CHAPTER 4

GETTING DOWN TO THE NITTY-GRITTY:
WHY, WHO, AND WHAT

I hope by now I have persuaded you that having a more granular and focused view of the customers you serve is critical to competing in a hypercompetitive market. The more granular your customer view is, the more specific your messaging will become and the more targeted your insights will be. Ultimately, having such a view enables you to invent better customer experiences. You send customers on a journey that’s been architected for their specific customer type, and as a result you will lead your market in customer loyalty, sales, and profitability.

The greatest companies in the world understand their customers by type, even if they don’t call it that, and they serve up exceptional and relevant human experiences for them. Because of this, these companies get significantly better returns on their marketing and customer experience efforts. Their customers can’t help but love them because the companies satisfy their core needs and desires. Meanwhile, the rest of the companies face a slow, painful death-by-competition.

WHAT CUSTOMERS CRAVE
TOP TWENTY FAVORITE COMPANIES

The companies listed below exemplify what it means to understand your customer and to invent exceptional experiences across all touchpoints in digital and non-digital channels. Perhaps more important, they have institutionalized the process of gaining real insights about their customers to systematically and predictably deliver exceptional levels of customer value.*

Apple

Closet Factory

Costco

Dutch Bros.

Google

In-N-Out Burger

MAC Cosmetics

Nike

Nordstrom

Polaris Industries

Safelite

Salesforce

Southwest Airlines

Sur La Table

Tesla Motors

Trader Joe’s

Whole Foods Market

YETI

Zappos

Zoya

These companies understand that to be competitive in today’s world, you need to know that it’s not customer service—it’s customer experience. It’s not having inward-driven organizational goals—it’s creating outward-driven holistic, relevant experiences for your customers. In return, these satisfied customers will nurture you with sales, repeat business, referrals, and incredibly powerful positive ratings on social media as well as through digital sharing, which creates a digital trail of excellence that drives more sales than any marketing campaign you could ever dream up.

In this chapter. we begin framing up strategies and tactics to help you identify the customer types within your specific business. You will then be able to use these concepts to understand who your customer types are, what they love and hate, and why you should care.

I am often surprised at how poorly developed most organizations’ enterprise strategies are. These initiatives ensure that organizations meet their stated goals—for example, achieving better returns on assets, increasing customer satisfaction, and implementing technological innovations. But without an enterprise strategy carefully tied to your customer experience strategy, you will likely fail in today’s hypercompetitive economy.

FRAME UP WHY YOU CARE

The reason why you care lies in the answer to this basic question: Why are you in business? That, in turn, leads to the answers to these questions: Why should you care about understanding who your customers are? And why should you spend all your time and effort in this endeavor when you could be doing (fill in the blank) instead?

In working with leadership teams, I use a traditional linear process to help them get down to the tactics of how to create exceptional customer experience strategies. The genesis of this process is to create a one-sentence mission statement. All of your strategic initiatives and certainly your customer experience strategy will derive from this key concept. Because your mission statement essentially asks why you are in business, it defines your reason to exist. To be effective, the statement should be short, powerful, and to the point.

In researching the topic of mission statements, I unearthed an interesting phenomenon. Generally, organizations with mission statements that speak to the organization’s needs, rather than the needs of its customers and the markets it serves, fail at delivering exceptional customer experiences. Not surprisingly, customer service failure results in higher levels of business failure.

For this reason, when you design your customer experience strategy, it’s important that you first develop a well-defined mission statement that you can communicate to both your stakeholders and your customers. This is not a marketing issue; rather, it is about defining the foundation for why you are in business. What you do to create amazing customer experiences springs from your mission statement and therefore should encapsulate your organization’s overarching values and reason for being.

Here is an example of a bad mission statement: XYZ Corporation’s mission is to drive the most profitable Internet company in our market. In addition, our mission is to build an enterprise that delivers the highest returns on investment for our stockholders.

Here are some examples of several great companies’ mission statements:

•Apple is committed to bringing the best personal computing experience to students, educators, creative professionals and consumers around the world through its innovative hardware, software, and Internet offerings.

•Facebook’s mission is to give people the power to share and make the world more open and connected.

•Google’s mission is to organize the world’s information and make it universally accessible and useful.

•YouTube’s mission is to provide fast and easy video access and the ability to share videos frequently.

•Amazon’s vision is to be Earth’s most customer-centric company; to build a place where people can come to find and discover anything they might want to buy online.

“A customer is the most important visitor on our premises.
He is not dependent on us, we are dependent on him. He is
not an interruption in our work, he is the purpose of it.
He is not an outsider in our business, he is part of it. We are
not doing him a favor by serving him. He is doing us
a favor by giving us an opportunity to do so.”

—ATTRIBUTED TO MAHATMA GANDHI

FRAME UP WHO YOUR CUSTOMERS ARE
AND WHAT THEY LOVE AND HATE

You will never have a perfectly architected customer type. People run so deep and are so nuanced that you can’t capture it all. Although we aim for precision in identifying customer types and their loves and hates, we can do it only in a less than precise, observational way. It’s a sloppy process. Fortunately, though, being perfect doesn’t matter. The key isn’t to frame up your customer types in terms of perfection but rather in terms of productivity.

When we drill down, we generally find a great deal of overlap from one customer type to another, so even though you might not get it exactly right, you can still benefit because the same things often work for different customer types. In the process of creating specific value for one customer type, you also provide value for another type. Most organizations never drill down to understand their customers this deeply. Therefore, they won’t know their customers as well as you will know yours, which will cost them a lot of money and be to your benefit. So while you might not create the perfect customer type, you will create productive and profitable customer types.

The Anatomy of Customer Types

My goal is to take the über-complexity out of customer typing and make the concept simple. The first step is to understand the building blocks of your customers and their human experiences. I’ve created an anatomical view of a customer (see Figure 4-1) to illustrate their experiential components. Using this as our foundation, we can begin the process of finding out who these customer types are and what they hate and love in order to understand that what they feel is exceptional and relevant.

Figure 4-1. Anatomical view of a customer.

I call the three building blocks or key areas of the anatomical view ESP (Expectation, Sensory Experience, and Price/Value). Together, they tell you what your customers hate and love. Here’s how it works:

1.Customers come to your product or service with an expectation of the experience they will have. You lose if you simply meet that expectation. You must exceed it at each and every touchpoint.

2.We all receive information through our senses, such as sight and smell. At each touchpoint, make sure customers are delighted by each sensory experience they have.

3.Finally, what customers expect from a product or service relates to what they pay for it. If your price exceeds the value your customers expect, they will be dissatisfied and leave you. If, on the other hand, you increase the value customers receive by exceeding their expectations and your price is below what they expect, they will become your fans and de facto marketing department.

Design Experiences for Your Customer Types

By understanding your customers’ experience in each of these areas more completely, you gain the focus you need to invent experiences for them.

Although I’ve isolated three specific areas of experience, you still need to make certain you look at the areas combined as a whole and as they pertain to your customer. This is one ingredient that goes into the secret sauce. By understanding the parts, you better understand the whole. If you don’t appreciate the whole, you create fractional experiences—a sure recipe for disaster.

In previous chapters, I talked about delivering holistic human experiences throughout the customer journey, that is, throughout the five touchpoints. If you have a beautiful restaurant offering impeccable service but deliver terrible food, you have not delivered a holistic experience; you’ve delivered a fractional one. And your business will die as a result.

Each of the three anatomical views of the customer—expectation, sensory experience, and price/value—must be considered at each touchpoint. This makes your customer experiences amazing, relevant, and holistic. The best innovators in the world deliver the best customer value and lead their markets in profitability and growth by being full-time practitioners of holistic planning.

Here’s an example of how this might work: The managers of a hotel realize their new digitally connected customers would like the ability to expedite the check-in process after a long trip. So the managers identify ways to reinvent the check-in process. They might create a Will Call Check-in Station where your keys would be waiting for you when you walked in the door. For the hotel, an ancillary benefit is that such a station would reduce the pressure on the reception desk staff and might even require fewer people there, thus reducing costs. Taking it a step further, the hotel might create a Check-in Welcome Kit that, in addition to the room key, contained free water, instructions for accessing the complimentary Wi-Fi, directions to the gym, and perhaps some healthy snacks.

If the hotel managers did this, they would reinvent the first touchpoint by applying the three anatomical views of the customer: It’s an exceptional experience that exceeds their expectations—(guests don’t have to stand in line and are quickly checked in), their sensory experience is met by the sight of the thoughtful Welcome Kit, and the price/value equation moves in the correct direction as value increases and price stays the same or even lowers.

One company already doing something like this is In-N-Out Burger, with its exceptional service, clean locations, friendly staff, and appropriately priced burgers. Another is Hollister, with its hip clothes and amazing staff and locations, all without sending prices through the roof. (More about both companies later.)

The Customer Expectation Component

We discussed customer expectations in depth in Chapter 3 with my Net Customer Value Strata (see Figure 3-1 for a quick refresher). But I can’t say this often enough: Each customer arrives at your product or service with a preconceived expectation of the experience they are about to have. If you deliver at or below that expectation, you fail. It isn’t a matter of if, but when. The only question is how long it takes.

What you deliver in terms of products or services doesn’t really matter if you don’t know what your customers expect. You can have the best product on the planet, but if customers expect something else, it won’t much matter because they will be disappointed.

A certain brand of electric skateboards is insanely popular with kids. However, that company’s service has been extremely poor. Customers find that getting help with a problem or replacing a part is a nightmare. The company’s online ratings have dropped as a result of negative customer reviews of the customer service. The company’s bad reputation then deflected sales to its competitors, which delivered both great technology and great service.

You can’t make up for bad customer experiences solely with great technology. Great technology is expected nowadays. Creating exceptional customer experiences is where the battles are fought and won.

Therefore, understanding your customers’ expectations across all types, throughout their journey, and across their sensory experience and price/value expectations (see below) is critical to your success.

Exceed the Expected

Your job is to devise products and services that exceed what your customers anticipate. By understanding your customers and what they expect more deeply, you are positioned to deliver products and services well beyond what they imagined. Therefore, being very careful about understanding what your customers really expect is another secret ingredient to your success.

From the perspective of sensory experience (more below), if your customers expect your restaurant to smell good, ask yourself: “What smells good?” Should it smell like bleach to signify cleanliness or like garlic to signify savory, delicious food? Some customer types may have a negative attitude about bleach; they may think it’s covering something up. For some, the smell of garlic is delicious; for others, it’s repulsive. A direct function of knowing your customer types is knowing what “good” is.

The same holds true for price/value expectations. Does a higher price relative to competitors’ prices mean “better quality” for your customer type? Or does it mean “overpriced rip-off”? While a $100 room at a Hampton Inn may be expensive compared to a Holiday Inn Express, it’s incredibly cheap compared to a Four Seasons. What does the customer expect in return? What does the customer expect in terms of their experience at a Hampton Inn versus the Four Seasons?

•Understand what your customer expects at each touchpoint.

•Exceed that expectation in surprising and relevant ways.

The Customer Sensory Experience Component

Human beings are multisensory life forms who glean information from a range of sensors that transmit that information through the central nervous system to the brain, where the data is aggregated. We constantly gather information that we aggregate at lightning speed to form opinions of the overall experience.

Once the sensory data has been aggregated and interpreted, we can then respond. Is this idealistic? No. Is it pragmatic? Yes. And that’s what is needed if you are to be successful.

Consumers experience our products, services, and brands through these sensory inputs:

•Sight

•Sound

•Smell

•Touch

•Taste

The best companies in the world make sure their customers have amazing experiences across each of the sensory inputs at each touchpoint.

Multisensory Design

Targeting primarily teenagers and young adults with their Southern California sun and surf theme, the executives at the retailer Hollister understand they’re selling a story. The story is that it’s attractive to be a young and hip sun-soaked surfer. Hollister tells this story across different sensory inputs and touchpoints, both digitally and non-digitally.

For example, in what is unusual for a shopping mall retailer, Hollister brilliantly understands that smell matters. When you approach a Hollister store, you experience its great smell from several shops away. The company has actually invested in perfume pumps that push the aroma throughout the store, so the pre-touchpoint is already beautifully covered, and customers enter the store with a positive perception.

Next, Hollister hires attractive salespeople whom many teenagers and young adults aspire to look like. Not only do they look great, but they often wear Hollister clothing. The business wants to sell this image to customers.

The visual sensory input doesn’t stop there. In an effort to create exceptional and relevant human experiences, the stores are designed to look like they’re sitting on the Huntington Beach pier. In fact, a live video feed from the Huntington pier is projected onto both sides of the stores. Hollister has leveraged digital technology to enhance the in-person experience. And of course, the latest pop music is pumping through an excellent sound system.

From the lighting, to the scent, to the music, staff, and video feed, Hollister has designed a retail experience that makes its customers believe that if they buy Hollister clothes, they’re going to be one of the cool surfer kids too.

The retail environment is brilliant. I love this brand because the company put a lot of thought into inventing a bold ambience that provides great human experiences while concurrently driving big sales.

Architecting the Experience to
Customers’ Sensors

HomeTown Buffet is a successful smorgasbord restaurant throughout the United States, including in my town. The organization’s mission statement revolves around providing quality food, friendly service, and cleanliness. The restaurants are particularly appealing to seniors living on a fixed budget.

What would happen if managers decided to play rap music at a HomeTown Buffet? They would quickly scare off their customers and go out of business. Could that be right? Could something as simple as music put a business into bankruptcy? The answer is absolutely yes. Senior citizens on a fixed budget usually aren’t into rap. In other words, you need to be extremely careful about how you design each and every sensory aspect of your business.

On the other hand, I was recently at a microbrewery in the San Francisco Bay area. It played rap so loudly you could hardly hear the person sitting across from you. The brewery was hip and fun, and music was part of the tapestry of the human experience it delivered. As a result, people lined up outside and around the corner to get into the brewery to listen to the music and drink reasonably good beer.

The takeaway: When you carefully architect experiences for your customer types’ sensors, you win every time. The folks at the microbrewery weren’t just playing rap music. They were playing it loudly! The type of music and its volume were all part of the brewery’s insight into how to deliver relevant experiences to a San Francisco microbrew customer.

The Customer Price/Value Component

What we expect to receive from a product or service is directly correlated to what we pay for it. This experience driver comes into play in every business and with virtually every customer. To ignore it is to perish. If the price is less than the value customers expect, you will increase sales as well as the number of happy customers. If the opposite is true—if the price exceeds the value customers expect to receive—they will leave you in droves. I call this the Price/Value Slip, which is illustrated in Figure 4-2. Avoid it at all costs.

Figure 4-2. Price/Value Slip.

In Chapter 3, I described my customer service experience with a major international airline that was so bad I don’t think it could pay me to fly with it again. This company does not understand the Price/Value Slip, and as a consequence, its sales are suffering and it is losing once-loyal customers. Most organizations go from the start-up to the operational phase; later, they become organizational and bureaucratic and focus on ways to make more money. The Price/Value Slip occurs at this last stage, when the decision makers think it’s smart to provide a little less in value and charge a little more for it.

The Price/Value Equation

A great example of the price/value equation can be found in one of my favorite hotel chains—Hampton Inn, as you may already have guessed. I travel to nearly forty events a year worldwide, giving talks on innovation, business leadership, and customer experience. As a result, I’m a pretty savvy traveler. I’ve experienced the very best hotels and the very worst.

Hampton keeps its prices surprisingly low, yet with all the free amenities it offers for which I usually have to pay extra elsewhere, the hotels feel upscale. Hampton generally delivers a great experience at a competitive price. The bottom line is that the organization delivers more than what I expect, which is why it is one of my favorite hotels.

The price/value equation demonstrates price sensitivity for products and services based on what the consumer is expecting. One of the biggest mistakes most organizations make is that they tend to increase their prices at the same time as they (intentionally or unintentionally) reduce the value they deliver.

Frame Up the Best Human Experiences
Across Touchpoints

I believe that In-N-Out Burger is the best restaurant in the world. Insane, right? Wrong! The company not only delivers an exquisite product—a delicious burger—it delivers exceptional human experiences across each touchpoint throughout a wide range of customer types in both digital and non-digital channels.

Let’s examine the experience touchpoint by touchpoint.

The Pre-Touch Moment

Before you ever even engage with this amazing restaurant, you smell it blocks away. Enormous exhaust fans push the delicious burger smells out into the streets. It’s no accident; rather, it’s the beginning of the customers’ journey. Your sense of smell, one of the most powerful sensations, is immediately engaged in a positive and stimulating way.

As this incredible smell excites your taste buds, you approach the restaurant and note that the property is perfectly maintained. When you look into the windows, you see an immaculately clean restaurant with professional-looking and spotlessly dressed employees. This pre-engagement visual story communicates to customers that In-N-Out Burger is serious about quality and sanitation. So even before the customer has entered the restaurant and ordered, In-N-Out—through sight and smell, two extremely important drivers to consumers of fast food—is already delivering an exceptional experience. By the time the customer orders their food, they have a positive impression tucked away in their mind.

The experience is holistic at this point. All the parts go together.

The First-Touch Moment

In-N-Out began as a drive-through only chain, and this is still the most common first-touch point. As you enter the drive-through, you see a simple yet captivating menu. What you don’t see is In-N-Out trying to be everything to everybody. It is a specialist, with a mission statement centered on delivering the best burgers and fries in the world. It is extremely good at delivering on that promise.

At the drive-through, you are greeted by an intelligent order taker who judiciously repeats your order to make sure they have it right. Drive-through patrons may not notice, but a tremendous amount of time, effort, and resources have gone into the acoustics of In-N-Out’s drive-through speaker system. In fact, when the business was launched in the 1950s, In-N-Out actually used megaphones to make sure the order taker could clearly hear the customer and that person could clearly communicate back to them. The quality two-way communication at the drive-through increases accuracy (a big deal in fast food) and also improves the consumer experience.

Beautiful building, clear and simple menu, and a good, crisp, audible dialogue with an intelligent and engaged employee: a great first-touch.

The Core-Touch Moment

In-N-Out Burger is such a great restaurant that it’s almost become a cult in California. People drive extra miles to get to one, bypassing dozens of other fast food joints along the way.

In fact, if you’re in the inner circle of In-N-Out Burger patrons, you’re probably familiar with the “secret menu.” It is “secret” because it’s not displayed on the drive-through menu, only on the website. From this secret menu you discover off-menu items like the Flying Dutchman Animal Style burger and the Neapolitan milkshake, which you can then go and order at the restaurant.

The secret menu (and super secret menu—just Google it) gives customers a sense of belonging to a special club. In this way, In-N-Out can provide a broader range of options and still keep its core menu crisp and clean.

The Last-Touch Moment

The last-touch for In-N-Out Burger comes when you pick up your order at the window. A smart, well-trained employee greets you and double-checks your order to make sure it’s right. Your amazing smelling food is delivered in special boxes that make it easy to eat while driving. If you prefer, the food can be put in a bag to keep it fresher longer while you take it back to your home or office.

Employees consistently engage you in a way that suggests they truly care and are glad to serve you. The last-touch is a sincere smile from a great team member. Well done, In-N-Out Burger. No wonder it’s the best restaurant in the world.

The In-Touch Moment

In-N-Out has a creative and unique in-touch experience. Once customers know about the secret menu and the super secret menu, they frequently refer to them to find interesting menu items only they know about. In a twist on the traditional in-touch experience, customers are inspired to stay in touch with one another. This menu discussion seems to occur organically—I’m not sure how much involvement In-N-Out has—and it is a magical intouch experience.

CAUTION:
BEWARE A FRACTIONAL CUSTOMER EXPERIENCE

What would happen if In-N-Out Burger provided most of all this, but one of the sensory inputs delivered a bad customer experience?

Let’s say, for example, that everything was as I described it above, but this time the smell from the restaurant seemed suspiciously bad. Something just wasn’t right. Would you go back? Would you tell your friends that you had a great experience or that they should watch out since something wasn’t right?

All it takes is one broken link in the chain to turn a great experience into a terrible one. This is the difference between hugely successful companies and those in the slow slide to oblivion.

The takeaway is simple: The best brands in the world deliver exceptional human experiences that include all sensory inputs, for all customer types, throughout digital and non-digital channels.

Without this customer experience savvy, In-N-Out Burger would be just another fast food joint. Hollister, which I talked about earlier, would be just another retail store selling trendy clothes to young adults. It’s the ability to deliver at each touchpoint, across all sensors, for all your customer types that creates exceptional human experiences.

PUTTING IT TOGETHER:
WHAT YOU NEED TO KNOW ABOUT YOUR
MULTIDIMENSIONAL CUSTOMER

There are four things you need to know about your customers:

1.What they like and hate across each and every sensor

2.How to target them across their price/value sensitivity

3.What their expectations are across each and every touchpoint

4.How to reach them across both digital and non-digital channels

Knowing your customer types is extremely important, especially because your competitor is probably too lazy to do the hard work required to gain these insights.

I’ve spent a quarter-century in the new product development space and as a business developer and inventor with more than forty U.S. patents. What I’ve discovered is that the many (and there have been many) mistakes I’ve made were caused by my attempts to take a product to market before doing the heavy lifting required to understand my customer types. If only I knew then what I know now. If only!

“Spend a lot of time talking to your customers face to face.
You’d be amazed how many companies
don’t listen to their customers.”

—ROSS PEROT

Is it really worth spending the time and effort to identify your customer types and invent exceptional and relevant human experiences across their customer journey? Yes, yes, and yes!

Just sift through stories of the countless business start-up failures, and you will see in their wreckage people who simply didn’t know their customers. Statistics show that 85 percent of consumer products fail in the market because the businesses didn’t know their customers. Less than 2 percent of the 3,000 patents issued each week by the U.S. Patent and Trademark Office ever make it to market.

I believe the overwhelming reason for failure in product and service businesses is a squishy understanding of their customers and the experiences delivered to those customers.

The Return on Your Investment

I could literally write a 500-page book inventorying the incredibly bad news of how organizations fail because they do not know their customers and their customers’ expectations. But I think it’s more interesting to point out the benefits that better insights into your customers will provide you and your enterprise.

With better insights, you will:

•Significantly reduce product and service launch failures

•Significantly increase customer retention and satisfaction

•Improve the quality of work life

•Reduce the cost of customer acquisition

•Build and monetize brand value

•Fuel all new product activities with better insights

•Reduce time-to-market

•Increase new product development throughput

•Reduce advertising and promotion costs

•Attract and retain the best talent, including the all-important millennial talent

•Attract better vendors and better vendor relationships

•Improve distribution and channel options

•Increase sales

•Reduce marketing and operation costs

•Significantly improve returns on all strategic initiatives

We become great when we learn to collaborate with our customers. Unfortunately, American enterprise was built on a hierarchical, authoritarian structure. In the early days we pushed out one-way dialogue to customers in the form of persuasive advertising. Those days are gone for good. Our customers want to be part of the conversation, and they want to work in partnership and engage with brands in an authentic way.

In-N-Out Burger did not create its secret and the super secret menus for its customers to dictate to them, but because the restaurant knows its customers love to be part of its digital inner circle and share new and exciting secret menu items. Nobody was trying to sell anything to anybody. The menus occurred because a genuine dialogue in the digital sandbox was created organically within the restaurant’s enthusiastic fan base.

One of the people I admire most is Ken Grossman, the founder and CEO of Sierra Nevada Brewing Company. Ken loves beer, and after the thirty years he’s been in business, he still really, really loves his customers. As a result, he collaborates with them. Every year there is a contest among his enthusiastic fans to participate in his annual Sierra Nevada Beer Camp. If you Google “Sierra Nevada Beer Camp,” you find videos of people getting Sierra Nevada tattoos, singing Sierra Nevada songs, and doing anything and everything they can to collaborate and connect with the brand.

When was the last time one of your customers went out and got a tattoo with your logo on it? Ken has dozens of customers walking around with Sierra Nevada tattoos. When was the last time one of your customers wrote you a song and shared it online for millions to see?

Being exceptional requires maintaining authentic contact with your customers. Unfortunately, most organizations leverage email addresses and try to trick customers into giving them contact information so they can later use it to spam the latest offer. But staying in touch with your customers is about providing a continual stream of free value. It is not about hijacking their contact information and selling them stuff. Instead, listen to your customers. Get to know their loves and hates and design authentic and continual forms of customer engagement.

*For an updated list, visit whatcustomerscrave.com.