Report: How digital disruptors ‘prioritise’ personalised customer experiences

New IBM study of c-suite executives finds CXOs believe incumbent organisations are leading disruption in their industries

Organisations that emphasise customer experience over product will win out in the digital disruption game, according to a new global c-suite study.

The new IBM report, Incumbents strike back: insights from the global c-suite study, found organisations of all sizes are prioritising personalised customer experiences. The enterprises that most effectively deliver on this imperative are using design thinking to manage complexity, orchestrate across channels and truly understand their customers’ motivations.

What was also clear was that CXOs believe incumbent organisations, rather than new entrants, are leading the disruption in their industry, a situation that poses a significant competitive threat to new entrants and digital players.

“Incumbents have become smarter about leveraging valuable data, honing their employees’ skills, and in some cases, acquired possible disruptors to compete in today’s digital age,” the study authors stated. 

The c-suite study draws on input from 12,854 respondents across six c-suite roles from 112 countries, including 2091 CMOs, and is the work of business school academics in collaboration with global leaders from IBM. Respondents were grouped into three main segments: Reinventors, practitioners and aspirationals.

The reinventors (27 per cent) are the standouts, outperforming peers in both revenue and profitability and leading in innovation. They’re ahead in co-creation and close collaboration with customers and partners. They leverage the data and knowledge derived from close and continuous collaboration to orchestrate compelling customer experiences.

Practitioners (37 per cent) haven’t yet developed the capabilities to match their ambitions, while the aspirationals (36 per cent) have a ways to go in both their digital journey and their ability to move quickly to seize new opportunities.

The personalisation and customer service piece of the study - main tenets of the report - reported organisations that are approaching problems with empathy for users are creating close customer connections.

“In many industries, customers even become collaborators on product planning and design,” the report stated. “Companies that successfully personalise experiences know how to use data to identify unmet customer needs. They leave no stone unturned, using AI and cognitive solutions to uncover insights that create delightful experiences - and turn customers into advocates.”

On the customer experience front, the report found 68 per cent of c-suite executives expect organisations to emphasise customer experience over products. In line with this, organisations of all kinds have scrambled to take up the art of the personalised customer experience.

According to the study, 86 per cent of organisations say they’re at least somewhat effective at creating experiences that cater to the individual customer and 53 per cent consider themselves quite effective.

Indeed, the race is on to gain an outsized share of profits and customers. But the question organisations should ask is: ‘Am I running in the right direction?’. There are reasons to believe many may not be, the report warned.

“First, the elegant design of irresistible personalised experiences is of daunting complexity – and not just because it must be orchestrated across channels. The design of the experience requires deep understanding of what makes individuals human – the motivations, desires, temperament and in-the-moment moods of customers,” the report stated.

What distinguishes the leaders from other organisations is the capacity to use data to identify unmet customer needs. Eight in 10 reinventors report being very effective at uncovering new or unmet customer needs, and three times more reinventors than practitioners say they’ve perfected the task.

But much work needs to be done. The study found many organisations reporting they’re satisfied with their personalisation efforts may be missing the first step to truly doing it well: Understanding their customers’ needs.

Reinventors are good at personalising an experience in the context of the moment to understand what makes a customer human, and don’t just plumb lots of data. The report stated these groups of organisations are design thinkers, and approach problems with a sense of empathy for customers that helps them to explore and consider the right questions. To find the next best questions, design thinkers scan and interrogate their environment, the report explained.

Read more: 5 lessons in personalisation from Marriott Hotels

“Reinventors do this exceptionally well. As may be expected, they’re quite good at creating close connections with customers to garner direct feedback. But seven in 10 also turn to their partners to better understand the customer experience; and seven in 10 analyse their competitors’ responses to customers, presumably to learn what their competitors might understand that they don’t,” the report stated.  

Additionally, the report says reinventors are always on the hunt for new clues that reveal customer needs. Over one-quarter of reinventors are turning to artificial intelligence (AI) technologies and cognitive solutions to better understand customers and improve the customer experience. They also excel at the activities design thinkers typically use to great effect, such as customer collaboration and detailed journey maps.

“These activities generate empathetic understanding and insights in abundance and have equally important second-order effects. They propagate trust and accountability,” the report stated.

In addition, two-thirds of reinventors said they’re effective at collaborating with customers to co-create new products and services. Moreover, 68 per cent integrate feedback from their customers into all of their planning and design processes.

Co-creation communities are a rich source of customer insights, but to make sense from copious data, reinventors turn to customer journey maps. Just shy of two-thirds of reinventors reported being very effective at creating detailed customer journey maps versus 45 per cent of practitioners, one of the largest customer capability gaps between the two groups.

Journey maps, meanwhile, have moved well beyond attractive murals or a wilderness of Post-it notes on the wall, the report stated, revealing they can draw from rich sources of data to decompose the customer journey, uncovering root issues and pain points in highly precise detail.

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