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CUSTOMER EXPERIENCE MINDSET
If there’s one reason we have done better than our peers . . . it is because we have focused like a laser on customer experience.
—JEFF BEZOS
Customer experience has become a front-and-center conversation across the world. In fact, 72 percent of businesses say that improving the customer experience is their top priority. Brands that have superior customer experience bring in 5.7 times more revenue than their competitors. Customer experience is a big differentiator, and three trends are behind how this has come to be: the rise of the experience economy, a power shift from the company to the customer, and advances in technology that allow us to create more powerful customer experiences.
While price and quality are still the top considerations for consumers making a purchase decision, in one study 73 percent of respondents said that a good experience is key in influencing their brand loyalties.4 Providing an experience around a product or service is a smart investment. Companies that differentiate on experience find ways to make the customer’s life easier or better, to make the customer feel special, or to wrap a story around the product. One cannot simply throw up a product that is identical to thousands of other products and expect to be successful.
Today we live in a world where YOLO (“you only live once”) drives purchasing decisions for generation Z (born between 1998 and 2016), as well as millennials (born after 1980). Consumers increasingly value experiences over things, powering the experience economy. By 2020, generation Z will account for 40 percent of all consumers.
Part of what is driving the experience economy is the desire to curate digital lives, which you will read more about in this chapter. In one study, nearly 20 percent of generation Z respondents said they have stayed at a specific hotel or destination in order to score a positive response from followers on posts on their own social media channels. Up to 71 percent of generation Z would get a part-time job to save up for a leisure trip.
Millennials are also saving their money for interesting experiences. More than three in four millennials would choose to spend money on a desirable experience or event “over buying an attractive product, and 55 percent of millennials say they’re spending more on events and live experiences than ever before. Recent research from Dr. Thomas Gilovich suggested that people find more lasting happiness investing in experiences over buying things. The study found experiences are the glue of our social lives. Experiences enhance social relations, form a person’s identity—even a bad experience makes for a great story to share via social media.
A recent example of how this trend translates into business is LVMH—a luxury retailer we’ll talk more about later in this chapter—which recently purchased luxury travel company Belmond with plans to make traditional luxury travel less about opulent hotels and accommodations and more about one-of-a-kind experiences. They realize modern consumers care more about creating an Instagramable memory than purchasing the hottest new product. Brands like T-Mobile and Casper also are creating showrooms where customers can experience the product, make a memory, and buy something if they desire. “But how did we get here, to a time where people would rather save up for an exotic trip, participate in a compelling adventure, or learn a new skill with friends over buying a thing?
In 2008, the stock market crashed, the worst financial crisis since the Great Depression in 1933. I was living and working in New York City at the time, at a conference company, and I will never forget how quiet the streets were. Restaurants once filled with patrons were completely empty. This crisis in the subprime mortgage market in the United States became a global full-blown banking crisis with the collapse of the investment bank Lehman Brothers. The same year, an investor named Bernie Madoff—whose firm was one of the top market makers on Wall Street—was found to have operated the biggest Ponzi scheme in history, a form of fraud that gives the illusion of a sustainable business. Prosecutors estimated the size of the fraud to be almost $65 billion.
Millennials—today the largest living adult generation—were watching as their career plans were disrupted. Young people who went to school to become bankers or lawyers found the jobs had vanished. Their parents and grandparents lost their 401(k) plans or retirement savings. Young people learned that wealth could disappear in a moment’s notice.
The things that had defined their parents’ and grandparents’ lives were not going to be the main achievements of millennials’ lives. More young people opted to live in cities. Millennials opted to focus on their own aspirational dreams, putting off marriage, homeownership, and kids.
I say all this without mentioning the enormous innovation happening in tandem with these events: the internet and the proliferation of the smartphone—which armed 2.5 billion people (as of 2019) with a small computer in their pocket. People were now able to broadcast their lives online. Social media played a big role in enabling young people to create an identity online.
“This leads us to modern life, where many people choose to spend their money on experiences over things. According to McKinsey, consumers of all ages are opting for experiences, with millennials—the largest-spending group today—spending the most. Lifecasting has become a popular activity, and people curate their digital footprints with extreme focus and care. Facebook (created in 2004), YouTube (created in 2005), Twitter (created in 2006), and Instagram (created in 2010) ushered in a new era of curation and lifecasting, inspiring users to generate Instagramable content.” The smartphone, in tandem with the viral growth of these social networks, played a critical role in getting us to this inflection point today.”
“The sharing economy democratized travel, empowering more people to explore the world at better prices. Airbnb launched an offering on their platform called “experiences” to “discover things the locals do.” Airbnb advertises this offering as “activities designed and led by inspiring locals.” They immerse guests in unique worlds. Learn to bake with a famous pastry chef in Paris, take a dance class in Havana, Cuba, or get a photography lesson from an expert who will help you photograph the Sydney Opera House at sunset.
People want to feel something: they want to experience all that this world has to offer and they want to share these experiences with the world. Customer experience must be geared to this modern customer, who values experiences over things, and expects the businesses they frequent to empower and assist them as they navigate modern life.”
“THIS BRINGS US TO THE second trend driving the customer of the future: social media and the shift in power and influence from the corporation to the customer. Social media and smartphones armed customers with a platform and a microphone. Suddenly customers were talking about the experiences they were having, and companies were not prepared to engage with the customers. Companies thought social media would be a way for them to engage positively with customers, but customers expected brands on sites like Twitter and Facebook to help solve customer service issues for them. Companies were forced to engage with customers, expanding their social media teams and adding resources to serve customers on multiple channels.
Not only did customers demand companies help them with service needs, but they also had unprecedented power and an ability to share their responses to marketing campaigns. Companies faced backlash when they released ads that were perceived as racist, sexist, or offensive to groups such as veterans. Tone-deaf advertisements resulted in social media protests, and sometimes affected stock prices. Companies struggled to engage in public discourse.
The business world expected social media to empower brands, but instead customers became empowered. Nearly three-quarters of millennials report that their perception of a “brand improves when it is clear the company responds to customers’ social media inquiries. But brands were not accustomed to immediate feedback from customers (and from people on the internet who might not even be customers). Brands were required to respond and engage. Brands became more self-conscious of public opinion, now that it could travel fast and light a fire, which could bring down the company. From a customer service perspective, there has been a palpable shift in power from the brand to the customer. Social media forced brands to treat customers better, because the world was watching and they were now being held accountable.
“THE THIRD TREND THAT SHAPES the current state of customer experience is technology. In the past, customer experience technology was an “above-and-beyond” customer relationship management tool, but today having a customer relationship management tool is table stakes. Technology has empowered businesses to create efficiencies and meet the needs of a new era of demanding customers. More than half of customers actively seek to buy from the most innovative companies. We are seeing exponential growth in technology: Over the last five decades, the number of transistors (the tiny electrical components that perform basic operations) on a single chip have doubled regularly. This is the reason a modern smartphone packs incredible capability into such a small package. Connectivity has proven to be a critical aspect of modern life: Whether they’re in a rice paddy in China or on a cruise off the coast of New Zealand, people expect to be connected to the internet, and able to communicate with their family and friends. There are more than 5 billion unique mobile users in the world today, up 100 million (2 percent) in the past year. They all expect to have connectivity wherever they go.
“The cloud—which we will talk more about in chapter 6—has made data storage incredibly easy and affordable. Every company today is a technology company. Increasingly, we’re seeing companies call that out—like Allstate, an insurance company that now calls itself a data and technology company.
Technology increasingly shapes customers’ most beloved customer experiences. In a survey of 15,000 consumers, 73 percent of respondents said they value companies that offer up-to-date technology through customer experience. Technology allows companies to provide zero-friction, seamless customer experiences. Many of these companies are digital natives that deeply value the importance of digital innovation. According to Fortune, five of the top ten “most admired companies” are technology companies, including Apple, Amazon, Microsoft, Netflix, and Alphabet (Google). Most brands are reliant on a few key technology companies. Even Netflix—which competes with Amazon’s content services—relies on Amazon to host its content in the cloud through Amazon Web Services. Advances in machine learning and artificial intelligence have enabled a new era of automation, “of robots, and of personalization. Companies can do much more with data than they ever could before, not only gaining insights on the past, but also predicting the future—enabling them to better anticipate customer needs, gain real-time feedback, optimize pricing, identify customer flight risk factors, staff up or down, or make real-time marketing bets. In a 2018 survey of US senior decision-makers, big data and analytics was listed as the most important emerging technology for enhancing the customer experience.
Customers today get consumer-grade technology experiences in their personal lives, enjoying the use of social media, apps, and Apple products. Consumer-grade technology is what you experience with apps that are seamless. Customers expect the same frictionless experiences from the companies they do business with. Companies today are scrambling to digitize and are focusing on digital transformations, better leveraging technology to solve all kinds of problems with efficiencies, logistics, and supply chain. Companies are in a race to make life easier and better for customers—and they are starting by creating efficiencies for employees. “By focusing on issues like logistics and supply chain, companies are better able to get customers products faster, and create more personalized customer experiences. In chapter 7, we will look at digital transformation and how companies can do it right. A study at MIT found that companies that have embraced digital transformation are 26 percent more profitable than their peers.

Excerto de: Blake Morgan. “The Customer of the Future”. Apple Books.