Listening to customers through a well-established voice of the customer (VOC) program is critical. However, without a customer experience strategy rooted in a company strategy, it’s easy for a firm to lose track of its core value proposition to key target customers.
"Use Southwest Airlines as the model. When customers demanded reserved seating, inter-line baggage transfer, and food service, they refused (and only now, are reluctantly providing semi-reserved seating). Why? It is not because they ignore their customers. On the contrary, it is because they understood that their customers had a much more critical need. Southwest realized that what the customers really wanted was low fares and on-time service, and these other things would have interfered with those goals.
I once had a lively, entertaining dinner with Herbert Kelleher, Chairman and co-founder of Southwest Airlines. I asked him why they had ignored the requests of their customers. Herb looked me up and down sternly, sighed, took another sip of his drink, uttered a few obscenities, and patiently explained. His marketing people asked the wrong question. They should have asked, would you pay $100 more for inter-airline baggage transfers? $50 more for reserved seating? No, the customers wouldn't have. They valued on-time, low-cost flights, and that is what Southwest delivers.
I came across a recent Fortune article describing the activities behind Trader Joe’s experience, which illustrate well many aspects I talk about for Cost Leaders in my latest customer experience strategy report. One aspect I found interesting was Trader Joe’s general absence of self-service that I pointed to for low-cost leaders. Rather, the company focuses more on simplicity and layers over it a distinct culture embedded in employees. It pays employees well — meaning it can be more selective in finding individuals who embody its culture — while keeping prices low through other means, such as limiting its selection. The company makes tradeoffs to deliver on low-cost expectations.
My take: There’s no single customer experience strategy, just as there is no single company strategy. The point for both is to find the mix of aligned activities that provide a company with competitive advantage.
What is the right customer experience strategy? My new report on customer experience strategy investigates this question. To give it some context, consider customers’ expectations of Costco versus Apple. Costco customers expect barebones service in return for low prices, while Apple customers expect innovative products at relatively high prices. These firms deliver radically different experiences, yet they both delight customers. Should your company be like Costco or like Apple — or something else entirely?
The report uses Michael Porter’s three generic company strategies as a starting point to understand core value propositions that should drive the right customer experience strategy.
In researching the report, Adaptive Path’s VP of Creative Services Brandon Schauer was invaluable in pushing my thinking toward using Michael Porter’s generic strategies as a starting point. He had a couple of powerful insights that I think are worth mentioning:
“For customer experience leaders, the first big hurdle is to discern the organization’s business strategy.” I’ve talked with many firms in the process of changing their company strategy, which creates a moving target that is both a challenge and an opportunity for customer experience leaders.