Paymentgal Blog

As a business consultant and market researcher, I'm often asked about disruption.  Which companies should I be tracking?  How do I leverage more fintech in my business?  Tell me what companies I should be thinking about acquiring?  What technologies are dying?  And so on.   Of course, I try to answer these with sound advice, but in my head I'm really thinking...."there's not that much that's really new, my friend". 

So lately I'm thinking more about what really gets to the heart of disruption, what are the drivers that matter?  This article from The Wharton School, an interview with Harvard Business School professor Thales Teixeira, aligns with what I think is the answer and that's Customer Effort or how can a business impacts the effort it takes to get something done.  The importance of this is that Customer Effort is something that can be measured, unlike Customer Experience which is much more subjective.  Once we can apply some kind of metric to a solution, it becomes possible to value it in a whole new way and opens the possibility of incorporating this kind of valuation as a compliment to financial modeling when assessing a solution's viability.

But, I'm getting ahead of myself, let me summarize what professor Teixeira is talking about in the article.  His findings, articulated in his new book Unlocking the Customer Value Chain:How Decoupling Drives Consumer Disruption, essentially state that disruption is not found in technology, it's in a solution's ability to offer the consumer a better, cheaper, faster way of doing something that is inefficient, costly or both.  The key is "something", meaning a very explicit activity.  He offers a number of examples you can read about in the article.

This theory aligns well with my thinking about Customer Effort as a means of assessing the market impact of a solution or service.  We know there are established methods of quantifying customer effort, such as the Customer Effort Score, which generally is used to help companies determine how well they're servicing their clients.  It's designed to measure how much effort a customer has to expend to solve a problem. 

In the use I'm speaking about here however, Customer Effort is defined as how well a technology removes effort from an activity somewhere in the consumer experience.  The result is a better experience, yes, but the valuation is centered on extent to effort is reduced.  For example, let's look at the new Apple credit card. 

The credit card itself is nothing new albeit its great design and no fee promise.  Fine. The potentially disruptive component is the way consumers can figure out the optimal repayment strategy.  What Apple has done is taken a narrow, but very important activity of a credit card user - repaying the debt - and eliminated the effort of looking at a statement balance, finding the effective interest rate, calculating different repayment scenarios and finally figuring out the best way to pay down a balance.  Generally speaking, most consumers won't come anywhere near doing this because it's just too much work, so they make a minimum payment, pay what they have on hand to put against the balance or simply pay it off in full.  By addressing this narrow activity, Apple has created a potentially disruptive solution that appeals to a new and debt-adverse, information hungry, consumer group. 

I believe Apple now has the opportunity to build on this initial design to reduce the effort of figuring out the best way to pay for something at the POS, giving consumers a means of knowing how quickly money was sent or received, and helping consumers manage a budget.  As professor Teixiera says in the article, it's not the technology that's disruptive.  Banks can build applications too and often do it quite well.  It's how well a company is able to see the world from it's customers eyes and then imagining an easier path to completing an inefficient activity.  This type of strategy creates a better user experience, yes, but its through reducing Customer Effort.

I don't profess to be a master of analytics and perhaps there exist scoring methodologies that address this kind of metric.  If you know of one, I'd like to hear from you. In the meantime, I may fool around with a few ideas myself.  Stay tuned. 

 

E-mail me when people leave their comments –

You need to be a member of KEENonPayments to add comments!

Join KEENonPayments