Experiences are Last, True Competitive Advantage
By Mike Maughan, head of global insights, Qualtrics
It turns out that human beings aren't great at making decisions. We have many biases we're not even aware of. Duke behavioral economist, Dan Ariely, has written a lot about that -- how humans are predictably irrational. Lots of people buy products based on perceived quality, price or "top-brand" ranking. Those are all fair reasons to purchase something, but they aren't the primary differentiators that matter. The winners and losers of the future will be primarily differentiated by one thing: the experiences they provide.
Why is that? Consumers today have so many options and purchasing has never been easier or more convenient and while products can be imitated, experiences can't be duplicated.
Too Many Options
Today there are multiple versions of every product. Compare the grocery stores of today with those of 30 years ago. Walk down the baked goods aisle and you'll find 15 types of bread: white, whole wheat, gluten-free, multi-grain, low-fat, high-protein, etc. It was much easier to decide when only a few options existed.
Companies today can hire the brightest engineers and designers from around the world allowing most any product to be imitated or improved, and prices can vary widely for similar products. Add easy access to large-scale, low-cost manufacturing and almost every product has a knock-off within weeks of hitting the market. Just look at fidget spinners. They were everywhere, seemingly overnight, with little or no differentiation between them. Today, price, promotion, product, place (channel) are largely at parity.
But market leaders like Harley Davidson, JetBlue, and BMW have demonstrated that it is the experiences around their products, services and brands that provide the ultimate advantage. A customer originally comes to BMW to buy a car , but they keep returning because of the superior experience they have.
Brands today are rewarded, or ruined, primarily based on the experiences they provide. Market leaders know that experience is the key competitive advantage. And they are focused on optimizing the various experiences they provide across the organization, both internal and external, for maximum impact.
What Is the Product?
Let's take the airline industry as an example. In the past we would have said that the product being sold was access to the plane--quite simply, transportation from A to B. But today, it's the experience of getting from A to B that is the product and everything from booking the ticket, to the check-in process, to the in-flight experience, to the employees, the entire journey through to the baggage claim affects the traveler's overall experience of the airline.
A quick search of flights between Los Angeles and New York yields no less than 17 choices of airlines, all around similar price points. In order to capture brand loyalty, it is more important than ever to get all experiences just right for travelers, or airlines will risk losing out to one of the many competitors. Top experience airlines like JetBlue have been recognized, awarded and even studied for their use of experiences as a competitive advantage.
Understanding Customers' Desires
Airlines aren't the only example of an industry that is collecting, measuring and optimizing for preferred experiences to capture the advantage. Online shopping sites understand the benefits that come from curating great experiences for customers.
Amazon sells hundreds of thousands of products, and many of these products are the available on other websites. But the experience of buying on Amazon is often fundamentally different. It has personalized service, quick re-order dash buttons or Alexa & Dot-enabled ordering convenience complete with 2-day delivery and free returns. This is a far cry from ordering the same product from a no-frills wholesale website and waiting 2-3 weeks for it to arrive from overseas.
Customers today are demanding a comprehensive brand experience, not just the product. But most organizations are still measuring results and operating in a disjointed fashion.
Measuring Experiences the Right Way
You can't sustain an advantage without constantly having a pulse on why it's happening. Organizations have relied on operational data, or O-data, in the past to provide this information. But it's no longer a competitive advantage. O-data provides insight into past events. For example, how many units were sold, where, and by whom? To advance, today's organizations also need to collect and measure experience data, or X-data, which explains why things are happening.
But X-data must be collected and measured in the same way people have experiences, rather than in segmented steps. Think about eating at a restaurant. We have a single, unified experience. We don't break down the food, the service, the ambiance, the price, the location and measure each one separately when thinking about whether we had a good time or not. So why do organizations still measure the experiences their customers have in siloes?
The expanding responsibility of the Chief Experience Officer (CXO) is to provide a thorough understanding of all experiences to help influence sales, and they're recognizing the extreme limitations of segmented data which offers little to no competitive advantage.
Winning in an Experience World
Every company today is competing on experiences, whether or not they've realized it. Brands that can provide unique, authentic experiences across their organizations are winning market share and customer loyalty that has become otherwise impossible to capture based on product and price alone.
The organizations who best understand the increasing consumer desire for holistic experiences are those who are getting surprised the least and are accelerating past the competition.