Performance Consulting Group

“Corporate Growth: The Three Levels of Differentiation Leading to Three Levels of Customer Loyalty”

Presented by Kevin PittsJuly 30, 2015

Premises

Strategy is Choice – The Power of Putting Customers at the Center of Your Business

What is Winning – Innovative and Distinct Customer Experiences crafted from creative problem-solving processes

How to Win Today – Creating Distinct Sets of Integrated Activities Centered around the Customer Experiences

Neo Cortex: Executive Thinking Limbic: Emotional ProcessingBrain Stem: Survival Instinct

The human brain is divided into three main components each with a unique function:

The Limbic brain acts as the gate keeper for which part of the brain is engaged in response to a stimulus.

If the environment and the stimulus makes us feel safe, secure and motivated we engage our Neo Cortex.

The Neo Cortex processes stimulus by engaging higher order thinking functions which include Business Acumen and Creative Thinking

The Brain Stem’s response to any stimulus is to:•Attack it or•Run from it or•Ignore it

If the environment or the stimulus makes us feel threatened or stressed then we engage our Brain Stem

Brain Research

• How do Customers experience the interactions with your firms:

– Do I feel safe?– Do I feel respected?– Is this interesting?– Is this motivating?

Neo Cortex: Executive Thinking

Limbic: Emotional Processing

Brain Stem: Survival Instinct

The Secret FormulaInnovative Customer Experiences = Business Acumen + Creative Thinking + Motivation

5

Arena

Where will we be active?• Product categories• Market segments• Geographic areas• Technologies• Value-creation stages

How will we get there?• Asset Optimization• Organic growth • Partnerships

Vehicles

Differentiators

How will we win?• Price Differentiation• Brand• Service Differentiation• Product Differentiation• Process Innovation

Staging

What will be our speed &sequence of moves?• Speed of expansion• Sequence of initiatives

EconomicLogic

How will we obtain our returns?• Low cost• Premium prices• Customer loyalty• Proprietary technology

Source: Adapted from Hambrick & Fredrickson, (2001). Are you sure you have a strategy? Academy of Management Executive.

Innovative Customer Experiences and Business Acumen

The 3 Levels of Differentiation

“There is just nothing like this out there.”

“I see why we may want to pay a bit more here.”

“There is not much difference here.”

Source: McKain, Scott, 2012, Create Distinction: What to do when “Great” isn’t good enough to Grow your Business, Greenleaf Book Group Press.

Distinction is about creating an emotional connection with your customers.

Distinction

Differentiation

Sameness

Mar

gin

Expa

nsio

n

Large(United)

Small(Frontier)

Medium(China Eastern)

Puppy(Jet Airways)

By size

Pet

EmployeeGrandchild

Dog as …

Dog

Business Acumen/Innovative Segmentation – Making the Customer Experience Distinctive

The 3 Levels of Customer Experience

“Interesting and motivating.”

“I didn’t have to work hard.”

“I accomplished my goal.”

Source: Manning, H., and Bodine, K. (2012). Outside In: The Power of Putting Customers at the Center of Your Business. Forrester Research.

Customer experience is how your firm’s interactions are perceived by its customers.

Enjoyable

Easy

Meets Needs

Reve

nue

Grow

th

• Retailers• Hotels• Parcel delivery/shipping

providers• Consumer electronics• Insurance providers• Banks

• Investment firms• Credit card providers• Airlines• Wireless service providers• TV service providers• Internet service providers• Health insurance plans

Exercise: What industries do you believe to be the top 2 and bottom 2 with respect to Customer Experience scores?

High, Low, and Average Customer Experience Index Scores by Industry

Source: Forrester’s North American Technographics Customer Experience Online Survey

Retailers

(81)

Hotels (76)

Parcel d

elivery/Shipping (7

5)

Consumer e

lectronics

(73)

Insurance

(71)

Banks (70)

Investment F

irms (

70)

Credit card

providers

(67)

Airlines (

66)

Wire

less pro

viders (63)

TV service

providers

(56)

Internet s

ervice pro

viders (56)

Health in

surance

plans (55)

35

45

55

65

75

85Excellent

Good

OK

Poor

Very Poor

Distribution of Customer Experience Index Scores

Very Poor

Poor

Okay

Good

Excellent

0% 5% 10% 15% 20% 25% 30% 35% 40%

10%

23%

31%

34%

3%

Source: Forrester’s North American Technographics Customer Experience Online Survey

Customer Experience Revenue Benefits

Source: Forrester’s North American Technographics Customer Experience Online Survey

Banks

Credit Card Providers

Insurance Providers

Airlines

Wireless Providers

Hotels

$12

$12

$24

$65

$60

$44

$90

$83

$203

$44

$450

$825

$150

$213

$225

$481

$788

$495

Additional PurchasesChurn ReductionWord of Mouth

Total AnnualImpact

(in millions)

$252

$307

$452

$590

$1,297

$1,364

Creating distinction doesn’t mean you must be completely unique. It simply means firms must create an integrated set of unique activities that are of value and

essential from your customer’s point of view.

Enjoyable

Easy

Meets Needs

Distinction

Differentiation

Sameness

Source: Adapted from Scott McKain, 2012Source: Adapted from Harley Manning and Kerry Bodine, Forrester Research, 2012

The Customer Experience and Innovative Strategies

Innovation Continuum

incremental r upt i v ed i s

So How?????

Activity: Walk the Line

Incremental Breakthrough

1. Generate a list of company norms as it relates to customer experiences.

2. Select one norm to challenge.

3. Generate ideas to challenge the norm.

Norm 1

Norm 2

Norm 3

Norm 4

Challenging Customer Experience Norms

A Norm is a standard or pattern, especially of social behavior, that is typical or expected of a group.

Targeting

Define the bull’s eye criteria.Use “Will it…”? or “Does it…?”

For example:• Will it be implementable in the

next year?• Will it leverage new technology?• Does it cost under $50,000?

Define your criteria

TargetingPlot the proposed ideas on the target relative to the bulls eye.

Pick an idea to strengthen. Ask yourself: “What is stopping that proposed idea from being right in the bulls eye?”

Phrase as an open-ended question starting with “How to…”

Example: “How to Reduce the cost?”

Targeting

Generate some ideas for

overcoming the challenge.

Continue to work to improve

and strengthen ideas to get

them as close to the bulls eye as

possible.

After refining your ideas select

those ideas that are worth

pursuing further.

Why is Distinctiveness a Rarity in Business?

1.A Focus on Competitors and not Customers

2. The Paradox of Best Practices

3.Efficiency = Effectiveness

What Can You Do On Monday?

1. Clearly communicate the financial cost of retaining a customer versus finding a new one – make this transparent to all who touch the customer

2. Create a bonus pool for those who go beyond and above to ensure repeat business

3. Cultivate an innovative culture that encourages broad decision rights as it relates to customer experiences

4. Document each and every key customer touch point – and apply creative thinking principles to ensure distinctiveness

Questions