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Customers are buying down, and opportunities are rising, part 3

Customer-centric experience design is explored in this final installment of "Where's the Opportunity?"

November 3, 2009 by Mike Wittenstein — Customer Experience and Service Designer, Storyminers

This article is the third and final installment in a series (Part 1, Part 2).

In my last two articles I have been addressing middle market retailers in particular. I do this because I believe you are operating in the industry's sweet spot for change. Unlike the vendors of commodities who can hope only to drive down costs incrementally through cost controls and supply chain management, and unlike the luxury brands which face an imminent shakedown, you have the opportunity to make things different and better at your store. You can use this down time to design a great customer experience that is also highly profitable and achieve significant business growth in the process.

If you've been observing and engaging customers, you may have noticed that even luxury buyers are seeking high value at a low price. This is one of the reasons so many knock-off brands thrive. People like having others notice their Rolex watch, knowing that they only paid $50 for it. They like it even more when their clever purchase escapes unnoticed. The watch's weight is the same. The crown and bezel are the same. Even after a few years, it keeps time accurately. "Why pay more?" is a now ubiquitous advertising slogan because it reflects people's desire for quality and low price at the same time.

This trend represents a major shift from the days when luxury buyers bought for exclusivity—so that other people would covet what they had. Customers today know what they want to experience, and they're often looking for products and services that make their lives easier or more fulfilling. At the same time, they still want value.

So, how do you start to build a customer experience that's meaningfully different, cost-effective, and practical?

Creating the customer experience begins with what by now should be a familiar refrain—understanding what customers really want and why they buy. Step into your customer's shoes and observe your business processes from their perspective. You will get valuable information you need to design (or re-design) your experience. A good design not only yields a more talked about customer experience and a better employee experience, it drives down production (or delivery) costs by eliminating the steps that don't add value.

Asking the question "What's important to customers about printer ink?" drove an innovation at Hewlett-Packard a few years ago. The company changed its printers' operating system software so that when customers install HP printer drivers they also install an ink-level sensing applet with a dashboard showing current ink levels. The applet reminds you when you need ink and gives you a link to the Internet so that you can buy the right ink at the right time—before you run out.

The more than 400 Build-a-Bear Workshops around the world create a wonderful experience for children and adults while producing great business results. The experience of choosing, assembling and outfitting a stuffed animal is carefully choreographed. The giver and receiver bond over decisions they make together. Making a wish on a heart that is placed into the bear before its final assembly is a cherished part of the child's experience.

From a business perspective, the onsite customization drives down production costs. Only the "shells" and outfits are pre-produced, so there are virtually no finished goods in inventory. Onsite production—just-in-time delivery with full customization—is less expensive than importing finished products. Best of all, viral marketing is all but guaranteed. The total experience—not just the stuffed animal—leaves the store with the customer. For every bear that finds a home, at least two satisfied customers—the giver and the receiver—spread the word to all their friends.

Making your customer experience better isn't easy. But it's worth it. If you're leading the charge, start by taking a look at your operation from your customer's point of view. Pick one or two things to do that not only make the experience better for the customer, but easier to deliver for the employee and more profitable for the shareholders. The rest will come naturally.

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