Customer experience is at the heart of digital models (Manuel Diaz)

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I’ve written a lot on experience and its importance in new business models, digital or not. I had the chance to go further into the matter during a long discussion with Manuel Diaz, President of Emakina France, known for being a thought leader in this field.

Bertrand Duperrin : Hello Manuel. You’ve been focusing you speech on customer experience for a long time now. Can you tell me how the move started with the social web ended there ?

Manuel Diaz : There are some founding blocks behind that. First, let’s try to understand what the web is and what it’s going to change.

For us, at Emakina, and contrary to what we can hear elsewhere the web is not a new media, a new technology. The web, digital, is a new culture above all. Human beings are mutating. When you hear Google’s VPs in charge of the health business starting a conference saying “There are immortals among us, in this room” I can’t agree more. Humanity is undergoing a tremendous change. 50 or 50 years ago talking about having video conferences with grandchildren able to master technologies worthy of Star Trek would have been off-base.

We’re still not able to teleport ourselves but in a couple of years we’ll be able to print organs in 3D and implant them. Technology enters the human body. The clash between digital and business is as big when people said decades ago that pacemaker were going to help hearts to function. It sounded crazy ! In short, the web is actually a culture that’s making human people mutate. We need to have this in mind when we think about digital and wonder what to do with, where to head to, to understand how big is the ongoing transformation.

Now let’s get back to marketing and experience. The basics of communication were set regarding to a given paradigm : there is a finite number of spaces and media to share a message, promote a product. Today we can see new media and TV Channels appearing every day. Today you can’t interrupt a content to send a message, you need to generate attention. That’s what we’ve learned at the beginning of the social web, when individuals and brands became equal players. That was called “attention marketing”. No matter your financial means to interrupt and force people to hear your message, you must generate – and even deserve, earn – attention.

There’s no anti-digital shelter

Nmanuel diazow we’ve reached the next step : the experience one. We believe that the web is everywhere, that digital is everywhere, mostly because of the rise of mobile, smartphones, tablets, 3G and 4G networks. Before, digital used to be an expertise but that’s over. Digital is transverse, cross-everything and I don’t know any business that can claim being safe from the digital revolution. In my opinion there’s no anti-digital shelter. Who can say “I’m not impacted by e-commerce“, “I don’t care about what my customers say about me…I muzzle them” ? Nobody

So, if digital is everywhere the point is not to be good at digital anymore. Having a good e-commerce site that does the job is useless if I’m not treated well when I go into a store. That’s experiential marketing.

BD: So that’s the revenge of quality over quantity in a world with an abundance of signals. But the idea of experience is old, isn’t it ? It’s when digital experience meets physical experience ?

MD : Exactly. We even believe that if you’re not an experience you soon won’t be a brand anymore.

BD: That’s what the CEO of Mercedes USA said : “Experience is the brand”.

MD :Exactly. The best definition of a brand is the experience customers share with it. At every touchpoint. With the product, the packaging, the advertising campaign, the sales clerk, the store, the twitter account and the way it answers questions.

That’s also the reason why, when I can’t print an Amazon bill from Safari and they tell me to use another browser “hey…I love your brand but not enough to change my browser”. I have all my life, my passwords etc in…so from an experience perspective the answer is not acceptable.

If you’re not an experience you soon won’t be a brand anymore

You can learn a lot by interacting with brands online. And brands that don’t care about their experience will become nothing but a trade name, a shop. Places you go occasionally, without any loyalty, just because it’s a one-shot solution to a problem.

And, because that’s what really matters, margins are in the brand value. What’s the difference between two products, one branded and th other not ? The value of the brand. Take the example of bottled water. The Evian Bottle sells me the idea of the Alps, the idea of youth that comes in all their commercials. The product is not that different from their competitors but what will make me pay more than for any other bottled water is the brand. So the experience.

If you want to keep on creating value you must invest in your brand. And the only way to do so in a digitized world where information is fluid and the only way to exists is to generate attention instead of doing interruption marketing, it’s to provide an exceptional customer experience. A unique one.

BD: People often consider experience as something qualitative while it’s a quantifiable economic asset. What customers value is not the cost of raw materials plus the margin but the experience. Experience makes them ready to pay more for a product that’s not always better. The first iPhone was not a very good device but customers were ready to pay a premium for the  experience even the the product was less performant than the competition…

MD :Right. That was not a good phone but it provided an unprecedented experience. Everybody wanted a touch screen that actually works, with a glass screen that perfectly reacts to gesture. Everybody wanted to touch that experience.

If I were a brand today I would spend all my money in product design and placement because this vision dates from an era when only advertising could drive traffic and sales. What I would do is to define my “experience contract” with my customers.

A brand must define its experience contract with its customers

That’s what powerful brands like Zappos, Amazon and many others did. They built themselves up nearly without advertising. Amazon, Google, Ebay, Starbucks, New Balance etc.

BD: So that’s the end of the bad habit of only taking care of the experience at the moment customers buy. Once you’ve bought and done your “customer job” you were expected to go back home and not bother people. Today, experience comes beforehand, even before the idea of buying and afterward, once you’ve bought.

MD :There’s something magic with experience : it generates repeat-business. The best and most cost-effective way to generate revenue is to talk to you existing customers, improve your “repeat business”. The conquest of new customers is more risky and expensive. I’m appalled by the number of brands that don’t care about their repeat business. Brands that worked on their experience care more of their customers and do a lot of repeat-business.

Example : Amazon in France. A “bright” minister has decided to prohibit free shipping. Instead of helping book stores to embrace the digital revolution she decided to impede the new industry giants. What did Amazon do ? They sent their customers an email to inform them about the new rules, apologize and tell them that they’ll have to pay…1 cent by shipping. What they say is “our customers are our most precious asset and we decided to serve them the best possible way“. This is a brend that reacted under the pressure of its market, of regulation, and decided to do anything but downgraded the customer experience.

BD: What forms can experience take ? Relationship with the brand, belonging to an ecosystem, experience in stores, product experience….?

MD :First, a brand should not discriminate customers based on the channel. Why does Spotify tells me “Hi Manuel, here are the songs we selected for you based on what you and your friends like” while, when I walk into a large and famous record store the sales clerk is not equipped to recognize me and propose me songs that match my tastes ? That’s discrimination based on the channel and that’s why the retail industry suffers that much against digital players.

Brands must not discriminate based on the channel

The question is not to close retail stores but to know how to make sense of it in an era when technology offers so great online experiences that store experience looks so flat.

BD: So, paradoxically, customer experience in the digital era means moving back to physical spaces..

MD : Exactly. Let’s consider banks. If I’m a bank, what should I do with my network of agencies ? No one wants to meet his bank representative. We prefer to send him an email, skype him or have an online place for conversations with him. We don’t have time to waste going to the bank, queue etc.. Whatever banks will do to improve their agencies, to provide a personalized welcome, the truth is no one want to go to a bank agency anymore. Agencies must find a new purpose.

However, there are many people who need banking, legal, financial advice… Agencies must find a new purpose, a new role in the global experience with the bank.

Retail must find a new purpose in a digital world

It’s so easy to digitize basic operations that digital pure players in the bank industry offer experiences no traditional bank can compare with.

So the social link between banks and customers have to be reinvented. Why wouldn’t an entrepreneur spending a day in Paris to meet his clients be able to meet them at his bank ? In one its agencies ? It would be a experience that increases the value of the bank in the eyes of it client. WIth their network and their incredible presence, both in small cities and in foreign capitals, they could become the Regus of entrepreneurs. Entrepreneurs don’t have offices everywhere, banks do. It’s a service, a way to help. That what’s improving one’s experience contract means.

BD: That reminds me this new book by Robert Scobble and Shel Israel. The age of context. All that you’re saying seems to be based on the understanding of the customer’s context. They say that it’s going to be powered by sensors, connected objets, and big data. What do you think ? Where are businesses standing now ?

MD : It think that the platforms war is over. There’s Google, Facebook, Twitter etc…they’re here to stay. New players will emerge but we already know the cardinal points. Now the new battlefield is moving to data and connected objects.

Brands are struggling to integrate digital in their culture and management model in order to have an impact on their customers, their offer, service and products but they must understand that customers want even more. They are ready to wear devices – that’s the tend of quantified self – because of the use value or because it solves a problem. For example I want to know how many calories I burned based on my profile and needs. Or I want to be coached by my scale.

Data turns advertising into a service

In the data era it’s even better. A client in the Netherlands told me what he recently experienced. He landed in  New-York, did his self-scanning facial recognition etc… He’s been looking on Google for weeks to buy a new car, a 4WD and, suddenly, on a screen near hum he saw and ad for a 4WD in dutch ! That’s the power of data : turning advertising into a service. It’s making it so contextualized that you don’t see it as an ad anymore but as an opportunity.

We must also be aware that France may be training the best statisticians and mathematicians in the world. We have lots of assets to be successful in the data era.

It’s the same for connected devices : we have our “french touch”. Stay elegant while mobilizing technology, deliver an harmonious fusion. We have Parrot, Withings etc.. It means something.

BD: I’ve recently read two studies. One Deloitte-MIT on the state of the art in social business and another from Altimeter on digital transformation. I heard many practitioners worried by the few attention paid on the internal side of the digital transformation. Too much focus on experience, too little on what it means for employees. How do you see things happening ?

MD : Then, like the CEO of Mercedes USA did, state that experience is the #1 challenge. Angela Ahrendts, Burberry’s former CEO now in charge of retail activities at Apple, said a few years ago that “You have to create a social enterprise today. If you don’t do that, I don’t know what your business model is in five years”

Customer experience is the product of the enterprise’s collective intelligence

BD: yes…she also said that before building a relationship with customers, businesses should build one with their employees first. So what should businesses do ?

angela ahrendt engagementMD :First, in no one understands how important customer experience is, nothing will happen. Then, customer experience is the result of collective intelligence. If you want to build a customer experience worth the name you need specialists from every area of the company. C-suite, innovation R&D, IT, marketing, product management.

So, first, make it a priority. Then break down silos ! I know businesses where IT and marketing haven’t spoken to each other for 10 years ! I speak to each of the but they never come together in a meeting. They hate each other ! But today you can’t put a brand in motion without technology, each one needs the other.

Any initiative is a project that should be run with a startup mindset. Go fast, do well, test on the market, learn improve.It’s never been easier to test an idea and see how it works. Test and learn should be the new normal.

Businesses should also go and get innovation where it happens when they can’t innovate internally anymore. Look at what startups do, learn from them and even partner with them in you design process. But ideas can also come from the inside : in a networked world, ideas don’t come from the R&D only.

What you know has little value compared to what you are

Businesses must have the temerity to believe in impossible things and don’t let processes hold them back. Less management, more leadership to make employees surpass themselves. The ongoing transition is so big that what we know has few value compared to what we are and the experience we want to build.

BD: That reminds me of the latest IBM C-Study. It says that overperforming businesses collaborate a lot at the C-Level…but that very few are doing it. Do you see things changing ?

MD : A little. But too slowly in Europe and even more slowly in France. In France we have a problem, compared to Anglo-Saxons. Maybe because of their protestant culture. THey don’t have problems with transparency, they can talk about money. Here it hurts old habits. We’re a society made of castes, of networks..but not the right networks. The networks that exclude, not the ones that include. When a business only hires people who graduated from a given college – and it happens – it’s hard to reinvent oneself. It’s a consanguinity problem, what is the opposite of a world that understands that success from the ability co connect with others, that value comes from differences. It’s a handicap. We too often do the opposite of what success requires.