IoT-Enabled Customer Experience · 2018-03-07 · 3 IOT-ENABLED CUSTOMER EXPERIENCE RETHINKING CUSTOMER EXPERIENCE THE IOT WAY Executive Summary In an era of immediacy, organisations

IoT-Enabled Customer Experience

A Frost & Sullivan White Paper

Commissioned by Genesys

IOT-ENABLED CUSTOMER EXPERIENCE

Table of Contents

Executive Summary

Introduction

What Customers Want

Internet of Things: Turning Concept into Reality

How Real are IoT-Enabled CX Initiatives?

Introducing the IoT-Enabled CX Index (IoT-CXI)

The Last Word

APPENDIX: Methodology and Approach to the IoT-CXI

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WWW.FROST.COMIOT-ENABLED CUSTOMER EXPERIENCE

RETHINKING CUSTOMER EXPERIENCE THE IOT WAY

Executive Summary

In an era of immediacy, organisations need to leverage customer insights to drive business strategy. The advent of the

Internet of Things (IoT) has introduced new digitised possibilities that enable organisations to develop more holistic views

of their customers and introduce new engagement models that redefine how Customer Experience (CX) delivers value

for customers and organisations alike.

IoT-enabled-CX allows for the convergence of a customer’s journey across digital and physical environments, enabling

organisations to continually deliver personalised, predictive and productive experiences to their customers. Organisations

are already embarking on such strategic initiatives; for example, Volvo’s connected car, Whirlpool’s smart kitchen, and

Amazon’s Dash and Alexa, are integrating services to bring new levels of convenience to users and enhance experiences

with the brand’s support services.

Despite IoT showing immense potential in transforming customer experience, there are inherent misconceptions many

organisations have in embarking on the IoT-enabled CX journey. The Frost & Sullivan 2016 IoT-Enabled Customer

Experience (CX) Report seeks to dispel the following commonly-held myths and misconceptions:

MYTH 1 IOT-ENABLED CX IS

FOR THE FUTURE

MYTH 2 DEVELOPED

ECONOMIES ARE

LEADING THE WAY

IN IOT-ENABLED CX

There is much hype surrounding IoT-enabled-CX as a futuristic undertaking. However, the reality is quite different. Many organisations in Asia-Pacific are already actively exploring or implementing IoT-enabled-CX projects. The study seeks to establish a maturity index to track the progress of organisations in deploying IoT-enabled CX initiatives.

Survey respondents in emerging economies, particularly China (29%) and India (20%), expressed a more optimistic view of the value of IoT-enabled CX compared to other countries in the study. These markets also lead in terms of adoption as they are unencumbered by legacy systems and are more open to exploring new technologies, allowing them to leapfrog over their peers.

4


MYTH 3THE USUAL

SUSPECTS ARE

EARLY ADOPTERS

OF IOT-ENABLED-CX

MYTH 4 IOT-ENABLED-CX IS

ALL HYPE WITH NO

REAL BENEFITS

Communication Service Providers (CSPs), Logistics, Transportation and Automotive, Retail, Travel and Hospitality sectors are at the forefront in IoT-enabled CX adoption, in comparison to other traditional early adopters such as Banking and Financial Services and Insurance sectors. Respondents in the CSP sector, in particular, showed substantial knowledge about IoT compared to other industries. This is inevitable considering that machine-to-machine technologies and connected devices have been topics of interest among CSPs over the past five years.

Based on this report’s findings, there is a strong correlation between IoT-enabled-CX adoption and Net Promoter Score (NPS). Survey results show that organisations deploying IoT as part of their CX strategy achieve much higher NPS compared to the rest. Several other studies show that companies providing a better CX do better financially1.

Among respondents that have IoT-enabled-CX initiatives in place, 65% showed an increase in employee productivity while 67% experienced improvements in operational efficiency. Around 68% of participants surveyed perceived their IoT-enabled-CX initiative as improving their brand equity and having a positive impact on the development of new disruptive business models.

INTRODUCING THE IOT-CXI

THERE IS PLENTY AT STAKE HERE, SO WHAT ARE YOU WAITING FOR?

Based on findings derived from the 2016 IoT-Enabled Customer Experience (CX) Report, an IoT-enabled CX Index

was created. It comprises three different facets that determine the maturity of an organisation in an IoT-CX journey.

Respondents highlighted the value of IoT, their readiness for IoT-enabled CX, and related initiatives as key determinants

of their progress in their IoT-enabled CX journeys. The value of IoT emerged as the most important driver of the IoT-

enabled CX Index rather than the readiness of organisations to adopt the technology.

About 40% of respondents surveyed indicated that they have not started on their IoT-enabled-CX journey. Perception of

the benefits of IoT-enabled-CX is the lowest among C-level respondents, which could explain why many organisations have

not started on this journey. This report outlines the five critical questions organisations need to consider in developing

their IoT-enabled CX strategy.

1 http://www.genesys.com/asia/about-genesys/resources/the-value-of-experience-how-the-c-suite-values-customer-

experience-in-the-digital-age

5


In developing the 2016 IoT-Enabled Customer Experience (CX) Report, Frost & Sullivan surveyed

479 CX leaders, including C-suite leaders, Heads of Customer Experience (CX), Heads of Contact

Centres (CC), Customer Service Directors (CSDs), involved in defining the CX strategy as well as the

implementation of its systems and processes.

Respondents come from organisations running customer contact centres employing at least 50 agents

across diverse sectors, covering Banking and Financial Services (BFS), Government, Healthcare,

Utilities, Insurance, Retail, Travel and Hospitality, Logistics, Transportation and Automotive, and

Communication Service Providers (CSPs).

IoT-Enabled CX: Survey Demographics, by Job Designation, Asia-Pacific, 2016

Source: Frost & Sullivan 2016 IoT-Enabled Customer Experience (CX) Report

Introduction

IoT-Enabled CX: Survey Demographics, by Verticals, Asia-Pacific, 2016

Utilities, Healthcare & Government

Retail, Travel &

Hospitality

Logistics, Transportation & Automotive

BFS

CSP

Insurance

15% 20%

19% 10%

15%21%

C Suite

CSO and above

Heads of CC

Heads of CX

IT Director and above

CDO45%

39%

7%

6%

2%1%

6


The goal of this study was to understand how Asia-Pacific enterprises view Customer Experience (CX) at their

organisations as well as gain insights into perceptions about IoT and its impact on CX. The study also looked at

how organisations are viewing IoT as a key enabler in enhancing CX and how ready they are to take advantage

of this emerging technology. To cater to the study objectives, we asked CX leaders detailed questions about:

Technology trends having the greatest impact on their business

Business benefits derived as a result of improving CX

What respondents think their customers want

Awareness of IoT and its importance in enhancing CX

Perception of IoT in delivering fundamental values and impact on the overall CX strategy and business

Key motivations and drivers for enterprises’ adoption of IoT to enable superior CX

Readiness of organisations in taking advantage of IoT to enable CX

Enterprises’ IoT-enabled CX journey and their purchasing drivers

To attain a local market perspective, the survey included participants from organisations in 11 countries,

namely: ANZ (Australia, New Zealand), China, India, Japan, South Korea, and Southeast Asia (SEA)

(Indonesia, Malaysia, the Philippines, Singapore, Thailand).

IoT-Enabled CX: Survey Demographics, by Countries, Asia-Pacific, 2016

ANZ

China

India

Japan

South Korea

SEA 15%

16%

16%16%

16%

21%


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From Service

Consistency to Service

Personalisation

Instant Gratification

– Knowing Customers

Before They Do

Customers demand easy access to services and a personalised and consistent

experience at each stage of their purchasing journey. More than 45% of

customers surveyed rated personalised services among the top three aspects

defining better CX for them, while 70% of them expect organisations to treat

them uniquely3.

Increasingly, customers highly value “instantaneous” interactions as a key

aspect of their brand experience. More than 71% of customers consider

timeliness as essential to delivering excellent services, and they are willing to

share information with organisations in exchange for an enhanced experience.

Brands need to be able to collate and analyse data to proactively engage

with customers, as well as predict and influence their future interactions, even

before customers realise it themselves.

What Customers WantCustomers are vital to any organisation. The success of

an organisation hinges on its ability to understand what

customers want in order to deliver differentiated customer

services. Globally, companies lose more than US$300

billion each year2 due to poor CX, with more than two-

thirds being lost to competitors. In fact, more than 62%

of consumers worldwide stopped doing business with a

brand because of poor experience3. Delivering a positive

CX can be the #1 way to differentiate a brand and gain

commercial rewards as customers are likely to spend more

with a brand that provides excellent service experience.

By 2020, CX is projected to overtake price and product as

key brand differentiators4.

Today’s hyper-connected customers access and share information anytime, anywhere, from any device. They

are uniquely positioned to dictate the terms of their interaction and experiential journeys with brands. In short,

customers expect an open, iterative relationship to deliver a truly personalised experience.

Through the Customer’s Lens: What Customers Say They Want

Customer Experience:

The cumulative emotional

and practical impact of all

encounters and interactions a

customer has with a brand –

both direct and indirect.

2 Frost & Sullivan Research & Analysis3 2015 Global State of Multichannel Customer Service Report, Microsoft4 eMarketer; IBM: State of the Market (2014)

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Managing and retaining customer expectations have become among the top

priorities for organisations. Findings from this study reaffirm the importance

of CX in this area. Close to 80% of Asia-Pacific respondents confirmed that

customer lifetime value is the most significant business benefit delivered by

CX. Respondents also highlighted the importance of employee engagement in

the context of CX, indicative of the increased value customers are attaching to

the human touch throughout their experience with a brand.

Through the Organisation’s Lens: What Organisations Think Their Customers Want

Although omnichannel is a critical discussion point for effective Customer

Experience Management (CEM), many such initiatives fall short of expectations.

Often, this is due to the presence of silos resulting in the lack of visibility and

sharing of information across the customer journey. The emergence of IoT

provides greater access to contextual data from new sources, enabling the

establishment of an omni-data profile of the customer. Organisations are now

better equipped to leverage the power of analytics to anticipate and improve

customer interactions throughout their journey.

IoT-Enabled CX: Importance of Customer Experience for Organisations, Asia-Pacific, 2016

Increased Customer Lifetime Value

Employee Engagement

Revenue & Profit

Loyalty

Cost

78.5%

68.8%

66.9%

60.6%

42.7%

Omnichannel: Seamless, effortless, high-quality customer experiences that occur

within and between channels.


The Omni-data Profile

– A Truly 360-degree

View of the Customer

Recognising the Value

of CX

9


Survey findings point towards Asia-Pacific organisations adopting a more

customer-centric approach to CX, particularly in terms of enhancing the

experience between the brand and customer. Respondents perceived the

greater importance of personalisation and ubiquity over the consistency of

CX service delivery, resonating strongly with what customers indicate as

being crucial to them.

Organisations are also starting to recognise the customer’s need for instant

gratification, and placing significant emphasis on building a comprehensive

profile of their customers. As a result, organisations are able to proactively

manage customer relationships and engage with them based on their

preferences.

IoT-Enabled CX: Organisations’ Understanding of Their Customers’ Wants, Asia-Pacific, 2016


Proactive engagement

Instant gratification

Personalised services

Service anytime and

anywhere

Interactivity/ continuous

engagement

Consistency of service

Self-service

26.1%

14.4%

25.9%

8.1%

11.9%

7.3%

5.8%

Top Ranked

5th Ranked

2nd Ranked

6th Ranked 7th Ranked

3rd Ranked 4th Ranked

7.5% 6.3% 4.2%4.0%4.2% 2.1%

8.6% 6.7% 5.4%4.2%4.8%4.2%

10.2% 10.9% 11.1% 6.9% 1.3% 0.4%

18.4% 12.5% 8.4% 3.5% 1.7%

11.7% 7.9% 6.3% 3.5% 1.9% 0.8%

0.8%

15.0% 15.7% 6.9% 3.1% 1.5% 1.9%

20.0% 13.6% 6.3% 1.9% 0.4%1.5%

Pers

on

alis

ed

Ub

iqu

ito

us

Co

nsi

sten

t

The Two Ps of CX

– Proactivity and

Personalisation

10


The Internet of Things (IoT) refers to an ever-

expanding network connecting numerous devices

and sensors, enabling the collection of vast amounts

of data and the ability to interact with these devices.

The technology provides organisations with a

platform to leverage data to create new business

models. Popular examples of IoT use include Rolls

Royce leveraging embedded sensors to offer jet

engines-as-a-service rather than just selling jet

engines to its customers, or the use of sensor data

in cars to allow insurance companies to offer usage-

based insurance with differing premiums based on

driving behaviours and activities.

Internet of Things: Turning Concept into RealityWhat is Internet of Things (IoT)?

Asia-Pacific Organisations’ Perceptions of IoT

Internet of Things (IoT):

Refers to the digitisation of the

physical world as a key enabler for

digital transformation. Connecting

people, objects and environment

together, IoT enables visibility,

enhances decision-making, and

empowers innovation.

Asia-Pacific organisations surveyed are increasingly taking note of IoT and

creating new opportunities around the technology. Overall, 83% of respondents

showed some level of familiarity with IoT, with close to 20% indicating that

IoT-Enabled CX: Organisations’ Familiarity with IoT Across Countries, Asia-Pacific, 2016


0%

20%

India China SEA Korea ANZ Japan

40%

60%

80%

100%

Not familiar Slightly familiar Familiar

Familiarity with IoT, its

Value, and Relevance

11


they have a clear understanding of the concept and the value it brings. That

stated, it is also important to observe that one in six respondents admitted to

not being familiar with IoT. Respondents in less mature markets such as India

and China expressed a greater understanding of IoT, ahead of markets such

as Japan, Australia, and Korea. In terms of verticals, CSP respondents showed

substantial knowledge about IoT compared to other sectors. This is inevitable

considering that machine-to-machine technologies and connected devices

have been topics of interest among CSPs over the past five years.

Survey results suggest favourable perception and knowledge of IoT

among Asia-Pacific organisations. More than 45% of participants surveyed

recognised IoT as being more than just connected devices. In fact, most

respondents disagreed with the notion of IoT as just hype that would soon

move to oblivion. Respondents acknowledged the value IoT could potentially

bring to CX. From a geographical perspective, respondents in China and

India expressed a more positive attitude towards the values IoT brings to

CX, as well as the benefits it delivers when compared to the costs involved.

These markets are unencumbered by legacy systems and seem more open

to exploring new technologies, allowing them to leapfrog over their peers.

Furthermore, there is greater exposure to IoT technologies with the growing

focus on Smart Cities and Smart Industries by governments in these markets.

Positivity Fostering

Greater Knowledge

and Action

IoT is applicable to some

industries only

IoT is a hype

IoT-Enabled CX: Knowledge and Perception Towards IoT (Total), Asia-Pacific, 2016


0%

20%

40%

60%

80%

100%

IoT is more than just

connecting devices

IoT brings more benefits

than cost

IoT brings value to CX

Strongly disagree

Somewhat agree

Somewhat disagree

Strongly agree

Neutral

12


Although in its early stages of growth, IoT is

increasingly finding its way into our daily lives,

and capturing virtually every aspect of the human

experience. This presents significant opportunities

for organisations to predict, optimise, and enhance

interactions with their customers.

There were varying opinions, however, among

survey participants from different countries and

vertical markets regarding the importance of IoT

in the context of CX. Nearly 50% of Asia-Pacific

respondents believed that IoT is important in

enhancing CX. Such an opinion was the strongest

among participants from China and the CSP vertical.

Overall

China

India

SEA

ANZ

Japan

Korea

CSP

BFS

Insurance

0% 20% 40% 60% 80% 100%

Logistics, Transportation

and Automotive

Retail, Travel and Hospitality

Utilities, Healthcare and

Goverment

Perceived IoT Effectiveness in Delivering CX

IoT-Enabled CX:

A world full of connected objects has

the potential to forever change the

human experience.

IoT-Enabled CX: Perceived Importance of IoT in Enhancing Customer Experience, Asia-Pacific, 2016


Not Important at All

Somewhat Important

Somewhat not Important

Very Important

Neutral

13


Asia-Pacific organisations surveyed perceived IoT to be effective in delivering key qualities and values they

view as being necessary for their CX strategy. More than 71% of respondents considered IoT as being very

effective in providing “improved quality and accuracy of services”, rating this as the most useful aspect of

IoT in their CX strategy. Similarly, more than 70% of survey participants viewed IoT as effective in delivering

the following qualities ‒ “increased speed of service”, “anytime-and-anywhere service”, “ability to anticipate

customer needs”, and “proactively reach out” ‒ which they regard as being most crucial for their CX strategy.

IoT-Enabled CX: Effectiveness of IoT in Delivering Key Values and Qualities for CX Strategy, Asia-Pacific, 2016


0% 20% 40% 60% 80% 100%

Increase speed of service

Ease of service interactions

Ability to leverage analytics make the next

best offer and action

The ability to offer value added services

A unified and complete intimate view/profile of

the customer

Enhanced multi-channel strategy to engage

customer

Ability to automate interactions with

customers

The ability to provide objective measures of customer experience

Improved quality and accuracy of service

Anytime and anywhere service

Ability to anticipate customers need and

proactively reach out

Ability to offer personalization

Not Effective at All

Somewhat Effective

Somewhat Not Effective

Very Effective

Neutral

14


Is IoT Living Up to Expectations?

Achieving Higher NPS

through IoT-Enabled CX

IoT-Enabled CX: NPS Performance versus Adoption of IoT, Asia-Pacific, 2016


IoT for Customer Experience Adoption Stage

A large proportion of Asia-Pacific respondents use NPS as a measure of

their experiences with brands. Survey results showed a positive correlation

between organisations that have implemented IoT for CX and their NPS

ratings. Significantly higher NPS were recorded by organisations already

implementing IoT as part of their CX strategy. This is more likely due to the

organisations being in a much better position to understand the customer

journey, proactively engaging with them and resolving their issues more

quickly.

Volvo connected car solutions began with its Volvo on Call

service in 2001 as a remote safety feature for Volvo car

owners. In 2012, it launched a smart app5 allowing users to

remotely access the car’s dashboard, seek SOS assistance,

and check door lock status, fuel levels, and maintenance

warnings. Besides allowing Volvo to offer proactive

maintenance support, it also generates automatic collision

and theft alerts. Volvo’s “Sensus” solution connects drivers

with their cars’ navigation systems to share their location,

perform local searches, and estimate arrival times via SMS

or email. Volvo is also leveraging the car-as-a-service

delivery platform with its “Volvo In-Car Delivery” feature,

available in selected cities in Sweden, enabling the car to

be the delivery point for groceries and other purchases.

3.5

4

4.5

5

5.5

6

6.5

No plans Exploring introduction with vendors

Have implemented a

system

Thinking about introducing IoT

Implementing a trial

The Connected Volvo – More than Just Driving

The Connected Volvo

Connected Vehicle Cloud

Car to service

Car to infrastrucutre

Car to car

5 http://www.volvocars.com/intl/own/owner-info/

volvo-on-call

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Only 15% of respondents in Asia-Pacific stated that they have implemented

IoT. Although they primarily deployed IoT to deliver better CX, they are

benefiting significantly from many other positive impacts on their business.

Over 70 % respondents opined that their IoT implementation enables them

to influence their customer buying/engagement decisions. More than 35% of

organisations surveyed realised the very high impact on customer satisfaction

enhancement upon IoT implementation.

As more and more organisations embrace IoT to transform their business

models, moving from a transactional business model towards service-oriented

offerings, customer service and experience will soon become the product

rather than just a differentiator. This idea resonates with more than 70% of

respondents that have implemented IoT concluding that it has a positive

impact on the development of new disruptive business models. Similarly,

survey participants believed that IoT leads to higher internal efficiencies,

employee engagement, and productivity.

IoT-Enabled CX: How IoT is Impacting Business, Asia Pacific, 2016


Influences customer buying decision

26.0% 34.2% 32.9%

28.8% 30.1% 35.6%

24.7% 41.1% 24.7%

31.5% 35.6% 28.8%

31.5% 34.2% 28.8%

23.3% 38.4% 23.3%

34.2% 21.9% 28.8%

28.8% 31.5% 35.6%

28.8% 35.6% 32.9%

20.5% 45.2% 24.7%

24.7% 46.6% 24.7%

Develop new disruptive business model

Enhance customer satisfaction

Increased operational efficiency

Increased employee productivity

Increased employee engagement

Ability to offer new product/ services

Increased company revenue/profits

Increased customer lifetime value

Increased customer loyalty

Increased brand equity

No Impact at All High ImpactLow Impact Very High ImpactNeutral

0% 50% 100%

IoT Delivering Business

Benefits Beyond CX

16


IoT Empowers Happier

Employees, Happier

Customers

“Happy employees drive happy customers” may sound like a marketing

adage. However, many research studies continually demonstrate that engaged

employees are more productive, resulting in lower turnover as well as notable

reductions in recruitment and training costs. The key to a happy employees

involves equipping them with critical information at the right time and

empowering them to take appropriate action. IoT incorporates multiple new

sources of data augmenting an organisation’s existing view of the customer.

This provides contextual information enabling support staff to engage and

personalise interactions with their customers proactively.

More than 35% of organisations also concurred with the high impact on

increasing employee productivity followed by nearly 33% experiencing high

impact on increased operational efficiency and brand equity.

At the 2016 Consumer Electronics (CES) show in Las

Vegas, Whirlpool launched its line of smart ovens,

refrigerators, washers, and dryers that integrate with other

services consumers use daily6. The smart washer and dryer

can track the number of wash cycles and prompt users

via Whirlpool’s Smart Kitchen Suite app when laundry

supplies are running low. Integration with Amazon’s Dash

Replacement Service allows users to place orders easily.

Users can remotely activate various washer and dryer

modes from their personal devices. Whirlpool added the

Nest integration that enables energy saving and other

features automatically. The devices also automatically

notify Whirlpool about servicing requirements.

Living the Whirlpool Way – A New Way of Washing Clothes

6 http://www.prnewswire.com/news-releases/whirlpool-brand-brings-smart-with-heart-to-ces-300198307.html

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As IoT becomes commonplace in coming years and awareness of its value rises, organisations are likely to

integrate IoT into their CX initiatives. About 38% of respondents rated IoT initiatives higher in enhancing CX in

their organisations in comparison to other efforts. Organisations in China (29%) and India (20%) expressed a

more bullish view of IoT implementation in their CX initiatives compared to other countries in the survey. The

view may be due to recent smart/connected city/industry/customer initiatives in these markets.

The CSP vertical prioritises the importance of IoT in CX, most likely due to greater familiarity with the technology

and understanding of the value it delivers.

How Real Are IoT-Enabled CX Initiatives? Prioritisation of IoT in Relation to Other CX Initiatives

IoT-Enabled CX: Prioritisation of IoT Initiatives in Relation With Other CX Initiatives, Asia-Pacific, 2016


0% 20% 40% 60% 80% 100%

Lowest Priority

High Priority

Low Priority

Highest Priority

Neutral

Overall

China

India

SEA

ANZ

Japan

Korea

CSP

BFS

Insurance

Logistics, Transportation

and Automotive


Utilities, Healthcare and

Goverment

18


More than 60% of respondents indicated a starting point to their IoT-enabled CX journey, whether by having

a system in place, implementing a proof of concept, or even thinking about introducing IoT. Close to 16%

of respondents are looking to incorporate IoT into their organisations within a year to enhance CX, while

29% are aiming to accomplish this within the next two years. Surprisingly, the more mature economies have

a relatively higher percentage of respondents with no immediate plans to incorporate IoT into their CX

initiatives. China, on the other hand, came out on top in terms of not only exploring IoT opportunities, but also

in either implementing proof of concept or establishing systems in place. The CSP respondents viewed IoT as

an important factor for enhancing CX, with the vertical showing the highest interest in adoption as well with

the largest number of existing installations and the highest incidences of implementing proof of concept and

exploring IoT deployment with vendors .

In analysing respondents’ perceptions about the importance of IoT in the context of CX, the transportation

industry showed a lower prioritisation of IoT initiatives compared to the industry mean. The response is

surprising, considering that transportation respondents view IoT as important relative to the other industries

surveyed.

Adoption Stage of IoT for CX

IoT-Enabled CX: Adoption Stage of IoT for Customer Experience, Asia-Pacific, 2016


Already have a system in place


Implementing a proof of concept

No plans to incorporate IoT

Exploring how to introduce IoT with vendors

0% 10% 20% 30% 70%60%50%40%

Overall

China

India

SEA

ANZ

Japan

Korea

CSP

BFS

Insurance

Logistics, Transportation and Automotive


Utilities, Healthcare and Goverment

19


Currently, there is likelihood among Asia-Pacific respondents of focusing on investments in after-purchase

interactions. However, in the future we expect more organisations to increasingly take advantage of IoT data

in the earlier stages (pre-purchase, discovery phases) of the customer journey.

IoT CX Investment Priorities

IoT-Enabled CX: Investment Priorities in IoT to Drive Customer Lifecycle, Asia-Pacific, 2016


CU

ST

OM

ER

LIF

EC

YC

LE

JO

UR

NE

Y, IN

VE

ST

ME

NT

P

RIO

RIT

IES

No current plans

Implementing a proof of concept


Already have a system in place

Exploring how to introduce IoT with vendors

Discovery Phase

Acquisition Phase

Fulfillment Phase

Renewal Phase

Grow Phase

0% 20% 100%80%60%40%

Meet Amazon’s Alexa – Your New Best Friend

Amazon’s Alexa is an intelligent virtual personal assistant

capable of voice interactions and can potentially become a

home automation hub with control over other smart devices.

From playing your favourite music on your smartphone to

listing your appointments for the day, Alexa also helps you to

check your bank balance, apply for new services, or transfer

funds, without having to call your bank’s contact centre or go

to its website or app. The information you request via voice

interaction is sent to your designated connected device

such as a mobile, tablet, or wearables. These are enabled by

the virtual assistant authenticating the user with the bank’s

database and enabling self-service on the user’s behalf and

delivering the information on approved biometric devices.

20


Until recently, organisations’ interactions with customers have been limited to point of sale or contact centres.

Recent developments in IoT are allowing organisations to access valuable insights on customers including

purchase patterns, satisfaction drivers, and geographical locations. Organisations are already leveraging these

insights to offer improved products and services proactively. This marks just the beginning of the potential IoT

has to improve overall CX. IoT offers immense opportunities for organisations to establish deeper customer

relationships by providing valuable intelligence to enhance customer service, helping them to build trust and

loyalty and creating new revenue streams .

By gaining capabilities to proactively maintain the quality of their product offerings, organisations are now

able to remotely fix issues, preventing customer service calls altogether. Some verticals including CSP and

Government, Healthcare and Utilities rated “mitigating performance issues” as the highest driver for their

verticals. Whereas Retail, Travel, Hospitality and Logistics, Transportation & Automotive , ranked “enforcing

policies” as the biggest factor driving the need for IoT-enabled customer services for their organisations.

What is Driving the Adoption of IoT-Enabled CX?

IoT-Enabled CX: Factors Driving IoT CX Initiatives, Asia-Pacific, 2016


* Only applicable to

respondents who view IoT

as important for enhancing

employee engagement

Inte

rnal d

rivers* (N

=237)

Exte

rnal d

rivers (N

=4

79

)

Not Important At All

Somewhat Important

Somewhat Not Important

Very Important

Neutral

Enhancing services

Empowering interactions

Enforcing policies

Mitigating performance issues

Anticipate customer needs

Incorporate new channels for engagement

Digital distruption and new business models

New services to improve profits

Need for customer centricity

Demographic change interaction

IoT devices in customer environment

Motivating employees

Monitoring employees

Measuring interactions

0% 20% 40% 60% 80% 100%

21


By analysing data insights gathered from sensors and user interactions, organisations today can gain greater

visibility of their products and users. They can now understand the exact product usage pattern and update

features or adjust future launches in alignment with customer preferences, enhancing customer services.

Organisations ranked “anticipate customer needs” as the most important external driver for IoT-enabled

customer service. All verticals, with the exception of Insurance and CSP, also ranked it as their most important

external driver. Respondents from CSPs chose “digital disruptions and new business models” while those from

the Insurance sector selected “new services to improve profits” as their biggest needs for IoT-enabled CX.

Survey findings determine “understanding of IoT value proposition” as one of the biggest challenges

organisations face when deciding to deploy IoT for CX. Although those surveyed recognise the value of IoT in

driving CX, they have trouble operationalising and quantifying the benefits. This is exemplified by respondents’

relatively lower preparedness in “introduction of new devices into environment” and “ubiquitous access to

channels” enabling them to have better access to contextual data, a fundamental value proposition of IoT.

Results show that respondents feel they are most ready when it comes to addressing privacy and security

issues in relation to IoT-enabled CX.

There is a sea-change in effect across organisations’ CX considerations, moving from multichannel to

omnichannel to digital engagement to leverage IoT. While there is enthusiasm for the benefits IoT can deliver

for CX, organisations also understand the challenges involved .

How Prepared are Organisations for IoT-Enabled CX?

IoT-Enabled CX: Preparedness for IoT-Enabled CX, Asia-Pacific, 2016


Not Ready at All

Somewhat Ready

Somewhat Not Ready

Very Ready

Neutral

Privacy and security issues

Application for information dissemination and users

empowerment

Data strategy (data management)

Ability to automate insight into processes

Ability to orchestrate across organisation

Data Strategy (monetisation and analysis)

Ubiquitious access to channels

Understanding of IoT value proposition

Introduction of new devices into environment

Scalable delivery platform

Implementation and management of expand

ecosystem

0% 20% 40% 60% 80% 100%

22


Lack of understanding about the benefits IoT brings into CX is the largest restraint limiting organisations

from implementing IoT. This is understandable, as the value of IoT in the context of CX has not been clearly

articulated in the industry. Solution providers and ecosystem participants need to build greater awareness

about the benefits and communicate a clear value proposition to entice organisations.

Reasons for Not Adopting IoT by Those Having No Plans to Incorporate IoT to Enhance CX

IoT-Enabled CX: Reasons for Not Adopting IoT, Asia-Pacific, 2016(N=183)


Lack of understanding of what IoT bring

to customer

Lack of understanding of what IoT bring

to business

15% 20% 25% 30%

Lack of business case

Budgetary constraints

23


Introducing the IoT-Enabled CX Index (IoT-CXI)

Survey findings were analysed to understand what

drives IoT-enabled CX maturity in the context of

enhancing CX, leading to the creation of the IoT-

enabled CX Index (IoT-CXI). The IoT-CXI aims to

capture the various facets spurring IoT-enabled CX

maturity as organisations embark on their IoT-enabled

CX journeys. Based on a statistical modeling* using

regression of the survey data, we identified three

factors driving IoT-enabled CX maturity: IoT Value,

IoT Action, and IoT Readiness. The Index can be used

as a benchmark to aid organisations in ascertaining

their maturity levels when it comes to using IoT to

enhance CX.

IoT Value emerged as the main predictor of IoT-

enabled CX maturity in organisations in improving CX.

*Refer to the appendix to find out more.

What Drives IoT-Enabled CX Maturity ?

IoT-Enabled CX: Factors Driving IoT-Enabled CX Maturity, Asia Pacific, 2016



IoT Value(Perceived value of

IoT for CX)

IoT Readiness(IoT readiness assessment for

CX)

IoT Action(Stage of IoT

adoption in CX journey)

sig sig - 54% weightage

IoT-CX Maturity

IoT Value IoT Action IoT Readiness

sig - 34% weightage

sig - 12% weightage

Regression model

was significant,

with all predictors

combined

accounting for a

significant amount

of change in the

criterion

IoT Value accounted

for slightly more

than 50% of change

in the criterion,

emerging as the

strongest predictor

IoT Action was

found to be the

second strongest

predictor,

accounting for 34%

of change in the

criterion

IoT Readiness

contributed to 12%

of change in the

criterion and had a

small yet significant

impact on the

criterion

24


Understanding the Multi-dimensional IoT-CXI

IoT-Enabled CX: The IoT-CXI (Internet of Things-Enabled Customer Experience Index), Asia-Pacific, 2016

The value attributed to IoT in driving CX accounted for more than half of the change recorded in the IoT-

enabled CX maturity level of an organisation, underscoring the need to encourage organisations to appreciate

and operationalise the value proposition offered by IoT in driving CX. IoT Action was another key predictor,

contributing to about a third of change recorded in the IoT-enabled CX maturity levels of organisations. This

suggests that beyond recognising the value of IoT in CX, it is vital for organisations to start their IoT CX journeys

by aiming for actual implementation of the initiatives. Such an approach would also mean that organisations

have to be ready across various fronts to leverage the value offered by IoT as exemplified by the role of IoT

Readiness as the final predictor of IoT-enabled CX maturity.

Using the weightage derived by the regression model, individual IoT-CXI scores were calculated for all

respondents in the study. India, China, and Japan emerged as the leading markets, driving IoT CX initiatives

and showing higher levels of IoT-enabled CX maturity as a result. On the vertical front, organisations in CSP,

Retail, Travel, Hospitality, and Logistics, Transportation & Automotive scored the highest in the IoT-CXI.

An analysis of the factorial components making up the IoT-CXI reveal variations across the IoT Value and IoT

Action factors that were instrumental in contributing to the differences in overall performance of the IoT-CXIs

in different countries and verticals. In contrast, IoT Readiness remained relatively constant across the various

target groups.

Average Overall

1

Index Score

2 3 4 5

Overall

China

2.79

3.81

3.10

2.66

2.61

2.44

2.16

3.34

2.88

2.77

2.68

2.68

2.57

India

SEA

ANZ

Japan

Korea

CSP

BFS

Insurance





25


Differences in how organisations perceive IoT Value and their current status in IoT Action have a significant

impact on their overall IoT-CXI scores. For instance, Southeast Asian and Korean markets have similar IoT

Value and IoT Readiness scores. However, Southeast Asian respondents recorded higher IoT Action scores,

suggesting that the region is driving more IoT CX initiatives compared to their South Korean counterparts,

resulting in the higher IoT-CXI score in the region.

Similarly, across the verticals, BFS respondents recorded a higher IoT-CXI score than their Insurance counterparts

due to better IoT Action scores, despite both verticals recording similar IoT Value and Readiness ratings. This

indicates BFS companies taking the lead in implementing IoT CX initiatives and projects compared to the

Insurance sector.

By acquiring an in-depth understanding of the various underlying dimensions affecting the IoT-CXI,

organisations would be better equipped to identify existing gaps and gain greater clarity on the next steps to

improve IoT-CXI scores. More importantly, it could enable them to develop greater IoT-enabled CX maturity

and achieve better CX results moving forward.

IoT-Enabled CX: Examining the Various Dimensions of the IoT-CXI, Asia-Pacific, 2016


Overall

China

India

SEA

ANZ

Japan

Korea

CSP

BFS

Insurance




0

Index Score

0.5 1 1.5 2 2.5

Value

Readiness

Action

26


Building superior customer experience in today’s era of immediacy requires organisations to leverage customer insights to drive business strategies. IoT introduces new, digitised possibilities allowing organisations to develop more holistic and personalised profiles of their customers, and transformational business models to redefine how CX can deliver value for customers and organisations.

A key value proposition of IoT in the context of CX is its ability to “sensorise” an environment leading to digitising the physical world and quantifying human actions to enable inferences about the intention and subconscious state of a customer’s mind, for example, their behaviours in a physical retail store. This augments existing data sources with additional behavioural data. Organisations can map their customers’ entire journey in real-time and proactively engage them. Many leading organisations have begun their IoT initiatives to enhance CX, for example, Volvo’s connected car and Whirlpool’s smart kitchen.

Organisations need to consider the following critical questions in planning the next steps when developing an IoT-Enabled CX strategy:

The Last Word

Are you positioned

to unlock the

subconscious mind of

your customer?

Have you considered

employee engagement

as part of your CX

strategy?

Do you have an IoT-

Enabled CX roadmap

in place?

2

3

4

Are you a customer-

centric organisation? 1 Unless your organisation’s culture and processes are built around

a customer-centric approach that requires an understanding of

their entire buying lifecycle (consideration, purchase, experience,

support, or advocacy/loyalty), your IoT implementation is unlikely

to deliver the expected dividends.

IoT-enabled CX is about data and how it is used. It provides a way

to digitise the physical environment and quantify human actions

so that you can better understand your customers’ intentions. Your

organisation needs to be able to integrate and automate these

insights into processes to optimise the value of data and improve

interactions.

The importance of human interactions remains central to delivering

exceptional customer experience. Employee satisfaction plays a

significant role in establishing that. Unless you are leveraging your

IoT implementation to enable, empower, and enhance the well-

being of your employees, you will not be able to tap into the full

potential of IoT implementation in your organisation.

IoT devices may appear as an additional channel for interactions.

Although your organisation may have both a sound CX strategy

and IoT implementation plan in place, there needs to be synergies

across both initiatives. An IoT-enabled CX roadmap needs to be

charted to ensure achievement of the desired outcome.

How does your

preparedness compare

with peers/competitors and

other industry participants?

5Asia-Pacific organisations are increasingly deploying IoT-enabled

CX initiatives. Have you embarked on this journey? Find out where

your organisation stands. Take the IoT-enabled CX Survey to

determine your IoT-CXI value.

http://frost-apac.com/genesys/

http://frost-apac.com/genesys/

27


APPENDIX: Methodology and Approach to the IoT-CXI

The intent of this research study was to develop a benchmarking tool for organisations to evaluate their IoT-

enabled CX maturity. The Index was created using responses from the survey and by running a regression

model.

A factor analysis was first conducted on variables identified in the survey as being critical to the IoT CX

journey. The analysis exploring the statistical relationships between the variables were eventually grouped

into three factorial groups. These factors included respondents’ perceived value of IoT in driving CX, the

assessment of respondents on their IoT readiness for CX, and their actions, which reflect the current state

of their IoT journey in enhancing CX.

To ascertain the weightage of the various identified factors spurring IoT maturity, we built a regression

model with the factors as predictors (x variables) and the importance of IoT in driving CX as the criterion

(Y variable). The importance of IoT was chosen as the benchmark due to its strong correlation with NPS

and Customer Effort Score (CES) ratings, underscoring its importance in establishing the maturity level of

organisations in using IoT to enhance CX levels.

The overall regression model was found to be significant following the exercise. In particular, all the factors

including IoT Value, IoT Action, and IoT Readiness emerged as key predictors with substantial impact on

the IoT maturity levels among respondents in the study.

IoT-CX Maturity

Criterion Predictor 1 Predictor 2 Predictor 3 Error

IoT Value IoT ActionIoT

Readiness

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community. Is your organization prepared for the next profound wave of industry convergence, disruptive technologies, increasing

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