Archive for 2008

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Structuring the operational model around the new architectures and solutions is often left as a last minute consideration in delivering any new system. Organisational structure and associated processes are vital in order to deliver the most customer focussed experience and service possible. Every aspect of the operational model needs to be visited and assessed to determine the value it actually delivers to the customer and ensure that the priority and focus is aligned to this strategy.

This is where the thinking around the use of SOA needs to break out of the IT box and permeate through the business functions and respective processes. This is where the hard questions can often be found and where the structure of business functions needs to be most challenged. However, the balance of dividing business functions amongst the selected channels as opposed to maintaining a centralised operational model is a real tightrope and one that can only be managed on a case by case basis.

Creating a business architecture by applying SOA principles is not an exact science in some respects is still in its infancy. Even considering the business and operational model as an “Architecture” is a step too far for some organisations. But, those that have embraced this philosophy have broken out of the traditional business models and created cross functional working units geared to providing services to their customers, whether internal or external. This approach not only is geared towards a value added customer experience but leverages the experience and expertise of the people within an organisation.

I’d argue that the underlying success factor in multi-channel retail from an external perspective is a seamless customer experience, and from an internal perspective is a single customer view – different sides of the same coin. Most of the challenges to any retailer appear to stem from attempting to achieve this.

The two key areas of impact here are technological and organizational dependent on retailer age and size. The older the organization, the more likely they are to have legacy systems, and the larger they are, they more likely they are to face resistance to change. Multi-channel may therefore require integration of disparate technologies, while also needing a complete review of structure, skills, staff incentivisation, and a host of other business and marketing processes.

The 5 main issues faced by large retailers entering the multi-channel space are as follows:

  1. Evaluating cost of investment in development of cost effective, secure, scalable environments and systems integration against probable short term impact on bottom line
  2. Pricing across different channels – Store channels have higher cost structures than web channels for example, and price competition is higher on web, but consumers can be put off by different pricing for the same product
  3. Channel synchronisation i.e. ensuring brand, customer experience and customer information consistency across channels while avoiding the 3E trap i.e. trying to provide ‘everything to everyone everywhere’
  4. Problems in merging and standardising customer data i.e. unifying different systems which may have very different data models
  5. Difficulties in reducing or abolishing organisational boundaries to cope with new channels

In summary, customers for whom a multi-channel approach will yield the most benefits are often those for whom achieving it the most problematic – they have the largest customer bases, most complex lines, and longest histories of systems development, with many business critical systems that supply old CRM processes.

From an IT perspective, the use of SOA (Service Oriented Architecture) is a logical fit to fulfil the multi-channel solution where core capabilities such as product, delivery, payment etc. are developed in such a way that they are created as services allowing for re-use across the enterprise. However, if the IT department is the only place where the SOA principles are adopted, then there can be no real alignment between IT and the business. Therefore, it is essential that the SOA blueprint is adopted throughout the enterprise rather than remain solely as just another IT acronym. In order to achieve this, the entire organisation must adopt SOA principles and the blueprint for this ideally is owned by the business. If the IT department alone is trusted in implementing the SOA architecture (as is so often the case), then the chances of the remaining parts of the organisation fostering the principles of SOA (and hence the benefits) are somewhat slim.

So, the decision has been made to create a new architecture and it’s all hand on deck. Constructing the great new systems and solutions to support the multi-channel ambition is one thing, but there are many other considerations which are just as important. IT is undoubtedly the key enabler in this relentless march towards customer satisfaction, but it is truly only one part of the jigsaw. The creation of a technical architecture that is aligned to the operating goals is vital; less so is the selection of the exact technology as there are various products and technologies that can be blended together to form an effective solution. In addressing the architecture issue, the creation of a Service Oriented Architecture (SOA) is widely recognised as the best practice approach and one that dovetails into a customer focussed strategy.

The key benefits of SOA in a multi-channel strategy are one of re-use and the ability to initiate changes (to business or channel specific rules and functionality) without having a knock-on effect to all parts of the organisation. As discussed in my posts on the practicalities of multi-channel retailing, re-using components such as inventory, delivery and payment across the channels as services increases the efficiency and realises cost savings across the channels. However, the full benefits can only be full realised by creating a business logic layer across these services where specific attributes cater for the requirements of each channel. This is where such elements as price, promotions and catalogue are controlled and provide the channels with independence despite sharing a common data set.

Here are the 5 key performance issues facing Local and Regional Government right now:

  1. There is no common understanding of hundreds of performance indicators (PIs)
  2. Accessing the data necessary to derive each PI is difficult
  3. The quality of data is poor
  4. The cost of reporting is high
  5. Use of performance reporting is poor

Andrew Rogoyski, Head of Public Sector at Charteris, explores these further and covers the ways the LRG’s might look to address them in his paper on “Performance Management for Local and Regional Government Organisations in England” below.

(Excerpt taken from Stephen Hewett’s paper “The right way to do the right thing for the customer”)

Here’s our 8 step plan for maximising Customer Centricity within your organisation:

  1. Identify who your primary and secondary customers are.
  2. Identify the products and services they consume and through which channels (web, call centre, bricks and mortar and so on).
  3. Work out where the crucial ‘points of addition’ occur in adding value to those products and services.
  4. Make sure that the business areas involved in these points of addition understand how they each add value to these products and services.
  5. Align the organisational structure to support these points of addition.
  6. Minimise the activities that don’t add value to what the customer is getting from the organisation.
  7. Ensure that the correct measurements maintain and improve the processes.
  8. Support where appropriate with technology solutions.

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(Download the full whitepaper “The right way to do the right thing for the customer”)

If you want to know more, do feel free to get in touch as we have developed some helpful frameworks for the end to end delivery of customer centricity.

(Excerpt taken from Stephen Hewett’s paper “The right way to do the right thing for the customer”)

Successful organisations, whether in the private or public sector, all have one thing in common. They have all found a way, or ways, of consistently winning from customers a level of loyalty and willingness to buy again that in effect amounts to a reliable mandate from customers who are attracted to what the business has to offer.

The business, of course, will want those customers to keep being attracted by what is on offer, and for the number of customers who are attracted to increase. Essentially, Customer Centricity is a way of disciplining – in the most positive sense – the entire organisation to ensure that it is as good at looking after its customers and winning and maintaining new customer mandates and new levels of loyalty from customers as it possibly can be.

So what does it really mean in practice? How do you actually ‘do’ Customer Centricity at your organisation?

The key is to achieve agility in how the organisation is run and how every element in the chain links together. Make sure everyone knows who their own key internal and external customers are, and what products and services each of them needs (and are prepared to pay for, in the case of external customers). Take steps to assess whether your customer chain is delivering products and services most effectively at the lowest cost.

Be ready to start making your organisation customer centric from first principles – possibly taking advice on how best to do this – and be adamant that you won’t paper over the cracks in those parts of your organisation that aren’t agile and flexible enough to demonstrate very clearly the role they play in the chain.

Above all, be honest. Prepare yourself for long-term incremental change. Build a group of stakeholders from all levels who understand the concept of Customer Centricity, what it requires and who can preach it to others.

Ultimately you will need to drive the Customer Centricity concept and principles throughout all aspects of the business including strategic vision, people, process, organisational structure, information and technology.

Yes, change is hard, but you can grow Customer Centricity within your organisation on a department by department basis: you don’t need to do it all at once. And when you are ready to implement the technology, you’ll find there is plenty of great technology out there – systems for Workflow management, Enterprise Resource Planning (ERP), databases management, Business Intelligence tools and so on – that will enable you to create your new-look organisation without delay.

Remember that deep down in your organisation the chain that will delight your customers – and your shareholders – very possibly already exists, obscured by internally focused organisation design, poor process, inappropriately deployed technology and lack of vision.

Liberate it, and enjoy the brightest tomorrow you can imagine.

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(Download the full whitepaper “The right way to do the right thing for the customer”)

Understanding customer’s in-store and online shopping preferences

Whilst researching key customer needs and trends in the multi channel world, I came across this white paper published by Sterling commerce. They have produced a report full of compelling analysis and with very insightful statistics that is and will continue to affect Multi Channel retail.

Sterling Commerce conducted an online survey of 5,000 consumers to understand consumer preferences and attitudes when shopping online and in traditional retail channels. With some surprising results, the responses provide tremendous insight into the consumer’s expectations for selling and fulfilment.

Some highlights

1. Three statistics customers rated the most important when shopping across channels.

  • 1. 72% of customers wanted notification of filling/shipping delays
  • 2. 69% of customers wanted the store to locate an out-of–stock product at a different location.
  • 3. 68% of customers wanted notification throughout ordering/shipping process

2. Three statistics customers said would affect their willingness to shop at a retail store

  • 1. 74% of customers said no pricing on the item or shelf
  • 2. 72% of customers said sale items out of stock
  • 3. 65% of customers said unhelpful sales associates

3. 57% of consumers stating that it is important for them to be able to monitor the status of their order via the Web, free phone number, or through customer service in a store, regardless of whether that order was placed online, through the catalogue, or as a special order in a store.

4. Consumers are becoming more familiar with the experience of a single retailer offering products across multiple channels. They expect the communication and service options related to these products to be seamlessly merged. Retailers who do not provide a single face to their consumers with cross-channel execution will begin losing customers to retailers that do.

Retailers who create a customer centric seamless experience for their customers can expect increased customer loyalty, increased same-store sales, and improved margins.

Check it out, it’s free: Sterling Commerce.

(Excerpt taken from Stephen Hewett’s paper “The right way to do the right thing for the customer”)

In short because they

  1. Lose focus,
  2. Lose stamina,
  3. Get complacent and
  4. Get lazy.

When organisations first start trading they usually (and certainly should) have a clear idea what they are in business to do, who does what, and why. Every person involved in a start-up will most likely know how they add value to the finished product or service and whom they need to work with internally to make sure the best service or product is delivered to their new customers. They will know this because looking after the customer is so completely why they set up the business in the first place.

But then, if the new business succeeds, it will grow. To start with, as it grows, the founders and the new staff may be able to keep alive the flame that embodies the spirit of why they are in business. But sooner or later, somewhere along the line, the flame will diminish or even go out completely, as the clarity of why you are in business fades. Once that clarity starts to fade, Customer Centricity fades with it.

Why does this happen?

To speak generally, one has to say that as organisations grow in size a curious effect almost invariably occurs. Staff members start to look inward, worry about their own internal departmental issues and become more and more remote from the actual agenda of the customer.

Internal management processes arise that have little or nothing at all to do with adding value to the external customer. It’s common for whole new business areas and departments to be created to deal with and manage these internal issues. .

The trouble is, too many large organisations forget that people don’t just work for money, but satisfaction too; and they don’t ensure that their staff are encouraged and empowered to look after customers properly. This is particularly so for staff working in internal departments that don’t have a direct interface to customers, though it often applies to customer-facing departments, too. When people in those internal departments perceive that the organisation doesn’t empower them to take steps to understand their role in looking after customers, they forget they are part of a ‘chain’ of organisational resources aligned to allow the organisation to do its very best for its customers and consequently start to drift and lose focus at a motivational level.

In practice, within a large organisation it is almost inevitable that most of its departments will not be customer-facing. And here the very size of a large organisation can conspire against it being successful. The organisation needs to be certain, at all times, of what every individual person and every department is doing that adds value to the paying customer by providing top-quality products and services to customers directly or by doing things that directly facilitate the provision to customers.

After all, if any one individual or department is not involved in the chain, it needs to be asked what exactly they are doing in the organisation at all.

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(Download the full whitepaper “The right way to do the right thing for the customer”)

Providing the entire range of products in the catalogue, in as accessible format as possible, strengthens the offering of a retailer no end. Providing a fully joined up view on delivery options including premium and store pick-up is a challenge in its own right as it dictates that stock management and whereabouts are completely accurate all of the time. Co-ordination of different delivery methods amongst numerous partners need to be effectively managed so that data feeds and access to order tracking is fully transparent for not only the customer, but also the customer service agents.

Now the customer is only interested in how they are going to get their hands on the merchandise but ensuring that they are not disappointed or misled is paramount in providing a great customer experience. This is an area where taking a customer centric standpoint is vital and in combination with a service led approach can reap enormous benefit. The result of these approaches should be the provision of choice to the customer in how to receive their goods in a timely, and convenient fashion. No one solution fits all but by centrally co-ordinating the delivery options as a repeatable service amongst the various channels will provide the required choice. This means that all channels can obtain the same delivery services whilst the management of them is centralised