A Boardroom Conversation: Monetizing the Customer Experience 

26 February 2020 |  Jeremy Cox, Principal Analyst, Ovum
Competition for customers has driven the idea of digital transformation to the top of the board agenda of most enterprises. While for some the low-hanging fruit will be to remove cost by modernizing legacy systems and adopting cloud-based solutions, the importance of getting the customer experience right has also moved to the top of the agenda. This is less about cost and more about survival, because customers judge brands through the lens of their best consumer experiences, which are shaped by internet-native companies that make their interactions so simple and fluid. 
We now operate in an intensely Darwinian world.
 

We now operate in an intensely Darwinian world, where it is not the biggest, wealthiest, or strongest enterprise that will survive and flourish but the one that can adapt to accelerating change and increase its relevance to the customers it hopes to attract and retain.

The levers of growth are the only constant: attract the right customers, keep them longer, and increase their lifetime value.

It is the mindset and strategies that must change. Customers have the power and means of choice, so businesses must adapt to their tune and stay relevant in two critical ways:

  1. Deliver a consistently effortless and positive customer experience throughout every interaction, irrespective of channel or department touched in the course of many and varied customer journeys.
  2. Through continuous innovation, refresh the value customers receive. 

The underlying assumption is that in order to grow and generate profits to reinvest in growth and provide for shareholders and investors, the relationship between customers and the enterprise must be symbiotic. That only happens when customers' desired outcomes are fulfilled first. The revenue, profits, and growth are the consequence. Once the foundations are in place, the value in other technologies can be realized

While there are too many emerging technologies to cover, there are five already being explored, partially adopted, or part of experimentation underway at many forward-leaning enterprises across many sectors and industries: microservices; IoT; augmented, virtual, or mixed reality; blockchain; and, on the near horizon, 5G.

Microservices offer adaptability and speed

The rise of the Customer Engagement Platform (CEP) offers a big step forward for enterprises to engage with customers in more consistent, relevant, and helpful ways across their various interaction journeys. Most enterprises are still at the early stages of digital transformation and are laying the foundations for the more agile and adaptive enterprise. Once the foundation is in place, these enterprises will have to catch up quickly with the rising expectations of their customers. Reliability and consistency must be augmented with relevant differentiation to deliver an augmented customer experience.

Some may also seek to change their business models and to add new capabilities at speed. The advantage of microservices is that these self-contained functional applications can be added to existing systems via APIs, usually via a PaaS as an extension.

IoT can have a dramatic impact on the customer experience without the customer even knowing

A common use case for IoT has been in the predictive and preemptive maintenance field. This not only reduces costs of maintenance and call-outs but improves the reliability of the customer experience: Elevator manufacturer KONE uses IoT with Salesforce to monitor its elevators and to perform preemptive maintenance at times that do not negatively impact their customers.

IoT works best when it is feeding information into the CEP to trigger alerts and the most appropriate response from whichever department needs to monitor equipment performance, such as field service engineers, R&D, or sales. While these are well-established use cases for IoT, as 5G becomes more ubiquitous in the coming years, more data-hungry use cases will be supported, as outlined in Figure 1.

Figure 1: Future use cases for 5G-enabled IoT, Source: Ovum

Augmented reality / mixed reality / mixed virtual reality will create new opportunities for augmented customer engagement

There is no doubt that sooner or later augmented reality/mixed reality (AR/MR) and immersive virtual reality (VR) will find their way into the customer experience beyond the initial gimmick stage. Augmented reality is where computer-generated information and images are superimposed on a user's view of the real world, whereas virtual reality immerses the user in a digitally generated and fully immersive virtual world. Mixed reality encompasses augmented reality but leans toward virtual reality to enrich the experience of the user.

Ovum's Mobile AR App Revenue Forecast Report: 2019–24 forecasts mobile AR revenue will quadruple as a share of app store revenue during this period. The fastest growth, unsurprisingly, is in gaming, at 13.5% by the end of the period, whereas nongaming apps are expected to grow at a more modest 4.2%. From a customer engagement perspective, there are several factors that will impact on the take up of AR/VR:
 

  • rapid reduction in hardware prices
  • mobile apps from iOS and Android
  • uptake of IoT and the need to simulate complex environments remotely
  • explosion in the number of developers
  • increased 5G penetration
  • rising customer expectations.

Current enterprise use cases of AR/MR range from field service to training. As hardware prices continue to fall, and wireless headsets or mobile form factors become more usable, we can expect this whole virtual area to become an essential component in the delivery of a positive customer experience. This is already happening: Zara launched the Zara app in 2018. Customers can download the app for iOS or Android and explore collections using augmented reality. Models show the different collections, posing in them and discussing them, and customers can order from their mobiles.

As 5G takes off and more developers enter the field, we can expect more immersive experiences over time.

Blockchain is not an obvious candidate for augmented customer engagement

Blockchain is one of those technologies that lacks an obvious use case in the field of customer engagement but on closer examination may have an important role to play in the development of trust. In B2B environments and global procurement and supply, blockchain provides an immutable level of traceability and proof of payment as well as provenance. It has become vitally important to ensure that business activities are ethical and visibly seen to be so:

Blockchain can be used to ensure expensive items are not counterfeit copies but are traceable across the entire supply chain. A consumer who buys an expensive watch, for example, wants to enjoy ownership without fear it is a fake. 

5G will accelerate opportunities to augment customer engagement and deliver a more fulfilling customer experience

We have already seen that rapid access to masses of real-time streaming data has become an essential foundation for effective and relevant customer engagement. It also promises to create new and currently unimagined opportunities to augment customer engagement and deliver brilliant experiences wherever the customer happens to be. We can expect under 5G that AR will more rapidly morph into VR, where it makes sense, to deliver highly immersive experiences. Virtual collaboration across international boundaries, where participants can "see" each other holographically, may not be far behind. This is likely to impact many industries. As people around the world become increasingly passionate about saving the planet, the idea of thousands of people flying thousands of miles to attend large conferences may become just as unacceptable tomorrow as smoking in a restaurant is today.

In this evolving environment the leadership challenge is to establish a clear customer-focused purpose for the enterprise and then take a holistic approach to develop an effective customer engagement capability. This approach requires a clear understanding of the broad array of technologies available today and how they are likely to evolve. Enterprises that follow this route will be better positioned to take advantage of emerging technologies, especially microservices, IoT, AR/VR, and even blockchain and 5G.

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