Improving customer experience has to be a central plank in any strategy to build business success. But all too often, this is understood in a way that is much too generalised and not specific enough to the context of the business concerned. Customer experience, or CX, is not “one size fits all”.
Sometimes the CX approach is based on a philosophical view of what a good customer experience looks like – one that conforms to the orthodoxies that have sprung up as the CX profession has formed, stormed and normed over the past twenty years.
Instead, the CX should be appropriate to how you differentiate – which should be articulated in your brand promise. If you are designing an experience for EasyJet or Ryanair it will be very different than for Emirates.
For example, IKEA broke many of the CX norms – it injected effort into the customer experience rather than reducing it by asking customers to assemble their furniture. This unique approach (see Millie Peacock on ‘the Ikea effect’) has enabled them to sell attractively designed furniture at attractive prices. The art of differentiation is choosing to invest and be excellent on the one or two dimensions that make you stand out. That should be reflected in the CX you deliver.
How does your CX serve the commercial goals of the business?
How will this new and improved CX help to build the business – by attracting more customers, growing existing relationships, increasing margins or reducing costs? The financial dimension is important because you need to ensure there is a business case for investment.
A key constraint here is the margin model which is determined by the industry. If you have a gross margin of less than 10% you have far less scope for investing in delivering a great CX than if you have one of greater than 50%.
So using Ritz Carlton as your example is not great if you are a distributor of fuels that makes a 3% gross margin on massively high volumes – all most customers care about is ‘can you deliver when I want it, on time, in full and at a good price?’
Here are five steps to designing a CX grounded in business strategy
To avoid the one size fits all trap, we recommend a five-step approach
1 Understand where your business sits versus the competition
Map where your business sits currently and where strategically you want to be on key-value dimensions. These could be things like affordability, risk, convenience, choice/customisation, responsiveness, product/service quality, feel good, security, etc – whatever is most relevant to the industry – versus the competition.
2 Clarify how strategic positioning translates into brand promise
Define how the desired positioning translates into brand promise – what word do you want to own (e.g. Volvo owns safety in automotive, Asda owns low price among the major UK supermarket groups). Do you aspire to be the most convenient, fastest, most comfortable, lowest risk? Whatever word you seek to own should be infused into the experience you design.
3 Learn from appropriate comparators
Investigate what businesses in comparator sectors with similar gross margin structures and similar positioning have done to improve the experience they provide. Looking outside your industry is a great way to expand your thinking of what can be done, but you need to make sure you are learning from relevant exemplars – not ones that bear no resemblance to your own business.
4 Push your differentiator to the max
Design an experience that is really going to support and enhance your positioning using external learning. Really challenge yourself to push your desired differentiation to the extreme. Define the initiatives that will deliver that, including their likely cost and timing.
5 Define the business benefit
Create the business case. What metrics are you going to improve by delivering this experience – customer acquisition, retention, cross-sell, profitability (through higher average pricing or lower cost to serve). Will this improvement deliver the ROI that will make the CFO happy?
Very few businesses consistently ground CX strategy in business strategy. That means they don’t take advantage of all the opportunities this provides to differentiate from the competition and to build a stronger brand.
For more information on practical approaches to supporting you in navigating the complexities of underpinning your CX with that of your business strategy, reach out directly to Ross Robinson on [email protected] or via LinkedIn
by Jack Springman