Experience-Based Differentiation June 17, 2007
Posted by Bruce Temkin in Branding, Customer experience, Customer loyalty, Experience-Based Differentiation.trackback
Earlier this year, I published a report called Experience-Based Differentiation (only Forrester Research clients can read the full report). As of this point in time, it’s Forrester’s most-read report this year. I’ll get into some of the details about the report a little later in this post, but I’d like to talk about the report’s popularity a bit. Why have so many people wanted to read this report?
I don’t have hard data on why everyone’s reading my research, but I’ll throw out a hypothesis: Many execs believe that: 1) customer experience is critical to their future success (I do have data on this in my research) and 2) they currently deliver subpar experiences to their customers. This alone provides enough motivation for reading the report. But I think there’s something else at play as well.
Customer experience is, well, that’s the thing… what exactly is customer experience? Many people know that it’s important, but most people don’t really know what it is. That creates a black hole of insight — which generates a lot of demand for this type of research. My goal is to help shrink this black hole.
Now, on to some information about Experience-Based Differentiation (EBD) which we define as:
A systematic approach to interacting with customers that consistently builds loyalty.
Don’t focus too much on the definition. Instead, take a closer look at the three principles of EBD:
- Obsess about customer needs, not product features. Rather than racing to bring new product features to market, companies need to refocus on the needs of their customers — who might even want fewer features. While most firms have invested in customer analytics, even the largest data warehouse and most sophisticated software can’t model the nuances of human likes and needs. That’s why firms should augment data crunching with some old-fashioned techniques like talking to customers and observing their experience. This insight needs to be widely communicated across the organization.
- Reinforce brands with every interaction, not just communications. Traditional brand messaging is losing its power to influence consumers — that’s why branding efforts need to expand beyond marketing communications to help define how customers should be treated. To master EBD, firms must articulate their brand attributes to both customers and employees, clearly describing how the firm wants to be viewed. That’s just the first step, because companies must go on to translate brand attributes into requirements for how they’ll interact with customers.
- Treat customer experience as a competence, not a function. Delivering great customer experiences isn’t something that a small group of people can do on their own — everyone in the company needs to be fully engaged in the effort. It all starts at the top; the CEO and his executive team need to be fully engaged in the effort. To keep a companywide focus on customers, companies need a systematic and continuous approach for incorporating customer insights into all of their efforts. That’s why we recommend building a voice-of-the-customer program. (Note from Bruce: voice-of-the-customer is another hazy concept out there – that’s why we defined a five level model for voice-of-the customer; we’ll definitely touch on that topic in later posts.)
EBD is a core focus of my research, so you’ll definitely find these concepts making their way into future blog posts. But for know, I encourage everyone to add thoughts or examples of how companies can head towards Experience-Based Differentiation.
Thank you for distilling the core objectives of a successful customer experience strategy into these three main points. For nearly two decades our firm has helped leading brands in measuring the customer experience across critical touchpoints, and we have seen first hand how well your three principles, when properly integrated into a brand’s experience strategy, deliver on sustained success.
Have read the full report from Forrester and think you do an excellant job outlining the barriers that keep companies from realizing the “Promise Land”. In my 21 years in the agency business I have seen some of the best ideas shot down by executives who place their own likes, dislikes, wants and needs before those of their customers. I would love to see more work in the area of executive coaching and reporting based on these principles. Specifically concerning the points you make concerning Siloed Efforts, Industry Tunnel Vision and the big one Self Centered Design.
Nicely done, you summarize my thoughs and experiences beautifully.
M.J.: Thanks for the feedback. I will definitely think about looking into executive coaching and reporting around EBD.
Hey, Bruce, great stuff.
On the executive side, of course you’re going to get sunflowers that follow the lead of the self-centered exec, and that’s a culture issue that can be addressed through coaching and other HR triage. But the key thing, ultimately, it to replace the sunflower effect with a good business case for customer experience management, and making sure that it starts with developing a value prop that considers realistically the relevant factors that influence a person’s disposition towards a company and its products.
I am recalling a great anecdote from Why We Buy that describes how a veteran Nordstrom merchandising designer helped Hallmark “upgrade” its greeting card displays. Hallmark, being a top brand, wanted luxe appointments.
Failed miserably. Sales dropped measurably.
Why? Because the luxe appointments included materials like (I’m getting this from my own memory now) marble, brass — very distinguished and “cold”. It turns out that the customers — mostly women — wanted a warm, emotive environment in which to ponder and carefully select the right sentiment.
Hallmark tried to create a customer experience that was too much about their internal brand concept, not about what the customer needed to have a rich, rewarding experience.
Point is simply this: Customer experience management should yield business results, and this means understanding customer needs must be taken to a new level as a core competency. The conclusions you draw from the customer insight affect everything: the brand, processes, HR choices, etc.
Love your blog and it would be a privilege one day to knock heads about CEM. (I disagree with the scope of your definition, by the way. ‘Nother topic, ‘nother day!)
[...] Customer Experience Journey” which describes 5 levels of maturity as companies head towards Experience-Based Differentiation. As companies evolve past the first couple of stages, they need to develop “Customer-Centric [...]
[...] out of touch with consumers that it is heading in the opposite direction of the first principle of Experience-Based Differentiation: Obsess about customer needs, not product [...]
[...] que va de cabeza justo en la dirección contraria a la que propone el primer principio de Diferenciación a base de Experiencia: Obsesionarse con las necesidades de los clientes, no con las características de los [...]
[...] for customer experience to the customer service organization. That’s why the 3rd principle of Experience-Based Differentiation is: Treat customer experience as a competence, not a [...]
[...] of this blog, you’ll recognize that this directly conflicts with the first principle of Experience-Based Differentiation: Obsess about customer needs, not product [...]
[...] Experience-Based Differentiation (6/17/07). This is the blueprint for customer experience excellence which drives my research; it won Forrester’s best research award. [...]
[...] Wawa Succeeds With Experience-Based Differentiation July 19, 2009 Posted by Bruce Temkin in Customer experience. trackback The convenience-store chain, Wawa, saw its merchandise sales grow last year. How does this private company with 8,000 employees and more than $5 billion continue to succeed in the recession? By focusing on Experience-Based Differentiation (EBD). [...]