By Robert Reiss
In his book "Managing in the Next Society," Peter Drucker explains the nature of transformation. The Industrial Revolution of the 1820s occurred 40 years after James Watt's steam engine; and the railroad concept pioneered in 1829 became transformative in the 1860s, setting the stage for national expansion in America.
We are now witnessing a new transformation in the very fabric of what every successful company has in common – satisfied customers. The entire customer experience as we know it will be transformed by a new revolution … the revolution of big data. And perhaps the greatest difference between the winners and losers of business over the next decade is that the winners will utilize the powerful engine of big data.
First let's define big data. In the simplest terms, the reason it's called big data is because of two new elements 1. no-SQL data utilizes parallel processing instead of sequenced processing, which dramatically escalates speed, and 2. non-structured data includes blogs, emails, web logs, voice streams and social media etc., which when added to traditional structured data dramatically escalates data volume.
So while many believe social media is the game changer, in truth social media is just the appetizer of the big data banquet. Companies now have real-time speed potential and mind boggling amounts of every piece of personal preference information on customers. Smart companies will be able to capture significant business in two ways.
First, from a macro stand point, companies will be able to anticipate trends and change their offering to give customers what they want before they tell them. Just like the ATM did years ago for banking.
Second, companies for the first time in history will be able to reach millions of customers and market and provide service to them as individuals. Just like the salad bar allows for a mass customization (a word Joe Pine coined over a decade ago), companies will no longer segment by demographics … they will segment by individual preference.
For example, when you're passing by a Brooks Brothers, they will know because of the GPS in your phone that you're approaching and that you like a certain style cuff links; they can real time send you an 30% discount on those cuff links. Then in store they can create a customized experience and even get your feedback.
Consequently big data enables companies to treat each customer – potentially 1 million at a time – as an individual.
A key issue of course is privacy. Baby boomers and Gen Xers are willing to give some personal information. However Millennials understand – and really appreciate – the trade off of privacy for completely relevant and customized customer experiences and they will gladly make the trade.
In IBM's 2012 CEO study, the most important driver to CEOs for the first time is no longer external market factors -- it is technology. Of course, as technology drives our future, even more value is placed on authenticity. That's why perhaps the most powerful of all customer experience tools is still the handwritten letter.
In summary, a while back I read a book by Bill Gates called" The Road Ahead." He described his house. It was customized to the individual where painting and music would change according to the guest's preferences, because his home was actually a large computer. Today's customer experience will become like bill Gates' home -- customized to the individual.
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Robert Reiss, author, host of "The CEO Show" and a Forbes.com columnist, will moderate The Conference Board's "Customer Experience Leadership" Conference March 21-22 in New York. |