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Think “frictionless” for customer loyalty in the face of a Digital Disruptor

mikeshaw747

It’s all about getting closer to the customer, right? Big data - allows you to get closer to the customer. Mobile clients - get closer to the customer. I read the other day in The Economist that one of the key promises of internet of things is that it will allow us to get even closer, yes, even closer to our customers (apologies - this link may require at least an Economist login).

And, of course it’s better to be closer to your customer than … not close!  But customer intimacy is not everything, especially in a world where you may well get attacked by a digital disruptor (Geoffrey Moore's models for disruption). However close you are to your customers, if someone comes along with a disruptive business model, you are still at risk of losing your customers.

As I’ve discussed in a previous blog, Geoffrey Moore writes a lot about disruption. He says that if you are an incumbent and you are under attack by a business model disruptor, you need to focus on disrupting your own business operations. Not your fundamental business model, but your business operations.

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A good example is retail banking which is facing digital disruption attacks. Jamie Dimon, CEO of JP Morgan (pictured above), recently wrote the following to his shareholders:

"There are hundreds of startups [there are in fact more than 2,000] with a lot of brains and money working on various alternatives to traditional banking ….

They are very good at reducing the 'pain points' in that they can make loans in minutes, which might take banks weeks.

What Mr Dimon is saying, of course, is that many these startups attacking retail banking are trying to make things more frictionless - making loans in minutes and not weeks. 

Make your customer interactions as Frictionless as possible to resist a business model disruption attack

A few weeks ago, I was at the fledgling Digital Transformation conference in London. It wasn’t the largest conference, about 50 attendees, but I found it absolutely fascinating. 

One of the companies presenting was Localz. Localz is an Australian company that focusses on mobile apps using geo-positioning and beacons. They talked about how they were working with retailers like the UK's John Lewis to use geo-positioning data and beacons to help shoppers.  For example, if you order something on the web for pickup in the store, they notice when you enter the store and start getting your goods ready for collection. This more than halves the pickup time and massively improves the friction of the transaction. 

Tim Andrew, Commercial Director and co-founder of Localz, made a comment that really resonated with me. He said, “we are constantly trying to make the shopping experience as frictionless as possible”. 

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This remark took me back to Geoffrey Moore’s advice that those under business model disruption attack should focus on disrupting their business operations. And one of the best ways you can do this if you want to keep your customers is to focus on making it as frictionless as possible for them to do business with you. 

  • Can you make it easier to checkin online and go thru the airport? Answer (as a seasoned business traveller) is “yes”. 
  • Can you make it easier to pay for stuff? Yes - that’s what Apple Pay and other NFC payment systems are all about. 
  • Can you make it easier to order your stuff on the web? How about delivery of the goods? (I ordered some paint on the web the other day. Dead easy. But then the company required a signature for delivery and I wasn’t in. A signature for a small tin of paint? Seriously?)

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Relentlessly attack your business operations. Again and again and again and again.

The second thing that struck me about Localz was the way in which they were constantly and continuously trying to find ways of attacking friction in customer interactions (I would say “reducing friction”, but their attitude was more like an attack on friction than a quest to reduce it). “We tried xxx, but customers didn’t like it. So we tried yyyy instead. We then noticed zzzz and so we tried aaaa. Now we’re trying bbbb as well” 

It’s highly creative. It’s relentless. It’s not one big bang, but a constant chipping away. You are never finished. 

 

Relentlessly reduce friction if you want to stop a business model disruption attack

I think that there is a lot to copy in what Localz are doing for retailers in the UK and Australia:

  • Look at all aspects of your customer interactions and ask, honestly, “how get we reduce friction here?”  (For example, “getting a signature for a delivery is no big deal” is self-dilution)
  • Be relentless. Keep experimenting. Again and again and again. Assume you’ll never stop this process - you’ll never get to totally frictionless. And so, you’ll never be able to reduce the “remove friction” R&D budget to zero
  • Don’t wait for the business model disruption attack before you start. It will be too late by then. Assume you’ll soon be attacked by an Uber or a retail banking startup or a Aibnb or a Netflix 

 

Frictionless is not a fool-proof formula, but it’s probably your best bet

Could frictionless have stopped Netflix and iTunes killing the DVD rental business? No. Could frictionless have stopped email and social media shrinking the letter delivery business? No.

But in many cases, frictionless can help. Had the taxi companies of San Francisco created a cool app to order, track and pay for taxis, Uber would have had a much harder time. Physical retail outlets like John Lewis are able to compete against online retailers in part because they have made their omni-channel shopping experience as frictionless as possible. 

So, rather than putting all your eggs into the “get closer to the customer” basket, I would also suggest a relentless and continuous chipping away at the fiction of customer interaction.

One last point. I “own” two digital natives - two teenagers. Their tolerance for friction is close to zero. I don’t think it’s just because they are teenagers. I think it’s because they have been born into a world with a frictionless expectation where it is assumed that if you face friction in an interaction, you simply move onto the next supplier. In other words, our customer bases are becoming more sensitive to the friction of interaction with you as business or government. 

 

Want more?

I have put all my blog posts on Digital Disruption onto a scoop.it page.

I curate a scoop.it page on digital disruption. Myself and my collegues tend to post a couple of times a week on the goings-on in the world of digital disruption. 

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Mike Shaw
Director Strategic Marketing

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About the Author

mikeshaw747

Mike has been with HPE for 30 years. Half of that time was in research and development, mainly as an architect. The other 15 years has been spent in product management, product marketing, and now, strategic marketing. .

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