We’ve seen why experience is becoming key in digital transformation and tried to find its main characteristics. Before going further, it’s important to focus on its economical value.
I see this point from two perspectives. It’s both about margins and engagement.
Experience is about margins
What defines the price you’re ready to pay for a product or a service. Your budget ? No. Budget is the limit. The intrinsic value of the product or service ? Namely : raw materials, workforce and margin ? Neither. That’s the price the vendor should sell it to be profitable, not always the price you’re ready to pay. What’s on the price tag ? That what you’re going to pay but it won’t prevent you to say saying “it’s not worth it” or “at this price it’s a bargain !”.
I remember of a discussion I once had why someone from a company I’m a regular customer of.
– So, what do you think of our new xxxx ?
– Pretty good.
– You’re kidding. It’s the best on the market.
– Look at the numbers : it’s the most xxxx on the market, the most xxxx…
– Ah ? I did not notice. It made nothing to me.
Bottom line : I was not ready to pay that price for this product while I was ready to pay more for their competitor’s which was objectively inferior. Objectively because there was a little something that made me want one and to the other, experience one one more time and not the other and in case I had to make a money-based decision I would be more likely to make effort for one and not for the other.
I found the name of the little something : experience. It was about how the product was staged, it’s advantages, the associated services. Which services were quite the same in both cases but delivered differently. In short, a radically different perception from a qualitative standpoint but which, in the end, weights a lot in my decision and my propensity to recommend one of the other.
Experience is what allows you to
– ask customers to pay more than for competitor’s product even if the product is the same or inferior
– improve a product (hard) with a service (soft) without an heavy R&D investiment
– generate more repeat business as Manuel Diaz said in his interview, so more revenue with a lower incremental cost of sale.
– have a better recommendation rate from customers (or Net Promoter Score) so decreasing incremental marketing costs.
In short a successful customer experience means higher margins for your business. Nothing more, nothing less.
Of course experience as a cost. But it’s more about service or management innovation which costs have nothing to do with product innovation.
Of course connected objects will be experience conveyors and they’ll require massive investments on the product side. I agree but not fully. First because when it will come to connected objects the question of doing vs not doing will be a no brainer, a matter of live and death. Then, once the initial investment have been made, experience improvement will happen through software upgrades, not physical ones. Digital allow to provide experience at scale with no additional costs.
Consider Tesla. Imagine that one day they realize that the car would be more comfortable if the suspension clearance is changed. With a normal car the owner should take the car back to the garage, had the modifications done. In this case a better experience has a cost and causes annoyance to the customer. With Tesla the only thing needed is to upgrade the car software. Better experience, less costs, no annoyance.
Experience is about engagement and productivity
Now let’s consider employees.
I won’t repeat another time what you’ve read everywhere. The large majority of employees is disengaged and, from a financial perspective, a disengaged employee costs money while an engaged one makes money. Businesses makes much more money if they have more engaged employees. It may seem obvious but it’s always worth being repeated. That said, what should we do ? Track the causes of disengagement. They are numerous but I’m going to focus on some I can often observe in many workplaces.
While digital transformation is today’s hot topic, what do employees see ? Large budgets invested in customer relationship and marketing and, on their side, obsolete work tools and small budgets for change management. How do you want them feel they’re not (to use a word I heard from an employee) the cuckold of the story ?
No employee experience, no customer experience so no margins.
Drucker’s quote still applies.
Most of what we call management consists of making it difficult for people to get their work done.
What management experience do we want to provide employees with ? What experience in their work with others (it’s about collaboration). It’s about management, work practices, tools and has a result : engagement and productivity. It’s eventually on a collision course with well-being-at-work programs.
I’ll also mention a concept I like a lot : the symmetry of attentions. Employees won’t give customers what they don’t receive from employees. As stated by the CEO of Mercedes USA : “customer experience is the brand and customer experience follows employee experience“. No employee experience no customer experience and so no margins.
Engagement is also the fact employees buy or not the company’s strategy. It depends on many things : what they’re told, what they believe, both based on facts. Like customers buying experiences, employees buy a company experience and maybe businesses should think more about the experience contract they have with their employees.
Customer experience is the lift of your organization, employee experience is the thrust
Using the airplane metaphor I used for digital transformation, customer experience is the lift of your organization, employee experience is the thrust.
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