Who’s Minding Your Experience Gap?

Long before Netflix snuffed out media’s traditional business model, it killed one of retail’s.

If like me, you were a teenager in the 1980s, then you probably remember the ubiquitous retailer of the time: Blockbuster Video.

Do you remember the rush to Blockbuster on a Friday evening? If you didn’t have a date, you’d run to Blockbuster and drop last week’s rental in the bin, generating $4 in late fees and a $2 rewind fee, hoping to get there in time to rent the latest Bruce Willis action movie or Meg Ryan romantic comedy, only to reach the wall of new releases and find…a bunch of empty boxes.

Disappointment, quick and crushing, arrived as you rented The Goonies for the 74th time — not me, just an example.

Then along came Netflix.

Long before Orange was the New Black, back when you couldn’t stream quality content directly into your phone or tablet because it was still attached to the wall in the kitchen, Netflix was already disrupting traditional markets by letting you tell them what movie you wanted to watch and sending it to you. You could keep it as long as you wanted – no late fees or rewind charges – and when you sent it back, they just sent you the next movie on your list. Simple. Brilliant.

Netflix looked at the end-to-end customer journey, saw a gap, and stepped right into it. Even before the rest of the world began moving to digital, they bravely cannibalized their own business model before someone else did.

Today’s experience economy demands the same type of thinking. Every industry must seek to understand the consumer experience and the employee experience that is often tied to it, and drive changes to their business model, operations, and processes to either prevent or preempt disruption.

Consider:

  • Eighty percent of CEOs believe they are creating a compelling customer experience
  • Only eight percent of their customers agree
  • Two-thirds of the workforce is not as engaged by their work as they would like
  • Four out of five consumers have switched brands because of a poor experience
  • Twenty-five percent of customers defect after just one bad experience

It’s not that companies don’t care about the experiences they create or lack a desire to improve them. The challenge facing companies looking to understand their experience gaps is three-fold.

A Mechanism to Separate Signal from Noise

Companies need to understand whose feedback matters the most to the outcomes they are seeking to create. Which customer segments? Which employee populations? One of the main reasons cited in the bankruptcy of Kmart was its failure to see the details in its data. The company measured customer satisfaction but in the aggregate, everything looked fine. What it didn’t see was that the customers who were the most satisfied spent the least and the customers who would have spent the most were dissatisfied. Kmart couldn’t separate the signal from the noise.

Ability to See the “View from the Balcony”

Seeing the view from the balcony is a concept common to negotiation strategy, where emotion can distract you from seeing the big picture. Experiences are made up of touch points, each of which may be perfectly fine, but the overall customer journey – from the customer’s perspective – is not. McKinsey has done superb research showing that individual episodes can each drive high levels of satisfaction while the end-to-end journey is disappointing. Companies must understand what the customer perceives as the end-to-end experience and measure that – not just individual touch points that comprise it.

Drive Operational Change Directly from Feedback

If you can understand whose feedback matters and what the feedback is telling you, then as a result you need a mechanism to drive operational change – new business models, different capabilities, simpler processes. Thanks to the prevalence of enterprise systems, companies are awash in operational data like inventory turns, employee attrition, and churn.

Linking that to the experience data that actually impacts customer journeys – net promoter score, customer satisfaction, sentiment analysis – provides the ability to drive meaningful change. Context matters. Companies need to understand three things: what happens, why it happens, and how to either make it stop happening or make it happen more frequently.

Companies that master the ability to understand the what and the why in the context of the how are uniquely positioned to turn lagging indicators into leading indicators. They gain the precious advantage of time, able to prevent negative outcomes from showing up on the balance sheet, and ensuring positive ones do.

This begs the question: Do you want your results to be huge? Or do you want them to be Blockbuster?


Eric Stine is chief innovation officer of North America for SAP.
This story originally appeared on SAP BrandVoice on Forbes.

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