by Bill Snyder

Digital first: How companies transform customer relationships

Oct 10, 2018
Digital TransformationIT LeadershipIT Strategy

Companies are increasingly changing how they connect and serve by rolling out digital initiatives aimed at improving customer engagement and breaking down legacy barriers to new opportunities.

Need help picking out the right wine? If you’re shopping at a BevMo store in Silicon Valley, just ask the robot. The box-like digital clerk will greet you at the door, escort you to the correct aisle, and let you know what’s on sale.

In Long Island, New York, meanwhile, Alexa and the Google Assistant are helping customers of the NEFCU credit union manage their accounts from home. And when those depositors go to a brick-and-mortar branch, the teller that helps them will likely be miles away at a call center, connected via video link.

Welcome to the age of digital first. Driven by the increasing sophistication of consumers and enabled by the ubiquity of mobile broadband and technologies like machine learning, data mining and the internet of things, companies are looking for competitive advantage via new ways to reach — and be reached — by their customers.

Don’t confuse today’s digital-first drive to that of 20 years ago when building ecommerce sites, intranets, and online news outlets were on the cutting edge. “A mobile app or a new feature on your website is not digital first,” says Varun Jain, senior investment manager for Qualcomm Ventures. “A digital-first company has changed its thinking as an organization. It’s bringing software-driven ideology into every product and business decision it makes.”

In the past, CIOs and other IT leaders learned to cope with the consumerization of IT. But digital first has turned that formulation on its head. “I call it the ITization of the consumer,” says Anne Chow, AT&T’s president for national business. “Consumers are immensely more savvy than they ever were. Businesses have to ask how will customers get to them in terms of tools and avenues they control and those they don’t.”

Digital first is all about the customer

Although new technologies, particularly 5G connectivity, will open the door to new ways to interact with customers, Chow says that “strategy, not technology, needs to be at the fore.”

Not surprisingly, it’s the younger generation of consumers that is the most likely to embrace digital marketing. “Generation X, millennials, and Gen Z are all self-service generations,” says Aurimas Adomavicius, president and co-founder of Devbridge Group, a Chicago-based ISV. “The way these three generations interact with brands and services is first through digital channels. Only when those channels fail or are not available, do these consumers fall back to other means of interacting.”

Businesses that depend on brand loyalty to drive repeat business are scrambling to hold on to their customer base, says Ari Lightman, professor of digital media and marketing at Carnegie Mellon’s Heinz College. “Hotel chains have to compete with online travel aggregators [like]. They need to offer customized experiences.”

But how do they know what customers want? “They scour the social space looking for mentions of their brand,” using social listening tools from companies like Crimson Hexagon, Brandwatch, and Sysomos, Lightman says.

Customer support, generally seen as a cost center for businesses and an excruciating experience for consumers, can also drive customer loyalty — when it’s done right. That’s the premise of UJET, a San Francisco-based startup using mobile and video technologies to take at least some of the pain out of support calls. Smartphones, of course, are much more than mere cell phones these days, and because consumers use them so much, it makes sense to harness their capabilities for customer support, says UJET CEO Anand Janefalkar.

UJET embeds APIs in mobile applications, and that allows companies to add a multitude of support functions, says Janefalkar.

When tied into a CRM system, for example, the application immediately identifies customers and collects information on matters such as warranty status, support history and so on. UJET apps could be embedded in a device. When triggered, the apps would give the support tech information on the health of the device and if desired launch a video chat application.

Deconstructing legacy business logic

If your car manufacturer or automobile club has a roadside assistance program or your car has an assist program installed in its dashboard, there’s a good chance that its run by Agero, a Massachusetts-based provider of connected vehicle, roadside assistance, and claims management services.

Agero embeds APIs into clients’ devices to enable voice and data communications that link stranded motorists, tow truck drivers, and call center employees. A nervous stranded driver may not be able to find his or her insurance policy number or the vehicle’s VIN number, but that information is stored in the app and immediately available to the call center agent, as is the vehicle’s location and physical description.

The app can locate and dispatch a nearby tow truck driver or other emergency personnel. If the situation appears critical, the automated voice response system defaults over to a live operator.

Bernie Gracy, Agero’s chief digital officer, calls his strategy digital default. “Our job is to make digital experiences so delightful that they will stay there,” he says. But pushing customers into interacting with an app or automated voice response is a mistake. “If someone is more comfortable with voice and a real person, that’s what we will give them,” he adds.

Gracy and Agero have been implementing the digital default policy for about 18 months. The key enabler was a shift in the company’s business logic to microservices. By deconstructing the company’s business logic, IT is able to develop and repurpose new client applications significantly faster, Gracy says.

IoT: Digitizing a ‘legacy’ industry

Sensors and the internet of things are playing a large role in the transformation of businesses that wouldn’t normally be thought of as digital.

Two years ago, Finning, the world’s largest dealer in Caterpillar heavy equipment, formed a new business unit called Finning Digital to support digital initiatives across the company. Although you’d have to look hard to find an industry that better fits the term “legacy,” Tom Nyberg the unit’s general manager, says: “The heavy equipment industry and all our customers’ businesses are going, or about to go, through digital transformation.”

Finning’s tractors and other equipment can be linked to servers that collect information from embedded sensors. The information that’s collected can be used for relatively simple tasks such as notifying a mechanic that a tractor needs servicing. The use of analytics software allows the company to extract intelligence from sensor data on more sophisticated matters like the efficiency of equipment and driver safety issues.

Hello robots, bye-bye tellers

The robots being field-tested at two BevMo outlets in the San Francisco Bay Area don’t look anything like the anthropomorphic machines you’d see in the movies. For one thing, they have no arms.

But their cameras and voice capabilities are aimed at surprising and intriguing customers, and freeing store clerks from routine chores. BevMo would rather have its clerks selling to customers than checking shelves for inventory, and confirming that prices on the shelves and at checkout match, says Tamara Pattison, the chain’s chief marketing and information officer.

Customers at BevMo’s Walnut Creek store seemed more entranced with the robots than those in the Sunnyvale outlet, perhaps because Silicon Valley shoppers are too steeped in technology to be easily impressed, Pattison says. In any case, the overall reception by customers and employees has been good, though it will be some time until the chain decides if it will expand the robot corps to more stores.

“Millennials are the future of our business,” says Jojo Seva the CIO of NEFCU, a credit union with some $3 billion in assets. “The industry is going mobile and digital first, and we want to be first in offering new technology.”

It’s early days for NEFCU’s rollout of support for devices using Alexa or Google Assistant for banking, and the number of customers using them are relatively small, he says. Even so, the credit union is already planning to add more functions to the platforms, including the ability to move cash.

The use of remote tellers is further along and it could eventually result in a loss of some jobs, Seva concedes. But cutting-edge technology is a plus when it comes to keeping and recruiting IT pros, who like to work on projects that are more interesting than routine banking development and maintenance.

The rollout of new technologies at NEFCU has been a learning experience, he says. One important lesson: Complex projects can be dependent upon partners, such as a major credit company. When you’re planning, be sure those partners are prepared well in advance and have the capacity to deliver what you need, Seva says.

Best practices for digital-first strategies

What are some other best practices as your organization goes digital first? “We find that the most successful digital initiatives bring together teams from across an organization — not just from unexpected functions like risk or customer service — but also different levels of employees,” says Scott Likens, PwC’s new services and emerging technology leader.

AT&T’s Chow suggests that businesses repurpose the old secret shopper tactic, but instead of wandering around a store looking at the shelves, the shopper should try features on ecommerce sites and see what it’s like to shop there. And Qualcomm’s Jain says that a way to reduce security and privacy leaks in consumer devices is to develop methods to carry out as much processing as possible on devices, rather than sending all of its data to the cloud where it could be intercepted.

Indeed, if there’s any one speed bump on the road to digital-first strategies, it’s the need to protect the privacy and security of users and their data. If companies don’t do better — and soon — the U.S. may well follow the lead of the European Union and impose stringent restrictions on the use of personal data and the manner in which it is collected.