We all tend to think of new customer acquisition as the sexy part of selling, and it’s certainly a critical part of growing any business. But building customer delight well after the sale is critical to long-term success.
Achieving the above takes work, to be sure, but some basic tenets can help you be more successful:
At some point, your company will be one or the other. Disruption is a way of life in the corporate world, and companies that are disrupted suffer greatly. In fact, few companies survive major inflection points in their markets. Some completely miss the inflection point while others either create second-rate plans or they bungle their execution.
In 1960, the life expectancy of a company in the Fortune 500 was 75 years; today it is at 15 years and dropping. Disruptions have become a way of life. Even seemingly great companies can miss inflection points in their markets. Those that recognize change and effectively address it, will survive to be the disruptors, while those that don’t will get disrupted – the disruptees.
Netflix disrupted movie delivery. Result: Blockbuster gone.
Amazon disrupted the book industry. Result: Borders gone. (Actually, Amazon has disrupted quite a few companies.)
Uber and Lyft disrupted the taxi industry. Result: Wake up call received, but taxi companies don’t seem to be upping their game.
AirBnB disrupted the hotel industry. Result: TBD.
Which type company is yours – disruptor or disruptee?
Characteristics of Disruptees: Any one of these can kill you.
Characteristics of Disruptors:
Don’t be a disruptee. If the market is changing or you see the potential for change, leading is far more effective than trying to maintain the status quo. It’s also a lot more fun.
Startups have a huge advantage over large companies. A small team of people dedicated to one, and only one goal. Everybody moves in the same direction. Everybody lives and dies by that goal – or at least their wallets do. Everybody is tightly connected. Everybody contributes well beyond their job descriptions. No legacy customers to support. You get the picture. Of course, startups have unique challenges as well – resource limitations, brand awareness, and only embryonic partnerships, to name a few. But the entrepreneurial thrill and clarity of purpose are energizing.
Now contrast that with a Fortune 500 company that has just decided to pursue its latest strategic initiative.
It’s no wonder that companies often take major initiatives off-site to incubate, effectively replicating the advantages of a startup with the added advantages of the larger company.
But even this has its limitations. Eventually, the existing sales force and partners must be trained. The supply chain must be integrated. Support/service teams must change. That wouldn’t be so difficult for a simple product change, but big Strategies, with a capital S, can require much more.
These issues beg some critical questions: Who is truly empowered to ensure that planned customer experiences are enabled across the company? Who will deal with the conflicting budgets, priorities, biasses, history, and comp plans, all of which are designed to run the old company rather than the new one? Who will ensure that even well-intentioned execution is not crippled by biasses born of the old model? Your strategy is only as good as its execution.
We have found two solutions that work, although neither is perfect:
Which one is best for you depends on your individual situation and on your appetite for a more permanent cross-silo infrastructure with enough power to make change happen.
We use the term Value Alignment to describe how a company can best match its efforts to the needs of customers at every customer touch point. Our technology-based clients typically resonate with this concept as worthwhile, but when push comes to shove, most tech companies focus first on their primary products and services, with other issues addressed later and as lower priorities. Yet those “other issues” can often generate the most persistent customer loyalty results. Products and services can be replicated and customer perceptions will change rapidly, but a great purchasing or support experience, for instance, generates persistent perceptions that can’t easily be shaken by competitors. The “other issues” are sticky.
When we design customer experiences, we help our clients understand that products and services are only a portion of the plan. Everything a customer experiences with or about your company is an opportunity to differentiate yourself. We take into account a wide range of those opportunities; some are directly enabled by products and services while others are independent of the products/services themselves. The opportunities span every encounter from initial exposure to the company, through the shopping and purchasing process, and throughout the life of the relationship.
Full Value Alignment means that every part of your company is working in support of a set of designed experiences.
Like it or not, customer perceptions of your offerings are the only ones that matter. Your carefully crafted value propositions only become true if customers:
And the best way to ensure the customer perceives this value is to align the entire company around this set of experiences.
Why do companies succeed in the market? Why not? How can they move toward success?
Both market success and market failure are critical to understand if you wish to grow over time. Simple win/loss analyses don’t provide real answers. Rather companies need to understand the customers who bring you growth, from their point of view. They are after all the ones who create those successes and failures through their decisions and actions.
This quick 7-question self-assessment will help you understand how well-equipped your organization is to understand your market, extract game-changing insights and effectively act on that insight.
If you don’t like your answers to these questions, please contact us. We can help.
We’ve been hearing plenty about customer experience design recently. It’s a hot topic at universities, companies and in many online groups. This is rather exciting to us, because we’ve been doing customer experience design for over 20 years.
In my last post, I described how customers make decisions. In simple terms, it’s based on the experiences they expect to receive and the positive (or negative) value of those experiences. Customers do look at features, of course, but they do so to prove to themselves that they will get the experiences you promise. Customers also have experiences independent of product/service features, such as their discovery and purchasing experience, or customer support. All of these experiences, whether planned by you or not, differentiate your company from the competition, either positively or negatively. All of them affect the decisions your customers make.
Given that backdrop, it behooves companies to consciously build your business around the experiences most valued by your customers. First, focus efforts on understanding the experiences that customers would value and how they would prioritize those experiences, then build products, services and go to market plans in service of those experiences. Doing so is central to our techniques and generates unique insights.
To many, this may sound completely backwards. Too many companies build their products and services first. Then as a marketing afterthought, they develop the hopefully compelling reasons that customers should buy. Theirs is what we control systems folks call an open loop process. There’s little or no feedback to point everybody in a single direction that is compelling to customers – no True North to help internal people make the inevitable tough trade-offs.
Customer Experience Design includes discovering what experiences customers value most highly, then examining your competition, your own capabilities and major changes in your market to decide which experiences you can profitably deliver and why those will win customers’ preference. Our open-ended conversations with customers, partners, service providers and other influencers can create true magic when we explore their lives and discover answers to questions you never thought to ask. These are often the deep insights that drive real innovation for you – unique experiences that will delight your customers. Contrast this with other forms of research, which are great at quantifying known issues or getting feedback on existing concepts but far less useful for disruptive insight. Our client-tested customer experience design process can be found in our methodology description.
All companies face this question as they seek more customers and higher revenue.
Our experience and that of the most successful companies over time is different. Each of the above mindsets may work for awhile, but it will not produce a winning strategy over time. And when customers don’t buy, we often hear “they just don’t get it”. Yet it’s the Provider who often doesn’t get it, lacking a real understanding of the motivations and perceptions that drive customer behaviors.
Customers decide based on comparisons of their various options – Our offerings, our competitors’ offerings, do-it-themselves or do nothing. And they assess which alternative will make them better off – which will provide them the most value. That’s value as they define, experience and perceive it, not necessarily as we define it.
There is a wide range of dimensions involved. Here are a few examples:
Each of the above examples is about customers’ experiences and the impact of those experiences, much more than being about your offering itself. The features of what you offer are enablers of some experiences, to be sure, but many critical customer experiences have nothing to do with your primary offer.
Customers compare the experiences that you offer them with those of their alternatives. In some cases, you might be superior to any given alternative while in others you might be inferior. These experiences, as the customer perceives them, are the heart of the customer value proposition.
Customers typically pay for your offer, so they compare costs as well. Of course, if they don’t pay, in an ad-supported model, your customer is really your advertiser and your user is the product.
Customers must act in order to get the experiences above. Those actions may be minimal (e.g., one-click purchasing on Amazon), or they may be very significant (e.g., distasteful price negotiations to purchase a car).
So, in summary, there are three primary components to customer decision making:
It is our job to understand what experiences are critical to customers and how they perceive us and others. From this understanding we can create plans – products, services, go to market – that will inspire customers to do business with us. A robust strategy should be built upon the foundation described above, for each segment of your market.
How comfortable would you be if you were asked to drop into character and be interviewed as one of your customers? You would be asked a variety of questions, including some that you’ve never discussed with that customer. Do you believe that you could answer as your customer would? It can be done. And its value is huge.
We conduct many paired interviews with our clients and with their customers. In these, we discuss the same subjects with our client that we expect to discuss with their customer. This helps to establish a baseline hypothesis for validation and it provides a great assessment of value alignment. We have found that in the majority of cases, companies have inaccurate impressions of their customers that can be dangerous to their bottom line.
Here’s a rather extreme but impactful real-life example: A client of ours had a 20-year, $50M/year relationship with a large customer, and we were asked to talk with that customer on their behalf, as part of a broader engagement to gain actionable customer insights. In order to prepare ourselves, we discussed the customer at length with our client, interviewing them as if they were the customer. This was a tough customer, we were told, that valued price and price alone. Although our client had plenty of other value to bring to this customer, we were told that this wouldn’t matter. We then spent most of a full day with the customer, discussing a broad range of subjects regarding their business – we were not there to sell. There is one quote from this customer that I will never forget: “If the only thing you present to me is your price, how can I judge you on anything else?” Our client’s pre-conceived notions about this customer had colored their thinking so heavily that they created a self-fulfilling prophesy. Once they got past this, an unexpected and incremental $50M revenue opportunity quickly materialized.
“Becoming the customer” is how we describe learning so much about your customer that you feel you could accurately represent their interests in any discussion. What are the customer’s goals? What keeps them from reaching those goals? What support systems do they have? Describe the various relevant processes in the customer’s business. What works and doesn’t work in each of them? What are the customer’s perceptions of your company and of other alternatives they have available?
These questions and others provide far more insight than a dim-the-lights experience where a company presents its wares and asks then asks them what they want. We already know what they want. Your customers want better products for free. Unfortunately, that’s not very helpful or actionable, so you need to learn far more.
Rather than asking your customers what they want, ask them what they do and how they’re impacted in their own lives. By spending a day in their lives and “becoming” these customers, you will become much better informed about how to gain their preferences over time. This type of conversation will develop true innovative insight that can lead to disruptive change.
Some of the best companies in the world listen to their customers in this way. When P&G execs travel, they regularly get off the plane and go to the home of a P&G consumer to watch how they use their products. Additionally, P&G sends new recruits to live with families in new market areas in order to understand them better. This “day in the life” experience is terrific and far better than just asking customers what they want. There are lots of ways to achieve it.
If companies such as P&G believe in listening as a strategy, could you?
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