Who Are Your Most Profitable Customers?
How would you answer the question above? The majority of businesses and digital pundits would likely say it’s their digitally savvy customers. Why? Because many organizations carry an unconscious bias about digitally savvy segments due to the lower cost required to serve them, and the greater opportunity to woo them through personalized content and tailored services.
It’s a rational thought process, but it has led many to overinvest in digital experiences and channels without maximizing the bottom line, since digitally savvy customers are not the most profitable customers for most of the industries we studied—not by a long shot.
Accenture Strategy’s latest Global Consumer Pulse Research (in its 11th year) suggests that the most profitable ones are actually the multichannel “experimental” customers. They don’t want pure digital interactions; they want experiences that deliver the results they seek using unpredictable combinations of digital and traditional channels.
Nearly half (48 percent) of U.S. consumers are comfortable crossing back and forth between multiple channels, even within a single interaction. Another 83 percent prefer dealing with human beings over digital channels when getting advice or resolving customer service issues, underlining the continuing importance of human interaction.
Organizations that have pushed their digital capabilities to the brink but abandoned the human element in customer service risk losing their most profitable customers, and not getting them back. The research confirms that consumers with the highest rates of profitability are multichannel customers, and this trend holds true across many industries and geographies:
• In the retail industry, customers who engage with companies through a variety of channels drive three times the volume of sales and more than twice the margin of store-only customers.
• Among U.K. banks, customers who interact via multiple channels buy one and a half times more products than digital-only customers. And because the extra products they buy tend to be of a higher value, those purchases can significantly impact margin growth.
• Globally, customers who engage with their providers via multiple channels are 15 percent more likely than digital-only customers to serve as advocates for those providers.
This is not to suggest that investing in digital is a mistake—quite the opposite, given a decade’s worth of customer research showing a seemingly insatiable appetite for digital capabilities. Digital is a vital component of a company’s go-to-market strategy, but it is just one component.
When companies overinvest in digital front-office capabilities—or, conversely, underinvest in traditional capabilities—they fail to deliver the optimal channel mix that customers demand and deserve. Transitioning to a more balanced approach will involve these steps:
Apply new insights. Companies have access to more consumer data than ever before. Yet, many aren’t able to connect the pathways across channels and tie the behavior to profitability measurements. By observing consumers’ behavior within and across channels and applying new analytical capabilities to examine the data trail they leave behind, companies can generate entirely new insights about who their customers are, the types of interactions customers want to have, and the economic impact to the company on not meeting their needs.
Address negative experiences head-on. Armed with insights about consumer behavior, companies will be better positioned to not only offer seamless, cross-channel experiences that drive profitable growth, but also eliminate the toxic experiences that push customers away. Addressing negative experiences head-on can have a significant impact on profitability. Companies should leverage analytics to identify, isolate, and remediate the root causes of negative incidents.
Build outcome-focused organizational capabilities. A change in how your business is organized and structured might be necessary to drive better end-to-end outcomes. As always, ensuring the customer is at the heart of everything you do will influence any organizational rethink. Doing so will make profitable customer engagement exceptionally easier.
Leading organizations are embracing the view that digital capabilities are just one facet of a great customer experience. Profitability is not bound by a particular channel. It resides in the digital/physical blur. Successful companies find, and nurture, the most profitable combinations by optimizing their investments across channels, while simultaneously delivering the outcomes that their customers demand.
Robert Wollan is the senior managing director, advanced customer strategy, at Accenture Strategy.