The Value and Use of Contextual Information to Create Excellent Customer Relationships
Technological progress now happens on such a continuous and rapid basis that it can be hard to stay aware of, let alone assess, the implications of many of the developments. And yet new technologies must be tracked and evaluated in terms of their potential for commercial exploitation. Anything less could mean abdicating competitive advantage. A particular set of technologies is currently maturing and converging to make possible a step shift in Customer Relationship Management (CRM) capability. It all hinges on context: the ability to collate, analyze, and deploy more and more information about individual customers and classes of customers, and utilize the information to anticipate or respond to their articulated and unarticulated needs.
"On Time. Go Directly to Gate 6"
Imagine a simple scenario. You get out of your cab at the airport. As usual, it has been a rush to get here and you're feeling hassled and weighed down by your suitcase, briefcase, laptop, and the loose document file you were looking at en route. Now you have to join the melee in the terminal and push your way through to a flight indicator board to check your flight's status. Of course, you could have called the airline from your cab, but that would have meant negotiating your way through a lot of cell phone number-punching and an annoying ladder of phone menu selections. So, struggling with your bags while you fumble for your ticket, you push forward into the throng.
Now imagine it differently. This time, when you arrive at the airport, your PDA automatically informs you, "Your flight is on time. Because you have an electronic ticket and luggage locator tag, you can go straight to Gate 6."
That's more like it. Welcome to the imminently arriving next phase of CRM. Welcome to the next business and social revolution. Welcome to context-based, value-added customer services.
Towards uCommerce
Let's start by defining this revolution. It is the synergistic effect of two major trends that have been happening for some time. The first is the migration of computing beyond computers, the widespread expansion of microprocessors into objects of all kinds - the giving of intelligence, if you will, to all manner of devices. The second is the creation of new wireless communications and network capabilities, in macro (broadband) and micro (radio frequency) networks, that will allow every one of these microprocessors to communicate.
In combination, these trends mean that every device we use can be given intelligence, and will be able to communicate. Object will communicate with object. The car will communicate with the gas pump. The package will communicate with the sorting machine. The wardrobe will communicate with its owner!
In this emerging always on, always aware, always active environment, where location and context factors are measurable, successful companies will be those that seek continuously to anticipate their customers' needs and wants, and deliver precisely against them.
The seeds of this revolution have been spread by stealth for years. Today, only 3% of microprocessors go into the boxes that we call computers. The rest go into ideas. These microprocessors control and monitor manufacturing processes. They enable the logistics specialist to keep track of goods in transit. They "pacemake" irregular hearts. They store biographies on smartcards. They empower kids to rip songs off the Internet and disturb the peace with MP3 players. They allow pharmaceutical companies to test new drugs in virtual environments. And, in the modern automobile, they monitor and control the engine, safety systems, climate control, and in-car communications.
Now interconnect various of the objects in your mind, and you'll begin to appreciate the dramatic implications for managing customer relationships - from initial customer or prospect contact and data gathering, right through to payment systems. This is the way things are going. This is the next revolution. This takes us beyond e-commerce or m-commerce, to u-commerce - unbounded, untethered, ubiquitous commerce. In a world where technology is always on, always aware, always active, the business potential is nothing short of amazing.
Some Rules for New Context-Based Customer Relationship Management
Leveraging the huge opportunities for context-based CRM in a uCommerce environment will need scrupulous planning. For any potential, context-based application, ask three key questions:
o Is it useful or annoying?
o Does it compress time or conserve bandwidth?
o Is it a key source of sustainable competitive advantage?
Is it Useful or Annoying?
The desired customer perception of any context-based CRM activity must be one of usefulness. Anything other is self-defeating. And yet, all too often, customers are asked questions to which the supplying organizations should already know the answers. That's annoying. It often happens because of a failure of systems. One aspect of the "useful versus annoying" debate is, therefore, the improvement of interfaces: to provide the customer with a sense that he or she is talking to someone who knows something about them; that the organization recognizes their history; and that the history can be used to further help the customer.
But there is another way that annoying behavior exhibits itself - when the customer is asked too many questions. Think back, for a moment, to the scenario at the beginning of this paper - your arrival at an airport.
Walking into the airport, looking down at your PDA, what would you like to see there? The obvious answer is, details about your flight. The only way that information can be automatically provided is through context:
o The context of positioning - that is, the PDA needs to recognize the fact that you have just walked into the airport.
o The context of who you are - that is, by reference to your calendar and, possibly, other personal data.
Combining these things, it's fairly obvious that the things you are immediately likely to be interested in are: "Is my plane on time?" and "What should I do next and where should I go?"
So, if you have an electronic ticket and you're running late, the PDA can inform you that you should "Go to Gate X." If you normally travel with bags it can direct you to the right place to register. If you have special dietary requirements, it might assure you that the airline acknowledges you have requested a special meal.
Thus, added context can be used to create enhanced and new services that customers will welcome, and will help substantially to build customer loyalty.
Until a relatively short time ago, computer storage was scarce and expensive, which created a technological imperative to squeeze out as much data as possible, except for that which was absolutely necessary to complete a transaction or satisfy legal requirements. This drove a trend toward standardization of computer-controlled procedures - precisely choreographed manufacturing processes, for example, and accounting systems focused on consistency and repeatability.
Now the situation has changed utterly. Disk space is virtually free. We can store, recall, and process data in copious quantities, and remember things about our customers, their past behaviors, and information that can be used for their benefit. We can now afford to store information and throw such processing power at it that we can gain more and more insight into our customers' wants and needs. Where, once, standardization ruled the day, individualization is now increasingly real and possible.
Add to this the fact that we can now increasingly make dumb objects "smart," and keep everything wide-awake on the always-on World Wide Web, and new kinds of contextual information become readily usable.1
Let me give an example. Accenture technology researchers have built a prototype Online Wardrobe - an intelligent wardrobe that uses a combination of next-generation sensors, tagging, and tracking technologies, all linked to an integral online computer (the computer screen is in the wardrobe door). When items are taken out of the wardrobe, the system knows what is going on and has been given the "intelligence" to comment where appropriate, "That shirt is not the best choice to go with that jacket" maybe. Or, because the system knows the user's calendar, "You have a client meeting, this morning. Is that shirt a little too casual?" (Women readers will recognize that men, poor saps, need this sort of advice!)
Let's go one step further. Suppose our wardrobe user is the customer who will later that day appear at the airport. Suppose, also, that the flight is from Chicago to Madrid. It is relatively simple to program the wardrobe to recognize the fact that our user is packing for a trip, and, when the calendar context is added, to identify the destination. The wardrobe can now log on to the international weather service and offer advice on the choice of clothes: "It's January, remember! It was snowing in Madrid, yesterday. Pack something warmer!"
This example is light-hearted, but it does serve to indicate the far-reaching implications of new, context-based CRM capabilities.
Be Aware of the Line
Taking the Online Wardrobe example yet further, there is, of course, nothing to stop it being linked online to a customer's favorite clothes store, giving the outfitter the facility to say, for example, "Here's a new line in jackets that I think you'll like. If you're interested, I have your size in stock." You will, of course, recognize that this example has profound implications for the future of websites: this customer may never be tempted to look at a competitor's site.
The ability to get this close to a customer does, of course, raise another issue: when is close too close? If the online outfitter were to send a message saying, "You threw out an old pair of shoes last night. Do you need a replacement pair?", the customer may well find this privacy intrusion so serious as to be terminal for the relationship.
Customer-driven organizations will have to take great care to pitch their services and offerings on the right side of acceptable. Going over a "privacy" line will be totally self-defeating. And judging the acceptable-unacceptable point will vary by usage (for example, customers will share privileged information with physicians or bankers that they would certainly not want retailers to know), by time and by culture. It occurs to me that a rule of thumb may be to think "Mom" rather than "Big Brother," because, generally speaking, moms are helpful, kind and well-intentioned.
Does it Compress Time or Conserve Bandwidth?
Context can be used, too, to dramatically improve customer online interactions, by deploying a combination of forms of input. Using a voice input computer system, a customer might see an on-screen item and say, "Yes, I'd like that one." The problem is, the system needs to know what "that one" means. But add the context of touch, and the machine immediately knows which item is being referred to. So, all of the time that would have been taken to clarify "that one" gets compressed out of the picture; all of the data that would have had to flow back and forth to clarify the choice is rendered redundant; and by adding more contextual information, like where the customer is pointing to on the screen, the whole application becomes more efficient in terms of its use of bandwidth and the customer's time.
This kind of facility will be further enhanced by the use of short-range communications technologies such as Bluetooth and wireless LANs. Customers will be able to "point and buy" in a vast range of new, personal area networking environments. Think yourself back to that airport concourse for a moment: thanks to your helpful PDA, you're feeling much more relaxed than you had used to; so, if the device is Bluetooth-enabled, why not point it at the nearby coffee shop and get them to bring your favorite latté? The cost just gets debited to your smart purse.
In the industrial environment, this technology has already been deployed, using smart tags, to enable forklift trucks and pallets to communicate. When a forklift driver picks up a pallet, he or she is told what it contains and can verify that it is the required choice. The next step will be to further enrich this exchange with the context of the order, so that the driver can verify the choice directly against the customer's intentions as expressed by the order.
Is It a Key Source of Sustainable Competitive Advantage?
The third key question in establishing the value of context in any CRM activity is, "Will it deliver sustainable competitive advantage?"
Earlier, I used the example of the Online Wardrobe checking on the weather in Spain. The fact is, of course, anybody can do that and, because it is publicly available information, it cannot be a source of sustainable competitive advantage.
Sustainable competitive advantage will come from information that only you know and your competitors do not. That's what will create customer relationships that stick. For an example of this, let me take you back to the clothes store example I used earlier as an expansion of the Online Wardrobe concept. If a new outfitter opens up, the incumbent already has a competitive advantage in that they already know the customer's name, measurements, previous buying history and, generally, taste in clothes.
The new store has no option other than to try to discover all of this information as quickly as possible, in the least annoying way. But how is that to be done? The most direct way would be, when a new person walks into the store to take a look around, to say, "How do you do, whoever you are. Would you fill out this large questionnaire so that I know all of your background information?" The typical response to such an approach is probably unprintable. Which means that the new store has no option other than to try to tease the information out, just to get onto level terms with the incumbent store.
In this situation, the incumbent has a clear sustainable advantage because, provided the customer continues to shop at the original store, it can continue to learn more and build its customer relationship still further. The other guys are always playing catch up.
Point-to-point and person-to-person context information, in the B2B or B2C arenas, is a key source of sustainable competitive advantage because it permits organizations to gain a legal monopoly on data that is both difficult and expensive for a competitor to acquire.
In Japan, DoCoMo's iMode service is proving extremely successful, and currently has more than 15 million subscribers. In part, this success is due to the range of context data that iMode has brilliantly capitalized on. Customers are able, for example, to track the movements of their stock portfolios, receive personal horoscopes and obtain local area-specific weather forecasts. Each of these services uses context data - respectively, personal stockholding, date of birth and address - and, having given this personal information, customers feel a real sense of "investment." They have shared a part of their lives and are less likely than otherwise to be lured by the approaches of a competitor.
Redefine the Economic Model
Context-based CRM is happening now, and perhaps the most extraordinary thing of all about it is the fact that it is absolutely redefining the economic model.
For example, a building construction site earthmover is equipped with an in-cab display that uses GPS positioning to map the contours of a construction site. Where the ground is too high, it shows red on the screen. Where it's too low, blue. Where it's just right, green. So the job becomes a kind of video game to paint the screen green. But the potential is far greater. The next step will be to connect the earthmover's progress sensors up to the whole supply chain so that the system can trigger an alert to bring on the next set of equipment. All of this comprises a new kind of value-adding service in the guise of a technology. It alters the business economics. What the end-user buys or leases is no longer a piece of machinery, but the foolproof ability to do the specific task easier, quicker and more profitably.
Another idea that Accenture technology researcher professionals have developed is an Online Medicine Cabinet that tells a patient which of the day's confusing sequence of pills to take, and when, during combination therapy. It reminds the forgetful. Corrects mistakes. And, it can warn the physician online if an error is made. This previously unthought-of service can help physicians counter the life-threatening problems of non-compliance in therapy. It can give patients peace of mind and, for many infirm people, provide the opportunity to remain independent for longer.
Context-Based CRM = Competitive Advantage
It's only really in the past five years, or perhaps less, that CRM has blazed its way up the corporate agenda, and it is still the case that only the most enlightened companies have really understood the full implications of the customer revolution. And yet, now, we are facing another step shift in that revolution.
"CRM Phase One" enabled us to develop service offerings based on identified customer needs, wants, likes and dislikes. "CRM Phase Two" uses that information but adds a vast amount of context data (the location of both people and objects, and the means of presentation of information to customers) that has the power to build sustainable competitive advantage and potentially redefines the fundamental economic model.
Context represents the ultimate ingredient for the creation of precise, individual, value-added services that have an unparalleled potential to command loyalty and revenue. But the opportunities created will be available only to those who think deeply about the implications and formulate innovative service offerings to transform the ways we do things and the ways we put value on them.
Companies that move quickly to capitalize on the context-based CRM will be able to pioneer new offerings, generate sustainable competitive advantage and build profitable growth Companies that don't, won't.
