After decades of neglect, customers – and the moments that they share with your brand – have reappeared on the radar screens of customer-facing businesses. It’s as if business has suddenly discovered them, much as a chemist finds a new element on the periodic table or a biologist discovers a species that no one knew existed. But is this the birth of a new paradigm, or the renaissance of something long forgotten?
Companies that are customer-focused at heart have always been around, but their numbers are small enough to be counted on two hands. Fewer yet are those who have always understood that what they are selling is not just a product or a service, but an experience. And those few have either been high-end service brands like The Ritz-Carlton, entertainment brands like Disney, or small owner-operated businesses whose founders just happened to possess an extraordinary amount of emotional intelligence and a passion for making people happy.
It seems a no-brainer that anybody in the service business would be working from the basic premise that they are selling an experience to creatures who are just like them: human beings with the same chemistry, psychology, needs and desires as they have. But ask customers about the experience they have had with an airline, a telecom, a cable company or a utility provider and more often than not, the story is one of woefully unmet needs and expectations, and of how they were treated like anything but a human being.
If that reflects the attitude that service providers can have towards their customers, it’s no surprise that the term ‘customer experience’ is an even more abstract concept at a product manufacturer. The fact that these kinds of companies have historically been called ‘consumer goods’ companies reveals a great deal about how they think about the people they’re selling to. As a label, the word ‘consumer’ is imbued with a kind of soulless functionality, as if it were the last station on the assembly line or the last stop in the value chain – a depersonalization of the people it represents.
This is the case because industrial organizations of the 20th century were designed to produce and distribute tangible goods as efficiently, as widely and as profitably as possible. They tended to stop caring about the customer after she bought their product. They were obsessed with acquisition. Growth came from volume, scale and lots of advertising. Advertising is and always has been all about getting the customer, not keeping her. If your priority is acquiring customers, you focus all your energy and resources on conversion, and almost none on retention. After all, you have a customer service department for that. Let them deal with the complaints and the returns. Your job is to go out and keep acquiring.
This model worked well until product and service categories became competitively overpopulated and undifferentiated. When price, product, and messaging are relatively easy to knock off, the market becomes a crowd of look-alikes in which it is very difficult to stand out, but very easy for customers to switch. The only way to grow – or just stay in business – is to try to convince your competitor’s customers to switch, or convince the ones you’ve got to stay with you.
Throw the internet into that mix and you also have a very empowered customer, someone who’s figured out that actions speak louder than words and that the memory they have of an interaction with you will determine whether or not they come back for more. If it’s a bad memory, their friends and their friends’ friends will hear about it in the social channels. In these conditions, retention, not acquisition, becomes a business imperative. And the only way to keep customers is to do what Disney does: make their interaction with you an engaging, delightful and memorable one.
Customers have already figured out that it’s the experience that counts. In other words, customer experiences leave an impression, an impact, whether overt or imperceptible. They can leave you with a feeling of connection, engagement and loyalty, or a feeling of neglect, frustration and the desire to switch. It’s up to the brand to decide what that feeling’s going to be and how to make it happen.
We still haven’t answered the question: Is this focus on customer experience something new or a reawakening? The history of commerce suggests the latter. Seven or eight decades ago, high touch services were more common. The personal touch was important in department stores, restaurants, gas stations, and other service venues. Customers tended to be more loyal as a result.
But in the 1950s, as mass production really hit its stride, high-touch gave way to low touch. Business growth came from volume and scale. The greater the scale, the bigger the company, the further away from the customer it became. Capitalization of growing corporations required public funding, which prioritized shareholders over customers. When shareholders come first, the demand for profitability drives operational efficiency, self-service and minimal personal contact with the brand. That explains the business world’s first exuberant embrace of the internet in the late 90s – they saw it primarily as a cost saver, not as a human touchpoint.
Thankfully, we’re beyond the early days of digital. If anything, it would not be an exaggeration to say that the internet has made us realize the value of a high- touch experience. The world is not all digital or all analogue; it’s a mix of both. Companies that understand this realize there is a need to understand their customers, in whatever context they connect with them – in the store, online, on the street or at home. And even though they may be moving physical products, they understand that those products don’t exist in a vacuum; they exist within the experiential envelope of their customers’ lives.
Brands like Target, Singapore Airlines and Amazon have consciously and continuously engineered both digital and analogue touchpoints to deliver positive experiences across channels. Target brings its promise of ‘expect more, pay less’ to life with the same verve in its merchandising – both in bricks and mortar and online – as it does in its advertising, its product selection and its store design. Singapore Airlines has emphasized its people rather than its efficient routes or robust fleet, and consequently was called the World’s Best Airline in 2012. And Amazon is the undisputed chief architect of online retail: one of the first, and still one of the best, user experiences you can have in the digital universe.
So what does a company need to consider in this world reawakened to the importance of customer experience? In our experience work, we have noticed the following: There is a saying that if you have happy employees, you’ll have happy customers. And if you have happy customers, you’ll have happy shareholders. Business strategy needs to focus on customers. Organizations are still chasing spreadsheets, measurements and baselines that are designed to make shareholders happy, not customers. They should be focused on making customers happy and empowering their employees to do so. The shareholders will come.
There are more touchpoints now than ever before, and they are layered – on-device, within an app, within the web, within the content, within the story. It’s through an understanding of the customer and delivering positive experiences through each of these layers that connections are made, relationships are developed and, ultimately, loyalty is built.
The importance of focusing on customer experience needs to be an organizational priority to succeed. It needs to be seen, felt and heard as a part of every day. It needs to be woven into corporate culture across all the silos.
That requires knowing your customer – which is more difficult now than ever before. The homogeneity of traditional segments has given way to micro-segments, groups within groups, that cross geographies, cultures and demographics.
What this adds up to is that in this era of heightened expectations and empowered customers, customer experience needs to become an organizational core competence. Products and services are no longer just boxes sitting on a shelf. They are performers on the experiential stage of your customer’s lives. Your company is the producer. Are you ready for the next act?
This article originally appeared in summer 2013, The Bounce Back Issue