The New Customer-Driven Economy
We are witnessing an amazing acceleration of new products, services, and delivery methods. Many companies and even entire industries have been radically affected (think Department Stores, RIM Blackberry, Kodak, Blockbuster, and many others). There are new rules, principles, and ways of working for success in the customer-driven economy.
It’s no longer an exaggeration that you can simply dream of an idea and find that it is already available or under development. Take for example Amazon’s Prime Now offering. Within two hours you can take home delivery of a grapefruit, a new mobile phone, and a superhero costume for your Chihuahua. And there is Uber’s recent announcement to partner with Bell Helicopter on building personal autonomous flying drones, soon to be buzzing us about in Dubai and Dallas. And don’t forget the subterranean alternative being developed by Elon Musk’s SpaceX to zip us from LA to San Francisco at 350 mph in a pneumatic tube.
Fueled by the information revolution and changes in social norms, we are witnessing massive shifts in our economy. Once product-centric, then marketing and brand-driven, user focused, and now what I would characterize as customer-centric & humanity-based. No longer is it enough to simply have the best product at the best price. A company’s beliefs, communication, values, speed, and creativity are becoming equally, if not more important.
Winning organizations are applying ten key capabilities focused on Customer Centered Design, Delivery, and Culture.
Customer Centered Design
Designing products and experiences in the new economy starts with admitting we do not fully understand what customers will love. Designing a delightful experience depends on deep understanding of customer problems and rapid experimentation.
Address important customer problems
Truly understanding the pain of your target customers is the beginning of good design. Spending time observing, empathizing, and experiencing their problems first hand is foundational. For example, we embedded a product manager into a client’s office as a temporary employee for a week. The PM observed first-hand how the product worked (and didn’t) for this client leading to several new features and quality improvements.
Define how your products benefit customers
It is critical to define and deeply understand the one (maybe two) key benefits that your product is delivering. Is it saving time, money, generating fun, creating confidence? Nailing the problem and benefit allows you to build realistic performance measurements. You can also run tests of how well your product delivers on the customer benefit versus that of your competitors. The insights you gain will help spur innovation.
Understand what drives customer loyalty
It’s one thing to acquire a customer but quite another to retain them and create an advocate. There are typically six to ten key factors which determine whether you have earned a customer for life. Approaches to define these drivers include simple regression through the more complex structured equation modelling. This takes some work but is well worth the investment. At one firm, not only did we build a detailed Loyalty Model, we also created a simplified version and socialized it with every employee. This enabled front line service reps and designers alike, the ability to deliver a great experience at the moment of need.
Listen to your customers and gain empathy
While important, traditional methods used for gathering customer feedback and insights are no longer sufficient. Gaining deep customer empathy is necessary to ensure products and experiences are adding value. Tools such as empathy maps, interviews, home / office visits, and customer safaris can be used to ensure a great design.
A robust Voice of the Customer Listening System is also very important. Real-time listening posts in alignment with loyalty drivers provide fuel for customer-centric organizations. Solid customer listening and empathy capabilities enable senior leaders to put the customer in the center of every decision. We have created “Listening System Maturity Models” to help businesses identify gaps and prioritize resourcing. This common language of listening helps galvanize leaders to make investments.
Ensure loyalty economics are understood
Multiple listening channels will no doubt generate an abundance of customer feedback. The gold standard for leveraging these insights is loyalty economics. Having an accurate view of how much value each customer cohort generates over their lifetime will help in prioritizing resources for innovation and customer experience improvements. In one firm, we socialized visuals for leaders to see the specific dollar impact on customer lifetime value for each point of NPS improvement.
Design end-to-end customer experiences
If you’ve endured troubleshooting your utility or telecommunication bill lately, chances are you were not delighted. It seems that the larger the company, the more likely you are to experience an inconsistent experience. Customers do not buy products or services, they buy experiences. Architecting a fully seamless end-to-end experience around your product can be a challenge but is necessary to generate loyalty and growth. This means aligning each touchpoint including product awareness, investigation, shopping, purchasing, getting started, using, paying, modifying, repurchasing, and getting help (your touch points may vary). Journey Mapping is one popular tool in addition to storyboarding, and customer co-creation. We helped one team visualize the entire new customer experience using a wedding metaphor (from dating, engagement, marriage, honeymoon, etc.). This exposed some critical pain points that had previously not been addressed.
Customer Centered Delivery
Even the most awesome product and experience designs cannot deliver the customer benefit if execution suffers. Here are several important capabilities to ensure you deliver delight.
Establish ownership of customer experiences
If your company is of any size, you probably have experienced the Silo Syndrome. That nasty disease which infects organizations as they grow and divide into large functional, regional, and product divisions. Customers don’t care about silos, they simply want a seamless, low friction interaction that solves their pain/problem. Ownership is the cure for Silo Syndrome.
Toyota and other forward-leaning companies have found that appointing a “Strong Product Manager” or “Experience Owner” (XO) can help slice through the silos and advocate horizontally for the customer. XO’s don’t have large staffs or budgets but they do carry organizational clout and accountability for generating delighted customers. This often means building coalitions across all functions and establishing metrics to measure end-to-end customer experiences. XO’s establish Experience Champions (XC’s) across the organization to ensure each element is well managed and aligned. One team we partnered with appointed XO’s and XC’s for each of their major products. As these horizontal teams adopted many of the “Essentials” highlighted in this article, their products and experiences, followed by Net Promoter Scores and customer loyalty, improved dramatically.
Review customer experiences
A key role of the Experience Owner is to bring together Experience Champions regularly to review the end-to-end product or service experience. This group serves as the primary audience for the customer listening system, empathy insights and process performance results. Since XC’s have the budget and organizational authority to affect change, innovation and improvement decisions can be made during the experience reviews. Should you begin your own experience reviews, be sure to begin by defining the team’s purpose and roles. You can use a team charter and “position descriptions” for the XO and XC roles to help gain clarity and support from the leaders involved.
Close the loop with customers
You’ve probably heard the old saying that customers experiencing a problem which is resolved in a delightful manner are more loyal than customers that never have a problem. There is some truth to this. Loyalty leaders like The Ritz-Carlton Hotel Company empower front-line employees and managers to spend several thousand dollars to make things right for customers. I wouldn’t advocate creating problems to generate this type of loyalty however. Excellent execution is still an important strategy. Even the best organizations trip up however, and planning ahead is the best recipe for earning customer loyalty.
Several companies have implemented “Closed Loop Feedback” approaches, reaching out to customers experiencing problems. A simple apology, an ear to listen, and a quick remedy for outstanding issues will go a long way. We have seen impressive results with well-designed and executed Closed Loop Feedback Systems. I typically advocate a four-step “Listen, Respond, Recover, and Learn” approach using well documented job aids and training.
Customer Centered Culture
While many companies have built strong customer-centric design or delivery capabilities, it is difficult to find large firms that do both well. Even scarcer is finding an organization that excels at both design and delivery while cultivating a values-based Customer Centered Culture. All three elements together create the secret sauce for thriving in the new customer centered economy. Companies must rely on the shared values, purpose, and the behaviors of its team members to do the right thing for customers at any given moment. When the pressure is on, no set of policies, procedures, or approval hierarchies can meet a customer need like a well selected, inspired, trained, equipped and empowered employee.
Scale innovation and empathy
By defining and cultivating an intentionally customer-centric, purpose-based culture, organizations are able to establish a strong foundation for scaling innovation and customer empathy. Intuit’s Design4Delight / Innovation Catalyst approach and GE’s FastWorks program are both excellent examples of scaling innovation and customer centricity throughout a large organization. When it becomes everyone’s job to delight customers, a virtuous cycle begins that puts distance between you and your competitors.
Pulling it All Together
The certainty of uncertainty is certain. The previous models that made organizations successful have largely evaporated despite still being taught in many B-Schools. The pioneers of the new customer-centric, humanity-based economy are thriving beyond many analysts’ wildest predictions. While it is more challenging to lead a transformation to the new way outlined here, it is essential and possible. I encourage you and your leadership team to use these ten capabilities as a benchmark for evaluating where you are on the change curve. I have successfully used Full Customer Centricity Assessments to help organizations develop a common agreement on strengths and opportunities and on how to get started. Thanks for reading and here’s wishing you and your team many successes in the new economy!
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