Mike Hohnen

Coaching for personal growth, change and development

customer experience

The Big Shift – Products to Services

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This is the second post in a series on the new service economy. You will find the first post here.

Before we start dissecting what it actually means to create fantastic experiences and great services, I think it’s useful to take a step back and try to understand the big picture on how the world that we are operating in, as service providers, is changing quite dramatically.

There is a big shift taking place world-wide, and it is a shift that moves away from a focus on producing stuff to delivering services. It is also described as the move from a goods-dominate logic towards a service-dominate logic.

What that basically means is that for thousands of years, we have been used to creating value by taking something, adding to it, and then exchanging it with somebody else in return for their money. The focus has been on the functionality, the specifications, and the quality of the actual product. The better the specifications, the more money we have been able to obtain for that product.

Service Excellence (1).005
What is happening now is a gradual shift away from a focus on products towards a focus on needs.

Recently I realized I needed go buy a new power drill in order to put a cupboard up on the wall. My old drill doesn’t work very well anymore because it has been lying at the bottom of my cupboard for the past ten years without being used. So, I decide to go get a better drill. But, do I really have a need for a drill? My next drill is probably also going to lie in the cupboard for a few years before I use it again. What I really need is two holes in a very hard wall. If somebody could provide those holes for me in a faster, easier way that would require less effort, less resources, or less trouble for me, I would grab that opportunity immediately.

If you are in the service industry, you may not have paid attention to this because, in the service industry, one has been, in a certain respect, in the service-dominate logic forever. But what is happening is that a lot of traditional manufacturers and producers are also moving away from their traditional goods-dominate logic, and instead they are thinking about how they can make that shift from product specifications to needs fulfillment.

In a service-dominate logic, the value is not created by a transfer of ownership, value is created in use. When I use your product or service, it brings value to me; and the minute I am not using it, it no longer provides value for me.

A great example of this is Mercedes-Benz, their smart car, and the service they have now created in more than 30 cities called “Car2Go”. You can grab the car off of the street with just your membership card and drive from A to B and then leave the car. Most of us living in big cities don’t need to own a car – in fact, it is a downright nuisance. What we do need is flexible transportation at our fingertips. There are lots of other examples of this new trend if you start looking around.

Why do I think this is important?

Because, what this means for the traditional part of the service industry is that more and more consumers are going to experience higher and higher levels of service. Great service is going to be the new normal.

And, that is going to raise the bar…the level of service expected across the board…is my prediction.

In my next blog post, we will examine the concept of value.

In a Sea of Sameness, We need to Manage the Experience

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We have been talking about the experience economy for years, but what does it mean to create an experience?

And, have you ever wondered who is responsible for the total experience in your company?

Most companies I work with have subdivided the responsibility for the experience into various sections – the kitchen is responsible for the food experience, the restaurant  for the table service, the reception desk for the welcome.

When doing it that way, we hope that if each of them do it well, then the total experience is going to be the best possible experience.

But if we were to apply that principle to manufacturing, we would be calling it sub-optimization. Ensuring that the parts are fantastic doesn’t guarantee that the total becomes fantastic. Purchasing the 11 best soccer players in the world does not guarantee a championship.

If you take your family to a theme park for the day – does it end up being a fantastic day because of one or two rides, or is it the integration of all the different experiences that blend into what you all feel was an exceptional day?

So, how do we ensure that the overall experience is fantastic?

I became curious about all this because I came across an article that stated that 69%of major UK companies have a customer experience manager.

The financial sector and the telecom sectors seem to lead the way. In retail, we don’t see many; and I struggled to find any in the hospitality sector at all.

Interesting.

Why have people in finance and telecoms seen the need before everyone else to appoint someone senior to take responsibility for the total experience of our customers?

I think this has to do with the fact that in the financial sector and the telecoms sector, they have a huge challenge in differentiating their product.

Once you have obtained your overdraft facility or your loan or whatever it is you want from a financial company, the difference in the actual product is not clear. A loan is a loan. The same applies to the telecom sector. If I send you an SMS, it’s difficult to know if it has been sent through Telia or Orange or whoever it is. The quality of the SMS doesn’t vary from one telecom provider to the other – although the content may vary… but that is another story.

What does vary from company to company is the actual experience you have when applying for your loan or creating your mobile phone account. Paying your bill etc.

This is something that Virgin understood years ago.

They took boring industries and tried to see if they could improve the experience. Not a cheaper experience but a more interesting or fun experience. They did it to the airline industry, they did it to trains, they’ve done it in the banking sector, telecoms, and fitness centers.

So why is the retail sector or the hospitality sector not concerned about the total customer experience – they stand out as the two sectors who don’t seem to employ customer experience managers?

They don’t see the need because when you have a shop or a hotel and you stand inside your own business and look out into the world, you are convinced that what you have is very different from any of the other products out there. Furthermore, you are convinced that, of course, the customers can tell the difference between your beautiful shop and all the other mediocre shops that are out there. It is obvious. But if you switch perspective and look at the marketplace through the eyes of the customers, what they see is a sea of sameness.

From the customer’s point of view, in each category they are all similar products that do the same things at the same prices, etc.

Which is why we have now come to a point where customer service is probably the last frontier of a sustainable competitive advantage. Products are very similar; process – the way we do things – is the differentiator.

So, if you want to out-perform your competition, you need to focus on your processes. How do all the things we do blend into that great total and unforgettable experience?

In the following blog posts, we will take a closer look at what that means.

Customer Centric : they get it – Virgin Hotels

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In my previous post, I tried to illustrate how some hotels (and other service businesses) truly understand what it means to be customer centric and then all the others who really just don’t get it.

Two days after posting that I came across the following video from Virgin – who is now entering the hotel industry.

This is interesting because Virgin has always had a strategy of moving into industries where most of the players just don’t get it… Airlines, trains, banks, phone providers, and now hotels. What it means is that Virgin sees an opportunity to do it much better…there is room for improvement… Check out their website

Virgin Hotels – ‘Brilliant’ Not To Scale New York. from Not To Scale on Vimeo.

We make love and steal hearts. We’re passionate about creating brilliant experiences that make peoples’ lives better. And there’s nothing more honorable than that.

Customer centric – do you get it?

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Walt on legs

In my view there are basically 3 kinds of hotels.

Hotels that just don’t get it. The law of supply and demand eventually takes care of them.

Then there are hotels, who get it, or should I say they think they get it. They are the hotels who continually ask themselves: how could we get more money out of each guest by providing more options, loops and hops they must jump through?

– so they have complex internet packages, like lousy internet for free, decent internet at a price – cheaper if you take the full 5 day pass etc.
– or when you walk into the room the television screen is blaring at you suggesting all the films that are on offer – at a price – and it takes you 10 minutes to workout how to turn the dam thing off or find the news.

Then there is the third category .

These are the hotels that ask themselves: What is it like to be on the road, away from home? What does one need, what is annoying, troublesome, irritating? How can we create a service that would make life better, easier, smoother or more fun for our guests and what would we need to charge to make that possible.

From a guest point of view this kind of hotel has a very different feel from the former. The final guest experience is totally different because that basic intent ‘to serve’ comes out in everything they do.

And when you experience that it is such a pleasure because you feel like a welcome guest and not like a ‘wallet on legs’.