The future belongs to those who understand and harness the power of the customer experience, and the lifetime value of a customer. Few retailers realize the lifetime value of a customer which could be as high as $500,000 in the case of a supermarket shopper who spends $500 a week and lives in the area for twenty years, or $2,250,000 in the case of a customer who buys a new Mercedes every other year for thirty years, or $150,000 for an AT&T customer with full service for 20 years. I could go on, but you get the point. Losing a customer is very, very expensive; and yet the vast majority just don’t get it.
As Lou Carbone, of Experience Engineering fame puts it: Today’s organizations have become extremely vulnerable. By neglecting to consistently factor in customer expectations and preferences, they’ve essentially disenfranchised the customer from the determinations of value. They have abdicated their obligation to customers and to themselves. As a result, substantially all customers, except for a few who are loyal to a hand full of companies who get it right, are free agents, up for the grabs and waiting for someone who will deliver a total experience. Paying attention to the bottom line has never been more important, and yet most business leaders today fail to recognize the customer as a critically important asset, without which survival is impossible.
The premise is deceptively simple. Companies must reconnect, or in some cases, connect for the first time, with their customer. creating value for customers by providing distinctive experiential value is not an insurmountable feat. Making money and loyal customers are not mutually exclusive. Simply put, your mission, as it relates to customers, is to deliver an experience that is so memorable, that she keeps coming back, and tells wonderful stories about you.
Consider a customer that moved to Tampa from San Antonio in 1992 and discovered an old set of cheap Malibu lights in the unpacking. Enamored with his new abode, he decided to install them, only to discover they didn’t work. Not being a DIY guy, he called the local Home Depot and was immediately connected to a very pleasant and knowledgeable sales person in the lighting department. He described the problem. The sales person asked the man to bring the transformer in as he was relatively sure that was the problem. When the customer took the transformer to the store, the salesperson took the transformer to the back room and quickly returned with a brand new one. He told the customer that his transformer had died and that the Malibu no longer made that model. He handed the customer the new transformer, assured him it would solve his problem and sent him on his way. The customer was so tickled at this treatment, he’s been telling the story every since. 26 years!
Consider another customer who stopped in a Pappasito’s Mexican restaurant on I35 in Austin one afternoon about 3 o’clock one hot August afternoon. Starving to death and running behind to prep for his next meeting, he wanted something quick to eat. The waiter, who was exceptionally friendly, suggested nachos. When the customer finished and got ready to pay his bill, the waiter asked the customer how his nachos were. The customer replied that they were good
Every time a customer engages with you, they have an experience, about which they tell a story. Now get this. Every time they engage with you, they tell a story. If the experience meets their expectations, they tell themselves. If it exceeds their expectations, they tell a friend or two. If it falls far short of their expectations, they tell their friends, their families, their dog sitter, and everyone else who’ll listen. Your job is to deliver an experience that is special, so that your customers tell good stories about you. This is the very best and most effective advertising you can do. The good news is that most of your competition is so bad, that delivering a great customer experience is not that hard. While not hard, it must be deliberate. To deliver a consistent, cohesive compelling customer experience, it must be choreographed.
You must also understand that much of the customer’s experience in unconscious and emotional, rather than rational. the quality of the customer’s total experience is now recognized as the new differentiator. Experience means the take-away impression formed by the customer’s cumulative encounters with your products, services, businesses and people – a perception produced when humans consolidate sensory information.
Experience “clues” are the manageable building blocks of an experience. Unmanaged, clues may cancel each other out, or worse, leave a distinctively negative impression. If systematically managed, the clues promote a positive net impression, which can be leveraged to differentiate otherwise commoditized products or services. Systematically managing the whole customer experience represents an unprecedented and untapped source of competitive advantage. That is unavoidably every company’s real value proposition.
Dr. Gerald Zaltman of the Harvard Business School’s Mind of the Market Laboratory presents the case for Experience Engineering with mantra-like precision: The tangible attributes of a product or service have far less influence on consumer preference than the unconscious sensory and emotional elements derived from the total experience.
Howard Schultz, CEO of Starbucks from 1986 – 2000, and again from 2008 – 2017, credits the Starbucks we know today to a housewares show he attended in Milan, Italy in 1983. He’d been with the company for about a year. For no particular reason, he wandered in to an expresso bar in Milan, and immediately began to register sensory data. Piece by piece, he took in a very different experience than he had ever experienced stateside. The way the food was handled, the way the products, like figs, were wrapped, packaged and handed off of customers. He noticed the smells, the smiles and the warm, homey atmosphere, and custom accoutrements. Then he noticed the barista and how he took care of customers. He noticed the newspapers rustling and the grinders grinding, the milk steamers sizzling and the sound of Italian opera playing in the background. He recognized that the Italians had turned coffee drinking in to a symphony for the senses- an experiential rapture. He returned to the United States with a passion to unlock the experiential romance and history of coffee and to explore the connections that could be developed between a business and its customers, using experience as the value proposition. The rest is history.
What Starbucks does, and what Disney, Mayo Clinic, Harley Davidson, Nordstrom, Panera Bread, The Container Store, Wegmans, QuikTrip and many others have learned to do is what the winning business of the future will learn to do. As Lou says: The one-dimensional, accounting driven approach to managing value creation is a matter of “counting the wrong beans.”
Experience based value strategies can provide huge payback and extend the life cycle of companies indefinitely. Creating value around multi-dimensional, well integrated, and conspicuously managed experiences will challenge you to connect to the unconscious emotional passions of your customer and discover how to differentiate yourself from competitors in ways that are difficult or impossible to copy or commoditize.
The best supermarket operators in the world are very much about experiential clues, staring from what you see when you approach the store. Curb appeal, the scenery, the clean windows, the neat cart racks, the security patrol and more. When you enter the store, the smiles you see, the scents you smell, the displays of fresh produce, flowers, meat, seafood and bakery items have all been choregraphed. In the best operations, you’ll also experience remarkable consistency in human interaction. You’ll be greeted with a smile, asked if you’d prefer paper or plastic bags, asked if you found everything you were looking for, if you have any coupons and thanked when leaving the check stand. Nothing is left to chance.
Great service companies also think of customer complaints as a gift. Unhappy customers who don’t complain, leave! A great experience does not require perfection, as even the best of us are human. The key is understanding that a customer who has had a problem and had her issue successfully resolved, is more loyal than she was before the problem occurred! Learn to appreciate customer complaints and choreograph the response in such a fashion that leaves nothing to chance. Feargal Quinn, who wrote the book Crowning the Customer, built a supermarket chain with the highest sales per square foot of any food retailer in Europe. He taught his associates to listen carefully, thank customers for their comments, apologize, never offer excuses, promise a fix and ask the customer what they could do to make things right. Then go little step beyond. He taught his people to bring his customers back, one more time. Feargal understood the power of experience and the lifetime value of a customer.