A solid customer experience strategy is a surefire way to reduce being commoditized. Commoditization is certain to put pressure on a company’s profit, but it’s happening all over the place…
Think about it.
A few years ago, if you wanted to work with a marketing agency, you sorted through about a dozen choices – now there are thousands!
Buyers have too many choices.
Management advisor and author Joseph Pine says:
“Fundamentally, customers do not want choice; they just want exactly what they want.”
The issue is that many businesses don’t have a customer experience strategy, and fail to understand what it is that their clients want. As a result, they often believe lowering their prices will equal more sales.
Yet, a strong customer experience strategy illustrates:
Clients don’t just want products or services – they want the EXPERIENCE of buying and using a product or service.
And if you’re able to provide a “WOW!” customer experience that your clients can’t find elsewhere, you’ll never have to compete on price. In fact, you’ll be able to charge more than your competitors and still have your share of loyal customers.
Customer Experience Strategy Case Study:
The Real Estate Company That Built Experiences
I started a real estate development company at the age of 24. I bought land, paved roads, built homes, and did all of the things that a typical property developer does.
From the start, I believed that I had to work hard and do the right things. “The secret to success is hard work” – is still what many children are taught to believe.
I worked so hard that the stress took a toll. I woke up at 3am every morning so I wouldn’t “oversleep” and worked every waking hour, weekends and holidays included.
Despite all of that, I was in over $1 million in debt.
The stress was quickly becoming too much to handle. It got to a point where I developed severe shooting pains, starting in my spine and up to the back of my head. At the ER, the doctor broke it to me as plainly as he could: the stress was killing me. Literally.
And from that moment on, things changed..
My girlfriend/co-founder (now wife) promised to deliver the most enjoyable home buying experience in the industry. Her goal was to remove all of the stress of building a home in favor of an enjoyable experience.
This was only the beginning.
We understood that homebuyers were going to need furniture, TVs, and a bunch of other stuff when they bought a home. And so, we made it easier for them. We contacted the big-name vendors and pitched a triple win…
We connected vendors to homebuyers, making it easy for both. The homebuyers were able to find what they needed at a discount, and the vendors had a stream of hungry new customers. In return, the vendors gave my company a cut of the sales.
The new venture brought thousands of dollars a month of extra income, but this was nothing compared to the effects on the real estate company.
With the focus on a “WOW!” customer experience strategy, we were able to raise prices during a time when competitors considered lowering theirs – and sold homes so quickly, we had a six-month waiting list before construction could even begin.
I’m not saying all of this to toot my own horn… That’s the power of providing amazing experiences. You can charge a premium and have new clients lining up to buy from you.
How about other examples?
Customer Experience Strategy Case Study:
The Major Brands That Go for Experience Over Commodity
People who frequent Starbucks know that they’re paying for more than a cup of coffee…
But is it really because of the quality of the coffee?
In one blind taste test, Starbucks ranked last behind Folgers. So, why would anyone pay a lot more for a coffee that doesn’t taste as good as what you can get… At Walmart?
Because Starbucks sells the customer experience.
You may not be able to afford a mansion or a sports car, but you can afford half an hour of feeling good with a cup of coffee.
Starbucks is only one of the many brands that charge premium prices because they can, all based on the experiences they create.
How about Harley-Davidson as another example? On the 100th anniversary of the company, I bought the Heritage Softail… I paid thousands of dollars more for a motorcycle that does the same thing as its cheaper equivalents.
Because I wasn’t just buying a motorcycle. With a Harley, I was buying into a story, a culture, and a dream.
And this is far from the only thing that I willingly overspend on. I choose to worked out at CrossFit when a Planet Fitness membership costs about 10% of what I happily pay.
Me and many other gym goers are happy to pay more for the CrossFit atmosphere and community.
…And then there’s the 600-pound giant: Apple.
Does the iPhone, MacBook Pro, or iPad do something that no other devices can do?
Not exactly… There are phones and laptops that offer much better specs, after all. Yet, it’s Apple that continues to dominate the tech industry. And only few retailers can come close to Apple’s profit margin… Or profit per area for that matter.
In fact, Apple’s retail stores sell $6,000 worth of products per square foot!
They have the most lucrative retail stores in the world. In second place is Tiffany, which makes half of that per square foot in its retail stores… And Tiffany sells diamonds!
These examples prove a fundamental truth:
Selling an experience allows you to set prices that can massively improve your bottom line. And all the while, you’ll rack up new customers who are happy to spring for it. Plus, these are loyal customers who aren’t going to give the competition a second look.
There’s a reason that we went through all of these examples…
Customer Experience Strategy Rule #1:
Understand What Your Customers Want and Give It To Them
We’ve heard ad nauseam that customer satisfaction is key to loyalty… But according to a study by the Case Western Weatherhead School of Management, that’s not true.
The study found that satisfaction has very little to do with loyalty. More surprisingly, trust wasn’t a deciding factor either, at least not on its own…
So, what are people looking for?
Your customers want two things.
First, they want value. But it’s not the monetary kind. Instead, clients want value that impacts their life. Therefore, your products or services must offer such value if you’re going to charge a premium.
Second, you need to look at how your customer experience subtracts or adds to that value…
Your ability to charge a premium depends on your ability to offer an experience that raises your offer’s value beyond the monetary. That’s how your company can avoid becoming a commodity.
Above all, you need to be able to create a market of your own. You want to stay above the fray of your commoditized competitors and let them duke it with lower prices.
And you can only accomplish this if you focus on the experience.
Stay Clear of Commoditization
Let’s face it… It’s tough to set your company apart based on the features and benefits of your products/services alone.
As soon as your competitors notice your company’s success, they copy what you do in the hopes of getting a piece of the action. More creative rivals might even try to improve on your offer.
But if it’s an experience you’re offering, that’s far more difficult to copy.
There’s uniqueness in what you offer, then there’s another level of exclusivity in the experience you deliver for your clients… And that’s what truly what separates you from everyone else in your industry.
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