A Forrester Consulting March 2015 Thought Leadership Paper Commissioned By Qubit Optimizing The Digital Customer Experience Marketers Must Adopt And Embrace Continuous Optimization
Table Of Contents Executive Summary... 3 Shift Focus From Engagement Channels To Customer Engagement To Boost Customer Experience... 4 Poorly Optimized Customer Engagements Result In Failure To Delight Customers... 6 To Succeed, Organizations Must Adopt And Embrace Continuous Optimization Techniques... 7 Close The Gap By Building And Continuously Assessing A Road Map... 12 Key Recommendations... 13 Appendix A: Methodology... 14 Appendix B: Demographics... 14 ABOUT FORRESTER CONSULTING Forrester Consulting provides independent and objective research-based consulting to help leaders succeed in their organizations. Ranging in scope from a short strategy session to custom projects, Forrester s Consulting services connect you directly with research analysts who apply expert insight to your specific business challenges. For more information, visit forrester.com/consulting. 2015, Forrester Research, Inc. All rights reserved. Unauthorized reproduction is strictly prohibited. Information is based on best available resources. Opinions reflect judgment at the time and are subject to change. Forrester, Technographics, Forrester Wave, RoleView, TechRadar, and Total Economic Impact are trademarks of Forrester Research, Inc. All other trademarks are the property of their respective companies. For additional information, go to www.forrester.com. 1-S6LQA9
3 Executive Summary Today s customers are highly demanding. Empowered with multiple digital means of engaging with brands and their competitors, they expect to find information and purchase products at any time and from any location. But there is a problem. Brands are struggling to compete in the new digital age of the customer. The delivery of great customer experience is a businesswide task that relies upon unprecedented real-time collaboration between teams and departments. Taking this approach to a competitive level demands that marketing and ecommerce professionals adopt a continuous optimization approach. Continuous optimization is a strategic, analytics-driven approach that leverages customer insights and is focused on constantly learning from and optimizing every customer engagement to enhance the overall customer experience. Continuous optimization strategies enable competitive differentiation by maximizing the opportunity of every customer engagement across the entire customer life cycle and across all interactive channels. Any move toward continuous optimization requires the stitching together of disparate technologies and siloed customer data engagement points with a seamless flow of data and insights between tools, applications, and teams. In January 2015, Qubit commissioned Forrester Consulting to evaluate the current state and strategies of organizations and how they are moving toward delivering on the essential components of continuous optimization. We conducted an in-depth survey with 150 digital marketing and ecommerce decision-makers in France, Germany, the UK, and the US. The online survey was supplemented with five in-depth phone interviews with senior marketing decision-makers at ecommerce organizations. The study revealed key components of the state of continuous optimization that include a unified technology architecture and customer profile. These both contribute to a brand s capability to optimize every single customer engagement to deliver an evolving, meaningful, and ultimately optimized customer experience. KEY FINDINGS Forrester s study yielded three key findings: Organizations recognize the untapped value of improving the customer experience. In the age of the customer, firms are realizing they cannot simply improve customer experience at the margins or in a channel vacuum. Customers are effortlessly moving through digital and nondigital channels, engaging with brands on their terms. Surveyed digital marketers understand that in order to win, serve, and retain their fickle customers, creating a seamless, consistent, and personalized experience is the key to meeting their needs. Firms face myriad challenges and obstacles on their road to customer experience excellence. Organizations are finding that delivering this seamless, consistent, and personalized customer experience is much easier said than done. Surveyed marketing leaders understand that they must address technology and data requirements, analytics competencies, and organization challenges to deliver on their customer experience aspirations. Continuous optimization must be adopted and embraced. Since customer tendencies, patterns, and preferences are ever-changing, firms must not rest on the laurels of past tests, analysis, and improvements. Marketing and ecommerce pros understand the need to create an environment of perpetual learning and refinement via the adoption and employment of continuous optimization. To maximize value from continuous optimization, organizations must first close the digital intelligence maturity gap.
4 Shift Focus From Engagement Channels To Customer Engagement To Boost Customer Experience In today s business ecosystem, customers are in the driver s seat. They are increasingly empowered as they become more connected. The challenge for organizations today is to ensure that business-to-customer interactions meet customer experience requirements. Customers engage with brands across multiple touchpoints throughout the buyer life cycle (see Figure 1). Customers know that they want to be able to engage with a brand on their terms whether that s by browsing the aisles at a big-box electronics retailer or conducting price comparisons via a mobile app. To compete on experience, organizations must create a seamless and relevant customer experience across all potential interaction touchpoints. To support this, organizations are continuing to invest in improving digital customer experience to shift the experience from being channel-focused to a holistic customer engagement. They understand that a sound customer experience strategy (and the vital technological architecture necessary for execution) has broad and deep implications. Digital marketing and ecommerce professionals revealed that they are investing in digital customer experience to: Drive revenue growth. The primary factor (39%) driving an organization s investment in digital customer experience is revenue growth (see Figure 2). Marketing leaders also expect customer acquisition gains (31%), differentiation from emerging (31%) and traditional competitors (21%), and cost savings from an improved digital customer experience (29%). engaging with your brand is one of the building blocks to delivering a great customer experience. A third of respondents are leveraging digital to gain better customer insights. Without these insights, firms will be unable to personalize their customers experience to their unique needs. FIGURE 1 Consumers Use Multiple Touchpoints To Engage With Brands Throughout The Customer Life Cycle Discover Engage Explore Buy Source: Forrester Research, Inc. External digital touchpoints Branded digital touchpoints Traditional touchpoints Web (search, comparison shopping, etc.) Social (social network, reviews, community, etc.) Digital content (video, editorial, etc.) Company website Mobile (apps, mobile Web) Tablet (apps, Web) In-store device (kiosk, associate device, etc.) Call center Branch/store The biggest gain we re seeing is in profitable revenue via quality acquisition and increased retention. Roughly 80% of our customers are new, so we need to continually differentiate our brand to potential customers, and then ensure relevance and value to retain these customers. By investing in key drivers of customer experience, we re seeing measureable results. - An executive for a men s apparel retailer Gain better customer insights to foster a personalized experience. Customer insights play a vital role in enhancing customer experience. Knowing how, when, where, and by which method or device a customer is
5 FIGURE 2 Organizations Leverage Customer Experience Strategies To Drive Revenue Growth And Gain Better Customer Insights Drive more targeted online marketing campaigns. The more firms know about their customers, the better they can target them and drive more meaningful engagements. Sixty-four percent of marketing leaders identified more targeted marketing as a key way their digital customer experience strategy influences customer engagement. Improve opportunities in upsell and cross-sell strategies. A customer experience strategy that continues to delight customers will ensure repeat engagement. Over 60% of respondents also highlighted this as a key attribute for their digital customer experience strategy. A savvy marketer will capitalize on this loyalty and leverage brand and product tastes to serve up complementary products to increase upsell and cross-sell opportunities. FIGURE 3 Sound Customer Experience Strategy Drives Customer Engagement Base: 150 digital marketing and ecommerce decision-makers at organizations with more than 500 employees Source: A commissioned study conducted by Forrester Consulting on behalf of Qubit, January 2015 AN OMNICHANNEL CUSTOMER ENGAGEMENT FOCUS DELIVERS GREAT CUSTOMER EXPERIENCE AND BUSINESS VALUE Firms recognize that a sound customer engagement strategy will result in a better customer experience. By shifting from a channel-focused approach to a fluid customer engagement strategy, firms will be better equipped to (see Figure 3): Drive greater personalization for customers. Almost two-thirds (64%) of organizations identified greater personalization as a key component of their customer experience strategy. Base: 150 digital marketing and ecommerce decision-makers at organizations with more than 500 employees Source: A commissioned study conducted by Forrester Consulting on behalf of Qubit, January 2015 Personalization is a key corporate objective. Utilizing data to create a personalized experience is the single biggest focus for our organization. ecommerce director for major online shopping retailer
6 Poorly Optimized Customer Engagements Result In Failure To Delight Customers While marketing leaders acknowledge the impact of a sound customer engagement strategy on customer experience, most are not in a position to optimize engagements at scale. In fact, more than three-quarters (76%) of the marketing leaders surveyed indicated that the majority of their digital customer engagements are not optimized today. To optimize engagements at scale, organizations must address and remedy data, organizational, and technology challenges. that stop them from embracing data-based decisions to enhance digital customer experience. Inability to keep up with volume and variety of data. A third of organizations surveyed that are looking to leverage data and analytics to enhance their digital customer experience are struggling to keep up with the volume and variety of data that that flows in. FIGURE 4 Disparate And Poorly Integrated Data Sources Are The Biggest Challenges When Leveraging Analytics ORGANIZATIONS ARE HINDERED BY DATA, ORGANIZATIONAL, AND TECHNOLOGY CHALLENGES In this age of the customer, insights are needed to drive optimized actions within moments of engagement. However, omnichannel optimization programs fall flat if a firm cannot track customers by stitching together data from multiple customer touchpoints. When leveraging data and analytics to enhance the customer experience, survey respondents highlighted that the biggest challenges hindering progress toward improving digital customer experience are (see Figure 4): Disparate and poorly integrated customer data sources. Thirty-seven percent of those surveyed cited the inability to tie together customer data as the biggest obstacle when leveraging data and analytics to enhance the digital customer experience. This forces organizations to engage customers in a channel-based manner, rather than with a holistic customer-engagement focus. The biggest roadblock for us is connecting different customer touchpoints to construct a continuous engagement experience for each customer. - An executive for a high-end women s apparel retailer Insufficient investment in technologies and resources. Thirty-five percent of the respondents cited lack of investment in the technology and analytics needed to improve a customer experience strategy as a main challenge they re facing when leveraging data to enhance their digital customer experience. In addition, 31% of respondents cited organizational/cultural shortcomings Base: 150 digital marketing and ecommerce decision-makers at organizations with more than 500 employees Source: A commissioned study conducted by Forrester Consulting on behalf of Qubit, January 2015 Marketing leaders also run into significant technology and measurement barriers when effectively executing their customer experience strategy (see Figure 5). Marketing decision makers told us they struggle with: Finding the right digital technology provider. More than half (51%) of those surveyed said finding the right technology partner is their biggest challenge when executing their digital customer experience strategy. This is not surprising, given the suite of services and support
7 necessary to carry out an impactful digital customer experience strategy. Poorly integrated legacy systems. Legacy marketing technologies are unable to keep up with the demands of increasing data volume and variety necessary to drive real-time customer insights. Over 40% of digital marketing and ecommerce leaders indicated that one of the biggest challenges they face when executing their digital customer experience strategy is poorly integrated legacy systems. We struggle with developing, managing, and serving up the content necessary to provide tailored experiences. We can t keep up. - An ecommerce and CRM leader for a high-end men s apparel retailer Disjointed key performance indicators (KPIs) between lines of business. Forty percent of respondents said conflicting KPIs between departments stifle execution of their customer experience strategy. FIGURE 5 Customer Experience Partnerships Are Also A Challenge To Succeed, Organizations Must Adopt And Embrace Continuous Optimization Techniques The delivery of great customer experience is a businesswide task that relies upon unprecedented real-time collaboration between teams and departments. Taking this approach to a competitive level demands that marketing and ecommerce professionals adopt a continuous optimization approach. Continuous optimization strategies maximize the opportunity of every customer engagement across the entire customer life cycle and across all interactive channels. Almost all organizations surveyed see some value from optimization techniques, and many have near-term plans to increase the employment of these techniques. An overwhelming majority of survey respondents (89%) indicated they have plans to connect and optimize engagements to deliver richer customer experiences in the next 12 months. Adoption of these optimization techniques builds a superior customer experience. My company s site has over 200,000 products spanning 170 countries. Continuous optimization techniques create a personalized journey with less effort, serving up content that best fits the customer. I ve seen a lift in KPIs like average order value (AOV) as a direct result. - A digital marketing director for an ecommerce fashion retailer When asked about the value in specific optimization techniques, survey respondents revealed they see value from (see Figure 6): Web analytics. Organizations can optimize a customer s journey on their website by utilizing web analytics to monitor and track the customer s online behavior. The large majority (86%) of respondents see value in this technique. Several marketing leaders interviewed referenced their ongoing initiatives to better segment, test, and optimize customer behavior throughout the engagement funnel. All respondents interviewed alluded to the requisite expertise of proper analytics to support these initiatives. Base: 150 digital marketing and ecommerce decision-makers at organizations with more than 500 employees Source: A commissioned study conducted by Forrester Consulting on behalf of Qubit, January 2015
8 Creating a single view of our customer online and offline touchpoints, will allow for more personalization and predictive modeling. Device analytics is critical, as our sales continue to shift more online. - ecommerce executive for a menswear retailer FIGURE 6 Tangible Data Is Used In Understanding Continuous Optimization Strategies Voice of the customer feedback. Capturing a customer s attitudes and perception toward a brand is crucial to gain customer insights on how to best optimize the customer experience. Some 85% of survey respondents see value in optimizing the customer experience using inputs directly from the customer feedback. Mobile optimization. Customers engage with brands across multiple touchpoints, using multiple devices at any time and from anywhere. So understandably, 83% of organizations are seeing the value in leveraging mobile optimization techniques. Our top priority is to make our entire site mobileoptimized. We recognize that there are multiple outlets to purchase what we sell, so if we re not providing what they want experientially, they ll leave. Head of marketing for a fashion retailer Base: Digital marketing and ecommerce decision-makers at organizations with more than 500 employees Source: A commissioned study conducted by Forrester Consulting on behalf of Qubit, January 2015 Behavioral targeting. Forrester defines behavioral targeting as the process of serving tailored content to website visitors based on their characteristics, behavior, and interaction history. Marketers see value in both rulesbased targeting (81%) and algorithm-based targeting (78%) to improve the digital customer experience. We re applying behavioral targeting with regard to serving new versus existing visitors. While we know little about our new visitors, we are able to create and tailor a welcoming visitor experience [using attributes from an IP address]. This enhancement led to a 17% lift in purchase conversion for new visitors. - A digital marketing director for an ecommerce fashion retailer
9 Organizations Gain Significant Value From Continuous Optimization Forrester asked survey respondents to assess how wellintegrated their digital customer experience is. Analyzing the results, Forrester was able to segment respondents into two categories: Mature organizations that boast a data architecture that supports a unified view of the customer and optimize for omnichannel customer engagement. Somewhat mature organizations that have a view of the customer and partially optimize for omnichannel customer engagement. So what have those organizations that are further along the maturity spectrum done to reach this state? The linchpin is a robust data architecture that stitches together the disparate data sources and facilitates an agile and dynamic environment that allows for real-time analytics, insights, and action, with action being the true differentiator. Continuous optimization requires organizations to ingest large volumes of both structured and emerging data, tied together from various inputs, and inform both automated and human optimization methods, all in real time. While this is a tall order, organizations with mature customer experience are seeing immediate and sustained impact in working toward this ideal state. The survey revealed that more organizations with mature customer experience are seeing significant benefits from a well-executed continuous optimization strategy (see Figure 7): Enhanced customer acquisition. Attracting new customers to a brand will always be a key objective for organizations. The first moments of engagement that a customer has at the beginning of the relationship are long-lasting and crucial. A well-executed continuous optimization strategy gives a brand a competitive advantage at this crucial juncture by providing a relevant, rich experience to those customers. Eighty-four percent of the mature respondents expect to see benefits in customer acquisition as a result of continuous optimization techniques. Improved revenue. Over 80% of organizations with mature customer experience strategies expect to see revenue gains from employing a continuous optimization strategy. This can come in the form of customer loyalty and retention and improved cross-sell and upsell opportunities. Improved return on investment (ROI), return on marketing investment (ROMI), and return on capital employed (ROCE). Mature organizations expect to see lifts in the most important KPIs. Over 60% of mature organizations expect to see improvements in ROI, ROMI and/or ROCE as a result of a sound continuous optimization strategy. We plan to invest heavily in continuous optimization over the next year. Optimization efforts have led to the biggest ROI over the last few years, yielding 15% to 20% return ecommerce director for major online shopping site FIGURE 7 Mature Organizations See Gains In Revenue, Customer Acquisition, And ROMI What benefits have you seen or might you expect to see from a well-executed continuous optimization strategy focused on improving customer engagement? Enhanced customer acquisition 64% Base: 150 digital marketing and ecommerce decision-makers at organizations with more than 500 employees 84% Improved revenue 81% 52% Increased loyalty and retention Improved ROI, ROMI, ROCE Increased crosschannel integration 39% 46% 54% 70% 62% 62% Mature Somewhat mature Source: A commissioned study conducted by Forrester Consulting on behalf of Qubit, January 2015 ORGANIZATIONS WITH MATURE CUSTOMER EXPERIENCE PRACTICES ARE ABLE TO DELIVER A PERSONALIZED EXPERIENCE Customers demand the ability to bounce across the channel labyrinth at their leisure and expect a seamless, consistent experience. The ability to associate a channel engagement or interaction with a specific customer (versus an aggregated level like segment) is paramount for personalization. Whether they use a live chat session, a call
10 center exchange, or a click on a paid social advertisement, organizations must tie this behavior back to the customer. Mature firms have a much greater ability to capture their customers movements as they engage across various channels, allowing for a more personalized experience (see Figure 8). Forty-one percent of organizations with mature customer experience strategies are able to apply a uniform segmentation schema across all touchpoints. Applying a uniform segmentation approach across all touchpoints fosters the seamless, consistent experience customers expect. Employing a uniform segmentation one that ensures relevant and timely content is being served up consistently regardless of channel is a key component of personalization. FIGURE 8 Integrated Firms Can Apply A Uniform Segmentation Across All Touchpoints MATURE ORGANIZATIONS ARE ABLE TO LINK CUSTOMER DATA ACROSS MULTIPLE CHANNELS AND TOUCHPOINTS Since customers are engaging with brands via multiple channels and on multiple devices in a nonlinear manner, integrating the customer interactions to piece together their journey is a prerequisite for optimizing their experience. For example, it s important to integrate (see Figure 9): Website to mobile sites. More mature firms are able to connect customers as they move from the website to the mobile site at a much higher rate compared with somewhat mature firms (81% versus 57%, respectively). Mobile site to social. This connection uncovers the greatest dispersion among the two cohorts. While capturing and integrating social behavioral data remains a challenge based on privacy barriers, organizations with mature customer experience strategies are able to connect social data at a much higher rate. As customers move from the mobile site to social sites, 78% of mature firms are able to integrate these touchpoints, versus only 43% for somewhat mature firms. Email to website/mobile site. Email is the one digital channel where the delta between both maturity categories is not significant. This is an intuitive finding, as most firms, irrespective of their position on the maturity spectrum, have invested in the ability to join the email marketing efforts with the website and mobile site practices. Base: 150 digital marketing and ecommerce decision-makers at organizations with more than 500 employees Source: A commissioned study conducted by Forrester Consulting on behalf of Qubit, January 2015
11 FIGURE 9 Firms Further Along The Maturity Spectrum Can Easily Link Customer Data Between Many Channels And Touchpoints How easy is it for you to integrate customer data between each of the following touchpoints? (Respondents who selected 5 = very integrated and 4 = integrated) Websites -> mobile site 81% 57% Websites -> mobile app 76% 52% Websites -> email 84% 70% Websites -> social 81% 54% Mobile site-> website 86% 57% Mobile site -> mobile app 73% 65% Mobile site -> email 76% 61% Mobile site -> social 78% 43% Mobile app -> website 70% 55% Mobile app -> mobile site 78% 57% Mature Somewhat mature Mobile app -> email 57% 59% Mobile app -> social 78% 48% Email -> website 73% 72% Email -> mobile site 65% 64% Email -> mobile app 59% 68% Email -> social 68% 55% Social -> website 68% 55% Social -> mobile site 70% 58% Social -> mobile app 70% 55% Social -> email 68% 49% Base: 150 digital marketing and ecommerce decision-makers at organizations with more than 500 employees Source: A commissioned study conducted by Forrester Consulting on behalf of Qubit, January 2015
12 Close The Gap By Building And Continuously Assessing A Road Map Just as organizations continually optimize customer engagements, they should look to build a digital customer experience road map that continually adjusts to customers unique demands (see Figure 10). Enabling continuous optimization cannot be a discrete project; rather, it should be an ongoing analytics initiative guided by a strategic plan. Marketing leaders need to tailor their road map to their current level of maturity by: Developing a strategic plan. Organizations must develop a vision for their digital customer experience strategy and understand how the technology stack, ownership, metrics, and continuous optimization can support this vision. Assessing where they are relative to their strategy. Once organizations have defined their strategic plan, they should assess each component of their strategy across the enterprise to get a sense of maturity and areas for improvement. Building a road map. Organizations must prioritize digital and analytics projects that enhance their customer experience strategy strengths and address any gaps that were identified during the assessment. Continually assessing their digital intelligence maturity. Marketing leaders must regularly assess and learn lessons to clarify and update their strategic plan and the road map. FIGURE 10 Develop A Digital Customer Experience Road Map That Continually Assesses Maturity Strategy Assessment Road map Plan: Build vision, road map, and plans. Developing: Unite existing skills, tech, and data. Score digital intelligence maturity: Strategic components Technology Ownership Metrics and KPIs Optimization Assess current state of strategic components. Competence: Deploy new skills, tech, and data. Prioritize digital analytics projects. Continually assess and benchmark progress. Technology stack Ownership and support structure Mastery: Integrate into enterprise systems. Identify digital intelligence strengths and gaps. Metrics and KPIs to understand and drive engagement Approach to optimizing customer engagement Modify strategy based on current-state assessment. Source: Forrester Research, Inc.
13 Key Recommendations The road to delivering continually optimized customer engagements is long and challenging. But the potential upsides that help to drive business KPIs and competitive advantage are worth it. To succeed, digital marketing and ecommerce leaders must: Gain executive support with a comprehensive and clear strategy. The continuous optimization approach affects and leverages all aspects of a digital analytics program. A successful strategy means leveraging the right technology; making the right investments in staff and partnerships; implementing the right metrics and KPIs that are relevant and actionable and building the right organizational culture that values data as a strategic asset. Be ready to partner with the right technology provider. Continuous optimization gives competitive advantage. The biggest gains go to early adopters. The way to attaining a mature capability cannot be left to self-learning projects that take years to complete. Accelerate the adoption of continuous optimization by seeking strategic relationships with external partners such as enterprise services providers, agencies, and consultancies. Leverage their experience and skilled resources to demonstrate the value, build the strategy, and implement solutions, while you build your digital intelligence road map. Create an organization to support and scale continuous optimization. Continuous optimization demands a change in the way analytics and optimization teams work together with business partners. Firms must use the opportunities provided by a new generation of user-friendly analytics and optimization tools to deliver appropriate self-service analytics and reporting capabilities directly into the hands of business users. To back up this approach, digital marketing and ecommerce leaders should partner with the business to optimize the customer engagement touchpoints that drive business value.
14 Appendix A: Methodology In this study, Forrester conducted an online survey of 150 retail and wholesale trade, travel and hospitality, and financial services and insurance organizations in the US, UK, France, and Germany to evaluate their current digital marketing strategies and how they are moving toward delivering on the essential components of continuous optimization. Forrester supplemented the online survey with five in-depth phone interviews with senior marketing decision-makers at ecommerce organizations. The study was completed in January 2015. Appendix B: Demographics FIGURE 11 Survey Demographics: Location And Department In which country do you work? Which of the following departments do you work in? US 49% France 17% Germany 17% ebusiness/ ecommerce 39% Advertising, marketing, or customer experience 61% UK 17% Base: 150 digital marketing and ecommerce decision-makers at organizations with more than 500 employees Source: A commissioned study conducted by Forrester Consulting on behalf of Qubit, January 2015 FIGURE 12 Survey Demographics: Revenue And Position Using your best estimate, how much of your organization s revenue is generated online? 1% to 9% 3% 10% to 24% 12% 25% to 49% 35% 50% to 74% 37% Which of the following most closely describes your position? Most senior marketing decision-maker in the company Executive in marketing (e.g., VP, director, reporting to senior marketing decision-maker) 41% 43% 75% to 99% 7% 100% (all online) 6% Manager of marketing reporting to an executive in marketing 16% Base: 150 digital marketing and ecommerce decision-makers at organizations with more than 500 employees Source: A commissioned study conducted by Forrester Consulting on behalf of Qubit, January 2015