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Performance Consulting Group
“Corporate Growth: The Three Levels of Differentiation Leading to Three Levels of Customer Loyalty”
Presented by Kevin PittsJuly 30, 2015
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Premises
Strategy is Choice – The Power of Putting Customers at the Center of Your Business
What is Winning – Innovative and Distinct Customer Experiences crafted from creative problem-solving processes
How to Win Today – Creating Distinct Sets of Integrated Activities Centered around the Customer Experiences
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Neo Cortex: Executive Thinking Limbic: Emotional ProcessingBrain Stem: Survival Instinct
The human brain is divided into three main components each with a unique function:
The Limbic brain acts as the gate keeper for which part of the brain is engaged in response to a stimulus.
If the environment and the stimulus makes us feel safe, secure and motivated we engage our Neo Cortex.
The Neo Cortex processes stimulus by engaging higher order thinking functions which include Business Acumen and Creative Thinking
The Brain Stem’s response to any stimulus is to:•Attack it or•Run from it or•Ignore it
If the environment or the stimulus makes us feel threatened or stressed then we engage our Brain Stem
Brain Research
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• How do Customers experience the interactions with your firms:
– Do I feel safe?– Do I feel respected?– Is this interesting?– Is this motivating?
Neo Cortex: Executive Thinking
Limbic: Emotional Processing
Brain Stem: Survival Instinct
The Secret FormulaInnovative Customer Experiences = Business Acumen + Creative Thinking + Motivation
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5
Arena
Where will we be active?• Product categories• Market segments• Geographic areas• Technologies• Value-creation stages
How will we get there?• Asset Optimization• Organic growth • Partnerships
Vehicles
Differentiators
How will we win?• Price Differentiation• Brand• Service Differentiation• Product Differentiation• Process Innovation
Staging
What will be our speed &sequence of moves?• Speed of expansion• Sequence of initiatives
EconomicLogic
How will we obtain our returns?• Low cost• Premium prices• Customer loyalty• Proprietary technology
Source: Adapted from Hambrick & Fredrickson, (2001). Are you sure you have a strategy? Academy of Management Executive.
Innovative Customer Experiences and Business Acumen
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The 3 Levels of Differentiation
“There is just nothing like this out there.”
“I see why we may want to pay a bit more here.”
“There is not much difference here.”
Source: McKain, Scott, 2012, Create Distinction: What to do when “Great” isn’t good enough to Grow your Business, Greenleaf Book Group Press.
Distinction is about creating an emotional connection with your customers.
Distinction
Differentiation
Sameness
Mar
gin
Expa
nsio
n
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Large(United)
Small(Frontier)
Medium(China Eastern)
Puppy(Jet Airways)
By size
Pet
EmployeeGrandchild
Dog as …
Dog
Business Acumen/Innovative Segmentation – Making the Customer Experience Distinctive
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The 3 Levels of Customer Experience
“Interesting and motivating.”
“I didn’t have to work hard.”
“I accomplished my goal.”
Source: Manning, H., and Bodine, K. (2012). Outside In: The Power of Putting Customers at the Center of Your Business. Forrester Research.
Customer experience is how your firm’s interactions are perceived by its customers.
Enjoyable
Easy
Meets Needs
Reve
nue
Grow
th
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• Retailers• Hotels• Parcel delivery/shipping
providers• Consumer electronics• Insurance providers• Banks
• Investment firms• Credit card providers• Airlines• Wireless service providers• TV service providers• Internet service providers• Health insurance plans
Exercise: What industries do you believe to be the top 2 and bottom 2 with respect to Customer Experience scores?
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High, Low, and Average Customer Experience Index Scores by Industry
Source: Forrester’s North American Technographics Customer Experience Online Survey
Retailers
(81)
Hotels (76)
Parcel d
elivery/Shipping (7
5)
Consumer e
lectronics
(73)
Insurance
(71)
Banks (70)
Investment F
irms (
70)
Credit card
providers
(67)
Airlines (
66)
Wire
less pro
viders (63)
TV service
providers
(56)
Internet s
ervice pro
viders (56)
Health in
surance
plans (55)
35
45
55
65
75
85Excellent
Good
OK
Poor
Very Poor
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Distribution of Customer Experience Index Scores
Very Poor
Poor
Okay
Good
Excellent
0% 5% 10% 15% 20% 25% 30% 35% 40%
10%
23%
31%
34%
3%
Source: Forrester’s North American Technographics Customer Experience Online Survey
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Customer Experience Revenue Benefits
Source: Forrester’s North American Technographics Customer Experience Online Survey
Banks
Credit Card Providers
Insurance Providers
Airlines
Wireless Providers
Hotels
$12
$12
$24
$65
$60
$44
$90
$83
$203
$44
$450
$825
$150
$213
$225
$481
$788
$495
Additional PurchasesChurn ReductionWord of Mouth
Total AnnualImpact
(in millions)
$252
$307
$452
$590
$1,297
$1,364
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Creating distinction doesn’t mean you must be completely unique. It simply means firms must create an integrated set of unique activities that are of value and
essential from your customer’s point of view.
Enjoyable
Easy
Meets Needs
Distinction
Differentiation
Sameness
Source: Adapted from Scott McKain, 2012Source: Adapted from Harley Manning and Kerry Bodine, Forrester Research, 2012
The Customer Experience and Innovative Strategies
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Innovation Continuum
incremental r upt i v ed i s
So How?????
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Activity: Walk the Line
Incremental Breakthrough
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1. Generate a list of company norms as it relates to customer experiences.
2. Select one norm to challenge.
3. Generate ideas to challenge the norm.
Norm 1
Norm 2
Norm 3
Norm 4
Challenging Customer Experience Norms
A Norm is a standard or pattern, especially of social behavior, that is typical or expected of a group.
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Targeting
Define the bull’s eye criteria.Use “Will it…”? or “Does it…?”
For example:• Will it be implementable in the
next year?• Will it leverage new technology?• Does it cost under $50,000?
Define your criteria
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TargetingPlot the proposed ideas on the target relative to the bulls eye.
Pick an idea to strengthen. Ask yourself: “What is stopping that proposed idea from being right in the bulls eye?”
Phrase as an open-ended question starting with “How to…”
Example: “How to Reduce the cost?”
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Targeting
Generate some ideas for
overcoming the challenge.
Continue to work to improve
and strengthen ideas to get
them as close to the bulls eye as
possible.
After refining your ideas select
those ideas that are worth
pursuing further.
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Why is Distinctiveness a Rarity in Business?
1.A Focus on Competitors and not Customers
2. The Paradox of Best Practices
3.Efficiency = Effectiveness
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What Can You Do On Monday?
1. Clearly communicate the financial cost of retaining a customer versus finding a new one – make this transparent to all who touch the customer
2. Create a bonus pool for those who go beyond and above to ensure repeat business
3. Cultivate an innovative culture that encourages broad decision rights as it relates to customer experiences
4. Document each and every key customer touch point – and apply creative thinking principles to ensure distinctiveness
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Questions