All businesses rely on a combination of three drivers of value creation, the ‘3Es’ of efficiency, effectiveness, and experience.
Efficiency has been and remains a dominant driver of profitability since the industrial revolution, Taylorism, invention of the assembly line, and iconic For Model-T. Just utter 6-sigma, kaizen, reengineering or the increasingly popular zero-based budgeting in the boardroom and smiles will appear on the faces of even the most hardened executives. The very executives that pour over financial data rich with watershed cost models, and where 70% of CEOs count cost-cutting as their top priority for yet another year running. Even if you don’t compete on price, you need to offer competitive prices in a world where price fighters are growing ever-more prevalent. Yet precisely for that reason, price generally does not actually differentiate you from your nearest competitor. It is a qualifier for being considered but not a decider when it comes to choice.
The second ‘E’ is effectiveness. Building a better mousetrap is the origin of many business ventures. But as industries mature, effectiveness gains quickly hit diminishing returns. And in a global world, competitors will quickly follow suit when a quality advance has market appeal. Dorco recently announced the world’s first 6-bladed shaver, challenging Gillette Fusion’s 5-bladed supremacy. Surely Gillette already has a 7-bladed response in the making..
So, what does the customer love enough to buy and to buy again? It is not what companies put into their products and services, it is what the customer takes out. And the word customer is a problem here, as it focuses the business on the transaction.The 3rd ‘E’ – Experience – applies to what the consumer does with your product. If you buy an iPhone and then stick into your drawer, no value been created for the cost incurred. But people love their iPhones because of what they can do with them, how they enrich their lives. And the more they enjoy using them, the more likely they are to remain loyal to the brand. Apple knows this, so they measure quality not in bits and megabytes but in the delight on their consumers’ faces. When you visit their stores and their website, it is all about helping you use their products more. They developed iTunes to help consumers gain more value out of their iPods in discovering, buying, managing and listening to more music.
In the past, Big Data was all around the sales funnel. Understanding consumer search and accumulating transactional data on how customers bought what and when. It was all about what business wants from the customer. New Data is increasingly around what people are actually doing with your product. Whether it is Nike’s fitness bands that track how fast and far you run; or the business-to-business connectivity that has transformed how Volvo Trucks serve their customers.
Professor Nader Tavassoli of London Business School says: “My guess is that most business effort and investment focusses on efficiency and effectiveness. Look at your budgets, or major internal projects. See how you measure the quality of your products and services. Are these measures more around what you put in…or what consumers take out?”
Consumer experience is a dynamic journey that crosses your website, point of sale, sales process, installation, usage, service and billing. To build the right experience your staff need to exhibit on-brand behaviour at every stage of that journey.
Chris Harrison leads The Brand Inside