03 Apr Changing the Game: Escalating Expectations in Customer Experience
Customer experience isn’t a goal, it’s an arms race. As each company in an industry improves the customer’s experience, each customer comes to expect that level of service. Competitors must match or counter with their own improvement. The cycle continues. The successful playing of the game changes the game, and the result is escalating expectations in customer experience.
Technology and the rise of companies
The Internet facilitates the fast rise of new companies. In the old days, you had to have a certain amount of capital just to reach your audience through advertising. Now, it’s possible to build an entire customer base through social media. The barrier to entry for new firms is almost zero.
New companies intentionally disrupt old ways. Every company needs some way to stand out against it’s older, larger, and more established competitors, so it looks for a vulnerability and exploits it. A young Amazon offered free shipping even when it was bleeding money. Dollar Shave Club offered a cheaper product, delivered to your door every month. Uber and Lyft made it possible to order a car from your phone.
Even if those disruptions aren’t financially sound, customers become used to them. Amazon bled a fortune before it finally gained enough scale to make money, and it slowly increased the minimum purchase to qualify for free shipping. Uber may not survive its current model. It doesn’t matter; customers don’t care about the internal financials of a company. Now we expect shipping to be free and fast. We expect cars to come when we summon them through our phone.
Faced with pressure from newer companies, old companies innovate too, or they quickly find themselves out of business. Domino’s offers the ability to order pizza by texting a single emoji. Amazon, now a titan of retail, offers Sunday delivery or pickup from a local location.
The successful playing of the game changes the game.
The Internet also facilitates fast communication among customers, a concept called “frictionless karma.” Customers hear about good experiences and bad experiences quickly. A customer story can spread through social media before a company’s staff gets their first cup of coffee. News travels fast.
No longer is a customer experience story isolated to that customer and his or her circle of friends and family. Now it travels the world. The more amazing the experience, or the more abysmal, the faster it moves and the more people it touches.
We hear the good stories, and now we want companies to treat us in the same way. We flock to those companies, and they flourish. Customer expectations escalate as a result.
It’s an Arms Race
When a company drives a new customer experience innovation, competitors must match or face extinction. Retail, especially retail clothing, is going through an enormous disruption right now as online vendors devour what used to be a mall-based industry. As a result, malls are also suffering disruption and struggling to adapt. Netflix disrupted Blockbuster, Amazon disrupted Borders, and Google disrupted the entire marketing industry. Every successful disrupting company created a better customer experience.
Even companies that are in different markets or industries are affected by escalating expectations. Amazon offers me free two-day shipping, and now I expect any vendor to offer the same thing, even companies that aren’t in traditional retail. Domino’s makes it possible for me to order food online, and I expect other restaurants to do the same thing. Zappos lets me return any item free of charge and pays for the return shipping, and I expect all companies to offer similar return policies.
The Quick and the Dead
Disruption happens fast, and no company can avoid it. If there’s money to be made in your market, someone will see that opportunity and find a way to exploit the industry’s customer experience weaknesses.
Being at the front of your market is the best way to avoid disruption. You need to proactively assess and improve your own customer experience constantly. If your organization is static, you’re just biding time until an innovator sees the opportunity and takes it from you. You also need to be aware of what your competitors are doing, and be prepared to
steal leverage any innovations that they introduce and match them with your own.
It’s a competitive world out there. Be proactive and aware, or be dead