Finding what your customers really need, not patching what they already have

Duncan Avis

0:00

Thank you, Tim. Good morning, everybody. I have to say I’m glad I’m not in the second one where I got voted off the island. I didn’t realize that was actually going to happen. I’m excited to be here with you. For those of you in the back, if you want to come forward, feel free. There’s no extra change for the front seats. We’re very democratic here. So come down and enjoy yourself.

0:19

I’m going to take the next 12 minutes to talk to you about a couple of different things. My screen is not changing, but this one is… there you go. So, the topic is the perils of not knowing your customer and what your customer wants and needs. And I’m going to cover a couple of different things. One is, why does that happen? Two is, why is it important? Three is, how can you actually solve that problem? And four is, what is the moral of the story? So, as you think about the way that we go through that, hopefully this all makes sense. There’s going to be time for Q&A, but I’d love to take questions as we go through, if you’ve got anything burning. If you don’t believe me, you don’t think what I’m saying is right, feel free to stop me.

1:05

Let’s start off with a story or an analogy. Hopefully none of you here recognize the gentlemen here, but this is Mr. Ford. Not a good friend of mine, but somebody who we all know and love. And let’s imagine, and put ourselves back in the world where Henry was walking around, and he has some ideas, and if we were talking to him today, we would say, “You know what you really need to do? You need to go and talk to your customers and find out what they really need and want.” So, he would go around and he would talk to folks in their carriages, with their big hats, having a good time. And he would say, “So what do you need?” And what do you think their answer would be?

1:47

Well, their answer would probably be something like this, “Well, what I would really like is a horse that runs faster, and a horse that eats less hay, and a horse that can carry more weight. And a horse that maybe doesn’t make as much mess.” What they probably wouldn’t have said is, “You know what I really need? I need one of those car things,” right? We’re taught to think about what is a customer need, and what we should ask the customer, but sometimes your customers don’t even know what they need. And when I say customers, I mean a consumer as well as a business customer.

2:26

So what I want to explore in this is, how do we go beyond answering the questions of what you know today, and how you can articulate that, to how can you get to some of the unknowns and use that to drive profitable growth for your business. So, why should you care about this? Number one, customers, consumers. Right now I’m assuming that you’re all consumers at some point. Right? You may have a business job, hopefully you have a business job today. But when you go home, you’re consumers, or maybe during the day you’re consumers. So, let me ask you this question. How many of you have a real affinity with a brand where you say, “The experience was awful”? Raise your hands if you love awful experiences. Right, well this gentleman over here, you can leave the room right now. Spoiled the whole talk. The point is you guys love experiences, right? What we also know is that one of the largest segments and generations ever to enter the marketplace, millennials, they value experience over everything else.

3:41

So, it’s important to your customers, right? We are customers and consumers at home. We don’t come into the office and suddenly put on a different hat on. We don’t say, “Well, I had this experience before, but now I’m at work so things are very different.” So you have a great experience, you use an app. You have a great experience booking a flight, paying your bills. And then you come into the office and somebody says, “Oh, you need to enter something into our system,” like an ERP system, a timesheet, whatever it may be. And you say, “Wow, I really love this green screen system of Tanberg from 1978 to do my work,” right? Nobody says that. What you say is, “The experience I had as a consumer, I want to have as a business customer as well.” So it is relevant to both parties. That’s number one.

4:31

Number two, why is it important? Everybody has a boss. I have a boss. Tim has a boss. We all have bosses. At some point, the CEO, the he or she, you know what we ask them every year, “What keeps you up at night?” Very simple question. And either the number one or the number one or the number two issue they tell us is getting closer to our customers, putting the customer at the hear of our business. So, your leadership cares about it. And then lastly, your stakeholders. Let’s assume that we’re not in a nonprofit business. We’re here to make money, and we’re here to make money for our shareholders and stakeholders. As part of the work that we do, we study leaders in customer experience. And what we’re able to do is identify that leaders in customer experience outperform their competitive group and their peer set by up to two times, in terms of revenue, in terms of growth, both in the FTSE 10 and then the Fortune 250.

5:30

So there is real financial implications of doing this as well. So, hopefully now, you’ve decided that you should stay for the rest of the talk. Why is it so difficult? Why is it so difficult to really understand? Go back to our Henry Ford example, why didn’t people just tell him a car? Well, two things. One is consumer behavior and customer behavior is changing more rapidly than it’s ever changed before. We are in a world, and you probably see this in your day-to-day work, everything changes rapidly. The process from going from now, to change, and to being business as usual, is much more condensed. So, that’s number one. Number two is, we study human behavioral science and design thinking. Maybe some of you know about this.

6:18

When we think about that, what that tells you, that academic research over many years tells you is that when you ask somebody what they want, they will tell you a certain thing. And the reason for that is, there’s biases in there for sure, but the reason is that, and sometimes it’s 95, some people call it 80, but three is a very high percentage, 80-95% of what your desires, needs and wants happens below cognition. So if, let’s call it 80% even, if 80% of you needs, wants and desires happen below cognition, what do I get when I ask you what you want, and what you need? I get 20%, right? Is 20% good? No. I want 100%. So how do I get to that 100%?

7:13

The example I always use to bring this to life is, how many of you got to the office, drive home at night, and t hen you get home to your significant other and they say, “How was the drive?” You say, “It was great.” They say, “Well, how was the drive? Where did you stop? How many cars did you see? What light did you go through? How fast were you going? Did you see X, Y, and Z?” You can’t remember that. The reason is because your brain’s operating at a level below cognition, where you’re operating, where you’re not having to think because you’ve been trained to do that. Many times, what we find is when we ask customers what they really need or what they want, we’re not getting a true answer. So, what we need to do is think about how we can go beyond that, and we can use observation, we can use data, we can use other insights, and I’ll talk to you about that in a moment, to really get below that level to really understand. Because, once I understand what they truly need, then I can develop better products and services. I can create better experiences. I can engage with them better. And I can also truly meet their needs.

8:22

What does it mean to meet their needs? We talk about this a lot, clients ask us this question, “How do I deliver on the optimal experience?” And we undertook academic research, and we talked to our customers, and we used our own insights. And what we found was what we call the X. Very simple idea, but actually pretty powerful. One the left hand side of the X is underinvesting experience. So you’ve go this constant, customer expectations are constantly rising. So, whatever you think they expect today is going to be different tomorrow and the next day, which is why you need this continuous way of understanding your customer. And then the blue line is how I deliver on that experience.

9:06

On the left hand side, it’s pretty obvious. I under-deliver, customers know that I don’t acquire new customers or customers leave. Pretty simple equation. Most people have talked about this left hand side for many years. What we’re finding now is more customers, clients are on the right hand side where they’re actually over-delivering. I had one client where every time a business case came to them, as long as the business case said it was going to improve satisfaction, it got through. Almost to the detriment of financials. What we see on the right hand side is where we’re over-delivering. So left hand side, you’re losing revenue, right hand side, you’re losing profit. I’m delivering more than I truly need to.

9:52

We had this client where they asked us, “What was a point of satisfaction worth?” Pretty simple question. You would’ve thought, right? Multinational, global business, very sophisticated, still didn’t really understand what that meant. So, we brought our best people, we brought our best minds around data and analytics. We thought our best thinking around the X. And we tried to answer that question. We also brought this thing called the six pillars. So, over the last decade we’ve been talking to consumers across the globe and asking them, “What is really important to you? What drives satisfaction and what drives loyalty?” And through that we’ve talked to millions and millions of consumers and what they’ve told us is there are six drivers of satisfaction and loyalty.

10:42

Think of this as Maslow’s Hierarchy of Needs. At the bottom is integrity, resolution, expectations, time and effort. And then we get to these sort of human differentiators, which is personalization and empathy. What we hear a lot is, “I want to create these personalized experiences.” And we say, “Great, you should do that. But are you acting with integrity? Are you managing expectations? Are you resolving your issues with your customers and clients as quickly as possible?” If you’re not doing any of those, don’t even worry about personalization.

11:21

But in the higher order, then we start to create human empathy. And what we’ve been able to do, is actually isolate these six pillars down to percentages of which the percentage level of each of these pillars drive both satisfaction and loyalty. So, we’re getting very empirical. People think a lot about customer experience as art. We think about it as much as science as it is art. And that was Tim’s point about data. Right? Really bringing the two together.

11:47

So what we did, we used this, we took millions and millions of rows and data and what we were able to look at was we were able to put a financial number, a hard dollar number on a percentage of satisfaction. What we were also able to do, and it was somewhat controversial, is we said to the client, “By the way, you’re over-delivering on expectations. So actually, what you need to do is dial back your satisfaction and you’ll make more money.” And they said, “That can’t be true.” So, we showed them the data, we proved it out through the data and then we proved it out through tests and pilots. And what the customer actually found was they could deliver lower levels of satisfaction and still drive out more profit than they previously had into customer lifetime value and absolute profit.

12:37

So, what they were able to do was strike their X versus being on the right hand side. The reason why I share this is it’s counter-intuitive, right? We all now hear that experience, experience, experience, and I believe that by the way, that’s all I do every day is help clients think through things like this. But, there is also a financial balance that you need to make when you think about experiences.

13:01

So, what is the moral of the story? The moral of the story is I would ask you to leave today about being obsessed. I would ask you to be obsessed about three things. I would ask you to be obsessed about delivering unique experiences for your customers, whether that’s consumers, whether that’s business buyers, whether that’s you sell through another party to your end consumer. Be obsessed about it. We have the data to prove it. That it will make financial impact for you and we know customers value about it. And we also know that in today’s world, one of the biggest differentiators is going to be experience.

13:41

I would ask you to really understand what people value. Don’t look at the veneer, get below the veneer and use data and use methods to try and get below and get to that 80%. And put monetary values on it. And then lastly, I will ask you to be obsessed about thinking about how you create those experiences through that economic value and bringing that all together in one piece.