USAA’s Mobile App Showcases Innovation

For years, there’s been a lot of hype about mobile banking. It turns out, however, that most people are not ready to abandon their branch visits, phone calls, or Web browsing for a mobile window into their bank. But that doesn’t mean that mobile can’t play an important role in banking.

Source: New York Times

USAA introduced an innovative iPhone applicationremote check depositing. Customers that qualify for the service can take pictures of their checks and deposit them into their accounts as if they were handing the paper check over to a teller.

My take: This application makes a ton of sense for USAA, especially since many of its military customers are stationed around the world. Companies can find opportunities like this by following my three steps for customer experience innovation:

  1. Uncover the needs. Many USAA customers do not have an easy way to deposit checks.
  2. Design a disruptive strategy. The mobile app is a great example of a strategy called online infusion.
  3. Evaluate the opportunity. Given USAA’s focus on making it as easy as possible for their customers, this new application makes strategic sense. And the company’s rules for qualifying help keep the risks low. 

The bottom line: Everything starts with customers’ needs.

Google Chrome OS Sets Off Customer Experience War

Google recently created quite a stir when it introduced its new operating system (OS), Chrome OS. Here’s how Google describes its new OS:

Speed, simplicity and security are the key aspects of Google Chrome OS. We’re designing the OS to be fast and lightweight, to start up and get you onto the web in a few seconds.

My take: Will Chrome OS destroy Microsoft? No. Will Chrome shake up the PC market? Yes; especially when it comes to customer experience. Here are a few lessons that Microsoft and others can learn from Google’s announcement:

  • Ultrasimplicity is powerful. Most companies compete by adding features to their products. As a result, offerings (like PC operating systems) get bloated beyond the needs of large segments of customers. That’s why there are many opportunities for radically simplified offerings. This approach, which I call Ultrasimplicity, is one of five disruptive customer experience strategies.
  • PCs are just about passé. The world of large desktop and laptop PCs is past its prime. Computing will increasingly happen on smaller, networked devices like iPhones, Kindles, and netbooks. These portable computing devices will need to be designed like fashion accessories and provide near immediate access to functionality.
  • Unmet customer needs are gold. Companies should assume that they aren’t meeting customer needs. With this perspective, firms will continuously hunt for those unmet needs and actively cannibalize their existing products before their competitors do. That’s why one of the principles of Experience-Based Differentiation is Obsess about customer needs, not product features.

The bottom line: Chrome OS will refocus the “computer industry” on customer experience

PNC Bank Breaks Through Gen Y Blindspot

Last year I proclaimed that Banks Have A Gen Y Blind Spot. Well, that’s no longer true for all banks. It turns out that PNC enlisted IDEO to help engage Gen Y and created a new offering: VirtualWallet. According to a recent BusinessWeek article, PNC has signed up more than 20,000 customers (70% from Gen Y) and is on track to break even in two years.

Here’s how VirtualWallet is described on the IDEO Website:

[It is] a family of banking products that provide customers with seamless access to their finances and intuitive, tangible, and direct control of their money. Centered on electronic transactional banking, it is designed to both promote and optimize banking activities with features and visualizations that support the mental models and lifestyles of its Gen Y customers

My take: I really like VirtualWallet. It shows what you can do when you explicitly focus on Gen Y. The long-term success will require ongoing nurturing by PNC, but the initial approach makes a lot of sense because:

  • It applies a strategy called online infusion. While it’s a financial offering, online features like a money slide bar to graphically indicate available funds, a “Savings Engine” that helps customers establish rules around spending, and a playful instant transfer feature named “Punch the Pig” are core to the value proposition.
  • The online experience implements many components of the four strategies we’ve defined for engaging Gen Y: 1) Immediacy, 2) Gen Y literacy, 3) Individualism, and 4) Social Interactivity.
  • There’s a mobile component. While this wouldn’t make sense for many banking applications based on overall mobile usage, it’s almost a requirement if you want to target Gen Y; many of whom view their cell phone as their primary digital device.
  • The approach starts with customer needs. While this is not novel for projects that involve IDEO, many companies aren’t diligent enough in starting with a solid process for uncovering the true needs of specific customer segments. By understanding Gen Y behaviors, the bank can actually charge fees for anything more than 3 checks per month.

The bottom line: Gen Y will be getting a lot more attention from banks.

Recession Strategies From IDEO And Potatoes

I ran across an interesting article on the IDEO Website called Reframing Recession: Lessons from the potato (.pdf). The article discusses how potatoes became a popular food item in the 1790’s amidst the turmoil of a devastating grain market and repeated crop failures. The potato’s rise to the family table was driven by consumers’ innovation in trying to fill an overarching goal — feeding their families.

The article does a nice job of using this story to frame the reality of poor economic times: There’s still opportunities for growth. Here’s a very interesting observation from the article:

When the economy is down, people look to different product categories to solve persistent needs, making trade-offs that reflect both conscious and unconscious decisions. In the last recession we called this “The Lipstick Effect” – as budgets tightened, women still sought out ways to address their need to flaunt a little and sales of cosmetics went up. Just as in 2002, Estée Lauder’s makeup sales have recently felt an uptick – 11% in the third quarter of 2007.

The article ends up by making the following five recommendations:

  1. Hang out with your customers. Since customers will be looking to fill their needs in  different, cheaper ways, you need to spend time understanding their core needs. This is pretty much the 1st principle of Experience-Based Differentiation: Obsess about customer needs, not product features.
  2. Watch out for a new breed of unlikely competitors. Just like the potato replaced grain in the 1790s, consumers may turn to new categories of products as substitutes for your offerings.
  3. Be inspired by extreme value. Look for models to copy, across any industry, where people are getting more value for less.
  4. Go elephant hunting with a slingshot. Go find opportunities where you can provide a cheaper, simpler solution to replace expensive, complex ones. I like this one a lot. As a matter of fact it’s very close to one of the five disruptive customer experience strategies that I’ve called Ultrasimplicity.
  5. Don’t be afraid to prototype. Get some changes out in the field and be willing to learn, even through small-scale failures. The article provides this good advice: “Tougher times are exactly when you should give those managers who are closest to your customers the freedom to act on their insight and to experiment.” In the post Keep Customer Experience Momentum In A Recession, I also discuss the importance of innovation in a downturn.

The bottom line: Don’t react to a recession by clamping down on innovation.

HTC On Innovation, Simplicity, And Branding

I ran across a very interesting Q&A with John Wang, CMO of HTC, the Taiwanese company that delivered the first cell phone using Google’s Android operating system. The article focuses on how HTC cultivates innovation through it’s Magic Labs organization, which is a group of people across multiple disciplines (called “Magicians”) that focus on long-term innovations. The CMO runs the group and his business card says “Chief Innovation Wizard.”

While the article provides interesting insights about how HTC handles innovation, I really enjoyed Wang’s discussion about two of my favorite topics: simplicity and branding.

The way most companies compete is by adding features to their products and services. So, over time, the offerings become more complicated than what’s actually needed by large segments of customers. And the interface to those products becomes increasingly complex. That’s why I’ve defined ULTRASIMPLICITY as one of the Five Disruptive Customer Experience Strategies. Here’s some of what Wang had to say on the topic:

Everybody was talking about simplicity, everybody was talking about usability. What did people do? Well, they rearranged the menu and called that improving usability. That’s not simplicity, that’s rearranging menu items…. The true mission is not to reduce learning, but to eliminate learning… The baby is probably the best expression for zero learning because the baby has not learned anything yet. If she wants to see the monkey on the other side of the block, she simply reaches out and turns the cube.

When I discuss brand, it’s often in context of the 2nd principle of Experience-Based Differentiation: Reinforce the brand with every interaction, not just communications. Brands need to be about walking the walk, not just talking the talk. All too often, though, I find that “the brand” only exists in advertising groups. When that happens, the rest of the company doesn’t really reinforce any of the brand value; leading to empty promises in marketing. So I really appreciated the following comments from Wang:

There is a very important difference between brand value and brand recognition. Brand value means something to the end user. Brand recognition, all it means is a bunch of advertising to make people recognize the brand name. At HTC we care about brand value, not brand recognition. Building brand value is like earning respect; you have to earn respect, you cannot buy respect.

The bottom line: “Innovation + Simplicity + Brand Value” is a great formula.

T-Mobile’s “Family Allowances” Showcases Online Infusion

T-Mobile recently introduced a new feature called “Family Allowances” that provides online controls to help parents monitor and manage their kids’ phone usage. The features, which customers can control from the T-Mobile Website, include:

  • Setting limits for messages, minutes, and downloads for each phone
  • Defining the times of day when a phone can be used, or not used
  • Establishing “Always Allowed” numbers (like calling home) that work even when the limits are exceeded, and blocking other numbers

My take: This is another great example of a disruptive customer experience strategy that I call online infusion (designing offerings that natively incorporate online capabilities as part of the core product definition). These features go beyond the basic definition of of a wireless service, which usually just focuses on the features of the handset and the network, to address a broader set of needs for a specific customer segment: parents of young kids. The feature incorporates online controls as a core piece of the offering, instead of just using the Web as a channel for researching, buying, and getting customer service.

The “Family Allowances” plan incorporates features similar to a previous service called Disney Mobile that Disney built using the Sprint/Nextel network. I really liked the features of that offering, but the business did not work out in the US (it’s still operating in Japan). It makes more sense for existing carriers like T-Mobile to incorporate those features into their offerings, then to create an entirely new carrier.

Other online infusion examples that I’ve discussed in this blog include the Kindle, NetFlix, and Webkinz. To develop your own disruptive strategies, take a look at this post: Customer Experience Innovation: As Simple As 1-2-3.

The bottom line: As more consumers get more comfortable doing more things online, there will be an abundance of opportunities for online infusion.

Zara Bypasses The Gap; It’s All About Customers

The Spanish retail chain Zara has overtaken The Gap as the world’s largest clothing retailer. That’s amazing since many people outside of Europe probably don’t know much, if anything, about Zara. So what can we learn from Zara’s ascension to the top spot?

First of all, Zara is a division of Inditex, which is a vertically integrated apparel juggernaut. Unlike other large apparel corporations, the company owns all of its retailing, designing and manufacturing operations. This structural difference allows Zara to break some norms in the apparel industry.

Zara offers “instant fashions:” cheap, trendy clothing. In Zara shops, there are two new collections every week, and the company manages to design, produce, distribute and sell each of its collections in just four weeks. Here’s what Professor Isabel Díez Vial from the Complutense University of Madrid, who has studied Inditex, has said about the company:

The customer doesn’t go to the store at the beginning of summer or winter, and see what they want, and think about it and decide later what to buy. Instead, the customer has to go to the shop every 15 days because the collection is refreshed so frequently… This approach leads to a complete change in the production process. Instead of offering products that take a year to plan and sell, you now have a product that the customer demands.

In addition, Zara relies heavily on its front-line employees. Rather than squeezing costs out of its personnel costs, it sees them as a key to its advantage. By analyzing sales data, the retailer increases staff during the periods when there is heavy traffic in the store. Employees are also expected to provide feedback on any fashion trends they see or hear about — including what’s hot, what’s cold, or what’s missing from the current collection.

My take: Zara represents a great case study in how to change the paradigm by focusing on customers. Here are few lessons that others can learn from Zara’s approach:

  • Break supplier-driven paradigms. In many industries you’ll find approaches that are based on some limitation of the companies. These supplier-driven paradigms, like very discrete seasons in apparel, aren’t optimizing customer experience. So there are opportunities to expand your business by challenging the status-quo.
  • Disrupt with service amplification. Many firms view front-line employees as costs; which they try to minimize. That’s why there’s an opportunity for companies to differentiate themselves by investing in their people, like Zara. This approach, called service amplification, is one of the five disruptive customer experience strategies that I’ve mentioned before.
  • Shorten cycle times. If it takes six months to define, design, and manufacture something, then you need to make decisions six months too early. Zara’s ability to cut the cycle times for getting products to market provides it with the ability to respond more effectively to changes in the market. So firms should find ways to cut down the time it takes to make changes in their offerings. 
  • Look to customers for innovation. As I discussed in the post Customer Experience Innovation: As Simple As 1-2-3, companies need to focus their innovation efforts around the needs of customers. Zara’s growth shows that there’s a lot of opportunity to find new and better ways to meet their needs.

The bottom line: The path to the top is always fueled by customers.

The Kindle: A Great Example Of Online Infusion

Kudos to My prediction: The Kindle will revolutionize how people read books, newspapers, and magazines. This new product represents a great example of online infusion (designing offerings that natively incorporate online capabilities as part of the core product definition) which is one of the five disruptive customer experience strategies that I’ve discussed in the past.

I recently had the opportunity to play around with a Kindle…

While it has a few usability miscues, the Kindle gets enough right to establish a new paradigm for reading. It’s a great combination of product design and online capabilities.

What makes the Kindle a great disruptive product?

  • Appealing form factor (smaller than most books)
  • Simple core interactive buttons
  • Immediate access to media (books, magazines, etc.) through cellular network
  • Good readability, including font enlargement

The bottom line: There are many opportunities for an online infusion strategy; what’s yours?

Facebook’s Simple Redesign Is Worth Noting

Matt Vella wrote an interesting article in BusinessWeek about the redesign of Facebook (which includes a few quotes from me). Here’s an excerpt:

<Facebook> is readying an extensive overhaul of its core profile pages in an attempt to bring back the sleek aesthetic that helped fuel its early popularity… The moves come in reaction to Facebook’s becoming “more cluttered and harder for users to parse,” according to Katie Geminder, the site’s director of user experience and design… the redesign represents a major simplification.

My take: I really like Facebook’s move to simplicity. As I’ve mentioned in my work on disruptive customer experience strategies, offerings tend to get overly complex over time as companies add new features and capabilities. So there’s an opportunity to disrupt many industries with an ultra-simple alternative.

Facebook must keep involving its users in the redesign. The relationship between Facebook and its users is like a landlord and her tenants. While tenants recognize that the landlors owns the building, they don’t want her to redecorate their apartment at will; it’s their space.

The bottom line: My advice to Facebook: Keep it simple, keep it real.

Customer Experience Innovation: As Simple As 1-2-3

I just published a research report called “Customer Experience Innovation In Three Steps” which describes the following three-step process for creating breakthrough customer experience innovations:

  1. Uncover the needs. Let’s start with an assertion: In every industry, customers have a lot of unmet needs. Why else would digital video recorders (DVRs) like TiVo gain momentum when there was no shortage of mature VCR options? The first step in the customer experience innovation process is to understand exactly what current and potential customers really need through end user research like ethnography.
  2. Design a disruptive strategy. After understanding what customers really want, firms need to define potential offerings. Although ideas for new products and services can come from anywhere, firms should consider designing solutions based on one or more of Forrester’s five disruptive customer experience strategies.
  3. Evaluate the opportunity. Not all innovations are worthy of investment. To decide which ones make sense to fund, firms can use the R-W-W (real-win-worth it) framework. How does this work? Only go ahead with proposals if you can answer “yes” to all three of the following questions: Is the opportunity real? Can you win? Is it worth doing?

The bottom line: Make sure that innovation is on your agenda.

Hannah Wal-Martana and Microhoo!

There were a couple of announcements this week that really caught my attention: Wal-Mart’s Hannah Montana deal with Disney and Microsoft’s attempt to buy Yahoo!

Announcement #1: Hannah Wal-Martana

Let me start with a confession: I’m a Hannah Montana dad. What does that mean? Well, my daughter is hooked on Hannah and I’ve taken her to see the Hannah Montana concert as well as the Hannah Montana 3D movie of the concert. So I was very interested in the announcement that Wal-Mart struck a deal with Disney to become the “Hannah Montana Headquarters” for more than 140 Hannah Montana products. 

My take: The move taps into the strengths of both companies: Disney’s characters and Wal-Mart’s distribution. And they’ve certainly found a frenzied market of pre-teen girls to go after. If I were Wal-Mart, I’d also be negotiating with Ganz to develop the same type of deal with Webkinz.

Announcement #2: Microhoo!

Microsoft bid $45 billion for Yahoo! which was struggling to figure out its future strategy. We still need to see if this goes through, since Yahoo! would probably prefer a different suiter. But it might be hard for investors to say no to a 60%+ premium over the stock price.

My take: On the surface, this is a bid for a big search engine. But underneath the surface, this is about Microsoft trying to protect itself from Google. What happens if/when Google starts offering comparable products to Word, Excel, Powerpoint, and Outlook — and integrates them into the power of the Web? One of the five disruptive customer experience strategies that I’ve discussed is ultrasimplification, which I describe as follows: 

Companies often compete with each other by squeezing new features into their offerings. Over time, this process of “continuous enhancement” can lead to products and services with more capabilities than most customers need. So there’s an opportunity to develop a simplified version of existing offerings. 

Think about how complex Microsoft’s products have become over the years!

The bottom line: It’s a win for Disney, Wal-Mart, and Yahoo! investors;  a loss for Yahoo! management; and an escalation in the Microsoft-Google war.

The Best Of Customer Experience Matters, Volume #1

Well, this is a big moment — my 50th blog post. I just started a few months ago, but the uptick in readership has been fantastic. So let me start with by saying thank you to everyone who has been reading, linking to, writing about, and passing along my blog!

Rather than introducing something totally new to mark this milestone, I decided to go with a retrospective. TV series do this to get new audiences caught up with the plot line — why not do it with my blog?! So, here goes, a look back at some of my favorite posts from the first 49:

  • My Manifesto: Great Customer Experience Is Free. This post lays out my argument that the need to improve customer experience today is as strong as the need to improve quality was in the 1980s. It highlights the following areas where the “great customer experience is free” movement is just like the “quality is free” movement: nobody owns it, it requires cultural change, it requires process change, it requires discipline, upstream issues cause downstream problems, employees are a key asset in the battle, and executive involvement is essential. But in the end, the payback will be off the charts. In a follow-up post called Great Customer Experience Is Free, Part II, I offer my observations that customer experience is critical for firms… but they aren’t enjoyable to work with… and they deliver poor experiences… because they lack customer experience discipline. Please join the Great Customer Experience Is Free movement!
  • Experience-Based Differentiation. This is the name of a “Forrester Big Idea” report that I published in the beginning of this year. It’s been phenomenally successful in terms of its readership by Forrester clients and its impact on companies that read and internalize it. It is still the number one thing that I am asked to speak about. The concept, called “EBD” for short, is based on three principles: 1) Obsess about customer needs, not product features; 2) Reinforce brands with every interaction, not just communications; and 3) Treat customer experience as a competence, not a function. You can see an excerpt of a keynote speech about EBD that I gave at Forrester’s Finance Forum in this post: My Takes On YouTube.
  • Five Disruptive Customer Experience Strategies. This post represents another highly-read Forrester research report. My research uncovered five different ways in which companies had successfully disrupted the status quo: 1) Ultrasimplicity; 2) Online infusion; 3) Service infusion; 4) Service amplification; and 5) Value repositioning. I’ve also written a couple of posts that provide examples of these strategies: WaMu Heads For Simplicity: Follow! and NetFlix Ends Email Support; Tries Another Disruptive Strategy. I’ve found this to be a very effective tool for companies to use at off-sites. How? Breakout teams look at each one of these strategies as either an opportunity and a threat.
  • Lessons Learned From Chief Customer Officers. Yes, this was my previous post. It makes the “best of” list because I believe that any customer experience transformation effort needs dedicated leadership. This came out loud and clear when I interviewed executives with responsibility for customer experience (we generically call these execs Chief Customer/Experience Officers or CC/EOs). I wrote a post about one of those interviews: The Colorado Rockies Embraces Its Guests. The need for leadership can also be seen in the post Words Of Wisdom: Picasso On Organizational Change. But organizations should not just blindly appoint this type of an executive. I tried to frame the decision in a post called Chief Customer Officer: To Do, Or Not To Do? As one CC/EO said: “It takes massive support from senior management. This role can destruct careers.”
  • Don’t Let Profits Replace Purpose. I wrote this post after reading about the role that founders have played in some successful companies. It’s clear to me that a founder often has a different set of characteristics than “professional managers.” In what ways? He/she often has both a clear picture of where he/she wants the firm to go PLUS the passion to constantly evangelize that vision. This clear and constant communication can align everyone across the company about what’s important. The bottom line of that post stated: Founders help companies focus on something that is much more aligning than profits – a raison d’être. In related posts, I noted that organizations that have lost their souls in Firms Need Some Soul Searching (there’s a self-help video in that one) and quoted from Mahatma Gandhi in Words Of Wisdom: Gandhi On Sustainability.
  • Lessons Learned From 1,001 Web Site Reviews. The final spot goes to my inaugural blog post on June 15, 2007 in which I looked back at more than 1,000 Web Site Reviews that Forrester had completed. The methodology we follow is called an “expert review” which is where a trained analyst attempts to complete a specific goal as-if he/she was a target customer. We then evaluate the experience against 25 Web Site experience criteria (we also have criteria for other channels like email, phone, kiosks, and blogs as well as for experiences that cross over channels). This post makes the list because it was the first to mention Scenario Design. For almost a decade, the most powerful, yet seemingly simple piece of advice that we’ve been giving clients is to always ask — and answer — 3 questions (the foundation of Scenario Design): Who are your users? What are their goals? How can you help them achieve those goals? I revisited the importance of Scenario Design in a recent post called Web 2.0 (a.k.a. Web And Weberer).

The bottom line: I hope that you’ve enjoyed the first 50!

You can download this post (along with all of the posts referenced above) with this link:  The Best Of Customer Experience Matters, Volume 1 (.pdf). So you can print it out and read it anywhere.

WaMu Heads For Simplicity: Follow!

In the American Banker last week, there was an article called Web Simplicity Initiative Bearing Fruit for WamuAs an example of Washington Mutual’s (WaMu’s) focus on simplicity, the article described changes that WaMu made to the online application for its free checking account– cutting the process from 8 pages & 15 minutes to 3 steps & 6 minutes. And to eliminate the need for mailing forms to new customers, WaMu uses the first check as a signature card.

I really, really, really liked the this quote from Richard Blunck, a senior vice president and WaMu’s director of e-commerce:

Simple, for us, is critical

My take: Simple is critical for just about every bank (along with just about every investment firm and every insurer). Many customer-facing processes are based on outdated requirements, overly complex business rules, old technology, and organizational silos that discourage innovation. The result: A complicated experience for customers.  That’s why there’s enormous opportunity for financial services firms to apply a principle that I call ultrasimplicity, which is one of the Five Distruptive Customer Experience Strategies that I’ve written about in previous posts. 

The bottom line: When it comes to financial services, simpler is almost always better.

NetFlix Ends Email Support; Tries Another Disruptive Strategy

NetFlix decided to stop its email customer service and, instead, beef-up its phone support. According to an article in the New York Times:

Netflix took an unusual step for a Web-based company: it eliminated e-mail-based customer service inquiries. Now all questions, complaints and suggestions go to the Hillsboro call center, which is open 24 hours a day.  

My take: Wow! Gutsy move. Okay, now for a more analytical discussion…

NetFlix probably recognizes the realities of handling customer service emails — it’s incredibly difficult to do right. Here are some datapoints to think about:

  • Most emails deliver a poor customer experience. In a recent Forrester research report called Best And Worst Of Email Interaction Design, 2007, we evaluated the email service experience delivered by 16 large firms. None of the 16 firms passed our reviews — although Circuit City came closest. The biggest problem: Emails lacked essential content.  
  • Consumers aren’t thrilled with email. We asked about 5,000 consumers how satisfied they were in handling customer service through different channels. Here are the satisfaction numbers for different channels: in-person (44%), phone (29%), Web (15%), and email (13%). (Forrester Research clients can read: Match Channel Capabilities To Customer Goals).

So NetFlix is just focusing on an area that it can deliver better experiences. And the firm isn’t outsourcing its call center overseas to save money, it’s investing in its Hillsboro, Oregon facility. NetFlix thinks that it can staff that location with empathetic phone reps.

In a previous post, I defined Five Disruptive Customer Experience Strategies:

  1. Ultrasimplicity: stripping away features to better meet the needs of customers.
  2. Online infusion: integrating online features into core offerings.
  3. Service infusion: integrating service features into core offerings.
  4. Service amplification: investing in distinctly high levels of service.
  5. Value repositioning: offering a radically different value proposition.

NetFlix has been one of the examples that I use to explain online infusion — it integrates a robust set of online features to deliver value well beyond just DVDs by mail (for another great example of this strategy, check out WebKinz). With this move to enhance its phone support, the company is adopting another one of the disruptive strategies: service amplification. While most companies are looking at phone service as a cost center, NetFlix is investing in it as an experience differentiator.

My advice to NetFlix: Augment this strategy with a strong online chat capability. That will provide a solid option for customers that really want to complete the interaction online.

The bottom line: If customer service drives a key portion of NetFlix customers’ overall experience, then this disruptive strategy could be a great move. If it’s not, then they’re likely to move the call center offshore within 24 months. In any case, there are three disruptive strategies left for them to try!

Five Disruptive Customer Experience Strategies

In one of my earlier posts about Webkinz, I mentioned my research on five disruptive customer experience strategies. But I failed to list them out (thanks for those emails). So here they are:

  1. Ultrasimplicity: stripping away features to better meet the needs of customers. Companies often compete with each other by squeezing new features into their offerings. Over time, this process of “continuous enhancement” can lead to products and services with more capabilities than most customers need. So there’s an opportunity to develop a simplified version of existing offerings. [examples: ING Direct and JetBlue]
  2. Online infusion: integrating online features into core offerings. The number of US households with broadband more than doubled in the last few years – growing from 20 million in 2003 to almost 45 million in 2005. The increasing willingness of consumers to do things online has outpaced most companies’ online efforts. That’s why there’s an opportunity to disrupt the status quo by designing offerings that natively incorporate online capabilities as part of the core product definition. [examples: Netflix and Disney Mobile]
  3. Service infusion: integrating service features into core offerings. Companies often think of service independently of the products that they deliver. But customer needs are best met with a strong combination of both. That’s why firms can create a distinct advantage when they blend together product and service offerings. [examples: iPod/iTunes and Panasonic Plasma Concierge program]
  4. Service amplification: investing in distinctly high levels of service. For many companies, “human” service is viewed as pure cost – putting service capabilities on the chopping block whenever they face cost pressures. With this relentless marketplace squeeze on services, firms can differentiate themselves by bucking the trend and making a significant investment in raising their service levels. [examples: Mandarin Oriental hotels and The Container Store]
  5. Value repositioning: offering a radically different value proposition. One of the things that Starbucks’ success has taught us is that coffee shops don’t have to compete based solely on their coffee. When companies take a closer at a targeted set of customers, they’ll often find an opportunity to appeal to a different, less obvious set of needs and desires. [examples: Starbucks and Umpqua Bank]

All firms should ask themselves a couple of questions about these strategies:

  • Which of these can we use to differentiate our firm?
  • Which of these can competitors use to disrupt our business?

The bottom line: It’s better to be disruptive than disrupted!

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