User experience is widely accepted as a tactical discipline that drives dramatic marginal return from digital sales and service environments. But how can organisations create leadership and competitive advantage through the online customer experience? Does customer experience have a future as a strategic discipline?
User experience and usability are widely accepted as important by companies competing in online marketplaces. However, they are seen as tactical measures:
- Used to tune existing sales journeys and service processes for maximum yield
- Used to de-risk design by checking what’s being built with end users before launch.
Customer experience becomes a differentiator
Customer experience has long been treated as a hygiene factor within marketing. In the face of cost-control pressures, brands benchmark customer experience to an acceptable standard, rather than try to outflank the competition through their service proposition. In the last few decades this has created a ‘race-to-the-bottom’ in terms of customer service.
But changing socio-economic factors create the opportunity to re-appraise this. It is now feasible to create customer experiences within digital environments that drive a dramatic increase in customer value, but which don’t carry a heavy ongoing cost burden. This comes at a time when traditional strategic marketing options are under increasing pressure because:
1. Electronic distribution has a deeply commoditising effect: it is becoming hard to: It is becoming hard to maintain differentiation through price or product features. Comparison content and aggregators are slowly perfecting markets – or at least giving consumers the illusion that they are. Companies are denied the opportunity to build differentiated brands when comparison content defines the price and product characteristics which consumers use to inform their purchase decisions. In the UK general insurance market, probably the longest running case study for the effects of digital aggregation, no single brand has more than 10% market share amongst internet users.
Brands may say they are different, but search and comparison content exposes the stark similarities between products and prices.
2. The price of advertising media has not dropped in line with its failing effectiveness: the play-book strategic response: The play-book strategic response to commoditisation is differentiation through image. Advertising messages create a personality and platform for a brand which make it seem different (and more valuable) than its competition. Put bluntly, it is often cheaper to seem different and better, than to go to the expense of being different and better.
But new forms of media and media-consumption undermine this traditional model. Consumers are still exposed to messages from traditional, paid-for advertising, but it’s becoming much easier to avoid. Consumers are now also empowered to balance this formal content about brands with informal, user-generated content like review sites, social networks, fan sites, blogs and discussions. The media landscape now creates a more objective view of companies and their products than at any time since the beginning of commercial broadcasting.
The price of advertising has not yet fallen to reflect this new reality. Why?
Partly because of a superb rear-guard action by the media and creative industries who continue to convince senior executives (who grew up with mass-media marketing) that their model still works. It is also because the organisational changes required to support alternative approaches are often profound. Few established organisations have had the appetite to re-engineer themselves around a channel that they, and their shareholders, do not yet fully understand.
Yet the fact remains that some of the world’s most valuable corporations, like Google, Facebook and Amazon, managed to build attention and loyalty with little or no traditional advertising activity, relying instead on the power of their online customer experience.
3. The cost of customer service is falling rapidly: before the digital age: Before the digital age, high-quality customer experience was expensive and difficult to coordinate. Major corporations that created a consistent customer experience also created a ‘Stepford Wives’ feel to their customer interaction.
When the internet arrived many organisations seized on digital channels as a new way to lower acquisition and service costs. It was seen as a way to do ‘the same thing, cheaper’. Early enterprise management solutions were relatively expensive and unsophisticated. The return-on-investment case for building web-centric business systems was not compelling, especially as consumers’ commitment to the channel was unproven.
But this is changing. As organisations consider next-generation ebusiness platforms, far more is possible at a far lower cost. Customers too have changed. They are open to having more of their customer relationship handled in digital environments. Initial resistance to being ‘pushed’ online has turned into ‘pull’, with greater numbers of consumers seeing online as the natural centre-of-gravity for their relationships with companies.
Technology now allows not just ‘the same thing, cheaper’, but ‘better, cheaper’.
To sum up, in the golden age of mass communication:
Image = Reality
In the new fragmented, aggregated age:
Reality = Reality
The question is: how do you make the reality of dealing with your organisation substantially better and more valuable to customers?
Build a vision for online customer experience
The most successful approach we’ve seen is to develop a prototype of the proposed new customer experience and use this as a starting point for discussions around the board table. In short, develop a model of the customer experience that technology now enables and use this to create the case for investment and organisational change.
The diagram to the left is our approach for doing this.
The most important principle behind the process is that creative thinking is required from both the company and its customers. However, both parties tend to be limited or biased in their own perceptions, needs and beliefs about what is possible. The purpose is therefore to create an iterative process through which a company and its customers can collaborate to create valuable and viable ideas for their future relationship.
This model is striking mainly because of the amount of effort it requires in terms of gathering customer insight and feedback. But even so, it can be done quickly. Within a few weeks it’s possible to produce a compelling vision of the future customer experience.
In the future we suggest that the opportunity to differentiate through product, price and brand image will decrease. Instead companies will focus more attention on creating high-value customer experience delivered to a consistent standard at a relatively low cost.
The place to start is with a prototype which helps the whole organisation see the value (and inevitability) of change. The key to developing this is to gather a deep understanding of customer behaviour within digital environments: not just who is coming online, but what they are doing and what drives service usage and satisfaction.
Tom Wood
Partner, Foolproof
Twitter: @Foolproof_ux