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How customer experience has trumped product differentiation to drive business success

Nowadays it’s a given that customer experience and business success go hand-in-hand. The latest report on the state of customer satisfaction in the UK (published biannually by the Institute of Customer Service) confirms that “organisations with higher satisfaction benefit from greater levels of trust, recommendation and intention to remain a customer”.Avis advertisement

When product was king

Customer experience has not always been recognised as a key ingredient for success. Henry Ford (“It’s not the employer who pays the wages. Employers only handle the money. It is the customer who pays the wages”) appeared to be focused on customer experience but he realised it through the creation of a differentiated product – a car that was easy to use, reliable and within reach of household budgets. Ford set a pattern for business that drove brands to focus on creating unique products rather than unique experiences.

The ‘Unique Selling Proposition’

Not until the 1960s when US adman Rosser Reeves described the concept of a Unique Selling Proposition (USP) did brand owners start to acknowledge that differentiation could be achieved not just in what the product offered but in the benefits it created for its users. This gave rise to the awareness that brands needed to position themselves in a way that set them apart in the eyes of their customers. Bill Bernbach and his team were past masters at this, creating clearly differentiated propositions for brands such as VW, Alka-Seltzer and Avis (who made a virtue out of being number two in a market where coming first was everything).

Customer experience trumps product as key differentiator

Towards the end of the 20th century globalised manufacturing processes, speed of bringing products to market and the internet marketplace meant that genuine product differentiation became increasingly difficult to achieve. Dyson may have invented and patented the bagless vacuum cleaner but you can now buy a similar product from over a dozen different manufacturers. So they have turned their focus to providing first class customer experience and product support to retain their market edge. Similarly Apple have created an in-store customer experience that is second-to-none in order to maintain a sense of product superiority. Brands have been driven to identify ways in which they can encourage loyalty by developing the relationship they have with their customers. Focusing on delivering personalised service First Direct and Amazon (despite their lack of any face to face contact), John Lewis and Nationwide regularly top polls for customer satisfaction. Virgin has developed a uniquely transferable brand (airlines, financial services, wine, trains, telecoms and space travel) on the back of a laser-sharp focus on “an experience that's 100% human, treating customers with respect and speaking from the heart, not from a script.”

First class experience delivers business success

Good customer experience translates into business success. It creates loyal customers and happier employees, who generate more business and less churn, which improves the bottom line and increases shareholder value. It also prevents regulators imposing swingeing fines (such as that levied on a leading utility company recently) for ‘failing their customers’.

Brands that build a unique customer experience do so on 5 core principles:

  1. Doing rather than analysing
  2. Having a shared vision of what they want to achieve
  3. Leaders who ‘walk the talk’
  4. Employees who have bought into the vision and recognise they represent the ‘moment of truth’ that shapes perception of the brand
  5. A customer experience that is customer-centric (sounds obvious but isn’t always the case)

Over the course of the next 5 weeks I’ll be exploring in more detail each of these core principles and trying to unpick why they go hand in hand with positive customer experience

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