Customer Focus

Customer Focus
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Customers Will Pay a Premium for an Extraordinary Experience

86% Customers Pay Premium

A couple of years ago Volkswagen Sweden performed an experiment to prove a theory. The theory is: if you make something fun, you can get people to change their behavior.

The company took a subway station where most people take the escalator and outfitted the stairs to look and act like giant piano keys. The result? 66% more people than normal chose the stairs rather than the escalator.  Even though taking the stairs requires more effort, people went out of their way because of the experience. Fun won.

There’s an important analogy that can be drawn between the “fun” experiment and the experience a business offers. Imagine that the stairs (pre-piano) and the escalator represent two companies competing in the same industry.  They both offer the same product or service in a typical way, but one (the escalator) is preferred over the other because it provides a marginally better experience.  One of the companies (the stairs) decides it’s going to differentiate itself based upon the experience it offers to the customer. They make the experience so good that the customers don’t mind paying a premium price (climbing instead of riding). The decision between the two companies almost becomes a non-decision for most customers. The competitor (the escalator) loses out.

Ok, so maybe this oversimplifies things a bit, but this isn’t just theory. What if I told you that one study by RightNow indicates that 86% of consumers are willing to pay more over the standard price to ensure a superior customer experience?  That’s music to any business’ ears. (Sorry. I had to. You have no idea how I’ve had to restrain myself from using musical puns throughout this post.)

So, which are you going to take – the escalator or the stairs?

Customer Experience: The Next Corporate Battleground

We look at user ratings on Yelp before we try a restaurant. We read customer reviews – for everything from books to cars – before we make a purchase. We talk with friends and family about brands we’ve tried. According to the 2010 Customer Experience Impact Report, 76% of consumers say word-of-mouth is the number one influencer of purchase decision. And, what drives the motivation to recommend a product or service? It’s the experience someone has with a company or brand – the customer experience. Yet most companies operate under the norms of a bygone era, pouring money into marketing initiatives that have lost their effectiveness. Instead, they need to focus on building an experience so extraordinary that it differentiates them from their competition and inspires people to become advocates, who ignite conversation about the brand and recommend it to others.

Customer experience isn’t just one point of contact with a company. It is the sum of all interactions a customer has with a company – from its Facebook page to how a customer service representative answers the phone to the product or service itself.  Delivering a poor experience can spell big trouble for a business as people share their complaints with others, and providing a merely ‘good’ experience isn’t enough to stand out. But, creating an experience that exceeds expectations and elicits raves…now, that’s worth far more than a television commercial, and often less expensive.

There are several companies that have architected unparalleled customer experiences and, in return, have earned themselves a legion of ‘fans’ who evangelize the brand. A couple of stand-outs include Apple and Zappos.com. The Apple experience includes intuitively designed products, inviting retail stores, emailable receipts, and “geniuses”. Zappos.com provides customers a user-friendly website, large selection of products, free shipping and returns, and quickly processed refunds. A B2B example would be American Express OPEN, with their carefully selected experts offering curated small business advice, videos and other resources. It’s no coincidence these companies charge a premium, generate healthy revenues and enjoy positive business growth. One Gartner Group study shows “companies that prioritize the customer experience earn 60% higher profits than their competitors.”  Pretty compelling, right?

Companies are beginning to catch on. With 71% of business executives agreeing that customer experience is the next corporate battleground (source: Shaw & Ivens), an increasing number of organizations are creating positions such as Chief Customer Officer, Customer Experience Director and others whose role is to design and manage the customer experience across the entire organization.  Hopefully, they realize that to win in today’s age of advocacy, brands need to excel at the customer experience, not just talk about it.

The question isn’t whether companies should focus on designing captivating experiences that win passionate advocates. The question is, why wouldn’t they?


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