Proactive strategies to avoid Start-up failure.

 

Millions of start-ups begin their operations every year in the world, but only 10% survive beyond 10 years and a very very few i.e. @1% reach the unicorn level. Since entrepreneurs are trying out new and unique ideas, something which is new to customer, something which can change the business perspective; a high failure rate is expected. However, 90% failure rate looks very high and signifies higher risks in investing in start-ups. If we are able to reduce it even by few % points, it will benefit the customers, industry and investors to a great extent. The additional money available with investors can trigger a new boom.

When we look at the key reasons for failure, they can be categorized into 4 buckets

1   Product / Customer mapping (40-50%), which covers all the transformational aspects the product is going bring to customers life. It could be features, cost, delivery mechanism, when/how it is going to be launched, how they are positioned/marketed, what is the competition, how it is better for customer than its competition, if it is pathbreaking, then what are its unique benefits to customer, what is going to change for customer after using the product, what is the ultimate value customer is expected to get from the product, etc. These all relate to failure in understanding the needs of customer and/or failure to address them through the product. Sometimes, the customer needs evolve over a period of time and product fails to catch up with appropriate changes resulting in failure of capturing customer wallet share.   

2   Financial challenges (25-35%), which cover lack of funding, high cost, low volumes, low margins, cashflow issues etc. Poor cashflow management creates significant challenges to operate and grow.  

3   People / Relationship related challenges (15-20%), which covers non availability of skilled team, poor leadership, poor HR practices, poor relations with investors, leadership getting distracted, lack of agility to adopt to changes, etc. This stifles the organization and fails to generate the enthusiasm as well as focus required in the early stage of the life cycle. 

4   Others (10-20%) which include Technology related issues, Operational challenges, Legal Challenges etc.

As you can see, the biggest bucket relates to customers and their needs being satisfied by the product, which also presents biggest opportunity to improve the success percentage. I am going to discuss a framework which can help start-up entrepreneurs and their team understand customer better, validate their needs better and determine whether the product they have in mind is viable or not early in the game. This will result in creating a product which is better aligned with customer needs, raising its chances of success. This framework is called as Differentiated Needs Pyramid. It uses a principle that “customer has multiple needs from a product / service and every need fulfilled by a product gives different level of satisfaction / experience, and customer makes a decision based on aggregate satisfaction score”. Certain needs once satisfied give overwhelming experience where as certain needs do not move the needle for customer experience upon satisfaction. The game is to identify these needs and satisfy the needs which give higher level of experience. This helps creating a good bond between product and customer increasing its chances of success.

Let us dive a little deeper in to the framework and how it could be used by start-ups.

Differentiated Needs Pyramid, the framework

Differentiated Needs Pyramid provides a way for logical segregation of needs based on the impact they create on customer satisfaction / experience resulting into a specific buying behavior. The following picture illustrates the 5 levels of needs for a product which is going to be launched by a start-up. The needs are stacked in a manner to provide ascending level of satisfaction. Needs at level 1, when fulfilled, provides lower level of satisfaction than those at level 4.

The first level covers customer needs such as basic features / capabilities that a product should have; without which they will not look at it. Also, one needs to look at how these features / capabilities compare with competing products available to the customer.

Once basic needs are satisfied regarding features / capabilities, customer needs to understand how secure they are or how / where they are made available or how data is handled etc. customers will have specific needs in this area so unless these are addressed, product is not aligned with customer.

The needs at first two levels are simple and easy to identify; most of the competing products will have them. They become table stakes rather than becoming a factor determining alignment & purchase decision. So, the product being launched must have a way to satisfy these. The next two levels i.e. Level 3 and Level 4 are the key levels which drive the decision making for customer.

The third level will address the customers needs to feel connected or be part of some community; The needs to feel life simplified or enhanced; the need to feel camaraderie with like minded people; the need to feel like family taking care of each other etc. e.g. If your product has a feature which enables a transaction in a single click instead of many complicated steps with data entries etc., you have addressed one need of making life simple. The product customer alignment is a bit stronger now and can influence the purchase decision.

Forth level talks about the needs of customer to feel elated or free or strong or proud about something. Do you know what your customer would like to feel proud about and is your product satisfying this need in some form? E.g. If customer has a need to feel unique amongst his peers, if your product can satisfy his need somehow, then you are taking your customer on a high, elevating product customer alignment to significantly which should result in purchase decision.

Fifth level is ultimate, which means your product satisfies all the needs that customer may have from such kind of product and he does not have to look anywhere else. This is an ultimate state and normally not achieved.

How to use this framework?

There are four simple steps that the start-up should take so that they can achieve a better alignment of their product with their customers. These are, Create consolidated list of needs, Level wise segregation of needs, Map features v/s needs and identify gaps and Create an action plan.

a.      Create a consolidated list of needs

First step is to list down all the needs that customers can have from this product. They can talk with potential customers, read journals, study competitor products and their customers to see if you can find some needs that the products are not satisfying. Each feature could be a need, some customer fears could translate in to needs, some social media discussions can provide indication about needs, some industry/technology challenge can suggest a few needs. All these needs are consolidated in to a list. It is critical to identify the needs by grouping the customers in to specific groups/segments who are likely to behave in similar manner with respect to product consumption. If there are diverse groups, then create the specific lists for each group.

b.     Level wise segregation of Needs

Each need is then analyzed to determine the level it belongs to. A simple feature in the product could be part of level 1 needs, where as a simplified process (e.g. one click operation discussed in earlier paragraph) could be a level 3 need. At the end of this step, we have level wise list of needs of customer from our product.

c.      Map product features / capabilities with the needs and Identify Gaps

In this step, you map your features / capabilities in the product with needs. Identify which needs are getting fully satisfied with your product features, which are getting partly satisfied and which are not getting satisfied. At the end of this step, you have a level wise list of needs with understanding of degree of satisfaction at each level and gaps that needs to be filled.  This mapping portrays a clear picture about alignment between product and customer.

d.     Create action plan

If the alignment between product and customer is tight, you can go ahead and move forward with the product. If there are gaps, then a determination needs to be made about can we fulfill these gaps through additional feature / capabilities? If yes, then include these feature / capabilities in product spec and run the mapping again to confirm. If gaps can not be fulfilled through any feature / capability, the product most likely will not be liked by customers and may be dropped.

How to use this framework in the start-up lifecycle

To be a successful product, a start-up must apply the Differentiated Needs Pyramid framework throughout its lifecycle. Its application at every stage provides a clear picture of how the product-customer alignment is progressing and increases the confidence of success in the end. It also provides a clear idea of challenges product may face early in the lifecycle and enables mid-course correction. The results of the framework application can also create a Go-NoGo decision point early in the game to safeguard the investment.  

a.      Ideation

A start-up starts with an idea of doing something differently / efficiently, or building something new, or bringing in some new technology to transform certain processes / functions etc. Typically, it starts with one core need of the customer that needs to be fulfilled. Once the Idea gets groomed, features get added, clarity regarding customer base appears. Once the feature bundle reaches basic comfort level, it is time to build the first Differentiated Needs Pyramid and perform gap analysis. This exercise will certainly provide more clarity on “target customer” as well as “features in the product”. After a couple of rounds of adjusting the features, MVP definition could be completed with clear understanding of what goes in MVP and What goes in the final products with all the bells and whistles.

b.     MVP

After MVP is prepared and checked with select users, we come to know how the product is actually performing; is it really satisfying all the needs as it is supposed to? This is another stage where the Differentiated Needs Pyramid is reviewed and Gap analysis is made. Some actions might come out of this analysis, which can enhance the product further

There is a chance that customer needs might change while the product is being built due to some factors like introduction of new technology, new product launched by competition, changes in some regulations etc. These also needs to be captured while reviewing the Differentiated Needs Pyramid and Gap analysis and addressed appropriately.

c.      Launch

Once these fixes are completed, product is launched and real customers start using the product. Hopefully, we have understood the customer needs well and build the products catering to these so we expect a good acceptance from customer. This is the time where we review the Differentiated Needs Pyramid based on customer feedback and create another Gap document which can help building next releases of the product.

d.     Scale Up

The product is successful in a first customer segment and we are now ready to scale up to include wider customer base and geographies. This is another point where Differentiated Needs Pyramid needs to be redrawn. We might be scaling the product to different customer segments based on culture, geographies, countries, languages, income strata, etc. The Differentiated Needs Pyramid should be drawn separately for each segment as the needs from each segment might be different. We will get the gaps for each segment and an idea what needs to be done with product before it goes big.

e.      Continue the relevance in long term

Once the product is successful in wider customer base, it is a good practice to review the Differentiated Needs Pyramid every six months to incorporate the changes in the business environment, competitive scenario, and other changes. This will help the start-up in keeping the product relevant to its customer and this alignment will drive its success on the demand front.

Detailed explanation about Differentiated Needs Pyramid, its construction and usage are available in my book “Customer Experience Decoded” available on Amazon https://www.amazon.com/dp/8195052657. You can always reach out to me for any discussion you may want to have about your specific situation.

Classic Investment Dilemma – Conversational AI vs Generative AI vs Agentic AI? Approach for resolution using Differentiated Needs Pyramid.

This is the year of AI; where we see discussion about AI in every forum, from World Economic Forum, to every Technology company, to every Government, to Environmental bodies, to NGOs, to Industrial bodies and to individuals like you and me. AI is touching every one’s life and have a broad spectrum of feelings about it. Some are excited to the brim and some are frightened to the core; others fall in between. The discussions hover around topics like Benefits that AI can bring-in in terms of efficiency & effectiveness, challenges in terms of misuse, regulations that might be required, environmental impact of the energy usage, Data privacy and Copyright protection, Job loss and job creation, new strategies for business and war, realignment of human life, etc. AI has potential to disrupt everyone’s life; everyone is trying to realign and cope up with the change. This paranoia is justified to an extent as we have just seen the tip of iceberg. We have seen what technology is capable of in the laboratories and there is a lot of speculation on what is its full potential. So far three themes have emerged for industry to use i.e. Conversational AI, Generative AI and Agentic AI, where the technology has been productized for specific business scenarios. Significant experimentation is underway to test them and get the advantage as an early adopter. Multiple options are available for companies and they have to make a right choice to get the best ROI. One of the major challenges with this new technology is the investment required, even for prototyping or building a POC. Companies are in dilemma of where to invest and looking for help in making this decision. Since the technology is new, results at scale are unknown. ROI calculations do not give correct results as they are based on assumptions of unknown. Organizations are seeking additional validation, which looks at this situation differently and helps making the investment decision. I am going to talk about one such approach using Differentiate Needs Pyramid in this article which can help organizations in their decision-making process.

Let us quickly look at what is Conversational AI, Generative AI and Agentic AI.

Conversational AI is a type of artificial intelligence that allows computers to simulate human conversations. It uses natural language processing to understand and process human language. It can help machines interact with humans in a more natural way by simulating human conversations like Chatbots, Virtual assistants

Generative AI is a type of AI that can create new content like text, images, and videos. It uses large AI models, called foundation models, to learn from existing data and generate new data with similar characteristics. It can create conversations, stories, images, videos, and music. It can learn human language, programming languages, art, chemistry, biology, or any complex subject matter. It can help streamline the workflow of creatives, engineers, researchers, and scientists. e.g ChatGPT, DeepSeek

Agentic AI is a type of artificial intelligence, that can act autonomously to achieve goals. It's designed to interpret context, make decisions, and take actions with minimal human intervention. It understands the context of a problem and the user's goals. It uses machine learning, natural language processing, and automation technologies to make decisions. It can adapt to new information and changing circumstances. It can learn and improve through each interaction. It is like creating a autonomous co-worker.

Let us take an example of most popular playground for implementation of AI i.e. Service Desk. There are multiple products and use case scenarios covering Conversational AI, Agentic AI as well as Generative AI. Let us assume that a company wants to introduce AI in its service deck operations for Claims processing. The objective is to provide a better customer experience as well as reduce the cost of operations in long run. Now we will assess the situation using Differentiated Needs Pyramid. Let us first draw Differentiated Needs Pyramid for the Service Desk Service with two customer groups in mind i.e. Customer who is raising the claim and second, Management, which is internal customer. Leader of Service Desk operations is trying to improve experience for both set of customers from the operations by implementation of AI. The picture blow showcases what are the needs at different levels for each customer group. The customer experience improves as the needs at higher levels are satisfied.

Organization would have identified multiple use cases to be implemented so that collectively they give the required boost in customer experience as well as bottom line desired by management. We now need to look at all the use cases and test their impacts on each of the needs.  If the impact is positive, customer is happier with implementation of that use case. This is a “thumbs-up” for implementation from that customer segment. If the need is not going to get satisfied, then customer is going to struggle and unhappy. This is “thumbs-down” for implementation, unless use case is tweaked to satisfy the specific customer need or additional investment done for training.

Let us assume that for this organization, two needs “Immediate availability of agent- Level 1 need” and “Agent helps through the entire process – Level 3 need” are not satisfied for customer. To address this, organization wants to implement a simple use case for “Initial conversation with customer and providing him the status of the claim along with some information” as a part of conversational AI implementation program. The ROI calculations look favorable and need additional validation that ROI calculations will materialize. We now need to assess the impact of implementing each step /action in the use case on  the level of need satisfaction/ customer experience improvement. If we get positive results, the customer will support this initiative and it will be a success.  

The high-level steps could be as follows

1. Customer Calls to understand status of a claim and what needs to be done to expedite the same
2. Within 3 rings, Conversational AI bot picks up the call (This is a big positive with respect to needs satisfaction, if the conversation moves smoothly, customers will be happy to adopt)
3. Bot welcomes customer and asks reason for call
4. Customer tells the reason in his own style
5. Bot deciphers customer answer and replays its understanding to customer
6. Bot keeps on asking differently until its understanding matches with customer (There is a rule set up that if the understanding does not match within 3-4 tries, the call will move to human agent queue – This rule is applicable for every conversation) (if bot is able to understand the conversation, this is very positive. The % of time, bot needs to hand over the call to human agent queue will determine the success. Higher the % lower is the satisfaction. This also tells that model will need more training to be successful, i.e. more investment for the organization)  
7. Once the understanding is correct, bot asks specific questions (specific to a situation understood through earlier conversation) to get identity of customer and fetch the record. 
8. Customer provides the information
9. Bot will try multiple options if the primary option is not available with customer during the conversation. This conversation to continue till bot gets the information to fetch the record from the system
10. Bot shares another parameter fetched from the system with customer to reconfirm the identity.  
11. Customer confirms and conversation moves to the next step
12. Bot provides the status of the claim to customer e.g. it is pending for xyz approval
13. Customer asks how this process could be expedited, (or any similar question)
14. Bot again performs the routine about matching its understanding with customer and once match is achieved, provides an answer e.g. they want some additional information from customer (Success here depends on training for open ended questions. Higher the training, better results – overall customer satisfaction depends on completing the transaction in one channel i.e. through bot or through agent. If they need to shift, the waiting increases, resulting in dissatisfaction and reluctance for usage)
15. Customer provides that information
16. Bot records this information in to the system and confirms new date for approval
17. Customer thanks bot
18. Bot asks if there is anything else that customer needs
19. Customer says that he is looking for information on an unrelated topic
20. Bot again confirms the understanding and directs him to either another bot or a human agent for taking it forward.

Similar assessment could be done with needs of other customer segment i.e. Internal Customer- Management to see the impact

We need to look at all the use cases under consideration using differentiated needs pyramid to identify impact on the customer experience. This feedback is then combined with the ROI calculations regarding investments, savings, productivity gains etc. can provide correct picture of what will work and what will not. We consider volume reduction as one of the parameters for considering savings, this reduction will occur only if the “Complete” transaction is executed by bot. If bot has to transfer the call to human agent, volume reduction calculations go wrong and ROI is not materialized. Thus ROI calculations supported by Assessment through Differentiated Needs Pyramid gives confidence to organization to go ahead with AI initiative.

Detailed explanation about Differentiated Needs Pyramid, its construction and usage are available in my book “Customer Experience Decoded” available on Amazon https://www.amazon.com/dp/8195052657. You can always reach out to me for any discussion you may want to have about your specific situation.

Measure Customer Experience ON THE GO - Concept, Model and Example

 

Every organization is trying to capture the frontier of customer experience and making strides in various directions. New technology, tools and their applications are being summoned in unique manner for it. Secret algorithms are being built to decipher the data available in the universe intelligently and use it proactively to create the differentiated experience for the customer. Everything with a hope that customer will get hooked to this good experience and demand it again and again.  

In this endeavor, the most critical part is to measure where does a company stand with respect to customer experience provided to a specific customer or a group of customers and if this experience is changing in positively or otherwise. Multiple ways are being used by companies to tackle this puzzle and we have seen some of the approaches in my earlier blogs

https://personalandprofessionalexcellence.blogspot.com/2019/11/customer-experience-measurement-stand.html,

https://personalandprofessionalexcellence.blogspot.com/2019/11/customer-experience-measurement-direct.html

https://personalandprofessionalexcellence.blogspot.com/2019/12/customer-experience-measurement-past.html

Today, I am going to present a model, which when implemented by an organization allows it to measure the Customer Experience and its movements on a continuous basis. We can call it CX ON THE GO. I am sharing the Concept, Model, and an Example here for easy understanding.

Concept:

Whenever we interact with a customer, it could be IT department with Business Users or it could be Sales Person with Customer (B2B or B2C scenario) or it could be HR department with Employees; every interaction provides some kind of experience to customer. This gets refined through subsequent interactions in +ve or -ve direction with every interaction. If the individual customers from the customer organization interact with each other e.g. sourcing manager, technical manager, finance manager in an organization, the experience gets a further tweak. This is a continuous process. At the time of decision regarding award of a contract or purchase of a product, the customer experience level at that time plays a significant role.

If we build a mechanism to create a base line for customer experience and then measure its movement based on every interaction, we would be in a position to create mitigation measures in case of adverse trend and can avoid surprises at the end.

For successful results, the mechanism should be easy to use as well as applicable to multiple industries and situations. It should not create any burden on customer as well as provider e.g. surveys, where participation is low, participation may not represent the population, is influenced by the recent developments, and require significant follow up. Finally, it should not be expensive to implement. The model presented in the next section has all these characteristics and can provide a great insight in the Customer experience and its movements on the go.

The Model

In my model, I have used “Customer Meetings” as a focal point. Customer meetings are the key drivers for creating experience. They act as a mirror to observe what experience has been provided during this meeting as well as how it is trending from past interactions. In most of B2B scenarios, interactions happen with customer at multiple levels.  Each meeting has a stated objective like periodic status review, new idea/product discussions, business review, etc. The product / service providers always look to improve the experience they provide to customer so that they get a chance to sell extended range of products or services. The Service provider uses multiple tricks to assess if customer wants to engage in areas beyond and understand the pulse from reactions customer provides during the meetings. If we capture this interaction and aggregate across multiple meetings, we will be able to see the movement of customer experience after every meeting. This data can be analyzed at multiple levels in customer hierarchy or Product /service category or time line to understand the composition of customer experience we are providing to our customer.  

The model works with a points system for recording various observations in the meeting. If we achieve the stated objective of the meeting well, then we give Zero points. This is the base line for customer experience which denotes that we are doing stated work as required. Then we identify other things that can happen during the meeting e.g. Customer was unhappy for something, then we give a -1 point indicating experience has deteriorated to some extent. If customer is very happy about something and hints that he is open to give more work or buy more products, this indicates an improvement of experience customer is getting from us and thus we give +1 points. With this concept in mind, we create a complete table of possibilities and their impacts and use it for assessing all the meetings. Some of the impacts could be higher e.g. Customer awards new work or places an order then the impact could be rated at +2 or customer takes away some work from us or returns some products then the impact could be -3. We observe the meeting and fill in the list with observation and net score is calculated. If the score is +ve, we have improved from the base expectation and vice versa if it is -ve.

We then look at what was our score at previous meeting and can compare if we are doing better or worse. We can plot a trend after every meeting to give us an idea of direction which we are taking and possible direction and implications in the future.

We can also take an average of multiple meetings with multiple stakeholders of customer and look at overall picture or compare the results at a certain group level to give us understanding of experience level within different organization units of customer or different levels within customer organization.

Every organization has to prepare this template of possible situations in the meeting and then the teams have to just populate it after every meeting and get the customer experience level on the go. No additional survey, no additional work, no follow up and process can be automated to get the analysis at various levels as soon as an entry is made after every meeting (This could be part of debriefing session, which is part of regular process at most of the organizations).

The example in the next section provides clear idea on how to create the template for each organization and use it.    

Example:

Let us consider an IT Service provider providing services to a Customer. (we can replace IT service provider by IT department of an organization and Customer by Business users). Let us assume that IT service provider is supporting customer in supply chain area for a long time through ERP and digital initiatives. Customer is very happy and willing to give more work. IT service provider also has started a project in Finance area which they got through recommendation from Supply chain leadership. This is not going as well as the other project and IT service provider struggled in the beginning. IT service provider is also trying to get into Infrastructure/cloud area through an RFP and wanted to understand what the temperature at customer end is and how it is going to influence result of the RFP.

As a mature organization, they have a good cadence of formal and informal meetings like weekly meetings at various project level, monthly meetings as well as quarterly reviews. Typically, Delivery teams attend weekly meetings and Sales team joins them for monthly and quarterly meetings. Various leaders join from both organizations as appropriate. Sales team and Client Executive have several other meetings related to new opportunities and offerings etc. IT service provider is completely focused on growing this account multifold and are looking for all the help they may get.

The IT service provider decided to use the model described in the earlier section to see how they are doing with respect to Customer experience on an ongoing basis.

First and foremost thing of the model is to create a points template which could be used to record the meeting proceedings. They identified various situations / conversations that can occur during the meeting and what it meant in the context of customer experience. They also identified the degree of impact that each one would have. Then allocated points for each situation. The table shows the template which was created. E.g. There might be an escalation in the project and discussion around the same in the meeting. There is a possibility that escalation would be discussed along with other things or there could be discussion only on escalation. This depicts gravity of escalation, greater time devoted means higher impact on the customer experience. Keeping this in mind, the points are assigned. This template was prepared and filled in by the company after every meeting to see what the score is.

The table below provides an illustration of how this template was used for Project 1, in Supply Chain area. 

One column was filled in after every meeting. Similarly, the template was completed for the second project. These when plotted on the graph provide us clear indication of the trend for customer experience.

The blue line in the graph indicates the movement for Project 1. The graph is above the base line which means we are providing better customer experience and it is improving. Whereas the second project which started on rough patch created heart burn with customer and it reflected in the graph which started in the -ve zone (Red Line). The team has worked well and over a period of 4-5 weeks the situation seemed to have improved. The Gray line represents overall picture combining the experiences provided by both the projects. This overall picture is critical to understand where the wind is blowing.

The second Graph provides us trend based on monthly meetings. Monthly meetings are attended by wider and senior audience.

It can provide a lot of insight into the perception at leadership level. Many a times a single challenging project does not really have impact on overall CX, which seems to be a case here. But sometimes a challenge in critical project can create significant dip. This reflects clearly in the monthly meetings. When we compare weekly and monthly trends, we can make out what is in the mind of customer.

The example given is a simple example with two projects. Many a times, there are large number of projects and each one will have its own impact on overall customer experience that customer carries for services provided to them. This tool helps in understanding these impacts as and when they happen. Automation of analysis can provide the dashboard to leadership in terms of how the customer experience is trending in real time

This process could be further enriched by including meetings other than project meetings like sales meetings, idea presentation meetings to get a broader perspective of the CX that customer is having from services provided.

Summary

The model presented here uses customer meetings as a central point to understand customer experience level. The points template is a powerful tool to gather the information. It looks and is very simple to understand and implement. Once the information is gathered from every customer meeting, various techniques could be used to assess Customer experience and its trends from multiple view points as well as build intelligence in to it.

Customer Experience Life cycle – Is it still valid in Covid-19 era and beyond?

We have seen in earlier blogs that Customer Experience depicts characteristics of a new product and has a lifecycle similar to a product lifecycle.

Just to recap quickly; It has four stages,

·       Introduction,

·       Growth,

·       Maturity and

·       Decline.

During Introduction phase, a new CX initiative is implemented by an organization which starts getting noticed by customers through the experience they get during various transactions with the company. During this stage, the pace of receiving new customer experience is slow and sporadic. People start talking about this new experience in person as well as on social media and the rate at which customer throng to get this experience increases significantly. Advertisement by the company about the change also helps picking up the rate. This is the growth phase. This hype creates a pull for new customers to try out new experience and presents significant potential for the company to acquire these customers and retain them for long term. More customers connect with company, do more and more transactions and provide a positive impact on the overall revenue as well as revenue per customer. When the initial euphoria of new experience is over, the customers start expecting this experience to be available every time. This results in slowing down speed of adding new customers and transaction volume remaining steady. We are now in Maturity phase. This phase also keeps customer experience more or less at same level. This phase also faces a challenge in terms of competition trying to start initiatives to give same or better experience. The customers are in two minds but most of them continue. However, some of the customers start building a customer experience fatigue i.e., the experience, which thrilled them some time ago does not excite them anymore and they start looking for something better, something different. They then start losing interest and try out a different experience offered by competitors and company start losing customers along with the revenue. The decline begins. If company does not take any action, the decline continues, resulting in loosing customers and revenue.

In this blog we are going to examine if this cycle works in abnormal situations like COVID-19. We will also extrapolate if it will work, and if it works how it will manifest, in post COVID-19 scenario as well.

Let us take example of grocery shopping and its evolution from perspective of consumer and seller. When COVID-19 started spreading like wildfire and fatalities started mounting, entire population was gripped with panic without knowing what to do. Everyone wanted to be safe from getting infected. So experience of “Safety” was paramount in the minds of customer which moved them in hordes to sellers who were providing them this experience i.e. “Home Delivery”. The customers were ready to pay additional money to get the experience they desired. They let go their brand choices, which they were particular about in the pre-COVID-19 scenario, for the sake of safety. Looking at the significant shift (growth in volumes) due to Home Delivery, most of the companies launched Home Delivery option and provided “safety” option to customer. Customer now had choice of sellers who can provide him his needs and in safe manner. Now the brand choices started coming back and customer started splitting the orders so that they get the products of their choice. This resulted in reducing in volume for some. To enhance this experience, few more variants came in to play like Free Delivery, Same-day delivery. This intervention compelled a few more customers who were apprehensive of Delivery charges as well as who wanted specific item urgently; and volumes started increasing for a few sellers. Some other sellers started giving another experience of “Curb Side Pickup” which is safe and from your neighborhood stores, your loyalty points counted, you get the products you are used to and care you were used to. This initiative also shifted the loyal customer base back to the stores and with development of “Same-day pick up” or “2-Hour pick up” it was almost like old times. Now the situation is most of the grocery sellers have all the services like Free home delivery, Curbside pick up etc. and every one can provide the same experience to customer. These things have become a norm and customer expects the same with every seller. There was one thing to which customer had turned a little blind eye in the quest for their need of “Safety” which was price, they were paying some additional money for every product, although it was few cents per product, but total bill was higher; there was almost no SALE or MARKDOWN on prices anymore. Customers were OK with this with an expectation that COVID-19 is an aberration for a few months and things will be back, which unfortunately has not come true. We have completed almost a year in this situation and with no clear end in sight. We have also observed that consumption of store brands increased as compared to national brands due to availability and cost considerations. Now all the sellers are almost on equal footing as they were prior to pandemic (with some exceptions), the original differentiation has started playing again and some of the Grocery chains have started price reductions to attract the customers and other old tricks.

If we observe all these happenings in last one year, we can see the Customer Experience life cycle in full play. As a seller creates intervention for satisfying the customer need of “Safety” and give a great experience to him, the seller saw a jump in customer base and volumes (Introduction).

Social media played a significant role in terms of spreading the word about the facilities provided by a seller to bring in more and more customers to its fold (Growth). Observing this trend, the competitors jump on the bandwagon and create similar initiatives, customers have a choice, and they start experimenting (Mature). Some customers get used to the earlier experiences and like newer experience provided by competition or want to go back to their favorite seller and start moving away. To address this CX fatigue, the seller launches another initiative (Same Day Curb Side pickup) to take experience to another level. The cycle continues.   

This manifestation of gives us a glimpse of what to come in future after the population at large gets grasp on the COVID-19. We can easily extrapolate how the CX cycle will play out. During the COVID-19 pandemic grocery chains rolled out a slew of initiatives in the areas of Home delivery, Curb Side pick-up, Safer stores etc. in their unique way. By the time we get an upper hand over COVID-19, these initiatives would become part of basic services any grocery chain should provide. The grocery chains will have to look at multiple different initiatives beyond “Safety” aspect and differentiate their products/services so that they can attract more and more customers and revenue. To name a few, it could be “Great in-store experience”, “Personalized home or anywhere delivery”, “Restaurant style pick up of gourmet food to your order while you shop”. We will continue to see the CX cycle playing out, extensions created.  

If we look at another critical intervention that happened on the work front is “Work from Home”, “Safety” at core. The companies who were able to address this need successfully and created investments have been able to survive/thrive in the pandemic. This has resulted in significant flexibility in customer service without actually meeting customer in person. Today this model is forced on everyone, but will definitely be part of offerings of many companies going forward. Customers will be expecting providers to use this model and create a great value for customer beyond just “lights-ON” or “cost benefit”. We have already seen certain offerings (CX interventions) from a few organizations addressing this challenge and will see many more as go forward

 

In conclusion:     

Customer Experience Life Cycle is clearly seen operational in preCOVID-19 era as well as during COVID-19. It is expected that it will play out in post COVID-19 era also. So organizations can really look at what interventions they are planning and their timing to ride the CX fatigue as well as address the challenges thrown by competitors. Differentiated Needs Pyramid could be used understand the unique / differentiated customer needs and create targeted interventions     

 

Reference:

CX Life Cycle management for continuous improvement in Customer Experience and Revenue/customer

https://personalandprofessionalexcellence.blogspot.com/2019/07/cx-life-cycle-management-for-continuous.html

Customer Experience Improvement using Differentiated Needs Pyramid (Maslow’s theory)

https://personalandprofessionalexcellence.blogspot.com/2018/03/customer-experience-improvement-using.html

Predictability in Customer Experience Improvement – A Perspective for Grocery Retail Industry

https://personalandprofessionalexcellence.blogspot.com/2019/07/predictability-in-customer-experience.html?_sm_au_=iVV4Rtj4p0NLfDVr

 

 

PreCOVID-19 to COVID-19 to PostCOVID-19 dilemma for CIOs and Wayout

From last 4 months we have seen that COVID-19 has turned the wheels of industry in the direction which was not anticipated by many. Many corporations have changed or have been forced to change the way they are looking at business or the way they are executing business. Since there is no vaccine or cure available as of today, the actions taken by individuals, corporations as well as governments are towards prevention which has impacted the whole fabric of personal and professional life. It has changed the manner in which basic things are done e.g. we no more shake hands when we meet or we do not come within perimeter of 6 ft from other person, we cannot go out and eat, we prefer ordering even groceries and veggies online rather than going out and choosing ourselves, guests are not welcome, we are afraid of travel, large RFPs are submitted, presented, awarded without an in person meeting, I can go on and on. Smart businesses have created mechanisms to handle this anxiety in the minds of customer and developed incentives like free and safe home delivery to promote the same and offset the downside created by odd customer behavior. Most of the businesses are suffering due to lack of customers coupled with lack of intent of buying not-so-essential things from customer. Customer also has learnt to live with different kind of processes where everything happens from home, most of the stuff is bought online, people have started planning for groceries and essentials which might not be available easily, it has gone to a level where in disturbance from kid in a professional meeting is accepted. Scientists are working hard, and they will definitely find some vaccine and / or cure for this virus. Just that we do not know when. When they find the cure will everything return back to the old glory or there will be a new way. Everyone kind of believes that it will not be the old way but there will be a new normal that we will need to deal with.

• Do we know what is this new normal? – No
• Do we know if this new normal will be same for all? – We know that it will not be same for all, but we do not know how it will differ

If we look at situation in which most of the CIOs are today, no one envies it.

•  They have to ensure that the business runs with whatever constraints have been enforced,
•  They have to ensure that the business runs even with the new way of business transactions (which is evolving as the COVID -19 situation is unfolding) by building new applications or modifying existing applications,
•   They have to ensure that IT environment secure from all the predators
•   They have to conserve the cash, forcing them to make difficult decisions like closing/postponing noncritical running projects, reducing IT team with no fault of theirs (with a knowledge that they will need them back soon enough and may not get them back) etc.

This is not all, the CIOs have to be ready to zoom in to high gear as soon as a solution for COVID-19 situation is found. Business teams will assess the situation and determine strategy adjusting to new normal and recovering all the losses that it encountered during the crisis. They would expect every department in the organization to step up and do their best. CIO will be expected to work in tandem and get the IT systems ready for the new normal almost in parallel to the realization of new normal. This is tough as new normal will comprise significant online/automation component and IT has to play a major role in it. With all these uncertainties and moving parts, CIOs are in dilemma as to what to do, when to do and how to do? There is no case study nor there is any template and they have to find their unique way out.

I think, Differentiated Needs Pyramid, if applied to the three situations i.e. PreCOVID-19, During COVID-19 and PostCOVID-19, CIOs can find a way out to bring in some proactive measures and partner with business to get it back on track as fast as possible. 

In my earlier blog, Predictable Customer (Internal) Experience Improvement- CIO Perspective  

 https://personalandprofessionalexcellence.blogspot.com/2019/09/predictable-customer-internal.html,  We have seen that a CIO can be successful in improving the experience that they are providing to their customers i.e. Business Leaders by understanding their needs better. Following picture depicts the differentiated needs of the Business Leaders in the business as usual (PreCOVID-19) situation.

This is a five level Differentiated Needs Pyramid and once CIO is able to identify specific needs for the each level for Business Leaders corresponding to their business, then they can take up the right initiatives and go beyond the expectations from business and be a partner to business in its growth. 

If we extend the same philosophy a bit further and analyze this pyramid for three situations i.e. PreCOVID-19, During COVID-19 and PostCOVID-19, we can see how the needs of Business Leaders are going to change at each level in each phase. Using this, CIOs can predict what is going to come their way and they can start addressing the same. Following diagram provide the glimpse of how the needs are likely to be in these three situations Each CIO can plot the 5 levels of specific needs for their business leaders using needs of their specific business.

Each business is unique and their strategy to woo their customers is unique. This needs to be considered while detailing out the actions under each level that might be required to be taken by CIOs in order to satisfy or exceed the needs of their customers i.e. Business Leaders. If a similar exercise is undertaken by Business leaders for their end customers, they will know how the needs of their end customers are changing, thus what strategies need to be adopted by business to satisfy their needs. 

In my earlier blog Predictability in Customer Experience Improvement – A Perspective for Grocery Retail Industry,

 https://personalandprofessionalexcellence.blogspot.com/2019/07/predictability-in-customer-experience.html?_sm_au_=iVV4Rtj4p0NLfDVr  I had taken an example of Grocery Retail scenario for two segments of customer i.e. Customers with age greater than 50 & customers with age below 30. It was clear that the needs vary at each level and the business leaders assess them for specific customer base to determine specific initiatives for creating stickiness. I have extended the same example for customers with age greater than 50 and created a scenario of three stages PreCOVID-19, DuringCOVID-19 and PostCOVID-19. We see a significant swing in the needs as we transition. Some changes made during COVID-19 phase do stick around or get a little modified and get added to the PreCOVID-19 scenario to give a unique set of needs at different levels to the customer base. The diagram below provides a glimpse at this. Certain things like Online Ordering, Free Home delivery, Easy Curbside delivery, Security, pop up at multiple places, which means business will need to extend and enhance the model they have created during COVID-19 and make  

available to customer. The only change would be it will not be a compulsion on consumer to use this facility, but it will be an additional perk that consumer can avail. Better cost-effective way to create this facility through an IT project would definitely be on card for such an organization. Another situation could be around delivery; free home delivery or same day delivery or same day curbside pick up would be expected and if CIO can create an application which will help Supply chain team to make it happen, the business leaders would love it. During COVID-19 consumers were ready to bear some hardship due to fear and desperation, however in PostCOVID-19 scenario, they would not be ready for hardship and will expect the same facilities without hardship and additional cost. The race would be to satisfy these new needs (New Normal) and win over more customers and higher business.

In Summary, the transition from PreCOVID-19 to COVID-19 to PostCOVID-19 is dramatic. Consumer behavior will change almost 180^o each phase. A new normal will be attained in a short period after the solution to COVID-19 problem is found. There will be race to understand this new normal and satisfy the needs of customers in this new normal so that business can get itself back on track. The level of uncertainty is preventing business and their IT teams from launching new initiatives. In this situation Differentiated Needs Pyramid can help Business and IT to proactively look at what could be possible areas that they should work on and be ahead in the game.