What is Experience Strategy
Chapter Summary
Experience Strategy is about creating greater value for the customer and company by thinking strategically about three things: what makes the business model compelling? What describes the customer’s need? And how is value maintained and grown over time?
Experience Strategy is not marketing strategy, nor is it brand strategy, however, companies often confuse it for both.
Experience Strategy lays a foundation that brand strategy can build on. A great strategy has at least three elements:
A powerful Point of View: a future-focused insight on the customer that can only be fulfilled by the company.
A holistic understanding of the Jobs to be Done, or needs based in common situations that customers are willing to hire the company to do.
Knowledge of and ability to help customer feel like their experiences are Time Well Spent.
The Aim of Experience Strategy is to make Marketing Superfluous
In 2002, when many companies started realizing the power of ‘experiences’ to create value, Joe Pine used Peter Drucker’s famous line to describe the aim of Experience Strategy. First, here’s Peter Drucker’s declaration:
But the aim of marketing is to make selling superfluous. The aim of marketing is to know and understand the customer so well that the product or service fits him and sells itself." (Management 1973)
At the time many of the ‘chief marketing officers’ were in fact salespeople who had been promoted. Drucker was frustrated with companies who thought they were doing marketing but had only retitled their sales function and he wanted to describe the distinction.
Joe Pine, co-author of the book that would introduce the world to experiences as a new economic offering, The Experience Economy, made the following declaration:
The aim of experiences is to make marketing superfluous!
And over the last 20 years I have regularly heard Joe voice deep frustration when companies apply the principles of marketing strategy to experience strategy. Let’s take a look at the differences between the two:
Experience strategy is not focused on customer loyalty, like marketing is; the focus is on creating amazing experiences. Loyalty becomes a byproduct of amazing experiences, not the aim of the experience. Unfortunately, due to the way most companies measure experiences today, the distinction between what marketing’s aim is and what experience management’s aim is has been lost.
The Big Three
Peter Drucker also said that the purpose of a business model is to create a customer. I agree. The purpose of experience strategy is create meaningful experiences for customers using the resources that are available to innovate, grow, and increase the value of the experiences for customers and the company.
Most companies today do not have an experience strategy. What they have instead is a set of commonly accepted practices that focus on service, design, and measurement. Most leaders in Customer Experience (CX) do not know how to create experience strategies. In fact, I believe, the majority of CX leaders would be more at home creating brand strategies than creating experience strategies. So let’s start there.
How does Brand Strategy compare to Experience Strategy? What is similar and what is different? There are lots of things to compare, but for this chapter, let’s focus on the big three for experience strategy: Point of View, Jobs to be Done, and Time Well Spent. We will compare them to three key attributes of brand strategy: Differentiation, Segmentation, and Engagement.
Below is a table that we will discuss in more detail. It serves to show the similarities and differences between key foundational concepts of both types of strategies.
Comparing Differentiation to Point of View
For many years I helped companies create brand strategies. I was always startled when we would conduct workshops on image, personality, benefits, and brand purpose to hear people say these words: “When I think about what we stand for, the three words that come to mind are ‘trustworthy,’ ‘innovative’, and ‘obsessed with the customer.’ Perhaps you’ve been in similar sessions. While brand strategy is meant to describe who you are, it is also meant to describe who you are in a way that is unique and compelling to the customer. Great brand strategists understand this and probe to go deeper into the heart of the customer and the soul of the company: where those two stories overlap is the place to build a brand strategy.
Differentiation is the key to marketing strategy and brand strategy. And for a company to build a successful brand, the whole enterprise needs to ‘live’ the unique and compelling attributes of the brand. The objective of differentiation is to create a value proposition that customers relate to and want to embrace, and to do it in a way that no other company can match.
The key assumption made by Brand Strategy is that a business builds value by being unique and compelling. Differentiation attracts new customers and keeps current customers. What compels customers is when they identify with a company in a way they cannot with any other company.
When answering the question, what makes a business model compelling, Experience Strategy starts from a different place. The customer wants new and compelling experiences that evolve and get better over time. It is the company’s responsibility to anticipate what the customer will want in the future and chart a course that marshals company resources toward that end. In order to chart the course, the company needs insights into the customer that will help them ‘see’ what the opportunity is and how to build solutions that will deliver on the insights that help them anticipate future needs.
The Experience Strategy’s Point of View is a description of how the company understands the future of customer needs. It is built around a future-focused insight on the customer that can only be fulfilled by the company because A) only the company knows about it or B) only the company knows how to execute against it. Or both.
The Point of View helps the company to make faster decisions about how to deploy resources, what channels and tools to build, and how to innovate. The Point of View looks far enough forward that the company has time to adapt and adjust. It is not a ‘responsive’ strategy element—like CX metrics are—rather it is a powerful element that calls upon the company to continually innovate toward a common vision of what the customer should experience. As the company grows, The Point of View, evolves. As customers become used to the new solutions generated, the company updates the Point of View. And of course, the Point of View, informs the value proposition of the company heavily.
Comparing Segmentation to Jobs to Be Done
Brand Strategy builds on the fundamental premise of marketing: the way to understand the customer need is to find a need arises among a group of like-minded individuals. These like-minded individuals are the ‘who’ the company should focus on. And since the 1960s, particularly because of Peter Drucker’s work, the ideas that you must know the ‘who’ in order to understand the need has driven company strategies. To know the who, companies often employ segmentation, a process of dividing the company’s target market into groups of potential customers based on attributes. Historically the easiest data to collect on customers was demographic data. Therefore, segmentation by demographics has been what people consider the main stay of needs analysis. For example, for decades Procter & Gamble’s approach to needs analysis had almost always started with who the customer is, and by ‘who’ they meant: gender, location, marital status, number of children, and attitudes toward life.
Experience Strategy starts again from a different place. The first question the experience strategist asks is “what is the need?” Understanding the ‘what’ comes before or in very close connection to the ‘who’ question. In fact there are three questions that make up the experience strategists description of the need:
What is the need?
What are the situations in which the need arises?
Are customers willing to hire the company to fulfill the need?
Each of these questions help the company to understand ‘the-Job-to-be-Done.’ We really want to understand that job or set of jobs to be done because only then can we determine whether or not we can turn it into a viable value proposition for the customer. Many companies who use Job to be Done (JTBD) analysis to identify opportunities never employ segmentation. The most famous example of this approach is Apple under Steve Jobs (appropriately named) who spent a tremendous amount of time watching people and thinking about what they were trying to do and then marshalling his very talented leaders to find ways to get the job done.
By starting with the ‘what’ instead of the ‘who’ innovators find that they can focus on the factors that matter to people. Rarely are those factors their gender, age, income, home location, or other demographic data. More often those factors include the amount of time they have to spend, their learning curve, the importance of the job to the moment, and the value that they get from a solution to the challenge.
Comparing (Brand) Engagement with Time Well Spent
Companies create brand strategies to maintain and grow value over time for their offerings. If a brand can get a customer to believe in what the company stands for then the customer is likely to prefer the company, buy more, and buy more often, over a long period time. To engage the customer and encourage belief in the brand, the strategist employs a number of tools: storytelling, imagery, causes, emotional associations, innovations, environments, experiences, and people. The goal of the engagement is to get customers to feel like they are a part of something that matters, especially to them. And that they are special.
This form of engagement does create value for companies, but only if the experience gets the job done for the customer. No amount of storytelling, imagery, causes, or emotional associations can overcome the inability to get the job done for the customer. Brand strategists today recognize how important jobs to be done is and feel heavily invested in Experience Strategy because they need a strong JTBD program to build brand strategies on.
To maintain value and grow over time, Experience Strategy starts, again, from a different vantage point. The key indicator that the customer will stay with the company, buy and buy often, is the not the brand association per se, rather it’s whether or not the customer values the time that he or she spends with the company.
The companies that are most successful understand that meaningful experiences can only be created if the customer values the time that they spend with the company. Therefore, the way to maintain growth is to understand what kinds of experiences create the most time value for customers. A common and dangerous mistake that many companies make is to eliminate all time spent with the customer in hopes that customers will value conveniences. There is no way for the customer to value the time spent with the company if the customer never actually spends any time with company. Not only will eliminating time with the customer affect the experiential value of the offering but it will eliminate any preference for the brand as well. Without Time Well Spent as a part of its strategy, a company risks reduced engagement which negatively impacts brand associations, experience value, and ultimately growth.
Time Well Spent thinking helps the company to create value by
Eliminating activities that are Time Wasted.
Turning situations where customers want to save time into Time Well Saved.
Identifying and creating experiences that customers value as Time Well Spent.
And, in some cases, identifying and creating experiences that customer value as Time Well Invested.
The experience strategist identifies opportunities for engagement that are coded for time well saved, time well spent, or time well invested, and helps the company to rally resources and innovate to maximize the impact of that type of time for the good of the customer and the profit of the company.
Time Well Spent is short-hand for all three strategic activities. Our research has shown that what people (customers and employees) pay attention to are A) your ability to get the job done, B) how engaged they actually were with the experience you produced, and C) how much value they place on the time they spent.
Today I often hear brand strategists using the frameworks and thinking of Experience Strategy. That is because Experience Strategy creates the proper foundation for brand strategy to build on. BUT, they are not the same thing. When companies try to apply brand strategy principles first to experiences, they fail. When companies confuse the way value is created or how growth is maintained over time by blending a little branding with a little experiential thinking, both become muddled.
Better to get the foundation right and build on that foundation.
Reflection
Think about your own role in creating value for the company. Then reflect on the following questions:
Are you more of a brand strategist or an experience strategist?
What would your company have to do to really focus on Experience Strategy?
Do you have a Point of View regarding the future of your customer’s needs?
What is the Job your customers want your company to get done for them?
What would it take for your company to focus strategically on Time Well Spent?