Why Smart Companies See Customer Experience as the Prime Differentiator, and How They Do It

by Steven Keith

(TLDR: When you think about differentiation, do you think about the ways companies focus on features, benefits and innovative technologies? Most do. But this way of differentiation is no longer working for a growing number of companies. This is because of a growing number of competitors, a typical company’s fear of focusing and hesitations with being different and doing new things. Adding to this is an insane level of growth in social and digital channels companies can use to blast messages, the ease of content creation and the ability to measure and manage distribution of messages. This post helps CX leaders understand why differentiation on the basis of CX is key. Further, it explains how successful companies are differentiating by focusing on customer values.)

Intelligent companies (those who prove to be better at spotting and adapting to patterns) are turning toward more intangible things such as customer relationships and experiences to find newer and more powerful means of competing. But this is not easy to do, which is why so many are struggling to understand this and adapt their companies to do it well.

Focusing on customer experience (CX) requires many new leadership decisions, changes in age-old processes, technologies, approaches to collecting and analyzing data as well as many other dimensions. In short, CX is rapidly redefining the ways companies are increasing their competitiveness — but those who are making the investment are finding handsome returns across the board. According to a 2015 Gartner study, 89% of companies are now making shifts in their resources to differentiate on the basis of CX. Why? Because it works. How? All over the board.

To create a CX differentiation strategy, companies should explore suspending most of what they know about differentiated marketing and instead experiment with making the experience, itself, the product. How? Strive to better understand customers’ values from an outsider’s perspective — and develop a customer-centric view around those values. Companies that are doing this well are finding ways to merchandise the experience instead of the product or service. Exercise strategic sacrifice and resist the urge to talk about the tangible offering. Instead talk about what happens when a customer learns about, purchases and uses the company’s offering.

If you are taking an experiential approach to differentiation, that is, using CX as a differentiator, then you are creating ways to help customers navigate through choices to have the best experiences possible. This is customer-centricity. Further, customer-centricity is also about organizing all the simplified and helpful content and touchpoints with your company in accordance with what they value and in alignment with where the customer is in their journey.

In order to do this well, a company must learn how to engage a person (as a complex and sentient human being) on an emotional level, where they begin to research and develop a collection of distinctions, meaning and identity in concert with your offering — or that of your competitor.

Here’s a handy psychology note: when modern, CX-oriented companies talk about being customer-centric, they understand that customer experiences are almost always recalled as stories or narratives in their minds. Customer experiences are often consciously or subconsciously recompiled in the mind so they can recount them as needed and share them with others.

Think about the way you remember experiences with any brand. Are they recalled as stories or factual bullet points that clearly define specific product or service attributes? You know what I’m talking about — the “sizzle.” No, they are a mish-mash of narrative fragments that emerge as parts of a larger story. And as you tell yourself or others about them, do you do so in a way that is somewhat aligned to what’s important to you — how a brand’s offering totally nailed it or totally missed the mark? Probably. When retold, your experiences as a customer portray a reality that’s meaningful to you and in alignment to your values. Now think about how this affects the way you create dialogs about the value your company offers. It changes it, right?

Interestingly, we know our values reflect the experiences we choose to have — but the same thing happens in reverse. The experiences we have with a company’s offering oftentimes can influence our values and beliefs to the extent they are able to reflect who we want to be or conversely, contradict our values or the values we want other to perceive about us — which may be desirable under some circumstances (i.e.: McDonalds, Snickers, Smirnoff, Marlboros or Ferrari).

A company that focuses on experience needs to consider how its strategy and overall approach can systematically link experience, customer values, and the company’s offering in a way that benefits customers along their journey — in a way that makes them feel good about considering the company’s offering. Given this, it’s advisable that companies centralize efforts around better understanding the values customer want to see in their experiences. This approach starts out with listing the values customers want to realize, then working out how the company can support such scenarios. Highly differentiated and well-branded content in digestible storytelling formats should play a central role in how you tie this all together.

It’s important to note the way to create an experience strategy for many companies is difficult because it’s more of a creative process than a logical series of tasks and because the relationship between customer values and their experiences can be somewhat ambiguous and highly subjective — and exactly where customers spend a majority of their time along the buying and usage journey. Again, this is more about storytelling than listing out benefits. It’s creating a pool of content that’s clear enough for people to see their reflection. When customers look into this pool, you want them to see themselves, their values and their success staring right back at them. This is how companies use experience as a differentiator.

Customer values, as a component of a successful CX differentiation strategy, should be understood as the most enduring concept that guides research, consideration and comparison behavior. If what you’re marketing, merchandising or communicating about your product isn’t viewable through the lens of your prospect’s values, you will be placing the burden of choice entirely on their shoulders. In other words, you’re giving up. Using CX as a strategic differentiator is about finding new ways of sharing the burden of choice with your customer. It’s about creating access points where customers feel a connection with your brand that feels almost magical. However, it isn’t magic at all. It’s the effort you’ve taken to help them see themselves drawing connections to your offering they didn’t even know existed. It’s because you’ve considered their values in re-merchandising your offing around what makes them tick. And to the extent that you can help them draw from past experiences as they evaluate the potential use of your offering, you will, in turn, create more pathways to that seemingly magical connection you want your customers to make.

Keep in mind, most companies (make up your own statistic somewhere north of 75%) sell, service and manage customer experiences on the basis of needs. They imagine a customer has a need and they almost robotically angle to serve that need. It’s the way most every company has always done it. Using customer experience as a differentiator is different. It draws tighter connections to values over needs. At the core, values often contrast needs. While needs are most likely latent, values can and should be used to merchandize a company’s offerings and servicing a customer’s use of it. It’s all in how we understand customer motivations. Needs motivate people to seek interactions with your brand only while those needs go unsatisfied. Values, on the other hand, are persistently motivational. Therefore, many people shop absent of need. They’re doing it to satisfy another motivation — which can and often happens when they feel their values aren’t being satisfied. Starbucks has built an empire on this notion. They know people don’t need a $5 Venti Carmel Macchiato, however they also know their customers value community and space that makes them feel like they’re part of something. That’s experience that differentiates on the basis of values over needs and is core to Starbucks strategy.

Marketing and planning for optimal experiences has been around for a long time now, and doing so based on needs has been its fulcrum. As more and more companies experiment with differentiating based on experiences customers have, they are learning a lot about the challenges that emerge. Principally, it’s near impossible to plan for all experiences and the steepness of that workflow only crushes the spirit of teams. On top of that, most approaches have been based on needs and not based on values. Here’s the one central problem with that. We give people far more credit for knowing everything about their need states than they deserve. When companies are tasked with matching a product or service with a need state their target customer cannot articulate, much less know, they become paralyzed.

Let’s look at the counterpoint in this. We cannot assume every person operates in a vacuum, blissfully unaware of their needs. That’s simply not true and not implied. There is gray area. The point of the above argument is that people operate on multiple planes but have deeper connections to brands that differentiate based on appealing to values. Further, experiences are closer to values than needs.

Doing the work of differentiation on the basis of values feels counterintuitive but is precisely what works. So how do you do it? What does it look like?

To craft differentiation based on human values you must tweak your business strategy. You should design and develop organizational strategy that includes three principles.

They are:

  • Make the experience the product and provide experience offerings that you know can align to customer values. Think about what your customer finds important closer to their core. Is it stability, safety, economics, efficiency, honor, community and so on.

    Generally, you can explore this by finishing the following statement: “My ideal customer values________________ and _________________ at their core, and our offering aligns to those customer values by ____________________ and __________________. This is different than their needs, which are __________________ and ___________________ in these ways __________________________.

  • Replace needs with values as a dimension for interpreting and prioritizing which experiences you can address while distinguishing your customer’s wants and should have states. Normally, a customer’s in-the-moment desires are the focal points in companies competing for a customer’s attention. Savvy companies can outflank this conventional approach by thinking beyond how the customer interprets their needs at the moment of consumption — instead focusing on an enduring value. Appealing to a core value as a means to compete on CX has greater overall endurance as an approach.
  • When you’re helping customers live out experiences in accordance with their values or their company’s values in B2B scenarios, it’s better for all involved- the customer, the company and any extended cohorts associated with each. Juxtapose this to the alternative, where competing companies are merely finding and exploiting customers’ existing, knowable needs and aggressively marketing in that direction.

So what does this all mean? It means that if we want to compete on customer experience, we have quite a way to go. It means we must start thinking, organizing around, and acting on a deeper understanding of the customer as a human and not merely a generic archetype on a customer journey. It also means we have to re-evaluate how we plan and execute on needs vs. values. We have to rethink a lot of conventional ideas and approaches that we have used up to this point. Keep your eyes peeled. Notice companies in how the approach the experiences you have with their brand. When you’re researching your next purchase online, take particular note of how they’ve designed the way to appeal to your values. Notice how it hits you, or not. Those who win your trust, your money, and earn your advocacy will likely be the company that has learned how to compete based on experience.

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