The Customer Experience Challenge Met: SAP's Turn

Note from PG: If you cared enough to read my blog, you might remember that last month I challenged the following list of technology companies to tell me why they could claim to be a customer experienced focused software company where just a few months before they were something else - a Social CRM company, an enterprise feedback management software company, whatever.

1. Oracle
2. SAP
3. Get Satisfaction
4. Medallia
5. Allegiance
6. Genesys Labs
7. Clarabridge
8. Kana

I named these 8 companies for starters and offered them a guest blog post to prove to all of us why they should be seen as customer experience focused; after all its gotten hot again after a decade.  But most of them have wimped out so far. The first one to talk and walk the talk and walk was Get Satisfaction in this post by Jeff Nolan last week. Now SAP'S Volker Hildebrand and Jamie Anderson, two good friends and industry veterans - and forward thinkers have stepped up on behalf of their employer to accept the challenge.  Do they do the job? Are you convinced that they can claim the message and title ol customer-experienced focused technology?  Look, to their credit, they responded where the other 6 haven't. And its a comprehensive response. 

Hey Volker, Jamie, the floor is yours.

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Dear Paul,

First of all, let us just say that it was a brilliant idea to put out this challenge to CRM vendors regarding “customer experience”, we hope you get a lot of feedback. It certainly piqued our interest here at SAP where Volker Hildebrand and myself got together to consider our response, share theories, points of view and customer anecdotes in relation to your challenge. We also did this whilst listening to the awesome new album by Icelandic band, Of Monsters and Men, but more of that another time.

To be honest, we are as curious as you are about the various responses and hopefully it will spark an interesting discussion (that is, if not too many of the vendors ignore your challenge or choose to bail out because they can’t come up with a good answer).

As you know Paul, at SAP we have been passionate advocates of customer experience for many years now, a fact that is underlined in the book “The Customer Experience Edge.” co-authored by our very own Volker Hildebrand. And you are absolutely right when you say that the concept has been around for a long time. It goes way back and there are many examples (highlighted within the book) of companies who built their success on creating exceptional customer experiences. We completely agree with you that customer experience has always been at the core of customer relationship management as a business philosophy (please note that we did NOT use the acronym CRM!) but it has not always followed that it has been at the heart of, or even core to, the construct of CRM applications.

What’s different today, though, and this doesn’t mean we’re in disagreement here either, is that the topic of ‘customer experience’ is getting a lot more awareness, and this, in itself, is a good thing.

Today, we are witnessing a customer revolution. Armed with smart phones and tablets, today’s customers are digitally connected, always on, and socially networked. They live their lives ‘in the moment’, updating their relationship status, interacting with their friends, and sharing their likes, dislikes, and opinions, in real-time, through the power of their mobile devices. They are literally changing the rules of engagement and, through all of that, becoming more empowered than ever.  

In other words, rapidly advancing technology is changing the game and customers are changing the rules. In this world, customers are in control – whether you like it or not. They can whip out their iPhone to perform price comparisons anywhere, anytime, and change their buying decision based on what their ‘friends’ (or even total strangers) are saying. Their expectations are on the rise and they can instantly share their Brand experiences (good or bad) with anyone.

From a Brand perspective they can become your loudest champions, or they can expose your weaknesses or failures to the entire digital world. It is often noted that we are entering an age of ‘Digital Darwinism’, a phrase first coined by Brian Solis who describes this as, “the evolution of consumer behavior when society and technology evolve faster than our (Brands / Companies) ability to adapt. In that sense ‘Customer Experience’ becomes the real tip of the spear, the competitive battleground and, for many, will be the difference between the evolution or extinction of their Brand.

And with that, I am now going to hand over to Volker to talk through the technology play as we see it.

 (Volker Hildebrand takes over:)

Now, let’s take a look at the technology that is supposed to help companies: CRM (now I am using the acronym to refer to CRM software). I think we can all agree that CRM has evolved over time. In its infancy in the 90’s, CRM was basically a set of tools to improve efficiency in marketing, sales, and service. The 2nd generation of CRM was the CRM Suite, which combined these tools into an integrated solution. Clearly, Tom Siebel was driving the industry in this direction, and sales, service and marketing effectiveness became a focus… but it was all about the front office. The next big thing (3rd generation) was software as a service, which didn’t really change the concept (nor did it introduce any really new functionality) but provided a different way of consuming CRM.  And then there was social CRM which clearly added another important dimension to CRM but it is still focused on the front office. It certainly helps companies to stay in the game in the world of the digital customer but is not going to help them change the game. So despite the evolution of CRM – and some breakthrough innovations such as the cloud – CRM solutions did not cover all aspects of customer experience.

Why do I believe this? Let’s follow Steve Job’s advice: “You’ve got to start with the customer experience and work back toward the technology – not the other way around”. To explain further:

For The Customer Experience Edge, we interviewed executives at hundreds of companies and many thought leaders around the world to gain insight into the phenomenon of customer experience and how successful companies transformed their business and became customer experience leaders in their industry. We found out that there are four distinct qualities that a customer values, and that companies need to focus on in order to create a differentiating customer experience:

1. Reliability: The most fundamental quality of customer experience is reliability. That goes for the quality of your products and services. If a customer can trust that your products will work as specified, will arrive on time, and that your services will meet their expectations, you’re on your way to delivering a great customer experience.  But if the shelves aren’t stocked when the promotion hits the street or if you can’t deliver on your promise the customer experience turns sour.
2. Convenience: Customers also want to know how you can make their life more convenient. They want simple and fast interactions, anytime, any-place, and on any device. They may want to order online, call to cancel a service, check promotional offers or the availability of a product on the go, tweet about a problem they are facing with your product, or they prefer the shopping experience in a store – or they want a combination of all of the above. In short: you got to be where your customers are and make their life easier.
3. Relevance: Customers want you to be relevant; they are not interested in irrelevant offers, promotional coupons after they made a purchase or any other time when they don’t need them, and they are not interested in products or services that don’t meet their needs. If you don’t understand your customers’ needs and wants – in the moment when it matters to them – you are irrelevant or, even worse,  simply annoying. Relevance is all about personalized offers at the right time and at the right place.
4. Responsiveness: Last but not least customers want you to be responsive if they have a question or any issue that needs to be resolved. They don’t want to listen to music while being put on hold in a call center and they don’t like an eight hour time window for a service technician to show up. Responsiveness is about getting their problem fixed and being used to instant gratification in our new speed-driven culture they expect this to be fast. Responsiveness is also about being agile and reacting swiftly to market dynamics – if you miss key trends that are important to your customers, it can quickly be game over.

I have to admit, this is somewhat shockingly simple, no secret wisdom. What is even more shocking, though, is this: most companies get it wrong. A recent study we conducted with Bloomberg Business Week revealed that 80% of companies want to get closer to their customers and that they rate customer experience a top strategic objective. At the same time, only 20% of the companies contacted believe that they were doing a good job. Even more significantly, only 8% of their customers think they do a good job.

 It’s obvious: those companies who deliver a better overall customer experience than others will gain a competitive advantage. As Jamie pointed out, Customer Experience has become the new competitive Battleground. The big question is: what do successful customers do differently? We believe that technology – among other factors – is playing a key role.

Let’s take a look at two examples of companies who got it right:

• CEMEX, a global cement manufacturer, realized that they cannot differentiate focusing on a highly commoditized product. Cement is cement is cement… They figured out, that, by focusing on their customers and the customer experience instead they can gain a competitive edge. Delivering cement to a construction site, let’s say - to a bridge structure, is highly time sensitive… you need to keep the cement trucks rolling very consistently so you don’t slow down the construction… So real-time visibility into the customer demand, incoming orders and order changes as well as the situation on the supply and delivery side is extremely important to consistently deliver on their promise. With their innovative SAP solution, they accomplished the objective - to provide the best customer experience in their industry, and they won the prestigious Gartner and 1to1 media CRM excellence award for it.
• Another example is COOP – one of the two largest grocery chains in Switzerland. A pioneer in e-commerce, they provided their customers - early on - with the option to buy their groceries online and have them shipped to their home or ready for pick up at a pick-up station. And they were ahead of the competition when they were the first to introduce an iPhone app (and later Android) allowing Swiss customers to order on-the-go while they commuted back home from work. But COOP was not only looking at the convenience of their customers and creating a great online or mobile shopping experience – just like CEMEX - their efforts were not limited to the front office. They made sure that their solution is tightly integrated with their SAP backend - allowing customers to specify a 30-minute time window for delivery and ensured that they can execute and deliver on their promise.

Customers like CEMEX and Coop illustrate what we have learned from many other companies who’ve  emerged as customer experience leaders. It comes down to three key success factors (that go beyond ‘traditional’ CRM):

Customer Insight: Successful companies made it a point to gain as much insight into their customers’ needs as they could. And, they put technologies and processes in place to ensure that they could act on that insight in real time. It’s the real 360° view of the customer: You’ve got to know your customers, understand their needs, anticipate their behavior, and predict the next best action. To get that view, you need tools that can track and analyze transactional data (such as purchase and interaction history), customer profile and preference data, as well as social media data – oh, and then present that view to you in a meaningful way.

One-to-one Interaction: The companies focused on delivering an extraordinary customer experience making every interaction with the customer count. Capitalizing on their customer insight, they are able to treat different customers differently. They engage and interact with customers on a one-to-one basis, with full awareness of their immanent needs, in a way and at a time when that interaction is relevant to the customer. Moreover, the technology that supports the presentation of customer insight is also ensuring that that insight is available to every person and through every channel with which the customer might engage. It’s one-to-on all the time, any time, from any location, and from any device.

Execution excellence: Companies who create better customer experiences did not do it simply by implementing a CRM system, creating a fancy web site, or encouraging their customers to “like” them on Facebook. They reviewed their operations and business processes across the entire organization and its supply chain – and they then refined their operations and processes around the needs of their customers. Only by looking at execution excellence holistically could they create an infrastructure capable of delivering it. If the shelves aren’t stocked when the promotion hits the street, if you can’t fix the customer problem because the service technician does not have the right parts available, if you cannot deliver on your promise to deliver on quality and on time… you’re doomed and your CRM efforts will not result in a positive ROI.

So, in summary, what does this all mean? Well, it means two things. Firstly, it means that the ‘traditional’ CRM technology as we (largely) know it is necessary but, secondly, is not in itself enough to achieve the sustainable competitive advantage achievable through ‘customer experience’. This does not diminish the role or importance of CRM… but rather re-positions its role in the context of the overall customer experience.

If we then accept that CRM alone is not enough we need to look at the other factors that drive the desired customer experience outcome:

Firstly let’s consider mobile. From a customer experience perspective mobility has changed the way people consume information from and interact with their friends as well as their favourite brands. Many consider mobile to be ‘the new desktop’. Indeed, for some next generation customers, they will never actually ‘know’ a desktop experience BEFORE they encounter a mobile one. That fundamentally shifts the position in how applications are developed (mobile first?) with a greater focus on ease of use and user interaction.

Secondly, social interaction & collaboration is critical, both internally and externally, so it is important that this capability is embedded within the customer experience landscape. This also opens up the opportunity for greater customer insight by combining the information gathered from customer’s social profiles with the information held in enterprise transactional systems of record. Imagine combining this in ‘real-time’ to make intelligent interventions both offer and service related. You can!

Thirdly, and increasingly, we hear from customers that the co-existence of on premise and on demand is the future. I can’t emphasize that point enough ‘co-existence’. The religious arguments of old are a rather distracting red-herring from the reality of enterprise customers desiring the flexibility to deploy ‘cloud’ based solutions leveraging their on premise infrastructure to help them achieve scale whilst at the same time securing both key, critical customer information and the intellectual property locked in their operational systems.

And last but certainly not least - Speed is key. Everything needs to be real-time; customers demand it. Insight needs to be gained at the point at which it can effectively be executed. There is no point analysing some aspects of customer behaviour and providing an offer (or resolution) 7-10 days after an event. By that time the customer has simply moved on. One criticism of traditional relational databases that underpin many CRM systems today is that they are fast becoming a relic of the past.  They cannot deal with not only the wealth of information available today, nor do they hold the ability to aggregate it in real-time, and respond, ‘in the moment’ when it matters most to the customer.

So this is not about “de-emphasizing CRM”, rather it is about redefining its role as a technology enabler of customer experience and augmenting that role with infrastructure and applications that enrich and complement the desire of companies and brands to better engage their customers. This approach is fundamental to the way SAP views the future of Customer Experience and was a guiding principle in the recent release of our SAP 360 Customer solution powered by SAP HANA.

Sincerely,

Jamie and Volker