UPS's My Choice service shows the power and potential of the new consumer-funded digital infrastructure.
In prior eras, only governments or industry giants could invest in the infrastructure that powered the economy, from railways to highways to the Internet itself. But the latest development in the digital infrastructure came not at the cost of tax dollars or risky capital expenditures, but due to the voluntary contributions of consumers, who have been spending their hard-earned money on smartphones, tablets, game consoles, wearable gadgets and the platforms that power them.
Just as the highways made it possible for businesses to physically connect to customers, this vibrant network of consumer-funded devices, sensors and "things" opens up new connections for providers of every product experience imaginable, disrupting obviously vulnerable industries such as TV and retail and previously insulated industries such as healthcare and education.
Because such digital disruption is built on the high-speed, low-cost infrastructure consumers continue to invest in, it's easier to do than you might think.
[ Learn how to stay alert for profitable business innovation opportunities while keeping an eye on your day-to-day work. See CIOs Must Innovate Or Go Home. ]
Consider what UPS did with its My Choice home delivery management experience. With the help of digital agency T3, UPS is moving well beyond mere package tracking. After a free signup process whereby they indicate preferences, UPS customers receive a notice in voice, text or email that a package is coming, with an estimate of when it will arrive. If customers will not be home and prefer that the package not be left on the doorstep, they can arrange for it to be held. Or they have the option to pay to redirect the package to a different location or slot it for a different delivery window.
So far so good, but as is always the case with digital disruption, the investment pays off far beyond customer satisfaction. My Choice also reduces delivery and logistics costs as drivers don't waste time trying to deliver to empty homes. Furthermore, by creating digital-experience value for the more than 2.5 million customers who have signed up for My Choice since its October 2011 launch, UPS now has a new channel through which to communicate to its most valuable home delivery customers. It has delivered more than 42 million alerts so far, coordinating the delivery of nearly 37 million packages. That's a lot of added satisfaction and potential reduction in operating costs.
Previously, business investments such as this one might have been erroneously cast as a mobile or Web project and might have struggled to get funding. But to make My Choice work, UPS doesn't merely provide an app or Web interface. The company has had to change the way it queues up and manages deliveries. It has had to disrupt its process, not just its product experience. And that's what ultimately leads to more powerful outcomes for the company. By building this digital customer relationship and aligning its internal process to support it, UPS now has the opportunity to expand its business.
The company is now offering a $40-a-year premium My Choice membership that lets customers specify preferred delivery windows and to arrange for delivery to a neighbor's house on a package-by-package basis. After all, why should Amazon.com be the only company that benefits from consumer willingness to pay for convenient control over home-delivered items?
By embracing digital disruption, UPS ultimately is disrupting its business model as well. It's tying its fortunes more directly to the needs of customers, providing a return on the investments they have so eagerly made in the digital infrastructure they now depend on.
You can do this, too. But you'll have to get every department to participate, from IT to marketing to operations to strategy. Luckily for you, customers have already spent billions of dollars to enable your next disruption.
Join me and a stellar lineup of CIOs and other executives as we discuss the long-term benefits and shorter-term challenges of digital disruption and innovation at the InformationWeek CIO Summit, to be held May 8 at the Mandalay Bay Convention Center in Las Vegas. The theme of this one-day learning and networking event, presented in conjunction with Interop, is "Innovate Or Go Home: The CIO's Critical Role In Driving Growth, Opportunity and Breakthrough Ideas." I hope to see you in Las Vegas.
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