The Intuitive Customer

7 Imperatives For Moving Your Customer Experience to the Next Level

Colin Shaw, Ryan Hamilton, Ryan Hamilton

• Publisher: Palgrave Macmillan
• Year: 2016
• ISBN:
  9781137534309
• Topic: Commerce
• Subtopic: Marketing
• Index: Marketing

Building on the work of Daniel Kahneman ( Thinking Fast and Slow ), Dan Ariely ( Predictably Irrational ), Shaw and Hamilton provide a new understanding of how people behave, explain what it means for organizations who really want to understand their customers, and show you what to do to create exceptional customer experiences.

© The Author(s) 2016

Colin Shaw and Ryan HamiltonThe Intuitive Customer10.1057/978-1-137-53430-9_1

Begin Abstract

1. Moving Your Customer Experience to the Next Level Requires New Thinking

Colin Shaw¹ and Ryan Hamilton²

(1)

Beyond Philosophy, Orlando, USA

(2)

Emory University’s Goizueta Business School, Atlanta, USA

End Abstract

We cannot solve our problems with the same thinking we used when we created them.

Albert Einstein

The following is a typical call, one we receive more and more frequently; in fact this particular call came only yesterday from an organization seeking our help. The caller explained their predicament:

We introduced the loyalty score, Net Promoter, three years ago. We aligned our people around it by altering the measurement and the rewards. But after some initial improvements our score has remained flat. We have poured lots of time, effort, and money into the program. Why is this? Where have we gone wrong?

The answer to their problem is simple. They have reached their glass ceiling. They can see where they would like to be, but they don’t know how to get there. They have enjoyed the early gains of improving their Customer Experience and find themselves asking, “Now what?”

One of the authors of this book, Colin Shaw, wrote one of the first books on Customer Experience back in 2002: Building Great Customer Experiences (Palgrave Macmillan). He has seen the Customer Experience industry grow exponentially over the years. Today, many organizations suffer from the same issue: Their program is now plateauing or not progressing as much as they would like.

They don’t know how to take their Customer Experience to the next level.

Unfortunately, there are also many organizations that jumped on the “Customer Experience bandwagon” without knowing what they were getting themselves into. As they looked around their industry, they saw their competitors improving their Customer Experiences. They also heard many people talking about this brave new world, so they decided they should undertake a Customer Experience project as well – without understanding what it takes.

In both cases, the big problem is these organizations are using traditional thinking to try and solve modern problems. But using old thinking to solve new problems doesn’t work. To be fair, they don’t know any different. What they don’t realize is they have reached their limit, as “they don’t know what they don’t know.” The cumulative effect is that they can’t break through the glass ceiling and get to the next level of managing the Customer Experience.

Organizations are Trying to Solvethe Wrong Problem

We are in the Experience Economy. Pine and Gilmore first identified the experience economy in 1998. It is an economy driven by the experiences that people or businesses want as customers, and the organizations that design and promote these experiences to them. Pine and Gilmore stated that the next competitive battleground for business was in the “staging of experiences.”¹

We are well into the experience economy today. We all know competition is fierce in most markets. The web has put competition on steroids and globalization has been a real and growing force for some time. People’s lives are much busier, and their attention span is limited; they now crave mobile everything and synchronized anything! In short, people’s expectations of the experiences they should receive from organizations is now at an all-time high. Apple set the standard for the intuitive experience. Brands like Zappos have demonstrated that having a human interaction pays dividends, and have encouraged their people to spend time talking to customers. To paraphrase Tony Hsieh, the famous CEO of Zappos and long-time champion of the Customer Experience, the telephone can be the greatest branding tool. Why? Because a good customer interaction sticks in the mind of the customer and becomes a story they share with people.²

It’s not only the high-end companies that can provide a great Customer Experience. Southwest Airlines shows us that even a budget airline can have a great human interaction.

Operations can provide great experiences when even no people are visible. A great example of this concept is Amazon, a company that set the standard by wanting to be “Earth’s most customer-centric organization.”

Emphasizing Customer Experience is a concept that is now global. We have worked in Saudi Arabia, the United Arab Emirates, Egypt, Singapore, China, Australia, the US, Canada, Colombia, Mexico, Hong Kong, India, all over Europe, and Russia. The list goes on and expands every day. Our latest global customer-research shows that although different countries are at different stages of maturity and development, everyone is in the experience economy. But those organizations in more mature markets are starting to hit the problem of a plateauing Net Promoter Score (NPS). Every day we see organizations who are desperately trying to make the machine they have developed work faster, when what they need is a new set of machinery, another way of looking at things.

Let us give you an example. Before we knew any different, people thought the world was flat. We created rules and stories to set boundaries for ourselves, which included, “Don’t sail over the horizon as you’ll fall off the edge of the Earth.” It sounds silly now, of course, but back then, that was the belief. We have beliefs similar to this in business today. Those “flat-earth” beliefs are:

1. 1.
   Customer Experiences are entirely rational.
2. 2.
   People are logical, rational beings and make decisions in that way.
3. 3.
   People only buy based on price.
4. 4.
   People don’t buy emotionally, especially in the “Business-to-Business” arena.
5. 5.
   Improving your Customer Experience only adds cost to the business.
6. 6.
   Quality is the only key factor.

If you are convinced of these things, and you have no desire to reexamine these beliefs, then put this book down right now. Go back to whichever retailer you bought it from and attempt to get your money back. You are one of the flat-earth people, the people already convinced they know how things work and so don’t need to have an open mind. We suggest you also invest in a convenient bucket of sand and put your head in it, ostrich-style, and hope the world goes away. But beware! The horizon is close, and you are heading straight for the edge, like a clockwork toy (Fig. 1.1)!

Fig. 1.1

Flat-earth thinking trajectory

If, on the other hand, you want to have a breakthrough in the way you think about things and improve your Customer Experience, then this is the book for you. We consider our book a guide to the “new world.” We have been fortunate to work with some progressive companies, who have already taken their heads out of the sand and seen that the world is not flat. They have been brave and have embarked on this new venture.

We have acted as their guides and reduced the risks inherent in designing new and innovative programs. These clients include Maersk Line, the largest container shipping company in the world. Maersk was about to fall off the horizon from a Customer Experience perspective. When we worked with their senior team, we discovered they were visionaries recognizing they needed to change the way they did things. We helped them implement a global program, and they increased the NPS from −30 to +10 in 30 months. Also, they experienced a 10 % increase in shipping volumes.*³ Maersk admitted the need to solve their problems in a different way, and from a different perspective.

To cite another example, Ricoh Canada embraced the need to change the way they approached Customer Experience. As you read in the foreword by their CEO Glenn Laverty, by leveraging our thinking on Customer Experience, they moved their NPS up by 34 points in 30 months.

These companies have defied flat-earth thinking and moved their Customer Experiences to the next level by embracing the following concepts:

1. 1.
   Customers are people, not hyper-rational automatons, and their decisions – even the seemingly rational ones – are often driven by emotions.
2. 2.
   We need to understand the psychology of why people do things if we are going to anticipate them and serve them better.
3. 3.
   People don’t buy just based on price; buying decisions are far more complex than going with the cheapest option.

The key point is that many businesses today are stuck in the past. The Einstein quote at the beginning of this chapter is an appropriate caution for this situation. Too many businesses still believe they can solve the problems of declining customer loyalty, plateauing NPS values, declining retention and profits, increased global competitions, and commoditization in the usual way, by reducing prices and becoming ever-conscious of costs. Organizations try to spend more and more money on marketing to increase their market share, but then feel surprised when customers don’t stay with them for long. In our view, organizations often use outmoded thinking to solve the new problems of today. They are using logic, and an ever-more analytical approach, when what organizations need is a fresh perspective.

Understanding customer behavior at a psychological level is that fresh approach to moving your Customer Experience to the next level. Behavior is what people do, the actions they take. Moving your Customer Experience to the next level requires a DEEP understanding of what, why, and how customers do what they do. This book is about the deep understanding of the psychological motivation behind customer behavior. In other words, our book teaches you why customers do things, even when customers don’t know themselves.

Understanding why customers do what they do allows you to predict what they will do next. This ability has enormous advantages that have positive effects on your bottom line. It can save you money. For example, if your customer does something that costs the organization money, such as calling the call center, you can design an option that diverts them from their typical behavior earlier in their experience. Also, by predicting customer behavior, you can create opportunities to sell. For example, you might design an experience that leads customers down a particular path to buy, where their buying is the natural decision; it’s an intuitive decision. Hence, the title of this book: The Intuitive Customer.

Businesses strive for the automatic behavior of the Intuitive Customer. When someone makes an automatic decision to buy from you, you might hear them say, “It’s a no-brainer,” or, “It’s the natural choice,” or even, “Of course we buy from company XYZ. It would be silly not to!” Do you see why we say this is what all companies crave? These customers buy from you intuitively, without question or thought – and then they tell their friends about it!

Clearly, analyzing customer behavior is not new. What is new is the depth and detail that you need to analyze. We advocate that to have a deep and detailed understanding of why people do things, you need to have a deep and detailed understanding of customers’ rational, emotional, subconscious, and psychological experiences. In recent years, a potent combination of psychology and economics has become popular as a way of gaining insights into customer behavior. It is called Behavioral Economics, defined by the Oxford Dictionary as:

A method of economic analysis that applies psychological insights into human behavior to explain economic decision-making.

Most organizations, in our estimation, have not yet embraced this powerful set of theories and principles. Understanding Behavioral Economics allows you to design your experience to respond to customer behavior appropriately. This level of design and prediction needs specific tools to do that. We will share these tools with you in this book.

Your customer-facing employees also require this deep and detailed understanding of customer behavior. You must train them in how to identify how a customer feels upon entering the experience and encourage them to change those emotions, so they feel what you want them to feel as they are leaving the experience.

However, all the deep and detailed understanding in the world isn’t enough to create customer loyalty on its own. You must also facilitate good memories in your customers’ minds regarding their Customer Experience. We cannot emphasize enough the importance of planning for memory when designing your customers’ experiences. Creating great memories is the most powerful tool in your customer-loyalty toolbox. You will learn in this book that without positive and lasting memories of your brand, organization, and experience, you WILL NOT have loyal customers. We will look at how memories are formed and how to design your Customer Experience so as to facilitate the formation of favorable ones.

Companies on their way into this new world, leaving the flat-earth thinking behind them, understand these concepts. Apple, Zappos, and Mandarin Oriental hotels continue to grow their market share by embracing the move to the next level of an experience and understanding how to sell to the Intuitive Customer.

Let’s make sure that we are all on the same page about what we mean when we say Customer Experience. Colin first defined Customer Experience in his first book in 2002. Since then, we have enhanced our definition of a Customer Experience over the years. This enhancement is something of which we are proud, as it shows continuous improvement and understanding of the subject. Our latest definition summarizes what organizations that wish to move their experience to the next level need to understand and embrace:

A Customer Experience is a customer’s perception of their rational, physical, emotional, subconscious, and psychological interaction with any part of an organization. These perceptions influence customer behaviors and build memories, which drive customer loyalty and thereby affect the economic value an organization generates.

As you read, you will start to understand why this definition holds true. However, as a brief explanation, the first thing to realize is a Customer Experience can be based on many things. It can grow out of a face-to-face interaction in a retail store, a transaction over the website, a phone call into a call center, an ad on TV, or even seeing a truck with the company name on the side – or, more often, some combination of all of these things.

The next important point for understanding the Customer Experience is that it is a customer’s perception. We all know the saying “Perception is the reality.” I...

Table of contents

• Cover
• Frontmatter
• 1. Moving Your Customer Experience to the Next Level Requires New Thinking
• 2. Imperative 1: Recognize that Customers Decide Emotionally and Justify Rationally
• 3. Imperative 2: Embrace the All-Encompassing Nature of Customers’ Irrationality
• 4. Imperative 3: Understand that Customers’ Minds Can Be in Conflict with Themselves
• 5. Imperative 3(Continued): Understand that Customers’ Minds Can Be in Conflict with Themselves
• 6. Imperative 4: Commit Yourself to Understanding and Predicting Customer Habits and Behaviors
• 7. Imperative 5: Uncover the Hidden Causes and Unintended Consequences of Customers Wanting Things to Be Easy
• 8. Imperative 6: Accept that Apparently Irrelevant Aspects of Your Customer Experience Are Sometimes the Most Important Aspects
• 9. Imperative 7: Realize the Only Way to Build Customer Loyalty Is through Customer Memories
• 10. How to Move to the Next Level of Customer Experience
• 11. Customer Experience Is a Journey, Not a Destination
• Backmatter