Experience-Based Differentiation

Earlier this year, I published a report called Experience-Based Differentiation (only Forrester Research clients can read the full report). As of this point in time, it’s Forrester’s most-read report this year.  I’ll get into some of the details about the report a little later in this post, but I’d like to talk about the report’s popularity a bit. Why have so many people wanted to read this report?

I don’t have hard data on why everyone’s reading my research, but I’ll throw out a hypothesis: Many execs believe that: 1) customer experience is critical to their future success (I do have data on this in my research) and 2) they currently deliver subpar experiences to their customers. This alone provides enough motivation for reading the report. But I think there’s something else at play as well.

Customer experience is, well, that’s the thing… what exactly is customer experience? Many people know that it’s important, but most people don’t really know what it is. That creates a black hole of insight — which generates a lot of demand for this type of research. My goal is to help shrink this black hole.

Now, on to some information about Experience-Based Differentiation (EBD) which we define as:

A systematic approach to interacting with customers that consistently builds loyalty.

Don’t focus too much on the definition. Instead, take a closer look at the three principles of EBD:

  1. Obsess about customer needs, not product features. Rather than racing to bring new product features to market, companies need to refocus on the needs of their customers — who might even want fewer features. While most firms have invested in customer analytics, even the largest data warehouse and most sophisticated software can’t model the nuances of human likes and needs. That’s why firms should augment data crunching with some old-fashioned techniques like talking to customers and observing their experience. This insight needs to be widely communicated across the organization.
  2. Reinforce brands with every interaction, not just communications. Traditional brand messaging is losing its power to influence consumers — that’s why branding efforts need to expand beyond marketing communications to help define how customers should be treated. To master EBD, firms must articulate their brand attributes to both customers and employees, clearly describing how the firm wants to be viewed. That’s just the first step, because companies must go on to translate brand attributes into requirements for how they’ll interact with customers.
  3. Treat customer experience as a competence, not a function. Delivering great customer experiences isn’t something that a small group of people can do on their own — everyone in the company needs to be fully engaged in the effort. It all starts at the top; the CEO and his executive team need to be fully engaged in the effort. To keep a companywide focus on customers, companies need a systematic and continuous approach for incorporating customer insights into all of their efforts. That’s why we recommend building a voice-of-the-customer program. (Note from Bruce: voice-of-the-customer is another hazy concept out there — that’s why we defined a five level model for voice-of-the customer; we’ll definitely touch on that topic in later posts.)

EBD is a core focus of my research, so you’ll definitely find these concepts making their way into future blog posts. But for know, I encourage everyone to add thoughts or examples of how companies can head towards Experience-Based Differentiation

Written by 

I am an experience management transformist, helping organizations improve business results by engaging the hearts and minds of their customers, employees, and partners. My "job" is Head of the Qualtrics XM Institute. The Institute is still being established, but our goal is to help organizations around the world thrive by mastering Experience Management (XM). As part of this focus, I examine strategy, culture, interaction design, customer service, branding and leadership practices. And, as many people know, I love to speak about these topics in almost any forum. Prior to joining Qualtrics, I was managing partner of Temkin Group (leading CX research, advisory, and training firm), co-founder and chair of the Customer Experience Professionals Association (CXPA.org), and a VP at Forrester Research. I'm a fanatical student of business, so this blog provides an outlet for sharing insights from my ongoing educational journey. Check out my LinkedIn profile: www.linkedin.com/in/brucetemkin

17 thoughts on “Experience-Based Differentiation”

  1. Thank you for distilling the core objectives of a successful customer experience strategy into these three main points. For nearly two decades our firm has helped leading brands in measuring the customer experience across critical touchpoints, and we have seen first hand how well your three principles, when properly integrated into a brand’s experience strategy, deliver on sustained success.

  2. Have read the full report from Forrester and think you do an excellant job outlining the barriers that keep companies from realizing the “Promise Land”. In my 21 years in the agency business I have seen some of the best ideas shot down by executives who place their own likes, dislikes, wants and needs before those of their customers. I would love to see more work in the area of executive coaching and reporting based on these principles. Specifically concerning the points you make concerning Siloed Efforts, Industry Tunnel Vision and the big one Self Centered Design.

    Nicely done, you summarize my thoughs and experiences beautifully.

  3. Hey, Bruce, great stuff.

    On the executive side, of course you’re going to get sunflowers that follow the lead of the self-centered exec, and that’s a culture issue that can be addressed through coaching and other HR triage. But the key thing, ultimately, it to replace the sunflower effect with a good business case for customer experience management, and making sure that it starts with developing a value prop that considers realistically the relevant factors that influence a person’s disposition towards a company and its products.

    I am recalling a great anecdote from Why We Buy that describes how a veteran Nordstrom merchandising designer helped Hallmark “upgrade” its greeting card displays. Hallmark, being a top brand, wanted luxe appointments.

    Failed miserably. Sales dropped measurably.

    Why? Because the luxe appointments included materials like (I’m getting this from my own memory now) marble, brass — very distinguished and “cold”. It turns out that the customers — mostly women — wanted a warm, emotive environment in which to ponder and carefully select the right sentiment.

    Hallmark tried to create a customer experience that was too much about their internal brand concept, not about what the customer needed to have a rich, rewarding experience.

    Point is simply this: Customer experience management should yield business results, and this means understanding customer needs must be taken to a new level as a core competency. The conclusions you draw from the customer insight affect everything: the brand, processes, HR choices, etc.

    Love your blog and it would be a privilege one day to knock heads about CEM. (I disagree with the scope of your definition, by the way. ‘Nother topic, ‘nother day!)

  4. Bruce,

    Great article. I have long thought the same, and have spent the last two years attempting to teaching a sales force of a large corporation how to listen to their customers needs instead of ‘push’ our corporate mentality. Yes, it did not go over well, even though sales did increase with the salesman I worked with. I have written a short paper on the subject, it is in no way a scientific paper, that is a summation of a class I taught, and I would welcome your opinion if you have the time.

  5. Walmart needs to read this article. The past 6 months my experience with Walmart Shopping has been very disappointing. Customer oriented service and merchandise has declined so that my 2 to 3 times a week shopping and spending $100 to $300 a trip at Walmart has now been reduced to $2.00 to $80.00 a trip. Can’t find what I usually purchased at Walmart and empty shelves, I live in Bentonville, Home of Walmart. I have taken to stopping Walmart Executives while they are in the store and telling them how disappointed I am with the “changes.” They do not want to hear it! My conversation ranged from the simple, “Can’t find someone to help!, to “The products I puchased are no longer handled by Walmart” to “I’m going to other stores to purchase what I want/need and picking up other items at that store.” They don’t care! I am told that is the way it is. At one point I spoke to the Store Manager that an employee had told me they had the product; but the “guy who stocks these sheves won’t be in until 4:00” and didn’t bring the product to me. Another tall gentleman stopped me and thanked me for what I had just done. He told me he was an area manager over the produce department. I told him, “Sam Walton did not allow empty shelves: there are so many empty shelves they must have a problem with distirbution.” Walmart is handling even fewer product choices in the past month. It is a real increase in sales to the home suppliers and the two other grocery companies in the area. I’m shopping those stores more and more. Walmart didn’t handle a simple product as “mincemeat” during the Christmas season. Other local groceries did handle it and customers bought there and those store sold out of it, but got more in stock quickly! . . I imagine those customers found and purchased other items while at those stores… I know I did! I’m shopping the stores where I know I’ll find the merchandise and service I desire.

Leave a Reply

This site uses Akismet to reduce spam. Learn how your comment data is processed.