Why Customers Hold All the Cards Now: Three Technological Trends
Don Peppers
Customer experience expert, keynote speaker, business author, Founder of Peppers & Rogers Group
It’s no secret that the “balance of power” between customers and the companies they buy from has shifted dramatically in recent years, but the importance of this shift is hard to appreciate and often misunderstood.
At the root of it, however, are three important technological developments, and if we focus on their consequences, we’ll be better prepared to anticipate the likely future of business competition:
1. Automated Self-Service
Start with the simple fact that no one cares for a customer more than the customer. Because of this, automated self-service has the potential to be a great boon to the quality of the customer experience.
However, the vast majority of companies, even today, rely on automation not to improve the quality of the customer experience, but to reduce the cost of delivering it. They still justify automation financially by calculating the savings they achieve from eliminating the most expensive element of dealing with customer interactions – the human labor involved at a call center or point of sale. As a result, customer care has often been turned into the stuff of late-night comedy send-ups and hilarious YouTube videos.
When automated tools do work, however, whether they are embedded in a company’s contact center or cashier’s station, or within its website or smartphone app, they can take most of the hassle out of checking a status, changing a specification, or troubleshooting a problem.
In essence, by putting a customer in charge of fixing their own problem, businesses are relinquishing control over the process. And this can be a great boon to the quality of the customer experience.
2. Social Connections
More recently, customer control has increased because customers now find it so easy to connect and interact with other customers. It is here that the customer no longer depends at all on a company’s own services.
The problem, of course, is that social interactions are not as manageable as a company’s marketing and other functions are. The social interactions that customers have with other customers, or that a company has with its own customers, can’t be planned and directed the same way an advertising campaign or a cost-cutting initiative can.
Social interactions create what mathematicians call a “complex system” of outcomes. And even if a company’s analytics capabilities were sophisticated enough to read the minds of individual customers, it is still mathematically impossible to predict how a complex system will evolve, no matter how much computing power you throw at the problem.
3. Subscription-Based Products
But an even more important development is also giving customers greater control: cloud technology.
Recently I keynoted Totango’s CS Summit 2017, a two-day conclave of customer-success professionals. The “customer success management” discipline springs from the fact that with cloud technology, large software packages no longer have to be bought and installed to be put to use. An enterprise CRM system, for example, no longer requires the enterprise to embark on a million-dollar installation of software and hardware. Instead, by buying a SaaS (Software as a Service) product, such as Microsoft Dynamics, or Oracle OnDemand, a business can pay a few thousand dollars a month and get full access to the same robust enterprise CRM capability.
For SaaS companies, however, subscription customers are dangerous; they can quit at any time without taking a million-dollar loss for the re-do. So with the cloud, a customer’s success with a vendor’s software product is vital, and B2B vendors everywhere are now busy trying to ensure their customers’ continued success with their products, in order to maintain their loyalty (and monthly revenue).
Now think for a minute about how customers might be able to subscribe to physical products with the always-on, always-connected IoT (Internet of Things). At SAP Hybris’s “Digital Summit” just the other day, for instance, the company’s solution-management VP Fergus O’Reilly provided an example in the form of an ordinary household drill. He imagined a future in which the drill would be wirelessly communicating to the manufacturer via an IoT platform (such as one that could be supported by SAP Hybris). So the manufacturer will know how and when the drill is being used, and then simply charge a customer for the time he or she uses it.
Yet again, however, this means that a company’s business with a customer will be immediately at risk whenever that customer becomes unhappy with the product. Whether we call it a subscription economy or a consumption economy, it’s clear that technology will inevitably give customers themselves – even consumer customers –much more economic leverage in their relationships with the companies they buy from (which will precipitate an even more earnest business interest in how to ensure each customer’s success with their product or service).
Customers already have more control than before, and they are destined to get even more. As they become efficiently connected not just with the companies they buy from and with other customers, but also with the actual products and services they consume, your customers will definitely rule.
Get used to it.
Write, speak, train and coach on learning from customers. Emeritus Professor, DePaul University
6yAutomated self-service: Teaching Management Information Systems for many years, I recounted my mid-1970s experience with then-new ATMs. Once an ATM was available (24/7/365!) I was delighted to only enter a bank to open a new account, or resolve a problem with (or close) an existing account. I told bankers they might only want to see me once. I told students "That's the Holy Grail of new technology: get your customer to do the work, have responsibility for data entry errors, and THANK YOU for letting them do it!" SaaS: While there are certainly some advantages, as a consumer and solopreneur I find it frustrating to encounter a new user-interface or loss of functionality. Always seems to happen at the most inconvenient times. And don't underestimate the time and money it takes a large organization to move from one SaaS platform to another, they're still pretty sticky that way. Thanks for another excellent article! You can find my work on learning from customers in "Looking Outside the Box" (LI profile, accomplishments, publications).
One key thing is customer centricity .. we've been talking about this for years, but still haven't addressed it fully
Deceased
7yMark Coxon CTS-D
Vice President Digital Sales at TTEC Digital, LLC
7yGreat perspective Don, Thanks for sharing!
Transformational Leader | Founder & CEO
7yTo the third bullet of subscription based services.... This is one key point that many software vendors fail on. When the customer has control to cancel their service anytime, the vendors need to ensure they are giving the customer the best customer experience possible. Sadly, many vendors once a customer is sold, they move on to the next one (especially with self-service purchasing). The end result, where the customer only uses a small percentage of the capabilities of the software; making it easier for them to cancel the service at anytime. Software vendors should be using the initial sale as the jumping off point and be spending a significant time with the customer. The goal: get them to use it as much as possible and integrated into additional systems and business processes. The more the customer is embedded into the software; the less likely and harder it will be for them to switch services, shifting the leverage of power.