Intro – All Power to the Customer?
Reading time: approx. 20 min. All Power to the Customer?What do customers actually want? And what makes them remain loyal? With the advent of big data, artificial intelligence and digital technologies, we now have more knowledge about customers than ever before. Multichannel marketing and ecommerce solutions are changing the traditional customer journey and customers are now more likely to drift away sooner. In future, loyalty will be driven primarily by experience, service and diverse customization options – right down to the production processes.
This reportage is an interactive reading experience. Make your personal decisions and embark on an individual customer journey.
Welcome to the customer journey of the future. Choose your starting point:
Thousands of Touchpoints – The Multichannel Brand Experience
Thousands of Touchpoints – The Multichannel Brand Experience
This first 24-hour store from the international Würth Group, which is based in Swabia and has a global staff of 77,000 and an annual revenue of 13.62 billion euro, is just the latest step in a sales and marketing strategy, exclusively based on customers and their needs.
Stefan Schneid, branch manager at Würth
The Fusion of Online and Offline Solutions
The Fusion of Online and Offline SolutionsThe smartphone is the hub around which today’s complex customer journey is based.
“It allows me to connect with the brand along the entire chain of interaction, transaction and usage,”says Werner Reinartz, Professor of Retailing and Customer Management at the University of Cologne. “The top priority for businesses will therefore be to ensure that they are available and contactable.” Ideally, around the clock and via all channels.
Matthias Gouthier, Professor of Marketing and Electronic Services and Director of the Center for Service Excellence (CSE) at the University of Koblenz, agrees: “The fusion of online and offline solutions has massive implications, not only for the customer experience and customer perception but also for how businesses will need to respond to these factors in the future. Going forward, the goal will be to find the best possible way to link these aspects.”
This process of interconnecting all the touchpoints throughout the customer journey opens up a wealth of opportunities, yet a multichannel approach also means “that customer loyalty is no longer as unshakeable as it once was,” notes Peter Caracciolo, Customer Experience and Future Automotive Retail specialist at MHP. “Businesses have to rethink their strategy. The challenge will be to create a consistent brand experience that makes customers feel comfortable – across all the different channels and throughout the customer journey.”
This process of interconnecting all the touchpoints throughout the customer journey opens up a wealth of opportunities, yet a multichannel approach also means “that customer loyalty is no longer as unshakeable as it once was,” notes Peter Caracciolo, Customer Experience and Future Automotive Retail specialist at MHP. “Businesses have to rethink their strategy. The challenge will be to create a consistent brand experience that makes customers feel comfortable – across all the different channels and throughout the customer journey.”
Würth seems to be succeeding in this goal already. Direct sales, generated by the company’s 33,000 plus field staff worldwide, remains the core business, but the other distribution channels are becoming increasingly important, with a growing focus on teleshopping, physical stores, ecommerce and orders placed via the Würth app. Services available to customers include click & collect, delivery within three hours or delivery to the customer’s nearest branch. The new 24-hour stores are the final element of the company’s strategy for becoming an omnipresent B2B partner.
Stefan Schneid, branch manager at Würth
A Journey Without a Destination – And Without Limits
A Journey Without a Destination – And Without LimitsThe customer journey of the future will increasingly become a journey without limits. It is effectively a continuous state rather than a journey from A to B – a system that permanently encircles the customer, ideally for life.
“At companies like Amazon, the process of creating entire ecosystems around the customer is already a firm fixture,” notes marketing specialist Werner Reinartz. “They are with the customer from morning until night – through shopping, dining and entertainment. This will become more and more common in future.” Reinartz explains that US animal feed company Mars Petcare has a similar strategy. The company recently acquired the veterinary chain Anicura and now operates 2,000 veterinary practices. “This allows the company to offer Customers services throughout the pet ecosystem – that’s thousands of touchpoints. So, the brand will effectively become a companion for all scenarios.”
Reinartz himself is also perfectly at ease with these ecosystems. Yesterday he was in Toulouse for work and took an early-morning jog along the Garonne River – guided by the “Runtastic” fitness app. The professor is just one of around 140 million registered Runtastic users. He loves to exercise and is a big fan of the runner’s app, which was bought out by sportswear giant Adidas in 2015 for 220 million euro. And, of course, he’s well aware that technologies like this give Adidas direct access to millions of customers – “with the secondary goal of securing the customer transaction, increasing brand loyalty and adding an emotional connection to contact with the customer.”
The company’s competitor, Nike, has its own app with over 100 million users – a figure it is looking to triple by 2023.The app users tend to make more purchases during their customer journey than traditional Nike customers, and actively interact with the brand.In addition, with every action they take they leave an invaluable data trail.
Would you like to know what happens to collected data or learn more about customer behavior?
Experience and Convenience
Experience and ConvenienceDespite the study findings, it is clear that service is not the only crucial factor. “Customers make purchases in store because they are looking for inspiration, because of a desire for social interaction, and because they are seeking a sensory experience,” says customer expert Werner Reinartz. “None of that has changed, which is why in-store shopping remains relevant.” It’s no coincidence that online giants like Amazon are extending their digital business model to include analog sales channels.
In the Munich branch of outdoor equipment specialist Globetrotter, Claudia Dreibrodt stands in front of a thickly glazed cold room. The temperature inside the room is minus 25 degrees Celsius. Inside, a customer dressed in a red down jacket is walking up and down, accompanied by an equally well wrapped up sales advisor. Branch marketing manager Dreibrodt explains, “We view our stores as a place where our customers–outdoors enthusiasts–can come and try out as many of our products as possible.” Down jackets designed for use in extreme temperatures are just one example. In the nearby altitude chamber, customers can even test their own personal fitness at a simulated altitude of 6,000 meters. The outdoor equipment specialist ensures its customers remain loyal by delivering personal advice alongside a memorable experience and professional service. Each of the 12 German branches–and five more are set to be added this year–feature ‘experience’ elements such as climbing walls, large water troughs, rain rooms or ‘adventure toilets’ (which aim to simulate the layout of a toilet in an unusual location, e.g. on the Trans-Siberian Railway). The Munich store even has its own medical practice where professionals specializing in travel medicine can offer expert advice without an appointment.
On average, customers spend between an hour and a half and two hours at this outdoors Mecca. Many of them travel a long way to visit the store and dedicate a whole day to their shopping trip. And why shouldn’t they? Robert Marek, MHP’s Customer Experience strategist, believes that innovative customer journeys can be impactful:“If an experience is executed well, there can be a huge impact for the brand as well as a positive response on social media. In the ideal scenario, the experience will result in new customers and new potential customers.”
Customer Data – The Digital Lubricant
Customer Data – The Digital LubricantCustomer data is the primary driver for these digital ecosystems.
“It will fundamentally change the customer relationship over the next few years and will enable unprecedented proximity to customers,”predicts marketing professor Matthias Gouthier. The fact that we now have access to more data than ever before drives this change. It comes from brand-specific apps and corporate websites; from online shopping portals and social networks; from the black boxes of modern cars; from web platforms and web communities; from the immense seas of data generated by web giants such as Google and Amazon – and it all helps to lay the foundations for every contemporary customer journey.
Parsis Dastani predicts that this flood of information will be “gigantic, a crazy volume of information.”The Frankfurt-based data scientist has been exploring this ‘craziness’ for quite some time. His company, Dastani Consulting, provides advice on customer data analysis for companies such as BMW Group, Still, Continental and eco mail-order business Waschbär. Dastani, who has a Ph.D. in business data processing, is a pioneer of big data analytics, a field that has now also attracted major players such as Adobe. “The number of touchpoints will simply explode in the coming years,” he enthuses, “because businesses are acquiring more and more information about consumers. You simply can’t believe what’s already possible right now.”
Would you like to know what happens to collected data or learn more about customer behavior?
Customizing XXL
Customizing XXLThis definitely sums up Nike’s new flagship store in New York. The store is buzzing. The House of Innovation 000 illustrates perfectly how the customer journey can be customized to an even greater degree in store.
The New York store has a Sneaker Bar where customers can custom design their own shoes, using every conceivable color, pattern, complete with custom embroidery and laces – and everything else you might conceivably want. The shopping experience includes a concierge service that can help you to find the perfect outfit and even advise you on which size sports bra you need. Just a simple app click and the products land in a fitting room reserved in your name. Heidi O’Neill, president of Nike Direct, sums up the ethos behind this very personalized shopping experience: “We always ask ourselves how a store can be as personal, responsive, easy and fast as a mobile shopping experience.”
At the Würth Group 24-hour store in Vöhringen, Stefan Schneid stands in front of a large wooden block into which dozens of large brass screws have been drilled.This is a miniature playing field for tradespeople who want to try out the new cordless screwdriver from Würth.Tradespeople who wanted a more powerful screwdriver and improved handling gave the basic ideas for the screwdriver design. It sells like hot cakes. As well as being an innovative bestseller, it gives the company additional touchpoints for the customer journey.
Feedback from customers is already flowing into production processes quickly. The automotive industry is one particularly good example. “A lot of information is generated about vehicles – e.g. about equipment, faults, service,” explains Olaf Kleindienst, Head of Digital Enterprise at MHP. “If we combine this knowledge with knowledge about a customer, we can tailor the vehicle even more effectively to that customer’s needs. And the analysis helps us to develop insights that we can cascade right down to the departments.” Reversed dynamics is what we see here “We will increasingly see data informing processes,” says Kleindienst. In the past, it has been the other way round.
Know Your Customers Better Than They Know Themselves
Know Your Customers Better Than They Know ThemselvesIt sounds hard to believe, but Dastani explains that predictive analytics – predicting customer behavior based on personal data – is already in use and can predict with amazing accuracy how likely a customer is to order the organic cotton long-sleeved shirt or a Swiss pine pillow from eco mail-order retailer Waschbär.
With customer profiling, the software uses data to identify potential new customers. Würth has been using this tool successfully for over two years now. Predictive analytics from Dastani Consulting determine the revenue potential of trade companies or automotive workshops, for instance. Millions of websites were crawled and over a billion words analyzed in order to identify the most suitable companies for Würth. In addition to using data mining and text mining, data from a financial information file is sometimes also incorporated. Sales staff can use their smartphones to retrieve the addresses of potential new customers in the vicinity. And by using these recommendations, they are able to significantly increase revenue from new customers.
Stefan Schneid, branch manager at Würth
So Who ‘Owns’ the Customer of the Future?
So Who ‘Owns’ the Customer of the Future? The ground is set to shift still further. The old adage that customers will interact with the dealership exclusively has long since been softened by the advent of ecommerce.
“Manufacturers’ brands are now in much greater and more frequent contact with customers,”says marketing expert Reinartz. “We are seeing huge shifts in this area, and this will only increase.” In the automotive industry, for instance, manufacturers are increasingly communicating with end customers – e.g. in relation to the sale of spare parts, or for discussions about merchandising or the expansion of a company fleet. With the arrival of new market participants such as car sharing providers or providers of municipal charging stations for electric cars, the customer relationship is increasingly shifting from B2B to B2C. The traditional industry boundaries are also being broken down, and mobility is becoming increasingly modular. Set against this backdrop, it’s clear that it will not get any easier to maintain brand loyalty throughout the customer journey. “If future trends lean more toward sharing than individual ownership, brand loyalty will become something different,” notes MHP expert Robert Marek. “Loyalty management will therefore become an increasingly important element in future.”
Predictive Analytics Will Become the Norm
Predictive Analytics Will Become the NormAccording to the 2018 “Predictive Analytics” study conducted by Lufthansa Industry Solutions among 390 companies from the DACH region, around two thirds of the companies expected predictive analytics to become important or even very important for them in the next three years. Some 37 per cent were already using analytics tools. Likewise, 37 per cent of the companies indicated their intention to invest in analysis methods that use artificial intelligence.
This may sound rather ominous for those who focus on safeguarding data privacy. Although the General Data Protection Regulation (GDPR) adopted in 2018 placed greater restrictions on processing personal data (if this is what the customer wants), the Federal Commissioner for Data Protection and Freedom of Information still believes that there is scope for improvement in some areas. “As yet, there are no sufficiently tangible guidelines for the creation of profiles that will be used to categorize and evaluate people and then interact with them based on the outcome,” says Dirk Hensel, spokesperson for the Federal Commissioner for Data Protection and Freedom of Information. Hensel explains that in terms of scoring and profiling in particular, they stand up “to implement a change to the regulations with a view to providing better protection to those concerned.” Despite this situation, marketing professor Werner Reinartz believes that the developments are unstoppable. “We will definitely arrive at a ‘transparent customer’ scenario,” he says. “It will be a gradual change, but that’s where we’re heading. That’s the price of enhanced convenience.”
The rapid development of new technologies and the self-learning systems that form the basis of artificial intelligence drives change in this area. “Emotional AI in particular, which is about gathering data from faces, voices and body language, will become an increasingly popular tool for marketing and customer service applications,” predicts service expert Professor Matthias Gouthier. “It could be used in a call center or even in a car, with a camera and sensors being used to detect situations that are stressful for the driver and then changing the lighting or activating the seat massage function.”
The new beacon technology also provides knowledge about customers that is more detailed. “It communicates exactly where in the store a customer is located, right down to the specific shelf area, and compares that with the customer’s data,” explains Dastani. “With this technology you can provide customers with excellent, customized recommendations.” This can even happen right there in the store. “Imagine that you are traveling up the escalator in a department store and suddenly, for just a moment, an advertisement tailored precisely to you is displayed nearby,” says Dastani. “This is really no quantum leap. It will happen.” A few years from now, customers will simply no longer accept a generalized approach.
The Limits of Big Data
The Limits of Big DataAs appealing as the digital possibilities along the customer journey of the future may be, it remains open what benefits they will ultimately bring. Businesses still face the Herculean task of managing large volumes of data both securely and efficiently.
“They need to create an infrastructure in order to actually use the data to inform their future actions,” says data analyst Parsis Dastani. “That’s certainly no mean feat.” Dastani believes that AI will soon be able to take over complex decision-making in this area, e.g. deciding how to tailor advertising resources to a customer and which channel to use. “Computers can learn to act and then evaluate their own actions,” he says.
Far from becoming less relevant, these developments will actually see data protection take on increasing importance: “At a time when business models are becoming increasingly data driven, this is the area that puts people at the greatest risk,” believes Dirk Hensel, spokesperson for the Federal Commissioner for Data Protection and Freedom of Information. “Firstly, because they often don’t know that their data is being collected and evaluated, or don’t know the extent to which this is happening. And secondly, because in many cases they have no way to prevent this from happening if they wish to continue participating in normal life.” The Federal Commissioner is of the opinion that greater clarity and regulation is required in relation to the conditions under which it is permissible to create profiles.
Human Interaction Must Remain a Priority
Human Interaction Must Remain a PriorityLeaving apart the mega-digitalized process of acquiring knowledge about customers, one key aspect remains – consistent experiences with the people who represent a brand.
Ultimately, social interaction between people creates a kind of emotional resonance that algorithms are not currently able to replicate. In other words, a genuine smile has the ability not only to open hearts but also to prompt decisions to purchase.
At the Munich branch of Globetrotter, branch-marketing manager Dreibrodt stands in front of a wall covered with hundreds of photos of customers enjoying their travel experiences all over the world. This wall illustrates 4,000 customer journeys. “A customer’s loyalty to a company begins and ends with the service, the interaction and the integration; that’s not about to change,” believes Dreibrodt. “At Globetrotter, many of our customers feel like part of a community. This is due in part to the fact that we are so mindful of how we communicate and come into contact with them.”
Matthias Winkler, CEO of Hotel Sacher Wien, even goes one step further. He predicts that service providers and service employees will upgrade their service levels. “The relationship between customers and the people serving them will be assigned greater importance,” he says. “It will become the ultimate kind of connection – a personal relationship.” So even in the age of online retail, empathy, friendliness and recognition will remain key drivers of the customer journey. These qualities will create experiences that delight customers and lead to long-term customer loyalty.
Hyper-Personalization – It’s All about the Customer
Hyper-Personalization – It’s All about the Customer Marketing expert Gouthier refers to the process of completely individualizing the customer journey as hyper-personalization. “The challenge with this approach is in personalizing each touchpoint with the brand in the right way.
At Hotel Sacher Wien, a traditional hotel located in Vienna, guests will soon have the opportunity to personalize their stay truly using a dedicated Sacher app. Perhaps you’d like another pillow on the bed? A room with a view of the opera house? Your favorite Veltliner wine in the minibar? “By digitalizing our process, we can have more contact with our guests before they arrive and understand their individual requirements more effectively,” explains CEO Matthias Winkler. Winkler goes on to explain that requests might relate to the all-important ‘pillow menu’, ensuring their room is the right temperature or even booking tickets for the opera. “Our guests decide what data to share with us so that we can make their stay as personalized as possible.”
Expectations have continued to increase in recent years. In 2018, the Microsoft State of Global Customer Service study surveyed 5,000 customers from all over the world regarding their expectations. 95 per cent cited service quality as a decisive factor for product choice and brand loyalty. Some 59 per cent of customers stated that their expectations were higher than they had been a year earlier. Nearly a third reported switching to another brand due to poor service, in recent months alone.
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All Power to the Customer?
This reportage is an interactive reading experience. Make your personal decisions and embark on an individual customer journey.
“ding dong”
Thousands of Touchpoints – The Multichannel Brand Experience
Stefan Schneid, branch manager at Würth
Boundless or ON/OFF?
The Fusion of Online and Offline Solutions
“It allows me to connect with the brand along the entire chain of interaction, transaction and usage,”
Stefan Schneid, branch manager at Würth
How should it continue?
A Journey Without a Destination – And Without Limits
The app users tend to make more purchases during their customer journey than traditional Nike customers, and actively interact with the brand.
Would you like to know what happens to collected data or learn more about customer behavior?
Experience and Convenience
“If an experience is executed well, there can be a huge impact for the brand as well as a positive response on social media. In the ideal scenario, the experience will result in new customers and new potential customers.”
Customer Data – The Digital Lubricant
“It will fundamentally change the customer relationship over the next few years and will enable unprecedented proximity to customers,”
“gigantic, a crazy volume of information.”
Would you like to know what happens to collected data or learn more about customer behavior?
Customizing XXL
This is a miniature playing field for tradespeople who want to try out the new cordless screwdriver from Würth.
Know Your Customers Better Than They Know Themselves
how likely a customer is to order the organic cotton long-sleeved shirt or a Swiss pine pillow
Stefan Schneid, branch manager at Würth
So Who ‘Owns’ the Customer of the Future?
“Manufacturers’ brands are now in much greater and more frequent contact with customers,”
Predictive Analytics Will Become the Norm
The rapid development of new technologies and the self-learning systems that form the basis of artificial intelligence drives change in this area.
The Limits of Big Data
Human Interaction Must Remain a Priority
Already discovered?
Hyper-Personalization – It’s All about the Customer
The challenge will be to customize each touchpoint according to the brand.
All Power to the Customer?
This reportage is an interactive reading experience. Make your personal decisions and embark on an individual customer journey.
“ding dong”
Thousands of Touchpoints – The Multichannel Brand Experience
Stefan Schneid, branch manager at Würth
Boundless or ON/OFF?
The Fusion of Online and Offline Solutions
“It allows me to connect with the brand along the entire chain of interaction, transaction and usage,”
Stefan Schneid, branch manager at Würth
How should it continue?
A Journey Without a Destination – And Without Limits
The app users tend to make more purchases during their customer journey than traditional Nike customers, and actively interact with the brand.
Would you like to know what happens to collected data or learn more about customer behavior?
Experience and Convenience
“If an experience is executed well, there can be a huge impact for the brand as well as a positive response on social media. In the ideal scenario, the experience will result in new customers and new potential customers.”
Customer Data – The Digital Lubricant
“It will fundamentally change the customer relationship over the next few years and will enable unprecedented proximity to customers,”
“gigantic, a crazy volume of information.”
Would you like to know what happens to collected data or learn more about customer behavior?
Customizing XXL
This is a miniature playing field for tradespeople who want to try out the new cordless screwdriver from Würth.
Know Your Customers Better Than They Know Themselves
how likely a customer is to order the organic cotton long-sleeved shirt or a Swiss pine pillow
Stefan Schneid, branch manager at Würth
So Who ‘Owns’ the Customer of the Future?
“Manufacturers’ brands are now in much greater and more frequent contact with customers,”
Predictive Analytics Will Become the Norm
The rapid development of new technologies and the self-learning systems that form the basis of artificial intelligence drives change in this area.
The Limits of Big Data
Human Interaction Must Remain a Priority
Already discovered?
Hyper-Personalization – It’s All about the Customer
The challenge will be to customize each touchpoint according to the brand.
