Drive Differentiation Through Your Ecosystem

Global outsourcing, cloud-based computing, proliferating digital channels, and social media are all disrupting traditional forms of competitive advantage. In response, many companies are turning to customer experience to gain an edge. But to deliver exceptional experiences, firms must realign their customer experience ecosystems—the complex interdependent relationships between employees, partners, policies, processes, and technologies. Nokia CEO Stephen Elop captured the importance of this idea when he said, "Our competitors aren't taking our market share with devices; they are taking [it] with an entire ecosystem."

Narrow approaches only go so far.

Only 8 percent of companies succeed at delivering an excellent customer experience. That's because they fail to understand and orchestrate the complex system that delivers value to customers. Companies that overlook this broad ecosystem are making several major mistakes.

They treat the symptoms but don't cure the disease. Firms that respond to a rise in complaints by adding contact centers or training agents to be friendlier miss the point: Customers don't want to call at all. The root causes of experience flaws often can be traced to people, processes, and technology deep within the organization—or with contracted third parties. Failed software installations at Charter Communications looked like a technology problem, but actually stemmed from internal compensation and legal policies.

They fail to meet business objectives. When each division in a firm has its own marketing agenda and sales strategy, the effects go beyond wasting money on duplicated efforts. Companies are also overlooking opportunities to profit by serving their customers' larger goals. Financial institution USAA realized that by focusing narrowly on products like insurance and loans, they were missing customers' real objectives: to find, buy, and insure a new house or car. USAA neglected opportunities to serve its members by selling them multiple products that, taken together, solved their big picture challenges.

They ignore the impact of partners. Firms that overlook the role of partners do it at their own peril. When a major chemical manufacturer noticed an uptick in pricing complaints, it found that distributors were targeting the wrong prospects—people who would be better served by off-the-shelf chemicals. This wasted resources, affected distributor profitability, and risked creating a negative reputation for prospects in target markets.

The Value of a Healthy Ecosystem

Healthy customer experience ecosystems create value for all involved. Firms must engage all the parties involved by doing the following:

Encourage employees to meet business and personal objectives. Large companies employ hundreds or thousands of workers, all with their own goals. Top executives might seek higher levels of productivity to drive revenue growth and profitability, while their employees might want to balance work and life by working less hours. Firms need to understand that the employee experience correlates to the customer experience and should engage employees in creating the shifts that need to happen company-wide.

Encourage partners to drive results for their organizations too. Partner organizations have their own objectives and targets. Partners that work in plain sight of customers—resellers, agents, dealerships, distributors—will seek to optimize their own customer experiences, which might not align with those of the companies they represent. Behind-the-scenes players, such as technology vendors and service technicians, might focus on contractual targets—billable hours or uptime—without understanding how those metrics affect their customers' customers. Firms need to engage partners in delivering value to customers.

Encourage customers to create experiences that meet their needs, are easy, and are enjoyable. In return for their time and money, customers demand real value. In return for their loyalty and advocacy, customers require firms to be easy to work with. As digitally driven services eclipse the product itself, customers' interactions determine the quality of other customers' experiences. Firms need to engage customers as a critical part of the ecosystem that delivers an intended value proposition.

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Paul Hagen is a principal analyst at Forrester Research, serving customer experience professionals.

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