Two Layer CX
Maybe you’ve already considered this but it just popped into my head the other day as I was thinking once again about customer experience or CX as some people shorten it. I have often said that customers experience moments of truth and that the experience should be focused on the things that customers care most about AND that a business can actually do something about.
I make this distinction to try to focus on things that are core to relationships and there are real pitfalls you can avoid if you take this approach. A business is not responsible for every customer issue with a product or service and a good demarcation between what issues you own and what you empathize over might be the warranty or other declarative statements a business makes. At least we’d like this to be true but is it strictly speaking? Not really. There are things that a reasonable customer intuits as implied by the existence of a product. One is its ease of use but there’s also the important area of how the customer consumes the vendor’s policies and processes.
From this I came up with two layers of CX. There’s the obvious layer that we all know that consists of the stuff covered in the warranty but then there’s a lot of stuff that isn’t defined that can make all the difference between a good and lasting relationship and someone stalking off.
The second layer of CX is about how customers experience the business entity. Layer one might include, does the device work, is the coffee hot enough but not scalding and generally, does the thing I sell you live up to the expectation for thinginess? I realize I am inventing a word and that’s intentional to get us all thinking. The distaff end of a spectrum with thinginess on one end might be personable-ness or humanness and it accords with the relate-ability of your business, its people, and its processes with customers thus the two layers of CX.
Thinginess is usually engineered into a product or service because that’s what a business does to ensure that it meets the aspirations it expresses in its communication with the market. They are the ultimate signs of thinginess. Thinginess is a one-time item, you make a product and deliver it and that’s it. But personable-ness is something you need throughout the customer life cycle and hopefully into the next life cycle too. (Let’s not get creepy, I simply mean buying the next iteration of the product I am not making some allusion to vampires.)
It’s personable-ness that delves into your procedures, policies, and the tone you take with customers regardless of the channel they approach you on and it’s here that most businesses need help. Too often the systems that meet customers in channels are retreaded 20 year-old knowledge bases that were originally intended to help internal employees to support customers. Somewhere along the line we got the bright idea that with a shiny new front end these knowledge bases could do the same for end customers too.
Sometimes the knowledge base idea works well enough, helping people find easy answers to questions thus deflecting traffic that would normally invade other channels that require monitoring. But sometimes, it doesn’t work and it leaves customers stranded. This also leaves behind a core of harder issues to be solved by people or possibly more intelligent systems that leverage machine learning and natural language processing.
Even with advanced, intelligent systems, some customers will still need to speak with you or otherwise interact directly (via chat, email, social) with a human. How easy we make that transition says a lot about how we deal with the second tier of CX. If a customer is somewhere in your channels, the customer is on a moment of truth quest and the CX of your product is secondary to the CX of the quest into your processes and policies, the moment of truth. A customer’s experience of that moment of truth will determine to a great degree whether you create or strengthen a bond and ultimately whether or not the customer becomes an advocate or someday buys more.
So here are two ideas for your consideration. First, keep a big picture of CX in mind understanding that it’s not just what you can relate directly to product. Second, recognize that you need to focus on how customers consume your policies, processes and all the rest of the fuzzy stuff around your products and brand. That’s also called the customer journey and it’s why I place such emphasis on journey mapping. Products have blueprints and models, CX has journey maps or it should. The journey map is a model for how you interact and it will become one of the most important parts of your outreach to customers in the near future.
The iPad Pro, So Far
I am not one to buy a product as soon as it is introduced, not one to wait in line over night to be one of the first in my time zone, etc. But this time was different. I needed a new iPad. The iPad2 that I bought almost 5 years ago was running very slowly despite fixes like turning off a bunch of CPU hogging things that I didn’t need. I write using every device I have, sometimes I even dictate to the device. But writing on the iPad2 with its screen or virtual keypad had lost its glamour and I was intrigued about having a detachable keypad and, because I also draw and paint avidly, the pencil held a certain artistic allure.
So off I went to the mall, to my nearest Apple store on Saturday to fetch the newest iPad which I hoped would alleviate some of the discomfort I’d grown accustomed to with “the 2”.
My first observation of the mall in general was that the place looked like a ghost town. Normally full with shoppers, this time it was easy to navigate through the halls to find the store, and since I’d entered through a different portal than usual, I only got lost once.
Once at the store, all was as it should be, except the crowd inside was also miniscule. Perhaps the horde would descend after lunch but I saw no evidence of one queuing up in the food court. Was everyone avoiding malls and suddenly eating healthy?
So with minimal drama I got the device I wanted with Lele’s help, but with a surprising exception. The keyboards and pencils are on back order for an estimated 4-5 weeks and all I could buy was the thing itself, which I did in space grey. Set up is remarkably easy thanks to the backup from “the 2” that is automatically stored for me in iCloud. I did it in the store and left with a more or less fully functional device sans keyboard and pencil. Final installation of my apps happened once I was home via my own WiFi and that was achieved without drama.
First impressions
The device is fine. It’s a lot bigger than “the 2” but I don’t plan to travel with it and will mostly read from it so the larger form factor is all positive for me. Due the larger screen everything is bigger. The default font is readable without glasses and the virtual keyboard is bigger, with more keys, and better, though I still lust for the new keyboard-stand combo.
I was able to order the keyboard and pencil on-line (free shipping) and that’s where I learned of the 4-5 week wait time. They will be delivered before the holidays (barely). I suspect on-line everything is what’s accounting for the small crowds at the malls and if it’s true, then the old arguments from the 1990s about brick and mortar demolition thanks to the Internet might finally be too obvious to ignore. But I digress.
The iPad Pro is a worthy successor to the first iPad, in my humble judgment. It is pretty, has huge numbers of pixels and robust sound thanks to 4 speakers and I suspect it takes great pictures and even movies which I will try as soon as the cats wake up. I saw no reason, given my limited use to spring for a cellular plan or for 128 GB—the 32 GB WiFi only model will suffice just fine. Overall I am happy but would be more so if Apple had managed to get the accessories out at the same time. The delay seems to me very un-Apple like.
Final thoughts
Since I read books and news on the iPad, I wonder how much longer it will take for book publishers to follow the lead of the likes of the New York Times to embed video into books. Some books contain still photos and they are reproduced along with maps in eBooks. But it seems to me that if for no other reason than keeping prices up, book writers and sellers need to become more forward thinking about the multi-media aspects of this market. It would give devices like the iPad Pro something to do, something to better justify its existence, much like the spreadsheet did for the PC.
Digital transformation and moments of truth
I hadn’t been aware of one of the more important CRM stories of the year until I was doing research for a new book. But it’s a great story and it deserves retelling, especially if you are like me and think that focusing on customers’ moments of truth is important. Thanks to Narina Sippy for pointing it out.
Back in April, Starbucks announced revenues for the just completed quarter that exceeded year-over-year attainment by a whopping 17.8 percent. Usually when there’s a break this big it needs explaining and often there’s a logical reason. Maybe it’s because one company bought another or it introduced a world-beating product, or it opened a lot of new stores. Starbucks did add 210 stores in the quarter under discussion but 210 out of 22,088 is not likely to move the needle in the way reported. Still, there was Starbucks announcing record revenues of $4.56 billion and the aforementioned 17.8 percent improvement. For a retailer in the restaurant business that’s just about unheard of.
Also reported in the earnings results was the fact of the company’s 10.3 million loyalty members, up 10 percent from the previous quarter. According to Starbucks, an average a loyalty member spends three times as much as a non-member. But most of the credit for the outsized (should we say grande?) increase came from technology, specifically a mobile app that enables loyalty members to get their orders faster and with less hassle.
The mobile app now lets loyalty members order and pay without standing in line; moreover, it serves as a marketing platform for people well disposed to upsells. This is a big deal and not simply because it exemplifies the digital revolution taking place. Like any hype-cycle, there will be impressive successes in the everything-goes-digital transformation of business and there will be failures. The difference, as is often the case, is in understanding the application of the new technology rather than implementing it just because you hear voices.
In Starbucks’ case they didn’t simply decide to build a mobile app. Instead they decided to understand customer moments of truth and then tried to figure out how to be there for their customers. As it turns out, waiting in line at a busy coffee shop not once—to place an order—but twice, to wait for your order as well, is a major time sink for busy people. Why not skip the lines all together and just head right to pickup? That’s part of the mobile app’s appeal. Best of all, you can order on your way so that your stuff is waiting for you when you arrive, and yes, you’ve already paid for it too—so be on your way.
Now, perhaps you are reading this and thinking well, of course, why not build a mobile app to do this? It seems intuitive but if it really was there would be so many examples of companies engaging this way that my book would have written itself by now. But that’s not the case. The Starbucks example does, however, show what moments of truth and digital transformation are all about and how they can work synergistically.
The transformation is really about finding ways to proactively reach customers with something of value for their consideration and that leads directly to capturing customer data so that the vendor can know before hand where the moments of truth are and then forecast which customers to prepare for, like eliminating lines.
The Starbucks example shows two things. First, it demonstrates the right sequence for the transformation, which amounts to listen to customers first, then act. The availability of powerful technologies made a mobile app possible but it didn’t do anything to change the moments of truth. Without Wi-Fi and mobile and all the rest, customers would have had the same moments of truth and eliminating the waiting would have still been an important thing to tackle.
Previously, solving such a problem meant putting more people on duty or buying more machines to crank up output but that was capital intensive. And if no other vendor was competing on reducing wait time, those investments might have proven to be wasteful or without acceptable ROI.
The second thing I learned from this example is that the mobile app is effectively a new channel, newer even than social networking running on your phone. As a channel the mobile app needs to be filled, it needs content but not just any content. The nature of this channel is highly personal so the content needs to be also. This channel needs to be able to predict customer needs well enough that the customer will always think a suggestion is valid even if that customer rejects it.
So that’s it in a small space. Digital transformation is about getting tighter with customers, it is not primarily about saving a few parts of a penny on a transaction. The transaction is already basically free—the customer buys the device and air time and supplies the labor of the interaction. The responsibility or duty for vendors now is to be relevant.
OpenWorld Analysis
For once, Oracle OpenWorld went long on substance. That’s hard to do when you have so many products to discuss and Larry Ellison pontificating but Larry was both under control and substantive though he couldn’t resist taking a few shots at competitors. So he announced that his team hardly ever sees SAP and IBM in deals these days and gave due praise to cloud pioneers NetSuite and Salesforce.
Interestingly, he always mentioned NetSuite, which he owns a considerable share of, before Salesforce, which he invested in back in the day, despite the fact that Salesforce is six times larger than NetSuite by revenues. Both companies are doing just fine thank you veddy much.
Beyond the product revisions and enhancements I saw two real news items: Oracle is now (at last) a cloud company and the company put an important marker down on improving IT security—first things first.
Cloud
Oracle has always been in a different business than the cloud pioneers in that Oracle has a huge customer base (420,000 customers on one sign) to bring along to the promised land compared to the pioneers who more or less invited customers to start over, in many cases, in the cloud.
That reality permeated the keynotes and discussions led by Ellison, in a Sunday keynote, CEO Mark Hurd, on Monday, Thomas Kurian, President of Product Development, Tuesday, and Ellison in another keynote on Tuesday. Each man offered the view that for the next one to two decades, enterprises would operate in a hybrid—on-premise and cloud model—transition state. Further, each was careful to articulate that Oracle would continue to develop, maintain, and enhance on-premise applications during that time. No hard date for the end of the transition was offered.
It was a delicate balancing act trying to assure big enterprises considering the cloud because their deployments represent a large mass of computing that won’t easily unravel over night. Still, my thinking is that while there might be traces of on-premise applications 15 years from now, most of the transference will happen quicker for two reasons. First, cloud apps will make their users more competitive and second, security improvements will make cloud increasingly attractive.
Competitive angle
By itself, cloud is just a delivery mechanism and there’s little about it to recommend it for pure delivery. But layered on top, as most people know, there’s a total cost of ownership advantage to cloud systems. Even more than this, however, is the reality that when businesses transfer to new platforms, most take the time to reimagine the business and the apps. Consequently, the great cloud migration of the rest of this decade will be a moment when businesses ditch some spreadsheet apps that never worked very well so that they can achieve long desired end-to-end process support for their businesses. This migration from transaction systems or systems of record to process oriented systems is where the real payback for moving to the cloud will be found. It is also a real source of competitive differentiation for most companies, which will drive rapid adoption so hang on, it should be an interesting ride.
At the same time, we need to acknowledge that when those businesses start to reimagine their business processes, it will open up many to competitive bidding for those new apps. That’s no surprise and one big reason that Oracle is making a conscious effort to court customers by being with them in their moments of truth as they contemplate their next moves. In my opinion that’s smart, let’s watch how it plays out.
Security—What’s old is new
Many people shook their heads when Oracle bought Sun Microsystems because they saw Sun as playing in a space that was rapidly commoditizing. Some thought it as big a folly as Carly and HP buying Compaq but almost instantly Ellison began inventing differentiated hardware that set new standards for in-memory operations that vastly accelerated business processing. Devices like Xadata, a storage device that leverages flash memory so that storage operations could happen at memory speeds rather than much slower disk speeds led the parade.
At OpenWorld, Ellison announced that the new security direction of IT based on Oracle products is to encrypt all data. He introduced several vaults, like a password vault that stores unique encryption/de-encryption codes that users could keep on their own machines (hopefully a machine not connected to the Internet) or on-line in an Oracle cloud. But that was nothing, the bigger news was a new M7 CPU chip that offers security at the silicon level. This was instantly controversial in my circle and needs some explaining.
Security in silicon
Oracle’s approach to security with the M7 chip will be hotly debated with some people thinking it’s just a speed bump for dedicated hackers while others might see more promise. I think I am in the latter camp though there’s a huge caveat.
Oracle/Ellison discusses the security debate this way. Securing IT should happen at the lowest possible level in the stack, so for instance securing applications and data should happen at the operating system level which is also a logical place for hackers to do their worst. So to secure everything we need to find ways to bring security into silicon a place where hackers can’t make changes because hackers can’t alter chips. The M7 imposes what’s basically a check-in, check-out scheme for memory. It allocates a given amount of memory to tasks and if some piece of malware tries to occupy the memory space, overflowing the set parameters, the system can easily detect the intrusion and alert operators. Software bugs might operate the same way so there might be a few false positives as this paradigm gets going. So what? This is a crude description and for a more detailed explanation check out Oracle’s video cache from the show to see Larry explain it all.
As good as this sounds, and also incorporating M7’s very fast decompression algorithms, this security only operates on servers, it does nothing to protect desktops or handhelds. The advent of the M7 could be an incentive to hackers to turn their attention to smaller machines, which could be infected to do things on behalf of bad guys. If so, M7 technology could be coming to a future PC, laptop or smartphone
On the other hand
While OpenWorld was a good show, it could have been better in some details. Some of the discussions of platform and infrastructure could have been helped along by video animation of some arcane points. I found myself watching demos that went on too long only to show a static screen with one thing changing in a window to indicate an infrastructure accomplishment. Oracle is long overdue for investing in more video for these events and judging by his comments at one point, I think Ellison took undue and perverse pride in his “graphically challenged” slides as one Tweet put it.
Customer experience
A couple of years ago, Oracle shrewdly ditched the CRM badge and called itself a CX or customer experience company and there were enough CX announcements to make front office people happy. However, it should be noted that the Oracle CX event will happen in April in Las Vegas so stay tuned for that. Another post will dive deeper into CX at OpenWorld.
The critique I’d offer on CX is the same I’d give to any CRM vendor today. There’s a big discussion of products but too often it revolves around point solutions for marketing automation, sales enablement, mobile computing or whatever. This represents a transaction mindset and the front office needs to move aggressively to full end-to-end process support because that’s an important marker of the cloud.
My impression of all CRM vendors today is that they’re selling to the lowest common denominator, i.e. aiming for the user that just wants to use CRM as a glorified rolodex. That user represents about half of the market so the orientation is understandable but I wonder how it sits with the more advanced users.
At some point we need to flip a bit and concentrate more on processes that the first half of the market can best use. That’s why I am eager to see what happens in Las Vegas in April and at other CRM vendor events next year.
I’ll close now
Oracle has become a real cloud company with offerings at the software, platform, and infrastructure levels. But it still takes a data center-centric approach to the business especially when trying to reassure existing customers that there’s time for an orderly migration. It is a “new” cloud company in that it has thousands of successful and very reference-able customers and not tens or hundreds of thousands. Nonetheless, it is making strides and forecasts more than a billion dollars of new cloud business in the year ahead.
The company’s ace in the hole as it continues moving to the cloud may be its security through silicon approach, which must still be vetted. I might be in the minority about the security announcements but it strikes me that locking down memory and CPU and encrypting data will enable users to starve any malware that tries to gain a foothold.
Since many cloud and subscription vendors as well as enterprise customers already use Oracle DB and many are buying Xadata devices, we could see a dramatic decline in intrusions and data thefts. But that won’t end the problem; it might simply make the hackers focus more intently on the desktops and smart devices. I don’t think the IoT will take off until security is well in hand and that will ensure the security discussion continues.
Oracle Stakes Out Security
It was appropriate that Oracle put a stake in the ground over security at last week’s OpenWorld conference in San Francisco. As the database of choice for more than 420,000 customers, the effort to find ways to better protect their data is one of the clearest signs of customer-centricity the company could have picked.
Fortunately or unfortunately, as you choose to look at it, their logic is that to provide data security you need to move down the stack all the way to hardware. This sounds eminently reasonable to me though I think I can see a wrinkle. First the good news, like Woody Allen once said, “to a knife fight, always bring a gun,” and that neatly summarizes the Oracle plan. The company has decided to make data security and especially encryption a non-negotiable thing.
Currently some oracle database customers have the security option turned off which won’t help anybody so now the default will be always on. But encryption and de-encryption take CPU cycles which cash-strapped IT groups would rather see applied to “real” work. So the new regime will ding some IT budgets if they have to buy more compute power, but what’s the alternative? There’s not much you can do if security is an issue and it is. Oracle’s Xadata, device which moves database operations into flash memory can provide greater performance and therefore make everything better. But the last time I looked, those devices had a million dollar price tag. Perhaps this will be another decision point that drives companies to the cloud.
At the same time, the company is introducing the M7 CPU chip, which has embedded software instructions that allocate memory to legitimate processes. Any process that tries to use more memory because there’s a virus trying to freeload will cause an alarm of sorts and that will signal IT that it is potentially under attack. Since software bugs might also trigger the alarm there will be some false positives to deal with but a false positive is better than a real one.
These two innovations will help to lock down the data center but I wonder if they’ll just push the security problem out to the periphery, to desktops and devices that don’t have M7 technology. Ten thousand devices each asking for 100 customer names will pose a different but related security problem that might be harder to control so it looks to me like M7 technology will need to become a part of all devices for this scheme to be maximally protective.
Given all this, Oracle’s security innovations might not be perfect but I disagree with those who scoff at them. These approaches will definitely strangle malware where it is found though the Internet won’t be completely safe unless the security is ubiquitous. This reminds me of the way that antibiotics work, which include attacking and puncturing the cell wall, disrupting protein synthesis, and disabling DNA transcription and replication. While it’s true that some microbes have become resistant, especially to cell wall agents (i.e. the penicillin strategy), other approaches seem to be holding up. Interestingly, when you make protein or transcribe DNA you’re dealing with de-encrypting information, so I am very interested in seeing where this all goes
Right now, security might be the most important obstacle to greater expansion of the Internet of Things and to utility computing in general. The last things we need are cars and drones that can be hacked so these first attempts are indeed a welcome sign. No matter, this is an arms race and there will likely be setbacks but at least we are engaged.
