Designing a Differentiated Customer Experience – Where to Begin?

Forrester reports in The State of Customer Experience, 2011 that 51% of companies do not have a formal customer experience strategy in place, yet 63% wish to differentiate from their competition on the basis of the experience delivered. This research seems to demonstrate an obvious truth: it is often easier to say something than to do it. So how do company leaders begin creating a customer experience strategy that will differentiate them from their competitors?

Lead with Your Business Strategy

In their 1997 best-selling business book, The Discipline of Market Leaders, Michael Tracey and Fred Wiersema describe three fundamental business strategies: operational excellence, product leadership and customer intimacy. Each is defined below:

1. Operational Excellence: Efficiency, streamlined operations, no frills, and volume discounts, translating to good quality at a low price for the customer
2. Product Leadership: Development, design, and innovation, translating to product and service differentiation
3. Customer Intimacy: Customer attention and service, tailoring products and/or services to individual customers or small segments

Tracey and Wiersema go on to say that market leaders must choose to excel in one of these three value disciplines. While all three are important, companies that steal share from the competition lead with one of the three.

Translate Strategy to Experience

There is evidence that companies that are known for delivering exceptional customer experiences are also those that are clear about their leading value discipline. And contrary to what one might assume, a great customer experience doesn’t just belong to those companies that lead with customer-intimacy.

In our Annual Most Engaged Customers Study, we investigated leading brands known for creating superior levels of Customer Engagement including The Ritz-Carlton, Apple, Costco, Southwest Airlines, Google, USAA, and Netflix. But not all of these companies have customer-centricity as their core business strategy. Consider the following examples:

These companies don’t separate their “business strategy” from their “customer experience strategy.” Costco can’t “stream” their products to customers like Netflix does, any more than The Ritz-Carlton can use the Costco strategy of bulk discounts. Rather each tactic must focus on supporting the overarching business strategy.

Remain Focused

Consider this famous quote from Steve Jobs, “People think focus means saying ‘Yes’ to the thing you’ve got to focus on. But, that’s not what it means at all. It means saying ‘No’ to the 100 other ideas that there are. You have to pick carefully.” There are a myriad of options when designing an engaging customer experience – you can create apps, map touch points, leverage, streamline, and innovate all day long. But the best way to navigate this maze of choices is to focus relentlessly on aligning customer experiences to your core business strategy.

The key to a differentiated customer experience isn’t necessarily a relentless focus on getting closer to the customer and forging strong bonds with them, but rather a relentless focus on what you are, what you are known for, and how that translates to an experience customers want to have.

A friend of mine recounted a hugely frustrating experience attempting to buy a laptop charger at a recently re-branded RadioShack. Although the in-store design was noticeably improved, service was inattentive at best, product choice was lacking, and wait times were long; to top it all off, for a $40 purchase he was asked if he wanted the “1 or 2 year warranty.” We started to talk about the RadioShack business strategy. Their goal to make every store homogenous and to modernize the brand image has fallen short of delivering a differentiated, positive customer experience. They promise customers they will “solve all of your technology needs.” Yet “The Shack” in-store experience failed to deliver on that promise for my friend – and according to sites like my3cents, complaintsboard, and customerservicescoreboard, many other RadioShack customers as well.

Your customer experience is the embodiment of your business strategy. When starting down the path of delivering a differentiated customer experience, companies must start with their business strategy, and be prepared to say “no” to the many ideas that don’t necessarily align with that strategy.

The key to a differentiated customer experience isn’t a relentless focus on getting closer to the customer and forging strong bonds with them, but rather a relentless focus on what you are, what you are known for, and how that translates to an experience customers want to have. This is the only way to move from the 63% of companies that aspire to differentiate on experience to the elite group of companies that succeed at creating engaging, memorable experiences.