How to create additional customer value through service innovation

“Service will save the day!”

As competition becomes more fierce and costs are on the rise, companies turn to their Service organisations with the expectation that they pull additional “customer value” from their hats. After all, Service is the organisation that possibly operates closest to Customers.?

The obvious, quick go-to place for additional customer value is new technology, and the temptation to chase the latest tech advancement as an easy answer to the new “customer value” quest is strong.

Maybe there is a new AI hype to be tried out, or a Machine Learning development that will extract insights from customer assets usage, and there are hundreds of PowerPoint slides from a prestigious consultancy firm, with positive case studies as a backup.

But without a solid understanding of Customer Value, there is a risk that the new technology will not yield the promised results and it will turn instead into a very expensive 3rd grade science project. This is the case when we have successfully implemented a very sophisticated and expensive technology but it does not yield the projected business results.

Avoiding a very expensive 3rd grade science project

There are plenty of examples of failed technology, from Microsoft Zune to Apple Newton, from MySpace to Google+... and the statistics of failed digital transformations are even more impressive (70% of all digital transformations don’t reach their stated goals, according to McKinsey, see link below).

But how to avoid blindly trusting new technology to enhance customer value? There are plenty of considerations that can be done, I have identified 3 things that in my view can help build a solid foundation and avoid being stuck in analysis paralysis.

#1 Understand Customer Journey

Mapping Customer Journey (CJ) constitutes the backbone of customer value understanding.?

A CJ map provides a clear picture of all the touch points customers have with your company, and the service organisation. CJ map is made of several sub-journeys and each can be further broken down into steps. You can check a good overview from Qualtrics in the links section below.

These sub-journeys and steps offer a close up look into customers' workflows and their interactions with your organisation, and become the anchor and the context for customer feedback.?

Customer feedback is a huge source of opportunities for gain creation and for mapping how we are currently responding to customer needs with the current offering.

#2 Use customer feedback to find opportunities for gain creation

Customer feedback can become an excellent source, where you could dig for opportunities to create additional value. What are the main customer pain points? What are the repetitive threads in customer inquiries?

Service has the privileged position of interacting with customers when they are most frustrated and emotional. Service professionals know what frustrates customers and … what would it take to turn this around!

Customer feedback can come in a continuous transactional stream, or intermittent, depending on the nature of the business and the type of surveys customers receive.

?There are ways to analyse linguistics, extract sentiment from recorded interactions, find out what repetitive threads come up for specific customer segments. These are the opportunities to create gains for customers and ultimately additional value.

Once the opportunities are identified, they need to be validated with experiments.

#3 Use empiricism to validate assumptions?

Now that we know what customers are frequently complaining about, we have a clearer idea of what could constitute “customer value”. But it would be a “capital mistake to theorise before one has data”, to paraphrase Conan Doyle.?

Our clearer ideas of customer value are just assumptions. We assume that customers would pay to see those issues solved, for instance. And we must treat those assumptions as hypotheses to be verified.?

First of all, we need to sort them in a hypothesis prioritisation matrix and focus on those with higher perceived value and risk.

One type of hypothesis to test could be “Do customers really want this?”

The idea is to be as precise as possible in stating what we want to test and how will we be able to claim success or failure:

• We believe that [building this feature] [for these people] will achieve [this outcome].
• We will know we are successful when we see [the one metric that matters being achieved].

We also need to be disciplined in selecting the “one metric that matters”: we must avoid falling into the trap of selecting “vanity metrics”, as a source of validation. We need proper hard business metrics, connected to business results.

Experiments can involve customer interviews, surveys (better if double-blinded), pre-orders sales… all come with different strength of evidence, data points, and subsequent confidence levels.

In my experience, there are 2 very effective ways to run such experiments:

• Working jointly with a customer organisation to develop “ad-hoc” innovation focused on solving their problems and creating value. Solutions can be scaled afterwards.
• Having regular sessions with customers in a “customer advisory board”, discussing pain points and evaluating solutions.

In conclusion

When you have gone through these steps, you will have identified a way to make customers more successful and less frustrated. The risk of investing in an “expensive 3rd grade science project” will be significantly less. You will have a robust roadmap to deliver customer value and Service will have saved the day. One more time.

For further reading

McKinsey - The ‘how’ of transformation

Qualtrics - Your ultimate guide to customer journey mapping