Unpacking Customer Experience: 7 Ways Brands Gain Competitive Advantage

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1 Unpacking Customer Experience: 7 Ways Brands Gain Competitive Advantage

2 WHAT S INSIDE 3/ INTRO: EVERY COMPANY WILL COMPETE ON EXPERIENCE 7 WAYS BRANDS GAIN COMPETITIVE ADVANTAGE 4/ #1 UNDERSTAND WHAT CUSTOMER EXPERIENCE IS AND ISN T 5/ #2 DEFINE YOUR EXPERIENCE PLATFORM 6/ #3 PUT A VALUE ON EXPERIENCE 7/ #4 BE OMNICHANNEL LIKE YOU MEAN IT 8/ #5 LISTEN TO CUSTOMERS (DUH, RIGHT?) 9/ #6 OWN IT 10/ #7 NEVER STOP REINVENTING 11/ ADVICE FOR BRANDS 12/ TALK TO JACK

3 Every Company Will Compete on Experience One of the most surprising moments at this year s South by Southwest Interactive conference may have been when Wharton marketing professor Jonah Berger declared, to a room full of technology-obsessed movers and shakers, We spend far too much time thinking about technology and not enough time thinking about psychology. Berger threw out this zinger as part of a presentation 1 on word of mouth in which he argued that we over-emphasize channels of influence without first understanding fundamental drivers of influence. This is also true of customer experience. Customer experience is now recognized as a crucial area of investment for brands today. It s been said that Over the next decades, literally every company will compete on the basis of customer experience. In fact, they already do most just don t realize what that really means, what s at stake, or how to 2 do it well. But while a lot of marketers seem to spend a lot of time thinking and talking about customer experience, it often seems we re jumping to the hows before fully defining the whys. Often that means asking what technology case in point: silver bullet du jour, Big Data can do for customer experience, without first understanding what the customer experience should and could be for specific brands. So let s look at fundamentals first. And let s take the time to define what we mean by customer experience so that it s not just an empty buzzword. In that spirit, what follows isn t everything we need to know about customer experience but 7 ways brands can gain competitive advantage. Liz Bigham /3

4 #1 Understand What Customer Experience Is and Isn t Customer experience is generally understood as the sum of a person s interactions with a brand over time. Let s be clear: Interaction means connecting with brands in a back-andforth way. Experience touchpoints aren t defined by medium but by engagement. Customer experience is much bigger than customer service; it s a crucial ingredient of customer experience, but just one piece. Over time means more than an event or moment. It can mean quite a bit of time from the period of time it takes to fulfill a particular customer need to the entire lifecycle of the customer relationship. There s no singular customer experience. It varies from 1 brand to brand and from customer to customer.3 Social Engagement Customer rewards Promotions Product use and feedback Research on dotcom Visits to store, staff interactions Figure 1: A simplified set of customer experience touchpoints sampled from recent interactions with a fast fashion brand, shows the variety of different interactions. /4

5 #2 Define Your Experience Platform At the heart of great customer experience is a clear definition of how the brand should behave an experience platform (fig. 2). It s second nature to marketers to ask What s the brand platform? and to use that as the basis for how the brand is expressed in the market. We need to have similar expectations for customer experience: we need to ask What s the experience platform? and use that as the basis for how the brand behaves in the market. The experience platform needs to become core to how we work with brands now in the age of experience. Every experience platform should be unique not just because it s core to the brand on a conceptual level but also because it can transform the business in very concrete ways. 1 Social Engagement Customer rewards Promotions Experience Platform Product use and feedback Research on dotcom Visits to store, staff interactions Figure 2: Experience platform provides the basis for how brands behave /5

6 #3 Put a Value on Experience Again and again, research shows that companies perceived to have a unique brand experience gain clear competitive advantages: increased consideration, more word of mouth and even a price premium. Our own research has shown the value of experience (fig. 3). 4 We re not alone: Forrester has correlated superior experience to greater loyalty, increased word of mouth and lower churn; others have argued that people will pay as much as 25% more for a better experience.5 Better experience brings value to the organization both through increased revenue and through cost avoidance. Show that to help justify investing in customer experience and to track its impact on an ongoing basis. I m more likely to consider a brand if I know I will have a great experience (percent agreeing) I m willing to pay a premium price if I know that I will have a great experience (percent agreeing) US US UK AUS China Overall 78.7% 74.9% 74.2% 93.8% 80.4% UK AUS China Overall 60.6% 58.4% 49.5% 63.7% 58.1% Fig 3 (Source: Best Experience Brands 2013) /6

7 #4 Be Omnichannel Like You Mean It According to a Time Inc. study, people who grew up with mobile technology switch between devices and platforms 27 times per hour. 6 That in a nutshell is why omnichannel is so important these days: because consumers live in a world where they move constantly across channels, they expect brands to be consistently great across them. But while it s easy to say omnichannel (yes, it s a big buzzword) it s much harder for brands to actually deliver on it. Consumers expect seamlessness; likely, they only pause during that average of 27 back-and-forths if an isolated touchpoint fails to deliver. At such moments, they probably don t credit the brand for all the other 26 1 interactions that were great and recognize the challenge of stitching them all together with likely dozens if not scores of players and partners. They expect the customer experience to be uniformly excellent. They hold the brand accountable. Brands that invest in customer experience will by definition be more truly omnichannel. Two personal favorites: NPR, a media brand that s perpetually expanding how it brings great content to the public; and vitaminwater, which set out to make boring brilliant and has invited its fans to bring a hugely expansive world of new ownable touchpoints to them. /7

8 #5 Listen To Customers (Duh, Right?) Great customer experience starts with a clearly defined experience platform that s authentic to the brand and consistent across audiences and touchpoints. But as the name implies, customer experience can t happen without an outside-in approach that embraces clear channels to elicit input from customers and an active commitment to listening to what they have to say. Fortunately we have hugely powerful social channels and technologies that are pervasive in our world. As marketers we often think about using them for talking, but they re even more powerful for listening. Indeed this is one of the ways that Big Data really benefits customer experience: not so much as a way of pushing information to consumers in ways that feel invasive, but as a better way of taking in information from them. /8

9 #6 Own It Who owns customer experience? In many organizations, there s not one single person who s empowered to truly own all of the touchpoints that influence customer interactions (often the complexity and sheer number of factors are big barriers). With ownership comes accountability; the opposite can also be true. That s beginning to change. As companies have increased their investment in experience, they will look to experts inside their companies (as well as partners outside) to lead experience. The Chief Experience Officer, or CXO, is on the rise. So are CEOs who embrace putting experience at the center: think Howard Schultz of Starbucks, Steve Ells of Chipotle and Tony Hsieh of Zappos. /9

10 #7 Never Stop Reinventing A brand that isn t willing to update its customer experience is a brand with a limited future. The experience platform should be unique to the brand and relatively stable, in the same way that other elements of the brand are relatively stable. No brand would confuse its customers by changing its logo from month to month or from year to year, nor should it do so with its experience platform; it s core. But customer experience has to be dynamic. If it doesn t keep up with and reflect customer needs, there are going to be problems pretty quickly. Think of how brands struggle when their customer experience lags. RadioShack s leadership has done a good job of investing in an updated customer experience and made my favorite Super Bowl ad The 80s called: They want their store back poking a bit of fun at themselves for waiting so long to do so. Their stock 1 media that resulted from announcing this change surged on the huge in customer experience; its current struggles reflect the difficulty of actually delivering so much change in customer experience across every channel, in-store and online, when there s so much catching up to do both externally and internally. Social Engagement Customer rewards Customer experience is dynamic and changing Promotions Experience platform is core and constant Experience Platform Product use and feedback Research on dotcom Visits to store, staff interactions Figure 4 /10

11 Advice for Brands Again, now and the near future literally every company will compete on the basis of customer experience so the question isn t really whether but when to begin making it a priority. What happens when you ve made it as far as knowing it should be a priority? To my mind, three simple things: 1. Take the time to understand and define how your brand should behave in the marketplace. Do the work to establish an experience platform. Notes 1. Berger asked one of the most important marketing questions today: why do some things get shared, go viral, blow up all over the internet and others things, well, not so much? His recent research as well as the coverage of his talk are worth checking out. Full disclosure: I wasn t one of the 15,000 people at SXSW. jonahberger.com/wp-content/uploads/2013/02/bzzagent.pdf ; com/nicole-carter/jonah-berger-marketing-word-of-mouth.html 2. Outside In: The Power of Putting Customers at the Center of Your Business 3. Interestingly, a customer experience lens is just one more reason for brands to be inclusive of the diversity of their customers varied backgrounds and perspectives in how they plan their interactions and work with their marketing partners. 4. Best Experience Brands 2013: A Global Study jackmortonww/best-experience-brands Cited in Most Contagious most-contagious With the experience platform in place, invest in educating your people to understand how they should behave to deliver your unique brand experience. Internalize it before you try to externalize it. 3. Audit the touchpoints that make up your current customer experience and work to bring them in line with your experience platform. 4. Last but not least, listen to your customers. If your customer experience is working, they ll let you know and they ll let their friends know, too. /11

12 Talk to Jack Contact: Liz Bigham E: Read our blog at blog.jackmorton.com Follow us on Visit us online at jackmorton.com About Jack Morton We re an award-winning brand experience agency that turns brands into verbs and transforms customer experience into a competitive asset. We make brilliant things happen for our clients. We do that by bringing together brave, creative people who are true believers in the power of experience to transform brands and businesses. We re experts in brand experience strategy and activation. Our clients look to us to define and understand how their brands should behave in the marketplace, and create experiences that bring their brands to life. Our portfolio of award-winning work spans 75 years and clients like GM, Subway, Samsung and Verizon in areas like event marketing, retail experience, digital, social, mobile, sponsorship and employee engagement. Our team works together across 22 locations all around the world. We re also part of one of the world s leading marketing holding companies, Interpublic (NYSE: IPG), and experienced collaborators with a global network of best-in-class partners. Jack Morton Worldwide JACK WHITE PAPERS To read our earlier white papers, visit our Slideshare channel at slideshare.net/jackmortonww

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