Want Loyal Subscribers? Build Experiences Instead of Features.

Let’s start with why.

“Competitors can steal your product features, but they can’t steal the insights you gain from an active, loyal subscriber base.” — Tien Tzuo, Founder and CEO of Zuora, author of subscribed.

Since the 1950’s, Consumerism has focused businesses on shipping as many products as possible through as many channels as they could develop. Now, the emerging subscription-based economy is ushering in the age of “userism”, which shifts companies’ fundamental strategy from “shipping products” to “earning long-lasting subscriber loyalty” (see Figure 1).

As the subscription economy pushes companies out of “consumerism” and into the age of “user-ism”, understanding why, and how, users interact with their offerings will be the single largest competitive differentiator driving companies’ success.

Figure 1. Long-term relationships (LTR) with subscribers is the new business objective which makes experiences, rather than products, the new focus of development efforts. (Source: subscribe.)

While aligning business systems (e.g. pricing, licensing, sales motions…) to support a subscription model is certainly difficult, perhaps the most critical transformation subscription based companies face is how well they shift their culture from delivering features to delivering experiences.

Traditional business intelligence methods, like user research and customer advisory panels, are insufficient to meet the new demands of experience-driven, subscription-based economies. The subscription economy greatly increases the value of understanding users’ needs which means conventional business intelligence practices must evolve. While many of today’s methods remain useful, they are typically geared toward finding existing product flaws, or uncovering new product opportunities, rather than understanding how to build complete experiences capable of sustaining long-term loyalty.

Most companies have already established multiple user feedback “listening posts” through their various design, support, marketing, sales and customer communication channels (See figure 2). However, information gleaned from those channels tends toward tactical bug fixing, and information remains silo-ed within product teams. This prevents the bulk of the organization from seeing broader experiential patterns. Subscription economies force companies to re-think their user-feedback practices so they can better convert their wealth of user data into the wealth of unassailable user insights to which Tzou refers.

Figure 2. Sample of feedback types gleaned from various listening posts.

As mentioned, user-ism is about sustaining long-term relationships with your customers (largely through their digital experiences with your company rather than more traditional person-to-person interactions). The most powerful means for earning long-term customer loyalty is the dependable delivery of innovative capabilities with frictionless end-to-end experiences. All leading companies must innovate and bring new capabilities to the market. However, meaningful innovations are less predictable, and more rare, than we often let ourselves believe. In addition, any single capability will only exist as an “innovation” for a short time before the capability becomes a “table-stakes” commodity. As a result, rushing “innovations” to market before they are fully designed pushes companies into a chaotic execution model that works against the goal of establishing long term customer relationships.

When an innovation is successful, it only takes a few quarters before competitors adapt by either delivering similar solutions, or creating other means to minimize the advantages of the innovation. Because of this, as Tzou observes, the business advantages of new features are often short-lived. On the other hand, long-term relationships are most durably sustained by consistently demonstrating you have a superior understanding of your users’ true challenges and are constantly solving them.

In other words, you must understand your customers’ roles, goals and environments better than your competitors.

In a subscription based environment, companies are typically better served by spending resources ensuring a capability’s complete journey is thoughtfully delivered, rather than rushing to deliver as many new capabilities as possible.

Of course companies must continuously deliver innovation into their markets, but ultimately, how those innovations are delivered to users is what ensures customer loyalty. Companies should always strive to frequently deliver new, timely, capabilities. However, if those features are disjoint, difficult to discover, their value is not obvious, and/or cumbersome to use, then you’ve devalued the new capability, and left the door wide open for competitors. Because your pioneering work has done the heavy lifting, competitors can more easily imitate your core innovation, and “go you one better” by simply shipping a similar, or even lesser, capability wrapped inside a better end-to-end experience.

Timely delivery will always be important, but in the subscription-based world, how you deliver a capability is every bit as important as when you deliver a capability. While the remainder of this article focuses on delivering capabilities that best fit customers’ roles, goals and environments, an underlying assumption of this article is that capabilities still have to be delivered in a time frame that makes them relevant.

Figure 3. The two foundational formulas for building long-term customer loyalty .

Apple — An Historic Model for Building Customer Loyalty

Even though Apple wasn’t fundamentally a subscription based company, it’s core culture produced the kind of long-term customer loyalty that would be the envy of any modern subscription-based company. Apple’s developers, designers and leaders recognized that “innovation + frictionless experiences” was the driver of their users’ zealous long-term loyalty (in fact, it was this incredible loyalty that carried them through even the darkest days of the pre-Steve-return, and right up to the pinnacle of their trillion dollar valuation).

If one looks over the history of Apple, it was rare that Apple was first to market with a capability. It’s also arguable that they didn’t typically deliver on top of the most advanced technologies available. However, their offerings were consistently seen as delivering the best overall experiences. Apple intentionally built a strategy in which release timing, user experience, and new innovation/capabilities were dials to be turned in calculating their “best to market” strategy. More often than not, the experience dial was locked at a high level. Release timing and technical capabilities, however, were tweaked to ensure a deliverable’s complete experience was thoroughly designed and delivered. If a new feature’s experience wasn’t ready for a release train, it caught the next one (or people put in incredibly long hours to make it ready), but the experience wasn’t watered down to hit a deadline. Market awareness, discoverability, intuitiveness, and aesthetics, were as vital to the “definition of done” as any implementation deadline. This very intentional strategy, and internal cultural norm, created an enduring brand loyalty based upon users’ belief that “Apple would do it better”.

“If you’re going to figure out how to sell billions of dollars worth of product in a year, one of the things that I’ve always found is that you gotta start with the customer experience and then work backward to the technology.” (Video) — Steve Jobs.

Once Apple established a brand for delivering superior user value, competitors who rushed to innovate faster than Apple often found the sales of their new offerings stall. Customers were more than willing to “wait and see” what Apple was going to do even if Apple was months behind their competitors.

This established a virtuous cycle for Apple as it provided more time for Apple to refine their offerings, learn from, and adjust to, the strengths/weaknesses of their competitors’ early releases. This, in turn, pushed their competitors into a vicious cycle of trying to deliver more innovation faster and faster (typically with less and less focus on how it should be designed to best satisfy the roles, goals and environments of their users).

While my focus in this article is design, I don’t want to over-emphasize the role of design in Apple’s success. Apple’s innovations were not solely the result of their robust UX and design culture. The informed, opinionated, insights of many talented people in many fields formed the engine that drove Apple’s success. However, Apple’s core culture recognized that any innovation worth pursuing deserved a complete user experience capable of fending off competitors, and ensuring the long term success of their investment. As a result, all skill sets (eng, PM, support, mgmt…) developed high design, and user empathy, skills. Design was something everyone prided themselves on, and held their own work to a very high design standard. The focus on high design standards was reinforced in nearly every meeting and discussion with peers and executives.

A key element of Apple’s ability to deliver best in market experiences was its deeply ingrained culture of user understanding. Apple integrated experience feedback into most corners of its operation by leveraging info from a variety of customer facing “listening posts”. For example, designers, developers, and PMs all received monthly reports and anonymized call recordings from support. In addition to being informative, this information was often quite motivating because one was starkly confronted with the passion both design flaws, and delighters, induced in customers.

Even in the 90’s, designers, engineers and PMs had telemetry on durations and spurious clicks generated during core interactions (e.g. start up times, time to first click after an app was launched…). These data further highlighted what people expected to do with Apple products, and specifically where actual experiences were meeting, exceeding, or failing to meet expectations.

In addition, designers and marketing would collaborate with packaging to perform “out-of-box” studies to understand the true user journey from initial purchase to printing their first document. The results of all these endeavors were communicated across the organization. The network of sharing between the multiple listening posts was extensive (even though what each team did with the info was often a tightly held secret within each team). The goal of the sharing was to ensure everyone could readily internalize users’ end-to-end experiences with Apple’s products. Because everyone had a deep sense of what users’ valued, and what they were experiencing in the real world, design and development negotiations were actually accelerated. This was especially true for updates to existing products and features.

User research is not going away, and neither is it reverting to the days of Steve Jobs’ Apple. However, user research, and other conventional business intelligence methods, are on the precipice of significant change, and many of Apple’s loyalty-inducing practices serve as a model that contemporary subscription-based businesses may do well to emulate and build upon.

The Next Horizon: Integrated Experience Feedback (IXF) at Nutanix

Nutanix has already laid a promising foundation for earning customer loyalty in the enterprise space. With the introduction of HCI, Nutanix established a brand for disruptive innovation and demonstrated they understand their users’ core challenges. In addition, Nutanix demonstrated a deep design mentality by producing its own modern design system, and making its management plane available through a “single pane of glass”. Nutanix’ strong beginnings in these areas are vital, but we recognized that success in the new subscription economy won’t come without devising new ways of thinking about users, experiences and capabilities.

In addition, Nutanix, like many companies, already has, or is building, a variety of feedback mechanisms. Each has their own strengths and weaknesses as the table below summarizes (see Figure 4). The challenge lies not in creating these separate mechanisms, but in integrating, and disseminating, the feedback from all these threads into deeper, and more complete, insights about users’ real world experiences (aka their roles, goals and environments).

Figure 4. Strengths and Weaknesses of some common feedback mechanisms.

Integrated Experience Feedback (IXF) is a set of practices and perspectives aimed at combining information from a wide variety of feedback channels to uncover richer insights, and integrate those insights into the fabric of everything we do everyday. We want every skilled contributor to fully internalize our customers’ experience so they can consistently deliver new, uniquely insightful, capabilities within a framework of the industry’s best end-to-end experiences. (see Figure 5).

Figure 5. High level view of IXF

The formal mission statement of IXF is:

Enable all employees to fully internalize our customers’ day-to-day experiences, so they can discover the insights necessary to efficiently deliver end-to-end experiences capable of engendering long-term customer loyalty.

The above mission statement unpacks into the following tenants underlying any IXF-based culture:

Enable all employees to fully internalize customers’ experiences.

There is power in having everyone in the organization possess a clear, deep, and shared understanding of what our users value, and why. Cross-domain understanding of user experiences (roles, goal, environments) must be well understood, constantly updated, and reinforced throughout the organization. Constantly uncovering, proliferating, and refining insights about our users is the bedrock of building customer loyalty. To achieve this, companies must create a very strong culture of sharing. This means developing mechanisms for efficient cross-talk between groups. Jumpstarting a strong “sharing culture” typically implies conducting regular events where user findings are shared, newsletters, and yearly activities to summarize users’ and their key tasks based upon the best available information. Management must keep the users’ roles, goals and environments “front and center” in every employee’s mind. The goal is to increase the chances that experience atoms are going to combine somewhere in the organization to form a new insight molecule.

10x insights come from connecting dots across multiple domains.

Today’s user feedback channels are often too siloed. Typically, a team runs a feedback channel to discover issues specific to a product, and then drives those issues to some sort of direct action as quickly as possible (usually in the form of narrowly targeted “bug fixes” or improvements). In the subscription economy, this kind of responsiveness is still needed, but businesses will also need to produce more valuable insights by combining findings from multiple user feedback channels (i.e. “listening posts”). A key IXF activity is having a dedicated set of researchers, designers, eng and PM looking across all products and feedback channels to discover, describe and communicate common roles, goals and user activities.

No longer look at your users through the lens of your product. Look at your product through the eyes of your users. The most natural way to think about one’s work is to focus on the product and how it works today. After all, the product is what we are building and it is the most concrete means of planning our work. This means teams typically think about how the product works, what we need to add to it, and how the technology will most naturally allow us to add a new capability. Teams then ask if that solution will be good enough for our users. In a subscription economy teams will need to change this mindset and focus on questions that take us to “where our users’ are” rather than where our technologies allows us to go most easily. For example, why does the user want to use this capability? What task(s) are users most likely performing right before they access the new capability we’re building? What will they do immediately after? Is this task a sub-goal in service of a larger objective? What information must the user gather to successfully successfully complete this task? How will they move from here to the next step in their larger objective… We often need to spend more time designing the seams between capabilities than we spend designing the capabilities themselves. We must constantly resist the temptation to focus primarily on how our technology works and spend much more time thinking about how our users work.

Don’t keep data in its own lane.

Fundamental to modernizing our feedback and requirements practices, is the need to more effectively disseminate user experience information throughout the organization. Info that stays in its own silo often finds its way to leadership, or executives, where it may be combined with information from other silos, but is not effectively communicated to the broader population. The effective dissemination of this information is the key to improving the ultimate quality of our services and evolving a culture of craftsmanship. Part of improving this is achieved by the dedicated group described above, but organizing and distributing information about our users has to become a organic part of everyone’s job and the company’s culture.

User Experience insights have their greatest power when put in the hands of front-line contributors.

The effective dissemination of user experience information throughout a company engages those with the deepest knowledge, the best chance of identifying key patterns leading to improved customers’ experiences, and the most direct means of doing something about it. Without improving our ability to integrate, analyze, and communicate experience information throughout the organization, broader insights will usually come top-down. Relying too heavily on top-down insights will result in missed opportunities, and a more disengaged workforce.

Experiences have to become the primary unit of work.

Teams need to start with the customer experience and work back to the technology. Product teams can no longer focus on “features” as the primary unit of delivery, and then evolve toward a loyalty-inducing, end-to-end experience over multiple releases. Instead, subscription-based companies must define the experiences that delight users, and refuse to compromise them away in lieu of other, “more pragmatic”, priorities. It is the quality of the experiences we consistently deliver, not the race to more features, that will lead to long-term customer loyalty and contract value. We should remove product design from our vocabulary and replace it with experience design. Successful subscription companies will view their fundamental deliverable as frictionless experiences, rather than products, features or technology.

IXF isn’t just about fixing flaws. It’s about finding better approaches.

Creating an integrated fabric of experience feedback is much more than having conversations with customers and creating a new set of bugs to fix. IXF is about improving our competence in hearing our customers ask for “a faster horse that eats less”, but understanding what they really need is a different form of transport.

IXF is about doing more of what the Nutanix LCM team did when they initially thought the need was to improve performance, but discovered what users really needed was to shift the underlying conceptual model (see .Design Brief vol 8. The Nutanix X-Ray team were also able to conduct similar reformulations .Design Brief vol 4) based upon information gleaned from users.

IXF is about hearing your customers’ pleas to improve the understandability of multiple fields on a form, but understanding we really need to focus on eliminating those fields from the user experience. In the subscription business model, it is about constantly refining our holistic understanding of users, and reimagining our products based upon an improved, pervasive, understanding of users’ roles, goals and environments. New release cycles have to begin by re-examining our offerings, and not simply adding more capability. At the very least, the first step in each new release cycle should be reviewing and updating the pertinent user journeys, and identifying where your team’s knowledge about your users is lacking.

Delivering the experiences necessary to earn customer loyalty also means understanding our competition.

In order to engender loyalty, we must not only satisfy our users’ needs, but also satisfy those needs better than our competitors. We must constantly engage in competitive experience analyses, and integrate those lessons into our designs.

The goal is to improve our overall efficiency.

IXF will necessarily introduce new behaviors and practices. However, the net overhead of those new practices should be a gain in efficiency. As with any new approach there is likely to be a net slow down at the beginning as people build new habits. However, IXF will provide a clear, deep, and shared understanding of our users which improves the speed, and quality, of day-to-day design and requirement decisions.

Build upon existing practices where ever possible.

Much of the IXF infrastructure already exists in many companies today. Most of the new work needed to realize IXF is about improving communication practices, sharing information across the company effectively, and re-thinking how a new product cycle is kicked-off. However, building an IXF culture is not a trivial task. Any objective that requires defining, and learning, new behaviors in an already pressure packed environment will require dedicated, and sometimes intense, additional effort.

Many companies are still early in the transition to subscription-based businesses. As difficult as aligning accounting practices, sales approaches, pricing, licensing and other business systems are, the most critical leg of the subscription transformation still lies ahead of them. Namely, how well will they shift their focus from delivering features to delivering end-to-end experiences capable of engendering long-term loyalty and contract value.

The ability to make that transition will depend greatly upon how well a company can develop more effective methods for identifying meaningful patterns in experience data, and distributing those insights throughout the organization so they might fuel new insights and innovations. Doing so lays the most important foundation for building, and sustaining, leadership in a subscription-based marketplace.