S4 Ep. 7 Technology convergence is reinventing customer experience

Joe Wheeler: I started a company many years ago called the Service Profit Chain Institute with some Harvard Business School professors, Jim Heskitt, Earl Sasser, Len Schlesinger. And CX/Digital is a subsidiary of that.

I decided to write a book that looked at the impact that COVID 19 had on CX and just what we all experienced through lockdowns. It also looked at the best practices of companies that had really seemed to figure out — how to manage through COVID 19, which I call digital-first leaders.

CX/Digital is our consulting firm that we launched that supports that book in terms of implementing all the things we learned from that.

Joe Wheeler: So culture, we’re all experiencing it from the impact of COVID, the Great Resignation that’s been talked about, and there’s still some industries that still haven’t recovered in terms of employment, as we all know.

Convergence to me is interesting because it’s a tricky topic. It’s not just that there are a lot of new technologies. The question becomes: How do they relate to each other? So, for example, generative AI and machine learning are obviously very important technologies.

What’s more interesting to me is what happens with that when you consider how fast-edge computing is progressing and application networks. And then think about, 6G. What my friends in the telecom industry tell me is that 6G — you gotta really think about this — it’s not going to be like 30% faster than 5G. It’ll be like 30 to 50 times faster.

Think about in 2030 that type of performance. To me, this changes how brands need to rethink CX design and that’s why we call the book “Digital First,” because if you’re not thinking from a digital mindset, you’re going to miss out.

The last thing is competition. What I’ll say about that is this idea that I learned from David Rogers from Columbia Business School. He taught me this notion that in a digital-first world, you’re not just competing on a value proposition, which we’re all used to; you’re also competing with a value network.

And his example, which is a great one I put in the book, is when you look at Blockbuster and Netflix, and the degree to which Netflix built such a powerful value network besides their value proposition — it was just impossible for Blockbuster to reallocate those capital dollars. Even though they tried to imitate it, it was basically too little, too late.

And that combination of kind of culture change with competition and convergence really sets the table for how we need to rethink design in 2023 and beyond.

Joe Wheeler: So, two that I’m working with right now. A company that we’re working with is XSELL Technologies, and they’re doing a great job of taking AI, generative AI specifically, and combining that to help create super call center agents.

They work with the Genesys platform, and it’s really powerful because they can drive up agent productivity to drive up first-call resolution and have better conversions. Those are practical ways that gen AI is actually making a difference in customers’ lives.

A second one is I’m doing a lot of work right now with RetailNext. What’s interesting in the retail world, is that retailers are realizing they have so much first-party data that they’re starting to combine that data with what typically brand advertisers were doing and saying, “Can we converge these technologies so we can drive better conversions at the point of consideration?”

So, retail media networks are a new version of monetization that retailers are embracing and companies like Walmart are really at the leading edge of this.

Joe Wheeler: This is why we like the Pointillist platform so much, quite honestly, because it’s one of the few platforms that applies AI to be able to look at the full journey in an omnichannel way — and be able to quickly get to root cause.

One way will be the degree to which orchestration can help improve sales associate productivity. Permission-based data to help that sales associate provide a better experience for the customer in almost real time will be a big deal.

The second, maybe more obvious one, is just taking costs out. With an idea of being able to see the full 360-degree journey across channels, you can understand when the IVR is not being effective. We all love containment metrics, but we need to really rethink them if they start to de-optimize the whole experience.

And then the third one is something we do a lot of with clients, which is how do create A/B testing that quickly gets to proving which promotions or which kind of designs customers really value versus ones that don’t. Having an orchestration platform allows you to rapidly do A/B testing and create a test-and-learn culture that gets to better outcomes for both employees and customers.

Joe Wheeler: One of the big insights from the book that we didn’t have going in was the degree to which digital-first companies use personalization to create a revenue-growth flywheel.

This is a big deal because what you notice in companies like Spotify or Lemonade, the insurance disruptor, is their investment in machine learning prepares them to create a platform that’s self-reinforcing. They learn more about the customer. And with that learning, they’re able to create more engagement — not just better conversions and things like that, but really build a different way of thinking of customer lifetime value.

Here’s the thing. It takes both. You can’t just go hire 90 engineers from Carnegie Mellon University in machine learning and get that. You have to have a culture that 90 engineers from Carnegie Mellon University are going to want to work there.

Sure, you need to have great talent and understand technology, but you have to create a culture that makes them want to stay. And so, it’s that combination of culture and technology that you see in these digital-first companies that achieve that flywheel.

But once it’s achieved, man, that keeps turning and it drives a lot of revenue.

Joe Wheeler: One of the real great features from Spotify is their discoverability. It’s a feature by which they discover potential new music because their goal isn’t just to give you… if you like the Beach Boys, of course they might recommend a similar band, but they also want you to learn about a new podcast.

So, discoverability was built by engineers because they have a percentage of time that their developers can spend just pursuing different things on the side. And they started using it internally. This is a great feature. It’s one of the most powerful features in Spotify. That only happens in a culture where failure is accepted, where there’s permission to do your own kind of exploration, things like that.

And if we know anything about this target employee population, they need agency, they want to work with companies that are having an impact. So that culture piece is maybe the Achilles heel of companies that want to drive more machine learning outcomes.

Joe Wheeler: One is to do some benchmarking. I break a little bit with my peer group in the CX design world on this topic, but one of the things we learned from CEMEX — and cement isn’t something that jumps out as here’s a digital-first leader — but that’s an industry that hasn’t seen a lot of productivity from digital investments over the last 20 years.

But what CEMEX did is before they got started, they took their top 100 executives to MIT for a week and taught them everything from blockchain to immersive design. They did a deep soak in terms of what digital-first technologies are all about. And that was informative before they dove into their agile-based customer discovery work to build what they called CEMEX Go, which took them two years, but it reinvented the whole construction industry.

The second one is to become a student of behavioral economics. Because at the end of the day, the best technology doesn’t work if it doesn’t shape consumer behavior.

Being grounded in empathic-based design and behavioral economics, in combination with learning about what’s happening, are two pieces of advice I’d give to anyone working in this space right now.

Joe Wheeler: Here’s the thing… at the end of the day, the [question] is: What’s your brand problem? So, the answer for any specific company around this topic is, of course, you want to be good managers of the cost space. And if you can find more efficiencies, then you owe that to your shareholders and your customers and employees to go after that.

At the same time, you need to land on a design that is going to distinguish your brand. I’ve long time been a great customer of Expedia, but just had a terrible experience with that brand. And it strikes me as maybe they’ve doubled down on technology, because I could not get a hold of a live person on this very important problem.

And, we can’t forget what Charlotte Beers taught us many years ago: What makes a brand powerful is the emotional involvement of customers? If you could use technology to generate strong, emotional involvement — fantastic. You know what I mean? That Expedia example is not a bad thing. Basically, customers will self-select out of their experience if they don’t like it. I’ve got to just assume that’s what their strategy is, so good for them.

At the same time, we mustn’t miss the lessons of Starbucks, who went so hard with their digital flywheel back in 2016 and 2017, they didn’t anticipate the change that would happen in their product mix in the marketplace — and paid for it from an employee loyalty standpoint, which they’re working hard to fix with their reinvention plan.

Joe Wheeler: I mentioned that in terms of those technologies that converge, machine learning and AI, especially ambient AI, what’s really interesting to me is behavioral science around how people relate to technology. One of the examples I use is a great company called LifePod that’s using AI to change the senior experience in the home.

For caregivers and for patients, this is a technology that not only makes sure that senior people are taking their meds on time [or reminds them] when their nephew’s got a birthday that they want to give him a phone call, etc. It also creates companionship. Seriously, the result of their pilot was, many of them said, “I don’t feel alone anymore.”

There’s a lot of views you could take on that, right? It’s not real companionship because it’s a computer. At the same time, how can you argue with the positive emotional outcome that’s happening for that person and the strong, powerful impact it’s having for caregivers, who now can drive up productivity and deliver a better care experience for their patients.

So, I think what’s exciting about AI, ambient AI, especially in conversational AI, is what we miss. The power of machine learning isn’t the machine; it’s the learning. You can’t take your experience with bots and technology today that will be like that in three years because the learning is exponential. It’s curvilinear. It’s not like humans. It’s going to get better and better as hallucinations decrease.

The last thing I’ll say about this is I think the biggest integration will be when 6G really starts to pop. It’s not going to happen overnight.

You’re not going to turn your phone on and say, “Oh, welcome to the 6G network.” It’ll take until 2030 to be fully operational. But when that latency starts to become so low, all bets are off in terms of what we’ll see in terms of designs in the future. To me, it’s the most exciting time to be in this business.

Joe Wheeler: Number one: The experience a company will deliver today will look very different in 2030, just because of everything we’ve just talked about.

Think about healthcare for a second. Imagine if your doctor was able to have a digital twin of you. You could call him up and complain, and he might say, “Listen, let me run a few treatment scenarios against your digital twin and see how you react.”

That’s happening. They’re building these things right now. I think one thing to predict is that, for sure, every experience delivered will be some combination of digital human and logistic — maybe robotic. And number two: The reason why we call it digital-first is because the way brands will begin to connect with their customers is digital.

Even for retailers, so much more will begin in a digital standpoint. That’s the context we have to go into 2030 understanding. And given that, how do you back into what the right combination of digital, human and logistical types of elements really makes sense.

I opened this book with the story of Zoom Pizza. We might remember Zoom had this idea of robotic AI-based pizza delivery, which was fantastic. But I remember reading and I thought, ‘I liked Domino’s, they’d fix their quality problems. They got a pizza to me in about 30 minutes. I didn’t really need it any faster.’

So, we always have to ground these decisions in technology and if a customer will care. Is there a customer segment big enough that if you delivered this, they’d pay you something that you could still make a margin on it? And can you really engage employees in a way that they get excited about your company, and they want to stay there?

If you can answer those questions, whatever you become in 2030 will be still relevant to the marketplace.

Joe Wheeler: If you visit CXDigital.ai or Amazon, you can get a link to the book. It’s gotten great feedback, and I’m just so appreciative of all the case study companies from Amazon and Starbucks and all that I worked with.

There’s three pieces to it. One, talking about the business case around climate. We talked a little bit about what’s driving changes. And then we go into seven case studies in real detail where I break it right down to what’s at the core of these companies and why they deliver such a great experience.

And then the third piece is a playbook. How do you go from this into executing for your company. And there are four chapters around building the business case, designing experience and then how you scale that.

So far, I’ve got great feedback from our clients who are using it.