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It’s all About the Customer! Right?
A friend of mine Peter Flatow, innovation consultant and former product director, marketing manager, and corporate development director recently told me:
"In retrospect, it was easier to compete in the fifties, sixties, and even seventies, because modern product management was just catching on. We were just catching on to segmentation. We were just beginning to understand the power of broadcast TV. We had fewer channels to choose from and more control over costs than people do today.
"We then moved into the next phase where it got more difficult to compete because we had more options. There was more competition, but we were also making it difficult on ourselves. For companies with discipline, it was still easy to grow.
"For the last fifteen years, it has gotten extremely difficult, but the difficulty is more a function of ourselves as managers. We quit training people. We got caught up in M.B.A. insanity. In many ways, we stopped innovating, though we didn’t stop coming up with new stuff."
Good, bad, or indifferent, the pressure is off the large, well capitalized players to deliver a great customer experience. At least for the time being. The dot.com implosion saw to that.
I’ve talked to a number of senior executives at some of the big brand name firms, and they’ll readily admit that innovation in retail distribution—just to name one example—is just about dead for now. And with big players like K-Mart and Winn Dixie teetering as they are, there’s not a lot of incentive to innovate when you can just wait around for customers to defect or be abandoned.
But that doesn’t mean this will last forever.
Unless you have monopolistic power, and maybe not even then, failure to mount a serious and sustained customer experience initiative—and all that implies for organizational alignment, human resources, work flows, job design, and the supporting information technology—erodes a potential source of competitive advantage and opens up the door for some inevitable competitor.
For the past couple of decades, competitive advantage has been thought of in terms of product, pricing, distribution, and differentiation. I’m of the opinion that these sources of advantage are now easily surmounted or skirted. It just takes capital, and despite what 2001 felt like, there’s still bags of it out there.
Don’t read that as an implication that it’s either easy or unnecessary that your firm meet your industry’s threshold requirements for operational excellence and innovation. That’s what keeps you in the game. It’s j just that customers expect great product, service, pricing, and distribution.
They also want more. They’ve heard the promises. They were there during the dot.com revolution—you know, the one that was going to change everything—and they remember. They’re still waiting for the great experience.
But let’s face it, delivering a great customer experience is not yet on the same footing with cost control, operating efficiencies, and driving sales. Truthfully, most firms are probably best described as customer-aware rather than customer-centered.
A customer-aware firm gets bonus points for its intentions and rhetoric, but negative points for doing little or nothing to build processes and structures that allow the organization to deliver consistently and transparently for the customer.
A customer-centered company matches intention and attention. It does the hard work of threading enterprise-wide customer experience initiatives across the silos and specialized functions, through the processes, and down to and through the technologies and human factors in order to deliver for the customer and the organization.
Lining up all the moving parts to deliver a great customer experience is difficult to do in a single department or business unit, yet alone across the entire firm. But if you can do it, the effect on the customer is profound. It’s arguably the tipping point for creating competitive advantage now and in the foreseeable future.
Look at it this way. What choice do you really have? Can you really, rationally conclude that delivering a great customer experience is optional? That the customer somehow won’t notice, or will forgive your customer experience sins because you have such a great product and price? Really?
Good, Custom, Branded: Three Flavors of Customer Experience
So assuming delivering a great customer experience is a good a desirable strategy, what does the concept really mean. I think it can be broken down into three related concepts:
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Customers have a good experience when they are consistently pleased with their interactions with your people, processes, products, premises (physical and virtual), and partners. Some of the experience is attributed to sales and marketing interactions, some to post-sale use of the products or services, and some of it to post-sale service interactions. Firms that deliver a good experience meet the requirements for quality, service, convenience, and responsiveness that are typical of their industry.
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A click up from good is great, a concept I would define more specifically as a personalized experience. This happens when the firm uses what it learns about a customer to tailor the configuration of its marketing, sales, and service, and the configuration and pricing of its offers to reflect loyalty, patronage, past value, current value, future value, likelihood to attrit, and so on. The experience can be custom in parts, or through all, of the customer lifecycle.
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Customers have a branded experience when each interaction makes and delivers the brand promise along with the other values associated with your products and services.
A branded customer experience is not just a generically good purchase or use experience. There’s something special and unique about it. It’s stamped with a difference and supported by unique processes and interfaces that deliver that difference with consistency. The presence of the brand promise, along with customization and personalization, supports even higher margins and greater loyalty.
The presence of the brand promise does good things for the experience and the firm. For the customer, it serves as a sorting mechanism. “This is what the firm stands for. This is the experience I can expect. I should do business with this firm.” That same brand promise should also signal your employees as well. “This is what the firm stands for. Everything we do needs to deliver that promise.”
As Carol Gray, the head of the phenomenally successful small business unit at CIBC says, “Customer experience without a brand promise is a disaster. That’s when you start making compromises with your strategies and actions, and it’s a downward spiral from there. If you’re clear on what your brand stands for, customers will self-select. If you’re not, you’ll wind up promising everything and nothing, which creates all sorts of headaches when it comes time to deliver.”
Many firms can deliver “good” experiences. Because of rich customer information, some of those good-experience firms can also deliver “personalized” experiences. An even smaller group can add the third component – a differentiated promise delivered consistently – to provide “branded” customer experiences. The ultimate great experience combines all three: good, custom or personalized, and branded. Each step up in experience capability creates new opportunities to outdistance the competition and customer profitability.
Regardless of what’s bought or sold, a great customer experience differentiates one offer from another and one firm from another. Branded customer experiences go beyond pleasant interchanges and interactions. They stand out with a distinction drawn from the unique methods and insights the firm uses to operationalize its brand promise. String together enough of these branded customer experiences and you have the foundation for a real customer relationship.
. . . continued
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Kevin Hoffberg
Last modified:
05/03/06