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Deliver More With Less
The Winning Strategy In A Down Economy
Mr. Sampson Lee
President of G-CEM
www.g-cem.org
Republished with permission from Customer Futures
Every time I queue in the long lines at the IKEA check-out counter, I swear I won't go back. But, over twenty years, I have gone back again and again. My largest share of 'coffee wallet' goes to Starbucks, even though I hate paying more than US$3 for coffee, especially given its deteriorating quality. I feel badly when I am ignored inside Louis Vuitton shops, but I admit I am willing to pay a significant premium for LV products. These are definitely not good experiences to most customers, but these experiences are effective both for the brands and for their target customers.
Effective Does Not Equal Good
"Are you happy with your recent visits to IKEA, Starbucks, or Louis Vuitton?"
"Hmm..." "Well..." No matter what your answers are, they do not reflect the complete experience you had, but the partial experience you can recall from memory. Whether you feel good or bad and whether you buy again or not are largely determined by the remembered, not the actual experience.
Effective Experience Principle No.1: An Experience Is Not Effective Unless It Is REMEMBERED.
Coined by the Noble Prize-winning psychologist Daniel Kahneman, human beings only remember the peak and end moments during an experience process. What's the point of spending tremendous resources to satisfy customers on every single detail of an entire experience process, if they can only remember a critical few?
Most companies are driven by efficiency; they have been trying their best to perform well across the entire experience process. So, this recession is not necessarily a bad thing for them because they will be forced to cut spending and to re-allocate their resources. If they follow my advice and have the guts to make a paradigm shift from efficiency to effectiveness, they can drastically reduce spending on most aspects of the purchase experience and focus on excelling at a few critical moments. The result? Deliver a more effective experience with fewer resources.
Customer-Centricity Could be Wrong
If IKEA chose to follow the voice of the customer, they would have to enhance 'Car park', 'Staff service', 'Search and pick stock', 'Check-out' and 'Delivery and installation' because these attributes are important to customers but poorly performed by IKEA. However, if the company made these improvements, we wouldn't have the great IKEA brand we have today.
The dream of IKEA's founder, Ingvar Kamprad, "Produce quality furniture at an affordable price for the majority of people" is realized by excelling at attributes which reflect IKEA's core values and are both important to the brand and to target customers. IKEA excels at 'Product quality', 'Price', 'Display setting', 'Product trial' and 'Canteen, but does not try to satisfy all their customers' needs. Even though every single aspect of the IKEA in-store experience is not great and some aspects even induce pain for customers; IKEA remains effective in generating positive memories and delivering brand values.
Effective Experience Principle No.2: An Experience Is Not Effective Unless It Is BRANDED.
In a recession, a branded experience guides companies to focus increasingly scarce resources on Moments of Differentiation (MOD) - the critical moments or attributes which are important to customers and to the brand - and limit pain to an acceptable level. Following the voice of the customer without a focus could be misguided. Customer-centricity makes your customers happy, but it is the branded experience which makes them loyal. Need evidence?
Based on our global customer experience surveys on Starbucks, Louis Vuitton, and the Cosmetics, Automotive and Financial Services industries, covering a total of 135 customer segments with over 11,000 respondents, the highest Net Promoter Score (NPS), ranging from +81% to +97%, was achieved only when a branded experience was delivered, that is customers experience both high levels of satisfaction and brand differentiation. NPS dropped significantly when customers experienced high level of satisfaction only.
We Need More Pain
Though no one will deny Louis Vuitton is a successful brand, it doesn't seem that they provide a good retail experience - unless you're a celebrity or dress like the rich & famous, the sales staff usually ignores you. None of us like to be ignored, but since this pain is so intense, it's strong enough to trigger our Psychological Immune System to rationalize our suffering for something of great value. In this case, the great value is exclusivity, the most critical need of Louis Vuitton target customers and the core brand value, and this exclusivity is significantly perceived during the experience process. Thus, Louis Vuitton is delivering an effective and a branded in-store experience, though it may induce some pain and is not necessary a good experience.
Effective Experience Principle No.3: An Experience Is Not Effective Unless It Highlights CONTRAST.
Well, it doesn't seem logical. Think about queuing at Starbucks, DIY service at IKEA and flights without meals on Southwest - these are examples of pain within an experience. Why do customers stand for these negative attributes? Because the messages about their Branded Experience let customers know that they are not coming to Starbucks for speed and efficiency, they are not coming to IKEA for excellent service and they are not coming to Southwest for food. Allowing some pain in the process not only helps to highlight the contrast with the pleasure peaks of the experience, but also to free up resources, especially important in a recession. Not persuasive?
IBM generates the deepest pain (price) to B2B customers, but 757 IT managers and buyers rank IBM as the 'most liked' B2B purchase experience among 14 vendors. By maximizing the Pleasure-Pain Gap (PPG) between pleasure peaks (service) and pain peaks (price), IBM can reallocate resources away from pain peaks to generate the paramount pleasure peaks. Contrast helps when optimizing (or minimizing) resources and drives customers to push the BUY button.
Recession is a known fact. Reduced budgets are a reality. You can choose to deliver more (effectiveness) with less (resources). It is a matter of how you play the game, in either economic boom or doom. For those smart enough, a recession might just be a better time to win!
This article is part of "The Importance of the Customer Experience in a Down Economy" and is published here with permission of Customer Futures. In this free publication, eighteen international thought leaders make the case that a focus on the customer is not a fair weather endeavour, but rather an essential competitive strategy that is especially important in a down economy. Download the full paper: http://www.customerfutures.com/downeconomypublication/downloadnow
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About the Author
Mr. Sampson Lee the founder of G-CEM, has invented three U.S. patent-pending Customer Experience Management Methods. He applies modern psychology and human behavior disciplines to business practices to create effective customer experiences for today's business organizations. Lee and his International Partner team deliver the Global CEM Certification Program in Amsterdam, Dubai, London, Paris, San Francisco, Shanghai, Hong Kong and Singapore. He provides training and consulting to Fortune 500 companies and local conglomerates and deploys X-VOC customer experience research in developing Multiple Touch-points Experience Process model and Total Customer Experience Evaluation (TCE). Lee is the visiting Ass. Professor of the University of Hong Kong teaches the CRM module of the Master of e-Commerce and Internet Computing since 2004. He also sits on the Advisory Council of CustomerThink.com - the world's largest customer management community serving 300,000+ members.
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