Chapter 4
How Does Your Organization Compare?
The best vision is insight.
—Malcolm Forbes
With more than 1,000 participants in our Customer Experience Maturity Assessment, we have gathered many insights on marketing maturity across industries and how marketing organizations use new technology capabilities, as well as their organizational maturity. What we found shocked us. Those marketing organizations that take advantage of these findings have the opportunity to leapfrog their competition.
The Time for Change Is Now
For too many years, too many marketing organizations have watched the digital transformation happening right outside their door. But they have not taken an active role in embracing technology, building knowledge, increasing staff that would help them move into data-driven marketing, or simply taking advantage of new technology to win market share.
Considering that we are at the beginning of a revolution, the findings from our research are scary. Our analysis shows that 85.4 percent of organizations are at the very beginning levels of customer experience maturity. They are in either the Initiate stage (67 percent) or the Radiate stage (18.4 percent), as shown in Figure 4.1. For many organizations, that means they need to focus on using their current stage to distribute content through the channels most used by customers and then move up to the next stage, Align. In the Align stage organizations align their digital goals to drive marketing objectives that achieve strategic objectives. It is data-driven marketing that achieves business objectives.
Figure 4.1 Customer Experience Maturity Level
Biggest Barrier to Marketing Maturity
When doing our research and analysis, we found that the biggest barrier for entering the higher levels of maturity is how current technology is being used today!
For large organizations that use many technologies, the marketing data and technology actually span many different departments; for example:
- Marketing owns web content management and testing.
- Business intelligence owns analytics.
- Public relations owns social.
- Customer relationship management owns email marketing and marketing automation.
- Sales owns offline conversations.
With this landscape filled with silos, your organization will have different teams connecting with the customer at different touch points and providing different content. And each team is in a different context (the environment and device used by the customer).
This fragmentation of systems is at the heart of the biggest issue today, and is what prevents customers from having a connected, relevant experience. To deliver the connected experience organizations should have connected systems that need to work from a single view of the customer and have data collected across all the touch points accessible in real time. From this single view, marketing can build a coherent and relevant conversation in real time. To do that, the organization with the widest use of technology needs to either integrate systems or establish a customer data hub containing the single view of the customer. That hub needs to update in real time.
The first option, creating a single integrated system, is a big task. Creating such a system is not easy. It usually requires custom development that integrates data across multiple systems, is constantly updated, and maintains a single system of record that can drive events and actions across systems (see Figure 4.2).
Figure 4.2 Complexity by Integrating Five Systems
Creating a customer data hub, the second option is more feasible, but this also requires custom development. You need to have a real-time integration to the data hub with the single view of the customer, which is actionable. If you are an organization with few data repositories, this is more straightforward; however, for organizations with many data repositories, this is not an easy task as they are owned by different business units.
The best option if you are starting from scratch is to have one connected platform, which builds on a single view of the customer and allows you to own the experience in the different channels used by the customer, because it brings together customer data with the interactions and experiences being delivered to the customer.
This is also the approach that many start-up business disrupters use. To remain agile, they don't rely on legacy systems or separate data repositories; instead they start building data systems from scratch with the single view of the customer in mind. Their future view is to be more relevant to their customers than their competitors are.
How Do You Compare to Your Industry?
We segmented the survey results by industry and found roughly the same pattern: most organizations are at Initiate or Radiate (see Figure 4.3). These Stage 1 and Stage 2 organizations should focus first on getting the full benefits of Radiate before going to the Align stage, and then focus on optimizing the customer experience as well as the organizational outcome.
Figure 4.3 Across Industries, Most Organizations Remain in the Earliest Stages
When looking at maturity across industries, even though most are in the early stages, it's worth noticing that the majority of industries have a few organizations that are very mature. With the exception of government and travel, all industries have a few organizations at the highest maturity levels, Engage or Lifetime Customers. Looking at only the top stages, the financial services sector is the most mature and government is the farthest behind.
For additional information on specific industries, go to the companion website for this book at www.ConnectTheExperience.com/ cxassessment. You can take the assessment and get benchmark data for your industry.
How Do We Measure Success?
Many websites have not evolved beyond using first-generation legacy web analytics such as visits, page views, time on site, and so on. We found that 43 percent of organizations either don't measure (14.9 percent) or only use visits (28.1 percent) to report on digital success (see Figure 4.4). Forty-three percent is a huge percentage still using an ineffective metric. There is a big need for measuring the impact of digital success on strategic objectives.
Figure 4.4 How Organizations Measure Success across Digital Channels
The second highest measure of success is conversions with 24.1 percent of organizations using that metric. Only 22.8 percent have digital key performance indicators (KPIs) aligned with strategic business objectives, and 10.1 percent have digital KPIs aligned with Customer Life Cycle (CLC) across both online and offline channels. Only slightly more than 30 percent of organizations have a metric they feel relates to a business objective. There is certainly opportunity for improvement.
How Does Your Top-Level Management Compare for Involvement with Digital Strategy?
To gain the greatest value from digital marketing and digital strategy, it must become an intrinsic part of the organization. Digital marketing becomes marketing. Digital strategy becomes strategy. To make this happen requires an executive-sponsored mandate requiring collaboration among many departments.
Our research shows that only 29 percent of organizations have the backup they need with high involvement from top-level executives, while 30.3 percent have medium involvement, 31.4 percent have low involvement, and 9.2 percent have no involvement (see Figure 4.5).
Figure 4.5 How Top-Level Managers Are Involved with Digital Strategy
How Do You Compare in Optimizing for Mobile Devices?
Organizations must adapt to customers' increasing use of mobile devices at different stages in their journeys and beyond. A few of the facts on this major change in how customers access the web include:
- Estimates show that by 2015 there will be more people using mobile than desktop to access the Internet.1
- During Cyber Monday 2013, mobile share of sales was 17 percent.2
If you haven't optimized for mobile devices, you are most likely missing opportunities.
Our research shows that 48 percent of organizations have optimized for mobile, leaving 52 percent needing to prioritize for mobile users. Having sites that are optimized for mobile devices is an important part of moving into the Radiate stage and provides great potential for increasing business outcome, as we describe in Chapter 6.
E-commerce is leading the shift to mobile with 62 percent having optimized for mobile devices, whereas government is lagging behind with only 29 percent that have optimized for mobile devices.
How Do You Compare in Using Segmented Email Campaigns?
Many email campaigns are “send and forget” campaigns. Marketers with this attitude look only at metrics like open and click-through rates. However, having data about your customers and email recipients means you can take a more strategic approach to email. That approach more typically comes as part of Stage 3, Align. In the Align stage you want to utilize data for email segmentation so you can be more relevant in your campaigning and avoid irrelevant and untimely content.
Fifty-two percent of respondents said they are using data available on email recipients to do simple segmentation of email. Once an organization has a strategic focus, it measures email campaigns by the email's effectiveness on business metrics, such as value produced, rather than opens or click-through rates. The leader in using email segmentation is travel with 67 percent; government trails with 24 percent.
How Do You Compare in Using Testing to Optimize Customer Experience?
Testing is great for going from guesswork to actual feedback from customers consuming your content. Testing is a well-proven tactic to increase conversions. Forrester Research found that 96 percent of organizations using testing increased conversions by 1 percent or more, and 77 percent faced increased conversions by 6 percent or more.3
We found that 29 percent of organizations use A/B split testing or multivariate (MV) testing to increase outcome, which leaves 71 percent guessing at how they can optimize the experience. A/B and multivariate testing is a prime optimization technique that is being ignored.
Testing is an established practice with e-commerce, which is leading with 44 percent. Government lags behind with only 17 percent using testing.
How Do You Compare in Using Personalization to Be More Relevant?
Personalization can have a great impact on increasing outcome. Research has found that organizations that are using personalization to optimize the website experience are seeing, on average, a 19 percent uplift in sales.4
We found that personalization is used by 29 percent of organizations. Focusing on the low-hanging fruit of personalization is a great start for going into the Optimize stage, and with the significant impact it could have on conversions, this is a not-to-be-missed opportunity.
The leader sector in personalization is associations with 43 percent. Government lags with 17 percent.
How Do You Compare in Using Behavioral Targeting to Adapt to Visitor Browsing?
A more advanced form of optimization is to use implicit visitor browsing to personalize and display relevant content; 23 percent of organizations use this to optimize customer interactions online and the connected experience that will help them climb to the Nurture stage.
The leader in behavioral targeting, again, is associations with 38 percent. Government lags with 15 percent.
How Do You Compare to Organizations Using Marketing Automation?
Marketing automation is well established and broadly used to nurture prospects to become customers, to help with onboarding, or in upsell and recapture programs.
Several studies show that nurture programs using marketing automation improve business outcomes.
Currently, 29 percent of the organizations surveyed are using marketing automation. Entertainment is the leading industry with 45 percent, and nonprofit lags with 22 percent.
How Do You Compare to Those Having a Single View of the Customer across Online and Offline Touch Points?
The high value produced by multichannel marketing is apparent when 40 percent of those surveyed reported an increase of more than 15 percent in marketing-attributed revenue and 60 percent reported a 10 percent increase in Return on Marketing Investment (ROMI).5 This was attributed to having a single view of the customer across different touch points. This single view was used to optimize the conversation and the connected experience. This is an essential part of the Engage stage.
Currently 30 percent of organizations have a single view of the customer, with e-commerce leading with 47 percent and government lagging with only 12 percent.
When we followed up with organizations to understand the functionality of their single view of the customer, we found that very few had the capability to create real-time personalization using that data, which is a core element in creating connected experiences.
How Do You Compare in Using Predictive Analytics to Steer Content Targeting for Specific Customers?
Predictive analytics is crucial in making the right decisions and automating decisions that drive the conversations needed in the Lifetime Customers stage.
Instead of looking at the past, predictive analytics will help organizations be more relevant and anticipate the next best action for their customers. Currently 21 percent of organizations are using predictive analytics, with entertainment leading with 34 percent and government lagging with only 10 percent.
Get the Sitecore Customer Experience Maturity Assessment Benchmark at www.ConnectTheExperience.com/cxbenchmark.
Mapping People, Process, and Technology to the Customer Experience Maturity Model
To better understand gaps among people, process, and technology in the stages of the maturity model, we analyzed survey data to gain additional insights.
We took the main phases of the Customer Experience Maturity Model—Attract, Convert, and Advocate—and for each phase we mapped the people, process, and technology requirement for that phase. If organizations met all requirements, they would get 100 percent in people, 100 percent in process, and 100 percent in technology.
Technology
For the three phases, we looked primarily at:
- Attract. Technology to support distribution content in different channels and web analytics
- Convert. Technology to support optimization such as testing, personalization, and marketing automation, as well as being able to collect customer intelligence at the different touch points
- Advocate. Technology to support predictions and automate relevant content across channels, as well as having the single view of the customer
For the Attract phase, we found that approximately half of the organizations have the right technology in place to distribute content in the primary channels used by customers, web, mobile, social, and email, as well as having established basic web analytics (see Figure 4.6). In the Convert phase, only 17 percent have technology in place to optimize the experience and to focus on converting the visitor to a customer. Technology here is mostly dominated by adoption of testing, with advanced personalization being underutilized. Fourteen percent of organizations have the needed technology for the Advocate phase, dominated by those organizations having the single view in place. But even those organizations lack using that data for predictions as well as real-time automated optimization.
Figure 4.6 Technology Usage in Attract, Convert, and Advocate Phases
To better understand how technology is used for multichannel marketing and analytics, we analyzed on these two aspects alone across the three phases (see Figure 4.7).
Figure 4.7 Multichannel Marketing and Analytics Adoption in Attract, Convert, and Advocate Phases
Even though both of these areas are important uses of technology, they are underutilized. Technology use here should be a short-term priority for those organizations that don't yet have it in place. At the Attract phase, 54 percent have analytics in place with proper insights, but only 43 percent are able to use channels preferred by their customers—with nearly half having a mobile presence, 54 percent using email marketing, and 34.5 percent having social integration.
In the Convert and Advocate phases, many organizations don't have the technology for first using insights to optimize the experience in a preferred channel and later for using predictions and automation to do this at scale.
People
For the three phases, we looked primarily at:
- Attract. Having marketers, digital analysts, and acquisition marketers
- Convert. Having channel experts and optimization experts
- Advocate. Having data analysts and a chief digital officer or chief marketing technologist
Figure 4.8 shows that staffing is most mature in the Attract phase, but has serious limitations in all phases.
Figure 4.8 People in Attract, Convert, and Advocate Phases
It surprised us that half of the organizations have data analysts, but in most cases that role is currently within another team. In the future this could be an important asset to shift to marketing. Only 5 percent have a chief digital officer or a chief marketing technologist. Looking at the Attract phase, just below a third of the organizations have digital analysts and fewer have acquisition marketers. In the Convert phase, less than half have channel experts and only 25 percent have optimization experts.
Looking at barriers that are preventing organizations from reaching high maturity, lack of the correct staff is one of the most dominant.
Chapter 12 has more details on the specific roles and skills as organizations move up the Customer Experience Maturity Model.
Process
For the three phases we looked at:
- Attract: Having processes in place to gather data and use that for channel optimization
- Convert: Having processes that support gathering customer data that will enrich the experience across the different channels
- Advocate: Having processes that support the use of automation based on data, and use data for predictions, either customer focused or input to organizational financial budgets
A big barrier to a connected customer experience is having the processes to support getting the most value out of technology and resources. In Figure 4.9 we see a big gap where only 27 percent of organizations have the needed processes in place for the Attract phase and only 10 percent for the Convert and Advocate phases.
Figure 4.9 Process Support in Attract, Convert, and Advocate Phases
Figure 4.10 looks at people, process, and technology within the three phases.
Figure 4.10 People, Process, and Technology Mapped in Attract, Convert, and Advocate Phases
It's clear that organizations need to invest in the right processes, as this is currently the biggest gap.
Where Are Organizations Investing?
Many organizations understand the potential for using technology to create better-connected experiences. In the area of near-term technology investments, mobile tops the list, as shown in Figure 4.11.
Figure 4.11 Technology Investments
One concern is that organizations that have realized that they have fallen behind tend to invest in short-term capabilities. In reality, all of these areas need to be aligned to give the greatest impact so they are helping with the connected experience and focusing on the customers. However, the risk in focusing on many investments at the same time is that the focus gets diluted.
When we surveyed organizations about what would give the most value in the short term, web analytics, email marketing, and a mobile-adapted version of the website top the list, as shown in Figure 4.12. All of these are part of the Attract phase.
Figure 4.12 Short-Term Value Gain
What Must You Do?
So what must you do if you aren't the industry leader? What if your marketing is in the early stages of maturity?
To quote Robert Frost, “The best way out is through it.” You literally need to get on the train instead of watching it pull away from you and get started now. You need to make the decision, jump on board, and start building the next-generation marketing machine.
To start with, look at your success metrics for digital marketing. Are you looking at visits and page views instead of KPIs aligned with business objectives? If you are, then you need to align and rework your marketing to take advantage of the power of digital channels. You need to look at your customers, their journeys, their motives, their intents, and the touch points where you connect. You need a map to show you how to create an active, engaging conversation with your customers. To do that you need to own the experience across the channels your customers prefer. This will take investment, but it's necessary to build your marketing organization's experience, skills, and knowledge so you can move to higher levels of marketing maturity.
You may be trapped in an organization where business units own functional silos. Each silo controls different parts of the customer journey as well as the data for that silo. If you are surrounded by silos, then the best approach might be to gather allies and move forward with a business case that shows how the entire organization will benefit. Chapter 5, Making It Happen!, describes some proven techniques for creating change in small and large organizations.
If you're finding it difficult to make change happen and get an executive sponsor, get started by using the information from the Customer Experience Maturity Assessment to see where you can get ahead of your competitors. Let's take one of the easiest examples, one that will significantly improve most organizations. With 85.4 percent of organizations in Stage 1 and Stage 2, there are a few steps almost any organization can take to jump ahead. For example:
- Are you among the 52 percent that don't yet have a mobile presence? If so, then adding mobile is a great place to fill the gap between your customers' use of mobile and your lack of having mobile.
- Are you part of the 71 percent of marketers who don't test the experience? Begin using A/B split testing to find out what really works.
- Are you among the 48 percent that don't use email marketing segmentation? A quick win would be looking at data and starting to segment recipients so content is more relevant.
- Are your customers using social, but you are among the 65.5 percent that don't have social integration? Perhaps you should explore what social could add to your customers' experience.
- Are you writing content for a specific visitor segment and stage? If you are guilty of random acts of marketing, then create a Digital Relevancy Map and use it to focus your content on key visitor segments and specific stages in their decision journeys.
- Are you among the 67 percent of organizations that can't tie their KPIs to strategic and marketing objectives? Move into the Align stage by mapping how digital goals drive marketing objectives, and then create and implement an Engagement Value Scale. Even if you put an Engagement Value on only your most important digital goal, you'll be able to track which channels, campaigns, pages, and assets have the greatest impact.
With these six steps that almost any organization can implement, you should jump ahead of the majority of your industry.
Every Industry Has a Customer Experience Leader
Anyone who has been awake in the past 10 years has seen the shifting of business continents. Amazon.com's rise has pushed Barnes & Noble into a corner and has crushed Borders into extinction. Netflix, a business model that some scoffed at, has smothered Blockbuster. The list goes on.
What we are seeing is an evolutionary change that is probably the biggest in mercantile history. But this change where a few dominate the majority isn't new. It's just happening faster, and the rise of marketing using technology is allowing it to happen across many industries and business models. It won't happen just in B2B or B2C. This change is happening in nonprofits, in services, in online education, and in all forms of people-to-people connection touched by the Internet.
The change is happening now. As our assessments of more than 1,000 organizations show, 85.4 percent of organizations are still in Stages 1 and 2 of the seven stages of customer experience maturity. If you ranked in Stage 1 or Stage 2, you might think you can feel comfortable being there with the vast majority. But that is a false sense of security. In most of the industry segments surveyed there was at least one organization in Stage 7.
If You Aren't at the Top, Where Does That Leave You?
Michael Porter is recognized around the world as the father of competitive analysis. His groundbreaking work in the evolution of industries has revealing insights that marketers need to consider to be customer-centric. The tectonic shifts caused by technology have been seen before, and we can learn from them.
Most business professionals in fast-changing industries are familiar with the Rogers' bell curve known as the “adoption curve.” The adoption curve shows how buyers of new products and services begin with a few innovators, then come the early adopters, and so forth, creating a familiar bell-shape curve.
At the beginning of the adoption curve there is shallow growth as only a few innovators purchase new products. Gradually more buy until the curve becomes like a bulge in a python. Following the bulge come the late adopters, the last to buy.
What Porter discovered is what happens to the companies behind the customer adoption curve. (Porter studied industries like railroads and appliances, but I think you'll see how this applies to all industries.) From his studies that examined many industries, he found that during the first part of the adoption curve there was a high growth in companies providing products or services to that area. Those of us familiar with Silicon Valley know this as the “hockey stick” growth curve.
At the middle of the adoption curve, where the bulge is, the market is saturated by sometimes hundreds of companies supplying almost the same product or service. As the market becomes saturated and only late adopters are left, there is a vast number of mediocre companies stuck in the middle. Most are undifferentiated and have a sliver of market share. As the adoption curve becomes mature and shallow, there is only enough room for a few large companies. The large companies swallow up high-quality smaller ones and the lower-quality players disappear.
This gruesome evolutionary curve has repeated over and over across many industries for more than 100 years. Now we are faced with a similar situation in marketing. The marketing leaders who create the best customer experiences and grab the largest volume of customer advocates will be the survivors.
Making Your Choice
So what do you do? There are only a limited number of choices, but the good thing is that there is still time to make a winning choice and execute it well. However, given the past, you probably have less than two or three years to make your choice. Technology adoption history shows that change happens slowly, but when it hits the inflection point (the tipping point) the rate of change explodes.
Here are three choices for your future:
- Do nothing. Keep your marketing organization with the 85.4 percent that are currently in Stage 1 or Stage 2. The problem with this choice is that you will be left behind. Your marketing power will diminish and it will be incredibly difficult to catch up. Just ask newspaper publishers. They saw the future of the Internet coming in the 1990s, yet failed to adapt to the Internet.
- Grab a profitable niche and own it and the customers. In the studies of how industries evolve there are only two or three companies that rise to the top of an industry. The rest are acquired, merge, or die. However, at the opposite end from the large dominant companies are a few small companies that completely control a niche market. So one winning strategy is to find a profitable niche you can dominate using customer intimacy as one of your strategic themes. Use technology to engage totally with your customers by knowing everything about the customer, becoming an icon in their culture, and serving their niche needs.
- Accelerate and dominate. As companies fight their way out of the maelstrom in the middle, two or three rise to the top. One dominates, but the other one or two are still viable and have respectable large businesses. If you are going to become one of these top organizations, you must begin now to grow your (digital) marketing expertise and technology.
This shift will accelerate. The next few years will see the advent of cloud-based marketing using big data analytics. At that point those that have a large market share will be extremely difficult if not impossible to catch up to. They will not just engage customers; they will predict customer needs and make recommendations before the customer is consciously aware of the need.