Beyond products and services: The importance of experiences
Digital has put customer experience in the spotlight. The experiences that win will be the ones that go beyond products and services to focus on customer outcomes.
Products and services to experiences is one of three areas we focus on as part of the digital consumption cross-industry theme. The other themes we examine are hyper-personalization and ownership to access.
In 1999, B. Joseph Pine and James H. Gilmore made a bold prediction: offering goods and services would no longer be enough to bring businesses success. Instead, companies needed to offer their customers unique and unforgettable experiences.
Pine and Gilmore’s vision is now becoming a reality, and companies are seeing customer experience as an increasingly important differentiator alongside the quality of their core offering. In a survey by and Accenture, 89% of business leaders believe that customer experience will be their primary basis for competition by 2016.¹ More telling, however, was the finding that ranked customer experience as the top initiative for organizations addressing the impact of digital disruption in the coming year (see Figure 1). ² ³
A focus on outcomes
At the top of Pine and Gilmore’s five-tiered pyramid of economic value however, was ‘transformation’ – the experiences that transform users’ lives would have the highest value of all. Successful companies are employing the latest technologies not only to create captivating digital experiences, but also to harness their digital prowess to enhance their overall customer offering, spanning the digital and physical worlds (see case studies).⁴
Disney Magic Bands⁵
Launched in 2014 after six years of planning and $1 billion of investment, Disney Magic Bands are multicolored RFID wristbands that allow guests to manage every aspect of their Disney World visit. Visitors are able to make payments, manage reservations and access hotel rooms, all simply by using their Magic Band. Linked to Disney’s guest management system, its analytics servers and the My Magic+ app, the system allows staff to deliver a highly personalized service – for example, by creating customized itineraries or having preordered meals ready for collection at restaurants in the theme park.
Guests appreciate the convenience of not having to keep hold of several tickets or make multiple payments. So far, the bands have been used by more than 10 million visitors and received approval ratings of more than 90%. Disney also benefits from the Magic Bands project, gaining access to rich user data, allowing it to make efficiency and process improvements. Disney World has seen increased footfall and higher customer spending at its attractions.
Monsanto’s Climate FieldView⁶
Monsanto, an agricultural products company, expanded beyond its products portfolio to offer farmers field-level actionable intelligence to improve yields. By acquiring the Climate Corporation for approximately $1 billion in 2013, Monsanto gained the means to collect a wealth of hyperlocal data about field and weather conditions. It uses this information to offer targeted intelligence to farmers in real time, helping them lock in profits in the case of drought, heavy rain or otherwise adverse weather conditions. The product also allows farmers to see field-level nitrogen supplies based on application, crop stage and weather.
Farmers benefit from higher yields, a lower risk of crops failing and higher profitability. The offering helps Monsanto generate huge amounts of data relating to crop patterns, weather forecasts and yields, which can be used by Monsanto to develop better farming products and offer a more personalized experience to farmers.
The low cost and easy availability of connected sensors, coupled with breakthroughs in data analytics, have enabled outcome-based services to become a reality across industries.
A recent study found that 73% of businesses surveyed felt that their digital customer experiences met their customers’ expectations. However, only 5% believed that they were exceeding expectations – indicating that very few are confident that they have mastered digital to a point of differentiation from their competitors.⁸ Companies will have to evaluate their internal capacity for delivering on customer outcomes and determine if strategic partnerships have the potential to contribute toward customer experience goals.
A defining characteristic of leading companies in the future will be their ability to deliver experiences tailored around the needs of the individual and aimed at improving their life, in contrast to generic services offered to the mass market.
In the digital age, not meeting customer expectations, often defined in industries outside your own, comes at a high cost: Accenture estimates that as much as $6 trillion of revenue is up for grabs as a result of increased customer switching driven by poor customer service.⁹
Partnerships to improve customer experience
The businesses and experiences that succeed will be the ones that are able to find tangible ways of improving customer lives and delivering the outcomes that matter. Today, businesses realize that looking beyond just the interactions they ‘own’ is increasingly important in the race to deliver high-quality customer experiences.
Finding new partnerships that combine channels and product or service features will empower companies to develop increasingly unique customer value propositions. If This Then That provides an example of how companies can create unique partnerships that satisfy the needs of individual customers. The platform allows unrelated apps, services and even products to interact with each other based on rules defined by the customer (e.g., Deezer is exploring ways of automatically adjusting room lighting based on the song that is playing).¹⁰
Imperatives for companies
There are a number of crucial ingredients that are needed to create experiences that exceed customer expectations:
1. Identify the outcomes that matter. Competitive differentiation will be defined by the ability of companies to create value by delivering solutions to customers that lead, in turn, to quantifiable results.
- Develop the ‘listening infrastructure’ to measure customer voice and sentiment across the customer journey. Consider text recognition and analytical models that can be applied to online communities, social media and online search patterns to identify pain points and changing customer behaviors, particularly in industries that have higher degrees of separation from the end user. For instance, Mercedes-Benz collaborated with Medallia to design a platform that streamlines customer experience metrics and feedback actions, allowing the car manufacturer to listen and react to customer sentiment in real-time.¹¹
- Use hardware at the edge, where digital and physical worlds intersect, to discover the metrics or measures of value that customers care about along their journey. In this context, hardware goes beyond just smartphones and PCs to include the Internet of Things. Using hardware at the edge can be achieved by adding sensors and intelligent software to existing products and services, or by creating new hardware.¹²
- Catalog the outcomes your customers are trying to achieve and map those outcomes to current product and service offerings. Identify gaps in the ability of your existing product or service offerings to meet those outcomes.
- Build outcome-based revenue streams. Some companies are already building revenue models based on delivering customer outcomes. They include Proteus Digital Health, which identified medication adherence as a major issue for patients and are tackling this by inserting an ingestible sensor into pills. The sensor works in concert with a wearable device or smartphone to track and remind patients to take pills on time.¹³
- Create analytical feedback loops to constantly measure results and improve product or service features. Enterprises can map feedback loops throughout product and service life cycles, paying special attention to customers’ preferences and desired outcomes, and the ability of their offerings to deliver on those outcomes.
2. Leverage the power of ecosystems to meet customer experience goals. Identifying the right partners from a world of possibilities is not always easy. One approach is to identify partners that help meet predetermined customer experience goals. Here, companies need to begin by clearly defining their customer experience goals based on an analysis of customer needs and the ability of their service to meet those needs. This should be followed by an assessment of where the company holds a competitive advantage within the part of the user experience they own – whether it’s building devices or products, software and apps, providing data analytics and insights, or facilitating integrated experiences. Finally, leveraging ecosystem partners and technology startups should ultimately be the way for companies to fill in the gaps in their ability to meet those goals.
An alternative approach is for companies to develop open innovation platforms and APIs to enable a wide variety of service providers and businesses to develop unique combinations that deliver increasingly relevant experiences to customers. For example, Google’s open Nest platform has allowed companies such as Whirlpool, Jawbone, LIFX and Mercedes-Benz to link together to create a combined experience for the connected home customer.
1. “Gartner Reveals Top Predictions for IT Organizations and Users for 2015 and Beyond,” Gartner, October 7, 2014. http://www.gartner.com/ newsroom/id/2866617.
2. Forrester/Accenture, “Digital Transformation in the Age of the Customer,” 2015
3. Forrester/Accenture, “Digital Transformation in the Age of the Customer,” 2015
4. “Are you ready to be an insurer of things?”; Accenture 2015
7. Fjord Living Services
8. Digital Transformation in the Age of the Customer, Accenture and Forrester Research, October 2015
9. Customer 2020: Are you Future Ready or Reliving the Past – Accenture Global Consumer Pulse Research 2014
12. Accenture Technology Vision 2015
Digital consumption is one of four cross-industry themes (along with digital enterprise, societal implications, and platform governance) that have been the focus of the World Economic Forum’s Digital Transformation of Industries (DTI) 2016 project. An overview of the DTI program can be found here.
Our in-depth analysis of the digital consumption cross-industry theme is available in a white paper, which can be downloaded here.
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