Re-imagine brand differentiation

Make customer experience a strategic priority to achieve meaningful differentiation

With rising commoditisation, competitors can easily copy most product innovations. The 'me toos', with hindsight in their favour, even better the original innovation in its subsequent avatar. Many marketing gurus today (including Byron Sharp, author, How Brands Grow) downplay the role of innovation saying its advantage "seldom lasts long". Chasing after product innovations to get market share is presumed to be not only a losing strategic battle for most marketers, but also waste of good effort behind unsustainable and short-lived advantage.

So, is this the death of differentiation - the value all marketers have looked upon as the holy grail to strive for, ever since marketing guru David Aaker shone the light?

As with most things these days, genetic coding of differentiation must change. Brands today have tremendous opportunities for growth through innovation and can establish meaningful differentiation through logistics, supply chain, customer service, portfolio architecture, communication, media. In a nutshell, differentiation must give way to "differentiated brand experience".

What factors prompt companies to make customer experience a strategic priority? And how does one tie customer experience investments to business outcomes for sustained support?

Improving customer experience needs to be more than a process improvement exercise. To create impact, customer experience must be integrated with how a business defines itself to compete in the marketplace. The brand must embed company's culture through its leadership, its employees and extended arm of partnerships.

We know that a satisfied customer is likely to come back. A frustrated one will badmouth the brand to ten others. A recent study found that 25 per cent of customers will defect to other options with just one bad encounter. Moreover, with product innovation taking a back-seat, growing commoditisation means substitutes for most benefits are abundant. What will drive preference? Joseph Pine, who coined the term 'experience economy,' says, "Any industry can sustain one or two players that tackle commoditisation by cutting costs and becoming highly efficient at scale…The rest need something more. Experiences are what come naturally after goods and services."

With rapid rise of social media resulting in an unprecedented surge in digital interactions with customers, both positive and negative brand experiences spread like an epidemic to millions across geographies in minutes. In some industry segments, technology disruptions have resulted in accentuating the urgency to create innovative brand experiences, such as real estate brokerages and retail banking. Consequently, organisations are under pressure to create competitive customer experiences to drive brand differentiation.

Despite the obvious need to re-imagine brand differentiation, many companies fail to apply strategic rigour to their customer experience efforts. They often identify customer experience too narrowly as one of the processes in need for improvement. Such as better call centre experience and better service to distributors. As a result, investments that are often under close scrutiny for new initiatives, fail to move the needle.

To become meaningful, customer experiences need to deliver value. Frontrunners in this space like Apple, internationally, and Indigo Airlines, closer home, start by asking what experiences they could offer that customers would pay for. Then, spike that dimension where it becomes an inextricable part of their competitive rationale.

Most companies struggle to tie customer experience investments to business outcomes. However, some do use a number of measures as proxies. These can be simple short-term metrics that help guide efforts on the right path like customer churn rate, cross-sell/up-sell rate, brand mentions, campaign ROI, social media sentiment, customer lifetime value and traffic.

Once the business understands what basket of initiatives drives best results, longer term objectives can be defined and measured. More robust measures can be built with advanced analytics as the organisation evolves in its journey on customer experience delivery. Store visits, website behaviour, call centre data and CSS data can help discover what set of events led to best experiences; tie those experiences to actual sales and costs; compare performance on those events to competitors' and improve the brand experiences accordingly. The changes should drive increased sales - thereby clearly linking investments to business outcomes.

Vitika S Banerjee
Founder, Fourth Dimension Experience