Customers buy experiences – what are you selling?
“Customers are no longer buying products and services – they are buying experiences delivered via the products and services.” - Gregory Yankelovich, CEO Customer Experience IQ
Business leaders across industries in all regions are realizing that how their company delivers products and services to their customers must also gain advantage through the superior customer experience they provide while delivering value to their customers. Customers have taken full advantage of the digital world and are now savvier than ever. Business marketers no longer have complete power over them with their big-budget TV and radio advertising campaigns. Where companies once could differentiate themselves by product or efficiency, distinctiveness today increasingly lies in creating a seamless, omnichannel customer experience.
The omnichannel environment has opened up many more ways for the customers to learn about and purchase products and services—such as through websites and social media, in a store, and on a device while on the go—than they have had in the past. With so many channels, platforms, and devices to get right, companies frequently struggle to coordinate and prioritize the many different ways that customers interact with their brands. Worse yet, they have difficulty defining the right metrics to measure how well are they doing. However one thing is certain - better the experience, the more customers will talk about it with the people they know—while the worse the experience, the more they will spread the bad news. So, more and more the decision of the customer’s purchase decision revolves around buying into an idea and an experience.
Companies everywhere are realizing that they are now in the customer-experience business and so, how their organization delivers to the customers is beginning to be as important as what it delivers. We know that customers who have excellent customer experiences become strong advocates for the brand, spend significantly more, and are much more loyal than customers who have poor experiences. Businesses must explore the fundamentals of customer interaction, see the world through the customer’s eyes, as well as take the steps necessary to redesign the business from a more customer-centric perspective and organize it for optimal business outcomes.
Understand the customer’s journey
Leading companies detail key customer pathways, with a focus on so-called moments of truth, which determine whether a customer will buy a product or choose to switch companies. They recognize that each channel has a defined role at each step on the customer journey. At any point along the journey, a customer may transition seamlessly among channels depending on what’s most convenient. For example, a customer may browse online with a mobile device, receive relevant offers through e-mail, and obtain service and support in a store. Companies can create an attractive business case by optimizing the key pathways on the basis of lifetime customer value and return on investment across channels, with each channel making a clear contribution to the major sources of value in the customer relationship.
Customer journeys are the framework that allows a company to organize itself and mobilize employees to deliver value to customers consistently, in line with its purpose. The journey construct can help align employees around customer needs, despite functional boundaries. Customer journey consist of a progression of touch-points that has a clearly defined beginning and end, which together adds up to the experience customers get when they interact with companies. Companies have been focused individual interaction touchpoints like provisioning, billing, service calls, etc.
Lately, customer’s using technology has accelerated their demand for increased personalization, convenience, speed and transparency. This has handed customers unprecedented power to dictate the rules of their purchase. In most companies, there are a handful of critical customer journeys. Understanding these journeys, customer segment by customer segment, helps a business to maintain focus, have a positive impact on customer satisfaction, and begin the process of redesigning functions around customer needs.
Design experience with the customer at the center of everything
Designing the customer experience requires re-shaping interactions into different sequences and, though the effort may start small, soon entails digitizing processes, reorienting company cultures, and nimbly refining new approaches in the field. In large, distributed organizations, a distinctive customer experience depends on a collective sense of conviction and purpose to serve the customer’s true needs. This purpose must be made clear to every employee through a simple, crisp statement of intent: a shared vision and aspiration that’s authentic and consistent with a company’s brand-value proposition.
Customer-experience leaders start with a differentiating purpose and focus on improving the most important customer journey first—whether it be opening a bank account, returning a pair of shoes, installing cable television, or even updating address and account information. Then they improve the steps that make up that journey. To manage expectations, they design supporting processes with customer psychology in mind. They transform their digital profile to remove pain points in interactions, and to set in motion the culture of continuous innovation needed to make more fundamental organizational transformations.
Behavioral psychology can be applied to the interactions to shape customer perceptions and satisfaction levels that in turn generate significant additional value. Companies design the sequence of interactions with customers to end on a positive note. They merge different stages of interactions to diminish their perceived duration and stimulate a feeling of progress. And they provide simple options that give customers a feeling of control and choice. Customers are expecting experiences anytime, anywhere, quick, easy and simple on their mobile devices. So much of the experience must be designed for digital environment. Customer-experience leaders become even better by digitizing the processes behind the most important customer journeys. With some quick efforts, multidisciplinary teams jointly design, test, and iterate high-impact processes and journeys in the field, continually refining and re-releasing them after input from customers.
When companies lose customers because of a negative experience, they lose both the direct revenues from those customers and the indirect revenues that result from strong negative advocacy. This reinforces the imperative of providing excellent customer experiences and preventing good customers from leaving.
Transform the organization to deliver optimized customer experience
Reorganizing a company to provide leading customer experiences is a journey in itself, often taking two to four years and requiring high engagement from company leaders and frontline workers alike. As the customer experience becomes a bigger focus of corporate strategy, more and more executives will face the decision to commit their organizations to a broad customer-experience transformation. The immediate challenge will be how to structure the organization and rollout, as well as figuring out where and how to get started. Applying sophisticated measurement to what your customers are saying, empowering frontline employees to deliver against your customer vision, and a customer-centric governance structure form the foundation. Securing early economic wins will deliver value and momentum for continuous innovation.
Providing a great experience for customers has become a credo for many companies today. They realize that a great end-to-end experience will attract and retain customers, as well as engage the enthusiasm and creativity of employees. Every leading customer-experience company has motivated employees who embody the customer and brand promise in their interactions with consumers, and are empowered to do the right thing. Executives at customer-centered companies engage these employees at every level of the organization, working directly with them in retail settings, taking calls, and getting out into the field.
The key to satisfying customers is not just to measure what happens but also to use the data to drive action throughout the organization. The type of metric used is less important than the way it is applied. The ideal customer-experience measurement system puts journeys at the center and connects them to other critical elements such as business outcomes and operational improvements. Leading practitioners start at the top, with a metric to measure the customer experience and then cascade downward into key customer journeys and performance indicators, taking advantage of employee feedback to identify improvement opportunities.
Companies need to put cross-functional governance in place with a customer at the center of everything model, with structures that include a sponsor—a chief customer officer—and an executive champion for each of their primary cross-functional customer journeys. To foster understanding and conviction, leaders at all levels must role-model the behavior they expect from these teams, constantly communicating the changes needed. Formal reinforcement mechanisms and skill-building activities at multiple levels of the organization support the transformation, as well.
Customer-experience transformations much demonstrate value creation. Build an explicit link to value creation by defining the outcomes that really matter, analyzing historical performance of satisfied and dissatisfied customers, and focusing on customer satisfaction issues with the highest payouts. This requires discipline and patience, but the result will be early wins that will build confidence within the organization and momentum to innovate further
But for companies looking to make the customer experience a strategic priority, adopting a customer-centric mind-set can be a struggle. Like many change programs, customer experience transformations often fail to meet expectations. That’s not surprising: they require employees to change their mind-sets and behaviors, and an organization to make cultural changes and rewire itself across functions, with the customer’s needs and wants—rather than traditional organizational boundaries—in mind.
Improving customer experience delivers real benefits to companies that successfully execute customer-centric strategies. Across sectors, satisfied customers spend more, exhibit deeper loyalty to companies, and create conditions that allow companies to have lower costs and higher levels of employee engagement. In that dynamic of value creation and durable competitive advantage, delivering digital services and operations has emerged as a prime mover in reshaping customer experience in almost every sector. What is required is a more radical abandoning of traditional ways of working in favor of new approaches. By rethinking traditional operating models that hinder companies from achieving their potential and combining digital technologies and operating capabilities in an integrated, well-sequenced way, companies can create customer-centric strategies that can sustain new levels of speed, agility, efficiency, and precision.