Are customers at the heart of your business?

No business leader in their right mind would answer, “No,” but the sad truth is that many of us in the corporate world have been paying lip service to customer needs, ideas, and feedback without deeply understanding and taking action on them.

This inertia is, in part, created by the speed of innovation. As the digital world has emerged and evolved, it's enabled businesses to reach size and scale faster than ever before, and to do so with smaller initial investments and fewer people.

Instead of sinking tens of thousands of dollars into a neighborhood gym full of costly equipment and overhead, we can spend a couple hundred bucks on designing a fitness app that helps people slim down and build muscle mass.

Instead of attempting to build an entirely new academic institution, we can compile expertise and information into an online learning platform.

Instead of spending two years scouting locations, finding suppliers, and negotiating contracts to launch a brick‐and‐mortar retail business, we can spend two days tweaking our ecommerce infrastructure and supply chain.

The acceleration rate is dizzying. You know this already.

You also know that the ability to go from zero to profit in record time has triggered a tsunami of businesses, many of which offer nearly identical products. In this teeming marketplace, the key differentiator and driver of loyalty has become the customer experience.

Does the customer feel understood and valued? Can they set up a new account without any friction? Is the initial experience using the app easy and enjoyable? Are the new offers that appear in their inboxes anticipating their needs and helping them feel connected to the company?

Today's customers expect great experiences with the products, services, and brands that they support. Many of the businesses that have achieved phenomenal success in this market are the ones that know this and prioritize the creation of above‐and‐beyond customer experiences.

Take Spotify: Personalization has always been central to the music streaming service's brand and market presence, and in the summer of 2021, Spotify kicked it up a notch by launching its “Only You” campaign. This dedicated in‐app experience leverages user listening data to highlight the artists, songs, genres, and listening patterns that are unique and important to each listener.

Like the service's popular and personalized year‐end summary, Spotify Wrapped, Only You content is easily shareable across social media. The Only You content joins Discover Weekly, Release Radar, and Daily Mixes in the app's Made for You hub, the title of which underlines Spotify's dedication to making each user's experience feel personal, bespoke, and special.¹

Spotify has become one of the most successful on‐demand music platforms globally, with more than 320 million active daily users and more than 144 million paying monthly subscribers as of 2021,² while competitor Pandora has shrunk to 55.9 million active monthly users and 6.4 million subscribers.³ This focus on the almighty listener has clearly contributed to its success, and more and more people prefer and expect to receive personalization at this level.

And their expectations continue to rise as they compare experiences, not just within the same category, but across all of the products, services, and brands that they consume and support.

For example, when consumers purchase clothing online, they may compare their ordering and store pick‐up experience with the experience they have booking a restaurant reservation via a smartphone app. The intuitive and fast reservation experience doesn't resemble the retail transaction, but the consumer doesn't care. They've come to expect the same level of ease and integration from both.

Nailing this mix of canny design and well‐timed emotional ephemera can set a company apart from its competitors. Far apart. Think trillions of miles.

It's all borne out in the stats. Research shows that customers consistently convert for companies who offer them delightful experiences, and that they remain loyal to those companies once a connection is made. Even if another company offers similar products or services at lower cost or delivers them faster, people prefer the company that delivers the best experience and makes an authentic connection.

Take air travel as an example: Overall, airlines consistently rank as one of the top five most hated industries in the United States,⁴ so the bar is set pretty low. The advent of fees for things like checked bags and more legroom has continued to sour public opinion, in part because when customers have to pay for something that used to be free, they interpret this as a personal loss.⁵

And yet the U.S. Travel Association found that 60 percent of travelers would welcome additional fees dedicated to improving efficiency and choice.⁶ During the COVID‐19 outbreak, surveyed travelers said they would pay up to 17 percent more to fly on airlines that blocked the middle seat,⁷ and when Delta continued the blocked‐seat policy after other airlines rescinded it, Delta ​​rose to number one in the American Customer Satisfaction Index.⁸

This is a single example, but it isn't unique. Brands with superior customer experience rake in 5.7 times more revenue than competitors who lag behind,⁹ and 73 percent of customers say that good experiences influence their brand loyalties.¹⁰ And since every MBA knows it's far more costly to acquire new customers than it is to keep loyal ones happy, this is news worth noting.

Yet far too many business leaders note it and are paralyzed by the prospect of trying to please these hordes of tech‐savvy, highly discerning consumers. Either that, or they pour company money into analytics, surveys, and customer databases and assume an influx of data will help them rise as a market leader.

It won't. Not by a long shot.

Many companies spend billions of dollars collecting, sorting, and interpreting customer data, but still don't fully understand the people those data represent.

They may formulate potential new products or features to solve a customer problem, but do so without understanding how the problem arose or why it's a problem worth solving.

They may segment the living daylights out of their customer lists but still struggle to understand drivers and motivating factors.

They may sit inside dashboards watching app downloads and conversion rates, but they don't know why people are opting to download a competitor's app instead of theirs or dropping out of the purchase funnel.

A whopping eighty‐four percent of customers say their interactions with organizations fall short of their expectations,¹¹ proof that we're missing a crucial piece of the puzzle.

The missing puzzle piece is a view into authentic customer perspectives: the ability to stand in the shoes of a customer, to see through their eyes, hear what they have to say, and understand what it feels like for them to interact with a company.

The missing puzzle piece is human insight.

When Did We Start to Value Data Over Human Connections?

Before we dig into the mindset shifts and strategies that will help you transform your business through capturing human insight, we need to understand how we got here.

What caused so many businesses to stop talking with and observing their customers? When did we lose sight of the importance of seeing the world through our customers' eyes? Or did we ever really have these things in the first place?

Here's a quick summary of how companies have shifted their customer understanding efforts over the last century or so, mainly in response to new tech and manufacturing advancements.

So we've arrived in the Age of the Customer in the Experience Economy, an era in which consumers desire experiences and businesses respond by explicitly designing and promoting them.¹³

Business consultants B. Joseph Pine II and James H. Gilmore first defined the Experience Economy in Harvard Business Review back in 1998, and their definition has become increasingly relevant as the world has become more and more digitized.

Modern customers interact with the Experience Economy by making decisions that fit their lifestyles and values and paying for products and services that not only meet but exceed their expectations. If a certain company isn't up to snuff, they can easily find another that is.¹⁴

This fickleness came to a head during the COVID‐19 outbreak of 2020. In a study conducted by McKinsey & Company, 40 percent of respondents said they'd changed brands as a result of the pandemic, double the level of brand switching from 2019. Convenience was cited as a main driver of shopping behavior change—which makes sense during a time period when normal consumer activity was restricted—but 40 percent of respondents also said they were seeking brands that matched with their values.¹⁵ Clearly, people are more than willing to abandon a once‐beloved brand if it fails to deliver the level of experience or values they want and expect.

Keeping up with this shifting set of customer demands is overwhelming and costly, so many enterprises have chosen to leverage their gargantuan stockpiles of carefully collected customer data: repeat purchases, loyalty program sign‐ups, requests or preferences that have been codified through apps, websites, or customer service interactions. Doing this feels easier, faster, and cheaper than connecting with customers in person, and many business leaders have been led to believe that it's more accurate to rely on hard numbers than subjective input like customer stories and direct observations.

Surveys have replaced casual conversations with customers, databases have replaced shop‐a‐longs, and analytics have replaced observing your customers in real time. Instead of making decisions based on a blend of both numbers and customer narratives, many companies have opted to just trust the numbers.

This is how we find ourselves living in an era when customers are more influential and empowered than ever before and largely ignored by the companies that serve them. According to Harvard Business Review, product managers spend about 7 percent of their time interacting with customers.¹⁶ CEOs give an average of 3 percent of their schedules to the buying public.¹⁷ This is how we end up with enterprises insisting they're “customer‐centric” when they haven't reached out to an actual customer in months. Sometimes years.

No wonder the select few companies who actually do solicit and incorporate customer input have rocketed ahead of their data‐myopic competitors.

Great Experiences Are Derived from Deep Customer Understanding

Historically, buying a used car has been an objectively miserable experience. It's a long, drawn‐out process that often involves traipsing across huge lots at multiple dealerships, test‐driving dozens of vehicles, finally settling on one that's the right model but the wrong color, wondering how much of the crucial car back‐story you're actually getting, then finally signing reams of indecipherable paperwork. It's so bad, studies have shown that 81 percent of consumers do not enjoy the car‐buying process.¹⁸

And, of course, there are the salespeople whose profession has spawned an entire genre of derisive humor. A Gallup poll found that a measly 1 percent judge car salespeople as highly trustworthy.¹⁹

Paints a pretty dismal picture, doesn't it?

And yet used cars are big business. Nearly 41 million used vehicles sold in the United States in the year 2019, with average transaction price hitting an all‐time record high of $20,618.²⁰ The market size, measured by revenue, was $153.1 billion in early 2021.²¹ If someone unearthed the buyer pain points and addressed them, they could make bank. And that's just what the founders of Carvana did.

In 2012, this Phoenix‐based tech startup decided to change the game, not because the founders had a problem they wanted to address but because they recognized a problem that millions of car‐buyers across the world all shared. Carvana wanted to make the used car‐buying process simpler and more enjoyable.

“When we built Carvana, it wasn't just, ‘Let's go find something that's not online and bring it there.’ We realized that the customer experience of buying a car … people don't love it. It takes a lot of time,” says Ryan Keeton, co‐founder and chief brand officer at the company.²²

Yes, Keeton and his co‐founders set out to create a business model with reduced overall costs that would pass savings on to the consumer through lower prices with no hidden fees, but they also wanted to delight used car buyers. They wanted to build a fun, easy way to shop, finance, and trade in cars that took the slog out of the process.

So they created a website and app that provide 360‐degree views of the interior and exterior of each car so customers can inspect potential vehicles without ever stepping onto a used car lot. The company buys and inspects every vehicle they list, enabling them to offer an unprecedented seven‐day return policy on all cars. Carvana offers auto loans directly, giving users access to personalized financing terms without hurting their credit scores. Customers can browse through tens of thousands of listings and schedule next‐day delivery or pickup.

And if they choose pickup, it'll be at a vending machine. No, really.

In 2014, Carvana introduced its first multi‐story car vending machine in Atlanta and expanded to twenty‐seven by 2021. The structures provide an unforgettable signature experience for customers who have completed the online purchasing process and opted to pick up their vehicle on‐site. All they have to do is show up, claim their one‐pound golden token, and drop it into the slot to release their car. The company came up with this idea early on and partnered with design firms in Germany and the United States to make it a reality.²³ The vending machines have become branding icons for Carvana, and the quirky experience they offer reinforces the company's desire to make car‐buying fun.

The one‐two punch of convenience and enjoyability has paid off, and customers continually rave about their positive experiences working with Carvana. When we spoke to some of them, they were overwhelmingly enthusiastic.

“It was so simple. It was easy to find the vehicle I wanted. Getting it delivered was nice. Honestly, everything about the car buying experience was good.”

—Carvana customer

“I never had to leave my house. I didn't have to be haggled by salespeople. They just delivered it when it was convenient for me. It was really easy.”

—Carvana customer

“You have to start with the economics. What does the customer want and need? Is there a way to provide that more efficiently than the rest of the market does? For us, the answer was yes,” explains Ernie Garcia III, Carvana's president, CEO, and chairman. “Once you have better economics, you can also build a culture of delivering great experiences to your customers on top of that, and that is exactly what we seek to do every day.”²⁴

Carvana has become the second largest used car retailer in the United States over its short history, and the future looks bright. The company's stock prices have risen consistently and sales jumped 43 percent in 2020, despite (or perhaps because of) the global pandemic.²⁵ If Carvana can continue to create and deliver delightful and unique experiences to used‐car buyers, it's got a shot at sustainable success.

But … You Can’t Always Take Customer Suggestions at Face Value

Another customer experience champion, Target, has been studying shopper preferences for decades and adapting to shifting needs. The big box retailer has become legendary for coaxing more money out of in‐store shoppers' wallets than they'd planned to spend. We spoke with a few Target regulars who described this serendipitous shopping experience with cheerful resignation:

“I pass the accessories and see something I need. Then I go to the clothing section, and then I have to walk through the home goods. There is a feeling I shouldn't be doing this because I am going to see something I'm going to want to buy. It is the excitement of finding something…”

—Target customer

“They have so much no matter what you need. You go in looking for chips and you spend $500.”

—Target customer

In recent years, Target has invested heavily in creating a seamless omnichannel experience, ensuring its customers get the same level of service regardless of how they interact with the brand. Starting in 2017, the corporation strategically invested $7 billion to overhaul its supply chain, invest in digital transformation, and reinvent the in‐store experience.

Knowing that the in‐person shopper was an important part of their business strategy, CEO Brian Cornell said, “We're putting our stores at the center of our strategy. We spent more than $4 billion remodeling our stores, completing hundreds each year, transforming them into showrooms, fulfillment hubs, and service centers.”

Enhancements included in‐person pick‐up and drive‐up for orders placed online, and same‐day delivery via Shipt (which Target acquired in 2017). These options boosted the retailer's digital sales growth, which jumped 24 percent to $8.34 billion in 2020.²⁶ Not too shabby.

In an interesting twist, Cornell declared that this transformation strategy was based on customer feedback and opinions, which were mostly that brick‐and‐mortar stores are so last century.

“We had every reason to believe this would work, because we've been doing our homework; testing these bets and listening to our guests,” Cornell said. “And for them, stores were dead. They were just boring and uninspiring. Our guests still loved our brand. They just wanted us to do more.”²⁷

Translation: Target leadership hypothesized that abandoning their stores altogether would fail, and decided to upgrade and enhance the physical locations while also creating multiple ways for customers to buy from the brand, quickly and easily. Since Target has become the poster child for omnichannel strategy, they clearly made the right call.

This shows that listening to and analyzing what your customers have expressed is a crucial first step, but the final piece of the puzzle is interpreting feedback and identifying the issues it surfaces.

It requires teasing out the real human insight, which may seem hidden at first.

Customers told Target that stores were boring, but Target didn't just shutter its physical locations; instead, internal teams drilled down into the customer insights and addressed the real problem. If stores are boring, don't abandon them. Make them better, more fun, more accessible, and easier to incorporate into your life.

Decisioning on Metrics Alone Puts You at Risk

Truly customer‐centric decision making is derived from understanding what it is like to actually be your customer. It's informed by information about what the customer sees, values, and observes as they interact with you. It's depth of detail paired with emotional authenticity.

Without human insight, you put your company in very real danger of charging off in the wrong direction, and you may:

• Build products no one wants: Bic released the Bic For Her line of pens marketed directly to women in 2012. The pens were met with a wave of ridicule from customers and media outlets alike.²⁸
• Make uninformed decisions about current offerings, changing them in ways that frustrate or alienate users: In 2018, social media app Snapchat split the app interface into two sections, consolidating friend content on the left side, media content on the right, and installing a handful of other design changes. Users were so furious, the app lost 3 million daily users over the following three months.²⁹
• Become increasingly detached from the people you serve: When exercise bike company Peloton learned that many husbands buy their products as gifts for their wives, they created a commercial in which a woman gets a Peloton from her spouse as a holiday gift. The ad sparked viral backlash from people who felt it had both sexist and body‐shaming themes, and the company's stock fell by 9 percent in response.³⁰
• Erode employee satisfaction: Multiple studies have shown that happy customers make for happy employees, and miserable customers can cause mass employee exodus.³¹
• Miss out on key opportunities: The classic example here is Kodak. The company pioneered many of the underlying technologies inherent to digital cameras, creating some core components as early as 1975. But they didn't ask their customers to weigh in, assumed digital was a fad, and doubled down on film. Now the company is all but obsolete.³²

Integrating Human Insight into Decisioning Is the Way Forward

When you act on customer understanding powered by human insight paired with data, you gain:

• More market share: After the company hit rock bottom in 2008, Domino's Pizza took customer feedback to heart: they completely changed their recipes (which people hated), and invested in creating a fun and easy digital ordering experience. Between 2010 and 2017, Domino's stock has appreciated more than 2,000 percent, outperforming Alphabet, Amazon, Apple, and Netflix.³³
• Customer loyalty and die‐hard fans: Online retailer Zappos has always lauded themselves as a customer‐first organization and their dedication to soliciting and acting upon feedback has won them the loyalty of millions. Nearly 75 percent of Zappos purchases come from returning customers.³⁴
• Increased efficiency and lower costs: Analyzing almost two decades of data from 128 firms, researchers found that higher customer satisfaction can lower future cost of sales.³⁵
• A company culture that attracts and retains talent: Southwest Airlines has long been known as an organization that values customer input and satisfaction, as well as one that bends over backwards to keep its workforce happy. The company has a 96 percent retention rate and has never laid off a single employee.³⁶ The result is everyone wants to work for them. Southwest receives a new job application every two seconds.³⁷
• Expanded worldview and inclusivity: When a company in the feminine care space launched a new product, internal research teams spoke with “traditional” customers but also interviewed trans men and trans women about their needs and preferences. This yielded insights that the client company would have otherwise missed.³⁸

As these examples illustrate, data alone will not help you build unforgettable customer experiences, secure undying loyalty, or improve your offerings in meaningful ways. Data may help you see the big picture—generally in the form of trends and patterns—but human insight adds color and context, giving a human perspective that you can't get from the numbers.

When your company has the ability to see the human being for whom you're creating experiences, that sets you apart. That decidedly empathetic ability will never be achieved just by tracking clicks or charting sales trends. It can only be accomplished through a human to human connection. Doing this facilitates customer‐centric decisions every step of the way and positions you to envision and create experiences that delight and support the people you serve.

Human insight is the missing dimension for many businesses competing in the Experience Economy. Read on to find out why this is the case, and how you can incorporate it into your business.