Most businesses endeavor to create positive customer experiences. Yet things happen that can create experience challenges. Some events are beyond your control, such as a fires or hurricane that affects your ability to deliver product or fulfill a service. Some are inflicted, such as a cyberattack that takes down your website or international changes to currency that impact your pricing. Being able to plan for the unexpected is what makes a company exceptional at delivering on the promise of customer experience.
The secret is being able to anticipate. “Anticipating a customer’s needs is critical in any industry,” wrote Hannah Wittenly in CustomerThink. Shep Hyken, a customer service expert, says, “You should always try to be at least one or two moves ahead of your customers anticipating what they might want or need.” Work by Will Yakowicz suggests that “maintaining an edge over your competition” requires you to be able to anticipate their moves. While each of these statements reflects the same idea – the importance of anticipating a situation and planning accordingly – research a few years ago by McKinsey found that “some two-thirds of companies assess only two or fewer alternative strategies.”
If you aspire to be agile, then anticipation is essential. How can you improve your ability to anticipate? By becoming more adept at using the concept of scenario analysis. Scenario analysis is a valuable tool every company can use to help hone their skills at anticipating and preparing for a variety of business situations and outcomes, including customer experience.
A Look at the Basics of Scenario Analysis
To use this idea, you must be skilled at creating scenarios and understand the meaning of a scenario. A scenario is defined as “a description of possible events.” Scenarios are a powerful tool for understanding potential business situations, such as customer experience, and then developing appropriate strategies for each of those situations. The value of creating scenarios is that they allow you to consider a range of possible outcomes and drivers of change. When you can anticipate a problem, you have the opportunity to make a modification to a business process before the problem actually occurs.
The great thing about scenario analysis is that you don’t need anything more than your imagination. The goal is to create as many different combinations of potential events as you can conceive. Then by analyzing each potential scenario you can assess its likeliness to occur and decide what if any proactive action is necessary. An example: after analyzing several scenarios you learn there your company may face an increase risk in customer defection should one or more scenarios occur.
Creating scenarios that will be useful in helping to make you more agile does require data and timing information. When gathering your data, use the following questions as a guide; you might add specificity to the questions depending on what aspect of your customer’s experience you’re addressing.
- What can change, and by how much?
- What data are predictive of a key prospect or customer behavior?
- What data are essential for effectively engaging with customers and prospects?
- What data are required to support a consistent cross-channel customer experience?
It might help to look at the past and think about what you wish you had known then that you know now. Identify the industry, political, economic, societal, technological, and legal trends that might affect those issues.
Proven Principles to Help Craft Your Scenarios
Creating scenarios is both art and science. Want to give using scenarios a try? Follow these 10 steps to get started.
- Define your scope to look for events that are certain or nearly certain to happen within a specific time frame. As much as possible, try to take a customer-centric view of the event from the perspective of customer experience. For example, running out of a high-demand product or not having enough technical people to solve customer issues in a timely matter. We found this to be the case when we hit a home run with the introduction of the first 8-bit HCMOS microcontroller with onboard electrically erasable memory. As the potential applications for the product exploded we ran out of capacity, forcing us to allocate the product across the customer base. Few if any customers received all the product they purchased. Yet, these customers had ramped up their own facilities in anticipation of receiving product to support their customer demand.
- Generate scenarios that cover a broad range of outcomes. Again, think in terms of customer outcomes. For example, customers terminating contracts or delaying renewals of a software subscription service. Several scenarios might have the same outcome, so you may want to organize these into themes.
- Identify at least three driving factors and associated critical uncertainties. A driving factor in customer experience over the years has been technology. From call centers to automated voice response, to self-service via the website. Artificial intelligence (AI) is an emerging technology that may impact customer service. Technology is fraught with uncertainties, such as pricing, implementation, and adoption.
- Develop at least four scenarios to address each of these uncertainties. (Why four? To avoid learning toward the middle one.)
- Evaluate each scenario in terms of its likelihood within the time frame. Place scenarios outside the time frame in the “parking lots” to address later. Be careful not to discard scenarios that initially seem too far outside the box. These can provide valuable insights and potential risks. Sometimes the most interesting and insightful scenarios are the ones that at first seem the most unlikely.
- Make a weighting scale to evaluate the probability and risk of each scenario. (Many organizations have limited resources so addressing every scenario may not be possible.)
- Conduct research to flesh out the details and increase your understanding of each potential scenario. Evaluate each scenario based on the research findings.
- Select the scenarios where the outcome seems most likely.
- Consider what processes, skills, or systems will be impacted and what resources are needed to offset or prepare for each scenario.
- Produce and implement action plans to address each of the scenarios.
Securing a Solid Plan for Scenario Analysis
Creating and analyzing scenarios is far more than an exercise of your imagination. Scenarios help you understand the magnitude of a trend and the uncertainty of your environment. They provide a vehicle for developing a set of strategies that optimize your chances of success under nearly all possible outcomes. It is an excellent approach for anticipating and addressing customer experience pitfalls.
Use this process to help you revisit your strategies, challenge your assumptions, stimulate internal discussion, and help you detect early warning signals. If your organization is new to scenario planning, it may be helpful to engage a third party with expertise in scenario analysis, process engineering and planning.