Football season, apparently, has kicked off and is in full swing. It’s hard for me to avoid in a household which includes four teenage boys with a mind-bending commitment to “fantasy”—not to mention its prominence in a 24-hour news cycle which requires no more additional fodder than Trump and Hillary to stay jam-packed. What really intrigues me is what’s happening off the field to drive such obsession with the sport. These behind-the-scenes activities sit at the leading edge of what any company should be thinking about if it wants to create a rabidly supportive customer base.
To understand this phenomenon, I asked Simon McLain, Francesca Dijols, and the Customer Experience Value team at Deloitte Digital to reflect on how to take some learnings from professional sports and apply them to more traditional corporate marketing challenges. That team is the primary contributor to this month’s post.
The most desired fantasy football players are those – in the real world – who combine sheer potential with the right technology and real-time analysis to optimize their performance on a play-by-play basis. Not surprisingly, we’re living in a business world where the ‘winners’ are increasingly starting to follow the same rules.
Sports in the tech era.
It wasn’t that long ago that ESPN introduced the yellow first-down line that forever changed how we watch football[1]. And, thanks to virtual reality, before we know it we’ll likely all be watching our favorite team from row ten on the 50-yard line or at half court, while sitting in a recliner in our living rooms[2].
Additionally (and probably more importantly), coaches are using technology for enhanced metrics to better strategize and actively manage their respective games—from baseball to football to hockey. For example, RFID chips in uniforms can capture a player’s speed, distance and direction traveled, and even biometric data, all in real-time[3]. Coaches then receive alerts via an app when a player has been running for too long, they’re dehydrated, or if their heart rate is too elevated. As competition is heating up, coaches are looking to technology to drive player performance and refine their processes to do so in real time.
In a similar way, companies are just now starting to turn to a unique combination of strategy and technology to process customer data to enhance customer value creation interaction-by-interaction– all with an eye to improving their customer experience investments in real time.
Why customer experience matters.
In today’s digital world, consumers have more channel choices than ever before and they expect a company to “know” them: to know their needs, preferences and behaviors across their journey. As a result, companies are looking to differentiate themselves based on customer experience. The pace of this change is quickening as 89% of companies expect to compete mostly on the basis of customer experience (CX) compared to only 36% just four years ago[4]. By 2020, CX is expected to overtake price and products as the key brand differentiator[5].
Companies moving in this direction are seeing results. Leading CX companies had an average revenue CAGR of 17%, compared to just a 3% CAGR for ‘lagging’ CX companies[6]. Additionally, companies are seeing a 3x return for every $1 invested in CX[7].
Driving economic value from customer experience.
But where companies are struggling is in personalizing the experience in a way that creates maximum value for the customer while also creating maximum value for the business. This is an idea we call “Customer Experience Value” (CXV) which, by harnessing the appropriate technologies and supporting data, can drive superior performance for businesses. In working with our clients, we’ve discovered there are three imperatives to maximizing CXv.
1. Understand the value of CX from both the customer and the business perspective
As mentioned above, companies need to think of customer value on two dimensions: experience value (e.g., What is the quality of your customers’ interactions? How satisfied are they?) and business value (e.g., How much do your customers spend? How much do they cost to serve? How much do they promote us?).
For example, a team’s back office needs to concentrate on visitors’ experiences: How bad was traffic entering the stadium? How friendly were the staff taking tickets? Was the halftime show entertaining? Were the seats uncomfortable? Was the bathroom clean? And, perhaps most importantly, did the team win?[8]
Those experiences will likely impact how much the fans are willing to spend on items such as tickets, parking, food, and apparel. They may also impact future attendance, or how vociferously they encourage their friends to attend a game.
The key to creating disproportionate value through customer experiences is understating this value equation: what specifically creates (or destroys) value for a customer and for the business, and what measures and metrics allow us to best calculate this impact. A company can then use these algorithms, even if only loosely defined at first, to identify and prioritize investments that will have the greatest impact on CX.
2. Know which customers (can) drive the most value and what they care about
The translation of experience value to business value is not equally distributed across a customer base. Once a company understands the basic value equation, it then needs to identify which customers are having disproportionate impact in that equation. To do this, most companies conduct a traditional segmentation analysis based on demographics and/or customer lifetime value (grouping people based on their spending and profitability). However, these just scratch the surface.
For example, a traditional segmentation approach for a sports organization may produce segments like “local fans” or “cross-category spenders.” The segmentation that’s most valuable for customer experience value measurement, however, is one that layers on top variables that are predictive of the customers’ business value creation. “Local fans” is far less helpful a descriptor than “high spending local fans very active on social media” when it comes to understanding who drives business value and making marketing spend decisions.
Through the use of predictive analytics, segmentation schemes can become even more sophisticated by layering in not just current value creation but potential future value creation as well. Additionally, this type of ‘micro-segmentation’ allows an organization to target experiences at much smaller customer groups that are more personalized to customers’ needs and preferences.
3. Measure and invest in the moments that matter to customers
Once the “micro-segments” are identified, companies can then invest in the customer experience proportionate to customers’ current and/or future value. For example, if the most valuable local football fans tend toward negative social media posts while missing key plays in concession or bathroom lines, it may make sense to invest in solutions that prevent them from missing the key play in the first place--quicker service, access to live coverage, etc.
However, many companies struggle to quantify the value created by their CX investments, and hence are unable to draw any actionable insights. This often results from being locked into a narrow view of value or lack of knowledge around how to get and leverage the right customer value data. The following principles can help avoid this narrow view:
- Map and understand the customer experience journey at a sufficient level of precision to differentiate between the moments that matter, the moments that don’t, and for whom.
- Capture customer value data across all relevant touchpoints, from brick and mortar and online stores to mobile devices, email, and social media.
- Integrate that data to understand the experience and business value created for and by each customer on an ongoing basis.
- Leverage these insights and understanding of value, combined with a closed feedback loop, to inform CX treatment rules in real time.
- Capitalize on the full range of technology currently available to enable these tasks.
An Ecosystem That Enables.
To enable these key steps, companies should integrate data that traditionally sit in disparate parts of the technology architecture. The only way to construct a holistic view of customer value at the individual level is to get these disparate systems talking and playing together. Leading-edge companies increasingly depend on a ‘customer experience ecosystem’ to make this happen, often in collaboration with a constellation of enabling technologies and external partners.
Through this collaboration they are able to track and integrate front-office data (e.g., sales, customer service), back-office data (e.g., billing), and third party data (e.g., social mentions) to deliver highly personalized experiences and maximize the value created for and by each customer. In doing so, they will create increasing levels of precision behind the loosely held value algorithms previously mentioned. The resulting ultra-personalized CX investment capability enables companies to continuously improve the value of their CX investments and adjust their strategies accordingly.
Making the Cut.
The most desired fantasy football players are those – in the real world – who combine sheer potential with the right technology and real-time analysis to optimize their performance on a play-by-play basis. Not surprisingly, we’re living in a business world where the ‘winners’ are increasingly starting to follow the same rules. If you’re on the side that can figure out how to leverage technology to shift how you interact with your customers in order to optimize their experience on an interaction-by-interaction basis, you’ll better position yourself to win. If not, chances are you’re headed to waivers.
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Simon McLain is a Deloitte Consulting LLP principal and global leader of Deloitte’s Customer and Marketing Strategy practice. He has more than 16 years of management consulting experience helping leading companies address their most critical business challenges around profitable growth.
As a leader of Monitor Deloitte’s Customer Experience & Digital Strategy practice, Francesca Dijols helps companies drive profitable growth through customer experience innovation and optimization.
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- Squadron, Bill. “The story behind football's innovative yellow first down line.” Sports Illustrated. http://www.si.com/nfl/2013/07/18/nfl-birth-yellow-line. Accessed October 7, 2016.
- “Virtual Reality is the Future of Watching Football.” http://futurism.com/videos/the-future-of-watching-football-is-virtual-reality/. Accessed October 7, 2016.
- Tilley, Aaron. “How RFID Chips Are Changing The NFL.” http://www.forbes.com/sites/aarontilley/2016/02/06/how-rfid-chips-are-changing-the-nfl/#55d08e575ad0. Accessed: October 7, 2016.
- “Gartner Surveys Confirm Customer Experience Is the New Battlefield.” Gartner. http://blogs.gartner.com/jake-sorofman/gartner-surveys-confirm-customer-experience-new-battlefield/. Accessed: October 7, 2016.
- “Customers 2020,” Walker Info. http://www.walkerinfo.com/customers2020/. Accessed: October 7, 2016.
- “Customer Experience Drives Revenue Growth, 2016.” Forrester. http://blogs.forrester.com/harley_manning/16-06-21-customer_experience_drives_revenue_growth_2016. Accessed: October 7, 2016.
- “Customer experience can impact your bottom line.” Avenade and Sitecore. https://www.avanade.com/en/about-avanade/partnerships/sitecore/customer-experiences-whitepaper. Accessed: October 7, 2016.
- We recognize it’s debatable how much a football organization can influence an outcome of an individual game, but they do make the draft pick and trade decisions.