Tag Archives: Customer Experience

Rapid Revenue Retention: A “Swarming” Approach to Keeping Customers During Recessionary Conditions

Given all the business challenges you’re facing today, the last thing you want to do is drive away customers, particularly your most valuable customers.  However, I can say with total confidence that:

Some of your best customers will leave you based on negative experiences they’re currently having!

How do I know this?  Because, after having worked on customer experience initiatives with many dozens of different companies, I’ve learned that every complex organization is disconnected from their customers’ changing priorities… and the harsh realities of the experience customers have as they pursue those priorities.  (Note:  It turns out that this statement is more than just an observation.  It’s a provable certainty that I’ll cover in another post). As a result, it is highly likely your organization is unintentionally frustrating, annoying, confusing, missing opportunities with, and on the verge of losing some of its best customers.  And your organization is doing this in ways that are impossible to fully see from where you are sitting inside the organization.

I’m not trying to be antagonistic.  I’m just stating something that should be intuitively obvious to anyone that’s ever experienced the joys of being a customer.   Bain’sClosing the Delivery Gap” clearly illustrated this disconnect as follows, “When we recently surveyed 362 firms, we found that 80% believed they delivered a “superior experience” to their customers. But when we then asked customers about their own perceptions, we heard a very different story. They said that only 8% of companies were really delivering.”

disconnect

But wait!  It gets worse!   Not only does the gap exist, the gap is almost always growing.  This is true in any situation where the EXTERNAL REALITIES (customers’ circumstances, needs, expectations, and perceived alternatives) ARE CHANGING FASTER THAN THE INTERNAL BELIEFS held by management about what’s most important to customers.  If this is true in your situation, the rate this gap is growing is proportional to the rate of change in your external environment.

As we’ve entered this recessionary economic period, the external environment is changing quite dramatically and quite unpredictably.   As a result, any organization that turns its attention inwards rather than getting even closer to customers is only going to accelerate customer attrition and, ultimately, the irrelevance of their business.

In previous posts, I’ve started to address the most important strategies for dealing with these challenges.  (See:  When the Going Gets Tough… The Tough Get Closer to Their Customers and Delivering Winning Experiences for the Recessionary Customer Mindset ).   In this post, I’d like to extend these perspectives to one of the most valuable things you can start doing today.

Rapid Revenue Retention – A “Swarming” Approach

Over the past decade, we’ve done a particular type of focused Rapid Revenue Retention effort for clients.  We’ve affectionately call the approach we follow “swarming” or “swarm sensing” because it involves sending a distributed team of people into the field to observe (i.e., to swarm around) the experience customers are having.  The approach we follow is based on Swarm Intelligence; a highly parallelized approach to reconnaissance used by the military.

swarm

The objective is, over an 8-10 week period to:

Identify and prioritize the six most important things the company can immediately start doing or stop doing that will lead to a substantial improvement in customer retention or additional sales

In order to accomplish this objective, we send a team of “swarmers” into the field to live with and talk with customers and prospects; to experience things first hand, from the customers’ perspective; and to identify the specific frustration and confusion points that are leading to attrition or lost sales opportunities.   Generally these efforts have been able to quickly identify improvements that lead to a 3 to 5 point increase in retention and, often, a significant increase in the win rate on new business.  Depending on the size of the business, the benefits of this focused effort have traditionally run into the tens of millions of incremental retained revenue.

Here’s an example:

  • Situation: The company is a leading provider of financial products that get sold through intermediaries (dealers) around the country. The differentiated positioning for this organization was their ability to partner with those dealers in a way that created a measurable improvement in their performance. The President of the organization approached us and said, “I believe we provide a highly superior product but I can’t understand why dealers are leaving us at an increasing rate.”
  • Approach: In order to respond to his request, we had a team of swarmers hit the field and spend about 6 weeks with current dealers, lost dealers, as well as, the customers of those dealers. Like other situations we’ve been in, it’s surprising how immediately apparent the issues are when you’re able to step into the customers’ perspective.
  • Results: In the course of those six weeks, we were able to identify seven immediate interventions that improved both dealer retention and the profitability of the existing dealers. These interventions included improvements to the screening criteria for pursuing new dealers, modifications to the initial dealer training they provided along with the creation of a refresher training schedule, and an attrition early warning process that picked up on changes in dealer behavior and directed sales people to intervene proactively as soon as the dealer started to exhibit the behaviors associated with leaving. Over the course of the 6 months following this effort, the organization was able to increase their retention from 88% to 91% creating a revenue uplift of approximately 20 million dollars.

Organizing the Swarm

We’ve generally done this with a small number of trained swarmers (consultants or researchers) supported by a team of more inexperienced swarmers (employees).  While it’s generally easier for outsiders to approach the situation from a fresh perspective, there are several conditions that can be managed to make it possible to accomplish work economically with inside people.  The keys to organizing the swarm include:

  • Ensure swarmers are capable of seeing things from an unbiased perspective. This can be an unnatural act for anyone that’s been involved in any way in delivering or managing the services being observed.  People who’ve had any involvement in delivering the services being observed are “burdened by knowledge.” This includes being steeped in the processes, constraints, assumptions, excuses, biases, and blind-spots associated with delivering the service.
  • Arm swarmers with the right tools and training. Over the past 10 years, we have developed and continuously improved a “Customer Experience Observation Field Book” and accompanying training that has been effective at helping swarmers better see the experience from the customers’ perspective.

experience-fieldbook

  • Ensure swarmers are able to put themselves in the customers’ shoes. Swarmers must be able to step into and “live” the customers’ priorities.  It’s important that swarmers be able to viscerally “get” what the customer is trying to accomplish, feels their needs, and understands how the customer looks at the experience.  This can be easier to do with inexperienced swarmers when those people strongly resemble the customers in question and have themselves been in similar customer situations.  For example, we’ve found that inexperienced swarmers have done an outstanding job observing the experience at Disneyland, when they themselves fit the profile of the customers whose experience we’re interested in.  However, we’ve had much less success in situations where swarmers come from significantly different cultural, economic, or business backgrounds than the customers in question.
  • Ensure that swarmers have no relationship with the customers being observed or interviewed. The presence of any personal, professional, or organizational relationship with the customers being interviewed will bias: 1) what customers may feel comfortable sharing, 2) what the swarmer is comfortable asking about, and 3) the purity of observations that can be captured.  It is particularly important that neither party has a stake in the findings.  This is one of the reasons why…

One of the most biased and ineffective ways to listen to customers is through your sales and account management executives.

The immediate reaction we typically get is, “We’ll just have our people on the frontlines… the one’s that spend all day with our customers… do this.”  While we understand the advantages, we’ve learned this is generally a bad idea.  There are three multiplicative barriers that get in the way of having salespeople and account executives be a good source of insight.  First, when salespeople talk to customers, they have an agenda and customers know it.  There are often negotiation-oriented and face-saving dimensions to the relationship between the salesperson and the customer.  As a result, customers do not tell salespeople everything.  Second, since sales people show up with their agenda and existing relationship, they generally filter everything they hear through that agenda and relationship.  So, salespeople don’t hear many of the most important things customers have to say.   Third, salespeople don’t accurately report everything they’ve heard back to management.  This is particularly true if, by any stretch of the imagination, what the salesperson heard might reflect negatively on them.

  • Build a capable, well balanced team. There is a profile for the good swarmers.  In our experience, the best swarmers tend to be extroverted, empathetic, open-minded, detail-oriented people who are capable of withholding judgment rather than quickly jumping to conclusions quickly.  Although we generally have a diverse team, you need to have enough of these types of people in the mix.

There are several things that make the Swarm Sensing process different from “mystery shopping.”  Most importantly, the intention is different.  The objective is to aggressively identify the highest impact improvements that can be made immediately.  This requires executive sponsorship and visibility for the effort, as well as, for implementing subsequent improvements.  In addition, the level of depth is different.  Most mystery shopping exercises are more about measuring compliance with expected service standards rather than getting deeply under the covers of what’s working and not working about the experience customers are having.  In a way this makes the swarming effort more like a highly directed ethnographic study.  The most challenging elements of this are equipping, training, and coordinating a distributed team of swarmers to do the work over a short period of time with a very well-defined and highly valuable business objective.

I’d be happy to share more perspective on this approach than I have room to address here.  Shoot me a message or add a comment if you’d like more information.

Delivering Winning Experiences for the Recessionary Customer Mindset

Layout 1I just received an interesting advertisement from Mimi’s Café.  Mimi’s is a 115-store chain of upscale casual dining establishments known for generous portions of predictably high quality entrees.  In an unusual twist, Mimi’s is promoting a “Just Enough Menu” focused on smaller portions at prices that range from $7-9 for lunch and $8-12 for dinner.  While most advertisements you see promote “more for less,” this advertisement promotes “less for less.”   Although this may be surprising, I believe it’s an astute move.  Not only does it provide a low price incentive but the “less for less” approach strikes a chord with a recessionary mindset that has been taking hold.

The National Bureau of Economic Research (NBER) announced yesterday that the United States has officially been in a recession since December 2007.  I don’t think many people were surprised.  “I think that we’ve got a ways to go, that this is going to be probably a deep and long recession,” said Jeffrey Frankel, a Harvard University economist who sits on the NBER.

Over the past year or so, the focus of our work on customer experience design has transitioned from the strategic to the urgent.  We’ve spent more time helping clients focus attention and investment on collaborating with and retaining their best customers, surfacing and quickly addressing the reasons for customer attrition, and on continually reinforcing that, although everyone seems to have become more conservative,…

Customers are NOT NOT spending!  They are just changing how and why they spend.

Customers are continuing to opt for and engage in experiences that are designed to meet their needs.  It’s just that their needs and priorities are changing significantly.  Organizations that understand and quickly adapt to these changes can not only preserve but enhance revenue in the short term.  Organizations that hang onto outdated beliefs regarding their customers’ priorities will not only lose revenue but will ultimately be seen as out of touch and irrelevant.

While every industry and situation has its own unique behavioral shift to understand, we’re seeing a few overarching patterns that represent a solid starting place.  Increasingly, customers are:

1. Rejecting Conspicuous Consumption

The recession may just provide a cure for a wicked case of Affluenza!  In light of the current conditions, our past consumer behavior looks a little embarrassing; like our evolutionary predisposition to acquire has been running amuck.  The Times of London columnist, India Knight wrote, “I am happy to observe that the decades of vulgar excess are finally over… There is a strong collective sense of us all coming back down to earth. It’s like a huge national reality check and, unwelcome as it may be, there is a possibility that it will result in us straightening out our priorities.”   (See:  Dear Prudence: Recession May Bring Return of Traditional Values).

blingwater_1We’re seeing early indications that there may be an aggressive backlash against indulgent and conspicuous consumption.  Think about it.  How many families need a 5,000+ square foot house other than to store all the stuff they buy to fill it to the rafters?  Is it really necessary to spend between $40… and even $400… for a case of 12 liter bottles of water?  Have I got a deal for you?  A case of Bling H20 (water corked in frosted glass bottles adorned with Swarovski crystals) is currently on special for less than $400/case.  Even at this discounted price, it still makes the EvianPalace” water seem cheap at $15-$20 a bottle.  Similarly, is it necessary to spend three times as much on Renova’s designer toilet paper, $200 jeans, or a $690 on a Porsche baby stroller?

We’re starting to see a return to the more reasonable basics.  In the fashion industry, “the dress, which has enjoyed a lengthy reign over the market, is losing ground to more conservative, versatile, basic pieces that can blend and carry their owners through several seasons. Retailers report excellent sales in practical items such as blazers, denim, basic separates, and trousers.”  (http://www.slate.com/id/2191398/)

It’s starting to look more and more socially unacceptable to buy upscale goods.  A recent investment blog post provides an indicator of some of the sentiment we’re seeing.   “One company that will be hurt by the eating retrenchment is Whole Foods (NASDAQ: WFMI), a favorite of the upper middle class who wants to look down their noses at people who go to regular grocery stores.”  (My emphasis added).  The point isn’t whether Whole Foods shoppers believe in the health and environmental benefits of organic and natural foods; the point is that non-Whole Foods shoppers perceive the Whole Foods shoppers as “looking down their noses at them.”

As I mentioned in a previous post (When the Going Gets Tough… The Tough Get Closer to Their Customers), as customers that are struggling will buy up in order to keep up appearances, the ones that aren’t will tone it down.  I expect we’ll see an echo of the “grunge” music, fashion, and lifestyle movement that arose out of the recession of the early ’90s.  This will create opportunity for new products, entertainment, fashion, and retain outlets.

As we head into the holiday season, we’re starting to see an increased tendency to give “practical” gifts rather than the more luxurious and exotic gifts.  Look for high end companies to jump on opportunities to introduce more discreet chic alternatives.

2. Making Value-Focused Tradeoffs

As the recession has taken hold, most customers are more willing to postpone purchases, trade down, or buy less.  For many customers, yesterday’s “must haves” are becoming today’s “can do with outs.

In the course of making these tradeoffs, customers are buying more quality non-branded or store-branded alternatives.  Michael Barbaro and Eric Dash wrote in the New York Times “Recession Diet Just One Way to Tighten Belt” that, “Over the last year, purchases of brand name cookies and crackers have fallen, according to Information Resources, which tracks retail sales.  Sales of Nabisco graham crackers have dropped 7.5 percent, and Keebler Fudge Shoppe cookies have slipped by 12.3 percent.  Not even beer is immune.  Sales of inexpensive domestic beers, like Keystone Light, are up; sales of higher-price imports, like Corona Extra, are down, the firm said.”

Customers are also making tradeoffs in convenience for price.  This includes shifting from the Marriott to the Fairfield Inn and looking for cheaper flights at off peak times, such as mid afternoon and late evening rather than early morning.  As Barbaro and Dash write, “Spending data and interviews around the country show that middle- and working-class consumers are starting to switch from name brands to cheaper alternatives, to eat in instead of dining out and to fly at unusual hours to shave dollars off airfares.”

In a great article, “Dollar’s fall forces new standard of frugality,” San Francisco Chronicle writer Sam Zuckerman writes, “Now, that shop-till-you-drop, I-want-it-all-and-I-want-it-now era may be coming to an end. It couldn’t last because it was built on a mountain of money borrowed from overseas.”  Zuckerman goes on to summarize some of the ways that customers are throttling back:

IN OUT
Saving Borrowing
Cooking at home Eating out
Fixing the old car New car
Staying at home Foreign vacations
20 percent down No down payment
Debit cards Credit cards
Working past 65 Early retirement
Library Bookstore
Tap water Bottled water
BART Bay Bridge
Patching Remodeling
Public park Theme park
Eyeglasses Lasik surgery
Poker night Weekend in Vegas

We’re also finding that business customers want to see products and services unbundled and priced separately.  Customers want and need to evaluate the individual contribution of each component and are placing a premium on reliability, predictability, and performance.  New products and services that address new customer priorities and put pressure on competitors can be effective but advertising and sales efforts must stress differentiated value and superior price performance.

3. Smaller Scale, Do it Yourself Alternatives

During more optimistic economic times, customers often find I easier to justify making investments in major projects.  For example, homeowners might invest in renovating their home with the expectation that it’ll have a positive impact on their home’s value.   However, as home values are shrinking, homeowners are opting for smaller scale and more focused and necessary improvements driven by livability and value preservation rather than economic gain.  For example, at Home Depot, sinks, faucets, and bath accessories are selling briskly as consumers switch from full makeovers to more focused refreshes.

Barbaro and Dash go on to cite an NPD study that provides another example:  “Carl Hall, a retired construction worker in Detroit, wants to buy a fence for his backyard. But he decided not to buy a finished product at Lowe’s, the home improvement chain where he was shopping recently. With money tight, “I am looking to put it together myself,” he said, adding that he hoped to save $200.”

We’re also seeing anecdotal evidence of a similar pattern with business buyers.   It seems like more companies are breaking consulting and business services projects into smaller pieces and looking for parts that they can do themselves.

Agile companies will create offerings and experiences that provide customers both smaller scale and “do it yourself” alternatives… in addition to offering fully integrated options for those who may continue to prefer that.

4. Regaining Control

People experience an emotional loss of control during unpredictable times.  As a result, we typically see people acting in idiosyncratic ways driven by a deep psychological need to regain control.  For example, people often engage more in collecting hobbies when they feel out of control in their lives.  Depending on their individual interests, they’ll collect figurines, CD, DVDS, coins… just about anything.  Conway’s Vintage Treasures blog, stated, ” “Collecting is a passion and a distraction to a better place, a better quality of life then we can get from say for example, following stock prices everyday…”   Our research points to a deeper reason that has to do with control.  The more people feel their situation is out of control, the more they compensate by engaging in behavior that helps them regain their sense of control.  Collecting is one of those things.   What’s the benefit of collecting another figurine when you already have 200 of them?  Well, it makes them feel like they’re on top of their collection and making progress in small steps towards improving it.

Aside from these deeper control issues, we also see more obvious ways of regaining control.  For example, programmable thermostats and insulation which help gain control over fuel bills are another top seller at home improvement stores.

Another way that customers regain control is by taking advantage of packaged offerings that reduce the actual or perceived costs or level of uncertainty.  These bundled offerings can provide the comfort of “no surprises at a set price.”   For example, while travel agencies report that although overall demand for travel is down, there has been a shift to U.S. and even local destinations, with a rise in popularity of “all-inclusive” stays.  (See:  Americans Flee Looming Recession).  The opportunity for a local bed-and-breakfast might be:  they could offer a package that included dinner at a local restaurant; bicycle rental, horse carriage tour or the like; and tickets to a local attraction or museum.  Those establishments could provide the goods and services at a discount to the B&B (as a “cost” of marketing for the increased business), and the B&B could offer the full package below the retail cost of the individual items while guaranteeing the usage of their rooms.  A win-win situation for all of the businesses!

5. Cocooning, Insperiences, and Staycations

As hard times loom, we tend to retreat to the comfort of our friends and family.  We connect with cozy hearth-and-home scenes in advertisements rather than images of extreme sports, adventure, and rugged individualism.   As we cocoon, insperiences tend to boom.  According to trendwatching.com, Insperiences represent “consumers’ desire to bring top-level experiences into their domestic domain.” This can include high-end entertainment systems, in-home spas, exercise facilities, etc…

As a result, telephone use and discretionary spending on home furnishings and home entertainment should continue to hold up well, as uncertainty leads us to stay at home but also stay connected with family and friends.   Sales of big-ticket electronics, like $1,000 flat-panel televisions and $300 video game systems, are on the rise, according to retailers and research firms. Falling prices for such devices and a looming government deadline to convert to digital television have helped. So has the view, sensible or not, that the technology is a good investment.

Staycations often replace vacations.  Vacations at or around home rather than traveling can be significantly less costly since there are no lodging costs and minimal travel expenses.  Costs may be limited to gasoline for local trips, dining, and local attractions.   In addition, Staycations do not have the stress associated with travel, such as packing, long drives, or waits at airports.  They may also appeal to people who are stressed about being away from work.  (However, it also leads to the downside of working on your vacation.)

6. Small Understated Indulgences

In parallel with reverting to the practical, customers will look for small understated indulgences.  They seek diversionary yet affordable experiences that can make them temporarily forget their worries.   This includes things like going to the movies.  During the height of the great depression, when 25% of families had no income and unemployed labor reached 40%, movie receipts still increased by 22%.

Big indulgences like higher-end restaurant chains, including Ruth’s Chris and Morton’s, will be off since they are either actually too expensive or appear to be extravagant.  In addition, frequently small indulgences that have become habits, like Starbucks, will also take a hit since the total expenditures on those items tends to add up.

There are also a range of interesting anti-recessionary small indulgences.  Chocolates and alcohol generally sell well during a recession.  Another interesting affordable luxury that generally performs well during a recession is lipstick.  The “Lipstick Index” is the result of a time-series analysis that suggests that lipstick sales are inversely related to the strength of the economy.

7. Looking for Empathy

Customers are looking for companies that understand what they’re going through and are ready to help.  In the outstanding New York Times article, “Thriftiness on Special in Aisle 5,” authors  Stephanie Rosenbloom and Andrew Martin write:

“While it might seem counterintuitive for stores to teach shoppers to cut their spending, several chains have concluded that providing such knowledge can spur loyalty and keep customers from trading down to cheaper competitors.

So the Stop & Shop grocery chain is offering “affordable food summits” where consumers are taught how to lower their grocery bills. Home Depot offers classes on how to cut energy bills. And Wal-Mart Stores hired a “family financial expert” who has used online chats to teach several thousand shoppers how to save money for college, whittle away debt and sell a house.”

Whole Foods has redesigned their customer experience around the “Whole Deal” theme targeted at customers who remain committed to natural and organic foods but are feeling a heightened attention to cost.  This experience includes several creative elements that match customers’ shifting priorities : an expanded selection of lower-priced alternatives marketed under their “365″ store brand,  “Money Saving Meal Plans” and “Budget Friendly Recipes” that provide advice for containing costs while maintaining a focus healthy natural and organic foods.   They are even offering “Value Tours” through the store in order to help customers find the most cost-effective solutions.

Another way customers are looking for understanding is pricing.  Astute providers do not necessarily have to cut list prices but they may need to offer more temporary price promotions, reduce the thresholds for discounts, extend credit to long-standing customers and price smaller sizes more aggressively.

Rosenbloom and Martin very eloquently summarize that…

“The golden trend tip for brands in a downturn? Care about your customers. Deliver. Sympathize. Surprise them. Talk to them.”

These seven patterns provide a solid starting place for identifying the specific shifts in customer needs, priorities, and behaviors that may be relevant to your industry and situation.  In the end, companies that focus attention and investment on collaborating with and retaining their best customers, surface and quickly address the reasons for customer attrition, and remember that…

Customers are NOT NOT spending!  They are just changing how and why they spend.

Those companies will be in the best position to deliver winning experiences that resonate with their customers’ changing needs and priorities… and, maybe even, turn a downturn into an upturn.

When the Going Gets Tough… The Tough Get Closer to Their Customers

Whether we like it or not, the current recession will separate the weak from the strong.  For many organizations, I believe the deciding factor will be how well they recognize…

The linchpin of an effective recessionary strategy is aggressive customer focus!

In a downturn, customers’ assumptions about the future are driven by fear and uncertainty more than objective financial realities.  Any recession generates the obvious and predictable belt-tightening; customers delay necessary purchases, choose more inexpensive options, and avoid discretionary spending.  However, it’s critically important to recognize that, beyond these generalities, each recession produces it’s own unique pattern of changes in customers’ needs, priorities, and behaviors.  As a result, a recession can create opportunities for organizations that can understand these changes, think creatively, and use the situation as an opportunity to strengthen relationships with their most valuable customers.

One of the worst things an organization can do during a recession is to take its eyes off of their customers.  However, when threatened, most organizations have a tendency to adopt an inwardly-focused, “survival mode,” mentality.   They focus on operational and financial controls and stop investing in what appears like discretionary initiatives aimed at strengthening relationships with customers.  By taking their eye off of the customer, they end up accelerating customer and revenue attrition while undermining their longer-term competitive strength.  There are three things we’d recommend based on the work we’re doing to help our clients deal with this challenge:

1.      The first priority is aggressive focus on and investment in your best customers and prospects.  During a recession, a relatively small number of your best customers will provide an even larger share of your profits, while the often larger ranks of marginal or unprofitable customers will create even more of drain on the system.   The first thing to do in a recession is to clearly identify who your most valuable customers are and invest in strengthening relationships with those customers.   This includes collaborating with those customers to understand and address their changing priorities, restructuring your offerings around their unique needs and, as necessary, restructuring financial terms.  It also includes focusing sales efforts on the most valuable, winnable customers and making sure that you’re not wasting resources on customers that are not going to buy and that are unlikely to be profitable.

There are many classic examples of the benefits resulting from aggressive, customer-focused investment during times when competitors are retrenching.  For example, Dell invested in their customer-centric telephone ordering and pull production systems during the 1990-1991 downturn.  As a result, Dell was able to capture the strongest competitive position when the economy sprang back.  Singapore Airlines invested $300 million in new seats, entertainment, meals, flight attendant training all aimed at their most profitable first-and business-class customers.  As a result, they were able to not only survive, but remain profitable in the aftermath of the 1997 Asian currency crisis and emerged in stronger competitive position.

A lot of the work we’ve been doing is focused on helping clients collaborate effectively with their best customers.  This starts with the analysis required to clearly determine who their best customers are and continues with the implementation of joint planning processes, closed-loop satisfaction management practices, as well as, more agile, open, and collaborative product development and service processes.  In addition, we’ve been helping clients optimize their selling activities by starting with a clearer understanding of how their customers’ buying priorities are changing.

2.      The second priority is watching, talking with, and listening to customers more closely in order to identify creative ways to address subtle changes in their needs, priorities, and behavior.  It’s critically important to NOT rely on your traditional assumptions about what’s important to customers.  Instead you need an informed view of how your customers’ needs and behaviors are changing as dark clouds appear on the horizon.  You need to think creatively about ways to meet those changing needs and address those changing behaviors in order to strengthen the relationship, generate more value, make their lives easier, or make their businesses easier to run.  Not surprisingly, customer behavior will increasingly be driven by emotion rather than rational consideration.  By getting closer to customers you can identify ways to proactively address customers’ emotional needs and reactions.  Here are a few of the overarching behavioral shifts we’ve been observing as the recession continues to take hold:

  • Sympathetic Frugality and Inconspicuous Consumption. Most people who are struggling don’t want it to show; they’ll make compromises in order to keep up appearances.  However, even the customers that are doing well are becoming more cautious as they see friends and colleagues cutting back or losing their jobs.  Appearances matter.  Inconspicuous consumption refers to purchasing goods or services that convey a lower socioeconomic status. People who have, so far, been unaffected directly by the recession don’t want to rub it in.  As a result, we are starting to see a regression towards a more socially-neutral mean.  While the customers that are struggling will buy up in order to keep up appearances, the ones that aren’t will tone it down.  I expect we’ll see an echo of the “grunge” music, fashion, and lifestyle movement that arose out of the recession of the early ’90s.  This creates opportunities for clever, customer-centric marketers.
  • Exercising Control. People are starting to cut corners in ways that give them the feeling of being in control and of acting responsibly. All inclusive and bundled pricing that creates more predictable and budgetable expense streams will have an advantage.  Companies need to look for ways to help their customers regain a feeling of control. This might include measuring the benefits and savings associated with programs, locking in discounts for the future, etc…
  • Inexpensive Luxuries. During the height of the great depression, when 25% of families had no income and unemployed labor reached 40%, movie receipts still increased by 22%.   As stress and uncertainty levels rise, people naturally look for more inexpensive ways to meet their personal and social needs. This includes affordable entertainment alternatives. Beer, liquor, movies and home entertainment tend to do well during a recession. Product and service organizations that provide affordable alternatives to premium pleasures can benefit from promoting these options.  This includes everything from buying your latte at McDonalds or Duncan Donuts rather than Starbucks… to more economically-oriented entertainment, restaurants, hotels, and vacations.

whole-deal

I walked into Whole Foods yesterday and noticed how effectively they’ve redesigned the experience.    They’ve launched “Whole Deal,” a more value-focused experience targeted at customers who relocal-producer-loanmain committed to natural and organic foods but are feeling a heightened attention to cost.  This experience includes several creative elements that match customers’ shifting priorities : an expanded selection of lower-priced alternatives marketed under their “365” store brand,  “Money Saving Meal Plans” and “Budget Friendly Recipes” that provide advice for containing costs while maintaining a focus healthy natural and organic foods.   They are even offering “Value Tours” through the store in order to help customers find the most cost-effective solutions.  In addition, they are promoting a “Local Producer Loan Program” that highlights the support they provide to suppliers.   Overall, they are meeting a challenging situation by finding ways to add more value for customers, rather than just cutting costs.

3.      The third priority is identifying and eliminating the negative experience elements that drive attrition. Most organizations unintentionally frustrate and annoy customers in ways that they can’t even begin to understand.  Recent studies have shown that, while the economy has been weakening, their tolerance for bad service has been diminishing.  For example, a recent Customer Experience Study (conducted by RightNow and Harris Interactive) found that:

  • 87 percent of consumers have stopped doing business with an organization after a bad customer experience, up from 80 percent in 2007 and 68 percent in 2006.
  • 84 percent of consumers indicated they would tell others about a bad experience – up from 74 percent in 2007 and 67 percent in 2006, In fact, blogging about a negative customer experiences is on the rise: 22 percent of consumers this year have posted negative feedback about a company, vs. only 13 percent in 2007.
  • 58 percent of U.S. consumers said that in a down economy, they will always or often pay more for a better customer experience

In many cases, the negative experience elements that contribute to attrition may be relatively easy to fix without major investment.    The trick is to be able to clearly identify these things with an unbiased and unfiltered, outside-looking in perspective.  Over the past decade, we’ve worked with several organizations to conduct an Urgent, Short-Term Customer Retention Program.  Typically, over the course of 6-8 weeks, we can quickly diagnose the specific breakdowns in the experience that are leading to defection or lost new business opportunities.  For example, we worked with a business-to-business financial services provider to uncover the root causes for why customer attrition was increasing.  Over the course of an 8-week effort, we were able to identify 7 things they could immediately to 3 point increase in retention.  This translated into a 12% improvement in the business’ bottom line.   These improvements included a new template for on-boarding and initiating new customers, an early warning system for changes in customer behavior that preceded attrition, and expanding the schedule of follow up training for customers.

The way through many tough times is finding ways to intelligently create more value for others.  One of the surest ways there is for making sure that you end up being the strong rather than the weak is avoiding the tendency to become self-absorbed and maintain a clear focus on the customers that are, ultimately, the source of your success.

Effective Experiential Storytelling

What are the stories your customers tell about their experience with you and your business?  What do they think you really stand for?  What are the most memorable aspects of their experience?  What surprises them?  What frustrates them?  How do you make them feel?  The nature and quality of these stories has a profound impact on the success of your business.

We make sense of the world around us through the stories we tell… the stories we tell ourselves and the stories we hear from and tell to others.  If you think about the defining moments in your life, you’ll see that the stories you tell yourself about those moments have a powerful influence on your identity and the way you see the world.  Aside from these personal stories, across human history, we’ve shared meaning and knowledge with each other in the form of stories.  This includes the legends and parables shared within and across generations, as well as, the stories we share about more immediate events.

Stories are our Primary Means of Sharing Knowledge and Transmitting Culture

Humans have evolved as storytelling animals.  The story form is one of the core knowledge structures we use to encode and recall our experiences.   As I covered in a previous post (see:  Making Experiences Memorable), when we recall past experiences we actually reconstruct the experience from a limited amount of information encoded in memory.  Understanding how this happens provides powerful insight into how to design experiences that are both more memorable and more influential.

In business, the nature and quality of your relationships with customers is reflected in the nature and the quality of the stories your customers tell.  Your ability to retain customers is directly related to the nature and quality of the stories they tell themselves about their experience.  Your ability to cost-effectively acquire new customers is increasingly dependent on the nature and the quality of the stories your customers tell to other prospective customers.

The Experience Must Tell Customers the Story You Want Them to Retell

If you don’t effectively tell the story… how can ever expect that your customers will either get the message… or have the material to be able to pass the story effectively on to others.   In a previous post, I drew a parallel between experience and music.  (See:  Great Experiences are Music to My Ears).  The experience that customers have with most organizations is a lot like the Billy Preston song that goes, “I’ve got a song that ain’t got no melody.”  The experience doesn’t communicate anything effectively… it just defaults from the bunch of the things that organization does… and that bunch of things is generally all over the map.  Similarly, most organizations have a story that’s “got no message… and got no script.”

Earlier this week, I led several dozen executives from a wide range of companies through a full-day customer experience immersion event at Disneyland in Anaheim, CA.    Disney is an organization built on powerful storytelling.  There are stories of Walt; stories surrounding some of the worlds’ best loved fictional characters; the stories that unfold in movies, rides, and many of our personal memories of visits to one of the Disney theme parks.

As part of that event, we took a close look at one particularly well-crafted story; the “Pirates of the Caribbean” ride.  If you’re one of the more than half a billion people that have had the pleasure of experiencing this ride… take a moment… close your eyes and recall the experience.  What stands out as most memorable?  How do you remember feeling?  Over the course of about 13 minutes, a complete and highly immersive story unfolds.

Although it might seem like a stretch, there’s a lot that most businesses can learn about customer experience by considering how they can make the experience more like “Pirates of the Caribbean.”  For example, if you work for a bank, how can you make the experience customers have opening an account, applying for a loan, developing a financial plan, etc… a “Pirates of the Caribbean” experience?  If you’re a professional or business services provider, how can you make the experience that your clients have as engaging and meaningful as “Pirates of the Caribbean?”  In order to answer that question, we must start with three common characteristics of the most engaging, memorable, and retellable stories:

1. A Simple, Purposeful Message

A simple, purposeful message is at the core of many of the experiences that people find intuitively understandable and compelling.

By “simple” I mean a message that people can understand immediately; because it’s concrete rather than abstract and doesn’t require a lot of additional explanation. In their book, Made to Stick , Chip and Dan Heath do a great job of describing how the “Curse of Knowledge” often gets in the way of communicating in ways that people can easily understand.  The more knowledge you have of the strategy and inner workings of your industry and business, the more difficult it becomes to put yourself in the shoes of customers who don’t have that knowledge.  What seems intuitively obvious, concrete, and simple to you… may be confusing, abstract, and complex for your customers.

The Heaths illustrate the “Curse of Knowledge” using an experiment conducted in 1990 by Elizabeth Newton.  In that experiment, people were assigned to be either “tappers” or “listeners.”  Tappers were asked to select from a list of 25 well-known melodies and to tap out the selection’s rhythm on the table.   The listeners would then have to guess the song the tapper was tapping.  Tappers predicted that the listeners would guess correctly one out of two times (50%).  It turns out that the listeners were only able to guess one out of about forty times (2.5%).   The tappers thought it would be easy to communicate their “message” to the listener because, as they were tapping, they were hearing the song in their head.  However, the listener wasn’t hearing that song; they were just trying to decipher the message from what sounded like Morse code.  I don’t know how many times I’ve seen people try desperately to get their customers to understand when the underlying issue is that the customer just doesn’t have the same background music playing in their heads.

Beyond being simple, the message must also be “purposeful.” It must not only clearly articulate what you stand for BUT ALSO contrast that to what you stand against.   People will find it easier to understand who you are, when it’s clear who you’re not.  Heroes are boring without villains.  Triumphs don’t make sense without understanding the challenges that made those triumphs meaningful.  Stories without tension, uncertainty, or risk aren’t worth listening to.  The conflict built into the message clarifies the things that make the experience differentiated and worth engaging in.

It’s important to choose your enemies wisely.  For example, just about every insurance company out there portrays the enemy in their story to be the uncertain outcomes they protect you against.  As a result, the message from those companies pretty much boils down to the same thing… with only minor variations on how effectively they communicate that same old story.  Compare that to Progressive that has gotten a lot of mileage out of telling a different story; a story with a message that they provide competitive quotes that enable customers to feel they’ve made a more educated decision.  Allstate is also getting traction by telling a story around the message that they recognize and reward people for safe driving.  In both of these cases, the enemies are prevailing industry practices.

One of the best examples of a simple and purposeful message is Salesforce.com’sSuccess, Not Software.”  Salesforce.com’s “software as a service (Saas)” platform allows you to focus on your sales processes rather than having to implement complex and risky CRM software.  We’ve also worked with many companies that provide further examples of strong messages:

  • Jewelry Store Message: “The Perfect Gift Guaranteed.” It’s not about selling you jewelry. It’s about helping you give the perfect gift, in the perfect way that contributes to your relationship with the recipient.
  • Mortgage Bank Message: “A Better Way Home.” It’s not about just giving you a mortgage. It’s about a well designed and flawlessly executed home buying experience.
  • Automotive Financial Products Firm Message: “Driving Dealer Performance.” Rather than just providing financing and pre-paid maintenance (to their automotive dealer customers), we work with you to measurably improve the performance of your finance and insurance operation.

In each of these cases, the message is crisp and clearly articulated.  As you may guess, this is actually quite rare.  Most organizations become enamored with a message that doesn’t really communicate anything specific or concrete.

If we take a step back and look at “Pirates,” beneath the relatively light entertainment value, the story ends up hanging together brilliantly around the message:  “Despite the adventure, there is a price to be paid for a greedy and vile life.”

2. Characters that Make Sense

The most effective stories have characters that are authentic and intuitively understandable.  These characters make the experience more concrete.  This is particularly important if the product or service you provide is complex and abstract.  For example, if you’re in the insurance business, what you sell is abstract; a policy that represents the transfer of risk in exchange for a premium.  This raises the stakes on identifying both the characters in your story, as well as, the role they play.  If you’re in the banking business, who are the characters?

The strongest brand stories have great characters.  The book “Storytelling: Branding in Practice” by Klaus Fog, Christian Budtz, and Baris Yakaboylu describe the typical characters as follows:

  • The Hero. Who is fighting for the goal described in the central premise?
  • The Adversary. Who or what must the hero overcome to achieve that goal?
  • The Supporter(s). Who (or what) assists the hero in their quest?
  • The Benefactor(s). What superior character or force(s) provides aid in the quest?
  • The Beneficiaries. Who benefits in the end?

In many situations, the company and/or its representatives are the heroes; the customers’ situation or the alternatives provided by competitors are the adversary; and customers are the beneficiaries.  This is true in the case of Salesforce.com.  Many great services businesses, like the Four Seasons, really cast their frontline employees as the heroes that overcome the ordinary and predictable in order to provide the guest the most comforting and personalized experience.  In this case, the Four Seasons plays a supporting role rather than a heroic role.  (See:  A World-Class Hospitality Experience:  Four Seasons Aviara).

In  many marginally successful services businesses, like the major US airlines or many call center operations, frontline employees wind up playing the role of victims… caught between the demands of the customer and the constraints and frustrations imposed on them by their company.  In fact, there are many situations I’ve observed where the frontline associates not only play the victim but do untold damage to the brand my making their employer the adversary (e.g., “I’d like to help you but it’s against our policy”).

We’ve also seen many examples of companies that do a great job of telling the story in a way that makes the customer the hero.  One of the best examples is the wonderful grocery retailer, H.E.B., that’s core message is “Come Home a Hero.”    In the case of the jewelry store example above, the core message of “The Perfect Gift Guaranteed” is framed in a way that the male gift giver (70% of their customer base) is the hero… and the gift recipient is the beneficiary… but with a subtle message that, when the gift experience is a WOW, the gift giver becomes the ultimate beneficiary (figure it out).

3. An Engaging Plotline with “Signature Scenes”

There are common, relatively predictable patterns to the way stories are structured.  It doesn’t matter if these are verbal, or told in books and movies.  Think about your favorite movie.  With very few exceptions, the story typically opens with an Initiating Event that gets the audience hooked and encourages them care what will happen next.  That Initiating Event introduces the tension described in the message (described above).  Then, over the course of the story, there are a sequence of memorable, Signature Scenes that gradually increase the tension.  Typically each of those scenes introduces a question about what will happen next.  By doing so, it keeps the audience engaged and increases their investment in finding out how the story will eventually be resolved.  Finally, the story reaches a climax that answers most but not all of the questions that were posed over the course of the story.   The best writers and story tellers purposely don’t answer all the questions at the end.  The presence of unanswered questions is one of the reasons why people still talk about the movie the next day and, very often, the thing that leaves them wanting to see the movie again next week.

Experience Director, Adam St. John Lawrence, in his blog Work-Play-Experience has a very insightful way of putting this.  He says great experiences, like great stories go “BOOM Wow-Wow-Wow BOOM.”

One of the reasons that “Pirates” is so engaging is that it follows a very well-designed plotline and includes highly memorable “Signature Scenes.”  Here is the plotline:

  • BOOM: The Initiating Event: After lazily floating through the bayou for just long enough to feel immersed in the environment, guests encounter Jolly Roger who issues the warning that sets up the  conflict, “Psst! Avast there! It be too late to alter course, mateys… and there be plundering pirates lurking in every cove, waitin’ to board…. there be squalls ahead, and Davey Jones waiting for them what don’t obey…Guests then plummet through two rapids drops that represent a Point of No Return.

jolly-roger

  • Wow1: Guests enter the “Grotto of Lost Souls” where they see the skeletons of three unfortunate pirates, two of whom have been run through with swords. As guests progress through this scene, the skeletons progress from realistic to much more surreal states of animation… steering the ship, drinking at the bar, and finally the captain’s remains lying in bed still studying the treasure map with a magnifying glass.

animated-pirate unforatunate-pirate

  • Wow2: The Attack of the Wicked Wench. After leaving the Grotto, guests are thrown into the middle of a battle as the ship, The Wicked Wench, is attacking the walls of the city while cannon balls splash all around.

wicked-wench

  • Wow3: Sacking the Town. As the guest round the corner, they find that the pirates have captured the town and are now dunking the mayor in the well asking him about where to find “Jack Sparrow” (Disney added the references to the movie characters in 2006) as the town’s leaders are tied up and led away.

sacking-the-town

  • Wow4: In the Town… The Wench Auction and the Chase Scenes. In a series of memorable comedic scenes, guests are offered the opportunity to “buy a bride” and entertained as they see the brides and grooms chasing after each other. The characters are animated on turntables that circle the balconies of the buildings. As we progress through this scene, the characters are shown at progressive levels of drunkenness as the town sinks into chaos.

wench-auction

  • BOOM: The Town in Flames and the Escape. Eventually, the town is in engulfed in flames with spectacular effects and burning beams threatening to crash down on the guest’s boat. Meanwhile, the pirates are either too drunk to care or they’re in jail desperately pleading with the dog to let them out. As the guests escape up the waterfall, they are entreated to a final warning from Jack Sparrow (again, added in 2006).

town-on-fire drunk-pirate begging-the-dogs jacks-final-warning

So… how does all this apply to you?  Let’s look at one of the cases I mentioned earlier; the case of a leading specialty jewelry retailer that designed their experience around the message, “The Perfect Gift Guaranteed.”  After agreeing on that message, the customer experience was then designed to deliver that message using a set of Signature Scenes organized into a coherent plotline.  The Initiating Event was a specific greeting that welcomed the guest into the store.  That welcome introduced the message of helping the customer give the perfect gift… not just selling them a piece of jewelry.  This was then followed by a set of supporting, highly differentiated, Signature Experience Elements (or scenes).   These Signature Experience Elements included:  collaborative gift planning (differentiated from traditional selling), preparing the male gift giver to “romance the gift,” ensuring customers know what will happen if the gift doesn’t work out (the “guaranteed” part of the experience), creating a wow on exchanges or returns, and a clienteling process designed to maintain the relationship with the customer for future gift giving occasions.

Similarly, the mortgage company mentioned earlier designed a set of five Signature Experience Elements that happen over the life of the customer relationship, all designed to tell the story, “A Better Way Home.”

Building on the above points, The Disney Institute’s book, “Be Our Guest” summarizes their set of principles for delivering a compelling story, as follows:

  1. Know your audience. Clearly define who are you creating the experience for?  How do they think and what do they desire?
  2. Wear your guest’s shoes.  Design and evaluate the experience from the customer’s perspective by experiencing it as a customer.
  3. Organize the flow of people and ideas.  Think of a setting as a story and tell that story in a sequenced, organized way.  Build the same order and logic into the design of customer movement.
  4. Create a visual magnet.  It’s a visual landmark used to orient and attract people.
  5. Communicate with visual literacy.  Language is not always composed of words. Use common languages of color, shape and form to communicate through a setting.
  6. Avoid overload–create turn-ons.  Do not bombard customers with data.  Let them choose the information they want when they want it.
  7. Tell one story at a time.  Mixing multiple stories in a single setting is confusing.  Create one setting for each big idea.
  8. Avoid contradictions; maintain identity.  Every detail and every setting should support and further your identity and mission.
  9. For every ounce of treatment provide a ton of treat.  Give your customers the highest value by building an interactive setting that gives them the opportunity to exercise all of their senses.
  10. Keep it up. Never get complacent and always maintain your setting.

Over the past 25 years, we’ve worked with organizations that run the range from business-to-consumer to the most complex business-to-business relationships.  In the course of this work, we’ve found that Experiential Storytelling applies equally well everywhere along this range.  In practice, the business-to-consumer companies have the easiest time understanding it… while the business-to-business companies have the most to gain.

Experiences and Memory

I went to a Jackson Browne concert with a group of friends a week ago.  Yes, he’s still going strong at 60.  It was a great show.  He played a sufficient number of his hits, like Doctor My Eyes and Running on Empty.   For me, the highlight of the night was a very cool version of one of my personal favorites, “Lives in the Balance.”  Like many week-old experiences, I can sit back and still visualize a few of the key moments.  At the same time, like many week-old experiences, I can feel the memories fading.  It’s not that I’m getting old (even though I am); it’s just how memory works.

There is no experience without memory

Aside from whatever you happen to be doing at this precise moment in time, all of your experiences exist only as memories.  It is, therefore, impossible to really understand the nature of experience without understanding how we remember those experiences.  In this post, I’d like to cover some of the ways that memory affects how we experience the world.  This is very important for two reasons:

  1. One of the least effective ways to understand what someone has experienced is to ask them to tell you about it after the fact.  People’s memories of their experiences are notoriously unreliable.  The implications of this are significant.  For instance, it creates a substantial limitation on how effective simple voice of the customer approaches are for understanding customers’ experiences.
  2. If you want to design memorable experiences for your customers, you need to understand three things about how memory works:  how and why people pay attention to certain features of their experience, how those features and the overall gist of the experience are encoded in memory, and how those memories are recalled.  As you will see, understanding these three things is critically important to designing experiences that are much more memorable and, ultimately, much more influential.

Before jumping into this, I’d like to borrow an interesting illustration that Harvard Psychologist, Daniel Gilbert included in his wonderful book, “Stumbling on Happiness.”   Look at the six royal cards below and pick one.  No, no… don’t tell me which card you picked!  Just make sure you remember it.  You might want to repeat it to yourself a couple of times or even write it down to make sure you don’t forget.

6-cards

Okay good!  Now that you have your card memorized, I’d like to jump into how memory influences experiences.  We’ll see how well you did at remembering the card towards the end of this post.

Memory is an internal rumor.” George Santayana

Our memories of past experiences are notoriously unreliable.  There are three factors that contribute to the problem:  1) limitations in how much we can pay attention to at any moment in time, 2) issues with the way information in short-term memory are encoded into long-term memory, and 3) issues with how memories that we do encode are eventually recalled.  Understanding each of these factors provides insight into how to design much more memorable experiences.  Let’s take a look at all three.

ATTENTION

Every second, every day, every year, our senses take in millions of bits of rich detail about our experiences… all of the sights, sounds, textures, smells, tastes, etc…  However, we only have a limited capacity to attend to all that information.  Our conscious stream of the thought relies on short-term memory.  This short-term memory provides capacity for holding a small amount of this rich information in an active, readily available state for a short period of time.  The duration of short-term memory is about 20 seconds and experiments demonstrate that its capacity ranges from about 3 or 4 elements (i.e., words, digits, or letters) to about 9 elements.

Experiences like a concert, a fine meal, a glass of wine, a movie, browsing through a store, or walking along the street are very complex, rich, and multidimensional.  While it’s possible to hold some of that rich detail in short-term memory, it’s not easily translated to long-term memory.   We use language or a sort of mentalese in order to extract what seems like the most salient features of our experiences in order to be able to think about them or communicate them later.  As a result, the morning after a concert, you only really remember which songs were played, a few features of the way they were played, and the sense about what you liked or disliked about them.

The transfer from short-term to long-term memory involves fast forgetting.  There are numerous example of this.  For the sake of illustration, suppose I had you memorize a sequence of three letters and then count backwards in groups of three numbers.  In experiments to this effect, after counting backwards for 6 seconds, most people only remember about 50% of the letters.  After 12 seconds, most people only remember about 15% of the letters.

The way we experience the world starts with a combination of selective attention supported by subconscious “gist processing.” We generally pay attention to those elements of our experience that seem most important; the elements that capture our attention because they we were looking forward to them or they stood out because they were particularly high-contrast or they caught us by surprise in some way.  Beyond the relatively small amount of information that we’re able to pay conscious attention to; we do something called “gist processing.”  Gist processing enables us to get a sense for what is unfolding around us without having to focus attention on all the details.  It operates through subconscious pattern matching.  We get the gist of what’s happening because it roughly matches experiences we’ve had in the past.

Gorillas, Doors, and Selective Attention

Research provides many interesting examples of selective attention and inattentional blindness.   In one of the most striking and well- known demonstrations of selective attention, participants watch a video of people passing a basketball between each other, and they are asked to count the number of passes.   As the participants are busy counting the passes, less than 50% of those participants notice that a person dressed in a gorilla suit walks right through the middle of the action, stops, turns, looks at the camera, and does a little dance before turning and walking off the scene.   You can see an example of this experiment in one of Michael Shermer’s lectures posted here.

Another well-known example is the ‘door study’.   In this experiment, pedestrians are stopped by a researcher who asks them for directions.  While the pedestrian is talking to the experimenter, two men carrying a door walk between the two.   Hiding behind the door is another experimenter who changes places with the first experimenter.  The second experimenter then continues the conversation with the pedestrian.  The two experimenters are purposely different in height, weight, coloring, dress, etc…  Shockingly, only about half of the pedestrians realized that they were now talking to someone completely different than the person they were talking to at the beginning of the conversation with.  I’m sure you’ve had similar experiences?  How many of times have you placed an order in a restaurant and not been able to remember who your waitress was five minutes later?   These are illustrations of a specific type of inattentional blindness called change blindness.  (Click here for some further examples).

So much for our powers of observation!  In both examples, the subjects were paying attention to the central aspect of the experience:  counting the passes or giving directions.  In both examples, subjects were also surprisingly unaware of very significant elements of their experience.  If you look at this from the standpoint of evolutionary psychology, it makes total sense.  Over history, our survival has been based on recognizing and paying keen attention to those elements of our environment that seem most important while filtering out and not getting distracted by large amounts extraneous detail.

There are serious implications for anyone trying to improve the experience their customers have with their business.  It’s very easy to waste a lot of time and money designing experience elements that customers just filter out because those elements are neither central to the goals they are trying to accomplish nor occur on the attentional pathway customers are following in order to accomplish those goals.  We’ve found that the subtle elements of experience need to be designed in a way that specifically takes into account how people do gist processing.  That is, just give people the cues that will enable them to identify the experience.  The worst thing you can do is design a set of experience elements that get the customers’ attention but don’t fit with the way they think… elements that ultimately cause the experience to be both distracting and confusing for the customer.

ENCODING

The second issue has to do with how what we experience gets encoded in long-term memory.   We obviously don’t ultimately remember everything that was available to us in short-term memory as we were having the experience.  If we did, we’d need a brain many times larger than our current brain.   So, essentially, our experiences are compressed for storage.  As these experiences are coded in long-term memory, we store a summary of the gist of what happened, tagged with information about how the experience made us feel, along with a small set of specific representations of key features.  This is what I have left in my week-old memory of the Jackson Browne concert.

How information is moved into long term memory depends on the depth with which we process information.   A classic experiment by Craik and Tulving (1975), tested the strength of memory traces created using three different levels of processing:

  1. Shallow processing: Participants were shown a word and asked to think about the font it was written in.  In other words, they paid attention to peripheral cues rather than the core element of their experience.
  2. Intermediate processing: Participants were shown a word and asked to think about what it rhymes with.  In other words, participants were asked to make an association between their current experience and other experience.
  3. Deep processing: Participants were shown a word and asked to think about how it would fit into a sentence, or which category of ‘thing’ it was.  In this case, participants were asked to directly interact with the core element of the experience… rather than just paying attention to associations or peripheral cues.

Not surprisingly, participants who had encoded the information most deeply remembered the most words when given a surprise test later.   But it also took them longer to encode the information in the first place.

Encoding Favors High Contrast, Discrete Features

The most important factor with memory encoding is that our brain does a relatively poor job of encoding rich continuous features (e.g., the way the store looked, the way the music sounded, how the food tasted, how long we waited, etc…) and are somewhat better at remembering high-contrast discrete features (e.g., whether something happened or not, what we ordered at the restaurant, the description we provided after we had the experience, etc…).

The implications of this for experience design are profound and counter-intuitive.  Many companies think about the quality of the experience their customers have in terms of a relatively large number of service levels (e.g., how long the customer had to wait for service) or subtle improvements in rich peripheral cues (e.g., store or web design).  In most cases, these improvements represent differences in degree that, even if the customer paid attention to them, would only get perceived as “better sameness.”  As important as these things seem to be to the company, the typical customer doesn’t encode their experience in a way that makes these things memorable.  As discussed earlier, these continuous variables are only important to the extent that they influence the way customers do gist processing.

We’ve found that the most memorable experiences are designed around a small number of high contrast “signature elements.”   These signature elements are the things that get the customers’ attention because they “differences in kind” rather than “differences in degree.”  Customer service is generally a difference in degree; everyone provides some level of customer service.  A specific service that is provided differently than a competitor or differently than the customer expected is a “difference in kind.”  For example, experiences at both Starbucks and Caribou coffee shops are built around differences in kind compared to other coffee shops.  There are also many specific examples, like the Renaissance Inn in Tulsa which has a totally different design for their front desk area.  This hotel has individual reception desks rather than placing a long counter between customers and the front desk clerks… like virtually every other hotel does.   As a result, out of all the hotels I’ve stayed at in the past year, this experience was memorable because it included this high contrast “signature element.”

Focusing on designing high-contrast signature elements rather than better sameness peripheral cues is a good start.  However, our memories of even the highest contrast elements of our experiences are suspect.

Encoding False Memories

“Most people, probably, are in doubt about certain matters ascribed to their past. They may have seen them, may have said them, done them, or they may only have dreamed or imagined they did so.” William James

As this quote illustrates, another very significant issue related to encoding is misattribution, bias, and the formation of false memories.  These encoding issues can have dramatic consequences.  For example, Gary Wells and his colleagues at Iowa State University did a study of 40 different miscarriages of justice that relied on inaccurate eye-witness testimony.  Many of these falsely convicted people served years in prison; some facing the death penalty.

While memory encoding errors can have disastrous consequences like this, it happens to all of us in less dramatic situations every day.  Encoding errors are a regular occurrence for most people.  These include:

  • Misattributing sources. This includes things such as thinking that you read something in the newspaper when, in reality, a friend told you. It also includes unintentionally thinking you came up with an idea that, in fact, a colleague suggested to you several days earlier. (By the way, I apologize to my very forgiving colleagues for all the times this happens.)
  • Mixing memories. There are a very wide range of ways that this happens. For example, you might think you knew something about a product you bought when, in fact, you learned about it after you made the purchase. It’s very common to add new information to memories after the fact.
  • Confusing imagined elements of an experience with reality. There are numerous experiments that point to the fact that people often imagine elements of their experiences and create memories of those elements when, in reality, those elements didn’t actually happen. For example, I was talking with someone about how much I enjoyed Jackson Browne’s rendition of the song Load Out. I had been really looking forward to hearing him do it. The issue was, when I checked the set list that was posted online, he didn’t actually performance that song that night. (See also Goff and Roediger, 1998 for other interesting examples of “illusory recollections.)
  • Consistency bias. Our memory process is “cognitively conservative.” Our lives are so much simpler if we don’t have to continually re-evaluate what we believe to be true. As a result, we tend to pay attention to and remember the information that conforms to our expectations or justifies our beliefs… while disregarding any information that contradicts those expectations or beliefs. This is an enormous factor in areas of our lives like our personal relationships or our political beliefs. Consistency bias is just one of the many biases that affect our memories.

All of these relatively simple misattributions at least have some basis in reality.  They just involve getting a little mixed up on the details.  However, we also create entirely false memories.  As William James pointed out, memories can be constructed from our realities, our imaginations, and our dreams.  For more information on this, I’d suggest checking out C. J. Brainerd and V. F. Reyna‘s  book “The Science of False Memory.”

Why All These Idiosyncrasies of Memory are Actually Helpful

Given all of the challenges illustrated above, you might think it’s amazing we can function effectively at all.  While these limitations can have a disastrous effect in certain situations, we seem to function pretty well most of the time.   It turns out that selective attention, gist processing, and limited memory encoding is a blessing.  It spares us from cluttering our minds with a massive amount of meaningless detail.   There is a positive correlation between our ability to extract and remember features of our experiences while forgetting the details and our ability to engage in abstract thought and learn from our experiences.

Consider the case of Russian journalist Solomon Shereshevskii, whose memory was so perfect he could remember everything that was ever said to him.  Shereshevskii became famous after being criticized for not taking notes while attending a speech in the mid-’20s. To the astonishment of everyone there (and to his own also, due to his belief that everybody could remember that level of detail­), he demonstrated his ability to recall the speech perfectly, word by word.  There seemed to be no limited to his detailed memory.  However, Shereskevkii’s gift had a very significant downside.  It was difficult to ignore even the most insignificant events.  He remembered every scene, word, cough, scratch, sneeze, meal, etc… In addition, all of these memories were so detailed that it was difficult for him to generalize across experiences or think in the abstract.  Shereshevskii was so tortured with the accumulation of memories over time that he had to work out ways to try to intentionally forget.

RECALL

As much as it seems like we retrieve memories from storage, this is actually a very elegant illusion.  When we remember past experiences, what we actually do is quickly reconstruct and re-imagine the events by filling in around the relatively small number of features we stored.  This whole approach is efficient because it allows us to store a large number of memories.  However, it makes the memories we do have highly suspect.  It happens so quickly and easily that we get the illusion we are actually remembering what happened while our accounts of those past experiences can be pretty inaccurate.

But our memories seem so real!  Memories of past experiences seem real because many of the same portions of the brain are activated when we remember as when we perceived the event in the first place.  For example, listening to a song on the radio involve an area of the portion of the brain called the auditory cortex.  When you sit and remember what a song sounds like, it also activates the auditory cortex.  This use of the same area of the brain is a reason why it’s so difficult to remember how one song goes while you’re listening to another song.  It’s also why you can remember the song better if you plug your ears in order to eliminate the confusion associated with the same part of the brain trying to process two different experiences at the same time.

When we remember past experiences, it has an influence on what we will remember about that event the next time around… the story gets sharpened and leveled.  Information that is inconsistent with the overall storyline or gist we remember is forgotten (leveled) and features that reinforce our beliefs about the experience are emphasized (sharpened).  Often new information is introduced after the fact.   Aside from the issues with selective attention and limited encoding of memories, this is yet another reason why relying on eye witnesses creates problems in the criminal justice system.  The way a person is questioned about their experience can subtly influence what they remember about that experience.

Daniel Gilbert also shared the following example.  Volunteers in an experiment were asked to look at a series of slides that showed a red car approaching a yield sign, turning right, and then knocking over a pedestrian.  After seeing the slides, some volunteers (the no-question group) were not asked any questions, and the remaining volunteers (the question group) were.  The question that the second group of volunteers was asked was:  “Did another car pass the red car while it was stopped at the stop sign?”  Next, all the volunteers were shown two pictures:  one with the red car approaching a yield sign and one with the red car approaching a stop sign.  They were asked to point to the picture they had actually seen.   More than 90 percent of the volunteers in the no question group correctly pointed to the yield sign.  However, 80 percent of the volunteers in the question group incorrectly pointed to the picture of the car approaching the stop sign.   Clearly, the question that was asked influenced the volunteers’ memories of their experience.

There are several interesting implications of how memories are changed as they are recalled and reconstructed.  Since I got divorced 10 years ago, I have my two wonderful children with me for just the weekends.   Since I wanted to make sure that they always remembered the time we had together in the most positive light, we’ve consistently followed a Sunday evening ritual.  In the car on their way home, we have a discussion about the weekend and we each share what we thought were our best experiences.  It’s difficult to measure the impact that this has, but I know that it’s had an effect on the positive way they remember the special things we’ve done.

In a business application of a similar approach, I had the chance to work with the late Christine Boskoff, who was one of the most successful high-altitude mountain climbers in the world and the owner of a leading outdoor adventure travel company named Mountain Madness.  Her question was how to improve word of mouth about Mountain Madness in order to attract new clients.  The recommendation I developed with her was that, on the last day of each trip, there should be a final celebration involving a ceremonial round of “storytelling.”  In this storytelling ceremony, each participant would have a chance to share the personal story of their adventure, what it meant to them, and what their most positive takeaways were.  The act of telling their own story, in addition to listening to the stories of others, has a powerful effect to prime and prepare clients with the “personal legends” they’ll share with others when they get home.  In the course of telling and retelling these legendary stories the most compelling aspects are typically “sharpened” while any of the less positive or inconsistent aspects are “leveled” in order to fit with a more compact storyline.

There are a wide range of approaches we’ve used with our clients.  For example, is there a way to provide a personalized summary of the experience the customer had as a memento but do it in a way that positively reinforces the differentiated, signature elements of the experience.

Summary of Implications for Experience Design

Over the course of this post, I’ve covered the ways that memory affects our experiences. I’ve also highlighted several of the many ways that you can design and deliver more memorable experiences by understanding how people pay attention, encode memories, and reconstruct those experiences after the fact.    Those strategies include:  1) designing for gist processing and not overinvesting in service improvements or subtle cues that customers tend to filter out, 2) focusing on a small number of high-contrast signature elements that capture the customers’ attention, are easy to encode, and all contribute to a storyline that reinforces the brand, and 3) finding ways to enable customers to recall the experiences they’ve had in the most positive light.   As always, there is much more to say about all of these topics.  Feel free to submit a comment if you have questions or points to add.

OH… I ALMOST FORGOT… BACK TO THE CARDS

I hope you still remember the card you chose.  As you’ve been reading this post, I’ve been running a little web-based subroutine that was able to read your mind.  Based on the results of that little program, I’ve removed the card that you chose from the lineup.  I’ll leave it up to you to figure out how I did this fairly simple trick.

5-cards

Understanding Basic Drives and Experiential Temperament

In many ways, we are the product of the behaviors that worked for a long line of our ancestors.  When faced with a life threatening situation, say happening upon a saber tooth tiger, our ancestors were the ones that ran first and asked questions later.  Their friends that naively felt driven to go take a closer look weren’t so lucky.  Based on situation after situation like this, we are the descendants of the people that were driven to:  form and cooperate with others in reciprocal relationships, intuitively understand other peoples motives in order to be able to anticipate what they’d do; learn more about the way the world works in order to develop effective predictions and plans; and acquire the resources they needed to survive and that enhanced their status within the social hierarchy.

At the deepest level, our experiences today influenced by the same set of basic survival drives that were adaptive for our ancestors in the situations they faced.  While evolution does not pull our experiential strings directly, it has determined the design of how our brains process and act on experiences.   How we react to threats, strive to connect with others, seek to understand the ways of the world, and acquire resources are consistent with the mechanisms that contributed to the survival of those that came before us.

In the book, Driven: How Human Nature Shapes Our Choices, Paul Laurence and Nitin Nohria, two Harvard University professors, conclude that we are hardwired with four basic drives that can be used to explain a wide range of individual and collective behavior.  These four basic drives are to:  ACQUIRE (obtain essential resources as well as, intangibles that improve our social status), BOND (develop relationships with individuals and groups that provide security and pleasure), LEARN (acquire experiences and beliefs that help us make the world more predictable), and DEFEND (protect against threats to ourselves, as well as, our resources, relationships, and beliefs).

As different as we all appear to be on the surface, these four basic drives provide a common framework that apply across individuals and across cultures.   The degree to which they are satisfied directly affects our emotions and, by extension, our behavior.   As we will see, individual temperamental differences have an effect on the relative strength of these drives and how they’re expressed.

ACQUIRE:  The drive to obtain essential resources as well as, intangibles that improve our social status.  We are motivated to acquire goods that increase our sense of well-being.  We experience satisfaction when this drive is fulfilled and frustration when it is not. Our drive to ACQUIRE applies to essential resources like food, clothing, shelter, and money.  It also applies to collecting objects, symbols, and experiences that signal or improve our status relative to others.

Beyond our basic survival needs, the drive to ACQUIRE is relative rather than absolute; we tend to compare what we have to what others have.  Observers of the human condition have consistently pointed out that people are happy when they feel better off than other people they know, unhappy when they feel worse off.

In addition, the drive to ACQUIRE is often insatiable beyond any physical need.  We often want more even when there is little or no incremental benefit from having more.

BOND:  The drive to develop relationships with individuals and groups that provide security and pleasure.  There is obvious survival value to forming reciprocal relationships with others, as well as, to be part of a group that provides safety, support, and identity.  Most people experience positive emotions when they are associated with others and negative emotions when they are isolated.

The drive to BOND also leads to emergence of cooperation.  In order to stay positively connected to the group, an individual must naturally keep track of their indebtedness to others and reciprocate in a way that maintains the relationship.  It also becomes very adaptive to sacrifice on personal gain in order to contribute to the greater good of the group.  One of the other implications of the drive to BOND is the emergence of both a dominance hierarchy and attention to social justice.  (See:   Cognitive Ergonomics: How Customers’ React to Violations of Justice).

LEARN:  The drive to acquire knowledge and beliefs that help us navigate successfully in the world.   There is strong survival value in our ability to make sense of the world around us and produce theories that help us: explain what has happened, predict what will happen, and develop reasonable courses of action.   We get frustrated when things seem senseless and we feel satisfied when we can understand about how and why things happen the way they do.  While the drive to acquire is materially driven, the drive to LEARN can be considered intellectual foraging.

DEFEND:  The drive to protect against threats to ourselves, as well as, our resources, relationships, and beliefs.   This drive is rooted in the most basic fight or flight response that is common to most animals.  We all naturally defend ourselves, our possessions, our family and friends against physical harm.  By extension, we also DEFEND our ideas, beliefs, and accomplishments against psychological harm that would undermine our understanding of the world, our self-esteem, or our social status.  When we successfully fulfill our drive to DEFEND, it leads to feelings of confidence and security.  When we are faced with situations that are unpredictable and seemingly out of our control, we react with feelings of fear and resentment.

Laurence and Nohria observe that these drives are independent in that they can neither be ordered hierarchically nor substituted for each other.   This is important since it provides flexibility in our behavioral responses to the situations we face.  This is particularly important since, in many cases, these drives are competing.  We often can’t satisfy each of the four drives in every situation leading to psychological and moral dilemmas.  For example, the drive to LEARN is often in conflict with the drive to DEFEND and the drive to BOND (cooperate) is often at odds with the drive to ACQUIRE.

While these four drives are present in every effectively functioning human being, you know from personal experience that not everyone expresses the drive to BOND or LEARN or ACQUIRE or DEFEND in the same ways.  For example, people vary in the both the magnitude and the direction associated with their drive to LEARN.

Recognizing differences in the strength and expression of each of these drives is a very important part of understanding how different people have experiences… and in knowing what can be done to enable people to have more engaging experiences.  We describe these differences in terms of Experiential Temperament.  The first layer of the Experience Personae Model thus starts with a description of the how individuals differ in the way they express the four drives.

“In one way or another, all our experiences are chemically conditioned, and if we imagine that some of them are purely “spiritual,” purely “intellectual,” or purely “aesthetic;” it is merely because we have never troubled to investigate the internal chemical environment at the moment of the occurrence.”  Aldous Huxley

An individuals’ experience takes place in a biochemical environment in the brain that influences the experiences they will find compelling, engaging, and comfortable.   Different people react to experiences differently based on variations in the neuromodulation processes that influence their activity level and emotional state.

Note:  A neuromodulation process involves neurotransmitters (the chemicals that communicate across synapses in the brain) that are not reabsorbed by the neuron or broken down.  These neuromodulators end up influencing the chemical makeup of an individual’s cerebrospinal fluid (the chemical environment of the brain) and, as a result, influencing (or modulating) the overall activity level of the brain.

An individual’s unique expression of the drives we discussed above has a lot to do with variations in neuromodulation from one individual to another.   In essence, neuromodulators act like the volume and tone controls that influence magnitude and nature of our reactions to experiences.

In our work, we consider four Experiential Temperaments that influence the fundamental ways people engage with different types of experiences:  Novelty Seeking, Harm Avoidance, Social Orientation, and Persistence.  This perspective builds on work originally done by Dr. C. Robert Cloninger, a psychiatrist at Washington University School of Medicine.

Novelty Seeking is the level to which a person is comfortable with,drawn to, and exhilarated by new experiences. While everyone wants some excitement occasionally, people that express high levels of Novelty Seeking seem to live for new experiences and new ways of looking at things. High Novelty Seeking people tend to be curious, exploratory, easily bored, impulsive, quick tempered, extravagant, enthusiastic, and disorderly. On the other hand, low Novelty Seeking people tend to be more indifferent to unfamiliar experiences. They also tend to be more reflective, frugal, orderly, and regimented.

Novelty Seeking describes an individuals’ expression of the common underlying drive to LEARN.  Novelty Seeking behavior contributes to an individual’s practical and theoretical understanding of the way the world works.

In the brain, Novelty Seeking behavior is motivated and regulated by dopamine.  High Novelty Seeking people appear to have low base levels of dopamine and, as a result, experience an increased sensitivity to dopamine releases.  This gives Novelty Seekers an enhanced euphoric rush from novel stimulation that is either physical or intellectual.

Harm Avoidance is the level to which customers strive to escape from unfamiliar, uncertain, potentially dangerous, or unpleasant experiences. People that are high in Harm Avoidance tend to be cautious, apprehensive, and pessimistic in experiences that don’t worry others. They also tend to be insecure in social situations and often need reassurance and encouragement with new experiences. They tend to be critical of themselves if things don’t go smoothly. On the other hand, people that are low in Harm Avoidance are generally confident despite the unknown aspects of an experience, even those experiences that would worry other people. Overall, low Harm Avoidance individuals tend to be relaxed, courageous, carefree, and optimistic.

Harm Avoidance is an important way that different individuals express the drive to DEFEND.  While everyone has the drive to protect themselves, high Harm Avoidant individuals take this to an extreme by avoiding behavior that would lead to punishment, danger, or embarrassment.

Harm Avoidance appears to be regulated by serotonin.  Harm Avoidant individuals are more prone to the frequent release of serotonin when presented with uncertain or potentially threatening situations.  This frequent release of serotonin leads to a decrease in serotonin sensitivity and a resulting increase in cortisol which is associated with the feeling of stress.

Social Orientation is the level to which people seek to bond with and gain approval from others. Individuals with high Social Orientation are warm, dedicated, and dependent. They tend to seek communication and social contact and are sensitive to social cues which facilitate their understanding of and reciprocity with others. People that are low on Social Orientation tend to be self-absorbed, practical, cold, and more socially insensitive. They often don’t mind being alone and, in general, don’t feel a strong need to gain approval from others

Social Orientation is an expression of the underlying drive to BOND.  High Social Orientation individuals have an amplified need to BOND and tend to be effective in forming and maintaining strong reciprocal relationships.

Social Orientation appears to be related to levels of oxytocin (strong bonding with mates and family) and vasopressin, the only known hormones released by the posterior pituitary gland that act at a distance.  Studies have reported that higher levels of oxytocin enhance an individual’s ability to read others’ emotions based on eye cues.  In addition, a 2005 study in reported in Nature magazine found that people sprayed with oxytocin were more trusting in cooperation situations.  Subjects whose oxytocin levels were mildly increased could infer significantly better what a target person was thinking about, based only on eye cues.  The effect was more pronounced for emotions harder to read through eye cues.

Persistence is the level to which a person feels the drive towards behavioral inhibition (put it off) versus behavioral activation (just do it!). High Persistence individuals are eager to initiative experiences, tend to see roadblocks as personal challenges, and intensify their efforts in response to anticipated rewards. Low Persistence individuals require the deliberate removal of barriers to action and more powerful encouragement to engage in experiences.

Persistence can be considered an amplifier or modulator of the drive to ACQUIRE resources, experiences, relationships, etc…   Persistence appears to be connected with the complex interaction of neurotransmitters including dopamine (motivation based on reward-prediction), and serotonin.

So what does this all mean?  The ability to understand and rigorously describe the Experiential Temperament of a person has a profound impact on designing products, services, interactions, etc… that fit with and influence the way people think.   Designing high Novelty Seeking experiences for low Novelty Seeking customers is not ideal.  Not taking into account the high Harm Avoidant temperament of some customers can lead to experiences that make people feel uncomfortable.

For example, we are currently helping a leading healthcare organization design an integrated patient-physician experience that is sensitive to the fact that people have fundamentally different mental models for their health and the consumption of health-related services.  Some customers will be high novelty seeking “naturalists;” some customers will be low persistence “avoiders;” others will be more high harm avoidant “active consumers,” etc…   The experience that works for each of the personae involves different ways of communicating, prescribing courses of treatment, reinforcing behaviors like wellness programs, etc…

Another client is a leading retail chain expressed a desire to “Disneyize” their experience.  What they hadn’t taken into account in developing that vision is that the current customer experience could be described as:  low novelty seeking; moderately high harm avoidant; and high social orientation.  Some of the ideas this company had for improving the experience were brilliant.  However, many of those “improvements” would have led to an unintended shift in the temperament of the overall experience; one that would have created tension for existing customers.

The most effective experiences either match the temperament of the target ideal individual or avoid stressing people by providing a “temperament neutral experience.”

Putting the “Customer” in Customer Experience Efforts

We’ve reached the point where most business leaders understand that their organization’s ability to effectively acquire, retain, and improve the profitability of customers is a direct result of the nature and quality of the experience those customers have.

There is, however, a fundamental problem with both the literature and management practice surrounding customer experience.  The issue is that most business leaders and management gurus focus on how companies “deliver” experiences rather than how people actually HAVE experiences. Without understanding how customers HAVE experiences, companies often end up wasting lots of time and money on improvements that don’t generate a real return because they don’t fit with and influence how customers think, feel, and act.

If you do a scan on customer experience literature, you’ll find that virtually all of the definitions start something like this:  “A customer experience results from a set of interactions between an organization and a customer… ”   In addition, most of the discussion refers to an experience as if it is a characteristic of a company.  For example, people discuss the “Disney experience” or the “Starbucks experience” or the “BestBuy experience.”   All of this represents a highly company-centric perspective.

This company-centric perspective is deeply misguided.  It often encourages business leaders to make expensive improvements that are, at best, perceived by customers as “better sameness.”  At worst, these expensive improvements go unnoticed by customers who are too busy dealing with their own priorities and their own lives to pay attention to the fine details of their interactions with the business.

Over the past 25 years, we’ve worked with and studied businesses that have effectively innovated and differentiated the experience their customers have… and, as a result, have measurably improved the acquisition, retention, and profitability of those customers.   Based on this work, there are a couple of counterintuitive things we’ve learned:

  • Companies don’t have customer experiences; only customers do. The customers’ experience takes place in one place and one place only; in the mind of the customer. That experience consists of how a customer thinks and feels across the entire behavioral path they follow in pursuit of one or more goals that important to them. Talking about a company’s “customer experience” represents a very large step in the wrong direction. It’s a company-centric way of trying to be customer-centric. (See: Whose Experience is it Anyway?)
  • Casting customers in the role of “customer” can be limiting. This is a subtle distinction with profound implications. When you consider a person or organization to be a “customer,” it’s very easy to have your focus be on what you do to serve that customer. In the course of doing that, you may not look beyond that customer role to gain a much deeper and broader perspective on who they are, what’s important to them, what they’re trying to accomplish beyond the scope of your business. The fact that they’re a customer of your business doesn’t constrain the end-to-end experience THEY’RE having.
  • Customers’ experiences don’t just happen at your touch points. In fact, we’ve seen that the most important elements of the experience don’t happen at your touch-points at all. They happen at the non-touch-points. We’ve observed that touch-point oriented approaches end up leading to incremental improvements in the service quality that either seem like “better sameness” or, worse, go unnoticed. This is one of the reasons why it’s exceptionally easy to make uneconomic improvements in the experience. Alternatively, we’ve seen that companies that can develop a deep and comprehensive understanding of what customers experience at the non-touch-points generally uncover competitively relevant ways to differentiate the experience in a way that gets the customers’ attention. (See:  The Customers’ Experience Does Not Happen At Your Touchpoints!)
  • You can’t fundamentally shift the experience by tweaking surface level cues. The experience customers have with any business is a product of complex and deeply entrenched culture, legacy effects, and unwritten rules that drive the real behavior of the organization. For example, I’m writing this on-board a Delta flight from Atlanta to Los Angeles. Delta’s been promoting the new “Delta Experience” which includes cosmetic updates to their website, changes in their pricing policies, a new highly confusing boarding process, more contemporary music during boarding, along with a couple of “signature cocktails,” and a few other peripheral cues. Do you think these surface-level improvements have had ANY deep positive effect on the overall experience customers are having? Focusing on surface-level cues is a little like hacking at the leaves rather than striking at the root of the issue. In reality, most organizations are strongly predisposed towards the experience their customers are currently having. Unless you get to the root of how deeply entrenched organizational behavior influences the customer experience, you couldn’t possibly know enough about what to do to intervene and positively shift the experience. While those cues are an important, they are insufficient. On their own they are the proverbial “lipstick on a pig.”
  • How customers feel about your business is a side effect of how their experience with your business makes them feel about themselves. If your business makes customers feel great about themselves they’ll, in turn, feel great about your business. Understandably, most business leaders want to influence and measure how customers feel about their business. This strikes me as similar to a line you might overhear on a date… “but enough about me… what do you think about me?” Very often a company can consider their interactions with a customer successful if that customer’s orders were taken, problems resolved, and questions answered. In fact, many customer satisfaction surveys simply ask customers to give the company a report card on how well they feel the company did all those things. However, in many ways companies leave the customer feeling disrespected, devalued, stupid, or frustrated. This is one of the reasons why the concept of hospitality in business is so powerful (see: No Matter What Business You’re In… You’re in the Hospitality Business).
  • The most common customer experience approaches don’t consider how customers actually HAVE experiences. If they did, they would recognize that the vast majority of the experiences people have are subconscious. In most cases, people experience the world using something that can be called “gist processing.” In other words, they get a general sense for what’s happening without having to pay attention to all the details. In most cases, this gist processing leads to the execution of “automatic behavioral scripts.” Alfred North Whitehead said it best, “Civilization advances by extending the number of important operations which we can perform without thinking about them.” Our ability to navigate the majority of our experiences on automatic pilot frees us up to focus our relatively limited train of conscious thought on the small number of things that seem most important to us.

In general, the best strategy we’ve found includes the following components:

  1. Design for Gist Processing. At the base level, you need to understand the perceptional process and basic constructs customers apply to navigate most of the experience relying on gist processing and automatic behavioral scripts.   When a customer enters a bank branch, checks into a hotel, enrolls with a health insurance provider,  etc… they have a set of constructs they’ve learned from past experiences and that operate within a perceptual framework that enables gist processing.  Experiences designed based on this perceptual framework and set of experiential constructs become inherently easy to navigate.    We use process called Experiential Construct Elicitation to surface and understand the constructs that are applied by different customer personae.
  2. Deliver Signature Experience Elements. This is all about getting the customers’ attention using a small number of high contrast and differentiated “signature experience elements.”   These signature experience elements catch customers by surprise, are perceived as a difference in kind compared to what they expected, and contribute to the brand story we want the experience to tell.  If you listen to customers talk about the Starbucks experience, the Whole Foods experience, etc…, you’ll see that customers consistently refer to a small set of experience elements that stand out for them as being the defining elements of the experience.  While you can spend a lot of time getting lots of details correct in the experience, having a small set of signature elements are the kinds of things that really resonate with and influence customers.

So, in summary, the essential message is… you need to understand how customers’ HAVE experiences before you can possibly know what to do to influence their experience… and ultimately, their behavior.