UNIVERSITY OF AMSTERDAM
Faculty of Science
MSc Information Studies Business Information Systems
The Relationship between Customer Focus and Omni-channel Strategy in B2B Sales Service Innovation
A Case Study at HEINEKEN
Author: Michael Hadiono Student number: 11104902
Supervisor: Dr. Mieke Kleppe Signature:
Second examiner: Dr. Dick Heinhuis Signature:
ii Abstract
Companies strive to satisfy their customers and to fulfil customer needs by providing the services that they need. Having a customer focus helps companies to satisfy their customers with the provided services. However, customers demand certain flexibility, wanting to communicate via their own preferred channels. As such, companies need to identify effective ways on providing exactly what customers want. This thesis discusses the ways customer focus on fostering service innovation may be achieved using omni-channel strategy. As a starting point, a relation between customer focus and service innovation through omni-channel strategy was found in the literature review. A working conceptual model for this study was developed. The impacting factors in a customer focus theory and omni-channel strategy were incorporated into the working conceptual model. Several interviews were conducted at HEINEKEN, a large international brewing company, to test whether the findings in the literature were applicable within the company. The results indicate that the positive impact of customer focus on service innovation found within the literature was confirmed in the interviews. Customer focus has become a prominent part of company objectives. The impacting factors have covered all customer-related factors to foster service innovation. Furthermore, some relevant adjustment, such as an in-person approach during site-visit and other technological approaches, to achieve customer focus has been made. It appeared that a more direct approach, such as face-to-face meetings, is still the most effective way to engage customers. Finally, the results indicate that companies should be omni-present on customers’ preferred channels. For this reason, understanding customers are important for identifying the right services provided to customers.
iii Acknowledgements
I would like to express my gratitude to all the people who were involved in helping me with this thesis. First of all, I want to thank my thesis supervisor Dr. Mieke Kleppe for the time she dedicated and her guidance throughout this entire process, especially during a hard time. I was really lucky to have her as my thesis supervisor. I would like to thank my internship supervisor Elena Ungur and the rest of my office colleagues for guiding me through this project and putting me in contact with the interviewees. I would also like to thank all the interviewees who have participated in this research. Last but not least, I would also like to thank my friends, my family, and especially my girlfriend Angelina who supported and motivated me during the process.
iv Contents Abstract ... ii Acknowledgements ... iii 1. Introduction ... 1 2. Theoretical Framework ... 3 2.1. Service Innovation... 3 2.2. Customer Focus... 4 2.3. Omni-channel Strategy ... 6
2.4. Working Conceptual Model ... 8
3. Purpose and Research Questions ... 9
4. Research Methodology ... 11 4.1. Research Setting ... 11 4.2. Participants ... 12 4.3. Procedure ... 12 4.4. Data Analysis ... 13 5. Result ... 13
5.1. Omni-channel Strategy to Facilitate Customer Focus ... 13
5.2. The Impact of Customer Focus on Service Innovation ... 20
6. Discussion ... 22
6.1. Revised Conceptual Model ... 24
6.2. Theoretical Implications of Customer Focus in Service Innovation ... 25
6.3. Practical Implications of Customer Focus in Service Innovation ... 26
6.4. Limitations and Future Research ... 28
6.5. Conclusion ... 29
References ... v
Appendixes ... viii
Appendix A – Interview Guide ... viii
1 1. Introduction
In recent years, services have become the most promising sector to boost the European economy. Over two-thirds of the European GDP and 9 out of 10 job opportunities are created by services (Corugedo & Ruiz, 2014). Manufacturing firms have been shifting their focus towards this sector, particularly in developed countries, in order to be competitive in a world economy (Uppenberg & Strauss, 2010). However, the productivity growth of services has not yet shown its full potential. Services merely constitute around 20% of total internal EU trade and productivity growth has been generally lower than in manufacturing (Corugedo & Ruiz, 2014). In order to cope with these issues, Miller & Atkinson (2014) suggest that firms could increase their productivity by applying innovation strategies to improve their services. Thus, service innovation has become the major focus of many companies seeking to survive in a competitive and changing market (Chen at al., 2013).
As a concept rooted in the emerging service-dominant (S-D) logic (Vargo & Lusch, 2004), service innovation has become the preeminent concept among firms seeking to strengthen their position in the market. Vos (2010) defines service innovation as a process of designing, realising, and marketing new (or existing) services with the end goal of creating valuable customer experiences. With regard to the concept of S-D logic, Chen et al. (2013) highlight one of the fundamental propositions of S-D logic, namely that “the customer is always co-creator of value”. S-D logic may, therefore, be implemented to increase customer engagement opportunities by creating more interactive service providers and co-creation value together with customers (Hoyer at al., 2010). Therefore, it is necessary to establish precisely what services customers really want and develop new innovation strategies according to these preferences.
In order to accommodate customers’ preferences, many organisations are looking to maximise their use of Information Technology (IT). According to research by McKinsey & Co. Centre for Business Technology (2012), IT should be seen as a key business driver since it can drive innovation and improve performance in a company. With its digital environment, IT has rapidly evolved and has stimulated innovation as part of businesses by reconfiguring company practices to new service offerings (Miles & Green, 2008). However, Porter (2001) argues that the emergence of new technology and rapid mass marketing have shifted market competition from quality, features, and services towards prices. As a consequence, service innovation (as well as the variety of features) is overlooked in order to achieve a competitive price advantage over competitors. Whereas the distinctive value presented by an individual company is an essential prerequisite for its sustainable competitive advantage, these phenomena render such companies effectively indistinguishable from each other in the eyes of their customers. De Jong et al. (2003) suggest innovation efforts could lead to financial benefits, increased customer value, strategic success, and changing market conditions.
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With the help of technology, a company can interact with customers and thereby create a distinctive identity from other companies while maintaining low prices (Miles & Green, 2008).
Yet, despite efforts to gain a greater understanding of customer interaction, companies face many challenges in determining effective ways to manage customer participation (Pikkarainen et al., 2008). Companies are increasingly keen to build relationships with their customers as this helps to generate greater customer satisfaction with their products or services (Keil and Carmel, 1995). Consequently, these companies consistently direct their focus towards identifying customer needs in order to achieve agile approaches. Notably, Lohan, Conboy, & Lang (2011) highlight the importance of customer focus in agile system development (ASD) methods and especially for IT project managers to engage with customers. Nevertheless, ‘engaged’ customers have proven to be more valuable than simply ‘loyal’ customers in terms of prolonging the continuous purchase of goods or services (Chen at al., 2013). Given the importance of customer focus in IT projects, Bitner, Ostrom, & Morgan (2008) found that customer-focused approaches have a positive impact on innovation.
Research on innovation may be distinguished between the macro-level and micro-level perspectives (Vos, 2010). The macro-level perspective concentrates on differences between innovation patterns across different countries or sectors and the evolution of technology. On the contrary, the micro-level perspective focuses on the organization level where structures and processes are the central points. Although certain aspects of technological evolution are assessed, this paper focuses mainly on the micro-level perspective in which service innovation is applied in a certain sector of companies. While many previous studies have focused on innovation, very little has yet been said about service innovation and its inherent opportunities (Carlborg, Kindstrom, & Kowalkowski, 2014). Many innovation studies still place greater focus on product innovation within manufacturing firms. This is particularly apparent in studies which try to analyse the impact of various innovative efforts to support product innovation (Aghion et al., 2015; Cui & Wu, 2015; Wallin et al., 2015). The main reason behind this could be the intangibility to measure how well the performance of services (Vos, 2010). This paper attempts to confront this intangible element; it aims to measure services’ performance by achieving such a customer focused service innovation. Customer focus can be regarded as a vital requirement for companies aspiring to have a truly agile IT project team and to succeed in the modern marketplace (Lohan, Conboy, & Lang, 2011). Lohan, Conboy, & Lang (2011) develop a customer focus framework, providing project managers with a set of factors to overcome challenges and problems that they may face. This framework uses customer focus sub-constructs which derive from three fields of studies: information system development (ISD), marketing, and management. Since satisfying customers is the main objective of ISD studies, earlier customer focus studies have called for more of a marketing or management perspective (Lohan, Conboy, & Lang, 2011). Thus, it is not surprising that there are a limited number of studies on how customer focus can contribute to
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company innovation in the IT domain. Although some studies have accounted for issues regarding these customer focus factors in the IT domain (Kautz, 2009; Korkala, Pikkarainen, & Conboy, 2009; Martin, Biddle, & Noble, 2009; Mann & Maurer, 2005), there is little information on how these customer focus factors are interwoven with company innovation in services. It is evident that the evolution of new technologies has influenced many studies and practices in the IT domain. The evolution of IT has not only allowed companies to broaden their new service offerings (Miles & Green, 2008) but has also determined changes in the business model with regards to the distribution fields (Belu & Marinoiu, 2014). However, there is a need to identify different forms of distribution which a company may use to enrich the customer’s experience (Belu & Marinoiu, 2014). Miles & Green (2008) suggest that user experience is one of the critical drivers in innovation and, thus, media and capabilities that facilitate customer experience need to be identified.
Following on from the introduction (chapter 1), this paper is divided into five further sections. Chapter 2 outlines the theoretical framework of the thesis and how the key concepts employed relate both to each other and the theme of the paper. Chapter 3 defines the purpose of the study and its central research questions. Chapter 4 describes the research methodology employed and details the company case study that was conducted. Chapter 5 presents the results of the case study. Finally, chapter 6 contextualises these findings and draws some key conclusions and recommendations for future research.
2. Theoretical Framework
This chapter discusses the three key theories around which this research is centred: (i) service innovation, (ii) customer focus, and (iii) omni-channel strategy. These theories and their inherent concepts are discussed and a working conceptual model is presented.
2.1. Service Innovation
Service innovation –the concept rooted in the emerging service-dominant (S-D) logic (Vargo & Lusch, 2004)– has become a critical concern for companies looking to survive in a continuously dynamic market. Several authors have attempted to define service innovation (Sunbo & Gallouj, 2000; Toivonen & Tuominen, 2006; Preissl, 2000), but there is no formalised definition as yet. Vos (2010), for example, defines this concept by combining several important elements from several other authors’ definitions, notably Flikkema et al. (2010). Hence, for the purpose of this study, the following definition of service innovation may be given:
“Service innovation is the multidisciplinary process of designing, realizing and marketing combinations of existing and/or new services and products with the final attempt to create valuable customer experiences.” (Flikkema et al., 2010)
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For the past decade, the rivalry among enterprises and the expanded role of IT have shifted how enterprises maintain their innovation practices. Lusch and Nambisan (2015) suggest three focuses (i.e. network-centric, information-centric, experience-centric) in which this shift is clearly reflected. These focuses mainly describe the expansion of innovation targets from merely: (i) suppliers and partners to customers and external inventors; (ii) tangible goods to intangible offerings; and (iii) features of the innovation output to the value that is generated by the involvement of other actors or resources. As the basis of S-D logic, good-dominant (G-D) logic focuses on goods that are tangible resources – whether the goods have better value than that offered by competitors. Meanwhile, S-D logic centralises the idea more towards the human-centred view. In other words, S-D logic concentrates on the competencies, essential knowledge, and skills necessary to meet customers’ needs (Chen at al., 2013). With this human-centred view, S-D logic emphasizes the interaction between companies and customers. The interaction can be established by engaging customers to take part in the companies’ processes. Therefore, companies should increase their interaction opportunities with customers. Hoyer et al. (2010) suggest that S-D logic could increase customer engagement opportunities by offering more interactive service providers and co-creating value together with customers.
When it comes to the creation of engagement opportunities, the emergence of digitisation plays a vital role in supporting their interactions. Digitisation has rapidly evolved and it has stimulated innovation in businesses by reconfiguring their practices to create more opportunities for new market offerings (Miles & Green, 2008). The dawn of the new digital era –and consequently, the near universal prevalence of the internet– enables companies to have easier access to their customers. Vos (2010) suggests that service innovation can be seen as an internally and externally oriented interaction process to fulfil customer needs. On the one hand, service innovation, as an internal process, refers to a collective process in which both the management team and employees work together. On the other hand, service innovation, as an external process, mainly focuses on interaction with customers. Since the final goal is to create high-quality customer value, customers are the key to achieving project success.
2.2. Customer Focus
In achieving project success, companies are fully aware of the necessity to focus on their customers (Lohan, Conboy, & Lang, 2011). Companies therefore consider ASD teams as the key factor for business success. As part of agile project management (APM) principles and methods, ASD teams have a critical role in managing the IT projects of a company and ensuring if the company can fulfil all its customer needs. In maintaining customer needs and satisfaction, ASD teams have to manage the internal processes of the company in order to achieve customer focus in their practices (Conboy, Lohan, & Lang, 2010).
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Having a customer focus helps companies to satisfy their customers with the provided services or products. This in turn leads to a good relationship with their customers (Keil and Carmel, 1995). For this reason, customer focus –specifically in order to understand customer expectations– becomes one of the main objectives of ASD teams. Lohan, Conboy, & Lang (2011) define customer focus as “the degree to which an agile team focuses its activities, practices and processes on achieving value for their customer”. Influenced by information system development (ISD), marketing, and management studies, Lohan, Conboy, & Lang (2011) develop a customer focus framework based on their case studies in which they highlight four major contributing factors and four moderating factors to achieve customer focus in an ASD environment (see Figure 1). This framework not only contributes to the development of the customer focus concept in the agile project management (APM) field but also helps IT project managers to recognise the factors which need to be considered when looking at customer focus.
To be a customer focus agile team in an ASD environment, a number of major contributing factors and moderating factors need to be taken into account (Lohan, Conboy, & Lang, 2011). The ASD team has to find a way to improve customer relationships by obtaining and utilising customer requirements, customer information, and customer feedback. Other than the major contributing factors, the ASD team also has to be aware of the moderating factors, i.e. a clearly defined customer, the location of a customer, attitude or personality of a customer towards the team, and a team’s prior experience with the customer.
Figure 1. The customer focus framework. The framework is based on the customer focus theory
proposed by Lohan, Conboy, & Lang (2011). To make a customer-focused environment, project managers need to be aware of the importance of customer relationships, collecting and using customer information, gathering and understanding customer requirements and receiving and using customer feedback. Besides the four major contributing factors, they must also take into account the identity of the customer, the perceived personality of the customer, the location of the customer and the teams’ prior experience with the customer.
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By identifying the real practices in every customer focus factor, the ASD team would be able to establish a connecting link between customer satisfaction and the efforts in internal processes (Conboy, Lohan, & Lang, 2010). This connecting link can be seen as the strategy in company’s internal process which enables the ASD team to interact with customers, including access to all of the customers’ relevant information. However, the development of IT and the Internet have shifted the way the world communicates and interacts; by utilising technology, organisations can initiate various means of communication with a vast number of customers in a relatively short period of time. Furthermore, organisations and customers have more ways in which they may approach each other. Such extensive communication can be done by seamlessly integrating the customer experience across all interaction channels – in-store, on the web, and on mobile devices – where the companies need to be omni-present (Kourimsky & van den Berk, 2014). As a result, a complete integration among channels on the back-end has to be established in order to give a holistic experience for the customer when shifting to different channels.
2.3. Omni-channel Strategy
Omni-channel is the concept of complete integration of all physical and digital channels to create a unified customer experience (Belu & Marinoiu, 2014). In an omni-channel experience, a transaction can be extended to more than one channel and the customer can combine the advantage of using different retail channels. With the advantage of combining different channels, Rigby (2011) suggests that the main purpose of omni-channel retailing is to give the customer a seamless retail experience. With such an experience, customers can shift to their preferred touchpoints and access consistent information. Verhoef, Kannan, & Inman (2015) define touchpoints as episodes of direct or indirect contact between customers with a brand or firm. Driven by business-to-consumer (B2C) customer experiences, business-to-business (B2B) buyers also expect the seamless customer experience from sellers. Omni-channel experience has, therefore, become a salient concern in B2B businesses.
Forrester Consulting (2014) found that an inclusive omni-channel experience can motivate B2B buyers to be loyal to a particular company. They also found that 75% of B2B buyers around the globe would like to buy from the same merchant due to that merchant’s omni-channel capabilities. Nevertheless, there was much evidence that many multi-channel retailers failed to leverage omni-channel benefits due to lack of integration (Rigby, 2011). The sellers have to be able to integrate their omni-channel capabilities across channels in order to ensure the consistency of services provided. As a guideline, this paper uses the omni-channel strategy framework proposed by Belu & Marinoiu (2014) to list possible touchpoints in an omni-channel approach. Figure 2 illustrates the touchpoints of the omni-channel approach in providing the core services to drive customer experience. Belu & Marinoiu (2014) arrange the list of touchpoints by classifying channel interfaces with the possible
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channels (i.e. stores, online, telephone, social, and mobile). In stores, firms can use a retail management interface and an Electronic Point of Sale (EPOS) interface. Retail management refers to a process of enhancing customer service and discovering new innovative ways to buy, develop, and sell products by having a good understanding of the environment (Dumi, Sinaj, & S’eche, 2014). EPOS refers to a technology which enables an efficient sales tracking of products or services to the customers (Hammel & Kopczak, 1993). E-commerce and analytics optimisation in the online interface include the use of websites to interact with customers and customer analysis to acquire the actual customer behaviour. With regards to the telephone interface, while call centres create and maintain good customer relationships by providing assistance in customer inquiries, telemarketing provides customers with the information about sales and marketing activities. Furthermore, the social interface capability focuses on utilising social media to engage customers. Lastly, the mobile interface provides customers with the capability of using mobile-friendly websites, mobile applications, and geo-targeting.1
Using the touchpoints, companies should be able to provide customers with the core services (i.e., warehouse management, order management, finance management, payment service, CRM, ERP) in order to enhance the customer experience. However, the organisations do not necessarily have to handle all of these channel interfaces (Kersmark & Staflund, 2015). Instead, the foremost concern is to be present in the customer’s preferred touchpoints while maintaining the consistency of customer experience.
Figure 2. The touchpoints of channel strategy (Source: Belu & Marinoiu, 2014). The
omni-channel approach enables companies to provide their customers with a seamless shopping experience through various channels and their interfaces. These channel interfaces allow the customers to perform certain core services via their preferred means of communication.
1 Geo-targeting is a process of determining the physical location of a website-visitor to provide him/her with
8 2.4. Working Conceptual Model
To understand how the concepts of this paper relate to each other, a working conceptual model for this study was developed (see Figure 3). The impacting factors in the customer focus theory and omni-channel strategy were incorporated into the working conceptual model. This is used to guide the data collection process of this research and assist in the analysis of its findings. The correlation between each concept is described as below.
Most companies recognise that a good relationship with customers is the key to achieving project success (Lohan, Conboy, & Lang, 2011). Having a customer focus mind-set helps companies to increase customer satisfaction with the provided services or products and establish a good relationship with the customer (Keil and Carmel, 1995). As discussed, IT project managers should understand practices and factors that may impact and contribute to customer focus. In order to implement these factors, the use of technology can be the answer. Technology has been seen as an effective way to interact with the customer and to establish a good working relationship with the customer (Belu & Marinoiu, 2014).
However, due to the evolution of technology, companies need to adjust the way they interact with their customers (Janssen, 2015). Customers decide their own interaction preferences and they expect the company to be present on all touchpoints with consistent content (Belu & Marinoiu, 2014). Thus, omni-channel, as a consistent and seamless approach to communicate with customers, becomes a key success factor for companies to increase customer satisfaction and build relationships with the customer (Janssen, 2015). In building their relationship with customers, companies invite their customers to participate in their service innovation process (Hoyer at al., 2010). Bitner, Ostrom, & Morgan (2008) also support the model of a customer-focused company, finding that customer-focused approaches have a positive impact on innovation.
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Figure 3. The working conceptual model is based on the customer focus framework proposed by Lohan, Conboy, & Lang (2011) and the omni-channel strategy proposed by Belu & Marinoiu (2014). Omni-channel strategy enables companies to interact with their customers according to customer preference. Providing services that customers really want allows the companies to be customer focused companies. Customer focus might be achieved by contemplating necessary factors (i.e., major contributing factors, moderating factors) which can contribute to customer focus. In turn, following these factors might foster innovation in the companies’ services.
3. Purpose and Research Questions
The main purpose of this paper is to identify the possible ways to achieve customer focus on fostering innovation in services. Omni-channel strategy is chosen as the appropriate strategy to achieve this goal due to its innovative characteristic in providing customers with the freedom to choose their preferred touchpoints.
Therefore, the main research question in this paper states:
What are the ways to achieve customer focus through omni-channel strategy on fostering innovation in services?
Once these methods are identified, this paper could offer important insights for companies to help them reflect upon their service innovation efforts, to identify which efforts are worthwhile, and to plan their business initiatives. In addition, this could also give companies an insight to improve their
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business performance by involving their customers. As implied in the bandwagon’s concept, there is no doubt that when an innovative approach is proven to be useful for one firm in a particular sector, other firms will follow (De Jong et al., 2003). While companies focus on achieving their business goals, customers look for low prices and a service that satisfy their needs. Hence, when more companies involve customers in their service innovation process, mutualism could be achieved between the companies and the customers. The companies could influence the customers’ behaviour to continuously purchase goods or services and, at the same time, the customers receive the service that they want.
However, to answer the main research question, the way omni-channel strategy leverages customer focus must be identified. Becoming a customer focused agile IT project team could be achieved by considering all the customer focus factors including the moderating factors. Companies use online instruments to refine or create innovative solutions together with their customers by having an interactive dialogue with the team management of the company (Rusu & Avasilcai, 2014). Due to the development of the new digital era and the emergence of available digital media options, companies are aware of the importance in providing customers various ways of online interactions. These online interactions enable companies to involve customers in their service innovation processes.
As a strategy which accommodates interactions between organisations and customers, omni-channel can be seen as a valuable approach to facilitate the implementation of the customer focus factors. Understanding which touchpoints (i.e., episodes of direct or indirect contact of customers with a brand or firm) can be used to facilitate the customer focus factors could help the company to evaluate its omni-channel strategy. It could also identify which of the touchpoints could help the company become a customer-focused company. Besides identifying the touchpoints, the implementation of omni-channel strategy in practice also needs to be recognised. Understanding omni-channel strategy in practice can give detailed insights on how the touchpoints can facilitate the customer focus factors. This prompted the following research sub-questions:
Which touchpoints from omni-channel strategy can be used to facilitate the customer focus factors?
What practices from omni-channel strategy can be used to facilitate the customer focus factors?
Besides identifying the implementation of touchpoints in real practice, further qualitative research could extend the customer focus framework to include other contexts (Lohan, Conboy, & Lang, 2011). Reflecting on the real practices of the company would be useful for extending the customer focus framework and manifesting its implementation in the context of service innovation. Hence, the following research sub-questions are also addressed in this paper:
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Which of the customer focus factors are perceived to impact innovation in services?
What additional factors could improve customer focus to foster innovation in services?
A case study was conducted in a company by performing observations and conducting interviews with relevant employees of the company. Several interview sessions were conducted to answer all of these sub-questions. More detailed information about the methodology employed is explained in the next chapter. The results of the sub-questions provide valuable information about ways in which omni-channel strategy may be leveraged to achieve customer focus in service innovation. Therefore, in order to answer the main research question of study, the results of the sub-questions are combined with the findings of the literature review.
4. Research Methodology 4.1. Research Setting
This research was conducted in a large international brewing company, HEINEKEN, where I was stationed for six months working within Centre of Excellence (CoE) Commerce sales team in the Global Information Services (GIS) department located in Amsterdam, the Netherlands. The CoE Commerce sales team manages IT standard solutions which might be implemented in HEINEKEN’s operating companies (OpCos). HEINEKEN is a notable example of a company that has been focussing on digital collaboration networks with customers (Kracklauer, Mills, Seifert, 2004). As one of the world’s most internationally recognised brewers, with over 250 brands in more than 70 countries and OpCos in five regions, HEINEKEN has grown into a successful global business.2 Aspiring to be a company with a strong global presence, the company needs to set a global standard on how to run the business in its OpCos all over the world.
The company has realised that innovation plays a key role in its success. Innovation –in order to find great ideas and creative solutions– has become the main factor in the company’s efforts to perform multiple contacts with internal and external parties. Through this company strategy, the company expresses their commitment to permanent innovation and to value customers by integrating them into the conversation. In 2010, the company set a challenging ambition to double their innovation rate by 2020 through their online platforms. Using these platforms, the company collaborates with customers in identifying customer needs and launching creative initiatives. In some interview sessions conducted by McKinsey & Co. and Russel Reynolds Associates, HEINEKEN’s CEO, Jean-François van
2 For more information on HEINEKEN’s company profile, brands, and operating companies, refer to
http://www.theheinekencompany.com/about-us, http://www.theheinekencompany.com/about-us/our-global-presence, and http://www.theheinekencompany.com/brands
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Boxmeer, conveys the company’s commitment to their innovation focus which he believes can be of unique value for customers.3 Significantly, he emphasises innovation as the heart of the continued growth of HEINEKEN’s business.
4.2. Participants
In order to select appropriate participants for interviews, certain observations were performed. These were performed by attending several meetings, reading relevant documents and having conversations with relevant employees. Eleven HEINEKEN employees with responsibilities related to omni-channel strategy and service innovation, were identified and interviewed. Of these eleven participants, eight were part of the global services (i.e. HEINEKEN International) and three were employees of HEINEKEN OpCos (see Table 1). The participants were from different teams and held a variety of different roles. These differences help to generate a clear view of the different entities and social realms within this research.
Organisational Role Team Company
4 Senior Functional Consultants CoE Commerce Sales – GIS HEINEKEN International 2 Functional Consultants CoE Commerce Sales – GIS HEINEKEN International
Project Manager CoE Commerce Sales – GIS HEINEKEN International
Global Innovation Capability Manager
Innovation Capability HEINEKEN International Enterprise Architect & DIM Global Enterprise Architecture HEINEKEN International Digital and Content Manager Marketing Communication HEINEKEN OpCo
Project Manager CoE Program Delivery HEINEKEN OpCo
Digital Media Manager Communication HEINEKEN OpCo
Table 1. Interviewees profile
4.3. Procedure
The purpose of the interviews was to test whether the findings from the literature review are applicable within HEINEKEN. The interviews were conducted in either face-to-face meetings or via the company’s internal messenger application, Skype for Business, with an average of 52 minutes per interview. With the use of a semi-structured interview, a narrative style of conversation was adopted with the specific purpose of identifying certain emerging concepts (Gabriel & Griffiths, 2004). During the interviews, the sessions started with explaining the purpose of the research. To acquire the overview of the company’s strategy, several open questions followed afterwards. Then, the content of the research was briefly presented by using the working conceptual model based on the customer
3 The complete interview about innovation with the CEO of HEINEKEN is available on the McKinsey company
website http://www.mckinsey.com/business-functions/organization/our-insights/heinekens-ceo-on-leading-a-150-year-old-company and Russel Reynolds Associates’ website http://www.russellreynolds.com/insights/video-series/interview-with-heineken-ceo-jean-fran%C3%A7ois-van-boxmeer
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focus theory of Lohan, Conboy, & Lang (2011) and the omni-channel strategy of Belu & Marinoiu (2014). The participants were shown the working conceptual model in order to give them a basic understanding of the existing scientific knowledge in this research field. Finally, questions related to the content were asked in order to account for different ways of using omni-channel strategy in the company’s service innovation in real practice. The formal interview guideline can be found in Appendix A – Interview Guide.
4.4. Data Analysis
Data was analysed by incorporating the findings from the literature review with the subsequent observations at HEINEKEN, enabling a clear corroboration between the initial enquiry and the actual practices performed by the team. Conforming to the coding manual for qualitative researchers from the work of Saldana (2012), the interview responses were separated into short paragraph-length units with a line break in-between them whenever the topic or subtopic appeared to change and subsequently key ideas of every unit were drawn. After assembling all relevant ideas, these ideas were classified under a selection of label. As some ideas appear to be quite similar, they may be identified as one single code. This selection of labels is called the preliminary code. The preliminary code was categorised in a form of axial coding, looking at relationships between the different codes but also analysing emergent subcategories. This categorisation is called the final code. The coding process is included in the Appendix B – Coding table.
5. Result
Firstly, this chapter analyses the use of omni-channel strategy in contributing to customer focus at the case-study company. Referencing the customer focus theory, different touchpoints that can be used in every customer focus factor were analysed. In addition, some of the real practices identified by the interviewees are also mentioned. Secondly, the impact of customer focus on service innovation was analysed. Similarly, prominent customer focus factors and other additional factors that could facilitate service innovation were also analysed.
5.1. Omni-channel Strategy to Facilitate Customer Focus
This section answers the first and second research sub-questions of this study:
Which touchpoints from omni-channel strategy may be used to facilitate the customer focus factors?
What practices from omni-channel strategy may be used to facilitate the customer focus factors?
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Before we can answer these research sub-questions, it is important to understand precisely what HEINEKEN employees think of the company’s omni-channel strategy. Therefore, I asked for their general opinions about HEINEKEN’s current omni-channel strategy. This section starts with an overview of the omni-channel strategy at HEINEKEN. It then identifies several touchpoints of this strategy which have been found in use at HEINEKEN.
5.1.1. Overview
Providing customers with their preferred methods of interaction has become one of the main focus areas of the company. This impression was implicitly expressed by ten out of eleven respondents during the interviews. In defining the company’s omni-channel strategy, several teams in the HEINEKEN head office ─collectively known as the Global Commerce Team─ and several more advanced OpCos collaborate together. As a main guideline, they want to provide customers with as many ways of business relevant interaction as possible while maintaining a consistent message in every channel.
This indicates how the Global Commerce Team is eager to involve OpCos when designing their digital customer engagement strategy. The importance of working together with OpCos is clearly illustrated in the following quote:
“For instance, we use omni-channel for facilitating our marketing campaign. But it really depends on the regulation and characteristic of every country. Some countries are event based due to the limitation of the regulation of that country. We really focus on certain digital media due to no available media placement anymore. That is why I think every country has a different requirement.”
By working together with OpCos, the Global Commerce Team could understand the different requirements of each OpCo building a global standard solution. Getting these insights from OpCos helps them to identify the unique characteristic and regulation of each country where the company operates. On top of this, all respondents were also aware of the need to involve customers directly in the process of gathering customer expectations. The company, therefore, follows certain procedures to ensure that they receive these customer insights.
“It is really useful to gain insights by talking to the customers in order to make a clear problem analysis and an action plan to solve any request. It starts by making a plan then communicates the actual process related to the plan. So the overall processes are to conduct a stakeholder analysis, interview, measure and share the results.”
5.1.2. Customer Requirement
In identifying services that customers want, all respondents could recognise what HEINEKEN do in practice by using the touchpoints which were presented in the framework. Seven respondents cited in-person site-visits by HEINEKEN employees as an effective way of gathering customer requirements. In this context, HEINEKEN ‘employees’ refers specifically to sales representatives, drivers and
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Customer Technical Services (CTS) technicians. They ask for customer’s input and use a mobile application on their tablet or mobile to record the answer.
Gathering customer requirements is also be done by using the company’s B2B website. Here, there is a message section in which customers can create a message which will then be processed in a case management system. Using this method, the company can collect customer requirements in a more structured way since the system provides the relevant data for the individual customer who sent the message.
Customer requirements are also collected via email or telephone by telesales agents. On each of the company’s products, websites, or applications there is information on how to reach the company. This enables the company to have bidirectional communication with the customers. When gathering this information, activities are initiated by the company: telesales agents make outbound calls or send emails to some customers on their target list and proactively engage these customers by asking for their insights. Similarly, if customers feel they have insights into new services that they would like to share with the company, they can contact HEINEKEN directly by telephone or email.
Interestingly, six respondents also cited the importance of gathering customer requirements in broader scope. Notably, this includes non-HEINEKEN customers and end-consumers in the market. Identifying trends in the market helps the company to understand any potential technology that can be used to keep up their position with their competitors. For gathering information on trends, HEINEKEN acquires information via trusted research agencies and any reliable sources from the Internet such as websites, social media, and blogs.
“We received what customers need from the insights of customer insight team. The customer insight team can be either internal or research agency team. We have done some market research looking at the Internet, social media, blogs, and in the real field what is possible to use digital technologies for omni-channel customer engagement and we have been looking what our peer companies are doing.”
5.1.3. Customer Information
Before discussing methods for acquiring customer information, it is first necessary to define the exact interpretation of customer information employed by this study. During the interviews, I explained to the participants that customer information refers to any form of relevant customer data, including a customer’s personal identity, service preferences, transaction history, and purchase behaviour.
The company has various means of acquiring customer information. The most common approach is via sales representatives. Tellingly, during the interviews, the sales representative approach was the first approach cited by eight respondents. At HEINEKEN, the customer acquisition process is usually initiated by sales representative visiting a prospective customer and recording initial customer data using a mobile application on their tablet or smartphone.
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“The sales representative uses an application on the tablet or smartphone for collecting this information. So he creates a prospect customer and then there is a customer acquisition process where the customer is checked and validated. After few steps, a decision is taken if that pub or bar can become a HEINEKEN customer.”
Once the potential customers have been registered as HEINEKEN customers, they can then modify their information directly on the B2B website or mobile web. The customer can also make these changes by either contacting the telesales agents or informing the driver or CTS technician during the site-visit.
When customers make any purchase, they could see their transaction history on their personalised web portal. This transaction history is recorded in the company’s CRM system. Thus, when certain customer information is required, the data can be derived from the CRM system.
5.1.4. Customer Feedback
Nine respondents noted that sales representatives play an important role in acquiring customer feedback. Since customers has their own sales representative, these personnel act as the first point of contact when a customer wants to provide feedback.
“Every customer has his own point of contact like sales representative. We also approach our customer asking their feedback especially when we want to launch a new product or services. Therefore, it is necessary that we do not only wait for the customer feedback but also actively engage the customers asking their feedback. It has to be both ways.”
This also indicates the willingness of the company to proactively engage their customers. The company divides its strategy for collecting customer feedback into ‘planned’ and ‘unplanned’ approaches. Surveys are the cornerstone of the ‘planned’ approach. These can be conducted during an in-person site-visit by a HEINEKEN employee (i.e. sales representative, CTS technician, and driver). Using their tablet or mobile phone, they use the mobile application to record customer feedback. As well as this, telesales agents can also conduct the survey via an outbound call centre where they record the feedback in the case management system. Another way is to conduct an online survey via email or in the B2B website for target customers. The ‘unplanned’ approach depends on customers voluntarily sharing their feedback through ad-hoc contact via telephone or email with a sales agent. Like with a planned survey, customers can lodge any complaints directly with a HEINEKEN employee during a site-visit or by using the self-service case management feature on the B2B website. All complaints and feedback are handled by a centralised complaint management system. The system manages, records and monitors customer complaints and feedback. The feedback is categorised and prioritised according to a specific set of pre-determined criteria and it is routed automatically to the responsible person or department.
Some respondents also mentioned an alternative way to acquire customer feedback. Namely, five respondents detailed the usefulness of hiring a research agency to conduct a Forum Group Discussion
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(FGD) with the company’s target audience whenever there was a specific need to analyse certain services further.
“In some occasions, we hire a research agency to analyse the feedback from our customer by conducting customer satisfaction survey. We also get the feedback from our consumer insight team. Other than that, we use FGD with the target audience. It can provide us with good insight but FGD is more useful for digging deeper insights about something.”
5.1.5. Customer Relationship
All of the respondents felt that the company takes their customer relationship seriously. They felt that all channels presented in the framework are necessary for improving the company’s relationship with its customers. However, six respondents commented that the company has to select the most relevant means of interaction. When the customers want to engage with the company on certain channels, the company has to provide the necessary channels properly in order to have a good relationship with the customer.
“I think we should use all channels for improving the relationship with customers because the customer is engaging with us through all channels that you are included. Therefore, if you want to make a customer happy, you should support the customer through all the channels he wants to engage with us. […] you should find the most relevant points from a customer perspective and action on each one.”
While many OpCos described their relationship with customers as not being very close, others stated their relationship are really close. It may therefore be observed that the company’s varied relationship with customers depends entirely on each OpCo. However, all of the respondents agreed that HEINEKEN always maintain good relationships with key accounts. Indeed, HEINEKEN always involves all important stakeholders in the launch of new products or services.
The company recognises that close relationships with customers should be maintained in all of its approaches to customers –from on-site-visits and telephone calls to social media. However, once again, the importance of face-to-face meeting with customers was highlighted by the respondents as the most important way of improving customer relationships.
“Even though we can use various kinds of technology, meeting face to face is still the most effective way. Additional service is just supplementary.”
5.1.6. Customer Identity
When the respondents were asked about customer information, most of them tended to give an explanation on how the company gathers customer identity data. Therefore, the way to acquire a better understanding of customer identity is very similar to those methods employed to acquire customer information. Using the mobile application, the sales representatives are still the primary source of customer identity data because they initiate the customer acquisition process. This means
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that they have the responsibility to collect customer information related to customer identity and location.
“So the sales rep visiting the customer, as part of the acquisition process will check the customer identity, and this means that he has to collect legal information and tax information about this customer and this means VAT code is critical information by business perspective because this allows us to retrieve all the information which relevant by the needs of law.”
Just like with its strategy to acquire customer information, HEINEKEN uses a combination of its B2B website portal, mobile web, voice calls, and site-visits in order to acquire data on customer identity. For instance, customers can change their identity by themselves through the B2B website portal or mobile web. These customers could also modify or add their information by contacting the telesales agents or informing driver or CTS technician during the site-visit.
5.1.7. Customer Location
Significantly, all of the respondents directly related customer location to customer information and customer identity. This is because a customer’s address is recorded as part of their customer identity in the customer acquisition process. Like in the customer identity process, respondents emphasised site-visits by HEINEKEN employees (i.e. sales representatives, drivers, CTS technicians) as the primary way to acquire details of a customer’s location. Once again, in collecting this data, the sales representatives, CTS technicians, and drivers use the mobile application to record customer’s address during the site-visit. Besides inputting the address manually, they can also use GPS functionality in the application to capture GPS coordinates of that specific location.
“And for a customer location, besides taken from the address which his writing in his tablet, he also collects the GPS coordinate. So he has functionality on the tablet or on the phone while he is on-site at the customer location, he pressed the button and his tablet is collecting or capturing immediately the GPS coordinate of that location.”
Five respondents also pointed out that customers can call the company’s telesales agents if they change their address.
5.1.8. Customer Attitude
With regards to identifying customer attitude towards the company, six respondents directly associated customer attitude with customer feedback. They explained that information about these attitudes are often found in the feedback. Yet, all of the respondents stressed the power of conversation or face-to-face meeting with customers.
“And there are different ways, you can use the feedback which is provided by customer very clearly expressing his happiness or disappointment to HEINEKEN services to the telesales agent, then telesales agent will record a note or task or case in our case management solution […] Therefore, a kind of relationship is built between the telesales agent and the customer that is targeted for the calling. Same thing goes for those 3 types of HEINEKEN employees.”
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While telesales agents and site-visits are perceived as the most effective method, an understanding of customer attitudes can also be gained in the same way as with acquiring customer feedback (i.e. website, sales representatives, phone call via telesales agents, social media). However, some respondents felt that social media provided the easiest means of gauging customer attitudes.
Although social media might offer the easiest way of identifying customer attitudes, anyone can give comments and insights on HEINEKEN’s social media accounts. Hence, it is necessary to find a way to limit the scope of analysis in a B2B context which focusses on the opinions of registered customers. The company uses a social listening tool for analysing social media. To perform the right analysis, the tool uses customers’ email addresses registered in the B2B website as the reference for matching their social media accounts. In identifying customer attitudes in a B2B context, only comments from the matched accounts are taken into account.
5.1.9. The Team’s Prior Experience with Customers
With regards to the team’s prior experience in this domain, the respondents highlighted various methods that have been employed. Five respondents cited a case management system as one way to share experiences with customers. The case management system records all the notes taken by the telesales agents and employees conducting site-visits. The telesales agents record necessary information in the case management system when assisting the customers over a voice call. On the other hand, HEINEKEN employees who perform an in-person site-visit to the customers record the notes of their experience with the customers in the mobile application. These notes can be seen in the case management system by corresponding HEINEKEN employees for certain purposes (e.g. analysis, transfer knowledge, learning).
The second way is to contact the Global Support team. Although this is more relevant for HEINEKEN employees in OpCos, three respondents cited that employees in the Global Services can contact the Global Support team. Any HEINEKEN employees who need further information about certain projects including best practices and the customer experience can reach out the Global Support Team. This team acts as a dispatcher that will then redirect the request to the appropriate team. Answers from respondents strongly indicated that the work of the Global Support team is considered extremely helpful.
“Through global support team at HEINEKEN, we email them from the brand portal. It is really helpful because the market does not change that fast. Most of the time, the global solution is still applicable and valid. This is really important for service innovation. Colleagues are also really helpful because they can connect to the right people.”
20 5.1.10. Additional Touchpoints
When the respondents were asked if they felt any touchpoints were missing in the current framework, nine respondents emphasised the power of in-person site-visit contact between HEINEKEN employees (i.e. sales representatives, CTS technicians, and drivers) and its customers.
“There is in-person contact with the customer which is in the case of HEINEKEN through a sales rep, CTS technician or through the driver, which is also supported by digital technologies, mobile apps in their tablet or smartphones.”
Another missing touchpoint mentioned by five respondents was Electronic Data Interchange (EDI). This touchpoint enables the company to connect directly to the system of distributors or a big modern retailer. By using this touchpoint, the company can interact with the customers automatically through the system. Although this touchpoint might be more relevant to creating sales orders or sending invoices, five respondents observed the importance of establishing an EDI channel to engage with customers. For instance, EDI can be used for exchanging information between the company and its customers. The respondents also highlighted that EDI is a good way to improve the company’s relationship with its customers.
5.2. The Impact of Customer Focus on Service Innovation
This section answers the third and fourth research sub-questions of this study: Which of the customer focus factors are perceived to impact innovation in services? What additional factors could improve customer focus to foster innovation in services?
As with the first section of this chapter, it is important to highlight what HEINEKEN employees think of the company’s service innovation strategy before tackling these questions. This section starts with the overview of the company’s service innovation strategy to get the insights on the company’s effort to innovate its services by focusing on the customers. Then, having the customer focus theory suggested by Lohan, Conboy, & Lang (2011) as the basis of this study, I tried to test the existing theory with the practices in service innovation. Therefore, the way in which HEINEKEN is striving to be a customer focused company in real practice was investigated.
5.2.1. Overview of the Company’s Service Innovation Strategy
In order to maintain sustainability in service innovation, a clear and standardised procedure to initiate innovation is applied throughout the company. The procedure involves various teams and departments such as GIS and Global Enterprise Architecture. Together with the Global team, OpCos defines an appropriate solution which is suitable with local requirements. This solution is based on input and alignment with relevant stakeholders (i.e. business as represented by global functions, regions and/or
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OpCos and all GIS departments). The following quote clearly illustrates how the service innovation process is assessed.
“The innovation funnel is a stage gate for each innovation proposal […] It is split into several essential phases that each features a set of actions, controls and implications for moving forward. The innovation funnel has the aim of each IT-enabled innovation in GIS. For the IT-IT-enabled Innovation, GIS is part of the scouting process. Proposed innovations relevant to GIS start the innovation funnel in gate “Validation”. Then for all solutions, the solution selection processes are the accountability of Enterprise Architecture. No solutions may be selected without the approval of Global Enterprise Architecture.”
This also indicates the important role of the GIS and Enterprise Architecture teams in providing services which can make a positive impact on the customer journey.
In relation to the assessment of service innovation in the company, most of the respondents consistently linked the company’s effort with customers. They always cited customers as an important aspect to take into account whenever an innovation process is assessed. As customers are unique, the company has to put effort into providing the right solution for the customers. Thus, it is very important to truly understand the customer needs and priorities. In order to do this, the company has defined a strategy to leverage their own experience, learning from their best practices. They are also looking beyond HEINEKEN to learn from the market and what is going on in other industries or peer companies. So, the company uses the input from both worlds, from inside and outside of HEINEKEN.
“The idea is to look at the customer journey based on some typical personas that we will define for HEINEKEN customers and take into type of each personal which we define as relevant for our business, we will look at all touch points that HEINEKEN has with this customer persona and identify which are the pluses and minuses and we try to improve and increase the pluses.”
5.2.2. Important Customer Focus Factors in Service Innovation
When the respondents were asked whether they considered all of the customer focus factors to be important, each one were agreed that the factors presented in the framework are vital. The respondents felt that these factors are mandatory for every company.
“Okay. I think the factors that you mentioned here are all relevant for supporting innovation […] And understanding the customer is the starting point for innovation. […] So these contributing factors, all of them are relevant for delivering innovation and I think, as contributing factors from a customer related factor, all of these are valid. Major and moderating factors. So, all are relevant to customer related factors.”
In this case, the respondents emphasised the need to understand the customer as the starting point for innovation: innovation should generate ideas on how to solve a customer’s problems. To identify these problems, the company has to acquire sufficient information on what services that particular customer wants.
22 5.2.3. Additional Factors
All of the respondents felt that each of the factors presented in the framework cover all customer-related factors to foster service innovation. However, some additional factors were identified. Although these factors are not customer-related factors, they are worth discussing as other important factors for service innovation.
Firstly, most of the respondents commented on the importance of technology as a key factor. Overall, they consider technology to be an important enabling factor for encouraging innovation in services. The reason being is that the evolution of technology may create many opportunities for the company to provide new service offerings. This is also aligned with the company strategy mentioned earlier. The company’s effort to identify the use of technology, using the input from both inside and outside of the company, clearly shows how the technology factor is essential for their service innovation.
“We do some research on the market. We find the technological trend. At the end of the day, we want to provide our customers with an innovative technology which can answer their needs.”
Other factors mentioned by the respondents were process and employees. As explained in the company’s service innovation strategy, HEINEKEN has implemented a standardised procedure to assess service innovation processes. This procedure involves various teams and departments, including local OpCos. As such, these two factors are necessary to maintain the sustainability of service innovation. The importance of these three factors is particularly well articulated in the following quote:
“Three factors together form the capabilities are people, process, and technology. So every time when you will think that you need to capability, involving digital aspect, you have to think at all 3 as one whole. So always, you will need the people, which will be supporting this capability or executing, you will need the process to be put in place in the organisation otherwise the capability will never be used. And you will need the technology.”
6. Discussion
As mentioned previously, the objective of this study is to identify the ways in which customer focus on fostering service innovation may be achieved using omni-channel strategy. This chapter starts with a discussion of each research question on the theoretical findings of the key theories (i.e. service innovation, customer focus, and B2B sales) and the findings of this research. Then, a revised conceptual model is presented based on the findings of this study. The implications of this study in theory and practice follow afterwards.
With regards to answering the first research sub-questions (i.e. which touchpoints from omni-channel strategy may be used to facilitate the customer focus factors?) this research indicates the touchpoints which are applied at HEINEKEN in practice. Referencing the omni-channel strategy model proposed by Belu & Marinoiu (2014), some adjustment of the touchpoints corresponding to the real practices at
