The Rules of Competition Are Changing: Customer Experience Is Becoming More Important Than Product
Customer experience is just a buzzword for many businesses, either because they believe it’s a passing fad or because they have no idea how to apply the concept. Unfortunately, the companies ignoring the customer experience will find it increasingly difficult to compete because it has become more important than the products you offer!
“The customer experience is the next competitive battleground.” – Jerry Gregoire, Chief Information Officer at Dell.
Customer Experience trumps Product
88% of customers prefer doing business with a company that offers quality customer service over a company that has the latest and most innovative products, according to a Harris Interactive study conducted on behalf of Verint Systems. Likewise, 69% of customers switch brands due to real or perceived poor service, with quality being cited as the reason by only 13% of respondents, according to a Michaelson & Associates study.
Granted, customer service is only part of the customer experience, but it does have a large impact on the overall experience. And the statistics show that people are more interested in how they are treated, in their experience, rather than the product.
“Being on par in terms of price and quality only gets you in the game. Service wins the game.” – Tony Alessandra, President of Assessment Business Center.
In other words, the market is full of great products, so how can you compete with another company when you both have outstanding products? Well, it’s all about the customer experience you deliver.
Valerie L. Dodson, a pastor and author of A Voice behind Thunder, wrote on Huffington Post, “My message here is to every company that sells, anything. Your product may be spectacular but if people hate to call your customer service you won’t sell many products for long.”
This is a view expressed by many consumers. They no longer research just the product, but the company and the experience it provides. And 86% of consumers are willing to pay more to receive a better customer experience, according to a CEI survey, but only 1% of customers feel their expectations are being met consistently.
In other words, consumers are saying price doesn’t matter and the product itself is just an afterthought, really, as long as they are offered a great experience.
“Customer experience is the new marketing.” – Steve Cannon, Mercedes Benz USA President and CEO.
Clearly, customer experience isn’t a fad. It’s not going away. In fact, it’s always been around. Companies have only recently realized how important it is, though, because the power lies more and more in the hands of the consumer. And the company that doesn’t focus on customer experience is doomed to fail.
“You’ll never have a product or price advantage again. They can be easily duplicated, but a strong customer service culture can’t be copied.” – Jerry Fritz, Director of Management Institute, University of Wisconsin, Madison, WI.
The Changing Face of the Consumer: Cross-Industry Competition on Customer Experience
Customer experience has pretty much become the only true differentiator between companies. The better the customer experience, the more your customers will do business with you. The problem is that you aren’t competing only against businesses in your sector or industry anymore.
As Paige O’Neill, the Chief Marketing Officer of SDL explains, “Customers are now having experiences when dealing with vendors like Amazon or when they go to Disney, and one thing we’ve been discussing with our customers at SDL is the notion that if you’re a financial services institution you’re not just competing with other financial services institutions, but you’re competing with Amazon and their experience. Or you’re competing with the expectation that customers have now when they go across and have the best experience they can possibly have…”
“We see our customers as invited guests to a party, and we are the hosts. It’s our job every day to make every important aspect of the customer experience a little bit better.” – Jeff Bezos, CEO of Amazon.
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In other words, consumer expectations are constantly changing and evolving based on their experiences with other companies, too. They don’t have different expectations for their interactions with their bank and different expectations for their experience with their dentist, for example. No, if they are constantly and consistently on the receiving end of an amazing customer experience from their dentist, they will eventually expect a similar experience from their bank. In fact, if a “small” service provider like a dentist can provide a great customer experience, they will expect even more from a large company, like a bank.
Brian Solis, a principal analyst at Altimeter Group and an award-winning author, explains that to be able to deliver a great customer experience, businesses have to understand their customers but also employ empathy. In other words, businesses need to understand customers’ lives from their perspective or viewpoint. On top of that, they need to live the customer journey and not just understand it.
“If there is any one secret of success, it lies in the ability to get the other person’s point of view and see things from that person’s angle as well as from your own.” – Henry Ford.
Understand and Empathize with your Customers to craft a Compelling Experience
You need to get into the heads of your customers to understand what their real desires and expectations are if you are to craft a compelling, memorable and delightful experience. And one of the best ways of doing that is through observation.
In The Innovator’s DNA, Clayton M. Christensen considers observation to be one of the five essential discovery skills of innovators, along with questioning. These two skills are essential to understanding your customer, but observation can put you in their shoes like nothing else.
In the book, A. G. Lafley, the CEO of Procter & Gamble, explains his approach while he was on a regional assignment in Asia before he became CEO:
“Every time I traveled to China, I always went to stores to watch people purchasing our products. Then I went into homes. I always went in the evening because the woman almost always works outside the home. My routine was stores, homes, then the office. It gave me a current snapshot of what was going on. Of course, you can’t generalize from a single qualitative experience, but over five years of doing this regularly, those experiences add up, combined with reading whatever you have access to, as well as the ‘harder’ data. You develop a feel. You become more of an anthropologist because you can’t understand the language. Your power is observation, your listening skills; your ability to read nonverbal cues gets a lot better. Your ability to observe increases. There are so many subtle things to read, understand, react to in a foreign country.”
No, you don’t have to travel to a different country, but you can adapt Lafley’s method to better understand your customers. Observation is extremely powerful because it can uncover hidden needs, desires and even problems, many of which the consumers themselves aren’t aware of.
Observe your customers and live their customer journey so you can truly understand what would make their experience delightful.
You can also observe how your customers interact with other companies, which can help you identify precisely what makes their experience delightful and what they would change. You can then take your finding and adapt them to your own business.
Likewise, questioning is also an important skill to get into the minds of your customers. However, the key to success is being brave enough to ask the questions and not being afraid to question common wisdom.
Common wisdom said that you only had to create a great product and customers would buy it, but that no longer holds true. Not even by a long shot. Now, it’s all about the experience. So, if you were to ask, “What would make a great product?” you’d be wasting your time. Instead, you should be asking, “What do I want my customers to feel when using my product/interacting with my company?”
Lafley, for example, loves to come up with counterintuitive questions. So, instead of asking “How can we help consumers get floors and toilets clean?”, he asks, “How can we give consumers their Saturday morning back?”
So, observe and ask questions, but don’t be afraid to go against the grain because consumers have changed significantly and you need to understand all the different groups of customers you are dealing with to be able to deliver a truly delightful experience.
Customer Service isn’t Customer Experience
A common fallacy seems to be that customer service is an extension of the customer experience, but CX is comprised of much more.
Richard Owen, the Vice President of Dell Online Worldwide defines the customer experience as being the “sum total of the interactions that a customer has with a company’s products, people and processes. It goes from the moment when customers see an ad to the moment when they accept delivery of a product – and beyond.”
In other words, focusing solely on customer service to improve the customer experience is like taking three wheels off your car and expecting it to perform optimally. So, when you are observing and questioning, you need to observe all these interactions or you’re wasting your time.
Investing in CEM Is Not an Option
By 2017, 50% of consumer product investments will be redirected to customer experience innovations, according to a 2014 Gartner for Marketing Leaders study, which is an indicator that customer experience will really become an important brand differentiator.
So, if you’re still on the fence regarding investing in customer experience management, you really don’t have an option. You either get with the program, or you get left behind, breathing in everyone else’s dust.
59% of Americans would try a new brand or company for a better service experience, according to an American Express Survey. So rather than being the brand that customers’ are abandoning, shouldn’t you be the proactive forward-thinker to whom all these customers run because of the outstanding customer experience you offer? Of course you should.
More than half the Americans would switch to a new brand or company for a better customer experience.
To do this, though, you will have to invest in CEM because you need the tools to support you in your endeavor. Creating a great customer experience starts with information and there is so much data available that if you don’t have a good CEM system, you will find it extremely difficult to turn all that data into something actionable.
But you don’t have to worry over high costs, because an increasing number of companies are finding that investing in CEM and improving the customer experience as a whole is actually lowering their costs. Happy customers aren’t only cheaper but they also spend more than unhappy customers.
An increasing number of industries are finally coming to the realization that the rules of competition are changing significantly. Price and product will always be important, but customer experience is starting to outclass them. Thus, any business not focused on offering an outstanding customer experience is doomed to fail. However, as long as you understand how important the customer experience has become and you understand and empathize with your customers, you’ll find it much easier to compete in the future because you will be in the perfect position to meet and exceed your customers’ expectations.
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