1998

Walking in the Customers' Shoes: How to create a exceptional customer experience

By Peter Fisk

Winning Business (Vol 2, issue 3),  April 1998

Every business is attempting to attract and serve its customers, whilst many companies are also appreciating the value in retaining and building relationships with existing customers. They do this by developing better products and delivering better service. They have probably embraced customer first programmes, market research, new products, process reengineering and measuring customer satisfaction. They might have developed loyalty schemes, databases, built call centres, improved service levels, and introduced balanced scorecards.

However, most businesses are still not approaching their customers in a particularly focused or integrated manner. They typically seek to maximise the numbers of customers, rather than being selective in which customers to work with. They typically develop solutions which attempt to satisfy everybody, but delight nobody. They typically work separately in their functional silos, rather than working together for customers. They typically deliver inconsistent levels of service, rather than together delivering a seamless customer experience.

The exceptional customer experience is one which is great for customers, and great for the business. It must deliver

• superior value to customers, meaning that the experience and its benefits must be clearly differentiated, personalised and relevant.
• superior value to the business, meaning that the experience and its delivery must also be profitable, efficient, and generate significant loyalty.

Customer loyalty typically emerges by consistently delivering superior value to the customer. Managed appropriately, it is the source of sustainable future profitability for the business, and therefore a key driver of shareholder value. This need for mutual value creation requires customer experiences to have a relationship, rather than transactional focus. This may sound obvious, but it is rarely heeded.

A business cannot and should not create a great experience for everyone. Even in regulated markets, it requires choices, and focus of effort. A company's target customers will appreciate the differentiation which the company offers, will be profitable to serve, and be willing to work together through a relationship of mutual value.

Secondly the concept of an 'experience' is much more than a product and service. It includes every interaction customers have with a supplier or their brand - from initial awareness, through choice, purchase, usage, maintenance to disposal and repurchase. Crucially, it must be seen and defined by customers - by 'walking in the customer's shoes'.

Figure 1. The customer experience, as described by the customer

Each target group of customers will undoubtedly seek and require a very different experience from others. It is therefore crucial that there is a detailed understanding of customers' priorities and preferences for every aspect of the experience, and that this is continuously updated and embraced. Every interaction is an opportunity to learn more about the customer, and to apply this knowledge in appropriate ways.

Winning organisations recognise that their customers seek to derive significant personal or business benefits from their purchased solutions. PA's recent survey found that 84% of companies do not believe that their customers fully realise the benefits of their products and services. This is not the customer's fault. Companies must work much harder with their customers, seeing purchases as the beginning rather than end of their interaction.

Taking this a step further, the rapidly evolving world of 'one-to-one', doing business interactively with each individual, requires that the whole experience is personalised for each customer. This may seem challenging in mass markets, yet is absolutely possible through the effective application of people, technology and knowledge. Companies must get ever more intimate with their customers, building confidence and delivering benefits for each other.

Creating and delivering an exceptional customer experience is a huge challenge for every business today. It requires a significant breakthrough not just for marketing and customer service activity, but for every part of the business - HR, finance, operations, purchasing etc. Winning organisations orientate their entire business in support of the customer experience. This requires them to make three further breakthroughs :

• Exploiting customer insights throughout the business so that every customer interaction is personal, seamless and relevant. The insights come from many sources, not least through an interactive dialogue - the knowledge being captured, shared and utilised by everyone throughout the business.
• Aligning the whole business to support the customer experience - organising their business and their partners as an efficient 'enterprise', designed to meet customers' needs, rather than their own. This must be underpinned by the integration of seamless end-to-end processes, systems and technologies.
• Developing a customer culture, in which every person is willing, able, motivated and inspired to deliver a better experience for customers. This requires a true business commitment to customers - it requires leadership, empowerment, appropriate skills and knowledge, and balanced performance measures and rewards.

Figure 2. Winning organisations must achieve four breakthroughs.

How do I develop a great experience?

Exceptional customer experiences do not just happen, they must be carefully designed and developed - and effectively supported, delivered and managed. American-style restaurant chain TGI Fridays, for example, define a whole series of customer experiences, each one appropriate to different types of customers and occasions. Each 'experience map' defines an appropriate set of activities and behaviours carefully designed to ensure that the customer has 'a great experience, as well as a good meal'. It is unlikely, for example, that a fun-seeking girls-night-out will have the same agenda as a romantic couple seeking a quiet meal for two.

Winning organisations typically follow a number of steps to create an exceptional customer experience - one which creates superior value for customers and for the business. Through extensive work with clients worldwide, PA have identified the ten essential activities, which if followed rigorously will ensure that the experience is differentiated, personalised and relevant - as well as being profitable, efficient and the source of enduring loyalty.

Figure 3. PA's 10 steps to creating and delivering an exceptional customer experience

1. Select the best markets and customers

Winning organisations do not gain customers by chance, they choose them carefully. They seek the markets, segments and individuals where they can create most value. There is no point in a supermarket entering financial services, unless it can offer something better than competitors - superior value to customers, and can make more money out of it over time - superior value to the business. As an example of this focus and selectivity 'Red' recently made a winning entry into the seemingly saturated market of women's magazines. By clearly targeting the 'thirty-something, still young, with attitude', they identified a valuable segment, who lacked a dedicated focus.

Figure 4. Selecting the best customers with whom to build relationships.

Segmenting customers by their value and their needs is far more informative than simply grouping them by size, location or spend. By clustering together like-minded customers, such segmentation enables companies to serve customers better, rather than just organising them more efficiently. The 'best' customers will be those who are willing to build a relationship over time, who can be profitable to serve, and therefore have a high 'lifetime value' potential. Importantly, each company can seek different best customers, dependent on the fit of needs and aspirations. Car maker Audi targets very different customer segments and 'best' customers from Daewoo, yet both can be successful.

One of the most important philosophies behind Disney is their passionate encouragement of all their people to see everything that they do through the eyes of their customers. How many businesses really do this? Many are so remote from their real customers - hidden by internal interfaces, wholesalers, distributors and third-party research reports - that they have very little idea about their customers' experience. These companies fail to see the whole 'experience' of their customers. A pasta sauce could easily be yet another glass jar on a shelf, yet to Dolmio it is part of a whole experience for customers - how they buy it, what with, how they cook, how they entertain, how they holiday - in their case, directly brought to life through Dolmio's pasta-lovers club.

Winning organisations deliberately map out the entire experience of customers - considering every step of their experience. They question what is good and bad from a customer perspective, and seek to understand why the experience is such

• What - all the steps from initial awareness to final disposal?
• Where - whereabouts in a town, in a shop, in the home?
• When - the sequence, the time of day, the day of week?
• How - automated or in person, fast or a lengthy wait?
• Who - from a supplier and a customer perspective?
• Why - it happen in these situations, sequences, or at all?

Figure 5. Evaluating and improving every interaction within the customer experience.

For the senior executives of Guiness, this means late-night trips to pubs and clubs, seeking a better understanding of drinkers' priorities and behaviours as the night rolls on - both what they drink, as well as where, how and why they drink. Such an intimacy with customers is said to rapidly condition business attitudes, and to be the source of many anecdotes at executive meetings for months afterwards!

When Orange entered the mobile phone market, they considered in detail the current experiences of mobile users, and what aspects they could make different and better. As well as introducing a clarity of branding across retailers, handsets and airtime, Orange introduced charging per second rather than nearest minute, and this proved a significant motivation for many new buyers. American Express are another organisation who are constantly seeking to improve all aspects of their customers' experience - for both corporate buyers and cardholders. They constantly probe through user groups how every interaction can be improved - not just products and services, but the whole 'blue box' experience.

Winning organisations interrogate every part of the existing customer experience for ideas and opportunities to improve - often involving sales and customer service people, who are likely to know the situation best. They again question every interaction

• What - is it needed, what could be omitted, substituted or added?
• Where - change the location, from high street to home, shop to street?
• When - change the sequence of interactions, open night rather than day?
• How - automate or make human, length and style of contact?
• Who - reversal of roles, single rather than multiple people?
• Why - what difference will it make for customers and the business?

Some of the best insights come from comparing the experience to that which the customer might get in a totally different sector. How does buying flowers from Interflora compare to buying a train ticket from Eurostar? Paying a gas bill compare to buying a new sofa? Using the internet to using a washing machine? Customers' expectations are today influenced by all their diverse experiences - they are ever more discerning, demanding and discriminating.

Winning organisations have recognised the futility in asking customers what would they like. Many customers will say everything, and others will not say what they mean. And none of them will tell you about the things which they don't yet know. This is not a new dilemma, perhaps just an excuse. The challenge is to understand what really matters most to customers, and what matters least. This encompasses all aspects of the current and potential experience - from the method of purchase, to service style and price. An understanding of relative importance will enable efficient focus of effort - avoiding underperformance in crucial areas, and potential overdelivery in others.

Figure 6. Importance and performance of every interaction within the customer experience

When British Steel really got down to understanding what mattered most - and least - to their customers, they found that their efforts to ensure a 24-hour delivery were misdirected. Customers were far more concerned about the precision than the speed of deliveries. This insight of overdelivery in one area and underperformance in another led to slightly longer but more precise deliveries - resulting in a saving of several millions through logistics efficiencies - and happier customers too. Another example is Go, the recently announced low-cost airline, which is targeting price conscious travellers, offering them value with style. By understanding what really matters for this target segment, Go aims to create 'the Swatch of the skies'.

It might sound obvious, but winning organisations must give customers a reason to choose them. They must stand out from the crowd, through differentiation which is relevant and meaningful to the target customers. A customer value proposition is a technique which articulates this differentiation, for each target segment. It is a sharp definition of the value the company creates for its target customers - what it offers, the unique benefits which nobody else offers, the costs to the customer of attaining these benefits, and the trade-offs the customer must make in choosing one supplier over another. It is not a marketing slogan, but a clear focus for the whole business - what it does inside, and what it delivers outside.

Figure 7. The Customer Value Proposition creates focus for the whole business.

Surprisingly, a recent survey by PA showed that only 32% of companies believe they have clear differentiation in their marketplace. This is an astonishing fact, implying that the others are satisfied at playing as commodities in a parity world. The Co-operative Bank have chosen to differentiate themselves by being 'more ethical' than competitors. This provides the bank with a distinctive marketing message, but also has implications for how the whole company does business. SAS Hotels have similarly strong differentiation, by being the 'most environmentally friendly' hotel. They don't necessarily seek to be the most comfortable, or most luxurious hotel, but they are distinctive, in a way which matters to their target customers.

The real art in developing an exceptional customer experience is in the creative ways that the CVP is converted into reality, and in particular the ways in which the differentiation is brought to life. In the Co-operative Bank's case, this means how they advertise, sell, and support customers in an ethical way, as well as ensuring that funds are invested in ethical concerns. Their cause-related marketing, and the donation of a small proportion of all card spend to a charity of the customer's choice are examples.

Figure 8. Any aspect of the customer experience can be a source of radical innovation.

Innovation could be defined as 'seeing what everyone has seen, and thinking what nobody has thought', and by learning from other companies this is often productive - for example, in new ways of charging for goods, alternative packaging, ongoing support. However, as Richard Dyson will tell you, innovation also requires the courage to break assumed rules and perceived barriers. A vacuum cleaner without a bag seems obvious afterwards, but never crossed people's minds before. Two years ago when we raved about M&S sandwiches, nobody expected Pret a Manger to extend their 'passion for food' as far as today.

Having established target customer groups, understood what really matters, defined the customer value proposition, and explored innovative ways to deliver it, the business must now define a typical experience for each customer group. This is not rigid and inflexible, but a platform from which to serve customers better, and more individually. One group might be targeted through advertising, another through special events. One group might be account managed, others reached through intermediaries. One group might pay after purchase, others pay before. One group might have an ongoing support network, others would not.

In order to ensure that the experience will be exceptional, a business case at this point should be developed to demonstrate that it will deliver superior value to both customers and the business, and is therefore worth the investment. Once agreed, a more detailed specification of delivery will be required, such as levels and style of service, whilst maintaining flexibility and discretion. Movenpick, for example, bring their 'freshest food' proposition to life at every interaction in their Marche restaurants - vegetables are scrubbed, sauces are made, chefs are Swiss, the choice is unlimited, and the food cooked as you watch.

Figure 9. Delivering differentiation at every interaction within the customer experience.

Nobody can deliver a great experience without the absolute commitment, support and alignment of the whole business. The implications of a customer experience inside the organisation are so often overlooked, and this is probably the biggest reason why experiences fail to live up to their great marketing promises. Virgin Trains are an obvious example of this dysfunction, however many banks, telcos and utilities are not far behind. Winning organisations work with appropriate partners, to form an 'enterprise' in which structures, process and systems are shared and aligned to support the customer experience. By working together, and focusing on what matters they ensure efficiency and deliver differentiation.

Equally important is the cultural alignment of people, goals and rewards - ensuring that the enterprise works together for customers. Fundamental within this is the importance of making the brand come to life, so that people live and project its values, and share them with customers in a style which is seamless and consistent throughout the experience. Nike, for example, work hard to maintain their 'irreverence justified' brand values, as their shoes and clothes are promoted and sold through retailers. At Gateway 2000, the brand seeks to make a difference at every interaction - by phone, by mail, and face to face. Jim Taylor, their marketing director, talks constantly about 'living the story', everyone working to turn the Gateway experience into a living legend.

'One-to-one' is set to have the biggest impact on sales and marketing activities in a long time. Indeed, the concept of interactive relationships with individuals in mass markets is no longer the stuff of marketing fads. In many ways, it is about applying the principles of business-to-business marketing to the consumer world. There are three basic dimensions to this one-to-one world :

• Learning dialogues - building knowledge with every interaction, so that future customer interactions are more personal, more valued, and this becomes a positive barrier to exit.
• Customised experiences - making every aspect of the experience tailored and relevant to the individual - both the product and service solutions offered, and the ways of delivering it.
• Growing relationships - building a two-way relationship between customer and supplier, through dialogue and involvement, which is of mutual and incremental value.

British Airways, as an example, are customising their customers' experiences in many ways - offering a diverse range of travel solutions by working with over 50 travel partners; treating customers in more individualised ways by leveraging database insights and the humanity of their people; building growing relationships through their Executive Club, involving regular dialogue, activities and incremental benefits.

When the business has millions of customers, and therefore millions of experiences, each involving a number of interactions, then the challenge is indeed substantial. However, this is the challenge for winning organisations. It is perhaps not surprising therefore, that according to PA's survey, 74% of companies have yet to dedicate somebody to manage the customer experience. The majority still manage sales, marketing, service, logistics and support functions separately. Not only this, but in the majority of companies, customers are still far less important that financial results. Measurement and management are therefore crucial.

Customer satisfaction is a key measure in many organisations, yet we know that even the most satisfied customers defect. Therefore customer retention, or better still, customer loyalty are more useful measures of the success of the customer experience. Satisfaction is a useful 'oil gauge' to ensure that delivery is reaching expectations, however loyalty is not only a measure of customer attitudes, but also a key driver of business success. Although still in a minority, companies like Virgin and Disney realise that loyal customers provide a sustainable source of future profitability for their businesses, and that that is attractive to investors.

Finally, it is worth considering whether the experience is only a transaction - a one-night stand - or a stepping stone to a stronger, more lasting relationship - one of growing value to customers and the business. This is actually a fundamental question which should be asked before embarking on the 10 steps. In a relationship world, the steps are the key to growth and prosperity. In a transactional world, they have less value, as do the transactions. In which world is your business more likely to achieve future success?

Customer loyalty and relationships are unlikely to flourish merely through regular interaction. The challenge for the business is to develop an experience on which to build a relationship which the customer wants to belong to. Like a marriage guidance counsellor might advocate, it is about finding attractive and appropriate partners, who are both willing to learn, develop, adapt and deliver increasing benefits to each other over time.

The goal is to create the right experience, for the right customers, every time. The challenge is then to ensure that this delivers real value to customers, and that this is also realised as superior value for shareholders. By walking in your customers' shoes, you gain a new perspective on your business, and a new picture of success. You start doing business from the outside in, rather than the inside out.

As one successful electronics business recently put it : 'When we look at our business through customers' eyes, the complexity becomes simple, and the routine become inspiring'.

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