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Perspectives

Exploring the Customer Interface: You Had Me at '0100100001000101010011000100110001001111'

2015-01-14


By placing the customer at the center of the corporate strategy, businesses across industries can apply Code Halo thinking to create more satisfying and personal experiences that drive innovation, loyalty and performance.

One of the most exciting aspects of the Code Halo™ age is how digital tools and techniques are advancing the way we interact with — and get value from — the companies we do business with. Our Code Halos are taking W. B. Yeats' old phrase, "There are no strangers here; only friends you haven't yet met," and replacing it with a new one: "There are no strangers here; only code that hasn't yet collided with my code."

Any algorithm that "gets" how my affection for Wilco, Lowell George, Ralph Vaughan Williams and Elvis Costello makes me not only one seriously cool dude but also likely to appreciate the so-cool-I've-never-heard-of-them Shovels & Rope — as well as interested in driving the yet-to-roll-off-the-production-line E400 from Mercedes Benz — and interested in knowing that my brother's 7-year-old would love an American Girl Pajama Pal, which I could pick up on my business trip to Manhattan next week (if, of course, I didn't want it shipped overnight by the Amazon Drone) — is revolutionizing what we do, when we do it, how we do it, even why we do it. The "code that knows" is the catalytic converter at the heart of the spark changing every aspect of life and work before our very eyes.

As Code Halo thinking unfolds, it will usher in more intuitive ways of interacting with people and institutions that know us, understand us, remember us, anticipate us and serve us in ways that only the 1% of the 1% has ever really experienced before.

To dig a little deeper into what businesses and public sector organizations are doing to deploy and optimize these new approaches, we recently commissioned Oxford Economics,2 a leading global forecasting and research firm, to examine how the customer interface is morphing in markets undergoing rapid digitization. We chose to focus on the customer interface — among all major areas where Code Halos are impacting business — because it is the prominent touchpoint at which Code Halo thinking is most highly developed and having the greatest impact.

You, Mr. or Ms. Customer, are Really King (or Queen). No, Really

From our preliminary analysis, it is clear that more and more companies have received the Code Halo memo. They understand that digital consumer technologies have changed and are continuing to transform customer expectations. Now they want to follow in the footsteps of Amazon and Netflix and are, therefore, beginning to prioritize a revamp of the entire customer experience. Roughly 60% of respondents say they value digital- and customer- centric growth initiatives — such as increasing customer retention and engagement and creating new customer experiences — more highly than traditional objectives and goals like geographic expansion, M&A and even recruiting high-quality employees.

While the customer has always been and will remain king, Code Halos are now giving enterprises a way to really put customers at the center of their strategy. Well over half (58%) of respondents say customer data and analysis is the key element of their company's innovation efforts and another 47% report that digitizing the customer experience to deliver mass personalization is a core strategic goal. One executive, Mike Kozub, vice president of customer insights and analytics at Nationwide Insurance, put it well: "We really care about being outstanding at delivering personal and personalized experiences. The essence of that is in building a personal relationship with our customer in a digital environment." In fact, creating personalized experiences was the second most cited focal point for respondents.

Building Code Halos: Work in Progress

That's the good news; the not so good news? For all the focus on using customer data, collection methods are musty. Companies still rely heavily on familiar tools — spreadsheets and the like — to capture vital customer information and a broad range of customer data remains uncollected, resulting in missed opportunities to develop and enhance digital profiles that illuminate Code Halos. In fact, less than half of respondents say they collect data such as browsing and spending history, demographics and Facebook "likes," while use of social media is immature. Less than one-fifth of companies use API traffic to understand the customer journey, an essential part of compiling customers' digital profiles.

Figure 1

In addition, once data is collected, the job of turning it into information and then insight or foresight remains a challenge due to both human and technological factors. Nearly half of respondents say they lack adequate skills and tools for effective data analysis, creating a substantial drag on innovation potential.

Businesses that are furthest along in collecting and using customer data are seeing measurable return on their data programs. Companies that follow in the footsteps of Code Halo leaders will maximize insights and foresights gleaned at the customer interface — where personal, process, organization and device halos intersect. Creating a gestalt from these digital details can make all the difference. To make a sale, says Jørgen Klüwer, head of e‑commerce at Dansk Supermarket Group (DSG), "We need not just a good price to set a good promotion at the point of purchase — we also need to be there a month before this customer goes and buys a new TV."

This need for clairvoyance is exactly what Code Halos can fulfill; many enterprises recognize this. Nearly half (45%) of respondents say they expect digital profiles to spark gains in profitability (see Figure 2). Many see that the continuous interaction of a Code Halo-rich environment will ripen and deepen in a virtuous circle of "giving and getting," in which the value of the code we provide is positively outweighed by the value of the code we receive in return.

Figure 2

The Democratization of Luxury

In our book on Code Halo thinking,3 we examine how the digital customer interface is the focal point of personalized attention and service, amenities that were traditionally available only to the well-to-do. Code Halos are democratizing luxury and allowing the promise of mass customization to become real, with benefits for individuals and corporations alike. Cracking the Code Halo, embracing the digital trace and deciphering the fingerprint are all activities that are opening up completely new, uncharted territories and launching a new gold rush — of potentially unprecedented dimensions — in which code is the new gold.

Our latest study shows that many businesses get this. But it also shows that a lot of work needs to be done to unleash the full potential of these new ideas. Stay tuned for our forthcoming report, which will provide additional detail, analysis and insight into the steps that organizations are taking to optimize these once-in-a-generation opportunities.

Footnotes 

1 That's "hello" for all you non-coders. 

2 Oxford Economics undertook a global survey of 300 business and technology executives in April 2014 and conducted a series of in-depth interviews with executives tasked with leading digitization initiatives within their organizations. 

3 Malcolm Frank, Paul Roehrig and Ben Pring, Code Halos: How the Digital Lives of People, Things and Organizations are Changing the Rules of Business, John Wiley & Sons, April 2014. 

Exploring the Customer Interface: You Had Me at '0100100001000101010011000100110001001111'