User eXperience Obsession 1 / 2
Why will User eXperience become the major strategic focus of traditional companies?
No entrepreneur or employee of a startup would ever question the idea that outstanding User eXperience is the highest priority of all. It’s something that almost goes without saying. A deep-seated truth.
Even though they are gradually waking up to this fact, traditional corporations still find it difficult to take the leap and consider User eXperience at the heart of their strategy.
When companies are small, they are very customer-focused. However, as they become less vulnerable, internal operations and structures start to take precedence. That is not to say that exceptions don’t exist, but why do corporate executives still lag so far behind when it comes to prioritizing the user eXperience and allocating a non-negligible share of their resources to it?
Why User eXperience has become so fundamental?
The rise of the web has brought with it a number of new behaviors as well as new opportunities. Two, in particular, have disrupted everything and driven this change in direction.
The #first reason is that the cost of setting up a business has been reduced, which has encouraged innovation and undermined established monopolies.
Since the internet has become accessible to all, the costs involved in starting a company (and I do mean starting it, as opposed to growing it) have been reduced to zero, or close to it. Barriers to entry no longer exist in the same way. Overnight, disruptive thinkers appeared, ready to do battle against established market players and steal their markets, taking advantage of the opportunities of the internet to create serious challengers. These new entrants, with Jeff Bezos at the forefront, have toppled all the paradigms of traditional players. Their operating principles have continued to evolve and differ radically from the ways in which established companies work.
The new players were so revolutionary that no one anticipated their rise to prominence. Who would foreseen a ragtag bunch of entrepreneurs with the ability to challenge the paradigms that so many considered to be immutable? They defied all the reigning strategic dogmas, precisely by going unnoticed. This allowed them to develop their businesses more easily. What did WalMart have to fear from Amazon in 2004, when the company’s annual turnover was less than €5 billion?
This cost reduction has led to increased competition, more innovators, and an increase in the size of the market as a whole.
The #second reason is the gift of Ubiquity.
It used to be that you would go to the store / service nearest to your home and put up with average or poor service (exceptions, again, exist). Consumers lacked real choices, and the majority of retailers knew this. With mass retail business, it was even enhanced, because food shopping and FMCG (fast moving consumer goods) involved frequent, regular purchases. Who would waste an additional 20 minutes’ travel time in the car each week to go to a store further away from home? Not I.
Salvation came in the form of the internet, which gave the gift of ubiquity to everyone — the effective ability to be in all places at once! Suddenly, consumers had the ability to switch dealer in a fraction of a second. The internet ended the frustration of being talked down to by customer service staff, or being palmed off to the after sales department because a product you bought a week ago had given up the ghost and no one could help. If I’m not happy, I never need darken their doors again: there are now so many online alternatives that recognize my value as a customer (CLV, or customer lifetime value, wasn’t invented by retailers) and who will respond accordingly.
The tables have turned and customers now have the power to choose the service that the supplier provides. And, as customers start to eXperience more and more successful outcomes, their expectations rise significantly.
Social networks have given them the power to complain and warn other customers. Nowadays, consumers’ confidence comes from what they read. Not from what the brands have to say about themselves!
And, even though it obviously took time to reach this point, that is now the established reality of the situation.
And who realized there was a huge opportunity? Steve, Richard, Jeff, Brian, Travis, and co!
These creative minds understood that it would take nothing less than the best possible User eXperience, at all costs, to profit from this new reality.
This is why no one saw these start ups coming. They all started from scratch ; in January 2009, Airbnb’s revenue was ZERO!
Customer by customer, they won markets where there was room for improvement — which is to say, every single market out there!!! That’s why incumbents were frankly humiliated by the young pretenders. Amazon in retail, Airbnb in accommodation, Uber in transportation, Stripe in online payments, Square in offline payments, Number 26 in retail banking (wait for it), Blablacar, Google in advertising, and so on and so forth… Twenty five years ago, none of these companies even existed!
Why has it taken so long for companies to grasp this?
Because, in order to understand that, you must first dig deep, observe, and seek to understand where all these success stories, revolutions, and seismic shifts of our era have come from. That, in itself, is a voyage of discovery. Not everyone is curious enough to explore to that extent.
After that, you have to be open to change and challenge decades of conditioning — the upbringing of your parents, your education, your friendships, and so on. Change and transformation are frightening! But « It is not necessary to change. Survival is not mandatory.” (W. Edwards Deming). It is a brave act that requires an enormous amount of letting go: the ability to imagine system of thought being turned on its head, and seeing it not as a threat but as an opportunity. That’s an uncomfortable exercise that very few of us would undergo voluntarily!
A marketing director in the 90s / 2000s used to decide the entire strategy for the customer eXperience (customer journey, products and so on) and everyone hung on his every word. If he had reached that stage in his career, he must have had all the answers. Today, his role is to coach teams of people, all of whom are tasked to be better than him in every single area — as it’s impossible to master everything, such is the complexity of the world in which we now live. Think how much strength of character, capacity to challenge received wisdom, and risk-taking ability that requires!
Finally, the true costs of implementing an exceptional customer eXperience, and the impact in financial terms of doing so, are poorly understood.
Offering an exceptional User eXperience has a highly positive impact on the top line (revenue) as well as costs and therefore on the bottom line (profit), because it’s the best way to engender TRUST and therefore to secure customers’ preferences!
1. Satisfied customers each tell 5 people about their eXperiences; dissatisfied customers tell 10
2. 78% of consumers have stopped buying from a company because of poor service
3. 91% of unhappy customers won’t return to you to make another purchase
4. After ten years, a customer’s value to the business is ten times higher than that of a customer making a first purchase
5. Twelve positive customer eXperiences are required to make up for a single negative eXperience
6. It costs six or seven times more to sell to a new customer than to an existing one
7. 86% of people won’t choose to buy a product, or buy from a company that has negative online reviews
More and more investments will be devoted to creating exceptional User Experiences, and less and less to communicating messages about products and services. Word of mouth will become (is already) significantly more powerful. If you offer exceptional service, people will hear about it!
“It is not the strongest of the species, nor the most intelligent that survives. It is the one that is most adaptable to change” -Charles Darwin
