COVID-19 forced businesses to rethink multiple facets of their operations, and in some cases to recast them repeatedly, in response to the disease’s shifting geography, Whac-a-mole switches in rules and regulations, and huge changes in customer behavior and the way we work. Last year, we wrote about several of these trends, and the need for leaders to use design thinking to create the customer and employee experiences that would sustain their company through the pandemic.
Today, as vaccines are rolled out around the world (granted, at various degrees of speed and scale), people can start to imagine finding some stability. For the leaders who have been in response mode, it’s time to stop winging it and make a flight plan. Here are four actions companies can take to help improve customer experience, operations, and profitability for 2021 and beyond.
Stop improvising and start experimenting — to learn what to keep and what to scrap. Last year was a time of desperate improvisation, as companies tried anything and everything to survive. Now is the time to take stock and decide which of these actions are worth keeping and scaling up, and which are no longer necessary.
Every industry needs to add the rigor that distinguishes experimentation from improvisation and leads to genuine innovation. Take commercial banking, for example. “The pandemic presented a big opportunity to catapult digital transformation initiatives,” says Donna Arce of Barlow Research Associates, a U.S. market-research firm focusing on financial services. She points out that fully two-thirds of a bank’s touch points with middle-market commercial clients are now digital. Arce adds, “Banks have a big opportunity to fine-tune and cement alternative service delivery models that were introduced during the pandemic.”
Harvard Business School professor Stefan Thomke has written extensively about how to design and implement experiments to test innovations in services and processes as well as products. The good news: Digital touch points are especially amenable to experimentation, with, for example, the kind of A/B testing that’s a familiar tool of web marketers in various industries. And well-designed digital experiments yield quick results.
One of the big questions about what to keep and what to ditch has been the staying power of work-from-home. Some companies have already decided: Alphabet has announced that after September 2021, employees will be expected to show up in the office at least three days a week; by contrast, Facebook and Twitter have said many employees can continue to work from home indefinitely. Numerous companies had no choice last year. Soon they will have one. As the co-CEO of a B2B branding firm told us, “To make permanent decisions, we’re going to have to see what worked, what continued to reap positive results, what clients are doing, and what they expect.”
Manage costs and improve customer experience at the same time. Far too often, companies cut costs at the expense of the customer experience. That approach is frequently the result of “thinking of new products and services in a black-and-white or a very linear way,” notes the chief technology officer of a Fortune 500 financial-services company. “We were trying to eliminate the need for customers to ask questions or discourage them from asking for help, which was counterproductive,” she says.
Costs rose all around: in development, in customer service, and, notably, in goodwill lost among frustrated customers on both the B2B and B2C sides. Eventually, the organization recognized that it was inevitable customers would have questions and issues, and saw that the best way to manage the costs was to accept this reality, build in opportunities for customers to get help, and train customer service and help-line people accordingly. “It sounds obvious, but it took a lot to get people to understand that the problem wasn’t [in] our products or services, but in our processes and expectations,” she says.
Retailer Nordstrom, facing declining sales in 2020, focused on cutting costs while looking for ways to improve customer experience. Selling, general, and administrative (SG&A) cost reductions accompanied efforts to increase the amount of merchandise that customers could order online with two-day delivery or next-day pickup. These moves were facilitated by increased transparency into inventory and a more efficient supply chain.
“We have now reached scale in 10 of our top markets, which account for more than half of our sales, and we’ll continue to roll out our strategy across our top markets,” CEO Erik Nordstrom said during an investor conference call in November 2020. The result: more than US$100 million in positive EBIT during the third quarter, thanks to better-than-anticipated merchandise margins and SG&A reductions — with much of the savings expected to be permanent, the company indicated on the call.
For New York City–based makeup artist and “eyebrow guru” Ramy Gafni, managing costs and customer experience meant finding a way to deliver and price digital eyebrow shaping. Before the pandemic, a large part of his livelihood depended on delivering a hands-on experience in his salon or in clients’ homes. For a time in 2020, however, New York City regulations meant that he couldn’t physically see his clients. (Regulations now allow him to see clients in person, but he prefers not to until the vaccine is widely distributed.) The first challenge was re-creating the experience by having clients do the work he would customarily do, under his supervision via Zoom. That meant making sure customers had the requisite tools: tweezers, small scissors, and an eyebrow brush or comb.
But how could he re-create the sense of value? Part of the answer was pricing: Price the service too low, and clients would question its worth. But Gafni knew he couldn’t charge as much as he had for an in-person tweezing and trimming. “Even if the result is as good — or almost as good — the overall experience isn’t the same,” he says. “The feeling of being pampered, of being taken care of, is part of a salon or spa visit.” Gafni couldn’t replicate that on Zoom — but he could offer one-on-one advice in the form of conversations about grooming, makeup, and style.
That, of course, can also be a plus for him, as he sells a full line of makeup products. “I’m investing a lot of time in these appointments, but time is something I have a lot of now,” he says. That investment is a way to keep his clients, and perhaps to gain new ones who will stick and convert to in-person visits when it’s safe to do so. It’s also a hedge against the possibility of regulations on nonessential services shifting once again.
Work harder for your ecosystem and make it work harder for you. The extraordinary process by which scientists produced highly effective COVID-19 vaccines in record time (we were going to write “a few short months” — but how long those short months seemed!) was not just the triumph of Pfizer and Moderna. It was a victory by an ecosystem that included research scientists at startups, small companies, and universities; companies that conduct clinical trials; regulators; contract manufacturers; and, at the distribution end, UPS, FedEx, and a host of hospitals, pharmacies, and caregivers. It’s yet another example of the power of ecosystems to multiply the value any single company can create.
Unlike traditional supply chains, ecosystems are often governed informally rather than by a memorandum of understanding or contract — but active management can make ecosystems more valuable to you and every other participant, creating opportunities to increase revenue and take advantage of the capabilities or assets of ecosystem partners. In the insurance industry, for instance, the ecosystem of underwriters (and reinsurers), brokers, and dealers has been enhanced by the emergence of groups such as TechAssure. This network of insurance brokers specializes in covering the unique needs of technology companies. Brokers can join only after they’ve been vetted by their peers and, as members, have gotten the network’s “seal of approval,” as well as tools, global connections, and other revenue-enhancing benefits.
Other insurance industry ecosystems are helping insurers share data, modernize distribution with digital technology, and profitably offer niche services. Industry observer Paul Carroll says, “Ecosystems should produce key changes in two areas: how we touch customers and how we organize internal processes.” The next six months — an interim period during which companies will continue to focus on recovery and experimentation but will not yet have locked themselves into a post-COVID operating model — can be a time to seek out and cement new partnerships that allow organizations to bring their capabilities to a wider market.
Connect your employee feedback and your customer feedback. Right now, information from employee surveys goes to your HR team, whereas customer-survey data flows to sales and marketing — and the two streams never connect. To create a learning system in which they can inform each other, you’ll need to bring them together. Data from LinkedIn shows that “customer success specialist” is the sixth-fastest-growing white-collar occupation in the United States — a reflection of the fact that complex products, software, and services require ongoing support and can’t just be hooked up and left to function on their own.
Selling, customer on-boarding, consulting, service — all are part of a customer’s experience and, therefore, an opportunity to wow customers and keep them. The same holds true for the experience of employees. Many hassles and hiccups that they encounter are likely to have been caused by the same processes that give customers heartburn. By connecting the two streams of feedback — customer and employee — you’ll learn about problems faster, capture frontline employees’ ideas on how to solve them, and improve experience and efficiency at the same time.
By connecting customer and employee feedback, you’ll learn about problems faster, capture frontline employees’ ideas on how to solve them, and improve experience and efficiency at the same time.
This approach is now an ingrained part of the process when introducing any new product, says the financial-services CTO quoted above. “Neither the technologists nor customer experience people can predict where all the questions or other ‘speed bumps’ are going to come up during the design and implementation phase,” she notes. “And the data doesn’t give a full picture, so we now include our customer service reps and help-line people in our product development huddles.”
Employees from both IT and customer service feel heard, and friction between the two groups is greatly reduced. Though there’s a formal process, an informal dialogue and way of working together have also developed, notes the CTO. Such a process for input and feedback can be as simple as having a Slack channel where employees can contribute ideas or as structured as scheduled meetings and managed projects.
It’s worth noting that all four of these actions were valid before the pandemic, and they will remain so long after 2020 is consigned to memory — justifiably — as an annus horribilis. If you haven’t been working in this way, the conditions created by the pandemic and the eventual recovery provide the ideal opportunity to start.