A huge 90 percent of companies have already or are in the process of reengineering their businesses in the past year to deliver better moments of service. Yet many are neglecting to address issues with the critical inflection points that impact results.
This is according to “Fixing the fundamentals: Understanding new business models and opportunities in the wake of Covid-19”—a new global study of more than 1,700 business executives and 12,500 consumers sponsored by IFS.
The study explores how a challenging economy impacts the importance of customer experience, why organizations should ‘design for service’, and, importantly, how critical it is to identify and understand the key inflection points that impact a business’ core objectives. More importantly, the study focuses on how frequently problems with these inflection points are ignored.
The rise of the customer
Over the past few months, businesses in all industries have seen their value chains disrupted, forcing them to rearchitect their organization and rethink their business models—virtually overnight.
Customer experience was already growing in importance when the pandemic laid new pressures on companies: fractured supply chains, reduced access to resources, and restricted movement rendered it nearly impossible for people to travel and engineers to reach customers. Changing demand patterns further stressed value chains, while man-made disruptions like Brexit also reared their heads.
This landscape has fundamentally altered the fabric of business. Long before the pandemic, the ‘Amazon effect’ had revolutionized customer expectations for speed and consistency. But now, companies in industries ranging from paint manufacturing to air travel are finding that the pandemic has made both business-to-consumer (B2C) and business-to-business (B2B) customers even more demanding.
Central to these new customer demands is service. They want reliability and consistency in quality, delivery and returns, and want to get continuous value throughout an asset’s lifetime. For this reason, expectations for quality service continue to increase, and businesses are recognizing that they must shift to selling ‘outcomes’ and ‘experiences’ instead of just products. As a result, it is critical that businesses ensure each part, department, and discipline in their operation is aligned not around immediate sales or revenue, but around delivering a quality ‘Moment of Service’. This moment of service, in which people, decisions, processes, and technology come together to create a result for a customer, is the key determiner of business success.
However, while much attention has been paid to the rising importance of customer service, the critical inflection points that contribute to the overall moment of service are frequently overlooked, stifling business growth. But these inflection points—which occur throughout the lifecycle of an operation and encompass processes, technology solutions and human coordination—hold the key to success.
The study unearthed some surprising findings. As mentioned, 90 percent of companies have in the past year already or are in the process of reengineering their businesses to deliver better moments of service, yet many are neglecting to address issues with the critical inflection points that impact results. While companies reevaluate their businesses in the wake of the pandemic, there is an unprecedented opportunity to evolve their approach, and ‘build back better’.
Designing for service
By designing a business around the moment of service a company looks to create for their customer—whether that’s a flight landing on time at the chosen destination, a mobile network having reception anywhere in the country or the power in a house turning on whenever it is needed, every day, without outages—companies gain a valuable new perspective on their entire operations. They can see how they must orchestrate assets and interactions with customers and people to achieve the desired end goal—and how this will fuel their growth. They will also be able to see what the customer truly wants and use these insights to launch profitable new services.
To achieve this, enterprises must rethink how they architect their operations, and become a ‘composable enterprise’ that harnesses a combination of packaged functions and technologies to deliver outcomes and adapts to the pace of business.
The IFS study shows how businesses’ ability to perform across a variety of customer experience inflection points have been impacted by Covid-19, Brexit, or both. In response, 51 percent of companies have already reengineered their business processes to deliver better customer experiences—proof that the moment of service movement has bolted from the gates and the time to get onboard is now.
As companies evolve their customer experience, it is critical that they emulate the models popularized by tech giants to meet consumer demand. According to the study, some 43 percent of people are much more or somewhat more likely to purchase products on a subscription basis, as a direct result of the rise of brands such as Netflix and Spotify. In the US, this figure is as high as 53 percent. These findings show us that there is a booming demand for subscription services that provide a key means for brands to boost sales while simultaneously enhancing the customer experience.
Ultimately, however, it’s about being closer to customers. Understanding those all-important moments of service are an integral part in this journey. By establishing and optimizing moments of service, organizations can plan their business based on achieving advocacy, repeat purchase and margin improvements. This enables them to switch from being reactive to being predictive, and in the end, take a proactive approach to business orchestration.
Outcome-based business models
The past year has been a time of reckoning for businesses. In the wake of unprecedented turbulence, companies across the world have accelerated transformation strategies and developed new business models. But as enterprises look to the future, they must evolve further to meet new customer demands. Business models focused on products are no longer fit for the digital economy. Instead, organizations need to shift to selling outcomes and services.
At the core of these new business models is the moment of service—a point of view from where organizations see their business from the perspective of their customers. By designing for service instead of products, companies can architect their business to promote customer loyalty and increased sales. They can carefully orchestrate people, assets, and processes to ensure the right item arrives in the right place at the right time. And they can become truly customer driven.
These changes won’t happen overnight. But as companies in every industry evaluate their offering, it is critical that they also rethink their approach to business. In placing their moment of service front and center, businesses can transform, grow, and thrive.
To read more about understanding the value chain, download the report for free here.