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"Innovations" like the self-checkouts at stores come about when businesses neglect to focus on what's best for customers—and ignore the potential of smartphone apps
Posted on Harvard Business Review: March 31, 2011 11:35 AM
Why does your supermarket herd you toward those clumsy self-service checkout stations while ignoring the incredible usefulness of the smartphone in your pocket? Same reason your own company might be forcing customers to use other clumsy technologies.
Marketing groups like to think of themselves as technically savvy and feel a need to prove it. But over and over, they confuse usefulness to the company with usefulness to the customer. The result is implementation of technologies that customers don't like. Customers might "accept" a technology, but that's not the same as liking it.
So there I was, staring at the very few open checkout lanes, trying to decide which was worse: waiting in a long queue or using one of the self-checkout stations. I opted for the latter. I scanned and rescanned and weighed and reweighed, all the while being talked at by an automated voice that clearly assumed I was stone deaf. Checkout took 15 minutes. Assuming the store pays cashiers $10 per hour, I figured I was owed $2.50 for my labor.
This happened just a few days after the same supermarket refused to give me a discount without a new bar-coded card and made me wait in line for one at the service desk while the system rebooted. "It is new," I was informed. Total cost for the week in lost discounts and the amount I was owed for checking myself out: $6.34.
When considering a new technology, companies need to ask themselves three questions: Does it easily integrate with the customer's lifestyle? Does it improve the process for the customer or just the company? Does the value-add for the customer justify implementation?
Take the self-service checkout lane. The answer to question one is pretty obvious: The only people who really enjoy that experience are those who enjoy going through airport security again and again while peeling off their belts and watches under the iron gaze of TSA officers. As for question two: The technology reduces the supermarket's staffing needs, but it doesn't do much for the customer, unless you consider it an advantage to avoid a huge queue that the supermarket has created through inadequate staffing. Re question three: It seems to me that as long as the supermarket was going to install a new technology, it should have gone straight to the RFID chip and the smartphone.
Advances in technology allow companies to place RFID labels on items and let shoppers walk through an automatic scanner at the exit. Tesco in the UK pioneered an RFID-based approach to checkout in 2005. Today, the smartphone can also be used to achieve lower operational costs and potentially heighten customer satisfaction by giving consumers more control during the shopping experience. While the technology is new to the market, early results are very promising.
Leading technology advocates such as Tesco and Subway in the U.S. already let customers use smartphone apps to facilitate the rewards process. Customers can modify their profiles and see and spend their rewards at will. Tesco even links its smartphone strategy with a social media strategy, providing Twitter and Facebook updates on discounts and other news. It almost goes without saying that a smartphone strategy also allows the companies to reap significant benefits in direct sales and marketing.
My supermarket linked my new card to a discount gas offer, but it turns out the redemption of points for gas is complicated, and only select gas stations are participating. A smartphone solution would have helped: A GPS-powered app could have guided customers to participating gas stations. And with a smartphone strategy, my supermarket chain wouldn't have to reissue a card every time it strikes up a new partnership. Such an approach would be transparent and personalized and would allow for marketing experimentation. (See "A Step-by-Step Guide to Smart Business Experiments.")
Too often, technology ROI calculations are simplistically derived from subtracting the cost of a deployment from the gain. When the technology underperforms, the blame falls on cost. The gain side is overlooked. But that's where the customer experience comes in. A technology that improves the customer experience can provide significant gains. So if your ROI calculations don't include a column labeled "Customer Value Proposition," it's time to add one.