically. The explosive spread of digital social platforms means that customers have scale — they can create a wave of negative noise in a way that was previously unimaginable. So, where does this leave organizations? How can they create compelling digital customer experiences that work? In this sixth edition of the Digital Transformation Review, we posed this very question to a diverse panel from around the world. Our panel for this edition includes industry leaders, academics, startup founders, platform vendors and technology gurus. They come from all over the world, including the home of innovation in the digital age — Silicon Valley (see Figure 1). While 91% of organizations wish to be considered a customer experience leader in their industry, only 37% are getting started with a formal customer experience initiative. i New Voice Media, “A nation of serial switchers : The multibillion dollar cost of poor customer service”, January 2014 ii CMO, “Just How High Is The Price For Delivering A Poor Customer Experience?”, September 2013 iii Oracle, “Global Insights on Succeeding in the Customer Experience Era”, 2013 iv Oracle, “Global Insights on Succeeding in the Customer Experience Era”, 2013
  • 6. What’s New in Digital: The View from the Academic and Cutting-Edge Startups Where should organizations start? A good first step in creating a compelling digital customer experience is to understand what’s new with digital. Renée Gosline, from the MIT Sloan School of Management, spoke to us about the impact of technological shifts on customer experience and how organizations can connect with customers in a digital world. She highlights how Consumer-to- Consumer (C2C) interactions influence customer perceptions in a digital world, and what this means for CMOs. She puts the importance of C2C like this, “Until CMOs realize that consumers co-create their brand, they are really not grasping what it takes to form deep relationships with consumers.” Startups are increasingly breaking the mould of customer engagement. In many ways, they can serve as an inspiration to those seeking to meet and exceed the expectations of the digital consumer. Shopcade, a social commerce startup that could be described as a cross between DIGITAL TRANSFORMATION REVIEW Amazon and Facebook, has focused its efforts on delivering a lean and simple online shopping experience, bolstered by rich, personalized content. We spoke with Nathalie Gaveau, Founder and CEO of Shopcade, to understand how the startup leverages social and mobile technologies to do so. Nathalie’s view that “Content is trumping advertising when it comes to effective interaction and engagement with consumers” embodies an important lesson for traditional marketers. 7 Figure 1: Map of Guest Contributors for the Digital Transformation Review VI
  • 7. Rebooting the Digital Customer Experience 8 DI G I TA L TR ANS F O RMAT I ON RE V I EW N° 06 Making It Real: How Lithium Technologies is Transforming Customer Engagement “Not all those who wander are lost,” observed author J.R.R. Tolkien. And this aphorism holds true for creating compelling digital customer experiences: there are many paths to creating a compelling experience. Lithium Technologies, for instance, helps organizations transform the way they manage customer engagement and brand management through C2C interaction and online social communities. At the core, they enable companies to create communities of highly engaged customers so that they can help one another. If 43% of customers expect a response within an hour of posting a problem, they are best addressed by the wisdom of the crowds, rather than dedicated customer service agents. As Rob Tarkoff, the President and CEO of the company, says, “Brand-specific communities enable customers to interact with the organization directly and this level of engagement fosters customer loyalty.” with Ola Källenius, Member of the Divisional Board of Mercedes- Benz Cars responsible for Marketing & Sales, to understand how the marquee brand is adapting its approach to customer experience in the wake of digital disruptions. Ola describes the organizational changes that Mercedes-Benz implemented in order to enhance the digital customer experience, saying: “We created a customer experience function with a project and organizational leadership model that is based entirely around the customer journey.” It is clear that the automotive industry faces significant digital change in the customer sphere. For example, customer comfort with online purchase of items, such as a car, is growing. Our latest Cars Online study indicates that as many as 44% of people surveyed were likely to purchase a vehicle online. It is behaviors like these that are shaping the industry’s response to the digital customer experience. Andy Palmer, Chief Planning Officer and Member of the Board at Nissan Motor Co., highlights the impact of evolving customer preferences on automotive marketing. Andy sets out the context for the discussion when he says, “We are on the cusp of one of the most radical changes in the way that you buy cars in 125 years.” Amazon-owned online retailer Zappos has a different take on how customer experience needs to be addressed in the digital age. The company encourages customers to dial into its call center and engages them in extensive conversations, which in one case has stretched to, as long as, ten hours! As Darrin Shamo, the Director of Direct and Online Marketing at Zappos explains, “We do not follow any productivity metrics that are designed to reduce the volume of calls coming into our call center or the time spent on the call.” Digital Convergence: A Driver’s-Seat Perspective from the Auto Industry However, the realm of exceptional customer experience is not limited to startups. In this issue, we also shine a light on some of the leading brands in the automotive industry that have made significant strides in bridging the online and offline worlds. The automotive industry offers an interesting example of an area where multiple technology trends are coming to fruition at around the same time. Intelligent highways embedded with sensors, autonomous vehicles, and digital showrooms are all converging to create new challenges for large automotive players in managing customer experience. We spoke
  • 8. DIGITAL TRANSFORMATION REVIEW place the insights of our panel, is to shed some light on these very areas. We have urged our readers to create customer experiences that are compelling, and we hope you find the contents of this Review compelling reading. If you would like to discuss the ideas raised here in more detail, then please do get in touch. As this edition of the Review shows, getting digital customer experience right is a journey. There is no one secret recipe for getting it right the first time. Organizations will need a forensic understanding of customer behavior, smart investments in digital channels, the ability to harness customer data and, finally, the ability to creatively mesh physical and digital experiences. Our aim, by gathering together in one DI G I TAL TRANSFORMATION REVIEW N° 06 9 Crafting a Compelling Customer Experience: The View from Capgemini Consulting Capgemini Consulting’s own view on customer experience is that it needs to be totally rewired for the digital age. We believe organizations need to take an outside-in approach in understanding customer interactions, invest smartly in digital channels focusing on impact, become data-driven and mesh the physical with the digital to create a continuum of experience (see Figure 2). Digital Revolution: The View from Tim O’Reilly Silicon Valley has embedded itself at the heart of the world’s digital revolutions. The range of companies that have sprung up from the valley, and their impact, are already the subject matter of case studies in business schools around the world. And who better to close this edition of the Review than Tim O’Reilly, leading Silicon Valley intellectual, technology icon and venture capitalist. Tim speaks on the importance of platforms, the latest wave of digital disruptions and how companies can and should react. In closing, Tim provides what can indeed appear as counter-intuitive to traditional companies across sectors, “Organizations should actively resist winner-takes- all strategies.” Figure 2: Creating a Digital Customer Experience Source: Capgemini Consulting Analysis For more information, please contact: Digital Transformation: Didier Bonnet (didier.bonnet@capgemini.com, @didiebon) Digital Customer Experience: Steffen Elsaesser (steffen.elsaesser@capgemini.com, @SElsaesser) Patrick Ferraris (patrick.ferraris@capgemini.com, @pgferrar) Scott Clarke (scott.clarke@capgemini.com, @ScottDClarke)
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  • 10. Delivering Compelling Customer Experiences, Digitally DI G I TAL TRANSFORMATION REVIEW N° 06 11
  • 11. Zappos: The Digital Age Benchmark on Customer Service Zappos: The Digital Age Benchmark on Customer Service Interview with Darrin Shamo – Director of Direct and Online Marketing at Zappos Zappos is an online shoe and clothing retailer based out of Las Vegas, Nevada. Started in 1999, the company achieved $1 billion in annual sales in 2008 and was acquired by Amazon in 2009 for an all-stock deal worth $1.2 billion. Zappos has continually been rated amongst the best customer service providers, banking significantly on word-of-mouth publicity from its consumers. Capgemini Consulting spoke with Darrin Shamo, Director of Direct and Online Marketing at Zappos, to understand more about their approach towards customer service. 12 DI G I TA L TR ANS F O RMAT I ON RE V I EW N° 06
  • 12. Making Customer Service a Key Element of Zappos' DNA Zappos’ tagline says “Powered by Service”. Zappos has been praised many times for the quality of its customer experience. How has Zappos been able to make customer service an integral part of its organizational culture? Our obsession with customer experience started long time ago. We determined that we wanted to be the absolute best when it came to customer service and many of our decisions in the early days were built around this vision, even if they came at a significant loss in the short term. For instance, we decided to control our entire inventory and own the entire customer experience from start to finish. While every other pure play retailer was drop-shipping, we went against the flow and moved our inventory in-house. Anything that was on the website for sale was available in our warehouse. This prevented the need for placing back-orders and enabled a stable delivery window that our customers could depend on. We wanted to be the absolute best in customer service, even if that came at a significant loss in the short term. We further invested in people to develop an organizational culture around customer service. All employees go through a four-week call center training course before they start in their official position, and each holiday season the entire work force, even the CEO, goes back to the phones to handle the volume. Once employees near the end of their training, we offer successful candidates up to $4,000 to quit. The idea behind this is to weed out people who are not a match to the customer service culture at Zappos. Those that choose to stay are more committed and passionate. DIGITAL TRANSFORMATION REVIEW How has this focus on customer service been beneficial for Zappos? Many publications put together lists of companies that are rated the best in customer service and every year we — along with our parent company, Amazon — feature near the top of that list. It is surprising to see that two companies — Amazon and Zappos — with very differing approaches to customer service, come out on top every year. The Amazon approach is technology-centric while the Zappos approach is people-centric. We invest in people to develop an organizational culture around customer service. All employees go through a four-week call center training course. DI G I TAL TRANSFORMATION REVIEW N° 06 13
  • 13. For instance, Amazon employs call center usage as a customer service metric. If call volume increases, there is likely a process breakdown and technology is employed to correct it. Zappos, on the other hand, tries to increase call center volume as a means to enhance the customer experience. We have our phone number listed prominently in the global header of the website, which makes it visible on every page of the site, to encourage people to call in. Apart from being rated as one of the best companies in delivering customer service, we have been able to retain our consumers’ loyalty. In fact, 75% of our business comes from repeat consumers. We do not follow any productivity metrics that are designed to reduce the volume of calls coming into our call center or the time spent on the call. You mentioned that you encourage customers to call you. What is the role of the call center in building a great customer experience? As an organization focused on delivering exemplary customer service, Zappos is on a continual quest to create a 1-to-1 connection with our customers. In fact, we feel that our biggest competitors are not online retailers but rather brick-and- mortar companies because they have the opportunity to greet their consumers at the door. While various technical developments, such as personalized retargeting, triggered communication and master data management, help us reach customers in a personalized and relevant way, we believe that person-to-person connections are still the most effective method of interaction. Our call center aids us in achieving this — it helps us connect with consumers on a personal level and leaves them feeling heard and ultimately WOWed. We try to get as close to the consumer as possible by controlling the whole process of communication and incentivizing it. For instance, we do not follow any productivity metrics that are designed to reduce the volume of calls coming into our call center or the time spent on the call. In fact, we encourage our employees across the organization to spend more time interacting with consumers. We try to focus on long-term health measurements rather than looking at short-term costs. We have found that if you can deliver a better experience to consumers coming through the call centers, you can expect a higher lifetime value. Every year, both Amazon and Zappos are rated among the best in customer service, despite very different approaches to customer service. 14 DI G I TA L TR ANS F O RMAT I ON RE V I EW N° 06 We feel that our biggest competitors are not online retailers but rather brick-and-mortar companies because they have the opportunity to greet their consumers at the door. Zappos: The Digital Age Benchmark on Customer Service
  • 14. Innovating for an Enhanced Customer Experience How has innovation helped Zappos deliver an enhanced customer experience? Zappos, as an organization, is built very differently from other companies and this has helped us foster innovation. At Zappos, we believe in stepping back and allowing people to be who they need to be. I spoke about how rigorous our selection and training criteria are. For the people who make it through this process, we give them autonomy to really impact things the way they see it. We don’t hire all Ivy League students. We hire above average people but then we give them the room to self-actualize. Currently, we are rolling out a new management style at Zappos termed “Holacracy”. It is a unique management style that distributes the authority of leadership to influence various decisions. Managers are replaced by a concept of lead links. These lead links are given a great deal of authority to take control of their circles and all the accountabilities that fall into their sphere of influence. This concept of lead links results in the formation of small groups of independent and entrepreneurial employees, impacting specific areas of the business in an autonomous way. We are rolling out a new management style at Zappos termed “Holacracy”. It is a unique management style that distributes the authority of leadership to influence various decisions. As most businesses grow, the productivity per individual employee decreases and a large part of this can be attributed to bureaucratic governance structures. In a way, the idea behind “Holacracy” is to distribute that authority and put it in the hands of entrepreneurial people who can take decisions for their domain. Currently, we are around 1,500 employees strong, and in order to scale without DIGITAL TRANSFORMATION REVIEW compromising our core goals, we need a management structure that will allow our teams to continue to grow. This can only happen if we can eliminate the bureaucracy inherent in other large businesses. We try to focus on long-term health measurements rather than looking at short-term costs. DI G I TAL TRANSFORMATION REVIEW N° 06 15
  • 16. DIGITAL TRANSFORMATION REVIEW There’s a lot of information available on consumers, though we’re very selective with what we use and how we use it. DI G I TAL TRANSFORMATION REVIEW N° 06 17 Customizing the Digital Customer Experience How does Zappos deliver a personalized experience to customers? We know what people have viewed over the Web, what works for them and what they like. We take all this information and factor in certain predictors of intent, such as weather, and use all of this to create a relevant experience without crossing over to becoming creepy. These results are then mapped to our product catalogue and used to deliver customized products. This leads to an increased positive utility and enhanced shopping experience for the consumer. A similar process is used for personalized retargeting. We have the ability to take information on what has worked for them on site — or is similar to what they like — and use this to share relevant products throughout the open Web. We a r e a l s o d e l i v e r i n g personalized experiences through our advertisements. For instance, we have created weather-based ad units. These ad units integrate local weather information with existing details of a customer’s preferred products. The end result is a personalized experience based on the user’s preference and weather conditions. So, if Boston were to expect snow on Saturday, the advertisement to the customer would read — “18” of snow this Saturday, here are some boots to help you dig yourself out”. The ad unit ultimately enables us to provide utility to the customer while acting on the intent with relevant products. How do you use available customer information to deliver an experience that is different from others? There’s a lot of information available on consumers, though we’re very selective with what we use and how we use it. We take great care to ensure that the ultimate experience is relevant rather than creepy. We want our customers to feel that we understand them and their needs rather than feeling stalked. We try to take subtle cues rather than ingest all the information that is available. In some instances, this selected information is then passed through a platform like a recommendation engine before it is delivered back to the consumer. Marketing in the Digital Age Many CMOs are calling for reinvention of marketing. What are your views on it? I would agree that it is time for marketing to be reinvented. It has become too channel-focused. A siloed channel approach does not look into various events or aspects affecting the purchase; it only focuses on whether the organization was able to generate revenues in the short-term from the consumer.
  • 17. Zappos: The Digital Age Benchmark on Customer Service Marketing strategies have to become more customer-centric. Organizations should move towards assessing the value and needs at the customer level. This is not just from a dollar standpoint, but how likely are they to engage with the organization over a longer period of time. In order to achieve this, they need to develop a comprehensive view of their consumers across various touch points and interact with them through the entire shopping journey. How do you see the role of technology in the future of marketing? The future of marketing lies in the development of systems to better understand the causal effects of customer happiness and the predictive value of customers. If you have a good understanding of the motivators for your consumers and their causal effects, it is easier for you to employ a successful marketing strategy. Technology and math can help organizations with this. This places additional pressure on marketers to be more aware of technology. The future marketeer will have a stronger focus on technology and consumer behavior than they do today. The future of marketing lies in the development of systems to better understand the causal effects of customer happiness and the predictive value of customers. 18 DI G I TA L TR ANS F O RMAT I ON RE V I EW N° 06
  • 19. Nissan: Steering a Path to the Digital Customer Nissan: Steering a Path to the Digital Customer Interview with Andy Palmer – Chief Planning Officer and Member of the Executive Committee of Nissan Motor Co., Ltd. Nissan Motor Co., Ltd. is one of the leading global automotive manufacturers. The company is based in Yokohama, Japan and offers products and services in approx. 170 markets worldwide. In 2013, Nissan sold nearly 5.2 million vehicles, generating net revenue of $105 billion. Capgemini Consulting spoke with Andy Palmer — Chief Planning Officer and Member of the Executive Committee of Nissan — to understand Nissan’s view on the digital customer and how it affects traditional marketing. Andy also handles Global Marketing Communications for Nissan. 20 DI G I TA L TR ANS F O RMAT I ON RE V I EW N° 06
  • 20. The Changing Digital Customer Relationship How do you think digital technology is changing the traditional manufacturer-customer relationship in the automotive sector? I think we are on the cusp of one of the most radical changes in the way that you buy cars in 125 years. Historically, it took customers around 7 trips amongst various dealers before they finalized a car purchase. In recent years, post the advent of digital technologies, that number is down to 1.5. That means, by the time the customer comes to the dealer, they are coming down to the selection of two competitors. They are either coming for a test drive or they are coming to make a transaction. They have already looked at reviews, peer group comparison sites, and consumer reports, all online. So they come highly empowered. And in markets such as the US, they also know the typical transaction price, leaving little room for negotiation either. In previous times, the customer journey began the first time a customer walked into a dealer. Now, it is 6 to 12 months before purchase intention. Once the transaction is completed, it’s very important that we continue that digital journey. The car that a customer is buying today or in the future is likely connected to the Internet. Therefore, it’s important that we continue the relationship with the customer and the car. In previous times, the customer journey began the first time a customer walked into a dealer. Now, it is probably 6 to 12 months before purchase intention, and that continues throughout the life of vehicle ownership. DIGITAL TRANSFORMATION REVIEW You talked about your willingness to continue the relationship with the customer after the purchase of the car. Can you give us some examples on how you are doing that? Let’s look at a couple of our products, the Leaf and the Infiniti Q50, which are both permanently connected to the Internet. With the Leaf, we are continuously monitoring the state of the battery and, if there is a problem, we can immediately contact the customer to highlight the concern. With the Infiniti Q50, we have two categories of applications. One is embedded apps and the other is downloadable apps. With one set of applications, you can download information and update them directly. So, bugs in software can be updated remotely, as opposed to recalling the car as you would have done in the past. In this case, we are using digital communication to ease the experience that the customer has after a purchase. How does such an evolving customer relationship impact the traditional role of a dealer? Historically, visiting the dealership is not always the most enjoyable experience and therein lies where we, as an industry, have to change. The role of the dealer obviously becomes different when the traffic is basically DI G I TAL TRANSFORMATION REVIEW N° 06 21 We are on the cusp of one of the most radical changes in the way that you buy cars in 125 years.
  • 21. Nissan: Steering a Path to the Digital Customer Looking forward, I would say that making the deal is less significant. However, attracting the customer into the dealership using digital channels is what gains in importance. The brand attribute and the behavior of the dealership become extraordinarily important. And then, in after-sales, there needs to be a more proactive relationship that is based on the data that we now have access to. Driving Around with Data The growing number of sensors inside cars is giving rise to a lot of data. How do you intend to use this data going forward? I think it was around ten years or so ago when the value of electronics in the car exceeded the value of the engine. That’s evermore true. Electronics in the vehicle informatics, in particular, will become a greater proportion of the value of the car as we go forward. Every time a customer presses “OK” on their Leaf vehicle, the vehicle will basically transmit the journey that the vehicle has done, the state of the battery, and various other pieces of information. We discard all of the owner experiences and use the essential data. That gives us, for example, traffic patterns. So we can go and look at a particular city. We can then deep dive and look at the usage of our vehicles there and see data over a period of time. This helps us understand typically what type of journey has been undertaken, what kind of charging patterns have been used, and when people are charging the car. We can use this information to work with city planners to identify where traffic jams are and where we can put additional charging stations to make the customer’s life easier. coming down for deal closure. The dealer needs to very much be the brand ambassador in the digital age; it needs to carry the brand. Remember that when your customers come to your dealer, you basically have one shot at impressing them and impressing upon them the meaning of the brand. If you mess it up then that’s basically going to be the lasting impression. You don’t get a second bite of the cherry. So, I would say that the dealer becomes more of a brand ambassador going forward. They also become much more important in terms of the ongoing relationship that you have with the customer. So, through CRM systems, you need to know who your customer is. You need to be able to recognize them when they come into the dealership. You need to be able to communicate with them not only through flyers, but using digital channels. Dealers need to turn into brand ambassadors in the digital age. 22 DI G I TA L TR ANS F O RMAT I ON RE V I EW N° 06 The biggest commercial opportunity we have around Big Data right now is in marketing. Our customers today come highly empowered, armed with significant information.
  • 22. Within the company, we try to focus our data crunching efforts on where the biggest business opportunities exist. In the first instance, we were using data to largely monitor the health of the car. I would say that the biggest commercial opportunity we have around Big Data right now is probably in marketing — how to market to our customers and how to improve retention through enhanced user experience. How easy or challenging is it to encourage a data-driven culture in the organization? Typically, Japanese companies are usually data-driven. Therefore, the idea of having more data resonates reasonably well within this company. However, the challenge is that there is too much data. Basically, we have to make difficult decisions on what analysis to do with the huge amount of data that we have in front of us. If we took everybody’s requests, we would be cutting the data a million different ways. Where should an organization like Nissan draw the line when it comes to data privacy? The trust that your customers have in you entirely drives the brand reputation of organizations. Privacy needs to be as defined by the customer, not the company. And it has to be protected at all costs. And this protection comes at two levels. One is to ensure we separate all customer data specifics from the data we collect so we only have patterns to analyze. The other is to protect this data from cyberattacks. We have to be, I think, more guarded particularly in terms of cyber theft at the levels of the server, the smartphone and the car. DIGITAL TRANSFORMATION REVIEW DI G I TAL TRANSFORMATION REVIEW N° 06 23 The challenge with Big Data is that we have too much data. Privacy needs to be as defined by the customer, not the company. The Advent of the Digital Marketing Offi cer Do you see the traditional boundaries of marketing being redefined? In Nissan, I am responsible for product planning, product marketing, and sales. So, my own responsibilities reflect the changing scope of the modern-day marketing professional. There is a huge blurring of roles between what is the traditionally engineering-led product planning type of activity and marketing. And more importantly, they need to talk to each other and not sit in separate buckets. Our organization brings marketing and sales four to five years upstream from where a typical marketing organization lies today. By doing so, we have a greater control over all of the attributes that typically make up an internal contract. For instance, for a new car, our marketing department has already made the mood video in a way that we are going to advertise the car, the PR department has already written the press release, our assessment engineers have already analyzed what the road test and group reports will say about the car.
  • 23. The Future of Technology and Automotive What are the biggest challenges that you foresee in greater adoption of digital technologies? There are numerous examples of putting digital technology into cars that just make the lives of customers harder. I think the key is to strip out complexity from our customers’ lives. We already have extremely complicated lives. This is all the more true when we look at Gen Y and Gen Z consumers, particularly, the millennials. They’re looking forward to finding more time to experience social media and interact with their friends online. They’re looking for the machine to take the problem away from them rather than give them more problems. Nissan: Steering a Path to the Digital Customer We've already started planning out the digital interfaces. The sales department is already thinking about how you sell that car, both online and offline. So, that blurring is most definitely happening. You very much have to work out of your functional chimneys. There is a huge blurring of roles between what is the traditionally engineering-led product planning type of activity and marketing. How do you manage to create internal governance structures in such a scenario? Traditionally, automotive companies such as Nissan have program directors for each physical platform on which car models are built. These program directors typically manage the different models from start to finish. However, at Nissan we realized that beyond the platform approach there are new megatrends driven by digital technologies that we need to address across the company. The three megatrends we identified were connected cars, autonomous car and zero emissions. Now, each of these megatrends, CMOs need to have a grasp of mathematics, statistics, data technology as well as digital technology. 24 DI G I TA L TR ANS F O RMAT I ON RE V I EW N° 06 The key is to strip out complexity from our customers’ lives. which are inherently interconnected, has its own program director. What kind of an impact does this have on CMOs, and their traditional role? I think it’s very important that the CMO is first and foremost mathematically driven. It’s not the only question of having great creative ideas or thinking of the next creative ad. Because the data is there, you are no longer mass marketing. In fact, what big data allows you to do is move from mass marketing to personal marketing. Today, the CMO can reach their target customer with pinpoint accuracy and could start talking to individuals, rather than clusters. So, I think it’s a prerequisite of CMOs looking to the future that they have to have a grasp of mathematics, statistics, data technology as well as digital technology. Otherwise, you just can’t keep up.
  • 25. Nissan: Steering a Path to the Digital Customer What is your vision of the future customer journey? A lot of the focus is going to be on the pre-purchase experience. I think the marketing job has moved from advertise on a Tuesday and transact on a Saturday, to a much longer journey. A journey where the brand is much more important and where the customer, when they finally come to the dealer, is much more empowered. In such a scenario, what automotive companies need to do is to create a mental model of what the brand stands for in the mind of the potential customer. So, we are seeing a lot more use of long-term marketing assets, be they online or offline. Nissan has transformed its spend on experiential and sponsorship type of marketing. For instance, sponsoring the Olympics — which is in 2016 — doesn’t bring customers necessarily tomorrow to the dealer. What it does do is it starts to show potential customers what Nissan stands for. We are talking about a lifetime engagement involving personalized marketing. And, I think that transforms the way the marketers have to think about doing business. Visualizing the Car of the Future 26 DI G I TA L TR ANS F O RMAT I ON RE V I EW N° 06 About Nissan Motor Co. Ltd. Nissan Motor Co., Ltd., Japan’s second-largest automotive company, is headquartered in Yokohama, Japan, and is part of the Renault-Nissan Alliance. Operating with more than 244,500 employees globally, Nissan sold almost 5.2 million vehicles and generated revenue of 10.5 trillion Yen (USD 105 billion) in fiscal 2013. Nissan delivers a comprehensive range of more than 60 models under the Nissan, Infiniti and Datsun brands. In 2010, Nissan introduced the Nissan LEAF, and continues to lead in zero-emission mobility. The LEAF, the first mass-market, pure-electric vehicle launched globally, is now the best-selling EV in history with almost 50% share of the zero-emission vehicle segment. Nissan has pledged to bring the autonomous car to market by 2020. Here, we talk to Andy Palmer about the exciting possibilities for the car of the future. A part of my job is also to imagine the car of the future. Let’s do that. The car of the future will have no engine as it will run on battery power. If we no longer put the engine in the front of the car, what can we do with that space. If the electric motors are going within the wheels, effectively anything above platform height of, say, 12 inches is free for the designer to play with. Once you start thinking without traditional constraints, it can lead to interesting outcomes. For instance, where do you seat the driver? You no longer have to seat the driver on the left or the right. You no longer need to put them in the front. They can be in the rear. They can be in the middle. We can think about the whole configuration of how you use the car. We have not yet reached the true driverless car but we are certainly very deeply into the path of autonomous. So, the driver no longer needs to have their eyes permanently fixed on the road. This means that we could imagine younger customers coming to buy cars and indeed older people driving cars so much later in their lives. “Eyes-off” cars mean that we can transform what people do in the car. And that’s where the connected elements start to work. For example, we can imagine having head-up displays that basically observe things going on around you much more quickly than you can. Since the computer can work much more rapidly than the brain, it can override in dangerous situations. The passengers though can focus on their social media newsfeeds and other entertainment. The windscreen can become a display for video streaming. The possibilities are virtually unlimited.
  • 26. DIGITAL TRANSFORMATION REVIEW DI G I TAL TRANSFORMATION REVIEW N° 06 27
  • 27. Where Digital Meets Physical: Mercedes-Benz and the Seamless Customer Experience Where Digital Meets Physical: Mercedes- Benz and the Seamless Customer Experience Interview with Ola Källenius – Member of the Divisional Board Mercedes-Benz Cars, responsible for Marketing & Sales Mercedes-Benz Cars is the passenger cars’ division of Daimler AG and manufactures products ranging from the premium automobiles of the Mercedes-Benz brand to the small cars of the “smart” brand. In 2013, Mercedes-Benz and smart sold more than 1.5 million vehicles and recorded revenues of more than €64 billion. Mercedes-Benz is ranked at number 16 on Forbes’ list of the most valuable brands in the world. Capgemini Consulting spoke with Ola Källenius, Member of the Divisional Board Mercedes-Benz Cars, responsible for Marketing & Sales, to understand the company’s approach to customer experience in the wake of digital disruptions. 28 DI G I TA L TR ANS F O RMAT I ON RE V I EW N° 06
  • 28. Driving Customer Experience to New Levels How do you see the role of customer experience in Mercedes-Benz Cars? Customer experience is one of the three key pillars of our long-term growth strategy — along with brand and product. We launched the “Mercedes-Benz 2020 — Best Customer Experience” initiative in 2013 with the aim of providing our customers with a consistent premium brand experience across all touch points — physical as well as digital. With “Best Customer Experience”, we want to raise the relationship with the customer to a new level. Our goal is twofold — to create special moments for the customer at every step in the customer journey, and to connect the dots across all customer touch points. From our perspective, one thing is absolutely clear — the integration between the digital and the physical world has to be and will be a seamless one. What are some of the key initiatives that you have taken to provide a seamless customer experience? One key initiative that we launched is a new service brand called “Mercedes me” as part of our “Best Customer Experience” initiative (see insert for details). Through “Mercedes me”, we intend to comprehensively address our customers’ product purchasing, financing, and servicing needs both in the digital and physical worlds. All of the “Mercedes me” services are available via a unified digital platform. To ensure a seamless experience, we have also introduced a new city store format — the “Mercedes me” store — that offers an interactive brand and product experience in a relaxed atmosphere. Touch screens, configuration tools or a talk with our product experts help DIGITAL TRANSFORMATION REVIEW customers and persons interested to get to know our brand, products and services better. In essence, our objective in introducing all of these different formats is to ensure that our customers have access to us anytime, anywhere. Our customer experience strategy centers around providing our customers with a consistent premium brand experience across all touch points, digital and physical. DI G I TA L TR ANS F O RMAT I ON RE V I EW N° 06 29
  • 29. 'Mercedes me': Accelerating Mercedes-Benz Services Mercedes-Benz Cars launched its “Mercedes me” brand of services in early 2014. “Mercedes me” is the umbrella brand for all of the company’s current and future services. It covers five service areas under the sub-brands “Move me”, “Connect me”, “Assist me”, “Finance me” and “Inspire me”. The services are offered via an online portal and include a range of solutions to help customers with their purchase, financing and service requirements. “Move me” comprises intelligent mobility solutions such as the car2go car sharing service and the Park2gether peer-to-peer parking service. “Connect me” offers remote monitoring, remote diagnostics, accident, maintenance, and breakdown management services. “Assist me” enables online access to customer service functions such as automated appointment booking. “Finance me” offers personalized financing, leasing and insurance solutions to customers. “Inspire me” allows customers to contribute their own ideas and suggestions towards the development of new technologies and services. Source: Daimler, ““Mercedes me” – a new benchmark for service”, March 2014 30 DI G I TA L TR ANS F O RMAT I ON RE V I EW N° 06 How do you manage the expectations of a generation of customers that are digitally native? Indeed, Gen-Y customers have a greater bias towards a digital experience. They are more likely to search for information online than visit a dealership. We have learnt that relationships with Gen-Y customers need to be nurtured for longer in the digital world. We focus on ensuring that we don’t lose them after the online experience. We make sure that we offer them a variety of options online. For instance, they can have a chat with somebody to understand more about the car, book a test drive, or set up a meeting with the sales person. We are currently running pilots in Hamburg and Warsaw to sell our cars online. In most cases, the online experience acts as a catalyst for customers to visit dealerships. itself doesn’t matter, because even the online sale at the very end is processed by our own retail dealerships or our distribution partners. It holds true in case of service as well. Customers need a physical place to service their cars. They don’t want to pick it up in some random place. They want to have a relationship with a person that they can speak to about the features of the car. For us, it is always physical and digital, rather than digital instead of physical. What do you think is the role of the dealer in the digital age? The dealer relationship continues to be extremely important to us. In our business, digital can complement and enhance the physical experience, but not replace it. Customers value the human element involved in the purchase process. This is true for most luxury product categories. Customers want to be able to speak with a person about the product before they purchase it. Whether the customer ultimately buys it online, in one of our new city stores, or in the dealership In our business, digital can complement and enhance the physical experience, but not replace it. Where Digital Meets Physical: Mercedes-Benz and the Seamless Customer Experience
  • 30. car can automatically detect and prompt the owner when it is due for a service. So, connectivity certainly opens up new opportunities for us to provide more value to our customers. Beyond enhancing customer experience, how do you think connected cars can help large automobile companies such as Mercedes-Benz? One of the big opportunities created through connected cars is using data generated by the car itself. Our mobility services generate a lot of data on vehicle location, customer profiles, and other parameters. We have used Big Data analytics to improve our mobility services. Take car2go for instance — our car rental service — that lets users locate and pick up cars on hire through a smartphone app. We need to ensure that our vehicles run as many trips as possible through the day. As such, we analyze real-time vehicle location data to optimize vehicle DIGITAL TRANSFORMATION REVIEW DI G I TAL TRANSFORMATION REVIEW N° 06 31 Customers value the human element involved in the purchase process. We look at connected cars as an opportunity to create a seamless world of services for our customers. I think we are at the beginning of using data from connected cars in the auto industry. Customer Experience in a Connected Environment: The Rise of Connected Cars How do you see the rise of connected cars impacting on the customer experience? Connected cars are an opportunity for us to create a seamless world of services for our customers. We see connectivity at two levels. One is the standard bought-in category where the customers bring in their smartphones and use all of the apps that they are already used to having inside the car. We are at the forefront of such services, and other car makers are also pushing towards that. “Mercedes me” though brings connectivity to a whole new level through the “Connect me” service. “Connect me” lets customers remotely view and control various vehicle parameters. For instance, customers can view fuel levels or tire pressure, turn on the preheat function, or even locate a car remotely. With the “Assist me” service, which is again a part of our “Mercedes me” portfolio, the availability. There is a wealth of such opportunities opening up as we gather more data. Tech companies such as Amazon and Google have focused their entire business model around the use of data. I think we are at the beginning of using data from connected cars in the auto industry. At the same time data protection and information security are of central importance to Daimler, and this also applies to the increasing networking of vehicles. For us it is a matter of course that the customer always has full transparency and self-determination over the data — either by contract, consent or the touch of a button.
  • 32. DIGITAL TRANSFORMATION REVIEW DI G I TA L TR ANS F O RMAT I ON RE V I EW N° 06 33 Creating an Organization Geared to Delivering Seamless Experiences How did you adapt your organization to deliver a superior and seamless customer experience? We created a customer experience function with a project and organizational leadership model that is based entirely around the customer journey. So, we took departments dealing with different aspects of the customer journey, which were spread across the company, and brought them under a single leadership. The customer experience function is tasked with creating the blueprint for a consistent global Mercedes- Benz brand experience. For instance, the customer experience function set the standards, developed the digital platform, and defined processes for the launch of the “Mercedes me” service brand. While there may be some market-specific differences in service rollout, the customer experience function ensures that the overall experience is the same across geographies. How do you ensure that local units are aligned with the global vision for customer experience? In order to develop a stronger customer focus, the Daimler Group launched an organizational restructuring initiative last year under the banner of “Customer Dedication”. The objective of the initiative was to build a leaner and more flexible organization, so that each division within the Group could focus its activities more sharply around customer needs. Under the initiative, the responsibility for the main sales functions was anchored directly in each of the Group’s five divisions, of which Mercedes-Benz Cars is one. Within Mercedes-Benz Cars, we then developed a regionally focused marketing and sales organization. We address six major regions and each of these is represented directly in my management team. In each of the management team meetings in sales and marketing, we ensure that we have regional as well as central Group level functions for sales, marketing, services and other areas represented. During these meetings, we discuss and arrive at an agreement on various strategic issues. This ensures that while the execution is handled by the regional units, we are aligned with the overall Group vision on customer experience. We created a customer experience function with a project and organizational leadership model that is based entirely around the customer journey.
  • 33. How are you developing the talent required to deliver integrated customer experiences? I often say that the ability to meet the challenges of a digital world is not a function of biological age, but a function of mindset. Consequently, we have built a diverse talent pool with people from different backgrounds who have embraced digital very quickly. We have focused skill-set development around ramping up our services expertise, and also on making our in-car experience intuitive and easy-to-use. In addition to growing our own talent pool, we also leverage external agencies. We try to use the best that the market has to offer. Finally, are there companies that you look up to for inspiration as you seek to enhance customer experience? In the last few years, we have started to look outside of the automotive industry for inspiration. We look at high-end hotels, fashion retailers and restaurants. For instance, we benchmarked ourselves against the Mandarin Oriental Hotel. We looked at their concierge service and I remember a quote from one of their head concierges, which reflects the hotel’s attitude towards customer experience. He said, “Our motto is simple. The answer is yes, but what’s the question?” We also benchmarked ourselves against a three-star Michelin restaurant in the US. So, we believe that it is critical to look beyond the automotive industry as we seek to create the most compelling experiences for our customers. We believe that it is critical to look beyond our own industry as we seek to create the most compelling experiences for our customers. 34 DI G I TA L TR ANS F O RMAT I ON RE V I EW N° 06 We drew inspiration for our customer experience initiatives from one of the head concierges at the Mandarin Oriental Hotel who told us, “Our motto is simple. The answer is yes, but what’s the question?” Where Digital Meets Physical: Mercedes-Benz and the Seamless Customer Experience
  • 35. When Amazon meets Facebook: Social Shopping with a Twist When Amazon Meets Facebook: Social Shopping with a Twist Interview with Nathalie Gaveau – Founder and CEO of Shopcade Nathalie Gaveau is the founder and CEO of Shopcade, the world’s leading social shopping app, which positions itself as the first shoppable mobile fashion magazine with content curated by users and brands. Shopcade was recently crowned the “Coolest App in Europe” at the GP Bullhound Summit and the 2014 Media Momentum Awards in Paris. The app was launched in December 2011 and currently includes more than 150,000 brands and 1 million products for sale. We interviewed Nathalie to understand how Shopcade is revolutionizing mobile customer experience through personalization and social. 36 DI G I TA L TR ANS F O RMAT I ON RE V I EW N° 06
  • 36. A Glimpse into Shopcade Could you start by helping us understand how Shopcade works, and how it all started? There is a large gap nowadays between what content a young mobile consumer desires when purchasing a product and what information companies provide. The idea behind Shopcade came about when I wanted to shop online and didn’t find really good quality content to inspire me to shop. Online stores provided a good way to search for products and deals. Social networks and magazines were a source of inspiration. However, none of these sites bridged the gap. That is when I decided to start Shopcade — an app that would showcase all the latest fashion shopping trends on mobile as well as the Web and enable users to shop these items easily. A typical Shopcade user keenly follows brands, celebrity trends and is abreast of the latest fashion trends. So, when they find a look they like, they research it extensively. Shopcade simplifies the process for them by showcasing everyday trends from retailers, bloggers and celebrities. We like to describe ourselves as the first shoppable fashion magazine that resides in a mobile phone. The difference between us and traditional magazines is that the content is created by users or brands. What kind of content does Shopcade feature? We have a mix of content from two major directions. One is a constantly evolving trending feed that is curated by the app itself. The content we showcase includes celebrity trends, summer fashion and beauty trends, community ratings of top products, and exclusive deals that are driven directly by over 150,000 brands that we host on Shopcade. The other set of content comes from a community of bloggers, DIGITAL TRANSFORMATION REVIEW editors and users. We have partner bloggers who showcase their favorite looks, make lists of trending items they like and then we curate them and put them into a personalized feed based on people’s location and gender. Only activities that are the most popular or the most interesting get featured on our feeds. DI G I TAL TRANSFORMATION REVIEW N° 06 37 Shopcade showcases everyday trends from retailers, bloggers and celebrities. We are a shoppable fashion magazine that resides in a mobile phone. Customers are increasingly expecting a simpler, leaner experience that is adapted to mobile. How important is the social dimension for Shopcade? For us, it is a key part of the platform. We enable people to identify whom they like to follow and what trends they want to stay on top of. All Shopcade users also have a public profile on the app, where they can publish their blog and save all brands, products, and looks they like. All our content is based on what is popular on the app and being a social platform makes it more real-time. Our vision is that everyone is an editor today and has a share of voice on trends. We are similar to Facebook or Instagram, except that people are sharing looks and products they like. In essence, we are like a fashion shopping network.
  • 37. When Amazon meets Facebook: Social Shopping with a Twist Content is trumping advertising when it comes to effective interaction and engagement with consumers. How do you make money — what is your business model and what are some of the brands you associate with? We called our business “Shopcade” — which means “Shopping Arcade” — so we can host and sell various brands in one place. We are generating revenue based on affiliate commissions, brands advertising and direct sales. All sales that are generated by the platform are affiliated to merchants and we get a commission from these sales. We also work with different brands, featuring engaging fashion content about their products on the app. Out of the existing 150,000 brands on our site, we have direct contacts with a few thousand, and are working very closely with our top 200. For these 200 brands, we get exclusive deals and we feature their products. In return, the brands promote native ad content on our newsletter, on social media, as part of key trends on the trending feed on the main page of the app. Towards a Leaner Customer Experience How do you think customer expectations are evolving? Customers are increasingly expecting a simpler, leaner experience that is adapted to mobile. Some startups that are clearly doing this well are Instagram and Airbnb; their apps are pretty lean and easy to use. Our experience also suggests that content is trumping advertising when it comes to effective interaction and engagement with consumers. What do you think is holding companies back from creating and delivering such an experience? It’s a very new requirement and not many people have this expertise yet. But I also think that when companies focus on too many aspects, they lose out on their unique selling proposition, their key selling point. If you don’t have a singular vision on the end-objective from an improved customer experience, you can end up doing too many things. That’s when companies start to clutter the user experience. 38 DI G I TA L TR ANS F O RMAT I ON RE V I EW N° 06
  • 38. What type of data do you collect and how do you use analytics in enhancing customer experience? We collect a wide range of data from our users. We have data around ‘likes’ and what users want, and trending brands. And since we are inherently social, we have a whole layer of data from each user’s network. We use all of this data to create highly personalized experiences through a robust recommendation system for each product. This enables people to endlessly navigate from one product to another inside our app. And our users appreciate that. We also use analytics to improve cross-selling. For instance, depending on which products or brands users have favorited or liked, we send them recommendations on potential products that may interest them. Our analytics system enables us to see straightaway the top-performing channels and most trending brands as well as the most influential users. We then invite these brands and influencers to be featured on the platform, either through exclusive deals or through extra content. Lack of a singular vision can result in companies doing too many things that start to clutter the user experience. The Startup View: Challenges and Advantages How are startups geared to deliver a superior digital customer experience compared to large, traditional corporations? Startups have to be more focused since they tend to have fewer resources compared to larger organizations. Also, startups don’t have a lot of business requirements from different units of the company. This helps them focus on one crucial aspect and follow it up to completion. This also ties in with the challenge around not having a singular vision that I was referring to earlier. DIGITAL TRANSFORMATION REVIEW What are some of the key challenges that are typical to startups such as Shopcade? A large part of the challenge boils down to the ability to prioritize scarce resources. It’s all about being able to understand what is going to pull most growth and profit in the quickest way. At the same time, it’s important to focus on the long-term product and the user experience to deliver a superior positioning for the business. The other challenges include keeping things really simple from a data analysis perspective and making sure that you have outstanding and committed people to deliver a high-quality product. We essentially want to start transforming our app into more of a platform play and keep simplifying the user experience. DI G I TAL TRANSFORMATION REVIEW N° 06 39
  • 39. When Amazon meets Facebook: Social Shopping with a Twist 40 DI G I TA L TR ANS F O RMAT I ON RE V I EW N° 06
  • 40. Looking into the Future How do you see Shopcade evolve? Shopcade will be one of the biggest social shopping apps on mobile. There has been a rapid increase in the number of brands and users that are engaging with Shopcade. We are going to start transforming our app into more of a platform play and integrate a global payment system. I am keen to partner with people who have complementary services that can let us grow, and I am keen to develop the awareness of the platform, and the model, in the UK and in Asia. What do you think the future of shopping will look like? I think mobile and curation are going to play a significant role in driving the personalized shopping experience of the future. Businesses who get data analytics are going to be leading the pack, whereas those who don’t know how to build a good user experience, understand data analytics and present products or content in the best way possible, are just going to miss out. The future of retail is clearly digital – just in clothing, more than 13% of sales are already happening online in the US and e-commerce is the only retail growth segment. Having said that, I think that some retailers like Zara, who have a real product differentiation or value proposition, can gain a real competitive advantage from their store network. But digital will help connect inventories with customer preferences and manage better merchandising analytics and customer trends. For example, on Shopcade, we see trends happening very quickly, before they hit magazines or the high street. Mobile will play a big role in payments and services around stores, not just on a standalone basis. DIGITAL TRANSFORMATION REVIEW DI G I TAL TRANSFORMATION REVIEW N° 06 41 Those who don’t know how to build a good user experience, understand data analytics and present products or content in the best way possible, are just going to miss out in the future of retail. Curation is going to play a significant role in driving the personalized shopping experience of the future.
  • 42. Marketing Reinvented for the Digital Age DI G I TAL TRANSFORMATION REVIEW N° 06 43
  • 43. Lithium Technologies: RIP for traditional CRM as the new world of C2C kicks in Lithium Technologies: RIP for Traditional CRM as the New World of C2C Kicks in Interview with Rob Tarkoff – President and CEO, Lithium Technologies Rob Tarkoff is CEO and President of Lithium Technologies. Lithium Technologies helps organizations transform the way they manage customer engagement and brand management through consumer-to-consumer interaction and online social communities. Its customers include the likes of HP, Research in Motion, Best Buy, Symantec, Comcast and Sony. Recently, the company acquired Klout — a website and mobile app that uses social media analytics to rank users — for around $200 million. The acquisition means Lithium can integrate its C2C social community capability with Klout’s scoring system for rank and profile. 44 DI G I TA L TR ANS F O RMAT I ON RE V I EW N° 06
  • 44. Driving Social Business: Lithium's Journey, Then and Now Can you give us a quick overview of how Lithium Technologies started? Even before people were talking about social networking, Lithium was pioneering a concept that sprung from the online gaming world. Some gamers were so good at multiplayer games that they were sponsored by companies such as Nvidia and Microsoft to test the limits of games. From those origins, we developed the idea of building the same sort of gamified experience in a corporate context. If we could get online domain experts to help others, we could change the economics of the customer service industry. We then started to move the company from just this service and support area, looking at how online word-of- mouth from peer to peer could really change the economics of a brand’s marketing efforts. Could you explain the concept of social communities? Studies show that more customers trust recommendations from peers as opposed to direct advertising. These ‘peers’ are people who are considered experts but who have no direct affiliation with the brand. Customers tend to trust the opinion and recommendations of such experts because of their domain knowledge, and online reputation and rank. Online social communities have arisen as an extension of this trend. Social communities enable customers to ask questions and get answers from experts, voice their concerns and discuss specific issues. Brand-specific communities enable customers to interact with the organization directly and this level of engagement fosters customer loyalty. We saw that the dynamic of word-of- mouth from people with strong reputation to other customers could really change the economics of a brand’s marketing efforts. What are some ways in which social communities add more value over traditional channels? Typically, traditional channels follow a broadcast style of communication with their customers. So, if you look at contact centers, Short Message DIGITAL TRANSFORMATION REVIEW Service (SMS) or CRM tools, they are used predominantly for making company-wide announcements or to resolve customer concerns in a linear, one-way fashion. In comparison, social communities online are more fluid and organic. Conversations are dynamic and brands are able to gauge customer sentiment and pulse by listening in to these communities. Brands can listen in on conversations to resolve issues, understand changing customer preferences and to unearth potential business opportunities. Google, which is one of our customers, runs its AdWords community on Lithium. By listening in, Google has been able to discover which elements of the Adwords products people are talking about. Brand-specific communities enable customers to interact with the organization directly and this level of engagement fosters customer loyalty. DI G I TAL TRANSFORMATION REVIEW N° 06 45
  • 45. Lithium Technologies: RIP for traditional CRM as the new world of C2C kicks in 46 DI G I TA L TR ANS F O RMAT I ON RE V I EW N° 06
  • 46. DIGITAL TRANSFORMATION REVIEW Lithium Technologies – A Primer How Does Lithium Technologies Foster Social Communities? Lithium enables brands to convert their website into a social destination through online social communities, offering brands a platform to create dedicated communities. Take the case of Cortal Consors — a European broker in personal investing and online trading — which worked with Lithium to launch a banking social community. The community allows financial services customers to interact and network with each other. So, when a customer has a question or is facing an issue, they can simply search for similar questions posted by other users. Users can post replies, like a post, ask questions, post multimedia content relevant to the topic and receive “kudos” from other users based on their levels of activity on the platform. How is Lithium Different from Generic Social Networks? Most large brands engage with social customers by meeting them where the concentration of customers is the highest — the social Web. However, the true value for these brands is to have engagement via dedicated hubs. For a start, this means peer-to-peer interactions are based on specific interests. General social networking sites fail to offer such depth of focus. Dedicated social communities also facilitate customers helping each other out. This way, the brand ends up spending less on support costs. Lithium also uses behavioral science to analyze how social communities influence brand loyalty and drive repeat sales. How Can Lithium Drive Up Sales for Organizations Through Customer Engagement? Engaged consumers tend to purchase more frequently from the same brand. According to Lithium’s research, 79% of visitors to a Lithium community have said they would purchase again from the company in future1. To build that engagement, Lithium uses gamification concepts that give contributors badges, ranks and “kudos” counts. These elements help to drive more active contribution. Lithium also analyzes customers’ preferences for how they wish to interact. Finally, Lithium opens up the social communities to the broader social Web. This helps bring in customers from public social networking sites, where they are happy to find the kind of in-depth engagement they are looking for. This creates a wide and engaged community, and when brands target people who are truly engaged with specific offers, there is uplift. DI G I TAL TRANSFORMATION REVIEW N° 06 47 Social communities also drive better brand engagement, because customers feel they are being responded to and in a timely way. We found that when provided with a timely response, 43% of American customers were more likely to encourage their friends and family to buy their products and 38% were more receptive to advertisements from the brandi. This is how you create loyal advocates. When such brand loyalty comes at a much lower cost to the organization — via online platforms as opposed to traditional channels — the result is a win-win situation. 43% of American customers expect a response within the hour. What are some of the typical challenges organizations face in adopting a community-based solution such as yours? One of the biggest challenges is in hiring the right kind of professionals. Typically, most organizations hire professionals who create content and then broadcast it. However, when it comes to creating a platform that can support highly engaged
  • 47. social communities, the hiring process needs to be very different. It means hiring people who have prior knowledge of curating and aggregating user-generated content, which requires a diverse set of skills. Then the other challenge is around anticipating and dealing with the kind of dramatic changes a social community platform brings — whether it is around processes or infrastructure. It requires a complete re-think of existing Web properties as well as social marketing and social support infrastructure. Peer-to-Peer Interactions: A Cornerstone of Customer Engagement How are digital technologies disrupting the customer experience? Our view is that the disruption is being driven by what we call an era of extreme customer expectations. Customers expect the experience to be easy, personalized, shareable and seamless. We found that 66% of Americans expect a same-day response to their online requests and 43% customers expect a response within the hourii! However, companies are not ready for this kind of change. Organizations are experiencing massive disruption in their brand-building efforts over digital. For instance, when a customer of British Airways, took out advertisements on Twitter to complain about inability to find his baggage, the company dealt with it ineffectively. This led to the advent of a category called 'complainvertizing', wherein consumers can take to the social media channels and dramatically alter brand perception in a way that companies like British Airways never thought possible. We found that a significant part of this happens from younger folks, with 46% going online to complain about a brandiii. Most companies are failing to scale up to such changing customer expectations and this is causing massive deterioration of brands; it's causing losses of millions of dollars in brand reputation repair. Organizations are experiencing massive disruption in their brand-building efforts over digital. 48 DI G I TA L TR ANS F O RMAT I ON RE V I EW N° 06 Why do you think Customer-to- Customer (C2C) interactions are becoming so important now? It's not as though there is suddenly a big revolution in C2C. It is more to do with the fact that a behavior that typically used to be offline and based on word-of-mouth has now been amplified to a massive degree because of the availability of digital channels and social media networks. From the data we have gathered, we found that people prefer to get recommendations through peer-to- peer interactions; people look for expertise. Experientially, in our consumer lives, we are completely immersed in the C2C digital experience. Before making a purchase, consumers look at online reviews or do a search to look for answers. Product comparison and seeking the opinions of peers are very common activities socially. For instance, we found that 81% of Americans use online resources to research a big purchase. This behavior is very pronounced in the younger demographic — one out of every ten people aged between 18 and 34 use as many as six different sources when researching for a purchaseiv. Once brands are able to harness the information from customer interactions, they will be able to capture a lot of uplift relative to their competitors. Lithium Technologies: RIP for traditional CRM as the new world of C2C kicks in
  • 48. DIGITAL TRANSFORMATION REVIEW DI G I TAL TRANSFORMATION REVIEW N° 06 49 Brands are finding it difficult to figure out how to take advantage of all the data from C2C interactions. As customers increasingly engage themselves in conversations with one another, what is the role of organizations? The role of the organization is shifting from that of a promoter and declarer, to that of curating conversations, and participating and enabling a dialog. Customers see how brands really are because it is all in the open on social networks. There are no secrets anymore. Transparency is the norm and trust is the new currency; and you build trust by being in a conversation, not telling customers what to do. Companies who are successful are the ones who use digital technologies to uplift the customer experience in a way that converts to dollars. You’ve recently acquired Klout. What is the link between social reputation and customer experience? A few months ago, we announced the acquisition of Klout — a company that scores people’s profiles based on their presence and expertise on social networks. The acquisition enabled us to tie in Klout’s scoring system for rank and reputation mechanism with our own database on brand-specific communities. We are now able to provide a very broad platform that not only offers community building, but also provides profile reputation and expertise across diverse topic areas, with a consumer angle to it. So, again, we are sort of creating this concept where brands are able to refine the customer experience on their own. Rather than being disrupted by a third party, brands can now be the disrupters themselves. How do you visualize an ideal customer-centric organization to look like? When community-speak becomes an important action item on the agenda of C-level executives, that’s when an organization is bringing in real change towards customer-centricity. It’s when organizations start treating consumer interactions as important pieces of data for market research or brand studies that they will become more successful than their competitors. The brands we are talking to now are brands that have always prided themselves on setting the bar for customer experience. They are now coming to us and saying, “We are not exactly sure we know what to do.” So, it’s pretty interesting to see that brands that thought they were the hallmark of customer experience now think they don’t really know the consumer. They are asking, “How do we activate consumers to tell us more about themselves than we are able to get today.” I think that is the big change. The role of the organization is shifting from that of a promoter to that of a curator and enabler of conversations.
  • 49. Future Steps: Peering into the Crystal Ball How do you see peer-to-peer communities evolve over time, in the coming years? Well, I think peer-to-peer communities have been the single biggest disruption to CRM. So, my view is that the CRM industry is going to get abandoned over the next 5 to 10 years. Instead, you are going to see systems like ours that are about curating conversation and understanding customer opinion, more than trying to orchestrate around one customer as an item in a database. Peer-to-peer communities have changed the dynamics of managing customers, providing service, marketing techniques and sales tactics. It’s similar to the way e-commerce disrupted brick-and- mortar stores. I think we have a similar phenomenon wherein C2C conversations are becoming an engine of change for the way technology is deployed, data is gathered and incorporated in this decision-making. 50 DI G I TA L TR ANS F O RMAT I ON RE V I EW N° 06 What does the future look like for community-based platforms such as Lithium? Community-based platforms are going to dramatically alter the way we market products and provide support to customers. There is going to be less focus on internal production of content and projecting that outward. Instead, it will be all about organizations tapping into external conversations. Customers are far more empowered today than they were a couple of years ago, and they have multiple outlets to ensure they are heard and in turn impact the brand’s sales and reputation. In fact, we have found that when brands provide customers with timely responses, 34% of customers are more likely to purchase more from the companyv. I think customers are willing to tell you what they think of your brand provided you structure the experience in the right way. The companies that get it right will be the successful ones. Lithium Technologies: RIP for traditional CRM as the new world of C2C kicks in Brands need to build trust by being in a conversation, not telling customers what to do. i Lithium Technologies and Millward Brown DigitalSurvey, October 2013 ii Lithium Customer Expectations Survey, May 2014 iii Lithium Customer Expectations Survey, May 2014 iv Lithium Customer Expectations Survey, May 2014 v Lithium Technologies and Millward Brown Digital Survey, October 2013 Digital ROI: Measuring and Monitoring Progress How does Lithium help enable ROI improvements? Do you have any examples to share? The challenge with digital is that if I am going to make big investments, I need to see returns — uplift in purchase, dramatic decrease in cost to service, and overall improved experience with customers, which results in greater loyalty and share of wallet. We have customers that are routinely saving between 10 and 50 million dollars a year. For instance, Autodesk, a customer of ours, achieved ROI of USD 12 million within the very first year of being with us. Every year since, they have reached the USD 10 million USD mark. Another example is that of CrowdSource, a platform Lithium operates for Telstra. CrowdSource has been able to resolve 50% of Telstra’s customer support issues right on the very first query. Due to the success of our platform and the Telstra social community, the company is closing their traditional contact centers because their customers prefer engaging online. I think this also resonates with the findings from our survey. We found that two-thirds of Americans (67%) tend to call an “800” or toll free number for help only as a last resort.
  • 51. Remixing the Customer Experience for a Digital World Remixing the Customer Experience for a Digital World Interview with Renée Gosline – Assistant Professor MIT Sloan School of Management Renée Richardson Gosline is Assistant Professor of Marketing in the Management Science Group at the MIT Sloan School of Management. She has been named one of the World’s Top 40 Professors under 40, and is a member of the MIT Center for Digital Business. Her expertise includes Consumer Behavior, Social Media, and Social Status Influence. Prior to academia, she was a Marketing practitioner at LVMH Moet Hennessy and Leo Burnett. Capgemini Consulting spoke with Professor Gosline to understand the impact of technological shifts on customer experience and how organizations can connect with customers in a digital world. 52 DI G I TA L TR ANS F O RMAT I ON RE V I EW N° 06
  • 52. A New Customer Experience for the Digital Generation Over the last few years, how has technology impacted customer experience? What has changed? Consumers are exposed to constant stimulus from different forms of media, both traditional and digital, throughout the day. You can imagine them watching television while also simultaneously using a second or third screen, such as a PDA or an iPad. This “lived experience” with technology is now transforming the customer experience to a place where there is no longer a division between old and new media. It is really more about “how can the experience be integrated across all these different forms of media”? What are the implications of this change? What does it mean for brands? I see two key outcomes emerging from these changes. Research shows that when faced with too many alternatives, people seek familiarity and tend to choose default options. The volume of information that consumers are exposed to today can be overwhelming. As a result, they are more likely to choose brands that they are familiar with. Strong brands act as heuristics or shortcuts that help consumers make sense of all the information around them. The sensory experience is not diminished in the digital age, and there are, in fact, new ways to stimulate it. The second key outcome is the growing importance of the sensory experience. People tend to think that digital results in a reduction of the sensory experience since you cannot touch and feel a digital product. However, we are learning that the sensory experience is not diminished in the digital age. There are, in fact, new ways to stimulate it. For instance, recent research has shown that users develop a completely different attachment to a brand when they use a touchpad to interact with a brand website, than if they just click through the website with a mouse. In this case, touchpad technology is allowing us to have a proxy interaction with customers, where touching the screen is giving them a sensory experience that they could not have had before. DIGITAL TRANSFORMATION REVIEW Are these changes only affecting the younger generation or does their impact extend to a wider group? Our research has shown that the younger generations are more comfortable with this multi-sensory experience. While older generations can sometimes feel overwhelmed, the younger generation is less prone to that. Because of their ability to use multiple devices with ease, their brains are mapped differently. In a very real cognitive sense, they have higher fluency. In fact, we are now increasingly finding a two-way flow of influence so that content on traditional media is being remixed by consumers, and then discovered and promoted by brands. But while we are finding that millennials have a different orientation towards digital media, it is also true that people from older age-groups are also increasingly adopting it. How do you see the role of the traditional CMO evolving in response to these changes? I think it is time that we rethink the role of the CMO. Perhaps to the extent that the phrase “CMO” itself needs to be rethought. Perhaps it should really be CXO, Chief Experience Officer, or CRO, Chief Relationship Officer. I use those labels quite deliberately, DI G I TAL TRANSFORMATION REVIEW N° 06 53
  • 53. This blending of traditional television with social media enhances the utility that viewers get from a rerun. Watching their tweets broadcast along with the rerun enhances a viewer’s sense of satisfaction. Ultimately, this cements their interest in the show and increases their attachment to the program. Should marketers continue to use focus groups? In my opinion, focus groups are not appropriate if you want to dive deep into consumer needs, because people tend to converge towards the dominant opinion in the group. I would instead recommend being more experiential and using experimentation. The beauty of experiments is that they teach us about causal factors. Marketers should conduct experiments where they vary social cues and observe their effect on an online or social media group. This is a rich way of seeing how people interact with your brand and to observe changes in behavior, and not just in attitude. Attitudinal responses can be inaccurate as people often tell you what they think you want to hear. This is why I think experimentation is really crucial to understanding consumer behavior. Remixing the Customer Experience for a Digital World Until CMOs realize that consumers co-create their brand, they are really not grasping what it takes to form deep relationships with consumers. Engaging the Digital Generation: New Approaches How can marketers blend traditional and new media to enhance the customer experience? Let me give you an example. Many popular television shows are expanding the digital experience they provide by integrating content with social media. While watching the Oscars, for instance, viewers can post tweets on winners or losers, or on the outfits worn by the attendees. In addition, television shows are integrating social media by repeating their shows with what is called the “social edition”. A social edition is a rerun with added content in the form of tweets posted by viewers during the original broadcast. so let me explain why. It is important for CMOs to constantly try and cultivate an experience based on the relationship that they wish to have with the consumer. This requires stepping out of the traditional marketing mindset that revolves around commercials, spots and agencies, and really thinking about the consumer experience and relationship. The traditional notion of a CMO presupposes a downward flow of influence from the company to the consumers. But until CMOs realize that consumers co-create their brand, they are really not grasping what it takes to form deep relationships with consumers. Taco Bell, for instance, understands that customers do not perceive it as health food. It has, therefore, consciously developed a playful and irreverent relationship with its customers. The company has cultivated this relationship by responding to customer tweets in a deliberately tongue-in-cheek manner. So, it’s important for CMOs to start thinking about the kind of relationship they want to develop with customers, and then deliver an experience that matches the relationship. 54 DI G I TA L TR ANS F O RMAT I ON RE V I EW N° 06
  • 54. Does this also mean that marketers will need more statistical knowledge? No, I don’t think so. The problem with statistics is that they often mask the cognitive processes that drive consumer behavior. For instance, we know from research on consumer-brand relationships that repeat purchase does not necessarily mean loyalty. The causes of repeat purchase could be factors other than loyalty, such as a lack of suitable alternatives. Therefore, relying on statistics alone is not sufficient. I think what marketers will need is a more nuanced understanding of what statistics represent, or the causal factors behind them. And they will only know that by being experimental, and by presenting customers with different scenarios and seeing how they behave. What are your views on personalization? Is it still a buzzword? For consumers today, personalization really comes from the ability to use a brand or brand experience as a means of social signaling. For instance, in social media, people like discovering a unique experience and displaying it in their social group. In a sense they are saying, “I am not just experiencing what everybody experiences. I am displaying an experience that is unique to me.” We find that this is really driving a lot of purchase behavior. Therefore, brands should bear in mind that the goal of personalization should not be to create the same level of intimacy with every consumer. That might not be appropriate and might not be what the consumer wants or needs. The goal should be to ascertain what kind of relationship the consumer wants with the brand. Then it is about cultivating that relationship on the consumer’s terms; that is the kind of personalization that I think we will see happen. DIGITAL TRANSFORMATION REVIEW DI G I TAL TRANSFORMATION REVIEW N° 06 55 The beauty of experiments is that they teach us about causal factors. Personalization really comes from the ability to use the brand or the brand experience as a means of social signaling.
  • 56. Mastering Customer Engagement: The Rise of C2C Marketing How do you rate the impact of C2C marketing? C2C marketing is becoming extremely powerful. In a digital world, everyone has a voice and consumers influence each other’s judgments. There have been incidents where consumers tell businesses how they feel and, not feeling heard, vent their feelings on a C2C platform. The incident then gets blown up, re-blogged, and assumes a life of its own. So, it is essential that we understand C2C dynamics; otherwise, we are really losing the filter through which many people are receiving messages. C2C is also important because people like to tell others when they have discovered something. And people have a bias toward things that are controversial, entertaining, or new. I think it is important for CMOs to keep that in mind while crafting the brand experience. Can CMOs influence C2C dynamics? Yes, CMOs can influence the C2C interaction. While CMOs cannot control what people say to one another, they can control the brand narrative at its origin, and they must be deliberate about that. A good example of this would be Dominos Pizza. When Dominos experienced a sharp decline in sales, it launched research to find out why. It emerged that consumers were dissatisfied with the quality of ingredients in the pizzas, among other things. So, Dominos created a Twitter hashtag campaign that incorporated these findings into its overall brand narrative. The campaign was called “What is wrong with the Dominos Pizza?” and the company asked people to give honest feedback on how it could improve. Dominos got really good feedback from this. People felt that Dominos was honest and really trying to hear them, which built trust. So, this is a way in which CMOs can help shape the brand narrative. Would this not be risky considering customers could react unpredictably? True! But the risk also comes from not doing anything and not connecting with the consumer. Take the case of Wheat Thins — the whole wheat snack brand that decided to use humor as a way of connecting with consumers. They did that by creating a set of humorous guidelines that required sponsors to not feature people eating more than 16 Wheat Thins. They then roped in Stephen Colbert, the satirical comedian, who joked about the product saying he was going to try and eat 17 Wheat Thins, which was like telling consumers “We can eat Wheat Thins the way we want.” The joke went viral and people who would never think about Wheat Thins started talking about it. Yes, there was a bit of risk involved here, but there is risk in inaction as well. While CMOs cannot control what people say to one another, they can control the brand narrative at its origin. In a digital world, everyone has a voice and consumers influence each other’s judgments. DI G I TAL TRANSFORMATION REVIEW N° 06 57
  • 57. What role do you see agencies playing in the co-creation of content? Agencies are in an unenviable position because to a certain extent they can only go where the client allows them to go. Not many companies or CMOs are thinking in terms of co-creation because there is a certain amount of risk involved in abdicating some of the control in content creation to consumers. Companies that can strongly control what their brand essence is, but also abdicate control to embrace consumer empowerment will be well-positioned to really go to this new frontier of co-creation. Their agency partners will enable them to co-create experiences that are really unique. The Digital Future: The Brave New World of Co-Creation In your opinion, what is the next frontier for the marketing community? I think what we need to understand next is how to integrate brand-produced content with consumer-produced content. The question is: How will co-authorship happen? How can we have a situation where we have the brand and the consumer creating content together? I think cracking that nut is the next big thing. When you have that kind of collaborative effort, it builds a whole new level of trust and investment, because when I feel like I have been an architect of an entity, then I am far more likely to keep up with it, and to have a connection to it. Right now, we do not really have good examples of that kind of co-creation. The closest thing we have is a brand saying, “Make your own video and we will feature the winner.” That is not quite a true integration. If you can create a joint narrative, where both the brand and the consumer share the story, then I think that you can really differentiate in a digital world from people who are just having their agency create content or just sitting back passively and seeing what consumers are talking about today. 58 Right now, we do not really have good examples of co-creation between brands and consumers. Remixing the Customer Experience for a Digital World
  • 58. DIGITAL TRANSFORMATION REVIEW DI G I TA L TR ANS F O RMAT I ON RE V I EW N° 06 59
  • 59. Rewired: Crafting a Compelling Digital Customer Experience Rewired: Crafting a Compelling Digital Customer Experience By Didier Bonnet, Jerome Buvat and Subrahmanyam KVJ didier.bonnet@capgemini.com jerome.buvat@capgemini.com subrahmanyam.kvj@capgemini.com In 2008, Dominos Pizza was staring at a difficult future. The company faced plummetting sales, falling stock prices and a lacklustre brand image. Customer dissatisfaction was running high with customers complaining about the poor quality of Domino’s Pizzas1. By November 2008, the company’s stock price was at a record low of $2.832. That is when Dominos decided to chart a new path for itself. From that position, the company has scripted a historic turnaround making its entire customer experience digital. The company focused on making easy-to-order and easy-to-track the foundations of its overall customer experience. And they did this across the key channels of PC/ mobile/social. Dominos launched a social media campaign — “What is wrong with the Dominos Pizza?” — where it sought feedback from customers to help improve its pizzas. Customers appreciated the company’s sincerity in reaching out to them and as a result, the strategy proved to be highly successful (see interview with Professor Renée Gosline on page 50). Dominos streamlined the ordering process by introducing “Pizza Tracker” — an online tracking mechanism to let customers view the progress of their pizza from order to delivery. They also let customers build online profiles, with their location and other preferences, thereby reducing order placement time to as low as 30 seconds. The results have been remarkable, to say the least. From $2.83 a share in November 2008, Dominos has seen its stock price rise to over $70 a share in June 20143. Domino’s mobile sales accounted for 22% of online sales in 2012, which was larger than the entire company’s sales in 19994. 60 DI G I TA L TR ANS F O RMAT I ON RE V I EW N° 06 Less than half of organizations have a company-wide program for customer experience, and only 30% have a dedicated budget to fund the transformation. Such transformative impacts do not come by accident. They happen as a result of carefully coordinated and orchestrated use of digital technologies and platforms such as social media and mobile. However, while the opportunities for driving a great customer experience using digital technologies are significant, so are the challenges. First, organizations need to manage an ever-increasing tide of customer
  • 60. DIGITAL TRANSFORMATION REVIEW of agility that companies from the Internet sector are bringing. In short, what has worked in the past is not guaranteed to work in the future. So, how can organizations master the new rules that will help them drive lasting customer engagement in a digital world? Our research revealed that four key actions play a defining role in delivering compelling customer experiences — and differentiate digital leaders from their peers (see Figure 1). We examine each of these actions in the sections that follow. click attribution model rather than more sophisticated cross-channel attribution models that are more relevant in the digital age5. Third, digitally transforming the customer experience requires an overhaul of organizational culture and traditional ways of managing customer relationships. 56% of marketers in a survey described their organizations as customer-centric, but only 12% of their customers agreed with their assessment6. This shows that the promise of customer centricity still has a long way to go. Finally, the pace of decision-making has hastened and there is a new sense DI G I TAL TRANSFORMATION REVIEW N° 06 61 expectations. As Rob Tarkoff, CEO of Lithium Technologies, a provider of social customer community software, says in our interview (see interview on page 42), “We are living in an age of extreme customer expectations.” Second, the complexities of integrating new digital channels with existing operations can be daunting. A recent survey indicates that over 38% of marketers feel the technology to build an integrated digital marketing strategy is too complicated. Over 58% of marketers still use basic methodologies such as last- Figure 1: Creating a Digital Customer Experience Source: Capgemini Consulting Analysis
  • 61. Digital leaders look at technology as a means to an end, and not an end in itself. Look Outside to Transform Inside Digital leaders look at technology as a means to an end, and not an end in itself. The end-state is defined by the kind of experience that the customer desires at each touch point. Digital leaders design experiences based on a forensic understanding of customer expectations, and actively seek to understand and alleviate customer pain points. They ensure that their knowledge of customer interactions extends across all touch points. Barclay’s Bank for instance, has set up a website dedicated to gathering the voice of the customer. The website called “Your Bank” encourages customers to publicly share their views, concerns and complaints regarding the bank’s products and services. In addition, the bank puts future changes to its offerings to vote on the website, in order to gauge customer reactions prior to rollout7. Organizations are beginning to realize the importance of customer experience. Research indicates that over 86% of executives consider customer experience to be a top strategic priority. However, less than half have a company-wide program for customer experience, and only 30% have a dedicated budget to fund the transformation8. Customers increasingly see their interactions with organizations as a continuum of physical and digital experiences. Focus on Smart Investments in Digital Channels to Enhance Reach and Drive Engagement Digital leaders approach digital investments differently. Rather than the size of the investment, they focus on its impact. Sephora, the global cosmetics major, has shown how smart investments in digital channels can deliver extraordinary results. Sephora has closely tied its social media strategy to the way that customers use various social media platforms. Research suggests that Pinterest is better than Facebook in inspiring purchases9, and that its users tend to spend more on every purchase than users of other social media 62 DI G I TA L TR ANS F O RMAT I ON RE V I EW N° 06 platforms10. Sephora has focused its customer engagement efforts primarily on Pinterest and it was among the first retailers to integrate the “Pin It” button on its website11. Sephora curates lists of popular products on Pinterest and launched a Pinterest-centric email marketing campaign, where users can pin products directly from emails. Sephora’s social media strategy has proved to be highly successful. The company saw a 60% increase in traffic from Pinterest following its email campaign. Its average Pinterest follower spends 15 times more money on Sephora.com than its average Facebook fan12. Sephora has seen similar success with its investments on mobile channels. The company was among the earliest to extend mobile payment services to its customers by integrating loyalty data with Apple’s Passbook application. As a result, customers that used the Passbook application were found to purchase twice as frequently and spend twice as much annually as the average customer13. Sephora introduced new features for its mobile app that allowed customers to create online shopping lists and access their online and in-store purchase history14. The company also offers free digital content, such as music, magazines and apps, through the “Sephora Shares” program15. The Rewired: Crafting a Compelling Digital Customer Experience
  • 62. company’s continued focus on its mobile strategy has contributed significantly to spurring sales. As the director for mobile and digital store marketing at Sephora puts it, “We’ve seen 150% growth in the mobile space this past year, and we’re seeing that continue, which is really outpacing the industry.16” Use Data to Create Engaging Customer Experiences A compelling customer experience is often underpinned by a good grasp of data and customer insights. Digital leaders such as Amazon and Macy’s are applying analytics to substantially enhance their understanding of customer behavior, preferences and motivations. Macy’s analyzes several million Terabytes of data every day including store transaction data and social media feeds. This is used to personalize the customer experience in various ways, including for instance, by offering customized promotions to customers at checkout. The retailer’s analytics capabilities now enable it to create 500,000 unique versions of a single direct mail catalog17. As a result of its focus on advanced analytics, Macy’s has been able to boost store sales by 10%18. Similarly, Amazon’s ability to harness data allows it to help customers find products that are most relevant to them. The online retailing giant’s analytics-driven recommendations engine accounts for 29% of its overall sales19. U.S. Bank improved its lead conversion rates by 100% using Big Data analytics. Several banks have also reaped the rewards of leveraging customer insights to enhance customer experience. For instance, U.S. Bank, the fifth largest commercial bank in the US, integrates data from online and offline channels in order to create a unified view of the customer. This data is then used to target prospects with personalized offers. As a result, the bank has been able to improve its lead conversion rates by 100%. The bank even tailors the content on its website, based on data analytics. For instance, products and services featured on the website vary based on the profile of the customer visiting the website20. Organizations across industries are faced with a deluge of structured and unstructured data. However, the ability to translate this data to meaningful insights and deliver superior customer experiences sets digital leaders apart. DIGITAL TRANSFORMATION REVIEW Integrate Physical with Digital to Create Unending Experiences Customers increasingly see their interactions with organizations as a continuum — a continuum of physical and digital experiences. They don’t necessarily understand and appreciate internal organizational barriers between physical and digital. Organizations will need to understand that this is not about old vs. new, or physical on one side and digital on the other. It is about creatively integrating their digital and physical experiences so they blend in a seamless customer experience. Digital technologies offer powerful ways of amplifying the impact of a physical experience. Macy’s has been able to boost store sales by 10% using Big Data. DI G I TAL TRANSFORMATION REVIEW N° 06 63
  • 63. US financial services major Capital One is experimenting with a café format for its bank branches, designed primarily to drive services offered by their online bank — Capital One 360. Across the US, the bank has opened nine café styled branches that provide high levels of customer intimacy along with complimentary services21. The branches also provide access to financial and digital tools. Bankers within the café give personalized advice on saving and investing strategies while also providing detailed information on Capital One 360 products. As such, the café format allows Capital One to combine the personal touch of the physical branch with the convenience of online banking – ultimately providing customers with the best of both worlds. Automobile giant Audi’s showroom in London is another example of digital blending with physical to create a great customer experience (see Figure 2). The new showroom — called “Audi City” — houses just one car, the company’s most exclusive model. In addition, it has an array of large screens where Audi’s complete range of models can be viewed, customized, repainted and accessorized. In its first ten months of operation, Audi’s digital showroom saw a 70% increase in car sales compared to prior retail format22, and a higher average sales price than its average UK dealership23. Figure 2: Audi’s Digital Showroom Source: Company website 64 DI G I TA L TR ANS F O RMAT I ON RE V I EW N° 06 Audi’s Digital Car Showroom reported a 70% increase in new car sales and higher average sales price than traditional dealers. Rewired: Crafting a Compelling Digital Customer Experience
  • 64. Figure 3: Build-A-Bear Workshop Store Build-A-Bear Workshop Inc, the US-based do-it-yourself retailer of stuffed animals, is another great example of the power of such an integrated physical-digital approach. The company undertook a two-year modernization program aimed at providing a more immersive in-store experience to its target customers — young children accustomed to using smartphones and tablets. As part of the program, Build-A-Bear remodeled some of its stores using touch, object and gesture recognition technology. Digital storefront installations enabled with Microsoft’s Kinect technology allow customers to use gestures to play games and interact with Build-A-Bear’s latest product offerings as they enter the store. Within the store, a series of kiosks with interactive touch screens digitally enhance each step in the process of making the toys. For instance, children can choose personality traits for their toys, which are represented by a set of emoticons on the touch screens. They can also choose from an assortment of digital music and sounds to add a “voice” to their toys. Such tactile experiences were introduced to help children form deeper connections with their chosen toys24 (see Figure 3). The remodeled stores met with DIGITAL TRANSFORMATION REVIEW strong positive reception from customers, with sales increasing by an average of 25%, compared with an 8% average increase in company-wide store sales. Driven by the success of the program, the company plans to extend the same experience to many more stores25. Organizations can lose as much as 20% of their annual revenues due to poor customer experience. DI G I TAL TRANSFORMATION REVIEW N° 06 65 Source: Company press release Digital leaders such as Capital One, Audi and Build-A-Bear have successfully understood the amplifying effect that they can achieve by meshing physical with digital experiences in order to help differentiate themselves.
  • 65. Rewired: Crafting a Compelling Digital Customer Experience Can traditional organizations create a rewired digital customer experience? Many Born-Digital companies have set a high entry bar for compelling customer experiences. Companies such as Zappos (see interview on page 12) go to great lengths to create a compelling customer experience. Zappos has also shown that they are willing to work around traditional organizational governance models. For instance, the company replaced its traditional management style with ‘Holacracy’ - a model that distributes authority amongst various circles of employees. Such a model empowers employees enabling them to assign top priority to customer experience. Some traditional organizations have been quick to adapt. Mercedes-Benz for instance, launched an organizational restructuring initiative — aptly titled “Customer Dedication” — to focus its activities more sharply around customer needs (see interview on page 26). For most other organizations however, it is time to play catch-up rapidly. Not doing so will expose organizations to the perils of a poor customer experience, which can indeed be significant. Research indicates that organizations can lose as much as 20% of their revenue due to poor customer experience26. So, why don’t many companies try creating great customer experiences? One obvious reason - it is very challenging to do so. Organizational constraints are usually the biggest reason. There is very little coordination between the front-end of the organization and the back-end. Customer experience, while being everybody’s priority is no one’s job. Delivering a compelling customer experience requires the careful orchestration of people, data, IT, processes and customer behavior. It requires an exhaustive understanding of customer behavior, smart investments in digital channels, the ability to harness customer data, and finally, the ability to creatively mesh physical and digital experiences. Many Born-Digital companies have set a high entry bar for compelling customer experiences. 66 DI G I TA L TR ANS F O RMAT I ON RE V I EW N° 06
  • 66. DIGITAL TRANSFORMATION REVIEW 1 TIME.com, “Domino’s Mea Culpa and America’s Pizza Passions”, January 2010 2 Fastcocreate, “How Domino’s Became a Tech Company”, May 2014 3 Stock price as of 17th June 2014 4 MobileMarketing, “Domino’s Mobile Sales Larger Than its Entire Business in 1999”, June 2013 5 IgnitionOne, “Integrated Marketing Survey 2013”, November 2013 6 Informa.com.au, “Customer Centricity: The Key to a Sustainable Future”, 2012 7 CustomerCentric.info, “Barclays Bank Working Smart and Gathering VoC Data”, September 2013 8 Forrester Research inc, “The State Of Customer Experience 2011”, February 17, 2011 9 Bizrate Insights, “Pinterest vs. Facebook: Which Social Sharing Site Wins at Shopping Engagement?”, October 2012 10 Internet Retailer, “How Pinterest tops Facebook in e-commerce”, January 2014 11 Venturebeat, “Sephora: Our Pinterest followers spend 15X more than our Facebook fans”, February 2013 12 Social Media Delivered, “Pinterest Case Study: Sephora”, September 2013 13 Internetretailer, “Apple Passbook users are among Sephora’s best customers”, April 2013 14 Sephora.com, “My Beauty Bag” 15 Mobilemarketer, “Sephora borrows from Starbucks with app recommendation program”, January 2014 16 eMarketer, “At Sephora, Mobile-First Means ‘Connecting’ the Customer’s Experiences”, November 2013 17 Direct Marketing News, “Macy’s CMO shares loyalty insights at NRF Big Show”, January 2013 18 CNBC, “Retail Goes Shopping Through Big Data”, April 2013 19 Yahoo, “Retailers Using Big Data: The Secret Behind Amazon and Nordstrom’s Success”, March 2014 20 Adobe Digital Marketing Suite Success Story, “U.S. Bank”, 2012 21 Company website, accessed in May 2014 22 Audi MediaInfo Release on “Audi City” 23 Financial Times, “Online showrooms and digital dealerships revolutionise car buying”, December 2013 24 Samsung.com, “Case Study: Build-A-Bear Workshop®”, June 2013 25 Marketwatch.com, “Build-A-Bear gets a big bear hug; shares surge 30%”, May 2013 26 Oracle, “Global Insights on Succeeding in the Customer Experience Era”, February 2013 DI G I TAL TRANSFORMATION REVIEW N° 06 67
  • 68. Special Guest DI G I TAL TRANSFORMATION REVIEW N° 06 69
  • 69. Surviving and Thriving in an Age of Digital Disruption Surviving and Thriving in an Age of Digital Disruption: An Interview with Tim O’Reilly Interview with Tim O’Reilly – Founder and CEO of O’Reilly Media Tim O’Reilly is a leading Silicon Valley intellectual, technology icon and venture capitalist. Tim has chronicled technology trends since 1978, and is the founder and CEO of O’Reilly Media, one of the world’s most respected publishers of technology books and producer of cutting-edge technology conferences. He has been a key spokesperson for the original commercialization of the Internet, for open source software, for Web 2.0, open government (and open data in general), and the Maker movement. Capgemini Consulting spoke with him to understand more about the latest wave of digital disruptions and how companies can and should react. 70 DI G I TA L TR ANS F O RMAT I ON RE V I EW N° 06
  • 70. In your opinion, what is driving the current era of digital disruptions? Have we reached an inflection point? There has been steady advancement in transformative technologies right from the birth of computing to the smartphone era. But we’re now at that start of something that is arguably even bigger, as digital technology interacts with the physical world. Some people refer to it as the “Internet of Things” or the “Internet of Everything”. At the heart of it, this new technology revolution is being driven by sensors that are making physical objects more responsive and seemingly “intelligent” than ever. We need to expand our earlier definition of robots, which referred only to autonomous humanoid robots. In fact, there are many so-called special purpose robots in our homes today, such as the Nest Thermostat. Even our dishwashers and washing machines have all become much more intelligent over time. As they become more connected with the Web, these devices will become even more capable of seemingly independent action. A major part of the current revolution is the manner in which intelligent machines augment humans in new ways. However, I think the notion of an autonomous, purely machine-based revolution misses the point. A major part of the current revolution is the manner in which intelligent machines augment humans in new ways. Take the case of Uber — the on-demand car hire service. Uber connects passengers and drivers much more efficiently, and in real-time, using the GPS functionality in smartphones. You don’t normally think of this as an “Internet of Things” application, yet it is made possible by one very smart thing — the location-enabled phones of both the driver and the passenger. But those things aren’t operating autonomously. They are a tool for augmenting humans. It’s important to realize that the Internet of things is not just for things! It is the beginning of a DIGITAL TRANSFORMATION REVIEW massive change in the way that people and “things” relate to one another. What are the industry sectors that are going to be the most affected by these digital disruptions? They don’t call it “the internet of everything” for nothing. Agriculture and manufacturing are already in the throes of transformation. But for consumer impact, look to the automotive, transportation, and healthcare industries. I see the automotive sector poised for massive change given the ability to understand where every vehicle is at any moment. New applications become possible, leading us ultimately to self-driven cars. (I should point out that robotic tractors and mining equipment is already commonplace.) This ability to track and control will affect all forms of transportation and logistics. In the healthcare sector, I believe advancements in our ability to monitor bodily functions and track medication adherence will have a powerful impact on patient care. DI G I TAL TRANSFORMATION REVIEW N° 06 71
  • 71. Managing Digital Disruption: A New Mindset for CxOs What advice would you give to CXOs who are trying to cope with digital disruptions? First, I would advise CXOs not to fight the future. Trying to prevent disruptions from taking shape is a losing strategy. If you think you are going to be disrupted, then the first and most powerful alternative is to adapt to get ahead of a disruption and not solely focus on “what I should do to preserve the business.” Second, CXOs need to step away from the way they do business today and ask themselves the question — “what will the consumer expect?” At O’Reilly Media, for instance, we decided to go DRM-free for our digital products because we realized that is what consumers want. It is important to benchmark yourself against a broader range of consumer services and not just against other companies like yourself. Take the case of government services. They routinely accept wait times of months or years, when consumer services now provide almost instant turnaround! Government officials must understand that in an age where consumers have near-immediate access to information through their televisions, tablets or smartphones, government services need to be much more responsive than before. Who would you recommend that organizations benchmark themselves against? I think of Amazon as one of the great companies to observe because, in many ways, they have been in a fairly traditional industry. However, they have broken out and not only disrupted retail and book stores, but also become one of the largest infrastructure providers for the next generation of cloud applications. What are the lessons that organizations can learn from the success of Amazon? There are two key lessons. Amazon understood more than anybody else that they had to organize themselves around technology rather than organize technology around their business. Very early on, Amazon mandated an internal API culture where all teams were required to encapsulate their work with service interfaces, so that they could be consumed easily by others. In other words, Amazon organized itself internally around a service-oriented architecture. This made it much easier for them to open up their services to the external world. Another idea that Jeff Bezos got early on was to design Amazon as a platform that would enable an ecosystem in numerous ways. A lot of companies forget how they can actually enable others. Platforms are a great way of doing this. In fact, a platform beats an application every time. Unlocking Innovation: The Need for Collaborative Ecosystems It appears that most innovations are coming from small firms. Even Gartner says that 50% of the value in the “Internet of Things” will come from startups. How should large companies unlock innovation? Well, first of all, I think that’s just the way of the world. It’s very difficult when you are a large 72 DI G I TA L TR ANS F O RMAT I ON RE V I EW N° 06 A platform beats an application every time. Surviving and Thriving in an Age of Digital Disruption
  • 72. company to pay attention to things that are still small and put emphasis on small bets. Venture capitalists place many small bets and most of them fail. I think it’s a fool’s errand for a large company to try and become a great early-stage innovation company. It is more important to be able to recognize innovation and become a fast follower. Cisco, Microsoft, Adobe and Google are all examples of companies that have grown successfully through an aggressive acquisition strategy. Being a great partner is another crucial element of unlocking innovation. Large organizations need to understand the ecosystem of companies that are disrupting their industries, identify ways of working more closely with them and making them more successful. I preach this all the time and I think really successful companies understand this — you succeed when you make other people successful. And if you play a zero-sum game — where if you win, everybody else loses — then you lose as well. What differentiates great companies from others in terms of the way in which they approach innovation? I think great companies enable strong ecosystems. Consider how Apple has created value for its App Store developer ecosystem. Ironically, the value that you create for others need not even be very high. For instance, while the App Store ecosystem made some really big winners, the share of App Store revenues that go to outside developers are only a tiny slice of Apple’s overall revenues. But still, you must have a sense that you are creating value for other people because that will eventually drive your success. So, my advice to companies would be to seriously consider how they can help others and how they can all grow stronger together. The focus should be on making the pie bigger. If you were the CEO of a major hotel chain, how would you respond to the disruption caused by Airbnb, for example? What would you do? I would explore options to partner with Airbnb and create a win-win situation for both companies. I would ask myself how I could make Airbnb more successful by having them affiliate with my DIGITAL TRANSFORMATION REVIEW DI G I TAL TRANSFORMATION REVIEW N° 06 73 You succeed when you make other people successful. brand. As a platform provider, I would look at how I could really deliver value to them. There’s certainly some value in branding, but also in directing customers to them and potentially giving them cover from legal issues. For that matter, if I were a hotel chain, I might acquire Airbnb. Looking Ahead: The Trends That Will Shape The Future What are your three best bets on technologies that will reshape industries over the next five years? The deep technology trends that I see are the merging of hardware and software, Big Data, and the fact that everything is becoming a service. It is important to understand how these things come together into a kind of “collective intelligence” in which people and machines work together in new and innovative ways. Our collective data gathered by sensors goes is part of a powerful feedback loop that makes our machines smarter. I would advise organizations to look at these trends and open their minds to what they could transform. I would like to specifically mention Big Data, because I think that is going to be a major part of the sensor revolution. In order to
  • 73. Surviving and Thriving in an Age of Digital Disruption necessary if organizations want to preserve and expand value at a higher level. That is how Google challenged Apple’s dominance in the smartphone market, even though it required letting Samsung take a significant share of market value. In the end, Google’s actions pushed the industry forward. Who do you think will emerge as winners in this space? It is probably too early to tell but I think Google and GE appear to be well placed to play a leading role in the evolution of the Internet of Things. GE is doing some very interesting work in the area with their Industrial Internet and frictionless manufacturing initiatives. And if we look at Google’s acquisition strategy, where they have acquired almost all of the interesting robotics startups, it appears that they are making a major long-term bet on the Internet of Things. build sensor-based applications, organizations need to be able to effectively use the data from sensors. They will also need to redesign workflows based on the various types of machine intelligence that will be generated. Great companies enable strong ecosystems. 74 DI G I TA L TR ANS F O RMAT I ON RE V I EW N° 06 If you were to invest $1 million, what are the technologies you would consider for your investment? I would consider low-cost lightweight sensors, drones, quantified-self technologies, mobile interfaces, government services and corporate IT as key areas for investment. At O’Reilly AlphaTech Ventures (OATV), we are investing in many of these themes. For instance, we have invested in Planet Labs, which is developing low-cost sensors for satellites that will enable more complete coverage of the Earth’s surface at more affordable costs. We see strong commercial opportunities for drones and consequently, we have invested in 3D Robotics, a startup specializing in Unmanned Aerial Vehicles (UAVs). If we consider the “Internet of Things”, is a winner-takes-all approach inevitable in its evolution? No, I don’t think it is inevitable. In fact, I think organizations should actively resist winner-takes- all strategies. To my mind, a winning strategy is about building partnerships and striving for interoperability through open source, open standards, and an open data strategy. Consider GE’s Industrial Internet initiative for instance. There is value in creating a truly interoperable Industrial Internet where, in addition to GE’s own suppliers and partners, other industrial manufacturers such as Siemens and Philips can also participate. This may require consciously giving up a part of the market value that might otherwise be secured by directly competing in a market. But it is Organizations should actively resist winner-takes-all strategies.
  • 74. DIGITAL TRANSFORMATION REVIEW We invested in Sight Machines, which provides machine vision and other kinds of sensor applications for factory automation. We have invested in a range of startups as part of our focus on quantified self technologies that combine wearable sensors and computing to measure aspects of our daily life. These include Misfit Wearables, which develops wearable devices for wellness and medical applications, as well as FitnessKeeper. We also believe that innovative mobile interfaces will DI G I TA L TR ANS F O RMAT I ON RE V I EW N° 06 75 I would consider low-cost lightweight sensors, drones, quantified-self technologies, mobile interfaces, government services and corporate IT as key areas for investment. change the way people interact in the real world. So, we have invested in Cover, which is an Uber-like application for making restaurant payments. I also see a huge opportunity in transforming government services, where, given the backdrop of budget deficits, there is a strong need for cost reduction. And finally, I would definitely invest in new types of companies that are disruptive for corporate IT.
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  • 76. About Capgemini Consulting Capgemini Consulting is the global strategy and transformation consulting organization of the Capgemini Group, specializing in advising and supporting enterprises in significant transformation, from innovative strategy to execution and with an unstinting focus on results. With the new digital economy creating significant disruptions and opportunities, our global team of over 3,600 talented individuals work with leading companies and governments to master Digital Transformation, drawing on our understanding of the digital economy and our leadership in business transformation and organizational change. Find out more at: www.capgemini-consulting.com About Capgemini With more than 130,000 people in over 40 countries, Capgemini is one of the world's foremost providers of consulting, technology and outsourcing services. The Group reported 2013 global revenues of EUR 10.1 billion. Together with its clients, Capgemini creates and delivers business and technology solutions that fit their needs and drive the results they want. A deeply multicultural organization, Capgemini has developed its own way of working, the Collaborative Business ExperienceTM, and draws on Rightshore®, its worldwide delivery model. Learn more about us at: www.capgemini.com
  • 77. Nathalie Gaveau, Digital Transformation Review Founder and CEO of Shopcade Ola Källenius, Member of the Divisional Board Mercedes-Benz Cars, responsible for Marketing & Sales Guest Contributors Andy Palmer, Chief Planning Officer and Member of the Executive Committee of Nissan Motor Co., Ltd. Darrin Shamo, Director of Direct and Online Marketing at Zappos Renée Gosline, Assistant Professor MIT Sloan School of Management Rob Tarkoff , President and CEO, Lithium Technologies Tim O’Reilly, Founder and CEO of O’Reilly Media