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Data Driven

Customer Experience

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Index

Data Driven Customer Experience .......................................... 2

1 The groundwork ...................................................................... 2

2 The four-tier-model ................................................................ 4

2.1 Introduction ........................................................................ 4

2.2 Context Tier - Understand your customer .......................... 5

2.3 Contact Tier - It’s all about interaction ............................... 5

2.4 Data Tier - Collecting and using data .................................. 6

2.5 Content Tier - The base for communication ....................... 7

2.6 Automated Personalization and Machine Learning ............ 8

2.7 Model Summary ................................................................. 9

3 How do we build excellent experience ............................. 10

3.1 Situation ........................................................................... 10

3.2 Awareness ........................................................................ 10

3.3 Engagement...................................................................... 11

3.4 Performance ..................................................................... 11

3.5 Retention .......................................................................... 12

3.6 Conclusion ........................................................................ 12

4 Contacts ................................................................................... 13

5 Sources ..................................................................................... 13

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Data Driven Customer Experience First episode: The groundwork for an outstanding experiences customers will love

Innogy Consulting experienced that consistent great customer experience (CX) does make a

difference for businesses across all industries. Dealing with a homogeneous product like

electric power, CX is the competitive edge to create customer satisfaction and gain trust. We

further believe that great customer experience can easily be achieved – with the right

utilization of data.

To share our experiences with you and give you a basic understanding of how data driven

customer experience works we have started this series of white papers.

1 The groundwork

In this first article, we explain the basics of data driven customer experience – how to set up a data infrastructure with digital state-of-the-art solutions to push personalized content to the customers’ awareness.

1.1 Customer Experience: the differentiator

Customer experience is the subjective emotional perception customers gets at any

direct or indirect contact with a company. Recent statistics show that 53% of

potential consumers have scrapped a planned purchase or transaction because of

bad experience. And 74% are likely to switch brands if the purchasing process is too

difficult 1. Fewer than half of all customers these days are actually satisfied with the

provided customer experience.

A poor experience triggers customers to share their opinion with an average of 15

people. To put monetary value behind this, a total of USD 62 billion is lost by US

businesses each year related to bad customer experience. Hence, managing

customer experience is a central dimension for companies in their quest to create a

competitive edge.

CX has the potential both to propel customer satisfaction, sales, and loyalty, as well

as to build emotional friction between the user and the product or supplier.

Against this background and an increasing experience orientation in society, CX has

made its way to the executive agenda.

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Figure 1 illustrates the impact this has on basic performance KPIs. Therefore, it is

necessary to have a uniformly coordinated CX strategy across all departments

which is supported and actively promoted by Sales/Retail and After Sales.

1.2 The challenge: seamless Customer Experience

But still, companies allocate their human and financial resources for the creation of

an outstanding experience at isolated customer touchpoints. Most companies fail

to pay adequate attention to the customer experience across the full journey, i.e.

across all customer touch points on all channels – online or offline, owned or paid.

A good example is a luxurious and personalized eCommerce shopping experience,

but the downstream logistics and the unboxing experience does not meet the users

built up expectations from the web shop.

The few companies that attach great importance to a seamless good customer

experience along the journey, reap the benefits of their work by outperforming

their competitors on revenue growth rate 2.

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2 The four-tier-model 2.1 Introduction

The apparent complexity of digitizing and data driven CX leads companies to giving

up before they have even begun. We will explain a model we call the four-tier-

model that makes data driven customer experience understandable and you will

realize that it is not necessary to rebuild your data assets from scratch. First and

foremost, it is about understanding the underlying idea of data driven customer

experience.

It helps you to restructure your already existing data assets and extending your

data infrastructure with measures and tools tailored to your company performance

goals. With our four-tier-model all you need to do is solid marketing groundwork.

Let us look at each tier to better understand their task and to clarify the logical

connection with the other tiers.

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2.2 Context Tier - Understand your customer

To be more specific: the customers’ situation is divided in different phases that we

call the context tier. Depending on your business it can be three to six stages that

locate customers concerning their position in the overall customer journey all the

way from becoming aware of a product to repurchasing the same product or a

different product from the same brand.

This transformation from potential customer to repurchaser or even an influencer

can be divided into four phases - Awareness, Engagement, Performance, and

Retention.

Within the awareness phase, you are facing people who not yet know your product

in detail but are keenly interested in the category. We would call them “in the

market”.

But in order to get people's awareness, relevant content is key. In the engagement

phase, you will face potential customers that think about buying your product,

their behavior is guided by their product interest. In the performance phase, you

will find a future customer who wants to have exactly your product. In the last

phase, the retention phase, are those users who have bought from you or

recommend your offers for other reasons to other potential customers. This group

is small in relation to the entire target group, but it can have a big impact on your

success 3.

2.3 Contact Tier - It’s all about interaction

As mentioned earlier, the journey of a potential customer takes place along several

touchpoints supposed to serve certain customer needs. At each touchpoint the

customer interacts with the company. This exchange of content/ information must

be managed by the company so that the customer experience meets the

customers’ expectations or even exceeds them. Customer experience is the

subjective emotional perception customers have at any direct or indirect

touchpoint with a company.

The first tier - the context tier - describes the situation the customer is in and includes a rough breakdown of the holistic customer journey. It helps do understand the changes in customers’ expectation and behavior with an increasing involvement towards product and brand

The contact tier is dealing with touchpoints - the interfaces of a company to

potential, existing or former customers and other stakeholders.

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Indirect touchpoints are widespread throughout the phases, but more common in

the awareness and engagement phase.

Those can take the form of word-of-mouth recommendations, online and offline

advertising, or reviews and many more. With the right utilization of data and

statistical methods, indirect touchpoints should be personalized.

A direct touchpoint generally occurs in the performance and retention phase in a

personalized form since you have already made contact with the customer and

collected various data, mostly at indirect touchpoints. In the rarest case, all touch

points within a customer journey are located on a single channel (e.g web-page,

out-of-home, telephone, etc.) - an omnichannel approach is more widespread. The

goal is for different physical touchpoints as well as digital touchpoints to

complement each other in such a way that barriers are removed, and a smooth and

seamless customer journey experience is ensured.

This means a perfect harmonization of service, performance and communication

across all channels and touchpoints, matched with the customer expectations.

To optimize this match between customer expectations and the actual delivered

experience, data on the customer and his behavior is collected from all touchpoints

across all channels during his/ her journey.

2.4 Data Tier - Collecting and using data in the customer’s interest

A constant connection to the internet entails that on multiple touchpoints along

the journey customers leave a trail of data behind. This data is collected at each of

the physical or digital touchpoints. Different technologies are in place to collect,

store, and manage data. Online touchpoint data (e.g. online advertising) is

retrieved by using an Adserver. Common Ad-Server software is Google Doubleclick

or Amazons Sizmek or newer solutions such as Salesforce or Adobe DMP. A website

most likely tracks customer behavior using a Web-Analytics tool such as Google

Analytics, Webtrekk or Adobe Analytics. There are tools to monitor the interaction

of the customer and collect further data relevant for all the other touchpoints

(direct or indirect) in the customer journey.

The data-trace left behind todays always-connected customer is processed in the

data

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The high art of data driven customer experience is the interaction of all individual

data sources in a central node. This enables companies to gain a true 360° view of

their customers using individual information across all touchpoints and to avoid

data asymmetry compared to storing data in silos. This place is known as a data-

warehouse or recently marketed as a Customer Data Platform (CDP). Hence, a CDP

set-up can serve as a data tier and is the heart of our four-tier-architecture.

2.5 Content Tier - The base for communication

Behind each customer data set is a human being. In the retention stage a customer

constantly expects new positive experiences gradually personalized due to

enriched data (better customer insights) towards the fourth phase. The presented

content needs to be engaging, relevant, reliable, interesting, entertaining or

enlightening based on the customers’ expectations and can appear in the form of

text, image, video or audio to the user.

Beyond the classic example of personalized banner advertising websites, apps and

other digital user interfaces can also be personalized with the help of data and

adapted to individual user behavior and their expectations. Therefore, the choice

of the content does not only depend on the journey position of the customer

(context tier), but also on the product type. It is important to identify to which

category the offered product belongs. Is it one that you would like to have because

of its technical specifications, for example, or is it a product that you would like to

own for emotional reasons (example: lifestyle).

Figure 2

The last tier - the content tier - makes use of that data to push the most relevant

content to the customers’ awareness to encourage desired actions /behavior in

favor of the company.

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Let us take a look at an automotive retailer - Dacia vs. BMW - as a classic example

for high involvement products. Dacia customers are rather fact driven and

generally have fixed parameters that influence their purchase decision from the

outset.

A BMW customer is emotionally involved with the brand and is generally rather

willing to pay for a feeling coming from the product itself (see Figure 3). BMW plays

to this emotion with its german slogan “Freude am Fahren” (driving pleasure).

2.6 Automated Personalization and Machine Learning

A perfect example of excellent customer and user experience due to personalized

content is Netflix. When the user visits Netflix he can instantly start the movie

where he left and the recommendations for other films and series are fully

personalized. Even the “movie posters” are personalized: If you like to watch

movies with Leonardo DiCaprio the movie posters of other movies show Leonardo

DiCaprio even if he doesn’t have the main role. Because they know you are a fan of

him. Or you like action movies.

High Emotional Involvement

High Cognitive Involvement

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Then the photos of movie posters are more dramatic than the original DVD cover.

Netflix could also push the system to the extreme and adapt the overall design of

the user interfaces to the needs of the user. Elderly people would see a less

overloaded interface with larger fonts and young children would recognize

categories such as movies with animals or wizards by symbols.

Figure 4 – The image shows two resulting movie posters of pulp fiction based of your (probably) favorite actor.

Source: https://netflixtechblog.com/artwork-personalization-c589f074ad76

2.7 Model Summary

The models describe the interplay between the customers’ behavior, his actions,

the collected data and the possibilities to support the customer via personalized

content. The potential lies in the speed and quality of information sent out.

The data tier is activated by customer interaction on the contact tier and

communicates within milliseconds with the content tier to render personalized

content based on the predetermined use cases based on the context tier. The

selected content is then presented to the customer on the contact layer. Due to

the strict logical separation of the layers, personalized customer experience is done

with ease.

Still, to utilize data most efficiently, it is crucial to understand the interdependence

of data and the users’ behavior to deliver the right information at the right time.

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3 How do we build excellent experience by leveraging the four tiers

Let's take a closer look at a car purchase use case to illustrate the above theory of

the four -tier-model and bring it to life. The passenger car market is transforming

from a product oriented to a service-oriented market. Customer experience is the

central distinguishing feature to win over customers. Data is collected at various

physical and digital touchpoints in the customer journey network.

3.1 Situation

Often the decision to buy a car is caused by a change in the personal life situation.

For example, family need is rated as the top trigger in purchase decision of a car,

and is 8x more important as a trigger than better brand image 4.

Suppose our fictitious prospective customer - James - is an expectant father. He

has a precise idea that his current car is no longer the right one and therefore has a

clear interest in a new car. James also has a clear idea of how much the car may

cost and a rough idea of what equipment could do justice to the new life situation.

3.2 Awareness

Weeks before James made the decision that a new car is needed due to the new

life situation, he already informed himself online about his new role as a father on

various websites and social media, visited corresponding online shops and now

follows a few bloggers who deal with the topic. Due to the data-trace left behind

by James in form of cookies, log-in data, social media activities and more, he can be

identified as a potential customer and becomes target group relevant for various

car manufacturers.

Now, in the awareness phase, it is a data matching procedure to push relevant

content to get James’ awareness by the use of online advertising. The online

advertising campaign is the first touchpoint through which James enters into a

direct exchange with the car manufacturer.

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3.3 Engagement

This takes James directly to the landing page, which takes up the content of the

campaign and expands it to create a storytelling experience. James is registered (by

the data tier) as a new user. So James´ online behavior is measured and if a second

page view is detected new content will be presented which seamlessly

complements James' already built up knowledge. By showing personalized content

via automation, James´ customer journey can be shortened and his search effort

for new information can be reduced.

He is delighted to find the relevant information and starts to build trust in the

brand because they understand his needs. James is convinced by the offered

product and configured a car online according to his wishes. James also booked an

appointment at the local dealer for a test drive online.

3.4 Performance

The appointment with the dealer is the first physical touchpoint in James' customer

journey. By booking the appointment, James´ configuration data was shared with

the dealer. Thus, a personal customer experience based on data can also be

created at physical touchpoints.

An hour before the appointment James gets a personalized text message with

details about the appointment, the name of his contact person and the question of

what he likes to drink in the meeting. The dealer can not only prepare a personal

offer and, of course, the requested “coarse ground Ethiopian Yirgacheffe coffee”,

but also prepare in advance about delivery times and possible improvements of the

configuration.

So James doesn’t have to sit next to the dealer while he is researching all the

information for him because everything is already prepared. James is very satisfied

with the customer experience and feels well taken care of - he signs the contract.

The production status is recorded and can be accessed by James at any time via a

dashboard in the customer portal.

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3.5 Retention

Imagine, James is fully happy with his decision and also with the journey he made

with the car company. Guess who could be the first contact for equipment for the

first holidays with his small family?

Someday his colleague Marc is in the same situation. James is now the first

touchpoint in Marcs' Awareness phase. James’ journey continues and Marcs'

journey starts.

3.6 Conclusion

The model gives you a good first impression of the areas you need to look at to

create a seamless, data-driven CX. It is all about understanding the situations in

which your customers use your products and services, to know all touchpoints the

user could get in touch with you and to gather and analyze data to give your

customer the perfect content when needed.

A great Data Driven Customer Experience makes a difference for businesses across

all industries and helps to move ahead in your industry. The first steps to create a

great customer experience are easy to take – with the right utilization of data and

the right mix of technologies depending on your specific needs.

We want to share our experiences with you – not only in designing and

implementing outstanding customer experience measures, but also in

implementing and operating data management platforms and creating valuable

customer insights from the gathered data.

Let’s talk about your experiences and goals. Get in touch and let us know how we

could create a perfectly fitted CX with you.

We hope you have gained new insights through this whitepaper. The next part of

this whitepaper series will focus on solutions to better understand the customer.

We look forward to receiving your feedback: Did you like the document? What

questions do you have about Customer Experience? Do you have any specific CX

issues we can help you with? Please feel free to contact us.

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4 Contacts

Please write us a mail via competences@innogy.com to get in touch with Max Deitmer or

Daniel Sochaczewski.

Max Deitmer Daniel Sochaczewski

Partner Digital Associate Partner

5 Sources

1 https://www.salesforce.com/blog/2016/10/state-of-connected-customer-2016.html

2 Rawson, A., Duncan, E. and Jones, C., 2013. The truth about customer experience.

Harvard Business Review, 91(9), pp.90-98.

3 https://www.more-fire.com/ueber-uns/see-think-do-care/

4 Deloitte, K., and Tiwar, A. 2014. “Deloitte. Driving through the consumer’s mind: Steps

in the buying process,” Deloitte Touch India (available at

http://www2.deloitte.com/content/dam/Deloitte/in/Documents/manufacturing/in-

mfg-dtcm- steps-in-the-buying-process-noexp.pdf).

Editors: Konrad Barkhoff, Nathanael Stoll, Daniel Sochaczewski, Max Deitmer