Optimizing the Customer Journey
- 1. OPTIMIZING THE CUSTOMER JOURNEY With Next-Best-Action Analytics Matt Nolan, Director of Product Marketing, Marketing Solutions, Pegasystems Nicholas Gent, Practice Lead – Intellectual Property, Comet Global Consulting, A Merkle Company
- 2. Contents 01 Introduction: The Customer Landscape 02 Macro vs. Micro-Journeys 06 Identifying Your Customer Journey Gaps 09 Where Technology Becomes Important 15 The Financial Impact 16 Conclusion
- 3. Their objective is to build the “perfect” journey – to design an elegant, seamless experience that eliminates all of the noise and distraction disrupting the customer engagement process. The problem is, while some journeys are simple – customers interacting in a single channel, with easy-to-understand problems and goals – those simple journeys are the exception, not the rule. Today’s connected customers choose their own path – researching and interacting with the brand on their own terms. They flow across channels, shift their preferences, and take unpredictable routes to a fluid destination. They expect the brand to know and understand them, adapting constantly even as they change course and advance down hundreds of possible paths. And while so much data is available about customers, the brand is blind to much of their experience – they often have no insight into 1-1 conversations with personal contacts, interactions with Modern businesses spend tremendous time and resources every year – mapping, analyzing, and optimizing the customer journey. Introduction: The Customer Landscape Modern businesses spend tremendous time and resources every year – mapping, analyzing, and optimizing the customer journey. They want to understand the paths their customers take to purchase products, learn which channels, offers and treatments are most effective at certain stages, and understand where individuals get “stuck”, and drop off the grid completely. 01
- 4. competitors, research done on third- party platforms, and so on, and while these interactions might be highly valuable to the customer, to the brand they make the customer’s journey seem more complex, erratic, and disjointed. In addition, organizations themselves are also very fluid, which adds complexity. The journeys they enable must balance customer needs with a variety of corporate objectives such as customer acquisition, growth, retention, and risk mitigation; however these objectives change from quarter to quarter, as do the tools used to action them. For example, an upsell- oriented journey may change multiple times within a given year as new lines of business, offers, and shifting commercial drivers are introduced into the landscape. In essence, trying to predict and script out these modern, complex journeys beforehand is impossible – you’re effectively scripting a “journey to nowhere”. Instead, the optimal customer journey must be dynamic – flowing and changing with the customer, and at the same time maintaining accountability to the business. As an individual interacts across channels, the organization must constantly learn, reading and reacting to that customer’s signals, resisting the temptation to push them, rather than guide them. The best journeys – those that are both profitable and sustainable – shape a relevant, timely, and consistent experience for the customer, while also furthering the brand’s business goals. Macro vs. Micro-Journeys At a high level, the concept of customer journey management seems very simple – enabling the customer to progress down the “right” path – but in reality, a customer’s journey must be viewed from at least two perspectives. 02
- 5. Macro-Journeys The series of consumer/brand interactions through which a consumer progresses from awareness and consideration of a brand, to evaluating that brand, to a product purchase, potential advocacy, and eventual re-purchase from that brand has been coined by McKinsey & Company as the “Customer Decision Journey” 1 ,and can ultimately be considered as a form of Customer Experience Management (CEM). Gartner, a US research and advisory firm that’s well known to technologists and customer experience professionals, defines Customer Experience Management as: “The practice of designing and reacting to customer interactions to meet or exceed customer expectations and, thus, increase customer satisfaction, loyalty and advocacy.” 2 Proficiency in customer experience is mission critical for every type of organization, as it is a major factor in optimizing Customer Lifetime Value (CLV), and ultimately both revenue and profit margin. The components of customer satisfaction, loyalty, and advocacy are each highly-desirable end goals, but only represent the “customer side” of the equation; ultimately a brand must build a sustainable balance between the needs of its customers (who require the brand to provide value through relevant, timely, and consistent interactions that are aligned to situational context), and its own business needs – which include cost-effective customer acquisition, retention, growth, and the attainment of acceptable risk levels. Proficiency in Customer Experience is mission critical for every type of organization. 03 1 McKinsey & Company (Edelman & Singer), “The New Consumer Decision Journey”, 2015 http://www.mckinsey. com/business-functions/ marketing-and-sales/our- insights/the-new-consumer- decision-journey 2 Gartner Inc, http://www. gartner.com/it-glossary/ customer-experience- management-cem/
- 6. To achieve this balance, every customer interaction becomes critical, and must be seen as a potential tipping-point through which the brand can either reinforce its value or create barriers between itself, the customer, and financial success. To ensure each interaction is positive, they must be governed by a centralized, fully- informed, intelligent, and “always on” decision-making process, which takes into account all of the available information about the customer, their context, and their value to the business – then arbitrates through each of the possible interaction options, and makes a prescriptive “Next-Best-Action” decision. The following are a few examples of high-level, “macro” customer journeys, each of which is comprised of a series of customer interactions, which occur over a period of time: • A first time customer purchasing a product or service from a company. • A customer purchasing cross-sell “add-ons” to the original purchase. • A customer upgrading to a new service or product level. • A customer renewing a subscription service at the end of a contract. • A customer “opting” into a brand loyalty program. • A customer advocating directly on behalf of a brand. This list is simple and in no way complete, but even within this limited set, there are many situations in which the experience is inherently non- standard, more complex, or more “painful” than is desired. In these situations, a brand must dive deeper to ensure the balance – a focus on the micro-journey is required. Micro-Journeys Each customer journey is made up of many, many interactions through a variety of channels, with multiple steps and stages. Together, the net of those experiences makes up the whole and any one difficult step by itself can become a major barrier to customer satisfaction. These “micro-journeys” are the level at which a brand must 04
- 7. focus and operate – taking care to streamline the process, being mindful not to push the customer where they aren’t ready or willing to go, and constantly adapting to that individual’s shifting context. Any basic product purchase can potentially be broken down into dozens of micro-journeys. For example, when purchasing a new tablet computer, a consumer’s engagement with product and brand extend far beyond the initial point of purchase, and may ultimately impact the purchase decisions of other consumers down the road. Customers may choose to: • Use a search engine to identify brands and models of interest. • Read online reviews to gauge past owner satisfaction. • Use online comparison tools to evaluate features. • Build a virtual product with personalized features and pricing. • View current offers and upcoming promotions on retail websites. • Read online ads from dozens of brands and retailers. • Opt-into email, SMS, or direct mail offers. • Enter a retail store to touch and feel the product. • Talk with a sales agent to learn more about the product, and ask questions. • Purchase the product online, in store, or via a call center. • Purchase add-ons at the point of purchase, such as batteries, a data plan, or a warranty. • Utilize a coupon or loyalty card. • Register their product with the retailer or manufacturer. 05 Any basic product purchase can potentially be broken down into dozens of micro-journeys.
- 8. • Activate their product on a wireless network. • Download applications to use on their device. • View brand ads for up-sell and cross-sell products. • Post feedback about the product on social media, or an online forum. • Talk to a call-center agent to fix a problem, change information, ask a question, etc… This macro-level journey, a relatively simple tablet purchase, has more than a dozen different parts or “stages” – each of which introduces both opportunity and risk for the brand. Each tiny step that the customer takes can impact not only whether the organization makes a sale – but how that individual perceives and interacts with the brand moving forward, and differentiates the brand from its competition. Essentially, “The journey itself is becoming the defining source of competitive advantage.” 3 Identifying Your Customer Journey Gaps Ultimately, when evaluating the effectiveness of any journey and deciding whether it needs optimization or how to do so, a brand must consider, from a customer perspective, questions like the following: Brand Visibility & Access • Is the brand visible on paid third-party networks, with a viable value proposition, and is the consumer aware? • Is the consumer able to search for and navigate to the brand easily, using keywords and terms linked to their value proposition, in a compelling and relevant way that differentiates the brand from competitors? 06 3 McKinsey & Company (Edelman & Singer), “The New Consumer Decision Journey”, 2015 http://www.mckinsey. com/business-functions/ marketing-and-sales/our- insights/the-new-consumer- decision-journey
- 9. • Is the transition from paid-to- owned channels easy to navigate for the customer? Interaction Intelligence • When interacting directly through the brand’s “owned” channels, are individuals able to find the information they need easily, without distraction or interference? • Is content personalized based on their individual interests and propensities? • Is the brand empowered to collect quality data about the customer before, during, and after an interaction? • Can the brand instantly translate data into relevant actions or offers that are timely, align with the consumer’s needs, and match the context of specific interactions? Is the actual purchase process simple and elegant? • Is data collected about the customer on one channel immediately used to add intelligence on other channels? • Can customers move across channels and still maintain their “conversation”? Sales Conversion • Is the actual purchase process simple and elegant? • Is the sales process the same in every channel (or optimized for the nature of each), or do individuals have to jump through hoops to make a purchase in their preferred manner? • Are customers forced to re-start as they cross channels? • What barriers exist that may stop the consumer from completing the sales process? 07
- 10. Onboarding & Support • Is the activation process simple? • Is a new customer able to start using the product quickly, and immediately receive value? • How does the brand optimize non- transactional experiences, such as resolving service or hardware issues, changing account information, or resolving login issues? • Is the brand easy to do business with, or does the concept of “nurturing” customers fail to expand beyond the initial purchase? Cross-Sell & Upsell • Is it simple for the customer to expand the relationship? Do they receive incentives for doing so? • Can customers add products or features and upgrade seamlessly? • Do customers know what’s available to them, do they see relevant offers, and are those filtered based on their eligibility? • Can information be relayed pro-actively by the brand, leveraging the customer’s channel preferences, in a subtle way that doesn’t push? The Holistic Experience • In a world where a brand is only as good as its last customer interaction, does the sum total of those interactions resolve to a positive customer experience? • Is the experience consistent across channels and business divisions? • Are customers willing, able and enabled to advocate on behalf of the brand and product? Do they have a forum to do so? Like most things in life and business, optimizing the customer journey is not necessarily a “big picture” initiative – It’s more likely a series of small, focused efforts, which, when strung together shape a positive customer perception of the brand. 08
- 11. Where Technology Becomes Important Unfortunately, technology supporting the customer journey has historically struggled with the dynamic nature of the customer: the market has been saturated with solutions that oversimplify the journey concept, essentially creating more problems than they solve. They use pre- calculated propensity scores, static “best practice” templates, canned visualizations, and pre-scripted journey paths that rely on just one or two customer channels for engagement – and by doing so, completely ignore the individual needs of the customer, and ultimately “turn them off," to the point where they disengage from the brand. But as stated in a recent article by McKinsey and Company, current technology has improved to the point where brands today cannot only react to shifting customer needs, but must 09 also “actively shape” those journeys. That technology can enable your organization to engage with customers in a more progressive way… but must allow brands to apply intelligence in the following ways: 1. Surface Next-Best-Actions, Not Just Offers In journey design, it is mission critical that the software recognize the context of the customer interaction, adapting as necessary to educate, service, retain, or initiate a collections process with a customer, rather than simply attempting to “push” a product to them. When the customer’s situation (their context) dictates a non-sales action, very little diminishes the experience more than a badly- timed, irrelevant offer. For instance, different strategies are required when a customer is calling because of a service outage or hardware problem, or when they’re searching the website for an instruction manual, as opposed Current technology has improved to the point where brands today can not only react to shifting customer needs, but “actively shape” those journeys. 4 McKinsey & Company (Edelman & Singer), “The New Consumer Decision Journey”, 2015 http://www.mckinsey. com/business-functions/ marketing-and-sales/our- insights/the-new-consumer- decision-journey
- 12. 10 to when they’re clicking through on an email offer or chatting with an agent about a new promotion they just saw online. For deeper information on Next-Best- Action analytics and its potential value to a brand, we’d recommend the following materials: • Video: Contextual Next-Best-Action • eBook: Next-Best-Action Marketing 2. Operationalize Real-Time Decisions (Advanced Analytics) To stay in tune with the customer, analytics must be executed in real- time, at the exact point of interaction with the customer (or as close to it as possible): a great experience can’t use pre-defined model scores and “wisdom of the crowd” algorithms to guide the brand’s actions. These approaches fail to capture changing customer needs and context, and can’t manage rapid-fire series of cross-channel interactions: so your calculated next action becomes irrelevant each time the customer makes an unexpected decision, or suddenly changes directions. There is significant revenue opportunity available to brands that can operationalize real-time decision-making. The ability to adapt instantly to shifting context, and to offer the most relevant proposition (that is in tune with this interaction, right now) is where businesses see lift in acquisition, cross-sell/upsell, retention, and average revenue per user. Traditional outbound campaigns, where the brand simply pushes messages at the target, don’t resonate with today’s connected customer. Instead, by listening closely to each individual in real-time, we can offer delightful customer experiences – while building more profitable relationships. For example, here are a few scenarios where real-time adaptation/ re-calculation is critical to the journey: • Guiding agents through an intelligent conversation when they’re “live” with a customer in the call center or branch, interpreting
- 13. 11 give-and-take dialogue as it happens to adapt the agent’s script and Next- Best-Action recommendations. • Setting email content at the point the customer opens it, rather than when it’s sent – enabling a shift in the Next-Best-Action offer or treatment to align with any intelligence / activity that’s occurred in the interim. • Personalizing web content as a known or anonymous visitor interacts with your website, so that all of their previous activity is applied to re-calculate actions dynamically, as they advance. • Orchestrating Next-Best- Actions across multiple channels simultaneously, as customers often view or reference online content at the same time they interact with an agent. In each of these instances, the organization must access, analyze, The brand must be able to track the customer through multiple journeys simultaneously. and apply data to make immediate decisions, which increases the relevance, timeliness, and consistency of their actions, and ensures that they align with the context of the customer’s situation. 3. Arbitrate Multiple Journeys Simultaneously, For Each Customer With customer journeys being highly complex, it is usually difficult for the brand to determine what specific journey a customer is undertaking, at least until they are well-underway. In many cases, the customer will often change their mind, and shift directions as they receive, collect, and process new information. To this end, the brand must be able to track the customer through multiple journeys simultaneously, and arbitrate the Next-Best-Actions associated with each of those journeys, against all their other potential actions. For example, a customer may place a product in an online shopping cart,
- 14. 12 then abandon that cart immediately thereafter (a very common occurrence). The brand may want to encourage the customer to complete that transaction, and thus prioritize actions that incent the customer to do so… but at what point does that abandoned cart action become “stagnant”? When should they shift from focusing on that shopping cart conversion journey, to another journey that customer may also be engaged in? This is a good example of why business rules alone aren’t enough: it’s the customer’s unique situation and their response to the brand’s subsequent actions that must drive this decision. The accepted approach is to utilize predictive modeling to drive complex decisions, rather than applying static, arbitrary business rules – but unfortunately most organizations do not have the resources to build and maintain the huge library of high-value predictive models needed to support contextual, journey-specific decisions. Adaptive modeling is a machine-learning technique that integrates real-time predictive analytics within the customer decision- making process. Unlike conventional predictive models, adaptive models will update themselves automatically as the system interacts with customers, gathers responses, and operationalizes that intelligence. For example, in the situation above, adaptive models can be used to evaluate the efficacy of any offers used to promote the shopping cart journey. Those models will take into account the products, timing of the cart abandonment, past customer interactions in that context, etc and score each option – which will be used by the Next-Best-Action strategy to make the best decision possible for that customer at the moment. Adaptive models are self-updating, and do not require up-front FTE labor for algorithm creation or “model refreshes” like predictive models do,
- 15. 13 so they can be used to cost-effectively evaluate situations that normal predictive models cannot, and do so with a high degree of reliability. 4. Integrate All Customer Touchpoints Nearly all of the customer journey tools available on the open market were originally developed from a channel-centric point solution (e.g. by a brand specializing in email service provision, ecommerce, web personalization, agent-facing applications, etc.), and tend to stick firmly to their roots. They’re geared to manage either inbound or outbound interactions, not both – and as such fail to seamlessly connect data across all inbound and outbound touchpoints, to show a holistic customer progression; this severely limits their effectiveness in optimizing anything but a simple journey. Feedback from marketing organizations supports this point. In a 2016 study by the CMO Council, just three percent of marketing professionals felt they truly could get a “comprehensive view” of their customers’ journeys; most times, the data was either “too complex” to integrate, or it was stored and analyzed in silos – both of which limited their insight and revenue potential.5 Ultimately, effective software must track and visualize interactions across every channel that customers may use to interact with the brand, show the flow between touchpoints, and map those interactions to journeys and stages that can be optimized. Also, the Next-Best-Actions on each individual channel will be significantly enhanced by integrating data from other channels – that data provides product interests, helps identify situational context, identifies the In a 2016 study by the CMO Council, just three percent of marketing professionals felt they truly could get a “comprehensive view” of their customers’ journeys. 5 “Predicting Routes to Revenue”, Pegasystems and the CMO Council, 2016, page 14, https://www.pega. com/sites/pega.com/files/ docs/2016/Jan/predicting- routes-to-revenue-report.pdf
- 16. 14 customer’s current journey stage, can detect potential retention issues, and can identify high-potential events to trigger additional engagement. For example, the brand can use events on the website to initiate an outbound email campaign, then adapt the timing, cadence and messages of that campaign dynamically, as they gather information from other customer touchpoints. 5. Account for Paid Channels This is part of the “integrate all channels” concept above, but because of how these channels are normally handled, deserves its own mention. On owned channels, a brand controls the data – but it can’t afford to ignore its paid touchpoints. Each time a customer interacts with an organization on a paid platform (e.g. via a mobile Facebook Ad, Google Search, a banner on The Wall Street Journal, etc.), that information must be tracked and accounted for in its customer interaction history. Paid interactions are often ignored because the information can be difficult to obtain and integrate, but that data is well worth the effort. It can add tremendous intelligence to a brand’s owned channels – uncovering unrecognized customer interests, preferences, and context. Vice-versa, data from owned channels is a critical part of optimizing paid media spend, as it provides insights to optimize paid targeting, offer selection, and bid levels. Some key benefits of integrating paid media channels/data into the customer journey include: • Increasing the relevancy and timing of paid advertisements. • Reducing paid spend on ads for products that customers have already purchased. • Increasing conversion rates, by shifting ads to relevant cross sell/upsell content.
- 17. 15 • Adding intelligence to the ad-buying process, to avoid over-spending on low lifetime value customers. For more information on how technology is evolving to integrate marketing and advertising analytics and decision making, we’d recommend the following materials: • Video: Paid Media and Next- Best-Action 6. Evaluate Actions in a Journey Context While understanding customer purchase paths is critical, it’s a descriptive starting point, not the end goal. Many journey tools emphasize form over function – providing aesthetically rich and beautiful visualizations, but failing to provide what’s desperately needed – a normalized ranking and scoring of the brand’s actions, offers, and channels, within that journey context. To provide real value, journey software must go beyond simple aggregations of impressions and click-through by stage. For example, a system user must be able to identify a journey, see all its component stages, and quickly understand which of their actions were impactful in each stage, and which failed to support the customer – so they can adapt their strategy accordingly. For example, if a brand typically had 10 possible Next-Best-Action options available for a certain stage of a journey, which score well? Which of those 10 are performing at a high level? Which are underperforming? Certain offers, messages, channels, and content perform well in a general sense, but add less value in a certain context. If the customer is trying to activate their phone, educational actions will often perform much better than offers – in this case, the key is identifying the channels and treatments through which those are best positioned to help the customer. To provide real value, journey software must go beyond simple aggregations of impressions and click-throughs by stage.
- 18. 16 The Financial Impact Journey optimization will provide tremendous benefit to your organization if you’re invested in the right technology, commit to a focused approach, and apply the right level of resources. Those benefits include significant lift in offer conversion, up- sell and cross-sell, retention, customer satisfaction, share of wallet, and both top / bottom-line revenue. For examples of how top-tier organizations are optimizing their customer journeys and realizing significant impacts to their business, we recommend the following: • Forrester: Total Economic Impact of Pega Marketing • Video: EE: Transforming the Customer Journey Through 1:1 Customer Engagement • Case Study: Next Generation Decisioning at British Gas • Case Study: Award Winning, Personalized, Real-Time Marketing at PNC Bank Conclusion When embarking on an initiative to optimize the customer journey, keep the following in mind: • You cannot “script” the perfect journey – customers will choose their own path, and the ecosystem is too complex to predict exactly where, when, or how they’ll act. • Your journey software must be able to do six critical things – surface next-best-actions (not just offers), operationalize real-time decisions, arbitrate multiple journeys for each customer, integrate data from paid channels, optimize across all touchpoints, and score all of your potential actions in a journey context. • Focusing on “micro-journeys” is critical – it’s much simpler to fix small steps in the process than to try and overhaul a broad-spectrum journey or experience all at once. • Identify 3-5 “high-impact” journeys to prioritize, and as you improve each experience, you can leverage your learnings and approach thereafter.
- 19. • Even after you’ve optimized a journey, you’re never truly done – journeys will evolve and change right along with the customer and the organizational context, and must be managed proactively. • A great customer experience requires that every interaction is relevant, timely, and consistent across channels – and at all times aligned with the context of the customer’s situation. 17
- 20. Pegasystems US: +1 (617) 374-9600 UK: +44 (0) 118 9591150 AU: +61 2 9581 7000 Request a Demo www.pega.com/request-demo Comet Global Consulting US: +1 (470) 210-0004 UK: +44 20 7151 0685 info@cometgc.com www.cometgc.com About Pegasystems Pegasystems (NASDAQ: PEGA) develops strategic applications for marketing, sales, service, and operations. Pega’s applications streamline critical business operations, connect enterprises to their customers seamlessly in real-time across channels, and adapt to meet rapidly changing requirements. Pega’s Global 3000 customers include many of the world’s most sophisticated and successful enterprises. Pega’s applications, available in the cloud or on-premises, are built on its unified Pega® 7 Platform, which uses visual tools to easily extend and change applications to meet clients’ strategic business needs. Pega’s clients report that Pega gives them the fastest time to value, extremely rapid deployment, efficient re-use, and global scale. For more information, please visit us at http://www.pega.com. About Comet Global Consulting, a Merkle Company With over 10 years designing, implementing and managing customer interaction programs and technology, Comet is a leading force in helping ensure that customers everywhere can experience a personalized—and personal—real-time relationship with some of the largest companies in the world. Our clients include leaders in telecommunications, banking, insurance, travel, transportation and retail. Leveraging Pega’s Build for Change concepts, we have developed best practice logic frameworks to deliver client projects faster, cheaper and at lower risk. In a marketing era in which authentic, personalized customer relationships are not a nice-to-have but a must-do, Comet are the must-have customer interaction experts. 18