bcg what really shapes customer experience
TRANSCRIPT
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8/17/2019 BCG What Really Shapes Customer Experience
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What Really Shapes theCustomer Experience
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8/17/2019 BCG What Really Shapes Customer Experience
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The Boston Consulting Group (BCG) is a global
management consulting rm and the world’s
leading advisor on business strategy. We partner
with clients from the private, public, and not-for-
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critical challenges, and transform their enterprises.
Our customized approach combines deep insight
into the dynamics of companies and markets with
close collaboration at all levels of the clientorganization. This ensures that our clients achieve
sustainable competitive advantage, build more
capable organizations, and secure lasting results.
Founded in 1963, BCG is a private company with
82 oces in 46 countries. For more information,
please visit bcg.com.
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September
Dag Fredrik Bjørnland, Cyrus Ditzel, Pedro Esquivias, Jody Visser, Steve Knox, andVictor Sánchez-Rodríguez
What Really Shapes theCustomer Experience
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W R S C E
AT A GLANCE
Four things get people talking about a brand: value for money, customer service,
product satisfaction, and emotional connection. Word-of-mouth recommendations
oer a critical way to measure and improve a company’s performance on each
dimension—and ultimately to boost growth.
W G C FPeople who have excellent customer experiences become strong advocates for a
brand; they also spend signicantly more and are much more loyal than customers
who have poor experiences.
T U
Companies in every industry can use these insights to improve their customers’
experience and thereby generate signicantly higher growth.
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T B C G 3
People who have good
customer experiences
become strongadvocates for a brand.
I ’ , consumers have many more ways to learnabout and purchase products and services—such as through websites and socialmedia, in a store, and on a device while on the go—than they have had in the past.
With so many channels, platforms, and devices to get right, companies frequently
struggle to coordinate and prioritize the many dierent ways that customers
interact with brands. Worse yet, they have diculty dening the right metrics tomeasure success.
The good news is that companies can assess and improve their customers’ experi-
ence through a simple yet powerful indicator that BCG has found to be one of the
best predictors of business performance: word-of-mouth recommendation, or brand
advocacy. The better the experience, the more customers will talk about it with the
people they know—while the worse the experience, the more they will spread the
bad news. Our research has found that four aspects of the customer experience
have an impact on brand advocacy: value for money, customer service, product sat-
isfaction, and emotional connection.
To holistically measure word-of-mouth recommendation, companies can use BCG’sBrand Advocacy Index (BAI), the only measure of customers’ experience that is
highly correlated with growth. BAI measures customer experience by means of ac -
tual recommendations—not just good intentions—among customers, noncustom-
ers, and former customers. It asks simple yet powerful questions, such as “Have you
recommended the brand, and why?”
For this year’s report, we used BAI to measure the experiences of more than
227,000 customers—roughly double the number of customers surveyed in our
previous report—with 650 brands in eight countries and seven industries. (See
Fueling Growth Through Word of Mouth: Introducing the Brand Advocacy Index, BCG
Focus, December 2013.) Our survey revealed the companies whose customers’ ex-
periences have earned them the strongest word-of-mouth recommendations. (Fora list of the top brands by BAI, see the sidebar “The Most Recommended Brands
2015.”)
Our survey also revealed the sources of growth as a result of good customer experi-
ence. We know that people who have excellent customer experiences become
strong advocates for a brand, spend significantly more, and are much more loyal
than customers who have poor experiences. Companies in every industry can use
these insights to improve their customers’ experience and thereby generate signifi-
cantly higher growth.
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W R S C E
BCG’s Bran Avcacy Inex (BAI)shines a spotlight on the companies
that have achieved the pinnacle of
word-of-mouth recommendations:
bran avcacy.
To learn about where companies
stan, we surveye mre tan
227,000 cnsumers in Canaa,
France, Germany, Italy, Japan, Spain,
te UK, an te U.S. (See te exibit
“Bran Avcacy Inex Rankings f
Brans, by Cuntry an Inustry.”)
Te results igligt pckets f
superb perfrmance acrss markets.
Fr example, te nnluxury autm-
tive inustry as an average BAI scre
of 52 percent—well above the average
levels in ter inustries. Brans suc
as Tyta an Vlkswagen perfrm
well acrss multiple cuntries, en
utsie teir me markets. Tyta
was in te tp tree brans in ve f
te cuntries we surveye. Becausecustomers tend to have strong
emotional connections with their
cars, te cars are en tpics f
conversation.
However, we have noticed that, in
many cases, te biggest r mst
cmmnly knwn brans nt
always scre te igest in avcacy
in a market. Cnsier retail grcery r
retail banking, fr instance: te tp
three most recommended brandsinclue many fairly small, fcuse
players tat prvie an excellent
experience espite teir lack f scale.
In sme cases, tey s by prviing
relatively g value fr mney (suc
as Lil an Ali in retail grcery) r
strng emtinal cnnectins (suc
as Traer Je’s an Cstc).
Some bigger brands do not show upon our list of most recommended
brans fr several reasns. BAI
measures relative scores among
customers and noncustomers, so
even wit a lw BAI, a cmpany migt
have more advocates in absolute
numbers. Small brans als typically
create a lyal fan base, en elpe
by teir specic psitining r
unexpected excellence compared with
large brans. In aitin, establise
large brans smetimes simply avefewer new things to announce, giving
peple less reasn t talk abut
them.
Wie ierences in scres amng
cuntries n te list typically result
from the overall sophistication and
stanars f any given natin’s
inustries, le by key players in te
market. Fr example, Mutua
Marileña’s ig scre pulls up te
entire car-insurance inustry in Spain.Wie ierences amng inustries
en reect varying levels f spisti-
catin f custmers’ experiences in a
given inustry, as well as custmers’
levels of interest in a particular
product or service.
In all inustries, wever, we ave
found a large gap between the
highest- and lowest-performing
companies. The results show that
avcacy is relevant in every inustryan can be imprve. (See te exibit
“Wie Variatins in Bran Avcacy
Exist Acrss Inustries.”)
ThE MoST RECoMMENdEd BRANdS 2015
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T B C G
I N D U S T R Y
TOPBRANDS,BY BAI (%) GERMANY
UNITEDSTATES
UNITEDKINGDOM FRANCE ITALY JAPAN CANADASPAIN A
V E R A G E
B A I ( % )
Trader Joe’s(U.S.)
Wegmans(U.S.)
Esselunga(Italy)
R E T
A I L
G R O C
E R Y
A U T O M O T I V E
( N O N L U X U R Y )
52
26
1
2
3
1
2
3
Volkswagen(Spain)
Volkswagen(Italy)
Toyota(Spain)
Honda
Toyota
Chevrolet
Trader Joe’s
Wegmans
Costco
5673
74
74
50
50
53
65
67
50
50
53
Hyundai
Mini
Škoda
Lidl
Waitrose
Aldi
Škoda59
59
63
35
42
44
55
60
67
24
25
30
55
55
65
66
73
74
64
66
74
41
44
45Volkswagen
Volkswagen
Volkswagen Volkswagen
Toyota
Toyota
Kaufland
Globus
Aldi Süd
Toyota
Toyota A lfa R omeo Mazd a
SEAT
19
21
22 Lidl
Mercadona
Aldi
Nissan Daihatsu
43
44
46
46
47
50
11
12
12Esselunga Max
Valu
Eurospin SEIYU
Lidl Seven-
Eleven 31
33
41Costco
Longos
No Frills
Nissan
Lidl
U
E.Leclerc
Simyo(Spain)
Yoigo(Spain)
Aldi Talk(Germany)
M O B I L E
T E L E C O M
25
1
2
3
TracFone
T-Mobile
Virgin48
50
62
31
31
34
O₂
TalkTalk
Three
16
21
26
Congstar
Fonic
Aldi Talk
30
37
48 Simyo
Yoigo
ONO 46
50
62
33
35
39
9
13
19Wind Docomo
Fastweb KDDI
TIM SoBank 30
31
44Koodo
Wind
Fido
USAA(U.S.)
Genialloyd(Italy)
Direct Line(Italy)
C A R
I N S U R A N C E
31
1
2
3
USAA
AAA
Geico48
51
64
46
47
64
TescoBank
Aviva
LV
34
38
40
LVM
R+V
HUK-Coburg
26
27
35 MutuaMadrileña
LíneaDirecta
CatalanaOccidente 38
41
47
47
48
51
23
27
28Genialloyd AXA
Direct
Direct Line Sony
Genertel Mitsui
Marine 35
38
41RBC
Desjardins
TD
Fineco(Italy)
USAA(U.S.)
EVO Banco(Spain)
R E T A I L
B A N K I N G
18
1
2
3
USAA
UnionBank
HuntingtonBank61
61
68
40
43
61
TSB
TescoBank
FirstDirect
17
20
43
La BanquePostale
CréditMutuel
Boursorama
Generali
MAAF
MAIF
30
31
41 EVO Banco
ING Direct
Bankinter20
31
55
32
32
41
DKB
Comdirect
ING DiBa 31
57
61
56
57
68
15
18
20Fineco
SBISumishinNet Bank
Mediolanum Sony
Bank
CheBanca
JapanPostBank
24
37
42Tangerine
President’sChoice
TD
TechnikerKrankenkasse(Germany)
MutuaMadrileña(Spain)
BarmerGEK(Germany)
H E A L
T H
I N S U R A
N C E
26
1
2
3
Humana
Blue CrossBlueShield
United-Health-care
38
39
49
21
24
29
Groupama
CréditAgricole
31
38
49 MutuaMadrileña
Sanitas
MAPFRE28
34
36TechnikerKranken-kasse
BarmerGEK
AOKSuisseLife 35
36
39
27
29
32AXA
SonyLife
TokioMarineNichido
TekSavvy(Canada)
ONO(Spain)
Sky Italia(Italy)
B R O A D B A N D
14
1
2
3
VerizonFiOS
DIRECTV
DishNetwork38
41
51
15
18
28
Sky
TalkTalk
VirginMedia
6
12
18
Unitymedia
KabelDeutsch-land
1&1
10
13
20 ONO
Jazztel
Or ange 15
34
41
34
34
38
5
10
10Sky Ita lia KDDI
Tiscali SoBank
Infostrada Docomo 15
16
51TekSavvy
Eastlink
Vidéotron
Sources: IntelliSurvey of more than 227,000 customers in the U.S., the UK, France, Germany, Spain,
Italy, Japan, and Canada; BCG analysis.
Note: BAI = Brand Advocacy Index. Scores reflect customer opinions only. Blank boxes indicate
industries or countries for which the sample size was too small to list brands.
Brand Advocacy Index Rankings of Brands, by Countryand Industry
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How the Customer Experience Fuels GrowthCustomers spread the word about their experiences—whether positive or nega -
tive—far and wide among people they know. Those opinions matter a great deal.Direct word-of-mouth recommendations from friends and family are by far the
most important source of information for customers thinking about buying a prod-
uct or service: such brand advocacy is about four to five times more influential than
the more indirect recommendations associated with newspapers, magazines, televi-
sion, and social media, for instance. (See Exhibit 1.) These results are consistent
across countries and industries.
Conversations about the customer experience also boost financial performance.
Our research shows definitively that brands with high levels of advocacy signifi-
cantly outperform those that are heavily criticized. In the sample of brands studied,
we found that the average difference between the topline growth of the highest-
and lowest-scoring brands was 27 percentage points.
Consider, for example, how one company in a traditional industry created an excel-
lent omnichannel experience that resulted in growth that is much faster than that
of its competitors. Techniker Krankenkasse (TK), founded in 1884, is the largest
health insurer in Germany, and it is growing at a rate of up to 7 percent per year.
The company was named the best insurer in Germany by Focus Money magazine for
nine years running. TK is the top-rated health insurer on BCG’s list of the most rec-
ommended brands, with a BAI of 49 percent—the highest score of any company in
the health insurance industry in the countries we studied, and 11 percentage points
ThE MoST RECoMMENdEd BRANdS 2015(cntinue)
Healthinsurance
Retailgrocery
Mobiletelecom
Retailbanking
Broadband
Minimum Average Maximum
Brand Advocacy Index (%)
Carinsurance
Automotive(nonluxury)
0-20-40 20 40 60
Sources: IntelliSurvey of more than 227,000 customers in Canada, France, Germany, Italy, Japan,
Spain, the UK, and the U.S in 2015; BCG analysis.
Wide Variations in Brand Advocacy Exist Across Industries
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T B C G
higher than the second-highest company in Germany. BAI reveals that a key driver
for that performance is TK’s attention to customer service. (See the sidebar “Tech-
niker Krankenkasse: Excelling in a Traditional Industry.”)
In this report, we have strengthened the proof of BAI’s impact on growth and identi-
fied the precise sources of that boost in performance. Our research shows that strong
advocates for a brand spend more, as measured by higher rates of cross-selling, larg-
er shares of wallet, and other industry-specific metrics. In car insurance, for example,
strong advocates buy 74 percent more products than strong critics. These findings
prove that a better experience leads to greater revenues, loyalty, and growth.
A company’s BAI also predicts whether customers will stick with a brand or leave
it. A company’s strong advocates have much higher levels of loyalty. For example,
39 percent of the strong crit ics of retail banking brands were thinking about leaving
the company, while only 3 percent of the strong advocates were considering doingso. Thirty-six percent of the strong critics of health insurers were thinking about
leaving, compared with only 4 percent of strong advocates. (See Exhibit 2.)
What’s more, we have found that once a customer leaves a brand, word of mouth
often doesn’t stop. Thirty-seven percent of all former customers continue talking
about their experience with a brand—almost half of them negatively—after they
have left. By contrast, 54 percent of current customers talk about the brand, but
only about 6 percent do so in a negative way. Results vary by market and industry,
especially in the smartphone and nonluxury automotive industries, where former
Percentage of people
consulting eachsource before
purchasing1
Newspapers
and magazines
TV
35%
50%Friends and family
Blogs and forums
Radio
Social media
39%
3%People are about
4X-5X more likely to consult friends and
family than newspapers, magazines,
television, and social media
Company websites
13%
13%
10%
Sources: IntelliSurvey of more than 227,000 customers in Canada, France, Germany, Italy, Japan, Spain, the UK, and the U.S in 2015; BCG analysis.1The average of all countries and sectors covered in the survey; multiple answers were possible.
E 1 | People Most Oen Consult Friends and Family Before Making a Purchase
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customers remain highly vocal. Industries with contractual relationships—such as
mobile, broadband, and retail banking—often feature higher levels of critics than
other industries, such as automotive and retail grocery.
When companies lose customers because of a negative experience, they lose both
the direct revenues from those customers and the indirect revenues that result from
strong negative advocacy. This reinforces the imperative of providing excellent cus-
tomer experiences and preventing good customers from leaving.
Tecniker Krankenkasse (TK), a
public ealt insurer in Germany,
excels at customer service, one of the
four elements of the customer
experience tat we n eavily
inuences peple’s ecisins abut
recmmening a bran. Custmer
service fuels the highest number of
recommendations for TK among all
the brands we studied in the health
insurance inustry.
histrically, TK fcuse n emplyees
in industries such as automotive,
ig-tec, an aviatin. In te
mi-1990s, te market fr ealt care
in Germany pene up, an regula-
tors allowed TK to cater to people in
ter inustries. In Germany, public
health insurers must all provide the
same coverage and services, so to
capture market sare, tey must
ierentiate in ter areas. In 1996,
TK’s CEo at te time, NrbertKlusen, began t make signicant
investments in building the brand.
Ten, in te rst few years f te
2000s, he paired that focus with a
centralized, low-cost organizational
structure.
Te majrity f ealt insurance
custmers in Germany are typically
not in regular contact with their
insurers. TK tus ierentiates itself
with a focus on customer service that
is unusually strng fr te cuntry’s
ealt-insurance inustry. Te
approach is modeled on that of
leading companies in industries such
as nline retailing an retail banking,
rather than on competitors in the
traitinal ealt-insurance inustry.
TK as a relatively small netwrk (200
brances) an empasizes nline an
phone contact with customers. The
cmpany was te rst insurer inGermany t set up a call center an a
meical-avice line stae by ctrs,
both available 24/7.
The call center aims to answer calls
witin 15 secns an as a rst-
cntact slutin rate f 82 percent. It
uses spisticate ata analysis f its
8 millin custmer cntacts per year
t imprve ealt care elivery an
increase customer satisfaction.
Patients with chronic diseases alsoigly value its pne-base cacing
program, which helps them under-
stan teir cnitins an make
psitive canges in teir ealt. TK’s
current CEo, Jens Cristian Baas, is
builing up te cmpany’s igital
capabilities, exploring opportunities
to create long-term relationships with
clients through online channels such
as e-mail, social media, and apps.
TEChNIKER KRANKENKASSEExcelling in a Traitinal Inustry
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T B C G
The Aspects of the Experience That Matter to CustomersIn addition to understanding how advocacy fuels growth, we now understand the
precise rational and emotional factors that shape the customer experience. The mix
of the four dimensions we have identified—value for money, customer service,
product satisfaction, and emotional connection—can vary widely by industry and
segment. (See Exhibit 3.)
In retail banking, for example, the personal service that customers receive at
branches traditionally plays a major role in the overall experience. But some on-
line-focused institutions, known as direct banks—which have the highest BAIs in
the retail banking industry in most countries—have been disrupting the industry
with a customer experience that emphasizes value for money and a mostly online
experience. For example, Boursorama Banque is the top retail bank in France on
our list of the most recommended brands. Its BAI of 55 percent is a full 24 percent-
age points higher than the second-highest bank. Banking is not usually considered a
fun experience. But Boursorama shows how, even in a traditional industry, a direct
bank can make the experience as fast and painless as possible, giving people some-
thing to talk about . (See the sidebar “Boursorama Banque: Succeeding as a DigitalUpstart.”)
Value for money, customer service, and product satisfaction are certainly important.
They remain the top factors in every industry, and without superior performance
on these dimensions, a brand is unlikely to earn customers’ strong recommenda -
tions. But we find that once companies master these rational factors, an emotional
connection often separates the good from the great. Emotional factors, which vary
by industry, can include brand identification, social responsibility, innovation, and
trustworthiness.
Additional products purchased by strong advocates vs.strong critics (%)2Churn rate of advocates and critics (%)1
Mobile telecom
Strong advocates Strong critics
Retail banking
Car insurance
Health
insurance
19
30
255
4
3
39
74
36
5
43
5
36
Sources: IntelliSurvey of more than 227,000 customers in Canada, France, Germany, Italy, Japan, Spain, the UK, and the U.S in 2015; BCG analysis.1Customers who are willing to leave a company, are actively looking for better oers, or are already switching brands.2Any product that a customer purchased in addition to the original product.
E 2 | Advocates Are Less Likely to Leave Than Critics, and They Spend More
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High performers often score well in both value for money and emotional connec-
tion, for example, but an emotional connection is more important—by 13 percent-
age points—than value for money for advocacy among leading brands.
Top-scoring brands Samsung and iPhone illustrate the power of an emotional con -
nection. When it comes to smartphones, key emotional factors include how muchconsumers identify with a brand and how much they perceive it to be innovative. For
Samsung, value for money fuels recommendations twice as often as for iPhone, but
iPhone scores higher on emotional factors. For iPhone, emotional factors can trump
lower cost, allowing the brand to charge premium prices. Emotional factors cause
iPhone to score higher than Samsung in the U.S., Spain, and Japan, for example.
Trader Joe’s shows how an emotional connection can play a starring role even in
a relatively low-tech and store-based industry such as retail grocery. With a BAI of
53 percent, Trader Joe’s is the top retail grocer in the U.S. on our list of most recom-
mended brands. It scored the highest on BAI among retail grocers in the countries
we studied, ahead of highly popular brands such as Wegmans and Costco in the
U.S. and Esselunga in Italy (each with a score of 50 percent). (See the sidebar“Trader Joe’s: Leading in a Store-Based Industry.”)
How to Improve the Customer ExperienceCompanies typically have their core product, service, and brand marketing well un-
der control, since these areas lie close to traditional core capabilities. The key chal-
lenge today involves managing the increasingly complex, omnichannel customer
pathways that define the overall experience with a brand, and then to create posi-
tive brand advocacy as a result of that experience.
VALUE FOR
MONEY
CUSTOMER
SERVICE
EMOTIONAL
CONNECTION
Smart-phone
Retailbanking
Automotive(nonluxury)
Healthinsurance
Mobiletelecom
Broad-band
Retailgrocery
Carinsurance
28
18
35
19
24
30
24
22
22
19
32
27
20
28
29
23
17
24
29
30
16
24
31
29
15
27
28
30
20
27
23
30
PRODUCT
SATISFACTION
Sources: IntelliSurvey of more than 227,000 customers in Canada, France, Germany, Italy, Japan, Spain, the UK, and the U.S in 2015; BCG analysis.
E 3 | Factors Aecting the Customer Experience Vary by Industry
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BAI can guide companies as they pinpoint efforts that will generate a step change
in improvement of the customer experience and therefore in the levels of advocacy,
loyalty, and—ultimately—growth. Advocacy levels reveal the key sources of growth
as well as the underlying reasons for over- or underperformance. This allows target-
ed interventions and investments to improve a company’s performance compared
with competitors.
Bursrama leas te retail banking
inustry in value fr mney, ne f
the four elements of the customer
experience tat we n eavily
inuences peple’s ecisins abut
recmmening a bran. Value fr
mney—te primary reasn fr te
bank’s ig BAI scre—fuels te
highest number of recommendations
fr Bursrama in te retail banking
inustry acrss all te cuntries we
stuie. Backe by parent cmpanySciété Générale, Bursrama ers
a full prtfli f retail banking
products and focuses on a more
auent segment f te market. Still,
it eavily prmtes itself as te least
expensive bank in France, isplaying
fees prminently. Many f its services
are free.
Bursrama als scres ig n
customer service relative to others in
te retail banking inustry. Te bankhas created a strong culture of put-
ting te custmer rst, lking fr
inspiratin utsie te banking sectr.
It selects emplyees n te basis f
teir custmer centricity an peple
skills, an it trains tem in te ay-
t-ay reuirements fr teir jbs.
Emplyees receive incentives tat are
based on such aspects of the experi-
ence as waiting time, customer satis-
faction, and service levels—not on
selling additional products or generat-ing iger fees. “Clients buy prod-
ucts,” says Marie Ceval, cairpersn
an CEo f Bursrama. “We n’t
sell pructs.”
Te bank as a relentless fcus n
eciency t minimize te time tat
custmers spen n banking. It
cnstantly lks fr ways t spee up
the self-service process—reducing the
number f uestins tat custmers
are aske an te cuments tat
tey ave t sen—wit te gal fkeeping custmers mstly nline t
reuce call center csts. “We feel te
clients even tug, as a irect bank,
we never see tem,” says Ceval. “If
tey are nt appy, tey call us, wic
csts us mre mney.”
Te bank als stans ut fr its
ability t prvie a service tat is
exclusively nline an mbile. It’s te
rst bank in France t er a cm-
pletely nline mrtgage applicatin,fr example. Custmers can als take
advantage of other innovations for the
Frenc market, suc as increasing
their withdrawal and credit card limits
in real time and reporting a lost card
via a secure mobile-phone app.
“We align te interests f te bank
with the interests of customers—a
win-win situatin,” says Ceval.
“Custmers feel it—an tey recm-
men us.”
BoURSoRAMA BANqUESucceeing as a digital Upstart
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W R S C E
Companies can take the following steps to improve the overall experience oftheir customers and to manage customers’ perceptions of, and advocacy for, that
experience.
Improve the omnichannel customer experience. The best companies develop a
clear vision on the basis of insights about customer preferences. For example, a
company may aim to provide personalized and relevant service, enabling customers
to perform most operations across all touch points, resolve questions on the rst
interaction, and learn about the best uses of a product and about available support
services.
Retail grcer Traer Je’s ranks near
te tp f its inustry wen it cmes
t custmers’ recmmenatins f its
pructs an custmer service. But
te cmpany leas te pack in terms
f custmers’ emtinal cnnectin
with the brand—another dimension of
te custmer experience tat we n
can eavily inuence peple’s
decisions about recommending a
bran. In fact, an emtinal cnnec-
tion is the main factor behind Trader Je’s ig BAI. Te cmpany als as
the highest emotional-connection
levels in te retail grcery inustry
across all the countries we studied,
even though emotional factors tend to
rank relatively lw fr te inustry
verall. Traer Je’s experience sws
that companies that foster an emo-
tional connection, in addition to
performing well on the other dimen-
sions, have an advantage over those
tat n’t wrk t create suc aconnection.
Interestingly, Traer Je’s ig rates
of product satisfaction and customer
service also fuel some of the highest
number of recommendations for the
cmpany in te retail grcery inus-
try, swing w te majr imen-
sions of the customer experience
reinforce each other. These high
ratings could compensate for the
relatively merate inuence f value
fr mney n Traer Je’s BAI.
Traer Je’s scres ig n BAI
without competing on four of the
tp-ve key factrs tat grcery stre
cnsumers say are mst imprtant t
them: convenient location, low prices,
good sales and promotions, and
ne-stp spping. Traer Je’s asnly 450 stres acrss te U.S. Its
prices are g, but tey are nt te
lwest. It escews sales, cupns, an
prmtins. Its relatively small stres
ave nly 2,000 t 4,000 SKUs—f
which more than 80 percent are
private label—compared with 40,000
t 70,000 SKUs at a typical full-size
grcery stre, suc as Publix r
Wegmans. on pruct imensins
suc as ig-uality meats, pruce,
an rganic ptins, Wle Fsbeats ut Traer Je’s.
Wy, ten, i Traer Je’s rank
secn ut f 68 supermarkets in
Consumer Reports’ 2015 rankings an
acieve ne f te igest ranks in
custmer experience as measure by
tw inepenent bencmarks? hw
can it pruce mre sales per suare
TRAdER JoE’SLeaing in a Stre-Base Inustry
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T B C G 3
Leading companies also detail key customer pathways, with a focus on so-called mo-
ments of truth, which determine whether a customer will buy a product or choose
to switch companies. They recognize that each channel has a defined role at each
step on the customer pathway. At any point along the path, a customer may transi-
tion seamlessly among channels depending on what’s most convenient. For exam-
ple, a customer may browse online with a mobile device, receive relevant offers
through e-mail, and obtain service and support in a store. Companies can create an
attractive business case by optimizing the key pathways on the basis of lifetime cus-
tomer value and return on investment across channels, with each channel making a
clear contribution to the major sources of value in the customer relationship.
ft tan any supermarket cain in
the U.S. with at least a comparable
number f stres?
Traer Je’s es tis trug a
selectin f simple yet buzz-wrty
pructs an marketing tat is aime
suarely at prucing an emtinal
connection with its target segment of
educated and adventurous shoppers.
Te cmpany’s target custmer as
been escribe as an unemplyePd w as te intelligence an
eucatin t appreciate te stre’s
pructs but nt necessarily te
buget t buy tem at ig retail
prices.
Traer Je’s secret is tat it treats
f like fasin. Te cmpany’s
buyers travel te glbe t bring back
minimally prcesse pructs tat
set trends, rather than follow them.
Its stres feature istinctive pructssuc as frzen Inian f, Tai
lime-and-chili cashews, dried mangos,
an inexpensive wines. Simplicity is
te key: unlike te typical U.S. super-
market, Traer Je’s esn’t carry 40
kins f nut butters; instea, it as
abut 10. But all f tem are carefully
selecte t appeal t te cain’s
target custmer. one f tse pr-
ucts is te aictive Speculs Ckie
Butter, wic resembles peanut
butter an tastes almst (but nt
uite) like gingerbrea. Jars f te
tp-selling sprea reprtely isap-
pear te mment tey it te selves.
The chain reinforces its homespun
bran image by iring lcal artists t
create signage uniue t a given
lcatin. An unusual style f custm-
er service also sets the chain apart.For example, managers wear Hawai-
ian shirts and have titles such as
captain, cmmaner, an rst mate,
wic reect te stre’s seafarer
theme.
Traer Je’s stres are s ppular tat
tey freuently acieve signicant
wr f mut befre tey ave even
entered an area—despite minimal
external avertising, wic usually
cnsists f mailing a flksy newslettert nearby custmers. Suc psitive
word of mouth will not surprise
anyne w as steppe ft in ne
f te cmpany’s stres.
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W R S C E
Effective companies also create the conditions for success: organizational capabili-
ties, culture, KPIs, processes, and systems. For example, collaboration among chan-
nels can be reflected in KPIs, while processes may encourage self-service through
online channels. Finally, the best companies develop a transformational roadmapfor success, with a clear end point in mind and realistic milestones along the way.
Proactively fuel higher advocacy. Companies with great customer experiences have
a clear focus on specic and well-dened target customer segments, whose mem-
bers share the same values as the brand and are aligned with the brand’s market-
ing goals. The crucial, most inuential advocates—typically only 2 percent of a
community—can be found in those segments.
Next, such companies build relationships with these informal opinion leaders that
go beyond the transactional. For instance, the most effective companies offer gifts
that matter to target customers and increase affinity with the brand without ex-
pecting anything in return. This move simultaneously develops an experience thatdisrupts the status quo and compels people to talk about the brand. In addition,
such companies foster ongoing, two-way communications and relationships across
online and off-line platforms.
A separates the winners from the losers inthe battle for the word-of-mouth recommendations that generate the mostsales. That advantage leads companies to grow faster than those with less compel-
ling experiences.
Companies in any industry can precisely measure the customer experience with
BAI. They can then use this knowledge in tangible ways to improve the most im-
portant areas of their customers’ experiences. Companies that do this will create
lasting reputational advantage.
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T B C G
About the Authors
Dag Fredrik Bjørnland is a partner an managing irectr in te osl ce f Te Bstn
Cnsulting Grup an te leaer f BCG’s custmer experience tpic area. Yu may cntact im
by e-mail at [email protected].
Cyrus Ditzel is a principal in te rm’s Amsteram ce. Yu may cntact im by e-mail at
Pedro Esquivias is a partner an managing irectr in BCG’s Lnn ce. Yu may cntact im
by e-mail at [email protected].
Jody Visser is a partner an managing irectr in te rm’s New Yrk ce an a cleaer f
BCG’s marketing eciency an eectiveness tpic area. Yu may cntact er by e-mail at
Steve Knox is a senir avisr t BCG’s Marketing an Sales practice in te rm’s Cicag ce.
Yu may cntact im by e-mail at [email protected].
Victor Sánchez-Rodríguez was a principal in te rm’s Mari ce an is nw a BCG alumnus.
AcknowledgmentsTis reprt wul nt ave been pssible witut te erts f ur clleagues Jan Crtenbac,
Maria Eneriz, hemant Sangwan, Jsé María Sanz, an davi Vig.
Te autrs are grateful t Mickey Butts fr is writing leaersip an t Katerine Anrews, Gary
Callaan, Lilit Fnulas, Kim Frieman, Abby Garlan, an Sara Strassenreiter fr teir cntribu-
tins t te reprt’s eiting, esign, an pructin.
For Further Contact
If yu wul like t iscuss tis reprt, please cntact ne f te autrs.
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