As customers choose brands based on how they make them feel, rather than their actual products or services, there is an intrinsic advantage to those organisations who use designed experiences as a weapon to cut through the most competitive of markets.
Those that don’t, operate in what we call the “experience gap”, the space between them and their customer’s expectation of them. Make no mistake, in our high paced and digitally connected economies, the experience gap is driving markets, fast.
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For example, take Instagram and Twitter. These brands filled the demand for a whole new human experience that did not exist before the evolution of digital technologies enabled that. They were pioneers, and there were no established players to unseat. But we are also seeing a similar dynamic in existing industries. New entrants are coming in and taking the space, also using whole new experiences, purely because the incumbents left the door open.
A great example of this would be Uber and Airbnb. Closer to home, this can be seen with Australian neobanks who are giving customers a better experience than the incumbents.
Robert Bell is the CEO at neobank 86400. He says banking has already become quite complicated and he wanted to make a change.
“People already bank with multiple banks [so] someone who can provide a better experience….. is going to win customers. That’s what we’re aiming to do.”
His neobank is working to solve customers problems more holistically.
Bell said, “It’s significantly harder work and takes more time to become a bank, but having done that we can have a much better relationship with our customers and we can offer them a lot more products and services.”
Think about that for a moment. Do you notice how better experiences, leads to better relationships, which is then the stepping stone more offerings? Many brands still jump straight to modified offerings, without gaining that customer connection and the necessary foundation of trust first.
Most incumbents, the established organisations inside industries, are all having to recalibrate their thinking in this way. They need to understand that their markets have changed, their customers think differently now, and they are continuing to change as well. Organisations now need to understand the perceptions against their products, their services, and their brand.
Yet many businesses are so busy patting themselves on the back, that they fail to notice very clear signals from their customers. They’re just not listening.
As far back as the last decade research by Bain and Company revealed that 80 per cent of CEO’s believed they provided a great customer experience, yet only eight per cent of their customers agreed. That research incidentally was conducted by Frederick F. Reichheld, inventor of the NPS concept – and is now widely quoted.
It is one data point alone, yet it rings a very loud bell. A decade on, conditions are far less forgiving. If businesses are unwilling to disrupt themselves, then someone else will.
Mind the gap
SAP CEO, Bill McDermott, addressed the critical importance of experience to modern commerce in an article entitled Mind The Gap: The Trust/Experience Paradox.
“In the experience economy, seven billion consumers are in the driver’s seat like never before. Emotion drives behaviour, loyalty, satisfaction,” said McDermott. “People make buying decisions based on a range of factors, not just price. We embrace brands that embody our dreams and shun those that fall short. This has serious repercussions for organisations of all shapes and sizes.
To deliver against these expectation companies need both the tools and the right organisational mindset. “It must be a far-reaching cultural transformation that sensitises every person inside an institution to the people outside the institution.”
Companies that embrace this vision, he says, understand that every human experience has the same potential to change the future as our own experience had to shape our perspective.
I’ve been researching experience and consumer behaviour for a long time now, and in 2017 my focus was on understanding trust. Now in 2019, working with Which-50 and a range of notable brands, we wanted to explore what this means for different organisations, operating in vastly different markets.
About this author
Aarron Spinley is the strategy director at SAP CX. SAP CX is a corporate member of the Which-50 Digital Intelligence Unit. Our members provide their insights and expertise for the benefit of the Which-50 community. Membership fees apply.