For Retailers and Brands, “The Moment of Truth” Has Already Passed

by Seeta Hariharan, GM and Group Head, TCS Digital Software & Solutions Group

In the 1980s, former Scandinavian Airlines System (SAS) CEO Jan Carlzon transformed the struggling carrier into a leader by turning customer service into an obsession. In doing so, he coined the phrase The Moment of Truth to describe the exact point in time a customer made contact with a SAS employee –when SAS had to prove its value in order to keep the customer.

For SAS, Carlzon preached, the collective outcome of these Moments of Truth – 50 million of them per year, he tallied – ultimately determined the success or failure of his company.

Walmart founder Sam Walton put the same phrase into action by instituting the retailer’s famous Ten Foot Rule. Employees who came within 10 feet of customers were expected to greet them to influence The Moment of Truth at the shelf when they decided whether to buy a product.

In 2005, Proctor & Gamble declared The Moment of Truth to be about the customer’s experience with a product: seeing it in a store or online, buying and using it, and offering feedback about it.

In 2011, Google (perhaps not surprisingly) proclaimed The Moment of Truth to be when a customer researched a product online before making a purchase.

Fast forward to today. Given the massive disruption in retail over the past decade, if you asked a hundred consumers or retailers to define The Moment of Truth, you’d get just as many answers. That’s because for retailers and brands, The Moment of Truth has passed. It’s been replaced by the sum of the consumer’s connected experiences.

Here’s why: As consumers, the value we once associated with the act of buying a product has diminished. Sure, there are lots of ways to buy products today – online, in stores, using mobile payments and even digital currencies. But in an omni-channel world, every successful transaction is still just a transaction. A non-event, not a memorable experience that creates lasting value. Ironically, it’s often memorable only if something goes wrong.

Today, brands at the vanguard don’t push products. They curate connected customer experiences by leveraging partners to create ecosystems of value for consumers.

Take Airbnb. They’re not just selling rooms, they’re delivering a broader, more satisfying travel experience involving such diverse experiences as violin making in Paris, truffle hunting in Tuscany or driving classic cars in Malibu.

Or consider Ikea’s acquisition of Task Rabbit. It improves the home furnishing experience by taking the frustration of assembling furniture off the table.

For consumers, it’s no longer just about buying a product or service. It’s about anticipating memorable experiences from their favorite brands, regardless of industry. In today’s connected economy, customers are placing more value on their experiences than the products or services they’re consuming. They want experiences that make their lives easier and precisely reflect their preferences, needs and aspirations.

Think about it. Decades ago, a Moment of Truth with a retailer or brand was when a customer in a store interacted with a salesperson or spoke with a customer service rep by phone. With the dawn of the Web and e-commerce, the number of these touch points exploded. Today, the Internet of Things has brought the digital insights of the online world to the physical world. Using machine learning and augmented intelligence, retailers and brands design highly personalized customer journeys spanning the real world and the digital world, which to consumers are one.

For today’s connected consumer, the most recent great experience with a retailer or brand automatically raises the bar for all other competitors going forward. It’s become a virtuous cycle that’s made them feel empowered, always expecting more.

For retailers and brands, this has made connected customer experiences the new competitive battlefield. Instead of pushing products, they must now sell great customer experiences that play out seamlessly across their integrated physical and digital worlds.

Leading born-on-the-Web retailers such as Amazon understand the importance of connected consumer experiences for creating greater value. That’s why industry pundits are so intrigued by the company’s foray into brick-and-mortar stores and its acquisition of the Whole Foods supermarket chain. They’re eager to see what it holds for the connected customer experience.

For retailers and brands, the implications of Connected Consumer Experiences are daunting. How do data-driven marketers reconcile the new Moment of Truth — the sum total of the consumer’s connected experiences?

They have to go well beyond selling products to address broader consumer needs and aspirations like beauty, adventure, health or wellness. They must orchestrate customer experiences that span multiple brands, service providers and commercial ecosystems.

Instead of static product offers, carefully designed connected experiences need to continuously raise the bar, feeding the virtuous cycle of consumer expectations. Imagine if a fitness equipment store went beyond its traditional boundaries to serve its customers – as an example, when a consumer buys a rowing machine, the store offers not just assembly services but also fitness apparel, nutritional supplements and a trial membership at a local rowing club.

Doing this at scale is a tall order. It requires capitalizing on the gold mine of customer data retailers are sitting on and IoT insights from the physical world, including stores. Connecting, analyzing and sharing it in real-time across company silos and with their new partners in value to understand, anticipate and satisfy customer needs. And most important — continuously detecting and learning new consumer consumption patterns so customer experiences get better and better.

The new marching orders for retailers and brands are clear: they must deliver connected consumer experiences that add up to The Moment of Truth.

Do you agree? To hear more about our views on digital transformation in retail, watch this video featuring IDC Retail Insights analyst Greg Girard.

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