No Really, APIs are ALL about the Customer Experience!

Happy New Year! I was about to respond to Ramprasad Burugu’s post on “A side effect of API everwhere” during the holidays because there is so much that still needs to be passed out about API best practices. But then I realized API management was the wrong place to start. The real question was why do we care about API management in the first place?

This should be brutally obvious to anyone with a customer … and yet it’s still not. We’re all customers, and we all have had bad experiences even over the holidays whether it was shopping or traveling.  And yet somehow our own companies still haven’t made the customer experience their top priority even though it’s the customer experience that will make or break more companies, and that offers more revenue and profit growth than any other improvement in the majority of businesses today.

I’m going to give you some numbers that should resonate with your own experiences. A typical retail company gets about 80% of their future revenues from 20% of their customer base. These are the loyal customers, who over their lifetime are worth about 10 times the revenues of the one-time-only customer. However, retailers lose about 25% of their customers each year. Now for the depressing part. Two thirds of all customer defections are because of poor customer service. Only about 14% leave because of the product. If you didn’t know that about your customers, you’re not alone. Only 4% of all dissatisfied customers complain. 91% of dissatisfied customers leave without telling you the reason.

So the customer experience should be the top priority. Because if you could just retain 5% more customers, the right customers, you could easily double your base of loyal customers over 5 years, which could mean double the revenues and more than double the profits. It’s important you do the math based on your business. But like most who have, when you do, it should become pretty clear your customer experience must be your top priority. You could even build a second IT group for 3-10% of revenues and STILL get a huge return on investment.

Now, problems with poor customer experiences leading to dissatisfaction and attrition have been around for decades. Why is it so important now to change? The reason is that by using a combination of the latest technologies including mobile devices and the Internet of Things (IoT), API management, Big Data and streaming analytics or event processing you can actually improve the customer experience fast enough to make a Big difference. 

By using computers, mobile devices and more sensors with streaming analytics you can watch each customer experience from how employees deliver the service using new real-time data, to how customers respond to it from the apps they use and the social media where they give feedback. Using Big Data technologies you can piece together a better view of the customer experience. And then you can act. You can give the right promotions to drive demand based on your supply or attract and keep the right customers at the right time. And you can rescue your customers in (near) real-time. 50-70% of dissatisfied customers STAY a customer WHEN you fix their problem to their satisfaction. Knowing when they have a problem and fixing it can cut your attrition in half. Then giving the feedback for that specific problem back into the system, perhaps through training the specific employees to improve their service, improves future experiences. And that’s priceless.

We are already there. How many mobile apps do you use now for purchases and/or loyalty programs? Amazon Prime? Starbucks? CVS Caremark or Walgreens? American Express? Do you get asked for feedback? Do you give it more often? Have you had these companies address your issues? Are you more loyal as a result? I am.

So what should you do as a company? Overall you need to get to a point where you have APIs with brains. 

By that I mean that fourth, you need to open up your systems as APIs so that you can rewire your business to monitor and improve your customer experience. Opening up every function as an API will make it easier for you, your partners and customers to use the assets of your business to support a better customer experience.

Third, you need to add brains to your business. You need to automate decisions if you’re going to react faster to customers. You can’t do it with people. If Big Data is growing 2-3x a year, you can’t double your people each year. That’s where streaming analytics come in. It takes a combination of real-time Big Data streaming into a data lake like Hadoop with analytics and data scientists to find the right patterns to watch, then streaming analytics to automate acting on those patterns in real-time to become more intelligent, to make your business assets behind your APIs smarter, and to improve the overall experience across your APIs.

Second, you’re going to need to add the people and a new competency with the organizational focus in IT that is aligned with the business to accomplish the end goals associated with improving the customer experience. It’s a new center of excellence (COE). It’s not the integration COE. Their customers where apps teams mostly, and their endpoints apps that they tricked into thinking they still owned their own processes and data while in fact they were being integrated. This new COE has product managers that work across the company, with partners and customers to design the best APIs for them, and API administrators to help deploy and manage APIs. They have data scientists that know how to find patterns. And they have developers who not only build APIs but support other teams who own their own APIs to help them be successful. Because APIs cannot be centralized even if API management is.

And first and foremost, you need to build your business case. You need to show the business the benefits so that you get the commitment and investment to make all of this a reality.

With that said, we can now address Ramprasad’s question … in the next post.