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Vice President of Digital and Application Services, NTT DATA Services
On his first day as an engineer, someone decided that Matt Leach should write requirements. He soon discovered that project success is not just about technology, but rather a holistic solution that solves the right problem. Since then, he has helped organizations better understand their business and their customers while delivering solutions that delight both. Currently, Leach is a Vice President in NTT DATA’s Digital and Applications Services business unit, where he leads the business analysis and project management practices.
Please explain the evaluation methodology and objective of NTT Data’s “Friction Challenges for the Consumer Packaged Goods Industry” study and why you focused on the customer interface in the corporate CPG sector.
Traditional methodologies, such as customer satisfaction surveys or Net Promoter Score, can be flawed. For example, surveys often do not outline individual areas that need improvement. To truly understand customer friction, companies need a method that identifies causes of friction and helps them develop precise, objective recommendations on reshaping processes and applications to fit consumer needs.
We define customer friction as any aspect of a customer interaction that has a negative impact on the customer’s experience. The premise is that the less friction a customer encounters when doing business with an organization, the more likely they are to continue to do business with that organization in the future.
With the Customer Friction Factor (CFF), we analyze a transaction for friction by evaluating more than 140 criteria that contribute to a superior or challenged customer experience. We measure every aspect of the customer journey so we can assign a numeric score that indicates the level of friction a customer experienced. This score, along with the details of that transaction and the insights gathered along the way, provides the foundation in defining recommendations and driving customer-focused digital transformation.
Corporate CPG companies are uniquely positioned to be the ambassadors of an experience-positive ecosystem—from upstream supply chain partners to retail and distribution channels and ultimately to the consumer. CPG firms need to see this reality as both a threat and an opportunity. Those that step up to navigate today’s trends will be empowered to optimize the end-to-end customer journey, creating the ultimate, integrated customer experience and a lasting competitive advantage. Those that do not will forfeit their competitive advantage and eventually their customers.
How did you determine which CPG sites to evaluate?
We choose to assess specific CPG companies because it is an industry that has traditionally understood the benefits of brand loyalty but has not invested in developing robust customer experiences. The goal of this study was to highlight opportunities for improvement and get CPG leaders to think differently about how they engage their customers and the experience those customers have with the brand. The CPG industry is seeing the impacts of digital disruption, and its current participants risk being the victims of increasing customer experience expectations if they do not transform themselves to meet the demands of their customers.
Customer friction tends to be more prevalent in CPG companies because of the dependencies that CPG companies have traditionally had on their extended enterprise and partner organizations. CPG companies are forced to engage with retailers, wholesalers and other distributors to get their products in the hands of consumers while at the same time developing brand loyalty and satisfaction. This is an incredible challenge when you do not own the end-to-end customer experience.
Do you have insights into the type and source of traffic going to the 15 corporate CPG websites and how many of these visitors are actually potential buyers or consumers of the companies’ branded products?
When we think of the customer, it is from a broader perspective—employees, suppliers and investors all deserve and demand excellent experiences as well. Unfortunately, most organizations measure the quantity of customer engagement (whether it’s page views or calls into a contact center), but very few people are measuring the quality of the customer experience. Customer buying decisions are influenced by how a customer feels they are treated and their overall experience with a brand, regardless of where they might be within the customer journey. These sentiments drive buying decisions and engagements with a company or brand.
Based on the research, the most successful sites held a significant advantage in the technology, process and knowledge categories. While 21 percent of all friction is related to technology, successful sites have more consistency in their design and navigation, fewer pop-up advertisements, and a shorter, easier process to navigate. Successful sites also incorporated existing customer knowledge by storing information and repopulating it for the customer to save time.
Finally, companies with stronger performances had far fewer steps necessary for a transaction. Successful sites required 55 percent fewer steps than competitors, and the decreased time and effort required by customers correlated with an increase in sales.
What reactions have you received from the brands included in this study?
The overall reaction to our CFF assessment of the CPG industry has been very positive. Each of these companies is looking for opportunities to better engage and extend their influence over their customers. Gaining a more in-depth understanding of the customer journey and where the opportunities to improve that customer journey exist gives these companies a significant edge over their competitors.
The concept of understanding the customer experience is often relegated to online channels, but as we all know, we operate in an omni-channel world. With the CFF, we score transactions from end to end across all channels because the CPG companies that we are working with want to gain a holistic understanding of their customer journey.
In fact, our analysis of the industry shows that the CPG brands with the lowest friction earned the best CFF assessment scores and were better able to translate their customer experience investment into a 31-percent improvement in asset turnover compared to their peers with higher friction and CFF scores. At the same time, these brands were also able increase their profitability.
Will you be replicating this study in more online transaction-intensive markets where the customer journey and path-to-purchase are heavily influenced by affiliate marketing, online experience, content richness/relevance, personalization, user interface design, suggestive AI marketing, etc.?
Yes. NTT DATA has been performing CFF analysis across multiple industries. To date, we have performed CFF analysis of companies within industries that have included retail, CPG, hotel, airline, health care, high tech and wireless. Our analysis has included an examination of the experiences that consumers, employees and business partners have when accomplishing their goals in collaboration with these companies.
By understanding the customer experience, companies can take steps to improve. This journey begins with a customer friction assessment. In a very short amount of time, our team defines transactions, understands friction and then partners with the client to understand the root causes of friction and define a roadmap for improvement.
To view the full results of the “Friction Challenges for the Consumer Packaged Goods Industry” study, click here.