Its pretty safe to say Customer Experience is now a thing – companies are hiring customer experience or customer design teams, online articles are appearing in ever greater numbers, as are conferences and professional associations.
The starting point for Customer Experience is a quest for competitive differentiation in a world where competition is increasing, products are increasingly commoditised, and technology offers new ways of engaging with customers. It also connects with a key strategic theme of digital that instead of benefits coming from replacing humans as in earlier generations of technology, the pay-off for digital comes finding new ways to make humans’ (customers’) lives better, more convenient and more fulfilling (see my previous post).
But like all new paradigms, it takes a while before there is a ‘playbook’ – a more-or-less-settled body of knowledge which; defines the new paradigm, what benefits it offers, how to succeed and what to avoid, and importantly provides a platform by which ongoing improvements can be made and shared.
Until the playbook for Customer Experience emerges, it’s hard for companies to know what it means, where to start, how and where to focus their efforts, and whether the results they achieve are good, poor, or average.
To help this process, we have developed a framework showing the levels of Customer Experience maturity.
- Customer Service
The first level might simplistically be called the ‘service is a smile’ level, where the focus is on friendly and responsive staff, getting it right first time, and dealing well with issues. The pay-off is greater customer satisfaction, lower costs from less rework, and more satisfied staff and a more positive company culture. Cross-selling and up-selling are usually part of the picture but generally based on training staff to identify simple ‘trigger points’ that identify a customer as a good prospect for specific products or services. These days virtually all companies at least talk about customer service if not make it a key business focus.
- Customer Journey
Where Customer Service is focussed on touchpoints – making individual customer interactions more pleasant and efficient – the second level involves considering your customer journey(s) end-to-end, from initial investigation of your services through to purchasing, using, and repurchasing.
This mirrors much more closely how customers think about companies, which is holistically, rather than just ‘did my last interaction go well’. It is, however, a more complex level to address as it involves mapping the customer journey(s) and gathering and analysing data on pain-points and inconsistencies. Similarly to Customer Service, the focus remains on being convenient, enjoyable, and efficient, with a step improvement in customer satisfaction, cost savings, staff satisfaction, and cross- and up-selling.
- Customer-Centric Services
If levels 1 and 2 are about your company more effectively interacting with its customers, levels 3 and 4 are about increasing the value delivered to your customers. Value is more than an enjoyable interaction; value is the fundamental reason your customers buy from you, it’s what you do for them, what benefits you deliver.
Companies at level 3 have moved from selling generic products and services to selling solutions that solve real problems for individual customers. This sounds obvious, but the trick is identifying what your customers’ needs and problems as well as unmet needs actually are.
As long ago as 1960, Theodore Levitt identified the problem of ‘marketing myopia’ in a classic Harvard Business Review article. His premise was that many companies suffer from being product-oriented rather than customer-oriented. An example was railroad companies who stopped growing, not because demand slowed, because they saw themselves in the rail business rather than the transportation business, thus lost business as demand shifted to road and air options.
Customer-Centric Services are now the happy hunting ground of innovators and startups. Successful new companies are based on customer insights that range from the macro – Facebook recognising people will value a lightweight way to stay in contact with friends and family – to Google recognising people who perform internet searches are likely to be looking to purchase thus are open to advertising, to more ‘micro’ insights for smartphone apps like Instapaper which provides an easy way to clip online articles to read later.
It is also the case that many companies known for making ‘customer service’ a competitive advantage – like Nordstrom and Singapore Airlines – are really operating at this level, in that they give autonomy to customer-facing staff to tailor their products and services to customer needs on the spot.
- Customer Experience
Level 4 is about the total customer experience – delivering emotional and intangible benefits as well as functional benefits. Theme parks and restaurants are examples of companies that provide experiences, but selling an experience is not confined to the hospitality and leisure industries.
Retailers are realising a shop full of clothes is easily replicated online but experience will keep shoppers coming into a physical store. One example I have recently experienced is David Jones in Australia, which now holds fashion parades and champagne shopping events for all its cardholders (rather than just its biggest spending customers). Property developers are moving from selling homes to selling lifestyles. It is now commonplace for large urban residential developments to include shops, cafes, and outdoor areas.
Of course the above examples are industries with physical products, but more intangible products can also have experience elements. The enterprise software industry (for all its many shortcomings) has long built loyalty through nurturing the professional development of those who make or heavily influence buying decisions with training, conferences and global awards and prizes for IT engineers. The key is to think of experience broadly as a meta-level of value over and above products and services, but which are relevant and connected to your products and services.
Thus confining your Customer Experience strategy to customer service and customer journey is missing a trick. While the first two levels are important, a larger opportunity awaits by moving into services and experiences.