Few business leaders would argue that quality customer service is essential to the running of their business. Nowadays most customers expect it as a given, and their experiences and perceptions of service will undoubtedly play a large role in the decision-making factors influencing a purchase.
What really counts, and differentiates service, however, is creating a great ‘customer experience’ that will attract new customers and will build loyalty and retention.
Surprisingly, our experience is that many businesses do not invest sufficiently in customer experience, thereby missing out on a hugely valuable opportunity for strategic differentiation.
In our work we have found that businesses need to seize every opportunity they can to differentiate, opportunities that are becoming harder to find, particularly in the service sector, unless of course you can rightly claim your service is truly unique.
In highly competitive environments, achieving meaningful differentiation is now really tough, because in reality your product and service offers are often very similar, or even the same as your competitors. Unfortunately this often leaves price as the major discriminator, which can often then lead to an undesirable downward spiral of eroding margins. Any opportunity that businesses can use to differentiate their services and help build a strong brand should therefore be seized upon.
At Octant Strategic, we help businesses develop new opportunities and help create competitive advantage. We often find that differentiation can be achieved around the ‘how you do it’ approach rather than the ‘what you do’. This is a key opportunity that cannot be overlooked. It’s about building stronger relationships and delivering a positive customer experience and that is what adds value.
This is particularly important where business transactions are increasingly automated and the customer interface is largely digital. While customers want business to be made easier, and online transactions can obviously help do this, our research confirms that customers still want to feel loved and valued. Often the solution is to find the right mix of digital and personal service.
Finding the optimal solution is made more complex because customer behaviours and expectations can vary radically across different demographic groups. Millennials, for example, expect a seamless digital interface, have zero tolerance for digital transactions that are remotely ‘clunky’, are prone to switch service provider instantly as they see a slicker alternative and also only use the phone as a last resort of communication. At the other extreme, older generations often highly value the personal interface and are reassured by being able to easily talk to and get answers from real people.
The point is that building a customer experience superior to that of your competitors will often require the right mix of digital and personal (‘human’) service and it’s likely that you’ll need to do both types of service incredibly well in order to truly differentiate your business. Do both well and get the balance right and your customers will become your best advocates.
Thinking about my B2B customer experiences, I often champion the services of the bank we use for company business. Banking is not generally a sector that gets customer experience praise in the media, but our experience of Swedish bank Handelsbanken tells a different story.
Handelsbanken is a bank that has a comparatively small UK network of branches. They don’t provide traditional ‘over the counter’ banking services like most high street banks, but they do offer excellent digital services and they use strategically positioned local branches to manage local relationships… and that’s where they excel.
Once or twice a month ‘call Kate’ echoes around our offices. Kate is a real person, and some might say that she’s the equivalent of a good old-fashioned bank manager. She is personable, helpful and she makes things happen, without the need to pass us to five different departments. Problems are sorted out quickly and we are left feeling good about the bank every time we talk to Kate. It’s a positive customer experience.
In the UK, Handelsbanken is a comparatively young company and it is clear to us that they have created a culture of positive customer experience, recruiting and training people who believe in the company’s values. The bank is undoubtedly differentiating in terms of positioning and self evidently it creates valuable word of mouth referrals. Long may it continue!
Probably no longer needing similar referrals, a good example of exceptional customer experience, primarily in the consumer market, is Amazon. Their mantra is apparently that ‘the best customer service is no customer service’, based on the belief that if their online experience excels and is totally reliable, there will be no need for any traditional form customer service outside that of the transaction itself. This certainly echoes my own experience to date, but the two or three people that I have struggled to find that have actually needed to speak to a real person at Amazon because of an issue, have also confirmed excellent levels of back-up telephone support and human interaction.
I believe Handelsbanken’s and Amazon’s management and focus on ‘customer experience’ are both excellent and that this certainly hasn’t happened by accident. Both companies have invested heavily in making sure they excel in all the areas of customer engagement, but when everything doesn’t quite go to plan for whatever reason, Plan ‘B’ is also excellent.
For Handelsbanken, I would argue that differentiation in customer experience has been achieved via a combination of the culture they have built, and their strategy to keep their branches small so they can provide the kind of focused, agile and personable service that the major banks find almost impossible to match.
For Amazon, their investment in digital technology to keep them ahead is relentless, to the extent that they use browsing and buying data to build a better ‘sense’ of customers’ likely needs in order to anticipate the future and provide better downstream buying solutions. Automation and big data is being used to make Amazon more empathetic of customer needs, thereby building an even greater customer experience.
For both Handelsbanken and Amazon it’s certainly the ‘how they do it’ that has helped them build strategic differentiation and competitive advantage.
Our Top 10 tips for improving the customer experience are: -
Put ‘customer experience’ high on your strategic agenda and revisit it regularly…. it’s a fast changing environment and you can’t afford to stand still.
Determine what your customers really think about ‘how you do it’ rather than what you think they think. Beware; your perceptions will often not be accurate enough to develop a winning strategy. You may well be very surprised!
Also, find out how your ‘non-customers’ perceive your customer experience and why they use other providers services. Their perceptions will often provide invaluable additional insights into how you can improve your service and ‘win over’ these new potential customers.
Assess how your competitors are managing customer experience so you can fully assess your opportunity for strategic differentiation.
Assess your mix of digital and person-to-person customer engagement and make sure it really does work in all customer segments. Letting down a great online digital customer experience with a poor personal service, or visa versa, will cost you dearly.
Consider a Handelsbanken type ‘Call Kate’ strategy because opportunities to interface with customers one-on-one are now increasingly rare. Excelling in this area will generate many valuable advocates.
Work hard to be more empathetic of customer needs. Feel the pain before your customers do, and do something about it before a problem occurs.
Above all, look hard at ‘how you do it’. Imagine ‘the art of the possible’ and challenge all your options to build the differentiation and competitive advantage your business needs to win.
Don’t forget that little changes can often make a big difference. Often improving customer experience does not have to be expensive or a radical change.
Remember that creating good customer experience is often a cultural issue. Its importance needs to be embraced within your corporate values and brand strategy. Both play a vital role in driving employee behaviour, and this behaviour will lead to action and results.
Posted by: David McRobert - Director And Co-founder