The CIO's And CMO's Blueprint For Strategy
In The Age Of The Customer

Four Imperatives To Establish New Competitive Advantage

By Kyle McNabbJosh Bernoff 

Put Customer Obsession At The Center Of Your Corporate Strategy

Face it: Your technology-empowered customers now know more than you do about your products and services, your pricing, and your reputation. Technology has tipped the balance in favor of the customer.

Once, Technology Favored Companies; Now, It Empowers Customers

Once, Technology Favored Companies; Now, It Empowers Customers -- Forrester Research

They can buy anything instantly and have it delivered to anywhere. And in a world of global sourcing and efficient supply chains, your competitors can copy or undermine the moves you take to compete. Your only successful response — the only way to retain customers and their loyalty — is to become customer-obsessed. Here's what we mean:

A customer-obsessed enterprise focuses its strategy, its energy, and its budget on processes that enhance knowledge of and engagement with customers and prioritizes these over maintaining traditional competitive barriers.

Customer-obsessed enterprises invest differently. Some, like Amazon.com, Macy's, and USAA, have customer obsession in their budgeting DNA. Others, such as Delta Air Lines and Royal Bank of Canada, use the customer life cycle to support a continuous relationship with their customers.

The Customer Life Cycle Shapes Customer-Obsession Decisions

The Customer Life Cycle Shapes Customer-Obsession Decisions -- Forrester Research

Customer obsession also drives firms, such as Hilton Worldwide and The Home Depot, to spend hundreds of millions on revamping technology to meet customer needs. And it pays off, regardless of whether the customer is a consumer or a business buyer. According to an analysis by Watermark Consulting, 10-year investment returns from publicly traded customer experience leaders (measured by Forrester's Customer Experience Index) were 43%, while investments from customer experience laggards generated negative returns.

Customer Experience Leaders Outperform The Market

Customer Experience Leaders Outperform The Market -- Forrester Research

A Blueprint For Strategy In The Age Of The Customer

Customer obsession is easy to talk about but hard to do. It requires remaking your company, systematically, to re-orient each element toward improved customer experience. It also requires embracing the technologies that make customer obsession real and actionable. We'll lay out a blueprint for how to do it, based on four key strategic imperatives:

  1. Transform the customer experience with a systematic, measurable approach.
  2. Accelerate your digital business future to deliver greater agility and customer value.
  3. Embrace the mobile mind shift to serve customers in their moments of need.
  4. Turn big data into business insights to continuously improve your efforts.

Four Market Imperatives In The Age Of The Customer

Four Market Imperatives In The Age Of The Customer -- Forrester Research

1. Transform The Customer Experience With A Systematic, Measurable Approach

While every company says that it's customer-focused, few act systematically on that impulse. In a global survey across all industries, seven out of 10 business leaders said that customer experience is a critical or high priority. Even so, less than one-third of customer experience professionals indicate that their firms consistently take the impact on customer experience into consideration when making business decisions. Customer experience success requires discipline and relentless focus. Here's how to approach it:

  • Embrace disciplines to design, implement, and manage customer experience. For example, a systematic approach to improving and measuring customer experience helped Fidelity Investments save more than $24 million per year, even as it grew investments from key customers by several billion dollars. Successful companies improve in four phases: repair, elevate, optimize, and differentiate. At each phase, employees must adopt new, increasingly sophisticated customer experience management practices.
     
  • Address defects in the customer experience ecosystem. To find unique strengths, opportunities, and differentiators, you need a full view of your ecosystem, including competitors, partners, and regulatory constraints. Delta Air Lines boosted its Customer Experience Index in a heavily regulated industry by embracing the process and operational changes needed to reduce flight cancellations and to improve on-time performance, service recovery, and baggage handling. To start, you must map painful customer journeys, including the parts of the ecosystem you don't control. Then, create improvements in collaboration with all the stakeholders you identify, including customers.
     
  • Design experiences that exceed customer expectations. Change happens so fast now that quick iterations and rapid prototyping and testing are mandatory. One major US home appliance manufacturer that embraced these Agile methods grew 30% annually for the past six years and is now approaching $1 billion in revenue. These approaches demand design expertise that encompasses customer understanding and empathy; effective prototyping, storyboarding, and envisioning; and building creative digital experiences.

Growth And Customer Experience Improvement Top Business Leaders' Priorities

Growth And Customer Experience Improvement Top Business Leaders' Priorities -- Forrester Research

2. Accelerate Your Digital Business Future For Greater Agility And Customer Value

How can you keep up with empowered customers? Be more digital. Your customers, your channels, and your competitors are digital. The future of your business is digital. But you probably lack a clear digital business vision. Executives in eBusiness and marketing often bolt on digital channels and processes rather than retool their company for digital agility. By contrast, truly digital businesses continuously exploit digital technologies to both create new sources of value for customers and increase operational agility in service of customers. This approach is how Mercedes-Benz can use digital sensors to transform the driving experience; Rolls-Royce can use digital sensors in its jet engines to revamp its business model; and Procter & Gamble can test product packaging and shelf layouts in virtual stores before committing to costly manufacturing. Here's how you can be like them:

  • Master digital customer experience and digital operational excellence. CMOs and CIOs should work with eBusiness professionals to embrace web and mobile customer touchpoints. Re-envision your business not as a standalone entity but as part of an ecosystem of suppliers that customers assemble according to their needs and an ecosystem of collaborating businesses that share data and services. And infuse all your processes with digital efficiency so you can react more quickly to customer demands.
     
  • Start your journey toward embracing digital business techniques everywhere. Digital business should be every person's job, every team's task, and every division's modus operandi. The size of this overhaul of your business varies: Some firms, like Amazon, were born digital — they find embracing these digital principles far easier. If you're not this lucky, start with a focus on just one business unit or product line. Use digital to reposition it within the value ecosystem. Then, build on that success.
     
  • Become comfortable with disruption. Digital disruption is here, and your company could be the next to be disrupted by the likes of Google News, Hailo, or Zipcar. Don't just wait for disruption to come to your industry — learn to disrupt your own business. Big companies from Intermountain Healthcare to Target are already doing this. Their strategy: 1) Define a clear vision of what digital disruption promises and 2) seek a frank understanding of the obstacles your specific organization must overcome to embrace disruption.

Executives Don't Believe They Have A Clear Vision For Digital Transformation

Executives Don't Believe They Have A Clear Vision For Digital Transformation  -- Forrester Research

3. Embrace The Mobile Mind Shift To Serve Customers In Their Moments Of Need

The most urgent place to apply digital thinking is through mobile devices. One billion smartphones have trained people, your customers, to turn to mobile first. Both consumers and business buyers have experienced a mobile mind shift: They expect that they can get what they want in their immediate context and moments of need.

The Mobile Mind Shift Is Spreading Rapidly

The Mobile Mind Shift Is Spreading Rapidly -- Forrester Research

Companies like Citibank (with mobile check deposit) and Starbucks (with mobile payment) have leveraged these mobile moments to reinforce customer loyalty. The new focus on mobile moments differs from PC-based web interactions, and it requires new thinking on how to interact with customers in their moments of need. To embrace it, develop new interactions with the four-step IDEA process:

  • Identify your customers' mobile moments and context. This starts with mapping the customer's journey using your systematic approach to customer experience. Use techniques like ethnographic research to determine moments where mobile can solve problems, reduce friction, or answer questions. For example, Johnson & Johnson uses its bedtime app to solve problems at the mobile moment of getting the baby to sleep, with lullabies and a sleep routine. Air conditioner vendor Trane streamlines the mobile selling moment by enabling its independent reps with a tablet app.
     
  • Design the mobile engagement. Design is about choosing the moments that matter most — not only the ones that customers value but also those that drive revenue or reduce costs. It's also about using context to deliver more value. For example, American Airlines knows it's your day of travel, knows what seats are available, and knows your frequent-flyer status — and uses this information to present the opportunity to upgrade your seat right from its app.
     
  • Engineer your platforms, processes, and people for mobile. The true costs of mobile spring from the challenges of updating corporate systems to live up to mobile demands. This is what's behind Hilton Worldwide's $550 million mobile makeover. You'll need to retool your platforms with atomized, responsive APIs; remake your processes with mobile in mind; and reform your design, business, and development talent into agile teams.
     
  • Analyze to optimize performance and improve interactions. Apps and mobile sites must evolve — and rapidly. That's why it's key to build analytics into every mobile project. Mobile apps and sites spin off lots of performance data, but you'll also want to instrument them to make it easy to measure their impact on business metrics (like room nights for a hotel chain). Because mobile engagement happens so close to the customer, you'll also want to mine this data for new customer insights.

An Overview Of The Steps In The IDEA Cycle

An Overview Of The Steps In The IDEA Cycle  -- Forrester Research

4. Turn Big Data Into Business Insights To Continuously Improve Your Efforts

Your understanding of your customers' context will make, or break, your ability to succeed in a customer's moment of need. Thankfully, your customers now create and leave behind digital breadcrumbs through their activity across all their touchpoints, such as websites, mobile apps, store visits, and phone calls. Firms like Lowe's, Macy's, and Walgreens use this data to respond based on context and develop deeper insights. American Express used big data to achieve an eightfold improvement in identifying at-risk customers. Here's what you can do to infuse insights from data into your business:

  • Reset what big data means to you. What's so big about big data? It's the opportunities you uncover when you put increasingly novel sources and types of data to use. Large, diverse, and messy forms of data can create new sources of customer value and increase operational agility in service of your customers. Big data helped Clorox anticipate demand based on social media and achieve record sales of its cleaning products. To exploit big data, CMOs, eBusiness leaders, and CIOs must collaborate to develop the culture, competencies, and capabilities required to close the gap between the data available and your ability to turn that data into business insight.
     
  • Use data to fuel a real-time contextual marketing engine. Your edge will come from self-sustaining cycles of real-time, two-way, insight-driven interactions with individual customers. Brands that have seized on this potential — such as McCormick & Company, Mini USA, and Nike — are assembling proprietary digital platforms that Forrester calls contextual marketing engines. They create sticky, highly engaging environments for customer interaction and generate unique, proprietary data and insights. The results improve customer engagement, boost revenue, and enhance customer experiences.
     
  • Accelerate innovation by using big data to anticipate customer needs. It's time to change how, and especially when, you apply and perform analytics. Go beyond static segmentation; embed analytics in your business. Emerging methods like location analytics and device usage analysis can generate the real-time contextual insight you need to deliver engaging, contextual experiences.


A Business Technology Agenda Will Sustain New Competitive Advantage

It's a tall order, remaking your business for the imperatives of customer experience, digital business, mobile engagement, and big data insights. That's why it will take the combined efforts of your most senior leaders — from the CIO to the CMO. Most likely, your technology is not up to the task of supporting these market imperatives. If you're like most firms, you've concentrated your technology management efforts on traditional IT — supporting and transforming internal operations. Successful companies will refocus their technology efforts on business technology (BT) — technology, systems, and processes to win, serve, and retain customers. Your BT agenda will lead to new competitive advantage if you:

  • Center on technologies that support the customer life cycle. The customer life cycle, and the systematic approach to transforming the customer experience, will push you to prioritize new and different technologies. You'll prioritize life-cycle solutions and engagement platform technologies to deliver seamless and compelling customer experiences.
     
  • Place a premium on software skills. Software powers nearly all the touchpoints your customers use to engage with your brand. Software is also essential to empowering your employees (in sales and customer service, for example) to address your customer's moment of need. Software is now a core asset to deliver elements of your customer-obsessed brand: trusted, remarkable, unmistakable, and essential. CIOs and their teams must rethink software's role, striving to build a software competency that establishes and maintains a unique advantage.
     
  • Embrace modern approaches to application and solution delivery. Your BT agenda must be delivered at a new, faster pace to keep up with rapidly changing business and market dynamics. It must focus on iterative delivery and continuous improvement to deliver impact and business value in weeks, not months. Modern delivery approaches will be the de facto expectation when delivering customer-obsessed solutions.
     
  • Force difficult prioritization and organization conversations. Companies like Delta Air Lines and Wal-Mart jumpstarted their competitive advantage by acquiring software companies. Firms like FedEx and The Washington Post got executive support and had the scale to start on their own. Comcast and UBS turned to software engineering firms for help. What you do will be based on an assessment of what your firm can do with the finite capital and scarce qualified resources it has available.
     
  • Demand changes to your partner ecosystem. Your BT agenda will redefine what's strategic to your organization and reshape the partner ecosystem you use. CMOs, eBusiness leaders, and CIOs must prioritize the agencies, management consultancies, and systems integrators that help advance your market imperative efforts. You may not replace existing relationships, but you will have an expanded partner ecosystem to both navigate and manage.

Top Technologies To Support The Customer Life Cycle

Top Technologies To Support The Customer Life Cycle  -- Forrester Research

What It Means For CIOs

IT Groups Will Wane, And Their Favored Vendors Will Be Replaced

The age of the customer spells the end of power for the traditional CIO. Those that make the BT transition will become valued partners in winning, serving, and retaining customers. But most won't make the transition.

  • The BT agenda will shrink technology departments. In many, half the staff — those with skills focused on maintaining systems — will lose their jobs. Smart CIOs will hire based on creativity and Agile skills with customer-facing technology. This structural change and the unemployment it creates could be the biggest labor retraining challenge of the 2020s.
     
  • Big tech vendors will lose power to data collectives. The IBMs, Microsofts, and Oracles of the world gain power from software. But power in the age of the customer comes not just from software, but from data. Already, companies like The Coca-Cola Company in consumer packaged goods, FICO in financial services, and UPS in shipping are building data collectives that will provide complete full-service, cloud-enabled shared data warehouses by industry. The vendors of the future will serve data the way that today's vendors serve software.
     
  • Systems integrators will find themselves competing with cloud players. The cloud is central to the agility required for digital business transformation, mobile engagement, and big data analytics. Cloud leaders like Amazon and Google will build out their software, eventually offering custom-built services similar to the way today's systems integrators build software solutions. The IBMs and KPMGs of the world will find Amazon their toughest competitor.
     
  • Vendors will merge based on where they live in the customer journey. Mergers in the tech world are commonplace. But in the age of the customer , vendors won't combine based on what department they sell into (marketing versus IT). Instead, they'll attempt to dominate elements of the  customer life cycle. We'll see packaged app suites for discovery, for service, and for closing the sale..
     

What It Means For CMOs

CMOs Will Shift From Customer Acquisition To Customer Experience

Traditional marketing is out of step with the age of the customer. Instead, CMOs will learn to focus on the contextual marketing that matters most when empowered customers can switch at a moment's notice.

  • The Obama political machinery will become the template for effective marketing. The Obama presidential victory in 2012 came from intelligence about voters, focused in key places on the day that it mattered. In marketing, now every day is decision day. You'll see the shift first in the entertainment industry, which will take a portion of the millions it spends promoting movies and divert it to personalized, contextualized, mobile persuasion. These techniques will spread to any company that needs to catalyze decisions — from car companies to telecom vendors. More and more of the marketing budget will go to buying the data to fuel these algorithms..
     
  • Companies will reorganize around customer journeys. Customer experience standout USAA already organizes its company around the customer journey. This trend will catch on in highly competitive industries like consumer packaged goods and travel. Instead of product lines, companies will have departments that focus on getting real-time information to buyers, easing the closing process, and turning service into loyalty. Heavy-handed efforts like Comcast's recently revealed crude upselling tactics will be replaced with agile, digitally enhanced, just-in-time offers that buyers will welcome.
     
  • Get ready for the race to the middle. Forrester's Customer Experience Index reveals that while breakthrough customer experience is still rare, truly poor customer experiences are becoming rarer. In industries from travel to telecom, the lowest performers have realized that there's money to be made going from bad to middling. If you are not above the midpoint in your industry, you'll be left in the dust by this movement.
     
  • Google will be your new key partner. Google's Nest Labs acquisition is just the beginning. Technology companies that control the intelligent hardware — set-top boxes, home appliances, mobile phones — will know the most about their customers. If your products are intelligent, too, you'll find this to be an advantage. If not, you'll need to come begging to partner with companies that have these intimate customer connections.

Next Steps

For CMOs:

Competitive Strategy In The Age Of The Customer

Learn how business models and success metrics will change in this new world where you must be customer obsessed.
Read the report
 

For CIOs:

Technology Management In The Age Of The Customer

See how technology managers must build the Business Technology agenda alongside the IT agenda in our report on empowered customers.

Read the report

By Kyle McNabbJosh Bernoff 

Put Customer Obsession At The Center Of Your Corporate Strategy

Face it: Your technology-empowered customers now know more than you do about your products and services, your pricing, and your reputation. Technology has tipped the balance in favor of the customer.

Once, Technology Favored Companies; Now, It Empowers Customers

Once, Technology Favored Companies; Now, It Empowers Customers -- Forrester Research

They can buy anything instantly and have it delivered to anywhere. And in a world of global sourcing and efficient supply chains, your competitors can copy or undermine the moves you take to compete. Your only successful response — the only way to retain customers and their loyalty — is to become customer-obsessed. Here's what we mean:

A customer-obsessed enterprise focuses its strategy, its energy, and its budget on processes that enhance knowledge of and engagement with customers and prioritizes these over maintaining traditional competitive barriers.

Customer-obsessed enterprises invest differently. Some, like Amazon.com, Macy's, and USAA, have customer obsession in their budgeting DNA. Others, such as Delta Air Lines and Royal Bank of Canada, use the customer life cycle to support a continuous relationship with their customers.

The Customer Life Cycle Shapes Customer-Obsession Decisions

The Customer Life Cycle Shapes Customer-Obsession Decisions -- Forrester Research

Customer obsession also drives firms, such as Hilton Worldwide and The Home Depot, to spend hundreds of millions on revamping technology to meet customer needs. And it pays off, regardless of whether the customer is a consumer or a business buyer. According to an analysis by Watermark Consulting, 10-year investment returns from publicly traded customer experience leaders (measured by Forrester's Customer Experience Index) were 43%, while investments from customer experience laggards generated negative returns.

Customer Experience Leaders Outperform The Market

Customer Experience Leaders Outperform The Market -- Forrester Research

A Blueprint For Strategy In The Age Of The Customer

Customer obsession is easy to talk about but hard to do. It requires remaking your company, systematically, to re-orient each element toward improved customer experience. It also requires embracing the technologies that make customer obsession real and actionable. We'll lay out a blueprint for how to do it, based on four key strategic imperatives:

  1. Transform the customer experience with a systematic, measurable approach.
  2. Accelerate your digital business future to deliver greater agility and customer value.
  3. Embrace the mobile mind shift to serve customers in their moments of need.
  4. Turn big data into business insights to continuously improve your efforts.

Four Market Imperatives In The Age Of The Customer

Four Market Imperatives In The Age Of The Customer -- Forrester Research

1. Transform The Customer Experience With A Systematic, Measurable Approach

While every company says that it's customer-focused, few act systematically on that impulse. In a global survey across all industries, seven out of 10 business leaders said that customer experience is a critical or high priority. Even so, less than one-third of customer experience professionals indicate that their firms consistently take the impact on customer experience into consideration when making business decisions. Customer experience success requires discipline and relentless focus. Here's how to approach it:

  • Embrace disciplines to design, implement, and manage customer experience. For example, a systematic approach to improving and measuring customer experience helped Fidelity Investments save more than $24 million per year, even as it grew investments from key customers by several billion dollars. Successful companies improve in four phases: repair, elevate, optimize, and differentiate. At each phase, employees must adopt new, increasingly sophisticated customer experience management practices.

  • Address defects in the customer experience ecosystem. To find unique strengths, opportunities, and differentiators, you need a full view of your ecosystem, including competitors, partners, and regulatory constraints. Delta Air Lines boosted its Customer Experience Index in a heavily regulated industry by embracing the process and operational changes needed to reduce flight cancellations and to improve on-time performance, service recovery, and baggage handling. To start, you must map painful customer journeys, including the parts of the ecosystem you don't control. Then, create improvements in collaboration with all the stakeholders you identify, including customers.

  • Design experiences that exceed customer expectations. Change happens so fast now that quick iterations and rapid prototyping and testing are mandatory. One major US home appliance manufacturer that embraced these Agile methods grew 30% annually for the past six years and is now approaching $1 billion in revenue. These approaches demand design expertise that encompasses customer understanding and empathy; effective prototyping, storyboarding, and envisioning; and building creative digital experiences.

Growth And Customer Experience Improvement Top Business Leaders' Priorities

Growth And Customer Experience Improvement Top Business Leaders' Priorities -- Forrester Research

2. Accelerate Your Digital Business Future For Greater Agility And Customer Value

How can you keep up with empowered customers? Be more digital. Your customers, your channels, and your competitors are digital. The future of your business is digital. But you probably lack a clear digital business vision. Executives in eBusiness and marketing often bolt on digital channels and processes rather than retool their company for digital agility. By contrast, truly digital businesses continuously exploit digital technologies to both create new sources of value for customers and increase operational agility in service of customers. This approach is how Mercedes-Benz can use digital sensors to transform the driving experience; Rolls-Royce can use digital sensors in its jet engines to revamp its business model; and Procter & Gamble can test product packaging and shelf layouts in virtual stores before committing to costly manufacturing. Here's how you can be like them:

  • Master digital customer experience and digital operational excellence. CMOs and CIOs should work with eBusiness professionals to embrace web and mobile customer touchpoints. Re-envision your business not as a standalone entity but as part of an ecosystem of suppliers that customers assemble according to their needs and an ecosystem of collaborating businesses that share data and services. And infuse all your processes with digital efficiency so you can react more quickly to customer demands.

  • Start your journey toward embracing digital business techniques everywhere. Digital business should be every person's job, every team's task, and every division's modus operandi. The size of this overhaul of your business varies: Some firms, like Amazon, were born digital — they find embracing these digital principles far easier. If you're not this lucky, start with a focus on just one business unit or product line. Use digital to reposition it within the value ecosystem. Then, build on that success.

  • Become comfortable with disruption. Digital disruption is here, and your company could be the next to be disrupted by the likes of Google News, Hailo, or Zipcar. Don't just wait for disruption to come to your industry — learn to disrupt your own business. Big companies from Intermountain Healthcare to Target are already doing this. Their strategy: 1) Define a clear vision of what digital disruption promises and 2) seek a frank understanding of the obstacles your specific organization must overcome to embrace disruption.

Executives Don't Believe They Have A Clear Vision For Digital Transformation

Executives Don't Believe They Have A Clear Vision For Digital Transformation  -- Forrester Research

3. Embrace The Mobile Mind Shift To Serve Customers In Their Moments Of Need

The most urgent place to apply digital thinking is through mobile devices. One billion smartphones have trained people, your customers, to turn to mobile first. Both consumers and business buyers have experienced a mobile mind shift: They expect that they can get what they want in their immediate context and moments of need.

The Mobile Mind Shift Is Spreading Rapidly

The Mobile Mind Shift Is Spreading Rapidly -- Forrester Research

Companies like Citibank (with mobile check deposit) and Starbucks (with mobile payment) have leveraged these mobile moments to reinforce customer loyalty. The new focus on mobile moments differs from PC-based web interactions, and it requires new thinking on how to interact with customers in their moments of need. To embrace it, develop new interactions with the four-step IDEA process:

  • Identify your customers' mobile moments and context. This starts with mapping the customer's journey using your systematic approach to customer experience. Use techniques like ethnographic research to determine moments where mobile can solve problems, reduce friction, or answer questions. For example, Johnson & Johnson uses its bedtime app to solve problems at the mobile moment of getting the baby to sleep, with lullabies and a sleep routine. Air conditioner vendor Trane streamlines the mobile selling moment by enabling its independent reps with a tablet app.

  • Design the mobile engagement. Design is about choosing the moments that matter most — not only the ones that customers value but also those that drive revenue or reduce costs. It's also about using context to deliver more value. For example, American Airlines knows it's your day of travel, knows what seats are available, and knows your frequent-flyer status — and uses this information to present the opportunity to upgrade your seat right from its app.

  • Engineer your platforms, processes, and people for mobile. The true costs of mobile spring from the challenges of updating corporate systems to live up to mobile demands. This is what's behind Hilton Worldwide's $550 million mobile makeover. You'll need to retool your platforms with atomized, responsive APIs; remake your processes with mobile in mind; and reform your design, business, and development talent into agile teams.

  • Analyze to optimize performance and improve interactions. Apps and mobile sites must evolve — and rapidly. That's why it's key to build analytics into every mobile project. Mobile apps and sites spin off lots of performance data, but you'll also want to instrument them to make it easy to measure their impact on business metrics (like room nights for a hotel chain). Because mobile engagement happens so close to the customer, you'll also want to mine this data for new customer insights.

An Overview Of The Steps In The IDEA Cycle

An Overview Of The Steps In The IDEA Cycle  -- Forrester Research

4. Turn Big Data Into Business Insights To Continuously Improve Your Efforts

Your understanding of your customers' context will make, or break, your ability to succeed in a customer's moment of need. Thankfully, your customers now create and leave behind digital breadcrumbs through their activity across all their touchpoints, such as websites, mobile apps, store visits, and phone calls. Firms like Lowe's, Macy's, and Walgreens use this data to respond based on context and develop deeper insights. American Express used big data to achieve an eightfold improvement in identifying at-risk customers. Here's what you can do to infuse insights from data into your business:

  • Reset what big data means to you. What's so big about big data? It's the opportunities you uncover when you put increasingly novel sources and types of data to use. Large, diverse, and messy forms of data can create new sources of customer value and increase operational agility in service of your customers. Big data helped Clorox anticipate demand based on social media and achieve record sales of its cleaning products. To exploit big data, CMOs, eBusiness leaders, and CIOs must collaborate to develop the culture, competencies, and capabilities required to close the gap between the data available and your ability to turn that data into business insight.

  • Use data to fuel a real-time contextual marketing engine. Your edge will come from self-sustaining cycles of real-time, two-way, insight-driven interactions with individual customers. Brands that have seized on this potential — such as McCormick & Company, Mini USA, and Nike — are assembling proprietary digital platforms that Forrester calls contextual marketing engines. They create sticky, highly engaging environments for customer interaction and generate unique, proprietary data and insights. The results improve customer engagement, boost revenue, and enhance customer experiences.

  • Accelerate innovation by using big data to anticipate customer needs. It's time to change how, and especially when, you apply and perform analytics. Go beyond static segmentation; embed analytics in your business. Emerging methods like location analytics and device usage analysis can generate the real-time contextual insight you need to deliver engaging, contextual experiences.


A Business Technology Agenda Will Sustain New Competitive Advantage

It's a tall order, remaking your business for the imperatives of customer experience, digital business, mobile engagement, and big data insights. That's why it will take the combined efforts of your most senior leaders — from the CIO to the CMO. Most likely, your technology is not up to the task of supporting these market imperatives. If you're like most firms, you've concentrated your technology management efforts on traditional IT — supporting and transforming internal operations. Successful companies will refocus their technology efforts on business technology (BT) — technology, systems, and processes to win, serve, and retain customers. Your BT agenda will lead to new competitive advantage if you:

  • Center on technologies that support the customer life cycle. The customer life cycle, and the systematic approach to transforming the customer experience, will push you to prioritize new and different technologies. You'll prioritize life-cycle solutions and engagement platform technologies to deliver seamless and compelling customer experiences.

  • Place a premium on software skills. Software powers nearly all the touchpoints your customers use to engage with your brand. Software is also essential to empowering your employees (in sales and customer service, for example) to address your customer's moment of need. Software is now a core asset to deliver elements of your customer-obsessed brand: trusted, remarkable, unmistakable, and essential. CIOs and their teams must rethink software's role, striving to build a software competency that establishes and maintains a unique advantage.

  • Embrace modern approaches to application and solution delivery. Your BT agenda must be delivered at a new, faster pace to keep up with rapidly changing business and market dynamics. It must focus on iterative delivery and continuous improvement to deliver impact and business value in weeks, not months. Modern delivery approaches will be the de facto expectation when delivering customer-obsessed solutions.

  • Force difficult prioritization and organization conversations. Companies like Delta Air Lines and Wal-Mart jumpstarted their competitive advantage by acquiring software companies. Firms like FedEx and The Washington Post got executive support and had the scale to start on their own. Comcast and UBS turned to software engineering firms for help. What you do will be based on an assessment of what your firm can do with the finite capital and scarce qualified resources it has available.

  • Demand changes to your partner ecosystem. Your BT agenda will redefine what's strategic to your organization and reshape the partner ecosystem you use. CMOs, eBusiness leaders, and CIOs must prioritize the agencies, management consultancies, and systems integrators that help advance your market imperative efforts. You may not replace existing relationships, but you will have an expanded partner ecosystem to both navigate and manage.

Top Technologies To Support The Customer Life Cycle

Top Technologies To Support The Customer Life Cycle  -- Forrester Research

What It Means For CIOs

IT Groups Will Wane, And Their Favored Vendors Will Be Replaced

The age of the customer spells the end of power for the traditional CIO. Those that make the BT transition will become valued partners in winning, serving, and retaining customers. But most won't make the transition.

  • The BT agenda will shrink technology departments. In many, half the staff — those with skills focused on maintaining systems — will lose their jobs. Smart CIOs will hire based on creativity and Agile skills with customer-facing technology. This structural change and the unemployment it creates could be the biggest labor retraining challenge of the 2020s.

  • Big tech vendors will lose power to data collectives. The IBMs, Microsofts, and Oracles of the world gain power from software. But power in the age of the customer comes not just from software, but from data. Already, companies like The Coca-Cola Company in consumer packaged goods, FICO in financial services, and UPS in shipping are building data collectives that will provide complete full-service, cloud-enabled shared data warehouses by industry. The vendors of the future will serve data the way that today's vendors serve software.

  • Systems integrators will find themselves competing with cloud players. The cloud is central to the agility required for digital business transformation, mobile engagement, and big data analytics. Cloud leaders like Amazon and Google will build out their software, eventually offering custom-built services similar to the way today's systems integrators build software solutions. The IBMs and KPMGs of the world will find Amazon their toughest competitor.

  • Vendors will merge based on where they live in the customer journey. Mergers in the tech world are commonplace. But in the age of the customer , vendors won't combine based on what department they sell into (marketing versus IT). Instead, they'll attempt to dominate elements of the  customer life cycle. We'll see packaged app suites for discovery, for service, and for closing the sale..

What It Means For CMOs

CMOs Will Shift From Customer Acquisition To Customer Experience

Traditional marketing is out of step with the age of the customer. Instead, CMOs will learn to focus on the contextual marketing that matters most when empowered customers can switch at a moment's notice.

  • The Obama political machinery will become the template for effective marketing. The Obama presidential victory in 2012 came from intelligence about voters, focused in key places on the day that it mattered. In marketing, now every day is decision day. You'll see the shift first in the entertainment industry, which will take a portion of the millions it spends promoting movies and divert it to personalized, contextualized, mobile persuasion. These techniques will spread to any company that needs to catalyze decisions — from car companies to telecom vendors. More and more of the marketing budget will go to buying the data to fuel these algorithms..

  • Companies will reorganize around customer journeys. Customer experience standout USAA already organizes its company around the customer journey. This trend will catch on in highly competitive industries like consumer packaged goods and travel. Instead of product lines, companies will have departments that focus on getting real-time information to buyers, easing the closing process, and turning service into loyalty. Heavy-handed efforts like Comcast's recently revealed crude upselling tactics will be replaced with agile, digitally enhanced, just-in-time offers that buyers will welcome.

  • Get ready for the race to the middle. Forrester's Customer Experience Index reveals that while breakthrough customer experience is still rare, truly poor customer experiences are becoming rarer. In industries from travel to telecom, the lowest performers have realized that there's money to be made going from bad to middling. If you are not above the midpoint in your industry, you'll be left in the dust by this movement.

  • Google will be your new key partner. Google's Nest Labs acquisition is just the beginning. Technology companies that control the intelligent hardware — set-top boxes, home appliances, mobile phones — will know the most about their customers. If your products are intelligent, too, you'll find this to be an advantage. If not, you'll need to come begging to partner with companies that have these intimate customer connections.