Business Strategy Model For Experience Management

Sourajit Ghosh

Organizations have excelled and grown by providing an excellent experience for their customers, employees, suppliers, and supply chain. Every business has tried to blend operational efficiency with the intangibles of feelings that help them provide that “wow!” experience and break through the typical constraints of business strategy, as explained in Porter’s Five Forces Framework.

Modern technologies help enable this blending of operational and experience data, catapulting an organization to business horizons the world has never seen before. This business strategy model described below helps the leadership team create a framework to enable this change.

Strategic benefits of experience management

To establish a quantifiable framework for this model, consider these two important management practices:

  1. Valuation methodologies of brand equity – how companies would like to increase their corporate brand value
  1. Valuation methodologies of mergers and acquisitions (M&A) – how companies would like to increase their financial value

Various methods are used when putting a financial value on brand equity or on an organization during M&A. A common construct in most of these methods can be summarized as:

  1. What is the monetary value that can be assigned to that company/brand from an overall cash-flow/revenue standpoint? One example of this is the net present value (NPV) of the discounted cash flows from future revenue streams of that company/brand.
  1. How passionate are the customers for that company/brand, and what is the value of that loyalty? One example of this customer lifetime value (CLV).

This business model described below uses NPV and CLV constructs to design a framework for an experience management business strategy.

Business strategy model with net present value and customer lifetime value

Business strategy model with NPV and CLV

Efficiency focus (high CLV, low NPV)

You already have built a great relationship with your customers. They are engaged and loyal to you. However, you are struggling in the fulfillment of that relationship at repeatable, massive, automated scale. As an organization, you are trying to influence strategic enablers like reducing staffing costs, manufacturing products at lower costs with higher efficiency, keeping your supply chain lean yet fast and responsive, and improving your spend management. To move to the “enrich your network” quadrant, you can drive various digital transformation initiatives like enabling an integrated value chain or adopting Industry 4.0 principles to build a digital supply network. In this category, you are focusing on digital transformation driving operations efficiency in various business processes like lead-to-cash, procure-to-pay, etc.

Effectiveness focus (low CLV, high NPV)

Many leading organizations are in this space today. They have a large customer base, have built excellent operational efficiency, and have tried-and-tested processes achieved through decades of outstanding performance in business. However, with the ever-changing economy and customers’ nature, the whole paradigm of engaging with customers has changed. This puts the existing business at risk to new and upcoming competition and innovative business models. To move to the “enrich your network” quadrant, you need to adopt a customer experience strategy and shape that with experience management that will help make your organization be more effective when it comes to omnichannel, digital customer engagement.

Expand and transform (low CLV, low NPV)

Organizations in this category believe they are struggling with both customer engagement and revenue streams and cash flows relative to peers. Hence, they are trying to expand business growth in all possible dimensions. If this describes your organization, bring in industry practices and market intelligence to help choose which path will help differentiate your business against the competition. Techniques like design thinking can help you prioritize initiatives most likely to bring in immediate, rich dividends and put you on the path to the “enrich” category. This transformation into an intelligent enterprise will help you move out of this quadrant and increase the realization of your high CLV and NPV goals.

Enrich your network (high CLV, high NPV)

So, what do you do when you are doing it all well? This is your opportunity to enrich your network and look at options to digitize your community network of customers, employees, suppliers, and vendors and truly digitally transform your organization with business innovations. Map your competition into where they are in this model, and build counter-strategies accordingly. Build strategic differentiators via digital transformation to help your ecosystem realize why your organization is bringing value to your shareholders while, at the same time, running your business by considering the feelings of your eco-system.

The way forward

Once you’ve built your management strategy holistically and evaluated with your business stakeholders where you exist in this business model matrix, create your own key performance indicators (KPIs) and value drivers for success and work with digital transformation experts to make this change real. The coming together of the operational and experience economy opens amazing growth potential for all organizations.

Organizations like Bain & Company provide measurement resources to ensure you’re tracking toward your KPIs and goals. They provide benchmarking services around customer experience like NPS Prism to compare yourself with your competitors on overall Net Promoter Score.

Additionally, experience management engineering can help businesses align experience data to operational KPIs. You can then design your business strategy accordingly and enable it with enterprise architecture to make your experience management vision real.

Learn more about the Experience Economy: Revolutionizing Industries With O’s And X’s.

Sourajit Ghosh (SG)

About Sourajit Ghosh (SG)

Sourajit Ghosh (SG) is a Chief Expert Presales, Business Architect & Experience Management Ambassador in SAP, focusing on Digital Transformation, Customer Experience, CRM, E-Commerce, Cloud Computing, Business Consulting and Enterprise Architecture. Sourajit has served a number of roles at SAP including PreSales, Value Advisor, Business Process Consultant, Enterprise Architect, Mentor, Solution Captain, Thought Leadership, and Expert Speaker in Events.