This post was created from a webinar which originally aired in late 2017. In this webinar, our CEO discussed how disruptive the new customer experience economy can be for companies both large and small.
Through this webinar, viewers will be able to understand customers' expectations and how to innovate for the future rather than for the features.
1. Design Your Personas
Design the most impacting personas for your business. Study and analyze common demographics and psychographics that you have in your database regarding your customers and design a fictitious person which represents a larger group of customers. You can design one or two personas, but try not to go beyond three. Learn how to design your personas
2. Map your customer journey
Understand what paths your customers are taking from the moment the need and expectation arises to the moment when it is fulfilled (when they make the decision) and beyond. What happens after they make the decision? The need is always going to be there. So, if they didn’t fulfill their need, it’s now going to be more intense, and if they did, it'll be less intense. But the need will continue to be there. Therefore, if your competitor sends a message with a better value proposition, they will move from your offer to the better offer that they’re seeing in the market. That’s why it’s important to design a customer journey map. It will give you a better understanding of what is important for your customers at different moments of their journey. Learn how to map your customer journey
3. Regularly listen to your customers
You need to regularly survey your customers to understand what’s important to them. Check social networks to see what they’re talking about. This should be the core of your strategy and the voice of customer should be the source of information for this strategy. Check out this Voice of Customer survey platform
4. Correlate Data
Don’t focus on your intuitions. You need correlate every single bit of data you collect throughout the customer journey so you can understand what truly matters to your customers and address the most important things. This is where you can create hyper-personalization by using your tech, your apps, your website and every channel that you have available to interact with your customers and instill in them a feeling of uniqueness. This is why it is important to correlate the transactional data that you have. By delivering a hyper-personalized, unique experience, you will make your price perception less relevant and your perceived value proposition much, more worth it than your competition.
You can read the full transcript of the webinar below.
Hi my name is Guilherme Cerqueira, but you can call me Gui.
And, today I am here to talk about this, that is by far, the most violent economy in the history of capitalism.
I’m talking about the customer experience economy. A lot of people tell me that I am exaggerating when I say this, but I’m going to give you a couple examples to prove that I am right.
Here we have for example Tesla and Ford Motors. Tesla within 9 years they was able to achieve a higher valuation than Ford Motors which is 114 years old. So, think about 9 years, this is like yesterday, right? And in 9 years they were able to become larger than Ford Motors.
So, at the same time this customer experience economy is building gigantic corporations in such a short period of time, the same thing is happening on the other hand with organizations that are dying and basically seeing their gigantic organizations becoming dust also in a very, very short period of time.
We can take for example, Nokia, Blackberry, and most recently Toy’s R’ Us, and Kodak. All these companies were basically reduced to dust in a very, very, very small period of time.
Nokia, for example, in 2007 they had an amazing 51% of market share. This is huge! We’re talking about a company that had more than 112,000 employees and represented more than 4% GDP. In 6 years, guys, 6 years only, they were reduced to a valuation of 7.2 billion dollars when they were acquired by Microsoft and after this, they basically disappeared.
Think about it. If this is not the most violent economy in the history of capitalism, I’m sorry but don’t know what is.
Now, let’s compare two companies. One of them is very product centric and the other is customer centric. If your company is product centric, this is the path for failure. You need to be focused in customer experience. There are a lot companies out there that believe that they’re being customer centric, by piling up features in their products and their services and that’s wrong. That doesn’t work anymore. So, here we have for example, Blockbuster and Netflix.
Let’s talk first about Blockbuster. A company that failed simply because they were too product centric. Blockbuster’s business model was based on creating and assimilating rental transactions per store. Also, you can rent as many as they have available, IF they have them available and IF you have the money to pay. Because it was a pay per rent model. Not only that, every piece of the experience that they were creating for their customer, they were available as long as you were willing to drive to one of their stores to experience what they were preparing for you.
On the other hand, we have Netflix. Netflix’s business model was based on creating long term subscribers, long term customers. See how it’s different? It’s about captivating someone to become your customers and to stay your customers for a long time. It’s not trying to motivate them to repeatedly buy something they don’t want or something that is not ideal for them. It’s about preparing an experience that will captivate and engage people to be your customers for a long term.
Let’s analyze their business model. Since day one, which I don’t know if most of you guys know, but it you could rent, go online, pick the movies you wanted, and the movies were always there, they would let deliver to your home, and you could stay with that movie as long as you want. So, no late fees and no need to drive to get a movie. Later they changed their business to streaming. Basically, it’s an all you can watch business model for a small fee per month. But the focus is not on the small fee or all you can watch. The focus was on creating an experience that was effortless. Not only this, but they were so focused on experience that they got into hyper-personalization.
For example, my user profile, in my home I have a user profile, my daughter, who is 5 years old, she has a user profile, and my wife has a user profile. The thing is, when I’m using my wife’s user profile, the experience that I’m having is totally different than when I’m using my user profile. Actually, Netflix with my wife’s user profile is very boring. I don’t like it, the movies that they are suggesting are not like the movies that I want to watch. Even when sometimes I see my daughter’s user profile, Netflix is not delivering for my daughter just the kid’s section of their database. They actually picking kid’s movies that are the favorite movies based on everything that she has already watched. They are actually concentrating on creating hyper personalization of the experience so it’s the same subscription, but we all live and feel a unique experience based on our needs and expectations. That’s really powerful! That’s what put Blockbuster out of the market.
Now I’m going to ask you a couple questions so we can think together. What happened with Blockbuster and who had a higher chance to be disruptor of this market, Netflix or Blockbuster? Blockbuster. Who had more capital? Netflix or Blockbuster? Blockbuster. When Netflix started it was basically only a start-up.
Who had a larger customer base? Blockbuster used to have operations world wide. I’m from Brazil and I used to be a Blockbuster customer because they had several stores there. Who had easier access to survey and study customer needs and expectations? Blockbuster. Because they were larger. They had a larger database of customers so they had plenty of access to understand customer needs and expectations. And who had access, this is a very important one, who had access to Internet streaming? Both of them. So, the technology and the innovation was there, was available, to both of them, but only Netflix was able to give a great use for it. Because of what? My next question. Who had the right mindset? Netflix. So, it doesn’t matter how many fancy buildings you have, how much money you have, how many Ivy League degrees or MBA’s your team has. This is not enough.
Remember the Customer Experience Economy is about customers, it’s about people. A mindset. It’s all about you having and building a culture that puts customers in the center as a priority. And put their needs and expectations as a priority. When I’m talking about customers, I’m talking again about people. I’m talking about need and expectations to be addressed and fulfilled. The issue also with piling up features and products is companies are considering the wrong part of the battle; the competitor. They’re considering that they need to build better products to beat out their competitor. This is wrong. It doesn’t fit anymore in this current economy. You need to build up features as long as these features are going to add a much better customer experience for your customers. So, that’s the main thing. Stop considering building up features to try to seduce your customers that you have a better value proposition to beat your competition. Do everything you need to deliver having your customers and their needs in their minds. I have a couple of examples of companies that did not kill their main competitors. They did not disrupt the market by killing their competitors or the current competition. AirBnb didn’t kill off the hotel industry. They did it to themselves by limited availability and price options. So, again, if you think about Hilton, or, Sheraton, they had more money, they had more assets. They had more everything than AirBnb. They could be the current AirBnb, but they didn’t have the mindset. And, again, we have Apple with the music industry. We have Uber and they didn’t kill the taxi industry. We have Amazon that didn’t kill retailers. Netflix didn’t kill off Blockbuster, as you were able to see. Stop thinking about your competition and beating out the competition and start thinking about delivering an amazing experience to your customers.
There’s interesting data from Gartner that shows that 9 out of 10 companies are now competing based on customer experiences. Why? Why is everybody so concerned with customer experience? And why is it the most violent economy in the [CX] history? It’s simply because of value proposition commoditization. Basically, today most industries and most companies have access to the same brains, to the same technology, to the same capital, which leads to the same value proposition. So, company A, B, and C are basically building different products, but for the consumer they all look the same. So, that leads companies to a battle for price because what commoditization of value proposition creates is this feeling that the customers can take whatever he wants so he’s going to choose for sure the best price. Value proposition commoditization plus empowered customers. And what do I mean by empowered customers? Like the Internet, people can buy and cancel with a click today. So, value proposition commoditization plus empowered customers leads to price wars. That’s why this is the most violent economy in the history. Whenever your customers decide not to buy from you, it’s not going to be 1 or 2 customers or 1% of customers from within a specific region. It’s gonna be a huge amount of customers leaving basically in the same month. You’re gonna see this can literally put your company out of the market.
And how do you survive? What do you have to do to? Where to innovate? How to drive and create more innovations, or innovations that are effective, you need to innovate in customer experience. You don’t need to innovate to make your product better than your competition. You need to make your product better for your customers. You need to create experiences that will surround your product and make your customer to feel more unique. And this is what’s going to drive people, because, again, we’re talking about people. This is what’s going to motivate people to feel, or to perceive your price as less relevant. So, if you want to charge more and still beat your competitor, you need to innovate in customer experience. Because you need to generate this feeling in your customers that they’re getting more than a product or a service. That your companies actually a need for his life. That your product or service or offer is actually a need for their life.
There are a lot of companies out there making a huge mistake when they’re trying to innovate. What they’re doing is copying. So, they want to be the next Uber, or Facebook, or Netflix for their industry by copying these companies. But it won’t work simply because these companies are not copying any other company. They’re creating things based on what their customers want. If you want to innovate in customer experience and if you want to innovate in customer experience and you want to thrive in this customer experience economy, you need to create your own path.
Everything starts with understanding your customers and meeting their needs, studying your customers, studying their behaviors, correlating the data you have in your database. Every bit of data with everything they say and everything you have available to better understand them. You have to put all this effort together. And, again, it’s a mindset. Every team within your organization must have this mindset. Everybody must have an idea, actually a very, very crystal clear idea about how their work is impacting the customer experience and how this customer experience is affecting customer decisions and the ability of your company to bring revenue in.
There’s an incredible gap [between customers and companies]. There are a lot of companies out there that believe that they’re customer centric, but they’re not because their customers are not perceiving them as a customer centric company. Like this study by Capgemini that says 75% of organizations believe themselves to be customer centric, but only 30% of customers agree with this sentiment. Huge gap, huge contrast. But why is this happening?
Simply because sometimes companies believe that because they’re registering a very high satisfaction index, or very high Net Promoter Score, that they are customer centric. No. That’s not it. It’s about value proposition. It’s not about verifying if at one specific path of their customer journey if they’re satisfied or not. They might be satisfied, but they might be leaving. In 2009, Blackberry’s customer satisfaction index was peaking while they were losing a tremendous amount of customers. What’s the point? Again, I’m not saying that you shouldn’t have satisfied customers and that you shouldn’t measure customer satisfaction. Yes, you should. But you should be more concerned today on understanding whether your value proposition is updated. Your value proposition is delivering what your customers are expecting for today. And that’s the most important thing.
Now, I’m going to show you guys a case study we did with this huge credit card brand. And we did this study with a combination of Worthix and FICO trying to help this big credit card company with this well-known, large bank to reduce or to help them understand what was causing their customers not to use their credit card anymore. Because here in the U.S., when someone’s not happy with their credit card, instead of cancelling, they stop using it. This bank was trying to understand what was causing people to no longer use the credit card. And think about when someone decides not to use their credit cards, basically they believe they have something that’s more worth it in their wallet. There’s another credit card in their wallet that’s more worth it than the credit card they were using before, right? And that’s what caused the bank to register a reduction in the use of a credit card, people stop using it, because they’re adopting something else. Not because they’re not buying. People keep buying. The thing is they’re simply adopting another offer.
When we visited this bank, in the first meeting they said, “We don’t have an issue with customer experience, we are a customer centric company. Last year, we won an award because of our customer satisfaction.” I said to them, “Look, I’m not here to measure your customer satisfaction. I’m glad that you have a great customer satisfaction. But I’m here to measure why your offer is no longer the most worth it option in your customers’ wallet.” So, when we’re talking about customer experience, we’re talking about many other things than satisfaction only. Satisfaction doesn’t represent your customer experience. It’s only a part of your customer experience. After we ran a study we were able to identify that the experiences that were making the credit card less worth it was related to credit limit adequacy. When you have a great credit limit adequacy, you don’t write a complaint to your credit card company. But when you don’t have it, that’s when you usually feel that it’s a bad experience. And that thing can motivate you not to use your credit card or to believe it’s no longer the most worth it alternative.
In summary, we were able to provide this information to FICO about the credit limit adequacy and they were able to re-run models for credit limit adequacy for this bank. And after two years, this bank saw the usage going back again to the top and actually it went way up and they were able to register 206X ROI considering the money they spent to solve the issue basically by identifying and investing in the right experiences that were causing people to conclude that they weren’t worth it. Invest in the value proposition and reshaping and reiterating in the value proposition to drive customers to the Worth It Conclusion.
But why do most companies fail when they’re trying to be customer centric? And why do most of them get misled by their customer satisfaction index? Simply because they’re believing in the customer satisfaction index only. They’re not measuring the decision. When they’re measuring the customer satisfaction only, they’re measuring only the experience that’s a part of the path of the customer journey and they’re missing the decision; the part where the customer decides where the money is going to go. HBR published several magazine articles discussing how hard it is to identify why customers really want things. So, here we have a slide where I’m going to show how the decision happens. Basically, as a customer we have a need. And in this case, it’s about getting a car. But we don’t have a need to have a car. We have a need to get from one place to another. And we have an expectation to get a vehicle. Today we have cars. Maybe tomorrow we’re going to have something else. But today is a car so, we start searching for cars and perceiving offers. Because when you need something, you start perceiving more offers than you usually perceive when your need’s not intense. At one point, you’re going to make a decision between one brand or the other. Let’s say in this example here that we go with Hyundai. We decided to buy a Hyundai instead of buying a Toyota. Doesn’t matter the reason. Let’s go with Hyundai. After I purchase my vehicle, Hyundai is going to start surveying me, asking me about my experience. And I’m probably going to give very good satisfaction scores, or maybe not, but the thing is I already made my decision. And all the surveys that they are deploying, they’re not going to be able to explain that decision.
So, let’s say that 9 out of 10 people there that have the need and expectation to buy a car are picking a Toyota. By measuring a point in my path, Hyundai will never find out why I chose them instead of choosing Toyota, or even Toyota, if they’re doing the same thing. Companies should focus on measuring decisions and it’s not only about measuring satisfaction. You need to combine satisfaction, the measurement of the decision, and also you need to correlate this feedback with real time data. You need to have access to real time data to correlate this information to find what’s actually important for customers and how you can create a hyper-personalization experience for them in their entire customer journey. That’s something we’re going to address a little bit later.
Now I’m going to talk to you guys a little bit more about what’s behind the customer decision; what’s behind this cost and benefit analysis that basically decides the money flow. Your company is a customer experience machine causing experience expecting to have as an affect a Worth It Conclusion. You’re causing an experience expecting your customers to believe your offer is the most worth it in the market so they can give you money for your product or services. But the thing is, the language you are using for your products or services is different from the language your customers are using to perceive.
You’re causing an experience by managing product, people, process, locations, communications. But your customers are not perceiving all these things that you’re managing. They do not see process. They do not see people. They only see quality. They only see relationship. They only see things that are related to the feelings they have. So, they only see quality, relationship, they see social proof, they see brand identification, and they see relative price.
Now that you understand there’s a gap between the language your company’s using to cause experience and the language your customers are using to receive and to perceive the experience to decide on you or your competitors, you know that you shouldn’t be measuring or trying to understand your customers using your own language. You should be understanding them from outside in, respecting the dimensions that they are capable of seeing; the dimensions that they’re capable of feeling and expressing themselves.
Now I’m going to leave you with four must haves to motivate the why behind the buy:
If you need to download more materials and if you need additional support materials, please visit our resource panel where you’re going to be able to download an ebook on how to implement CX in your organization. And visit our blog.
Thanks for watching.