Research conducted by Peer Insight, LLC show that businesses who focus on designing systems to create and maintain a compelling customer experience also deliver better profits than businesses who focus on operational excellence.
Looking at the chart above:
Customer experience (cX) leaders are companies that deliver value through the experiences they create around their products and services (e.g. Starbucks)
Operational Excellence (Op-X) leaders excel at the efficient and productive delivery of their product or service (e.g. Wal-Mart)
When you compare the financial growth of cX leaders with the S&P 500, the results are show that a hypothetical $1K investment in a customer experience portfolio would outperform the S&P 500 by a 10 to 1 margin from 2000 through 2005.
Peer Insight studied 104 distinct service innovation projects. They found that the use of Customer Experience Design was a key differentiator between success and mediocrity.
Their study entitled “Seizing the White Space: Innovative Service Concepts in the US,” presents 12 case studies of companies who have successfully developed new service concepts and service businesses (one features NineSigma an open business model service we featured in an earlier post).
Using the “ten types of innovation model” developed by the Doblin Group (see below), Peer Insight contrasted each of these companies approach to innovating their customer experience.
The most successful companies included these approaches to designing compelling customer experiences (bold highlights provide links to previous posts on this subject):
- Start with unmet user needs, not new ideas
- Research methods that are based on deep customer empathy (e.g., ethnography)
- Focus is on the customer journey – not merely your own touch points
- Emphasis on identifying and winning the moments of truth
- Rapid, low-fidelity service prototyping
- Open innovation – including the customer in the earliest stages
- Open innovation – bringing together a unique value network
- Creating evidence of the brand attributes within the touch points
- Use of storytelling to convey the experience intent
- Overcoming metrics that run counter to creating compelling experiences
- Creating a broad view of experiences – going beyond marketing and into operations and IT