CX: Building a customer engagement framework

Podcast Transcript

Sam Massey:

In today's business environment, a brand is defined not by what the organization does, but by how their customers feel. And with sophisticated digital capabilities, today's consumer expects excellence in their experience with brands across categories. At a time of heightened expectations, what kind of customer experience framework will help companies improve that user experience and drive brand equity? Welcome to Pragmatism in Practice, a podcast from Thoughtworks where we share stories of practical approaches to becoming a modern digital business. I'm Sam Massey. And today I'm here with Joe Murray, Chief Digital Officer at Thoughtworks North America who's going to chat with us about how winning companies put their customers at the center of their business.

I'm really excited, Joe, to talk to you today. So thanks so much for joining us. Let's start with a high level description. What does it mean to truly put the customer at the center of your business and why does that matter?

Joe Murray:

One of the most common characteristics of the world's most valuable companies today is they put the customer at the center of their business. An example would be Amazon, for instance. Their whole company is built around this idea of being customer obsessed. Starbucks was built on the theme of being America's second living room. Now they're the globe's second living room. USAA is completely... runs their whole business around member experience. And if you dig into all of their executives have a big part of their personal compensation tied to member experience. So there's something to it because the most successful companies in every industry focus on this concept of putting the customer at the center of their business.

Sam Massey:

Right. And it's about... I mean, we all know this because we interact with those services and products on sometimes multiple daily occurrences, right? It's what keeps us coming back. That obviously in turn leads to this amazing brand equity that you get with these new super brands. How do brands build that equity into their planning, into their strategy?

Joe Murray:

Brand equity is a really important concept here and it's a concept most marketers are familiar with, but it's amazing to me how little I hear it mentioned across the other functional areas in a business. And even when we do digital product initiatives, it's not even brought up by the marketing people as a target. But when you think about what the definition of brand equity is, I personally like the definition of brand as a promise you make your customers. And the equity piece of that is how much do your customers actually trust that promise and value that promise compared to other options they have to solve the same problem. So when you think about that as the definition of brand equity, it ties straight into this idea of how effectively are you truly empathizing with your customer's agenda to drive the highest levels of trust and value in how you're solving their problems.

And obviously there are certain companies that are examples of the penultimate achievement of brand equity, which is ubiquity. So like FedEx, right? So FedEx discovered that what they were really selling was not overnight shipping, but insurance. When you absolutely positively have to get something overnight, right? And so other companies like Google or Kleenex, there's probably a half a dozen companies you can think of that have achieved that level of brand recognition and brand equity. But the thing about brand equity is studies have shown there is no doubt about the fact that companies that enjoy the highest levels of brand equity have customers that are less price sensitive. So their margins are higher. Their lifetime value of customers is higher. Their customer loyalty is much higher. So having a customer centered process in your business or having a customer centered business as a whole directly affects your shareholder value and the value of your company.

Sam Massey:

I think the really interesting point you made there about empathizing with your customer all the time. And I mean, Amazon frames this really well of working back from the customer, right? And I love that as a framework because you're only ever thinking about that user. You're only ever thinking about the customer and what do they want today. I think I have... We probably all do. We have, maybe on one hand, we can count the brands that we say we trust and we feel tied to. And the technology is in my pocket. I renew it and it's a lot of money, but I feel so close to my iPhone. And I think a few other billion people do on the planet because these companies have built this experience around the user that makes it feel personal. I'm really curious about this empathy at scale thing and how you get closer to the customer. Why it's so important and the ways that some organizations are doing this. So have you got some examples that you can share?

Joe Murray:

Yeah, absolutely. The term empathy at scale is coined by IDC this year at their customer experience conference. And I think it is a great concept because it connects to this idea that, are you designing your whole business around the customer or are you just going through the motions of implementing some design thinking or some human centered design? These are all very trendy things a lot of companies claim to adopt. And if you think about product and design as a important capability for a company, we see evidence of this happening. Capital One acquired a whole design firm to be their internal design shop. So it's definitely something a number of companies are trying to adopt. But I think we see a similar pattern as we saw with agile software development, for instance. I think companies intellectually grasp the value of this and the importance of it, but they're failing in implementation.

Joe Murray:

So we see that companies silo themselves in different ways. There's a number of anti-patterns we can talk about. But when you talk about empathy at scale, it's truly about how are you taking these human centered design practices that established that basis of empathy, and how are you encoding that empathy across your entire multidisciplinary product development teams? So it's not just the realm of your creative directors or your designers, but your software engineers as well need to be connected to what drives empathy with the customer. Because the world is littered with great design ideas that fail in implementation because of that onset.

Sam Massey:

I was going to ask you about that. And there's numerous examples, aren't there? Of, I mean, this isn't anything new, but CEOs, Richard Branson giving out drinks and snacks on his Virgin Atlantic flights and Jeff Bezos taking customer complaint calls and things like that. Is it about going to that level of detail with your customer, making sure that it's across every area of the business that everyone's aware that who they're serving here is not the board, but actually you're serving your number one stakeholder, which is the customer ultimately, right?

Joe Murray:

Yeah. I think, well, if you look at Bezos for a second, another great example of how Amazon has truly embraced this is how they built the whole company around what they call the Amazon flywheel. And the flywheel is pretty simple in some dimensions in the sense that it starts with, if we build an amazing experience for customers, and back in the day when Amazon first came on the scene, most e-commerce experiences were not that great. And so they were confusing. It was unclear when you were going to actually get your product shipped to you. It was unreliable. And there were all kinds of extra costs.

So you'd go and buy a $50 item, but after shipping and taxes and service fees and everything else, that's a 60 or $70 item. So Amazon started with how do we make the world's most amazing customer experience around e-commerce and that will attract a community and a marketplace of customers. And when you have a thriving marketplace of engaged customers, that attracts more sellers to that marketplace. And as more sellers come to the marketplace, it increases the price diversity and competitive pricing and it also increases the diversity of products, which in turn attracts more customers.

This is the diversity of products, which in turn attracts more customers. And so, you can see how that, as a flywheel, just starts building on itself. But it's a great example of how the founder of a company set the tone culturally and it still exists to this day. You mentioned they're working backwards process. Today, Amazon still even takes time to teach their customers how to think backwards like they did and how to implement some of their best practices.

Sam Massey:

Even when I've had complaints, the way that the complaint is dealt with. I've had examples where I've had products that I haven't been pleased with, and it's been an instant refund to my account. I mean, that's ultimately what everyone wants. But if you were to tell me that this online bookstore was to become what it is now, you kind of couldn't believe it. It's almost one of these stories that you would have to read it in a book or see it in some kind of futuristic vision of what business can be. But even the invention of Prime or the creation of Prime, can change the way that customers interact or what what they expect from their online experiences.

I want an experience where I order something today and I, it turns up on my doorstep sometimes on the same day. And that in itself removes the need for walking out of my office or dealing with my busy lifestyle because I don't have time to do all these other things. And ultimately it keeps me loyal. I think that's the important thing here for Amazon is it keeps customer loyalty extremely high. I keep thinking as soon as they really do ramp up groceries and they get it right, I don't really see a reason to walk out any at all to go to a what you'd call a traditional online grocery store. There's no need to do that because my loyalty is tied to this brand, which I trust already. It gets it right on so many levels.

You were talking there briefly about where companies struggle and obviously, some companies do put the customer at the center of their businesses or think they are. What would you say are the contributing factors of why companies are struggling to achieve some of these outcomes in their segments? What would you say those areas are?

Joe Murray:

I think I'll answer that question in two parts. One is just to continue on our Amazon example for a second, because I think it's an important illustration of this concept that putting the customer at the center of your business is an operating model decision. It's a corporate mindset decision. It's not just a, "Oh, let's open a design department or hire some product managers." It's the way a whole company engages the marketplace and operates. And I think one of the things from the Prime example that a lot of people I think have forgotten now, but it requires courageous executives to decide what's really important for the customer and what's going to work. And one of the challenges we've seen... We run a quarterly round table with CX executives at Thoughtworks. And one of our most recent topics was around how capital allocation and financing behind customer-facing initiatives is still stuck in the legacy way of working. And the way companies allocate funds and decide how they're going to spend their money around customer experience has not caught up with the pace of how customer experience needs to be executed.

And so the example that comes to mind for Bezos, as a courageous executive, is... His board was adamant and majorly objected to his initial launch of Prime and the pricing structure for that. Because it was basically a money losing endeavor. And now it's one of the most profitable things Amazon or any company has ever done. But Bezos knew that in order to make it successful, he had to focus on the customer first and provide a value proposition to the customer to build that critical mass of members of Prime, before they could start really monetizing it. So it's a really great example of how a courageous executive even stared down his board and refused to be held hostage to the quarter over quarter performance metrics that a lot of people care about. And it's now one of the most valuable companies in the world.

Sam Massey: Yeah.

Joe Murray: It's a great example.

Sam Massey:

Yeah. I mean, and as a customer, when it came along, you kind of thought, "This is a win-win for me." I always find fascinating... The customer doesn't ultimately care about the profits of the company they're spending the money with, in fact, quite the opposite. We often have a strong aversion to big corporations, but we're a sucker, or I'm a sucker to it, at least, of these amazing experiences that are created.

Sam Massey:

I remember about 10, 15 years ago, when Nike came up with ID. They created this online experience where you could create your own sneaker and design it, have your initials on it. And as soon as you did that, you're like, "Wow, I can walk around in a pair of Jordans that are designed for me and no one else on the planet. That's kind of cool." And it has kind of shifted the way I experience that brand because all of a sudden, I started to think of them as they were gearing things around me. Those experiences change the way the customer then starts experiencing that brand and starts... They create their own loyalty within their emotional reaction to them.

And I think that's what it comes down to actually. It's quite a visceral thing. It becomes part of your emotional psyche of how you feel about certain things. And that's why customers stay loyal because they have an emotional reaction to the brand. But when you feel that you're being heard, when you feel like you're not being sold to, but you're actually being taken care of, it becomes a completely different experience. You've then decided in your head, "Oh, actually I feel something for this brand. And that's where, like you say, these best brands in the world have done an amazing job, bringing that experience to their customers.

Joe Murray:

Yeah. And I think to circle that bullet, to answer your, really quickly, the emotional point that you bring up. There are many studies that have proven that 70 to 80% of any purchase decision for a consumer is emotional, not feature buys. So that's why it's so important to solve the emotional problem first. We talk about things like jobs to be done. What am I trying to do from a lifestyle perspective? What am I trying to achieve? And is this product reducing friction or eliminating anxiety I have, or increasing the joy I have? And so that's a big part of my purchase decision. Not, "Does this widget have this feature or not?"

And so to go to the anti-patterns that we talked about earlier, what we've seen is really three main anti-patterns that stop companies from doing this. The first one that we see is companies are still organized around functional silos. So they've got the marketing team that's typically empathizing with the customer and they hand off that empathy output to a product team that turns that into a set of features to go get built. And that then gets handed over to an engineering team and the distance between the team building the product and the team empathizing with the customer is so great that it causes something I like to call a reduction in design fidelity. So, if you talk to any designer in a major design agency that just does design, one of the biggest banes of their existence is how their designs get cruelly demolished by the time their customers go build what they designed. And the fundamental problem there is the signal to noise ratio between the function that's empathizing with the customer and the function that's building the thing is too high.

So, and then another major anti-pattern in that regard would be, I see a number of companies organized by channel. So they've got a mobile team in charge of the mobile app. They've got a web team in charge of the website. They've got a separate team in charge of the call center. And there may be yet another team that's in charge of the retail experience. But those teams are not coordinated around a north star of a branded customer experience. So depending on what channel you use as a customer, you get a different experience. And so that erodes trust, because I'm not getting a consistent brand promise delivered. And so that's... And how many times, like the old saying is, "How many times do I feel like I'm telling somebody something they already know about me?" And it's super frustrating as a customer.

Sam Massey:

Yeah. When we have these negative experiences, we're so quick to create judgment and switch off. The digital native consumer just doesn't have the patience for it, which is why we get infuriatingly frustrated at services and companies. In fact, it doesn't even have to be a small or big organization at all. It's just one where we feel as a customer we're not being listened to.

Moving on from these anti-patterns that you were talking about-

Joe Murray:

Well, there is one more anti-pattern I'd like to address-

Sam Massey:

Yeah.

Joe Murray:

And that's where the companies tend to organize around products, product lines, and that's another missed opportunity.

So an example there, I was working with a telecommunications company and they have a team around their mobile phones division, and they have a team around their home internet division, and they have a team around their cable services division. And what we found when we did some initial research is, what the consumer wants is a solution for their digital lifestyle.

And so you look at opportunities like parental controls, for instance. Parents are really concerned about how much time their kids are spending on screens and the content they're consuming, but they have to manage a separate set of parental controls for every channel the kid's on. And so a company that was really concerned about solving a digital lifestyle problem would be, what if we gave you one place to put all your parental controls in it, propagated across all these products, right?

So it's just an example of, are you solving the customer's problem or are you a feature factory that is just I've got these products that I'm rolling out these features, and every quarter I have to put new features on in order to get my bonus, and am I really solving the customer's problem?

Sam Massey:

Hmm. Yeah, that's very true. I think that's where you're saying, when executives can be courageous enough to say, we're going to bring out this completely different thing, that this is the most... You wouldn't even link it between the thing you've just released, but this is what customers say they want, so we're going to build it. Those are the moments when sometimes the big changes actually have this huge effect on the customer, ultimately, and they'll have a positive effect, hopefully, on the company itself.

Joe Murray:

Well, that's an interesting nuance I want to pick on there. A word you said there is about, is what the customer wants. And actually, the nuance there is what the customer needs. And so there's that old saying from Henry Ford, "If I ask the customer what they want, it would be a faster horse," right?

So a lot of the practices around this customer centered approach is about observing how that customer is behaving and understanding what the customer's value system is. And so if you're looking at it from a behavioral perspective and a value system perspective, that's where you can really capture the market-changing, new product ideas that drive unique levels of brand loyalty that other people don't enjoy.

Sam Massey:

So let's talk about some best practices. We've talked about the anti-patterns and where sometimes people don't sometimes get it right, or are struggling. What are the building blocks, would you say, of customer experience? What are you seeing as best practices around customer experience?

Joe Murray:

Well, I think first and foremost is I think a lot of companies still don't completely understand that customer experience strategy and the practice of empathizing with a customer is a continuous evolution. And it's a continuous process that needs to be constantly refreshed.

And so you see some companies get enamored with some of the deliverables of the design thinking process, where they'll do some design research and they'll create a customer journey map, and they'll print it out on huge blotter paper and put it on the wall and say, "Great, we have our customer journey defined." And that gets stale in about five minutes, right?

So I think the first best practice is to understand that designing and gardening your customer experience is a continuous process and needs to be its own work stream and responsibility within the business. And then within that process, you will identify specific product workstreams that spin off of that as you identify key signature moments you want to take advantage of in your customer experience, like the parental controls idea. So let's do a project to build that.

But then it's about how do you accelerate time to value of these ideas that spawn out of your customer experience design process? And that's where this multidisciplinary team comes into play, and some of the agile software development practices and continuous integration and continuous development come into play. Because you want to be doing continuous design and continuous development with multidisciplinary teams that are rolling out products in smaller increments rather than monolithic, big bang rollouts.

Because another phrase I've come to really love is that the shelf life of ideas has never been shorter. So as soon as you have an idea about how you want to engage your market or innovate the customer experience, that idea starts to get stale from the minute you have it. So the faster you can actually execute on a thin slice and prove it out and iterate on it, the better off you're going to be, because you're going to beat your competitors to the market for that thing. And the sooner you get to market, the greater you will capture the potential return on that innovation idea.

Sam Massey:

You must have some good examples from customers, clients that you're working with and how you're helping them use technology platforms to support it. Give us some stories, give us some examples of clients that you're working with where you see it's working.

Joe Murray:

Well, I think one that's top of mind for me that I think is particularly interesting is we've been working with one of the larger oil and gas companies. They’re a global oil and gas company, and we started in North America, but now it's evolved into a global initiative.

But as many companies do, they started their journey with this backlog of twenty-five product ideas that had come from different sources through these traditional anti-patterns and they didn't know which one they should do next. But they were also acknowledging that they were facing this tectonic shift in their marketplace where, let's face it, fossil fuels are a declining market as electric vehicles come on the scene. So how do they protect and defend their relationship with their customers as the market changes in this dramatic way? And how do they transform from a fossil fuels company into an energy company?

And so we were able to start with them around taking a step back. Let's take this list of product ideas you have and just put it over here by the side for a second. And let's talk about your customer and the type of outcome do you want to have with those customers. And that was when we were able to zero in on some pretty innovative ideas around some subscription-based programs that have never been used.

It's like prime for your gasoline services. So it's a highly innovative process that helped them get some immediate gains from their existing gasoline customers, but also establish the platform that was based on a future vision of how do we take advantage of our real estate investments and all of these stations, and fundamentally rethink the consumer's relationship with their gas station? I mean, it's really kind of a depot, so why can't I pick up my dry cleaning there while I'm filling up with gas? Or why can't I pick up my groceries that I've ordered ahead. Instead of having to go to the grocery store to do another pickup, why can't I just pick them up there? Because I've got to go take my car there to fill it up, right?

And then how do I start to evolve into rapid charge stations for electric vehicles and all of that type of thing? And how do I help my customers who are fossil fuel users feel like they're contributing to the environment, but through things like carbon offset purchases through the loyalty app and things like that?

So they fundamentally took a minute to establish that north star vision. Then they were able to do a quick, thin-slice deployment. That was one of the first ideas they had that could be a signature moment to reduce the friction of whether somebody buys their gasoline or a cheaper gasoline. Because their gasoline is actually one of the higher gasolines in the market, but it's also more expensive because the refining process is more expensive. They were able to execute that, but then they also executed-

it with this idea that, "How do we build this as a platform that we can expand?" So they focused on a thin slice feature for the customer, which was the subscription fuel capability, but they built it in a way that, wow, there could be other opportunities to leverage subscriptions across the globe for other things, whether it's oil changes, or coffee, or whatever. And there could be other ways to expand a loyalty program where you're referring other people to the loyalty program, and et cetera, et cetera. So it was about where that product thinking meets platform thinking, and they truly started to build this mechanism that we call the customer engagement platform, which is around how are they actually operating a continuous product innovation process that is governed by a north star customer experience, but is built in a way that leverages the power of using platform thinking to build reusable components in your customer experience so you can accelerate the delivery of future innovation ideas you have over time, because you're reusing key components of the architecture?

Joe Murray:

So it was a really interesting situation where a client really embraced all these concepts. And now since that project, they have a global head of customer experience that's deploying this capability and way of thinking across all of their brands, not just gasoline. So I think it's a pretty successful example of how a lot of people think of oil and gas as kind of stodgy and slow to respond and slow to react, but this was a really great example of where a really established blue chip company, oil and gas industry, really stepped outside their comfort zone and decided to innovate their customer experience and to deploy this new platform to continuously engage customers in an innovative way.

Sam Massey:

And just because you mentioned, is curious, was the global customer experience executive, was that role there before we started the engagement or was it... It's part of the change?

Joe Murray:

Our sponsor was promoted into this role. The role was created because of the success of this program.

Sam Massey:

Wow. And I suppose in a way that that change is happening from within, but it has to happen. You wouldn't have a focus on the customer if global head of customer experience. Right? So that's an amazing change that they're going through.

Joe Murray:

Well, it's certainly more difficult. Somebody needs to own it. And in a lot of the anti-patterns we talked about, one of the fundamental problems is nobody has accountability or ownership of the overall experience and smaller companies we've seen that sometimes that's needs to be the CEO. 

Sam Massey:

Joe, this is a great conversation. I'm really enjoying it. We've got to wrap up soon. I'm thinking some nuggets and some takeaways, two or three takeaways that people can take with them today. What are they around customer experience for those executives out there who are... They're looking to step into this or will do something different that they haven't yet done?

Joe Murray:

Sure. I think first and foremost, if you want to transform your business into this customer engagement platform we've been talking about and truly design your business around your customer, there are really kind of three main components that companies should think about. One is, do you have an empathy based definition of your customer journeys and your customer experience. And typically those are expressed as a journey map, but you really need to think about what's the job to be done on behalf of the customer and what is their emotional journey that you're trying to solve for?

And then based on that, do you have a coordinated and integrated product strategy that encompasses all of your touch points? A lot of businesses talk about this buzzword called omni-channel, but it's really about every channel. And so we have a proliferation of customer touch points today that can be somewhat daunting, but your product strategy needs to embrace and incorporate all of that.

And one of those touch points is human beings. So think about how do you take advantage of the augmented human? Can you be powering up your retail agents with some type of machine learning or artificial intelligence so they can provide better insights and contribute to the design experience for their customers? It's not always just a digital touchpoint.

And lastly, are you taking advantage of the power of platform? So are you thinking about your technology as a set of experience APIs, if you will. So that a good example is personalization. Do you have one personalization engine that's behind all of these touch points that's consistently personalizing for the customer, rather than different ones for different channels that possibly give different recommendations. So if you think about those three layers working together and defining thin slices and a rapid test and learn culture, then I think you have all the major ingredients to the recipe to start executing like a customer centered organization.

Sam Massey:

Great takeaways, and a great conversation. Joe, thank you so much for joining us today on the podcast.

Joe Murray:

Thank you very much. It's been fun.

Sam Massey:

If you're interested in learning more about deploying some of these customer experience lessons for your organization, please find more information at thoughtworks.com. Thanks so much for joining us for this episode of Pragmatism in Practice. If you enjoyed the show, please rate us on your podcast platform or spread the word using #pragmatisminpractice. To listen to more podcast episodes, please visit us at thoughtworks.com/podcasts. Until next time.