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Customer experience: the next competitive battlefield – by Tom Knighton

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Companies which create unforgettable customer experiences will be the winners in both today's and tomorrow's economy. This is the latest in a series of columns written for HR Zone from management education portal FTdynamo.com.


An executive from Dell Computers recently said that "the customer experience is the next competitive battleground". He is right, and the battle is already underway.

Companies which create unforgettable customer experiences that leave indelible impressions in the minds of their customers will be the winners in both today's and tomorrow's economy.

This raises key questions:

  • How do you ensure that your investment in the customer experience pays off?
  • What are the bottom line benefits?
  • How do the best companies design the customer experience to motivate repeat business?
  • How can leaders motivate and guide their organizations to put the customer at the center of everything they do?
  • How can you balance the latest in technology — high tech – with personal interaction — high touch?

Perhaps one of the simplest and yet often unasked questions is the precise identity of key customers. Companies need to make sure they are serving the right customers – those that will reward them with repeat business and profits. Yet they often do not know who their best customers are or how much they spend.

The business reality is that in any selection of customers, some will be substantially more profitable than others. Often this follows the Pareto principle. Pareto, an Italian sociologist and economist, found that 80 per cent of the wealth of Italy was owned by 20 per cent of the population. He went on to uncover a recurring 80-20 pattern in a variety of situations. In many businesses, 80 per cent of profits are accounted for by 20 per cent of customers. The onus then is on companies to identify their key customers and to nurture them so that they remain so.

At the same time, companies must really understand what customers value – down to the little things that make the big difference. Do customers value timeliness, price efficiency, luxury, personal contact, lack of personal contact, style, feel, or status? What convinces them to become a customer? If companies understand what customers value, they can then deliver value in a way that makes their products and services stand out from the crowd. They need to excel. They cannot provide a little of what the customer values. Customers want it all, and they want it now.

Excellence means thinking about the consumer's experience from every angle. The experience must be carefully designed to meet target customer needs and must be consistent in meeting these needs while, at the same time, differentiated from competing offers. This difference must also, in itself, be valuable. The danger is that all this sounds highly prescriptive, as if there is a standardized formula.

Unfortunately, there is no template. But the experience must be made to count. It must matter. And it must work. As Shaun Smith shows in the first of a regular series of articles, Experiencing the Brand – Branding the Experience (available to FTdynamo – subscribers) the customer experience makes the difference between a loyal customer and an enthusiastic customer. The people who are involved in creating and delivering the experience make the difference between customer affection or customer defection; and building a powerful service brand makes the difference between market leadership and market indifference. Companies which fail to create valuable customer experiences are entering the battlefield unarmed.

Tom Knighton is executive vice-president of Forum Corporation.


FTdynamo features writing and research from leading business schools and management consultancies with expert insight and analysis from FTdynamo. A free trial of its services is available at www.ftdynamo.com

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