… and why it matters in your strategy process.
Article
Customer x-perience on purpose
The new paradigm to topline growth
Authors
The article was originally co-authored by Charlotte Wandorf and Anders Borcher Iversen..
It takes more than digitisation to stand out from the crowd. The winners of tomorrow know how to define and live out their purpose in an authentic and meaningful way. They know how to think and act on their customers´ needs throughout the customer journey before their customers even know it themselves.
Digitisation helps us to disrupt ourselves
Today, companies are heavily involved in finding their winning path in the fast developing environment. The digitisation of processes and services opens up for disruption and competition from other industries. Many businesses have already seen the writing on the wall and invest heavily in being on top of their own innovation. Design thinking is a management tool of broad acknowledgement and one of the crucial elements in transforming companies to meet future challenges.
Datamining, robotics, Internet of things and other data-driven processes are surpassing the abilities of the human brain. We are entering the fourth era of industrialisation where automation and smart production will rule the world. Industry dynamics will change, and we as customers will develop more confidence in machine learning than the human brain.
However, machine learning can be copied. So in order for companies to stand out from the crowd, they have to master the science of creating an authentic customer experience. A customer experience that cannot be copied by competition and that is strongly connected to the company and the brand. A customer experience with an x-factor that makes them seem as something unique in all touchpoints – direct and indirect.
Customer service has previously been organised in the sales department as the “department of customer care” making sure that the customers received the service agreed and needed to make them satisfied. But customer service as we knew it back then has been commoditised over the years. Commoditisation means price competition and thereby also reduced earnings. The only way to regain the ability to earn money is through differentiation.
Get closer than ever to your customers. So close that you tell them what they need well before they realise it themselves.
Steve Jobs, Apple
… But it is our understanding of customer needs that makes the difference
Value innovation and market dynamics arise where company objectives meet customer needs – not the other way around. Customers do not have to change. They just seek alternatives and even alternative ways of doing things. That is why companies are forced to listen, learn and deliver.
We need to think like our customers to really understand what they need. It is not just about looking at their behaviour and finding smarter ways of doing the same. That may work in the short run. But to really create a remarkable customer experience, we need to find alternatives for our customers before others do.
It has been said that we cannot research our way into understanding customers’ needs. That is not true. We just have to focus on the benefits, not the solutions, when mapping needs. People do not want to buy a washing machine. They want to have clean clothes.
A brand for a company is like a reputation for a person. You earn reputation by trying to do hard things well.
Jeff Bezos, Amazon
All big inventions – whether it’s products or services – are answers to customer needs. Otherwise they fail.
The smartphone is the answer to having ’easy access to everything, when we are on the go’. Starbucks is the answer to ‘charging my batteries away from home’, mobile payment solutions are the answer to ‘direct access to my money 24/7’, and Nespresso is the answer to ‘my own café experience at home’.
A strong long-lasting way of differentiation is through customer experience. But again, it is not just about implementing new ways of meeting the customer. It is a transformation in which the companies design and reposition themselves in order to be perceived and experienced differently.
Digitisation will not be doing the job alone. It is a sum of all activities experienced by the customer cohesive with the perception and heritage of the brand that builds a strong and authentic customer x-perience.
We see new brands entering the scene pushing old and distinguished brands down the ladder. New brands that even define or redefine new industries. Many of the new brands equal a service rather than a product. The transaction is no longer just the purchase but the relation you build with the brand. The brands transform your way of doing things or even perceiving yourself. They tend to be our future way of living, which makes them remarkable, outstanding and difficult to replace.
Video summary from March event 2017
The stars are leading the way
Strong brands are strong cultures
Being customer-centric seems to pay off. The market value increases exponentially with a company’s ability to deliver an authentic customer experience.
We have accepted that customers are different and act differently. A one-size-fits-all operating model does not exist anymore. We have to be agile and differentiated in our approach and adaptive to customer dynamics in the marketplace. It is about making choices and navigate through options. This kind of agility forces companies to delegate decision power to the employees meeting the customers.
Rules and regulations make it difficult to deliver an individual customer experience. Therefore, governance structures have to be replaced by a strong company culture. A culture where everybody knows what is expected of them in their meeting with the market and the customers. One-size-fits-all solutions have to be replaced with outspoken maxims that makes it easy for everybody to live out the culture. Companies like Disney and Zappos are prime examples of this approach. Previously, companies were able to orchestrate the customer perception to a large extent. There is a saying that “customer is king”. Today, it is not just a saying. It is a fact that customers are the ‘destiny’ of all businesses’ successes or failures.
To start the journey towards customer transformation, a company needs to understand the job to be done. However, in order to succeed, they need to be able to deliver on those needs in an authentic way.
Differentiation is not about being different. It is about being the best alternative to delivering on customer needs. It all starts with the customer. The enablers are the ‘tools and buttons’ to push all the way from people, products and services to communication, digital platforms and other instruments. It is all about coming across with an authentic customer experience ‘on purpose’.
What is the essence of company branding? What do they bring to the table that justifies them as being a truthful answer to delivering on the customers’ needs? The answer lies in the company’s ability to position themselves in a unique way that makes them the best alternative.
We already experience companies leading the way for us. The Interbrand list of Top 100 most valuable brands shows iconic brands we all refer to as good examples of an authentic customer experience. The ranking is based on three elements: the financial performance of products and services, the influence a brand has in the choices of consumers and a brand’s ability to sustain a price premium and guarantee a revenue stream for the corporation. So, it is not just a lucky punch that these brands appear on the list. A lot of them master the new paradigm of customer x-perience.
Organisations that create customer experience “on purpose” do three main things:
Stand up. Purposeful brands have a clear sense of who they are and WHY they exist. They stand for something beyond making a profit. They represent something of value in the minds of consumers. Think of Apple.
Stand out. They are different to competitors in some meaningful way that creates value for customers. They are international in delivering their purpose via their customer experience across multiple channels. They deliver consistently, and that contributes to their reputation in the marketplace. Think of Lush.
Stand firm. They create cultures that sustain them and continually innovate to stay ahead. They invest in product and service innovation and are more concerned with using profits to invest in the business and the delivery of their purpose rather than maximising earnings per share for their shareholders and chief executives. Think of Patagonia.
- Shaun Smith
Customer x-perience is the answer to commoditisation
The process of customer transformation
Availability is the main driver of a new industry. The customers line up to be part of this new adventure and are often less price sensitive at this stage. The margins are high, which attract new players to invest in entering the market. The increased competition forces the companies to focus on cost efficiency and customise their offerings, first by manufacturing goods and later by adding extra services and quality lifts. The industry evolves through customisation as a response to commoditisation. And the customers follow the companies as long as it is worthwhile and money well saved.
Customer x-perience is the winning strategy in an industry, where services constantly are copied and investments tend to be commoditised at the time of launch. It is not just a new service spiced up with ‘balloons and happenings’.
It is a new positioning of the company, where customers are customers for a reason. They buy with a purpose.
Goods and services are no longer enough; what customers want today are experiences. In today’s Experience Economy, we need to innovate in experiences.
Joseph Pine
At this stage, the reason for being in a market is not to ‘save time or money’ but to ‘spend time and money’. Customers gain from being customers and start a transformation into being a new kind of customer.
Nespresso and Apple are two strong examples of companies starting up with delivering goods (coffee and it equipment) to a situation today where we do not just buy their products and services. We experience them. They change our way of being customers. We brew our coffee in a new way in our homes, and we connect differently with our surroundings. We are transforming our customer behaviour.
Customer x-perience is scalable. The success lies in our ability as companies to introduce new industry standards that change customer behaviour and makes it time and money well spent. It is the companies’ ability to understand the customer dynamics, deliver on them with authenticity and to leverage that in an operating model that makes the experience come alive in all relevant situations and touchpoints.
6 steps to an authentic customer x-perience
- The key to success lies in the ability to understand the customer dynamics. Who are the customers we want to address in the market? What drives them to buy? What makes them stay or leave? Do we experience different customer “DNA” or is it the same? Can we observe their needs from their behaviour? Or have they not had the chance to live out their needs yet?
- The next step is to understand ourselves as a company. Do we have what it takes as a brand? What is our purpose, and does it resonate with the customer needs, the dynamics and tensions in the market and society? Do we have an edge that gives us the claim to fame in the market?
- Just as we cannot be everything for everybody, we cannot be present with the same strength and resources in all contact points throughout the customer journey. So where do we want to leverage our resources? And where and how do we want to invest in new products and services? What should the enablers of an authentic and differentiated customer experience be?
- Do we have the capabilities in place to meet the new market standards, i.e. people, technology and resources? What should new best practice look like? What does it take to deliver on the needs and market standards? Should we do it all by ourselves? Or is it more profitable to team up with other players in the marketplace?
- How should our operating model be? Who does what and when, and how do we govern, if we delegate judgement and decision power to the individual employee? What does it imply to lead by culture? How do we make responsive adjustments to our bearing when customers prioritise change? And how do we evaluate and track our own performance in all contact points to ensure continuity in quality?
- We want to differentiate our services in the marketplace and leave our competition behind. And we know that we are addressing customer needs with our new products and services. But how do we attract the attention of our customers? How do we ensure buy-in from our customers? Are there any perception barriers that we have overlooked?
The purpose directs the company in all touchpoints
A strong purpose often has roots in the company DNA, sometimes the founding story, but needs to be continually re-energised to meet the changes in the marketplace and society. If the brand purpose is placed at the heart of the business strategy, all actions and decisions revolve around the same common idea. We can design customer experiences in one touchpoint, but it is when all experiences are formed into a total impression of the brand and company that we really buy into the brand. It becomes relevant, authentic and what we call ‘on purpose’.
It forces the company to think in service operating models where the ‘where to play’ questions are answered by strong and appealing ‘how to win’ answers.
As Porras and Collins already proved in a substantial study published in the mid-90s, companies that know what they stand for and want to achieve create more value for employees, customers as well as shareholders. Today, where products and services are commoditised and digital touchpoints are becoming frictionless, a clearly defined and expressed brand purpose is key to creating meaning. Furthermore, a purpose not only aligns internal and external behaviour but also attracts loyal employees, customers and creates true advocates.
To live out the purpose, customer segmentation and customer journey mapping are keys to success. Customers act and react differently in different situations, and the moments of truth for choosing one supplier over another depend on the company’s ability to meet customer needs in these moments of truth.
However, it is impossible to serve all equally everywhere, which is why companies need to prioritise target groups and situations, where they want to stand out.
Individualisation and customisation are cost-ineffective unless companies modulise their products and services. In that way, they can lean their supply chain and deliver individual services at the same time without increasing production costs.
Today, you design your own shoe or even your own car, and the only difference is that you have to wait for your product a little longer. The waiting time is justified by the feeling of customisation, and the time is considered to be well spent.
Companies return to order production, where estimates equal actual sales. Planning and developing an agile operating model turns out to be crucial. Roles and responsibilities are delegated to the organisation, and business development is an agile process involving representatives from the entire supply chain. The customer journey will be matched with the flow of goods and money to ensure a smooth operation. Running the customer x-perience is about creating a robust and cost-effective value chain and a strong and stable customer experience.
The key is to set realistic customer expectations and to exceed them – preferably in unexpected ways
Richard Branson, Virgin Group
A Company's service delivery system
The process starts with the customer...
... and ends with the customer
