Like it or not, the world has shifted over the past two decades.
We’ve gone from a traditional pay-per-product economy to a subscription economy, and the implications for business leaders couldn’t be greater. Moving to a subscription-based business model has impacted everything from go-to-market strategies to product development to sales tactics.
Virtually every area of business has been dramatically affected, but, in my experience, many companies have failed to understand and evolve their customer experience strategy to better fit a subscription-oriented world.
What is a customer experience (CX) strategy?
Michael Porter—renowned Harvard business professor—famously said that the essence of strategy is “choosing to perform activities differently or to perform different activities” than your rivals.
Put simply, your business strategy isn’t just a slogan. It’s more than a catchy phrase to throw on your website’s “About Us” page or your next board meeting deck. Your strategy is the sum of the activities your company engages in to deliver unique value to your customers.
That’s true at a macro-level, but it’s also true when you zero in to specific business functions, such as customer experience. Your CX strategy should be a deliberate choice to engage in specific activities that will deliver a uniquely valuable experience for your customers (emphasis on the should be, because it’s often easy to not be deliberate and to simply do what your competitors are doing).
Your customer experience strategy should be a deliberate choice to engage in specific activities that will deliver a uniquely valuable experience for your customers.
Is your CX strategy to be frictionless or memorable?
Most CX strategies can be mapped on a single spectrum based on their focus. Is your company’s CX goal to deliver a frictionless experience or a memorable experience?
Neither option is inherently better or worse—what’s important is understanding the experience your customers are hoping for and delivering on that experience consistently. The first step to answering this question is to be clear about your brand promise. Sampson Lee, CX legend and brain behind the PIG (‘Pain is Good’) Strategy, has said,
“When a brand delivers their brand promise repeatedly and consistently, it drives brand differentiation, commands customer loyalty, and achieves business results.”
Everything about your brand—from your logo, to your marketing, to your product packaging—communicates something to your customers. You’re making promises about what they’ll experience, whether that’s a luxurious VIP experience or a budget-conscious DIY experience. Whatever your brand promise is, business results come from being clear and consistent with customers about what their customer experience will be.
For some businesses, this means optimizing their entire customer experience strategy around removing friction. For others, it means doing everything they can to create a memorable experience (even if this means introducing more friction at some points).
What is a frictionless customer experience?
A frictionless experience aims to get customers from A to B as quickly and easily as possible. What “A” and “B” mean will differ from company to company:
- If you’re a bank, it could be the process of opening a new account or transferring money between accounts.
- If you’re a healthcare provider, it could be your appointment scheduling experience.
- If you’re in SaaS, it could be your sign-up process or your customer support experience.
- If you’re an online store, it could be your checkout or return experience.
Customer Effort Score is a popular CX metric based on the idea that creating a frictionless customer experience is the best way to improve customer loyalty and increase future revenue.
If there’s a poster child for eliminating customer friction, it’s Amazon. From introducing Prime one-day delivery to one-click checkout to allowing customers to drop off returns at Whole Foods, Amazon’s entire customer experience is based on reducing friction for customers.
What is a memorable customer experience?
A memorable customer experience is just what it sounds like: it’s something you’ll remember for a long time. Companies focused on creating memorable experiences aren’t laser-focused on reducing friction—in fact, they may choose to introduce friction at some points to make a more memorable experience.
Companies with this CX strategy are focused on making a big impression.
If Amazon is the poster child for frictionless experiences, Disney may be the best example of a company built around creating memorable experiences. It’s no accident that Disney theme parks have mesmerized hundreds of millions of visitors over the years (despite long lines and high prices).
In fact, Disney is a prime example of how CX strategy is about pursuing specific activities to create a magical experience for visitors:
- They’ve built an advanced trash removal system that sucks trash away at 60 miles per hour to keep it out of sight for guests
- Cast members are empowered to give parents with small children special passes to skip to the front of lines
- Everything Disney does is fully immersive and done with a focus on details, helping guests to feel like they’ve stepped into a different world.
Disney’s dedication to creating memorable experiences is paying off because nearly 70% of first-time visitors return for future visits.
Creating a “best fit” customer experience starts with customer research and insights
You might be thinking, “Why choose just one? Why can’t I pursue a frictionless and memorable customer experience strategy?”
Good question. To be fair, you probably can pursue both, up to a certain point. As this HBR article summarizes, companies can often use both frictionless and memorable CX strategies to drive growth, but eventually, they hit a natural growth ceiling and need to optimize for one or the other.
“Brands must choose to focus on one or the other – to be either increasingly frictionless or increasingly memorable.” (HBR)
If that’s the case, how do you know which CX strategy is best for your organization? It all starts with customer research and insights.
That’s because the goal of every CX team should be to develop a ‘best fit’ CX strategy, where customer expectations perfectly align with the CX priorities they’ve chosen to pursue. Given that customer expectations fall on a spectrum between frictionless and memorable, customer feedback analysis is how you can achieve that alignment.
You read that right! Customer insights play a pivotal role in defining the best CX strategy for an organization. That’s why recent research found that “65% of companies now place more importance on the customer experience than they did prior to the COVID-19 pandemic, and addressing changing customer behaviors and demands was at the top of their list of concerns.”
That’s good news for customer insights teams—although it might also be a little stress-inducing. Welcome to the limelight, customer insights! It’s high time every business upped its customer research game.
Ryanair is a perfect example of relying on customer insights to refine its CX strategy. In 2015, Ryanair was Britain’s 4th most hated brand. Ryanair is a budget airline—that’s always been very clear. Its brand promise is to be the cheapest airfare option you’ll find, and plenty of passengers are willing to suffer some discomfort and frustration for a lower ticket price. It’s cheap and relatively frictionless.
But there’s a limit to what customers will put up, and part of why Ryanair was so hated was because they misunderstood their passengers’ expectations. They wrongly believed that customers didn’t care much at all about having a memorable experience.
Over the past few years, Ryanair has improved its CX strategy by listening to its customers. They’re still aiming for a relatively frictionless experience, but they’ve improved on the memorable part of their experience by listening to customers.
As CX leaders realize they need to understand their customers’ expectations more clearly, the role of customer insights teams becomes more central. Customer expectations are always evolving, and feedback analytics is how you monitor and identify when your customer expectations and actual CX experience shift away from each other.
The right strategy is the one that aligns with what your customers want
The biggest factor that should influence your CX strategy is your customers’ expectations. No ifs, ands, or buts. When you can perfectly align your customer experience strategy with what your customers want, you’ll have stepped into the promised land.
Successful insights teams leverage customer feedback to support CX leaders in understanding what customers want. They do this through collecting qualitative and quantitative, structured and unstructured data from across the entire customer journey.
If you could use some help making sense of your customer feedback to create a sound CX strategy, check out a demo of Kapiche today. We’ve helped dozens of the world’s leading companies better understand their customers, and we can help you uncover deeper insights in days or weeks.