IT Briefcase Exclusive Interview: How to Identify & Avoid Customer Friction

Matthew Leach, Vice President, Digital and Application Services, NTT DATA Services  

Consumer packaged goods (CPG) companies are always searching for ways to get an edge up on their competitors. As technology advances, the digital experience becomes more integral to successful consumer engagement, and CPG companies must allocate resources into understanding how UX can impact brand reputation.

NTT DATA Services recently released its latest Customer Friction Factor (CFF℠) Assessment, Friction Challenges for the Consumer Packaged Goods Industry, confirming that consumers’ online experience impacts the bottom line for CPG companies. Matthew Leach, Vice President, Digital and Application Services from NTT DATA Services offers some insight on customer friction and why CPG companies should make customer experience a priority for business growth.

• Q: Why is customer friction important, and how does it challenge CPG companies?

Customer friction is defined as any aspect of customer interaction that has a negative impact on the customer’s experience. The less friction a customer encounters, the more likely they are to be satisfied with a product or service and continue to do business with that company in the future. Every industry is facing the challenge of digital disruption, and many don’t know where to start or how to define a strategy. By embracing the concept of customer friction, companies are able to focus on initiatives which will provide the greatest benefits to their customers.

As an example, CPG companies seek to offer the best services to consumers. They are being forced to take a consumer-first approach given the demands of shifting customer expectations and the threat of digital disruptors. The Customer Friction Factor study highlights tremendous opportunity in this industry. For CPG companies to satisfy customers and increase sales, they must ensure friction remains as low as possible.

• Q: What is unique about the methodology behind the CFF assessment?

Traditional methodologies, such as customer satisfaction surveys or Net Promoter Score, have some inherent flaws. They are either lagging indicators or don’t provide actionable feedback. To truly understand customer friction, companies need a method that identifies friction and helps develop precise, objective recommendations that will guide the transformation agenda. This could include anything from reshaping business processes to modernizing existing applications.

This is accomplished by examining five categories of customer frictions: technology, knowledge, engagement, process and ecosystem. This assessment can be done across channels, customer types, and business processes to provide a 360 view of the customer experience.

By isolating each element and assessing performance in the individual categories as well as overall, companies can learn where improvement is needed for a stronger customer experience.

• Q: How were the most successful sites able to differentiate themselves from the others?

Across several industries there is a correlation between great customer experience, or high CFF scores, and improvements in business measures such as revenue growth and profitability. Most recently, leading CPG company sites have 31 percent greater asset turnover and 13 percent higher gross margins when compared to lagging organizations. The most successful sites held a significant advantage in the technology, process and knowledge categories.

While 21 percent of all friction is related to technology, more successful sites have deployed consistent design elements and navigation, were accessible across multiple device types, and were geared to support the reasons why a customer might visit their site. The most successful sites also incorporated existing customer knowledge by storing information and repopulating it for the customer to save time.

Finally, companies with stronger performances had far fewer customer steps within this transaction – customers did not have to work as hard to accomplish the same goal. Successful sites required 55 percent less steps than competitors, and the decreased time and effort required by customers correlated with an increase in sales.

• Q: What are recommendations for improving customer engagement on any of the evaluated sites or others like them?

In the past, CPG companies abdicated portions of the customer experience to their retail partners. This research confirms that in the digital economy, this strategy is no longer valid and that customer experience does indeed impact the bottom line for CPG companies. Those wishing to come out ahead of their competitors should focus their digital agenda on improving customer experience.

Missed opportunities and mismanaged experience that result in a negative impact on the company’s brand can have lasting effects. By focusing on core customer goals and transactions, organizations can remove barriers for the customer and simplify experiences, to the delight of their customers.

Companies with deeper customer relationships will see an increase in brand loyalty, customer satisfaction, and therefore steady sales. With that, companies must ensure the customer experience is both understood, drives strategy, and leveraged as a point of differentiation. This will allow CPG companies to focus on their core competencies while partnering with a service provider who can bring industry solutions and thought leadership to the relationship.

• Q: How can these findings impact business growth for an organization in any industry?

Because today’s consumers demand instant services that can be accessed anywhere, at any time and on any device, a company’s interactions with its customers will make or break their business. Providing a better customer experience is directly linked to higher revenue growth and gross margin.

As customers we love the organizations that provide us a superior experience and loath those that don’t. Customer expectations are not set by their interactions with one company or one industry. We judge every company to the high bars that are set in industries such as retail and hospitability that have long have long been leaders in customer experience. By working to reduce customer friction even further, companies across all industries will see an improved customer experience resulting in happier, more loyal customers and increased sales.

Consumers today want a fast, personalized and seamless experience. Whether they are purchasing, researching or trying to solve an issue, a frictionless journey is key to a positive experience. This means that identifying and reducing the causes of customer friction throughout the digital experience is now a business imperative.

Matthew Leach, NTT DATA Services

On his first day as an engineer, someone decided that Matt Leach should write requirements. He soon discovered that project success is not just about technology, but a holistic solution that solves the right problem. Since then, he has helped organizations better understand their business and their customers while delivering solutions that delight both. Currently, Mr. Leach is a Vice President in NTT DATA’s Digital, Applications and Information Management Practice where he leads the Business Analysis and Project Management Practices.