Earlier this year, I published a report called “Experience-Based Differentiation” (only Forrester Research clients can read the full report). As of this point in time, it’s Forrester’s most-read report this year.  I’ll get into some of the details about the report a little later in this post, but I’d like to talk about the report’s popularity a bit. Why have so many people wanted to read this report?

I don’t have hard data on why everyone’s reading my research, but I’ll throw out a hypothesis: Many execs believe that: 1) customer experience is critical to their future success (I do have data on this in my research) and 2) they currently deliver subpar experiences to their customers. This alone provides enough motivation for reading the report. But I think there’s something else at play as well.

Customer experience is, well, that’s the thing… what exactly is customer experience? Many people know that it’s important, but most people don’t really know what it is. That creates a black hole of insight — which generates a lot of demand for this type of research. My goal is to help shrink this black hole.

Now, on to some information about Experience-Based Differentiation (EBD) which we define as:

A systematic approach to interacting with customers that consistently builds loyalty.

Don’t focus too much on the definition. Instead, take a closer look at the three principles of EBD:

1. Obsess about customer needs, not product features. Rather than racing to bring new product features to market, companies need to refocus on the needs of their customers — who might even want fewer features. While most firms have invested in customer analytics, even the largest data warehouse and most sophisticated software can’t model the nuances of human likes and needs. That’s why firms should augment data crunching with some old-fashioned techniques like talking to customers and observing their experience. This insight needs to be widely communicated across the organization.
2. Reinforce brands with every interaction, not just communications. Traditional brand messaging is losing its power to influence consumers — that’s why branding efforts need to expand beyond marketing communications to help define how customers should be treated. To master EBD, firms must articulate their brand attributes to both customers and employees, clearly describing how the firm wants to be viewed. That’s just the first step because companies must go on to translate brand attributes into requirements for how they’ll interact with customers.
3. Treat customer experience as a competence, not a function. Delivering great customer experiences isn’t something that a small group of people can do on their own — everyone in the company needs to be fully engaged in the effort. It all starts at the top; the CEO and his executive team need to be fully engaged in the effort. To keep a companywide focus on customers, companies need a systematic and continuous approach for incorporating customer insights into all of their efforts. That’s why we recommend building a voice-of-the-customer program. (Note from Bruce: voice-of-the-customer is another hazy concept out there — that’s why we defined a five-level model for voice-of-the-customer; we’ll definitely touch on that topic in later posts.)

EBD is a core focus of my research, so you’ll definitely find these concepts making their way into future blog posts. But for now, I encourage everyone to add thoughts or examples of how companies can head towards Experience-Based Differentiation.

This blog post was originally published by Temkin Group prior to its acquisition by Qualtrics in October 2018.