There was a time when having consistently satisfied customers kept us ahead of the competition.  Those were the days when the differentiating power in the market was in products and services.  Now, as we become more and more accustomed to our EXPERIENCE economy, we begin to accept that the quality of our products and services rarely differentiate our brand.  Quality products and services are now common, expected, minimum business requirements – table stakes.  Brand differentiation and loyalty now come by way of our experience while consuming the product, service or brand.

I often ask in my seminars: “what does Barnes & Nobles sell?”  The reply is usually: “books”.
The truth is that I could do research for my next book at B&N for the next year, using their tables, sitting on their chairs, with clear access to all the books in the store, and never have to buy a book.  If B&N were really selling books, after a couple of days, they would ask me to buy something or leave.  But they don’t.  In fact, they are not selling books at all.  In stead, they are selling experiences and hoping that while we are consuming their experience (nice chairs while we read, a coffee shop, poetry readings, a children’s reading area, etc.) we will see a book we like and buy it.  Statistics show we do.

If we know our customers now value and are willing to pay more for experiences, but we continue to offer them marginally differentiated products, we should not act surprised when they ask us for a lower price.  Over 50% of the CEOs I speak with, actually believe customers DEMAND lower prices.  In most cases these CEOs are the source of unnecessary commoditization and failing businesses.   If we offer someone what they no longer value why would we expect them to pay a premium.  As long as we continue to try to differentiate our brands by the feature/price ratios,  we will always be “me too” brands.

Let’s get to know our customers and their values more intimately.  Then let’s create experiences for them that result in emotional bonds with our brand.  I know the temptation to simply lower the price is great since no one ever says no to a lower price,  but I also know if we are willing to think about our customers, talk to them, ask probing questions with humility and a sense of service, we can get to understand their values, those things that really matter to them; those things that will engage them emotionally and make them loyal.

Aligning our companies to our customers’ values is the only way we can gain sustainable differentiation in a commoditized market.
Alignments require the management of only a couple of key components: Customer Values, Corporate Purpose and Corporate Goals.  Align these three and magic will happen.

Customer loyalty is never an accident.

Rudy Vidal
Committed to XCL

• A well known product, already experienced by the entire market.
• It’s had many re-introductions in different forms, packages, and industry verticals.
• Fully commoditized.
• The market may be emotionally attached to the original version so the new version may be potentially undesirable.

We must agree that under such a scenario new value-add, demand and certainly loyalty would be difficult to achieve.

However, if we are willing to look beyond our paradigms, and if we know our customers well enough to offer them something they never knew they wanted,
then, maybe we have a chance to lead.

Take a look:

What is special about this video?
Knowing your customer is the key to adding unforeseen value.

Rudy Vidal
Committed to XCL

A couple of days ago, I answered a question on a linkedin group that I thought was interesting:

Should we Send Client Holiday Gifts?

Answer: Yes, but having the right motivation and choosing the right gift is key.

Here are some thoughts:

1. If you need to – don’t:
If we feel not sending a holiday gift would hurt our relationship with the customer, then it’s probably too late. The gift should not be seen as a way to improve the relationship, it will not. Ironically, holiday gifts are most effective when they are not needed.

2. The purpose:
the purpose of the gift is to remind the customer we are thankful for their patronage and are thinking of them at this special time.  But the power of the gift is in the opportunity to underscore what our customers should already know and feel about us; that we are aligned with their values; that we care for their success and for them as people. After all, they value us because we add value.

3. The right gift:
Choosing the right gift is not always easy; it should address the purpose above.  If the person in charge of maintaining the customer relationship has not thought carefully about what the gift should be then a card is probably best.

4. Personal gifts:
If we’ve developed a personal relationship with our customer then we shouldmake a personal gift in addition to the corporate gesture, where appropriate.

5. No self serving gifts:
Don’t send gifts that are boldly logo-ed, can be seen as advertising or mild reminders of our presence in the market.  Save those for the trade show. The customer should remember who sent the gift simply by knowing no-one else would have thought, would know or would care enough to send it.  Special offers, pricing are not gifts.  Send them at some other time.

6. Make it fun:
We rarely take the time to choose the right gift for a customer if the process is not fun.  Encourage relationship managers to think out of the box and to know that choosing the gift is important.  Small brainstorm groups for similar customer segments can save time.

7. The same gift?:
There is nothing wrong with sending the same gift to multiple or even all our clients, as long as it hits the mark.  In fact, if we can figure out that one gift that shows the essence of what we stand for as a brand, then sending them to every customer, maybe the best thing we could do.

8. A gift for every customer?
Depending on the business, a gift to every customer may or may not be a reasonable undertaking.  We should also consider than all customers are not created equal.  Some are more strategic and may warrant special attention, while others may suffice with a more generic or less costly approach.  I remember sending Christmas cards to 800 customers, where every employee wrote the card’s greeting for two customers and then asked five other colleagues to add their signature and role they played in providing great service.

Regardless of what we choose to do, our token should be true to our purpose and the essence as our company.  The customer should remember the gift fondly and after the second year of receiving such a gift, should suspect a potential theme or trend in our effort or choice.

The best business gift I ever received was a research project reviewing the best project management programs along with an independent assessment of which would be best for my company.  Beautiful ! – How did you know ?

Happy Holidays !

Committed to XCL
Rudy Vidal

We prefer to find good examples of customer centricity to make our point.
However, sometimes examples of poor alignment with customer values can serve as helpful warning beacons.

First, I must say that I love BlackBerry products, they are reliable and do the job.

Today I was delighted to see BlackBerry had corrected their lack of a Desktop Manager for Mac, which has caused me countless hours of grief in trying to sync my PDA and Entourage on my Mac. I was excited, so I followed the link and downloaded the software.

Here is my experience:

1.  The download did not include a pdf of the instructions. I went to the website to find the instructions and also found release notes – Cool.
2.  Oops, the release notes say that when synchronizing with Entourage there are several unresolved issues with data integrity, the same ones that were giving me grief with the third party software.
3.  I decided to call the contact center to ask if the release notes were still current and/or to get advice on whether I should make the switch.  No phone number listed for customer support.  They have self help and forums, I spent 15 minutes looking for an answer then gave up.
4.  Decided to send an email to the support desk with my question – I received a reply saying the email was not delivered, we have self-help options or payed-for-support.

• Why would a device come without necessary software to synch to well known computers?
• Why would they deliver software without operating instructions?
• Why would they deliver software that does not work, and not let you know before you download?
• Why would they lead customers to believe there is a support email address when there is not?
• Why would they consider reliable customer support for business people something beyond their responsibility?

The answer could be simple, and it can happen to any company in the blink of an eye:
Sometimes we may not consider the effects of our business decisions on the customer experience.
Perhaps even less if our products are leading the market.

Well, it’s not about the product, its about the customer and the company’s alignment to their values.

My 7 years of BlackBerry usage mean nothing if I don’t feel the company is ready to support me when I need them.

The point here is that great companies can quickly loose their footing simply by forgetting that we are no longer in a product economy.
Products are great, but no longer brand differentiators.  The differentiator is now the customer experience due to the company’s integrity of purpose.

My partner Donna Root, said it perfectly yesterday :  ” A company’s alignment to their purpose is critical because in an experience economy customers care about “HOW” companies win.”

Your customers have evolved.  Their criteria for loyalty has shifted to a more holistic view.  They care about what company’s stand for and about their authenticity in that purpose.

What does your company stand for?

Rudy Vidal
Committed to XCL

Friends,

Some of you may remember this posting from over a year ago.

As the need to differentiate becomes more and more critical, I thought I would have Johnny remind us
how its done.

This is a perfect example of the importance of the experience and the value of differentiation.

Enjoy.

Click for Johnny’s Video

Thank you.

2. Management Ownership

It’s interesting to note that the three cultural components in fig.1 are all under control of management.  In spite of this, the culture is often seen as an independent force, only to be addressed as a last resort.  It is not uncommon for managers to refer to the culture as “they,” perceiving it as the independent sum of employee attitude.  Experience shows, more often than not, that management does not take full responsibility for the culture, but at times may perceive it a cause of an inability to improve performance.

Another aspect of ownership that cannot be overemphasized is the need for management to lead by example.  Management, from supervisors to the president, need to show they understand and live the “WHY.”  Most of us assimilate examples and parables easier than literal explanations, emails or speeches.  When the workforce sees management in action, they can instantly translate what they saw into potential actions in their area of influence.  Walking the talk makes all the difference.

A successful shift is unlikely, without management ownership
of the current and future cultures.

3. Ensuring the Need for A Culture Shift

Many planned culture shifts are not necessary.  In many cases the culture is well aligned to the purpose and able to deliver, but may need incremental adjustments in one or more of its components.  It should be noted that changes in the components might not result in noticeable cultural shifts until certain thresholds are crossed.  Therefore, within these limits we are able to make adjustments for improved performance without needing to address a shift in culture.  The less invasive option is usually recommended.

It is important to assess the quality of the culture, based on its alignment to the purpose, and not based on organizational performance.

Cultures are less often a cause and more often an affect.

Next Post:

4. Clarifying the “Purpose”
5. Identifying Needed Cultural Qualities
6. Employee Engagement

Rudy Vidal
Committed to XCL

Copyright 2009 Vidal Consulting Group LLC

At times I find it difficult to illustrate to clients the idea of emotional customer experiences that transcend the product or service.  They often feel obliged to openly explain the product features or benefits in order to present a clear value proposition.

Although features have their place, in a commoditized market they are no longer effective differentiators of brand.  At best, and only marginally, features differentiate products.  In fact, continuing this practice can put entire industries in insatiable races to give customers more for less.

As we know, for the time being the differentiating power is now in the experience.  So, I have decided to start compiling examples of what I think are well executed experienced based campaigns so I can show the point in action (A video is worth a thousand words).

I thought it would be interesting to post one of my favorites, take a look: IQ font

In this example, Toyota uses the concept of typesetting fonts to demonstrate a feature, without mentioning it.  In doing so, it creates an experience outside of our expectations that reveals things about Toyota that for me, makes it more  human, organic and real.  The emotional requirement is achieved (we would never expect a car company to relate itself to typesetting fonts), yet the effort is still in context with the brand.  But wait, there is more.  The font is downloadable and available for us to use, thereby continuing the experience and incorporating the brand into our daily lives.

In today’s market, a company that is simply surving is no longer intersting.

Would love to hear your comments.

Rudy Vidal
Creating Profitable Loyalty

I was listening to a talk by Iqbal Quadir an inspiring entrepreneur who is changing the world through human empowerment. He said two phrases that made an impact.

“Connectivity is Productivity” and “Specialization is Productivity”.

Both of these make sense, but bringing them together is powerful.

Although I’m not a math major, I could not resist doing the logic.

If Connectivity = Productivity
and
If Specialization = Productivity

Then it follows that:
Connectivity = Specialization

As I thought about it, it didn’t take long for some of the challenges and opportunities in our markets to start making more sense.
One of these changes is the shifting marketing paradigm that is largely ignored.

For the last couple of hundred years, business has relied on raw POWER as the deciding factor of success. Although brilliant ideas and management are still necessary, the power to reach more people, to build more products, to move them faster, is the engine for success. We only need observe mass mailing, television, or the number of SKUs in Nike’s shoe lineup, to see that it’s about POWER more so than efficiency.

In the end, we are forced to homogenize our segments, compromise the essential value in our products and dilute our brands in order to widen our mass appeal. In essence, we destroy, destroy and destroy in order to deal with the inefficiency of the paradigm.

But maybe the equation: Connectivity = Specialization, presents new possibilities.

The drastic increase in Connectivity accelerates the normal rate at which we create “specialized” communities of like-minded people. These communities form faster and become larger and more powerful than would normally be possible. In essence, they become large networks of beacons searching for more resonant experiences, people, products and brands.
Suddenly, we find we may not need to look for them, they may be inadvertently looking for us.

The problem is that in order to be noticed we need to resonate, we need to have a point of view, a stand or clarity of purpose, what Simon Sinek might call a clarity of WHY?

This new paradigm has potentially meaningful characteristics:

1. It is personally meaningful
2. It is deliberate (not passive, like mass media)
3. It provides an opportunity for deeper connections.
4. But, it requires TRUST.

The old paradigm of PUSHING our value to the masses is giving way to the need for CLARITY and TRUTH that allows smaller more aligned groups to hear us. A clarity and truth about who we are, and what we stand for as companies. ?This clarity of purpose, turns the brand into a resonator that draws all that are tuned.

Only one problem . . .

Companies today are not good at CLARITY or TRUTH.

We find it difficult to be clear on what we stand for. (read your mission statement lately?).
And we find it difficult to be truthful because we want to maximize potential customers as we aim at the masses.

Are we sure of our WHY? Can we be true to it? Can we resonate?

I vote for investing some resources here, so we can stop sending junk mail.

Rudy Vidal
Committed to Profitable Loyalty – XCS

During a seminar last week, someone asked the following question:

“More industries than ever are experiencing runaway price and margin erosion. Why is that? More importantly, what can we do about it?”

I believe value is being lost as a result of our lack of understanding of shifting paradigms.

Economies naturally progress through value shifts. For example,

from Raw Material Economies (pre-industrial)
to
Product Economies (Industrial)
to
Service Economies (post industrial)
to
Experience Economies. (information)

Although we can still find economies at all four levels throughout the world, most of the higher systems are now Experience Economies. In experience economies, by and large, consumers place lesser value on Raw Materials, Products, or Services. Instead, they place more value and are willing to pay more for the Experience. Products and Services, although required and expected, are no longer the prime field of differentiation. Their expected high quality is simply a minimum business requirement.

Sadly, within our experience economy there are companies and entire verticals that may not have yet noticed the shifted paradigm and still offer products and/or services as their key value proposition. A perfect example is the consumer electronics sector, which continues to assert product features as their key value. Features, however, are easily copied, creating short-lived differentiation. In the absence of other differentiating value, they turn to price. And so, the cycle begins: Lower prices causes reduced margins which causes diminishing profits which creates pressure to reduce costs which causes layoffs which brings reduced purchasing power which prompts the need for lower prices. You get the idea.

A surprisingly large portion of top management I meet believe customers demand and cause lower prices, without considering the possibility we may simply be misaligned with customer values, which ultimately forces us to turn to price. After all, although lowering price is not usually the best course of action, we cannot deny it is an easy and generally effective way of getting attention; if only for a brief moment.

Maybe we should learn from others:

• American auto manufacturer’s have refused to see the new paradigm. They are still selling cars as if it were 1950.
• Nordstrom, on the other hand, sells the same exact merchandise as other department stores, but charges a premium based on the experience.

(I’ll leave more, and perhaps better examples to you – please share through a comment.)

Perhaps it’s time we listen to the voice of the customer and align ourselves accordingly.
If we don’t, our only recourse will be lower prices, outsourcing and ultimately layoffs.

Rudy Vidal
Committed to XCS

I was adjusting the FAQ portion of the blog and I came across one of the simple reasons we are doing this work. I thought I would post it, since it usually brings about considerable thought and good discussion.

The question is: Why is it that most business leadership is usually inconsistent and less than impressive in its commitment to customer satisfaction programs?

I won’t beat around the bush to give you my opinion and hope you will give us yours.

I believe reason for the inconsistency in customer centricity comes from the fact that most business leadership find customer centric programs to be short term expenses for unquantifiable, long-term results.

If we are able to show them that the short-term expense provides quantifiable short term results, I believe they will commit to changing their business and in turn changing the world.

The XCS methodology does just that.