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Connected Strategy: Value from Continuous Customer Relationships

Connected Strategy, by Nicolaj Siggelkow and Christian Terwiesch, professors at the Wharton School, offers a road map for building strategies that can harness the power of customer interactions.

Connected Strategy offers a road map for building strategies that can harness the power of customer interactions. 

Business executives in many industries are currently being inundated with a confusingly and exhaustingly broad range of technological developments that enable new business models.

There is, however, a common thread among all of these developments: firms are fundamentally changing how they connect with their customers. Rather than having occasional, episodic interactions–where customers realize they have an unmet need and then look for ways to fill it–firms are striving to be continuously connected to their customers, providing services and products as the needs arise, even before customers become aware of them.

Connected strategy: a resilient business model

What can you do to conceptualize and implement a business that will be more resistant in the near future? One answer is that you move away from transactions and services and move toward building strong relationships with customers. That’s the argument made by Nicolaj Siggelkow and Christian Terwiesch in Connected Strategy.  Their book explains recent trends and developments in the business world . It makes clear how companies can thrive in an era of disruption and innovation.

Think about firms such as Nike, Disney, Progressive Insurance, McGraw-Hill Higher Education, Medtronic, Hewlett-Packard, and Tesco. They are developing and competing on connected strategies: creating superior customer experiences through connectivity. While simultaneously driving dramatic improvements in operational efficiencies and reshaping their industries.

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Customer relations

The management of customer relations aims to create, maintain and improve experiences to each individual and context in a seamless manner across channels.

This includes all interaction, such as marketing, shopping and services experiences

4R Framework. 

The authors developed the 4R Personalization Framework. 

1. Recognize a customer need;

2. Help the customer identify a solution, which will lead the customer to Request the desired option;

3. This in turn will trigger the company to Respond.

4. Those that are able to Repeat these interactions and learn each time will be able to build lasting connections with customers that competitors will struggle to match

4 Types of Customer experience

Siggelkow and Terwiesch offer a helpful classification of four types of customer experiences.

  1. respond-to-desire (Amazon),
  2. curated offering (Blue Apron),
  3. coach behavior (Nike),
  4. automatic execution (HP sending printer ink replacement cartridges in anticipation of the customer running low).

The authors reveal how to turn occasional, episodic interactions into continuous – profitable relationships. Thus you learn how to create a connected strategy.

The architecture of the ecosystem

The authors describe different types of ecosystems. They use familiar examples and calling out five architectures, such as crowd orchestrators and peer-to-peer network creators. Recent research in strategic management has moved the focus from the supply chain. To figure out which entities are in any ecosystem, “Who else would derive value from our service or product?”

Data enables focus on jobs to be done

The authors outline companies that aim to more than just meet an immediate need. They strive for outcomes that for their potential customers are relevant in their personal or professional life.. And these companies aim at delivering more options against lower costs. This is possible because of the use of (often wearable) technology that improves operational efficiency, facilitates the collation of data, and maintains and build connections to customers. In such a concept a company can deliver a better experience, build more loyalty, and generate more revenue at a lower cost (when you’ve got someone hooked on your service, you have all the advantages of customer lock-in (less marketing and retention costs). Advances in technology are critical to connected delivery models. But you need not to be a technology expert to create a connected strategy..

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Connected strategy requires continuous learning

Designing, developing and maintaining a connected strategy is hard work. For any business it requires a much more agile, dynamic, and responsive data-driven organization to deliver on the expectations of the customers. You have to develop new competences, especially the ability to learn and adjust on a continual basis

Privacy

Any strategical decision considers the environment in which your organization operates. Now – more than ever – decisions are made in an environment in which all involved stakeholders required ethical decisions. Think about what technology could do and what you should do. Designing applications, ecosystems or platforms that derive their value from customer data, you have to decide how much data to collect, how to anticipate needs while respecting privacy concerns, how much to automate. As customers trust more of their data — and hence more of their personal lives — to companies, your sound judgment will be a critical capability.

Consider the potential for emerging technologies, especially AI, to improve the quality of scenario building, testing, and improvement.

Connected Strategy as a playbook

Connected Strategy contains more frameworks (capability or maturity model and revenue and technology models) and chapters enabling team sessions at your organization.. The book sits alongside a website full of case studies, videos, podcasts (featuring a fascinating group of entrepreneurs, business leaders, and academics), teaching materials, and workshop guides. Although the authors are academics, all the available content is very accessible.

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