Differentiation has always been important, but what matters more over the long term is your company’s diligence—and creativity—in seeking it. Here’s how.
You can’t prevent your business model from eroding. But you can build a company that’s capable of managing business-model transitions. One way to do that, says Columbia Business School professor Rita Gunther McGrath, is to develop the habit of thinking creatively about differentiation.
Rita McGrath (above) and Ian MacMillan co-authorized "Discovering New Points of Differentiation" in 1997 (Click Image To Enlarge)
McGrath first espoused this theory in her classic Harvard Business Review article, “Discovering New Points of Differentiation,” which she coauthored with Ian C. MacMillan in 1997. McGrath and MacMillan noted that companies, in seeking to differentiate themselves, had become too focused on end products or services and, as a result, were missing other opportunities to interact with customers. They wrote.
“We believe that if companies open up their creative thinking to their customers’ entire experience with a product or service—what we call the consumption chain—they can uncover opportunities to position their offerings in ways that they, and their competitors, would never have thought possible.”
That was 15 years ago. Build recently caught up with McGrath to ask what has or hasn’t changed since then. Here are a few highlights of the conversation.
How has your thinking about differentiation changed since 1997?
The importance of customer-experience innovation has risen significantly. In fact, I think conventional product/service differentiation is being copied or leapfrogged so quickly now that it is highly unusual for them to last as advantages at all. Take pharmaceutical companies, for instance: They’ve competed for years on “the tablet” that is a miracle cure. With generics breathing down their necks and fewer blockbusters to point to, they are going to have to look at the whole experience more holistically to find their next set of winning strategies.
What tenets of the article still hold up the strongest, today?
That all too often companies focus on what they do, rather than what the customer wants to accomplish. Typically they’ll focus on something like usage or engineering, when what gives a company an advantage may have nothing to do with those things. A simple example is the “one click” and “prime” combination offered by Amazon.com. Once you’ve paid the $79 annual charge, shipping is free and they already have all your details, so for buying something straightforward, why go to a site where payment and delivery are more cumbersome or expensive. And yet, for years, competitors focused on the web site functionality and trying to beat Amazon on price, when that had nothing to do with the customer experience.
Do you feel as if the main concept of the article—thinking about differentiation throughout the consumption chain—has permeated the business culture?
It has definitely not permeated the business culture, or we would not see so many new offerings flop and businesses struggling as their customers move on. Some companies do “get it,” and they are the ones that are having the best success from their investments in innovation. Square Enix [is] a terrific example. Others include Procter & Gamble, DuPont, IBM, Amazon, and Berlitz. Berlitz is a particularly interesting case, as they took a very traditional classroom based business model and used customer insight to dramatically shift their emphasis. The head of Americas in fact actually used the technique in the article to drive that transformation. Among the things he was able to do was to economically offer Arabic lessons by aggregating demand across multiple geographies. It’s a great story.
But if you think of most companies that directly serve consumers—airlines, credit card firms, cable companies, phone operators—it’s pretty clear that huge opportunities for creating better experiences are simply lying fallow.
How can a systematic effort at differentiation throughout the consumption chain help executives prevent their business models from getting disrupted?
I’m not sure you can prevent old models from eroding and new ones from emerging. You can, however, build an organization that manages transitions more effectively. Infosys would be a great example of a company that uses incredible discipline to phase out of fading models quickly and move on to new opportunities fast. The problem with many mature organizations is that they tend to allow power and resources to be held hostage to the currently successful business model, rendering their efforts to innovate ineffective. Poster child: Kodak. Although they were incredibly innovative and invested in diversification the political center of gravity of the company created this incredible inertia which eventually brought them to bankruptcy. It didn’t help that their supposed strategy for revival was to aggressively enter an industry segment (printers) that was already in decline. Next likely victim: HP. Hope that doesn’t happen, but the handwriting is certainly on the wall.
COMMENTARY: Discovering how-to differentiate one’s company is a skill that can be developed and nurtured. McGrath and McMillan have designed a two-part approach that can assist companies to continually identify new points of differentiation and develop the ability to generate successful differentiation strategies.
- Part I - “Mapping the Consumption Chain” - Captures the customer’s total experience with a product or service.
- Part II - “Analyzing Your Customer’s Experience” - Shows managers how directed brainstorming about each step in the consumption chain can elicit numerous ways to differentiate even the most mundane product or service.
Mapping the Consumption Chain
The first step toward strategic differentiation is to map your customer’s entire experience with your product or service. We recommend that companies perform this exercise for each important customer segment.
To begin, assemble groups from all areas of your company—in particular, those employees who use marketing data and those who have face-to-face or phone contact with customers. Charge the groups with identifying, for each major market segment, all the steps through which customers pass from the time they first become aware of your product to the time when they finally have to dispose of it or discontinue using it.
Naturally, every product or service will have a somewhat different consumption chain. However, a few activities are common to most chains. Consider the following questions, each of which illustrates one of those activities. Then, as the group begins to get a feel for the special relationship between your customers and your products, ask the following questions about the complex activities that pertain to your business.
- How do people become aware of their need for your product or service? Your company can create a powerful source of differentiation if it can make consumers aware of a need in a way that is unique and subtle.
- How do consumers find your offering? Making the search process for your product less complicated, more convenient, less expensive, and more habitual are all ways in which companies can differentiate themselves.
- How do consumers make their final selections? After a consumer has narrowed down the possibilities, he or she must make a choice. Can you make the selection process more comfortable, less irritating, or more convenient? Look for the ideal situation, in which competitors’ procedures actually discourage people from selecting their products, while your procedures encourage people to come to you.
- How do customers order and purchase your product or service? This question is particularly important for relatively low-cost, high-volume items. Can a company differentiate itself by making the process of ordering and purchasing more convenient? Many retailers now allow their suppliers to restock their shelves, remove stale dated merchandise and place reorders for them. This eliminates stock-outs and allows store personnel to concentrate on customer service rather than maintaing inventory.
- How is your product or service delivered? Delivery affords many opportunities for differentiation, especially if the product is an impulse purchase or if the customer needs it immediately. Providing the customer with a variety of delivery options (ground, 2nd day or overnite shipment) or delivery cost options (free shipping, free holiday shipping, discounted shipping) can create competitive advantage through differentiation.
- What happens when your product or service is delivered? An often overlooked opportunity for differentiation lies in considering what has to happen from the time a company delivers a product to the time the customer actually uses it. Opening, inspecting, transporting, and assembling products are frequently major issues for customers.
- How is your product installed? This step in the consumption chain is particularly relevant for companies with complex products. For example, installation has presented an enormous barrier for computer manufacturers trying to break into the novice-PC-user market. Apple Stores offers its customers a Genius Bar to help answer questions, conduct hands-on diagnosis and troubleshooting, install software, transfer files from another computer or device or solve problems with their Mac, iPod, or iPhone.
- How is your product or service paid for? Many companies unwittingly cause their customers major difficulties with their payment policies. Accepting all methods of payment including, cash, checks, major credit cards and bank debit cards makes convenient for the customer to pay for their purchases. Penney's recently introduced a "no questions asked" purchase return policy, and it also eliminated discounted pricing specials for "simple, lower prices" in the store.
- How is your product stored? When it is expensive, inconvenient, or downright dangerous for customers to have a product simply sitting around, the opportunities for differentiation abound. Air Products built small industrial-gas plants next to customers’ sites. The move pleased customers; it reduced inventory handling and storage costs; it also generated switching costs. Best of all, once an Air Products plant was in place, competitors had little opportunity to move in.
- How is your product moved around? What difficulties do customers encounter when they must transport a product from one location to another? How is your product packaged for easy transport? Whether the journey is across a room or across a state, this step in the consumption chain is another often-overlooked opportunity for differentiation.
- What is the customer really using your product for? Finding better ways for customers to use a product or service is a powerful differentiator. And such opportunities abound, especially for companies whose products are expensive and used relatively infrequently. GE is working on an arrangement through which the company will guarantee that a locomotive will be available on demand. Under that arrangement, GE will take over the management of all the engines in the customer’s system. It will relieve the customer of repair and maintenance concerns, and also will gain economies of scale by managing an entire network. What’s more, the entry barrier created by such a system can be formidable.
- What do customers need help with when they use your product? GE, for instance, has an enormously popular 800 number that is available 24 hours a day to help people who have difficulty using any of the company’s consumer products. Similarly, Butterball Turkey’s 24-hour hot line fields cooking questions from hundreds of customers every Thanksgiving.
- What about returns or exchanges? By focusing on and aggressively promoting its no-questions-asked return policy, Nordstrom has enhanced its position as a company that provides unique customer service. Customers may be unhappy with the brands they return, but they are not unhappy with the store.
- How is your product repaired or serviced? As many users of high-tech products will attest, repair experiences—both good and bad—can influence a lifetime of subsequent purchases. Remote diagnostics has allowed companies like Tandem Computers and Otis Elevator to spot malfunctioning components or parts to quickly fix the problem to reduce downtime or service interruptions.
- What happens when your product is disposed of or no longer used? Canon and Hewlett-Packard have differentiated themselves by allowing their customers to return spent printer cartridges in the original box at their expense.
Analyzing Your Customer’s Experience
Although mapping the consumption chain is a useful tool in itself, the strategic value of our approach lies in the next step: analyzing your customer’s experience. The objective is to gain insight into the customer by appreciating the context within which each step of the consumption chain unfolds. It is crucial to remember that the customer is always interacting with people, places, occasions, or activities. Those interactions determine the customer’s feelings toward your product or service at each link in the chain. When they are viewed strategically, they can shape the dynamics of competition for that customer’s business.
Essentially, this step involves considering how a series of simple questions—what, where, who, when, and how—apply at each link in the consumption chain.
- What? - What are customers doing at each point in the consumption chain? What else would they like to be doing? What problems could they be experiencing? (These problems may not be directly related to your product or service.) Is there anything you can do to enhance their experience while they are at this stage of the chain? Manufacturers might do well to explore the possibility of offering a complete “product experience” by offering products in different sizes, shapes and colors, different packaging than competitors, or producing or marketing complementary products as well.
- Where? Where are your customers when they are at this point in the consumption chain? Where else might they be? Where would they like to be? Can you arrange for them to be there? Do they have any concerns about their location? Can you ship your product anywhere or make it readily available at just about any geographic location? Think how FedEx made overnite delivery possible anywhere in the continental U.S. or allowed products to be delivered anywhere on the globe within a matter of 2 to 3 days and not weeks.
- Who? Who else is with the customer at any given link in the chain? Do those other people have any influence over the customer? Are their thoughts or concerns important? If you could arrange it, who else might be with the customer? If you could arrange it, how might those other people influence the customer’s decision to buy your product? Each type of person means a possible point of differentiation; each type means a different experience, a different mood, and a different time.
- When? When—at what time of day or night, on what day of the week, at what time of the year—are your customers at any given link in the chain? Does this timing cause any problems? If you could arrange it, when would they be at this link? Holidays (Christmas, Thanksgiving, Valentine's Day) offers manufacturers different ways to package their products condusive with that holiday. Decorative holiday packaging enhances the overall consumer experience with the traditional holly, religious figures, red and green colors of Christmas, bright red hearts during Valentine's Day and pumpkins, turkeys and autumn colors of Thanksgiving. Retailers making a killing during these holidays by tapping into the consumer emotional experience.
- How? How are your customers’ needs being addressed? Do they have any concerns about the way in which your company is meeting their needs? How else might you attend to their needs and concerns? Understanding the customer’s experience at any link in the chain for any product offers companies the opportunity to identify and explore many nontraditional ways to create value. The task then becomes selecting from among this wealth of possibilities; considering how each idea meshes with a company’s particular skills, assets, and systems; and focusing only on those that can generate a competitive advantage. Each idea also may open up an opportunity to develop a new competence.
Creating A Meaninful, Memorable and Differentiated Signature Experience
According to Frank Capek, Chief Experience Officer at Customer Innovations, Inc. and author of "Customer Experience: Beyond Better Sameness," the total customer experience is what drives brand awareness, brand loyalty and increases sales. Mr. Capek says.
"Moving beyond better sameness requires a fundamentally different way of the thinking about the nature and design of influential customers experiences. In order to create a competitively relevant improvement, you need to do something that actually grabs the customer’s attention and positively influences how they feel and what they do. It starts with recognizing some of the shortcomings of the most common approaches to understanding and designing experiences."
There are three important aspects to moving beyond better sameness. Highly influential experiences must:
- Focus on influencing specific customer behaviors that drive business results ("Outcomes Driven") and ask the question: How does the experience influence behaviors that create the greatest performance improvement?
- Create a meaningful, memorable, and differentiated experience (“Signature Experience”) and ask the question: What differentiated and compelling experience will influence these behaviors?
- Deliver it in a way that builds trust and demonstrates you authentically care. (“Empathically Delivered”) and asks the question: How will you align the organization to demonstrate you care and build trust with customers?
The most influential experiences create meaningful distinctions in what people remember, the stories they tell, the conclusions they draw, the decisions and resolutions they make, and the meaning they derive from it all. The most powerful influential experiences are designed around a compelling story and a series of high-contrast “signature elements” that catch people by surprise.
Not all differences are created equal. When it comes to customer experience, it’s worth distinguishing between differences in degree and differences in kind:
- Most differences in product and service quality can be described as differences in degree. A difference in degree is something everyone does but some do better than others. In general, people have a hard time noticing and measuring differences in degree. If your response time is 35 seconds and your competitor’s is 55 seconds, it may not register for customers, even though investing in increases in these service levels may be very expensive. Improving differences in degree are often expensive investments in better sameness.
- On the other hand, people have a very easy time perceiving differences in kind. A difference in kind is something you get from one provider that you don’t get from another; it’s fundamentally different and may even catch you by surprise. Virtually every example of companies that are recognized as customer experience leaders (e.g., Amazon, Zappos, Container Store, Starbucks, Chick-fil-A, etc.) have at least a small set of things that register as differences in kind, not just a large number of differences in degree. The good news is that creating a small set of differences in kind doesn’t necessarily cost as much as ramping up a large number of differences in degree. The bad news is that it takes a special kind of courage, often in short supply, for a company to break away from the pack (which turns out to be good news for their competitors).
Moving beyond better sameness demands doing something that isn’t just a difference in degree; it demands doing something that’s a difference in kind. A signature experience almost always represents a difference in kind, which helps to make it both meaningful and memorable.
Memorability and Meaningfulness
These characteristics turn out to be important—they form the logic behind creating signature experiences—because they are at the heart of how people actually have experiences. Every second of the day our senses take in millions of bits of rich sensory detail about our experiences: the sights, sounds, textures, smells, and tastes of everyday life. We have only a limited capacity, however, to attend to all that information.
Our conscious stream of the thought relies on short-term memory. This short-term memory provides capacity for holding a small amount of rich sensory information in an active, readily available state for a short period of time. The duration of short-term memory is about 20 seconds and experiments demonstrate its capacity ranges from about five to nine elements—words, digits, letters, or simple image representations.
Experiences like a concert, a fine meal, a glass of wine, a movie, browsing through a store, or walking along the street are very complex, rich, and multidimensional. While it’s possible to hold some of that rich detail in shortterm memory, it’s not easily transferred to long-term memory. As a result, the morning after a concert, you mayremember only a few of the songs that were played, a few salient features about the way they were played, and the sense of what you liked or disliked about them. As you recall that concert, you start to form a story about that experience based on these salient elements.
We generally pay attention to those elements of our experience that seem most important; the elements that capture our attention because they were particularly high-contrast or they caught us by surprise in some way. Beyond the relatively small amount of information we’re able to pay conscious attention to, we do something called gist processing. Gist processing enables us to get a sense for what is unfolding around us without having to focus attention on all the details. It operates through subconscious pattern matching. We get the gist of what’s happening because it roughly matches experiences we’ve had in the past.
Research has provided many interesting examples of selective attention and inattentional blindness:
- In one of the most well known demonstrations of selective attention, participants watch a video of people passing a basketball to each other and are asked to count the number of passes. As the participants are busy counting passes, fewer than 50% of the participants notice that a person dressed in a gorilla suit walks right through the middle of the action, stops, turns, looks at the camera, and does a little dance before turning and walking off the scene.
- Another well-known example is the “door study.” In this experiment, pedestrians are stopped on the street by a researcher who asks them for directions. While the pedestrian is talking to the experimenter, two men carrying a door walk between the two. Hiding behind the door is another experimenter who changes places with the first experimenter. The second experimenter then continues the conversation with the pedestrian. The two experimenters are purposely different in height, weight, coloring, dress, etc. Shockingly, only about half of the pedestrians realized that they were now talking to someone completely different than the person they were talking to at the beginning of the conversation.
In both examples, subjects were surprisingly unaware of very significant elements of their experience. From the standpoint of evolutionary psychology, this makes sense. Over history, our survival has been based on recognizing and paying keen attention to only those elements of our environment that seem most important,while filtering out and not getting distracted by large amounts extraneous detail.
These limits of human attention hold serious implications for the design of influential experiences. Another easy way to waste time and money in these efforts is by designing experience elements that customers just filter out,because the experience elements are neither central to the goals they are trying to accomplish nor occur on the attentional pathway customers are following to accomplish those goals. A signature experience needs to be designed to support how people do gist processing and create a small number of high-contrast elements that capture the customers’ attention and reinforce a meaningful, differentiated story.
Telling A Signature Story
“Stories are the creative conversion of life itself into a more powerful, clearer, more meaningful experience. They are the currency of human contact.” – Robert McKee
"A brand is a metaphorical story that connects with something very deep; a fundamental human appreciation of mythology. Companies that manifest this sensibility invoke something very powerful." – Scott Bedbury, ex-CMO, Nike and Starbucks
As many have noted, we make sense of the world around us through the stories we tell—the stories we tell ourselves and the stories we hear from and tell to others. If you think about the defining moments in your life, you’ll see that the stories you tell yourself about those moments have a powerful influence on your identity and the way you see the world. Across human history, we’ve also shared meaning and knowledge with each other in the form of stories. This includes the legends and parables shared within and across generations, as well as the stories we share about more immediate events.
What are the stories your customers tell about their experience with you and your business? What do they think you really stand for? What are the most memorable aspects of their experience? What surprises them? What frustrates them? How do you make them feel? The nature and quality of these stories has a profound impact on the success of your business.
Stories that create or reflect signature experiences rely on four interrelated components:
- Message: What does the brand, product, or service experience stand for? What does it mean?
- Conflict: What does the experience stand against? What tension does it help people overcome?
- Characters: What roles do people play and what characters bring the experience to life
- Signature Elements: What parts of the experience are unique and create anchors for telling the story?
Message
A simple, purposeful message is at the core of many of the experiences people find intuitively understandable and compelling. It serves as the ideological core and organizing theme for differentiating the experience. It is not necessarily the same as an advertising tagline. However, it is helpful to be able to express it in a few words—ideally, three to five. For example, although Southwest has the following statement on their website.
“Here at Southwest, we like to do things a bit differently than “the other guys”. We pride ourselves on making it both simple and fun to fly wherever it is that life takes you, with low fares to 70+ destinations nationwide. Whether you’re on the ground or in the air, we’re always working hard to ensure that your travel experience is top-notch. So the next time you head out on a journey, whether for business or to have a little fun, we hope it’s on one of our red-bellied jets.”
This translates to the following, simpler message: Cheap, Simple, and Fun.
Conflict
Stories make little sense without conflict. This is the biggest gap for most organizations. They attempt to express what they stand for, what their products or services stand for, but it makes no sense without clearly communicating what they stand against. To be meaningful and memorable, stories need to create this contrast. People will find it easier to understand who you are when it’s clear who you’re not. Heroes are boring without villains. Triumphs don’t make sense without understanding the challenges that made those triumphs meaningful. Stories without tension, uncertainty, or risk aren’t worth listening to. The conflict built into the message clarifies the things that make the experience differentiated and worth engaging in.
It becomes especially important, therefore, to choose your enemies wisely. For example, just about every insurance company out there portrays the enemy in their story to be the uncertain outcomes they protect you against. As a result, the message from those companies boils down to pretty much the same thing, with only minor variations on how effectively they communicate that same old story. Progressive Insurance, on the other hand, has gotten a lot of mileage out of telling a different story, a story that contrasts the standard risk protection with the provision of competitive quotes that enable customers to feel they’ve made a more educated decision.
Characters
Characters bring the story to life. The most effective stories have characters that are authentic and intuitively understandable. These characters make the experience more concrete, which is particularly important if the product or service you provide is complex and abstract. For example, if you’re in the insurance business, what you sell is abstract, a policy that represents the transfer of risk in exchange for a premium. Abstraction raises the stakes on identifying both the characters in your story as well as the role they play.
The strongest brand stories have great characters, characters who fulfill many roles: heroes, adversaries, supporters, benefactors, beneficiaries. In many situations, the company and/or its representatives are the heroes; the customers’ situation or the alternatives provided by competitors are the adversary; and customers are the beneficiaries.
Apple has done an outstanding job of creating characters that bring their experience to life. This includes their advertising, with the Mac vs. PC campaign that casts the Maccharacter as a laid back, self-possessed hero and the PC character as a relatively innocent, but inept, adversary. In various instances, these ads also show customers in beneficiary roles, ultimately making the right choice.
It also includes the creation of the “genius” role in the Apple store. The Genius hero helps customers overcome whatever is standing in their way, whether it be a lack of knowledge or a technical issue. The Genius character is a particular type of hero that is very different than what you’d find with most other technical support personnel, that unintentionally treat the customer like an innocent adversary.
Many distinctive service experiences, like that of the Four Seasons, cast their frontline employees as the heroes that overcome the ordinary and predictable in order to provide the guest the most comforting and personalized experience.
Compare this to many less effective service experiences, where frontline employees often end up playing the role of victims; caught between the demands of the customer and the constraints and frustrations imposed on them by their company. In fact, in many situations like this, frontline associates do untold damage to the brand bymaking their employer the adversary (e.g., “I understand and I’d like to help but it’s against our policy”).
Signature Elements
Signature elements of the experience are the specific differences in kind that bring the story to life, reinforce the message, overcome the conflict, and engage the characters. In most cases, you don’t need a lot of these elements—and they don’t even need to create distinctive value. They just need to be consistent with the story and make you, YOU!
These signature experience elements improve the transmission rate and fidelity of the story as it gets passed from company to customer and from customer to customer. For example, if you asked a hundred people on the street what makes the Apple Store experience different, there’s a good chance that you’ll hear a lot of the same things from people—the Genius Bar, a place to play with technology, crowded but with lots of associates, limited product quantities, making appointments for service, and (occasionally) long lines.
If you ask a hundred people what makes the Starbucks experience unique, you’d get something similar: baristas, signature drink designs, a characteristic ordering process, unique cup sizing, personalizing your order, commitment to sustainability, etc.
One of my recent favorites is UK’s MetroBank experience. Beyond courteous service (which is a difference in degree), they frame their core message and expressed conflict of “No stupid bank rules” with a set of signature elements, including being open 7 days a week, long hours, free coin counters, 10 minute account openings and free dog biscuits.
Mr. Capek says.
"Developing a set of signature experience elements that tell the story is not inherently difficult. However, we’ve found that the biggest barrier for most organizations is having the will to be different, the will to do something that makes them actually stand apart from their peers in their comfortable competitive set."
Do you provide a signature experience? If you asked 100 customers what makes their experience with you unique and compelling, how consistent would their answers be?
Deliver Emphatically - Building A Strong Emotional Bond With Customers
After having the chance to work with the leaders of many dozens of companies, we’ve noticed a distinguishing feature of organizations that have a seemingly natural ability to engage customers in a positive experience. It starts with how leaders and people throughout the organization think about and talk about their customers.
Customer: Person or Object?
A distinguishing characteristic of organizations that sustain success with customers is their ability to engage with customers as people. This seems like it should be easy. However, even casual conversations with leaders in many businesses reveal that their organization is focused on customers not as people, but as objects. Objectifying people generally involves intentionally or unintentionally treating them as a means to an end, without any deep, visceral understanding of their lives, feelings, priorities or preferences. As a result, organizational behavior toward customers tends to be, at best, reactive and, at worst, self-serving and manipulative.
There are several indicators of businesses that objectify customers.
- Top Management - People in leadership positions don’t spend much time in open dialogue with customers about what they need and what’s working and not working about their experience. There is often a much higher level of focus on products, technology, and delivery processes with insights about customers that tend to be surface-level generalizations. Conversations about customers tend to be abstract and removed rather than concrete and personal.
- Front Line Employees - People on the front line may be following the process but, at best, merely “pretending” to care. The company might measure customer satisfaction at the company’s touch points but doesn’t really know what customers do end-to-end, how they make choices, and how the overall experience makes them feel.
These characteristics stand in stark contrast to businesses that appear immersed in their customers’ lives and, as a result, deliver a very personal, human experience. As consumers, we recognize these businesses. They range from the small and local (e.g., your favorite restaurant or local retail establishment) to scale businesses like Chickfil-A, Zappos, Nordstrom, Apple, and many others.
Personifying Customers: Empathy In Action
To sustain the delivery of a positively and profitably distinctive experience, organizations need to adopt a discipline for personifying customers. Personifying customers often requires structured ways to counter any tendency to objectify customers and to build empathy—identifying with or experiencing vicariously the situations, feelings, thoughts, or attitudes of another—into the core processes of customer discovery, design, and delivery:
- Empathic Discovery - Most of what companies know about their customers tends to be descriptive and data driven: who they are, where they live, what they’ve purchased, how long they’ve been a customer, etc. There may be a segmentation analysis that groups customers by observable characteristics or even attitudes. In most cases, however, there is no rigorous framework for personifying customers in a way that brings them to life for the organization and, in the process, builds empathic understanding. This includes structured ways to answer new questions about these people:
- What situations are they in?
- What’s important to them and what are they trying to accomplish?
- How do they evaluate alternatives and make choices?
- What do they do outside of the limited set of contacts with our business?
- What emotional states influence their behavior?
- Empathic Design - Empathic design leverages empathic discovery to create products that allow customers to accomplish the goals that are important to them more easily or more fully. This includes designing products and services that customers love because they’re meaningful and make them feel good. Customers may not even know they desire these products, services, solutions, or modes of interaction because lack of familiarity with the possibilities offered by new technologies or being locked into a old mindset makes it difficult envisioning them.
- Empathic Delivery - Customer service is often a monologue: it’s about technical delivery, standards, and execution. The company decides what to do and how to do it. Well-designed and executed customer service usually does a good job of meeting customers’ baseline needs and expectations. Empathic delivery, on the other hand, is a dialogue: it’s about watching a customer’s experience with every sense and following up with a thoughtful and appropriate response that demonstrates that you really care and are on their side. It enables the organization to surround products and programmatic services with a personal touch.
A robust approach to Empathic Discovery and Design is described in more detail in our white paper titled, “An Introduction to Design for Behavior.” Here, because it forms the last requirement to go beyond better sameness, we will address the third process: Empathic Delivery.
Emphathic Delivery: Empowering The Organization To Deliver A Signature Experience
Sadly, empathic delivery is rare in the business world. Processes, policies, metrics, resource constraints, and more deeply entrenched unwritten rules often get in the way. Since empathic delivery cannot be fully scripted, it leads to significant implications for the employee experience. Employees must have enough “elbow room” to do the right thing for customers. This requires a deliberately designed pattern of interventions in the employee experience, including recruiting, integrating, training, communicating, measuring, and rewarding employees. It also involves surfacing the unwritten rules that may be driving employee behavior into patterns inconsistent with the desired customer experience.
Not surprisingly, putting empathy into action requires a tightly integrated perspective on customers and employees. You can’t treat customers with empathy without doing the same for employees. This is one of the reasons that many of the companies that appear on Fortune’s list of best places to work are businesses that deliver an outstanding customer experience.
Creating outstanding experiences for customers every time is certainly possible. Companies like Zappos, Starbucks, Amazon and many others focus on creating distinctive experiences based in large part on an empowered frontline. These organizations create employee experiences based on an overall management system that harnesses their employees’ full potential to create positive emotional connections with customers.
Paradoxically, however, the key to creating an empowered frontline is not the front line. The behavior of frontline employees is an outward expression of the organization’s core processes and tools, management systems (including funding, performance measurement, incentives, etc.), and leadership alignment. This deeper system is reinforced by an entrenched array of “unwritten rules” that drive the real behavior of the organization.
In many cases, frontline employees are as much the victims of a broken organizational system as are customers. Frontline employees are often stuck in the tension that exists between frustrated customers with needs they can’t address and a rigid system that makes it very difficult for them to do the right thing for those customers. Customer experience design must therefore consider fundamental questions about the purpose of customer service and frontline employees. Are they in place to solve customer problems that your company’s product or service creates and that prevents customers from gaining the value they expect from your product? Or is their role to serve as the gatekeeper to make sure that customers don’t submit fraudulent claims or take advantage of the company? When these purposes are at odds with the design of the customer experience, no one benefits.
Delivering an outstanding customer experience requires empowering employees to perform at their fullest. One approach to encouraging this behavior, developed by Vineet Nayar, CEO of HCL Technologies, has been described as servant leadership. Servant leadership is diametrically opposed to the traditional hierarchical approach to management, in which leaders are served by the people they have reporting to them. This approach requires leaders to remove barriers and make resources available so employees can deliver to their maximum ability. Servant leadership enables frontline employees to make better decisions and create a better experience for customers. It also promotes forward thinking at all levels.
A Few First Steps Towards Emphathic Delivery
While the process of alignment can be complex, here are a couple of initial steps that can help orient the organization to deliver a signature experience with empathy and authenticity:
- Provide empowerment funding for front-line employees - For example, we talked with a bank recently that has authorized tellers to fix customer problems without seeking permission up to $50.00 per day. It makes sense to provide guidance and training on what are acceptable and unacceptable uses of these funds. It also makes sense to celebrate role models who are doing it well and fine tune the training as new situations arise.
- Begin to identify the unwritten rules you must address - Monitor feedback from front-line employees on the most common service issues and have them help identify the policies and “unwritten rules” that are getting in the way of delivering outstanding service.
- Engage the front line in ideation - Encourage new concepts & ideas. Empowered employees will feel more so when they know that their opinions and ideas are accepted and respected. While not all ideas will be used, new & innovative methods often result from empowering your staff to make certain decisions.
- Make sure senior management is spending time on the front lines seeing how things are really going - This should be a continuous, regular set of experiences for them that provide direct customer feedback through observation and not filtered through the company management chain.
Courtesy of an article dated April 6, 2012 appearing in TheBuildNetwork
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