|Lee Hyang-eun, head of customer experience strategy at LG Electronics' home appliances division, poses while holding a non-fungible token (NFT) technology-based digital sneaker called "The Monster Show" displayed at this year's CES technology exhibition in Las Vegas at LG headquarters in Yeouido, southern Seoul, July 26. Korea Times photo by Choi Won-suk|
Korea's tech giant starts journey in customer experience strategy
By Kim Yoo-chul
How a hardware-oriented company handles customer policy entirely depends on the cost structure and end-user of products. This kind of old-fashioned customer retention strategy has proven effective over the last few decades for Korea's leading hardware manufacturers such as Samsung, LG and Hyundai Motor.
But digitization, steady advancements in electrification and greater access to the internet have seen the technology industry grow incredibly. Obviously, these moves caused technological changes which have in turn changed customers' views on how hardware products are commoditized. Because of the standardization of the underlying hardware, chances for manufacturers to compete on hardware-driven innovation have all but dried up.
Based on such assessment, Korea's leading technology companies are on a gradual track to realign and retouch their business models to increase the outstanding share of recurring revenue from services, including subscriptions, by elevating customer experience (CX) strategies with the hope of increasing customer engagement.
Consumers are more able to judge companies based on what type of product they sell, what type of services they provide and how they compare to competitors. Regardless of the nature of businesses ― business-to-business (B2B) or business-to-consumer (B2C) ― consumers' final decisions influence how companies create awareness and track the "customer journey" through past experiences and purchases.
Speaking to The Korea Times, Lee Hyang-eun, chief of CX strategy at LG Electronics' home appliances division, said she believes the surest way to ensure LG's sustainable growth in such cases is to look to one of the biggest challenges all industries face today ― customer experience (CX).
"CX is storytelling. It's a message, not just something aimed at selling products in the near term," Lee said during an interview at the company headquarters in Yeouido, southern Seoul, Wednesday. "An effective CX strategy starts with high aspiration focused on what matters to and concerns customers thereby empowering frontline and factory workers to deliver. My priority is to convince LG customers why they should stay with us and to offer services that consistently offer them the most convenience."
"My core assignment is to lead ways to achieve organizational change. I want to build increased internal momentum for initiatives in terms of developing a manageable CX strategy and help LG Electronics perform distinctively in the market," she added.
|Lee Hyang-eun, head of customer experience strategy at LG Electronics' home appliances division, answers questions during an interview at her office in the company's headquarters in Yeouido, southern Seoul, July 26. Korea Times photo by Choi Won-suk|
LG Electronics is a global leader in home appliances such as televisions. The company aims to report almost $79 billion in terms of global annual revenue by 2030 from $51 billion reported last year. It's been spending more on its electric vehicle component business as it exited its long-time loss-making smartphones and solar panel businesses.
Citing the company's recent announcements in which the company said it was hoping to generate profits from platform-based service models such as subscriptions, the executive said LG Electronics is in talks with Korean startups for collaborations in services and content, which are critical for the company to achieve greater interoperability between appliances already present in customers' homes.
"When it comes to execution of CX strategy, it's absolutely vital to define an aspiration centered on what matters to customers and how that affects businesses. LG wants to go beyond being a manufacturer. We can collaborate with startups providing laundry, dry-cleaning services to help connect LG customers with them. The core point behind our CX strategy is to maximize a customer lock-in strategy as doing this will result in long-term loyal customers," according to Lee, who stressed that the company has no interest in collecting commission fees from local startups it was talking to.
LG recently introduced its ThinQ UP range of appliances that upgrade functions even after the purchase and become a part of "Home as a Service Platform," which includes customer personalization options, subscription services and support for unnamed connected home services.
Solid brand awareness matters the most if a company wants to pursue a customer lock-in strategy because customers like to have options and don't want to feel trapped in a relationship that may not satisfy their needs. Companies that have stronger brand power are positioned to secure the loyalty of their customers and ensure steady sales over a significant period of time.
"When a lock-in strategy is successfully implemented, this approach enables businesses to grow faster and increases barriers to competition. Leadership clearly understands why the execution of CX is necessary. However, transforming CX also requires an engaging employee experience, which isn't an easy process but is also something I have to do," she said, adding it wants to increase customer engagement through its online support sites.
"Finding a new path forward is something we have to cultivate but in the long term CX strategy is more about invisible talk but this strategy has an enormous potential impact on businesses," Lee added.