CX (Customer Experience) has seen a major shift away from product-centricity to customer-centricity, as befits the new, consumer-enabled digital world – especially true in retail today. A poorly implemented CX initiative is often worse than having no such initiative at all, for both customer and the retailer. Even worse, it can create apathy within the organisation, which in extreme cases can be ‘fatal’ - considering the dwindling presence on the high street of those major retail brands that failed to meet the customers’ evolving needs.
We have seen that when CX is done well in retail, it is transformative. However, there are many well intentioned CX teams, putting in vast amounts of effort and cost that still result in products or solutions that customers do not need. We saw a retailer presenting a case where they had run an innovative CX programme to produce a technically excellent chatbot. Unfortunately, there was no evidence that it was addressing a real customer need. In fact, it answered the questions customers rarely asked.
How could so many dedicated CX professionals spend so much time and money doing the right thing and yet getting it all so wrong? Perhaps, because no one understood what the real customer needs were, as they assumed that their internal perspective mirrored that of their customers?!
Apple’s “Think different” Campaign.
In late 1990s, business leaders reluctantly embraced personal computing considering it a black art which did not deliver on its promise. Despite this, leaders instinctively felt the burgeoning computer revolution will permanently change the way everyone would work.
It was against this backdrop that Apple launched its ‘Think different’ campaign. Instead of focusing purely on technology, they promoted a ‘counter-culture’ of fearless creativity, bending the rules and inviting creators from across the globe.
It is well reported that this change in approach widened the appeal of their brand, moving from the tech-savvy to a broader audience, who wanted to be part of a different way of thinking. Apple’s success has been meteoric and ubiquitous.
So, what is the parallel between Apple and retail CX?
By popular definition, customer experience (CX) is “the sum of all experiences a customer has with a supplier of goods and/or services, over the duration of their relationship with that supplier.”
As a discipline, CX has been around for almost two decades, during which it has created tools, methodologies, metrics, and passionate influencers. Many business leaders have been slowly embracing the CX concept, yet they have not yet witnessed its full potential of creating customer satisfaction whilst delivering return to shareholders. As a result, many business leaders questioned the current approach to CX as a sustainable proposition with genuine business outcomes.
The data show it is time to overhaul the current approach and ‘Think different’ about CX by returning to simpler and more straightforward methods. We need a ‘back to basics’ approach that retailers often embrace, and which will help businesses to take full commercial advantage from the concept of customer-centricity.
The Hierarchy of Needs
After a decade of listening to tens of thousands of customer stories, we see that for any product or service, there are only three or four things that an individual customer cares about. When you aggregate these things across an entire customer base, you end up with a handful of needs that must be met. These can be defined as 'core needs'. A core need is something that must be there, otherwise the product, service or experience has failed.
The delivery of core needs is vital to retain customers. These core needs must be delivered at the lowest possible cost, as they do not differentiate a business. In fact, if an organisation does them well, the customer may not even notice them (and that is a good thing). Delivering core needs, though, is not enough to create a sustainable, growing business. If you wish to differentiate and lead the pack, your organisation must go beyond core needs.
An analysis of tens of thousands of customer stories suggests that there are three categories of customer needs that enable organisations to deliver an exceptional customer experience. To fully understand how these three categories are applied, we need some clear definitions:
Hierarchy of customer needs
Needs are not static and over time move downwards, through the Hierarchy of Needs:
Innovated Needs become Perceived Needs e.g. The original Apple iPhone made a huge jump from existing mobile phones and catalysed the plethora of what became the premium smartphone category.
- Innovated Needs become Perceived Needs e.g. The original Apple iPhone made a huge jump from existing mobile phones and catalysed the plethora of what became the premium smartphone category.
- Perceived Needs become Core Needs e.g., the smartphone category became ubiquitous and exploded with a vast range of what is now standard functionality, high-quality cameras, music players, games stores, social media, apps, a marketplace for third-party accessories etc.
To successfully deploy the Hierarchy of Customer Needs, one must prescribe a new set of measurements that show which needs are being met and those that are failing to be met.
Whilst this article sets out a new way to think about customer experience, through the lens of customer needs, it only scratches the surface of what focusing on the understanding of customer needs can achieve. It suggests some design principles that an organisation can consider supplying to its CX programmes. We have been working with BRC Learning on the Customer Needs Solution (RCX) which can be customised and deployed in any retail business. The solution is based on 10 years of experience and practical application and has already proven that thinking differently about the CX is a way to organisational success.
To find out more about ICG and the services they provide to the retail industry, click here.
This article was also published in The Retailer, our quarterly online magazine providing thought-leading insights from BRC experts and Associate Members.