Deliver More With Less - Sampson Lee, China Is your company making trade offs between resources and customers during this economic downturn? Most companies are. They are using conventional approaches and cutting costs at the expense of customer satisfaction, brand loyalty, and sales results. Taking an unconventional path, you can make a paradigm shift from efficiency to effectiveness. By applying the core principles of effective experience strategy, you can reduce spending by reallocating increasingly scarce resources to those touch-points, subprocesses, and attributes that are important in creating positive memories, reflecting differentiated brand values, and driving immediate and repeat purchases. The result? You will enhance your bottom-line and top-line without jeopardizing your brand equity. 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 ignore 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 instore experience, though it may induce some pain and is not necessarily 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! Sampson Lee, the founder of G-CEM, has invented three U.S. patent-pending customer experience management methods: the Branded CEM Method, the Customer Experience Research Method and the Purchase Experience Assessment and Optimization Method. He applies modern psychology and human behavior disciplines to business practices to create effective customer experiences for today’s business organizations. Lee’s three methods combine the art and science of Customer Experience Management (CEM) in experience innovation and assessment. They work synergistically to discover the three critical moments during an experience process: moments-of-truth at experience (for service), moments-of-differentiation (for brand) and moments-of-buying (for sales), to design the most effective experience for target customers. Lee and his International Partner team deliver the Global CEM Certification Program in Amsterdam, Dubai, Hong Kong, London, San Francisco, Shanghai, and Singapore. To reach Lee or to ask for a copy of the “Effective Experience Framework” white paper, please email to [email protected]. g-cem.org
Posted on: Fri, 12 Dec 2014 10:23:27 +0000
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