Digital enterprises are getting VERY personal with customers

Many CIO 100 award winners are personalizing the customer experience, creating one-to-one relationships that deliver competitive advantage.

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Kathleen Dooher

Typical medical laboratory reports could hardly be less personal. Whether they're for basic blood work or a battery of tests for serious disease, the black-and-white printouts of results--presenting a sea of cryptic abbreviations and numbers--remain largely indecipherable to the patients whose health depends upon them.

But CIO 100 award winner Boston Heart Diagnostics is replacing such documents with personalized reports of 25 pages or more for people with cardiovascular disease. The in-depth, graphics-driven Boston Heart Diagnostic Reports are customized for specific individuals, and cardiologists sit down with patients to review them. The reports address patients directly, using their first names, and deliver one-to-one information about their health status, including actions to consider. Patient-friendly and easy to navigate on the front end, they're powered by complex algorithms on the back end, using Boston Heart's proprietary medical informatics system to integrate the patient's laboratory test results with clinical risk factors (such as age, gender and family history) and the latest research and clinical guidelines.

The approach has enhanced the level of engagement between patients and doctors, and better engagement can lead to increases in the degree to which individuals adhere to recommended plans for improving their heart health.

"We wanted to go way beyond good and bad numeric values to provide a more predictive heart health report in a personalized fashion," says Mitch Hansen, Boston Heart's vice president for technology. "Personalization has always been the core of what we do. We're taking it to the next level to provide competitive differentiation."

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The reports that Boston Heart Diagnostics prepares for patients "provides a more predictive heart health report in a personalized fashion," says Mitch Hanson, vice president for technology.

That kind of technology-enabled customization proved to be a top business priority for many CIO 100 award winners. "We're putting a significant premium on personalization," says Shankar Arumugavelu, senior vice president and CIO at CIO 100 honoree Verizon Wireless. "Everything we do is about putting the customer first." And CIOs and their organizations are leading the effort to create the kind of singular experiences that customers today demand. "IT has a unique vantage point. The entire customer experience comes together in IT, and we can provide the thought leadership required to bring personalization to life," says Arumugavelu. "There is no better organization to move this forward."

A One-to-One Relationship -- With Everyone

There's a reason the IT group is now in the driver's seat for personalization. "Customers have always wanted products and services that were tailored to their preferences, but it wasn't affordable," says Elea McDonnell Feit, a fellow at the Wharton Customer Analytics Initiative and an assistant professor at Drexel University. "But today we can build that personalization into software and deliver it at scale to millions of customers."

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That's exactly what CIO 100 honoree Hilton Worldwide has done with its digital check-in capability, which enables guests of the company's hotels to select their own rooms from visual floor plans at more than 4,200 properties in 94 countries. In a 2014 survey of 1,009 adult U.S. travelers, Hilton found that a lack of customized self-service was one of the biggest complaints among people who travel: 28 percent of the respondents cited room location as one of their greatest frustrations with the hotel experience, and two out of three said they'd like to choose their own hotel rooms. "Guests now expect a level of personalization," says Hilton Worldwide CIO Bill Murphy. "It's a big priority. We view it as differentiation in the market."

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Guests now expect a level of personalization. It's a big priority. We view it as differentiation in the market," says Bill Murphy, CIO at Hilton Worldwide.

That has changed Murphy's role as CIO. "In the past, we developed systems that were designed to be used by employees of the company or designed to be used by business partners," Murphy says. "Now, all capabilities need to be used by your customer directly as well. It's the new reality." Hilton is currently piloting and implementing digital key and lock technology so guests can bypass the front desk altogether; it will require retrofitting about 750,000 hotel doors so that guests can swipe their way into their rooms with their smartphones.

Verizon Wireless has been implementing an omnichannel customer experience program since 2013 to make it easier for people to do business with the company, whether they're online, on the phone, accessing services via a mobile device or visiting a physical store. But company leaders were concerned that they couldn't take the level of personalized interaction they deliver to customers digitally and replicate it in real life. "We have much more information from a website analytic standpoint than we have on the customer's experience in our stores," says Arumugavelu. "We saw that there is a lot more we can do to provide that personal experience in the physical realm."

Last year, Verizon Wireless enhanced its mobile app with an optional feature that uses location-based information and other customer data to predict why someone might be visiting a Verizon Wireless store and then customize the shopper's in-store experience. The new feature, called SMART, also presents promotional information on featured products and offers self-checkout capability to customers who are purchasing accessories in the store. (Nearly 60 percent of consumers want real-time promotions and offers, according to a recent survey by Accenture.)

The Verizon Wireless system requires real-time analytics on customer data from multiple channels to deliver meaningful personal interaction as the shopper moves around the store. "If your information is even a few hours old, it's too old," says Arumugavelu. "You have to figure out how to use real-time analytics to gain insight quickly enough to tailor the experience. The IT enablers are huge."

But personalization can be expensive. "High-cost customization is easy," says McDonnell Feit. "What is more difficult is figuring out how to use real-time analytics to personalize at scale for low costs."

In the hypercompetitive financial services industry, CUNA Mutual Group is using personalization to woo baby boomers who are approaching retirement. It has a tablet-based animated sales tool called iDIA (for Individually Design Your Income Annuity) that helps its financial advisers walk customers through their retirement annuity plans. As data is entered and the customer asks questions, the tool visually demonstrates the impact of each choice. For example, sliding iDIA's timeline graphic to start annuity income at a later date immediately displays a larger monthly check, highlighting the power of income deferral. A light bulb feature in the iDIA tool shines more brightly with each new element that's selected as a customer's annuity is designed, illustrating how the customer's retirement scenario is becoming brighter. "So many people are confused by retirement and don't know which way to turn. We're spending a lot of time and effort to simplify this for consumers," says Jeff Bosco, senior vice president of wealth management at CUNA Mutual Group. By demonstrating how personal choices affect retirement income, the company has seen a 31 percent increase in the number of advisers selling income annuities and a 21 percent increase in annuity sales.

Translating Complexity Into Simplicity

The key with personalization is keeping it simple for customers. That has proved to be true for CUNA Mutual and other CIO 100 honorees. "We didn't want to make this thing any bigger than it had to be," says Bosco. "The biggest challenge was not to have to ask too many questions or have it be cumbersome for the adviser. We didn't want to overdo it. But simplification isn't easy."

There's abundant complexity on the back end. The lifetime annuity sales illustration requires sophisticated actuarial mathematics, combining age, gender, guarantee options, deferral period, purchase payment, tax status and state regulations to calculate an accurate income amount. It uses an in-memory computing model designed to deliver instantaneous results.

Hilton faced similar challenges. The task seemed simple--let guests pick their own rooms. After all, people pick their own airline seats and rental cars these days. But it wasn't. And that's likely why few hospitality companies offer that level of self-service. The systems that Hilton's front-desk employees used to assign rooms to guests had been developed many years ago. So, starting in 2007, the company invested $550 million to overhaul its IT infrastructure and unify 13 property management systems, develop mobile APIs and integrate them with back-office systems to pave the way for the room-selection capability. Only then could the feature be integrated with the central reservation system and the mobile API infrastructure to give guests more autonomy at check-in.

"There was considerable complexity. It would have been relatively easy to do it as a pilot for 10 or 20 hotels," says Murphy. "But when we do things, we want to do them at scale. A consistent guest experience is key."

In addition, in order to make room selection as intuitive as possible, Hilton had to individually digitize, optimize and integrate floor plans for more than 650,000 rooms across 11 brands. And each command within its app had to be fully integrated with the company's property management infrastructure to ensure that room availability would be updated in real time.

At Boston Heart, Hansen had to make sure that marketing's vision of graphics-intensive patient reports was actually doable from a production standpoint. The design is easy for users to digest, but complex for computer systems to produce. "The average size of the report more than doubled, expanding technical requirements and storage capacity," says Hansen. "When you [consider personalization], you need to really understand your master data sources and your production ecosystem and get out in front of any integration or production issues early on."

IT needs to stay involved throughout the design process. "A whole lot of assumptions can get made along the way that need to be proved out as you go, so you don't build in any obstacles," Hansen says. "The worst thing you can do is come up with a beautiful product that you can't execute."

Verizon Wireless is making personalization so simple that shoppers can now enter Verizon Wireless stores, scan the bar codes of the products they want, use their phones to pay and then leave--without ever interacting with another person. But that didn't sit well with commission-based sales personnel. "You can imagine the conflict it created," says Arumugavelu. "We needed to make sure the front line was ready and supportive as we rolled out this technology." Verizon Wireless had to rethink longstanding commission structures for sales reps. Today, if a customer completes a contactless sale, the store's employees share the commission. "We had to develop a governance strategy so we could act on real-time feedback from front-line employees and customers," Arumugavelu explains.

Customizing Without Creepiness

Personalization of the customer experience requires access to people's personal data. And, as Bosco of CUNA Mutual notes, "customers nowadays rightfully have concerns about protecting their personal data. It's always a concern, and we take it very seriously." Indeed, using CUNA Mutual's iDIA app actually requires less data from customers than the manual financial adviser interactions of the past.

Customer privacy has to be paramount. "It's first and foremost," says Verizon Wireless's Arumugavelu. "How do you provide personalization without being creepy. It's a critical requirement." The key at Verizon Wireless and other companies is to offer opt-in policies. "You have to be very transparent right up front and say, 'Here is the experience you can get in our stores--if you so choose,'" Arumugavelu says.

"The biggest risk is what we call the personalization-privacy paradox," says Gartner analyst Martin Kihn. "This is the very real balancing act that marketers have to perform between knowing something about an individual and using that information to create a custom message. Consumers want relevance but don't want to be invaded."

According to a survey conducted by the Pew Research Center, 86 percent of consumers have taken steps online to remove or mask their digital footprints, and 55 percent have taken steps to avoid observation by specific people, organizations or the government.

However, the Accenture study found that most consumers are willing to let trusted retailers use some of their personal data in return for personalized and targeted recommendations and offers of products or services. People want personal attention. They don't want to be spied on.

For CIOs, that means pushing back on any business partners that haven't gotten the message. "The IT leader has to partner with stakeholders and urge them to go beyond compliance," says Arumugavelu, who worked with Verizon Wireless's marketing, operations and legal departments on the SMART application. "You have to give end users transparency and control."

The CIO-CMO relationship is critical to succeeding with personalization, according to McDonnell Feit. "I've seen marketing-driven companies that have a terrific vision for the customer experience but fall down in integrating disparate vendor-provided components into a cohesive whole," she says. "I've also seen CIO-driven programs that fall flat because they are too enamored with the technology and don't take the time to see things from the customer's perspective. But companies who can put the two together have huge opportunities."

Arumugavelu wasn't sure how customers would respond to the personalization efforts at Verizon Wireless. But "once we made it clear exactly what we were asking consent for, we were pleasantly surprised with the take rates," he says. "Customers opted in at much higher rates than we anticipated. It goes to prove that as long as the customer feels they are getting something in return--a contextual, relevant experience that makes it easier for them to do business with you--they are more than happy to sign up for these experiences. It's better than being bombarded with coupons and gift cards that don't make sense for them."

Customer backlash over privacy concerns isn't the only risk for personalization initiatives. Bad execution can also be a problem. "Really poor customization risks alienating your customers," says McDonnell Feit. The key, says Hansen, is to "test, test, test" to make sure your new system works.

Evolution, Not a Revolution

Ultimately, customization programs take time. Just look at the king of online Its now-revered recommendation engine is the result of years of trial, error and refinement. And it's still not perfect. But customers trust that, more often than not, they're getting good value out of the experience.

CIO 100 honorees Boston Heart, Verizon Wireless, Hilton Worldwide and CUNA Mutual were recognized for their recent customer personalization efforts, but all four companies have been working for years to build platforms capable of supporting stronger one-on-one connections with customers. And their award-winning projects are just a first step.

But they've already begun to see results. Verizon Wireless tallied so many self-service purchases of accessories that the SMART application paid for itself in less than a year. And at Hilton, one-third of eligible guests now regularly use digital check-in with room selection, and more than 90 percent have said they were satisfied or extremely satisfied with the experience.

For its part, CUNA Mutual reports reaching its $20 million sales target for deferred income annuities within nine months of iDIA's launch. And Boston Heart says that 85 percent of its physician-customers are using the personalized diagnostic reports, and the reporting system has helped attract new customers, too. More important, the personalized reports are increasing patients' understanding of their heart health--and their understanding of the importance of sticking to treatment plans.

"The individual is at the heart of what we do. And personalized medicine is becoming the focus: How do we turn the tools of science and technology and apply that to the individual characteristics of disease?" says Hansen. "We spent a lot of time figuring out how to deliver this message to patients, involving a lot of customer interaction and testing. And we've come a long way in terms of personalization. We're at the forefront of diagnostic work that takes that individualized approach."

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