The Customer Experience Revolution — Are You Next?

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During 2007 and the particularly economic emptiness of 2008 it became very noticeable that there were a group of companies, large and small, from several industries that were better, different, more profitable and more sustainable than most others. What were these companies doing? That was the question that motivated the live interviews and research behind a new business leadership book called The Customer Experience Revolution. These companies, dubbed “Experience Makers,” included Apple®; Amazon; Starbucks Coffee Company; Square; Skinit, Inc.; BMW MINI Cooper; and Netflix, Inc. among others.

These Experience Makers redefined industries and changed customers’ lives for the better. They also changed the expectations of existing and future customers. Once a market has been changed to a difficult-to-duplicate customer experience, those left competing with just price, features or value-added services are usually marginalized or eliminated.

These customer experience leaders are masters of the three Ds of customer experience. The companies, which purposely and successfully Determine, Develop and Deliver extraordinary customer experiences, have a decisive advantage. The aggregate view of Experience Makers reveals how they define customer experience and when it begins:

  1. The customer experience includes all interactions people have with or about a company’s messages, people, processes, products or services. “With” as in direct contact with the company’s messages, people, processes, products or services. And “about” including viewing third-party videos, reading printed opinions such as reviews, and word-of-mouth referrals. “About” also includes very powerful social media, where one person can quickly communicate to many people about the extraordinary customer experience they just had.
  2. Inside the customer experience is user experience, a person’s experience directly interacting with a company’s products or services. It is the proof point that promises made during the customer experience are true.
  3. Experience leaders believe that customer experience begins when people are potential customers and continues when they become customers and even energized advocates.

This insight forms a customer experience continuum where the experience of customer care begins well before a person is actually a customer. All interactions with or about a company’s messages, people, processes, products or services affect that experience. Customer experience companies purposely create experiences people want to have along that continuum at the strategic, tactical and operational levels. It starts at the top and is part of the company’s culture. “Delivering extraordinary customer experiences is becoming more and more important,” according to J.D. Power & Associates. “We know from the data that people will pay for it.”

When people have experiences they do not compare them in nice, neat industrial ways. For example, if you have a web site that sells and transacts, it might be compared to Amazon, one of the best experience companies for process. That’s one reason to go outside your industry, look at the best customer experience companies, and gain and apply the insights from them. Even if you are not in the smartphone market, computer or content business, many of these insights can come from a company such as Apple — a company that took bold steps based on customer experience to enter and redefine a market new to it and change smartphone customers’ lives forever.

Seeing the customer experience opportunity

The crowd at the MacWorld Expo in San Francisco on January 9, 2007 could barely contain its excitement. A confident Steve Jobs entered the stage, peered out at the suddenly hushed crowd, and confidently announced, “Today, we are going to reinvent the phone.” It was a brand-new phone from a company new to the phone market. Apple launched the iPhone. And in a few short months the phone industry was changed forever.

What made it a great idea for Apple to enter a market with large, firmly entrenched corporations that seemed to most people indomitable? It was a bold step. Apple was entering a field crowded with tough and experienced competitors. Where exactly was the opportunity for a new entrant to compete with all those successful companies making phones? Some companies already in the market manufactured phones with great value. And others were adept at consistently introducing new technologies, styles and advanced features.

Before 2007, there were already many successful companies making smartphones, which combine computing, Internet connectivity and other capabilities in a wireless phone. Before Apple entered the market, these smartphone companies included formidable competitors such as Nokia, Research in Motion’s BlackBerry®, Palm and Motorola. These telecommunication giants leapfrogged each other every three months, constantly adding innovative features and functions.

Suddenly, with one announcement, Apple changed the playing field by changing customers’ expectations of what a smartphone should do for them. In the first year of production, Apple sold 3.7 million iPhones, with one million sales in the two months following its introduction.

Before the iPhone, Apple was primarily a computer company, not a phone manufacturing company. And its entry into the phone market was in many ways a competitive failure. The iPhone was expensive, with a poor camera, no 3G capabilities (a standard at that time), no keypad and no memory card. But this technologically weak and feature-poor product transformed customers to enthusiastic advocates at a rate unseen in the smartphone market.

As Apple saw it, success in this market wasn’t about the technology, the features, the calling plan or the price. While all those are important ingredients, Apple’s iPhone delivered exactly what it promised — an extraordinary experience. From the time people heard about the iPhone until they became customers and then enthusiastic advocates, the iPhone offered, by far, the best smartphone experience.

Customers flocked to phone stores to replace their old phones with the new iPhones. Even though their old phones were quite adequate, they wanted the charm, buzz, coolness, fun, aesthetics and prestige of Apple’s new product. Most of all, they wanted what they heard so much about from iPhone owners — the pleasurable experience of using it.

Best of all for Apple shareholders, the iPhone was extremely profitable. Apple grossed 50 percent on each sale. Furthermore, Apple gained 14 percent of the cell phone market in a year, and its stock rose 44 percent. The industry and its customers were so changed that four years would pass before another company, just as new to the phone industry as Apple was in 2007, would directly challenge the iPhone.

That company was Google, which introduced its Android phone in January 2011. And the people at Google are every bit as passionate and committed to anticipating, creating and coming through with remarkable customer experiences as Apple. It is no accident that in the experience revolution, these two Experience Makers, both new to the phone industry, are battling for smartphone supremacy.

Creating the iPhone customer experience

The iPhone offered an innovative experience by intimately understanding and anticipating what people wanted to do with their smartphones. The iPhone promised and delivered a pleasurable experience as a phone, an Internet communicator, and a music player.

Apple began studying the market and its competitors at least three years before it introduced the iPhone. While some people were having good experiences, most were not. The stylus that phone makers often included to poke and type on the tiny keys of their phones was generally unpopular. It was an enlarged toothpick-like pointer, a potentially dangerous poker that was precarious to use. People would worry about where the stylus was or even lose it. The real job of the stylus was to help people adapt to the phone maker’s hardware. However, the stylus got in the way. When smartphone owners were focusing on poking their device, the stylus ultimately disconnected most of them from the world around them.

Phone makers promised ease of use. But customers’ actual experiences were hampered by phones that had cramped keyboards and tiny hardware pieces that many reviewers and users experienced as feeling “unsure, toy-like or plastic.” Broken promises created an opportunity for Apple to create a better experience.

The smartphone experience that Apple created started with the elegance of the phone itself and the user experience that would deliver on the promises made from the beginning of the customer experience. For example, Apple replaced the user-resistant, fixed-in-plastic buttons and tiny keyboards with a daring interface. The stylus was replaced with the human finger — what Steve Jobs called, “The best pointing device in the world. One we are born with.” To assure that the screen and finger were a gratifying and efficient combination, Apple developed a screen to interact with people’s fingers by ignoring unintended touches and hover motions. This intuitive touching of the screen, or gesture-based interface, allowed users to “flick” through a menu, between photos, or from one screen to the next. This is very much like the experience of turning the pages of a book in real life. It is natural, engaging and, for many, fun.

iPhone’s lure confounded many competitors. Some of them had trouble understanding the customer experience advantage of the iPhone. This is likely an important part of the reason why Nokia and Research In Motion’s Blackberry® have had difficult times since the introduction of the iPhone in 2007. In the smartphone market, they were marginalized by an Experience Maker. If they are to come back, they must at least be at parity with Apple and Google along the customer experience continuum.

The same approach with the Customer Experience 3Ds can be said of Apple’s success creating the market for the tablet with the iPad. With an average selling price of $595 to $645, the iPad sold almost 15 million units worldwide in 2010 since its introduction in April of that year. Apple purposely created the tablet market by developing and delivering positive customer experiences for mobile customers.

The iPhone is a great example of how a company can create a complete customer experience that results in major success. Apple did its homework all along the customer experience continuum before it entered the smartphone market. The iPhone is exemplary. Furthermore, it keeps customers buying every time a new iPhone is introduced.

Customer experience is critical to sustainable success today. A purposely created customer experience will make a company better, different and more valuable than most others. Are you seeing opportunities to be created by customer experience? Are you next in the customer experience revolution?

Jeofrey Bean is an author, speaker and the principal of Del Mar Research & Consulting, LLC. He is also an advisor to companies wanting to increase the certainty and effectiveness of their decisions about product and service development, as well as marketing and customer experience leadership. He is the author of the new business leadership book The Customer Experience Revolution: How Companies like Apple, Amazon, and Starbucks Have Changed Business Forever, with Sean Van Tyne. He can be reached at jbean@delmarresearch.com.

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