Webinar: Experiential Innovation - New Sources of Value for Customers
"Our Stockholm School of Economics remains committed to its methods of learning - to train our brains, to guide us in the trends of modern global and local politics and economics, to share with us useful knowledge, experience and competencies," Sergei Efremov, graduate of the EMBA program GMR8 group commented on social media. "Being the graduates of the School, we are its active resource, and the management of the School continues interesting work on our training, development and self-improvement! And it is very important for us to keep our hand on the pulse of modern management and business education".
For a good workout you need a good coach. Especially under the remote learning conditions. The process of selecting speakers takes a lot of time: it is important for us that a speaker not only gives their standard lecture, but introduces our listeners to the new ideas. Because of this, we can't keep a record of our webinars - lecturers actually present their ideas to our guests here and now for the first time.
Among these novelties we offer webinar "Impressive Innovations", held on July 23 and dedicated to the Сustomer’s Journey - building their sustainable loyalty, which is necessary for long-term mutually beneficial relationships between the client and the company. Speaker Michael Ruckman, founder and CEO of Senteo Incorporated, an international expert in Customer Experience, Loyalty and Business Transformation with extensive experience in 30 countries and 300 projects, has lived and worked in Russia for the past 20 years and with his team has contributed significantly to creating new sources of value for the Russian businesses, their clients and partners.
Customer experience transformation
Even Karl Marks spoke about the added value that is generated by anyone who comes into contact with a product or service on its way to the final consumer. However, he did not explain why it results in the customer’s readiness to pay the price which the seller sets. Michael began his presentation by presenting a model of the economic value progression of the offer (product or service) for the customer, by comparing the cost of coffee beans (raw materials) with the cost of a cup of coffee served at Caffè Florian in Piazza San Marco in Venice (a service closely related to customer experience). “It's a very interesting phenomenon in the economy of impressions,” Michael says. “The more a customer is involved in a business emotionally, the less sensitive to the price they are".
Creating a customer journey means we save our customer's time and make the experience of using the product easier, more convenient and enjoyable. Over the last 10-15-20 years, business has learned how to create a certain impression on the client, moving from the economy of services to the economy of impressions. Time well spent has become the object of sale. This leads the business to a completely different model of interaction with their clients, allowing further transformation of the customers’ loyalty and, as a result, the increase of the monetization of outcome. For example, instead of a monthly subscription to the gym for $100, you can offer a client to pay $500 for three months in advance, but together with the promise they will finally lose 10 kg, they have been dreaming about losing all these years. Michael assures: “I would definitely agree to that! For me the outcome is much more important than the service of access to the equipment itself. We, as customers, are ready to pay, and the range between activity and result is the gap crossing which makes it possible to create value for the customer and thus earn much more for the business”.сть создать ценность для клиента и, соответственно, зарабатывать намного больше для бизнеса».
When we talk about monetization of the result, it means that it must be individual for each client, and the process itself is memorable and enjoyable. Thus, customers are willing to invest more of their personal time and money in achieving of the expected result.
Experiential Innovation, competition based on products and channels
Most companies "pack" customer experiences into one concept. Over the past 20 years, 95% of innovations have been in the product and channel areas. These types of innovations are aligned with the product-centric business models. With the increasing level of market development, it becomes more and more difficult to differentiate oneself on the basis of products and channels. Customer-centric business models focus on a different form of thinking: what does my client want and how can I guide my client to the desired result?
Moreover, rewards for business in terms of increased income, market share or competitive advantage are gradually declining as competitors become more alike and the market is flooded with goods. The cost of innovation is rising and the period of time when a business can enjoy premium pricing and competitive advantage is declining.
If product-based innovations answer the customer's question "What do I get?", Experiential Innovations answer the question "What does it mean for me?". For example, Harley Davidson motorcycles, being not the best in the world, have won the love and support of their customers thanks to the creation of the "lifestyle" associated with the brand. Customers do not just buy a motorcycle, but an entrance ticket to the community, and routinely demonstrate deep emotional involvement by getting tattoos with the brand logo. “The share of product innovation in the total value of innovation is much less than that of impressive innovation. It's much more profitable to guide the customer to the desired outcome, both in terms of business idea and strategy,” Michael concludes.
Customer Journeys and the new frontier of influencing human behavior
“Almost everything we see in the world now is not a customer journey, it's a product journey or a process journey,” Michael says. People usually don't know how to better achieve their goal. The essence of the user journey is to help the client find the optimal way to achieve their goal. All clients have different needs and behaviors. There is a difference between creating an experience and supporting the client’s transformation. Support is a very important territory. “If you see that your client has a goal, and your business can help them achieve it, offer them your solution. People respect those who help them in their lives and maintain loyalty to them for a long time. It wouldn't be an expensive investment for you,” the speaker explains.
User Journey is the experience of a customer interacting with a specific product, process, or service. A User Journey map is created in order to understand where to improve the route through all possible channels, product functionality and processes. Most improvements are related to the work of process improvement and the operating model (people, processes, technology).
Customer Journey includes the experience of interaction between the client and several User Journeys, which together solve one problem (vacation, buying a car or apartment, etc.). Clients most often interact with different companies to get what they want and it usually takes them a lot of time and effort. By taking on the interaction with other participants of the process, the company can offer a more convenient solution for its client (training, planning and tracking, maintenance and support), which will bring additional value for the client.
Life Journey is a set of Customer Journeys that are connected with the processes of managing relationships with clients outside of product categories. It is possible to build really long-term loyal client relationships if the business can find ways to accompany the client throughout their life.
“Over the past 8-9 years, businesses have gradually moved away from the old approaches to segmentation of the target audience and started to look only at the customer behavior. New client groups, formed on the basis of similar behavior, are emerging. The more we can stimulate certain behavioral patterns, the more we can gradually improve the profitability of client relationships,” Michael says.
Any business in the world can answer two simple questions: what they do and how they do it. Few businesses can explain why do they exist and what value they bring to their customers. “The main value of a business to a client is not in the financial success of your company, but in the impressions and level of relationships. Ultimately, the business of the future is about helping clients solve their problems, improve their quality of life and achieve their goals. This will be the key to your company's success,” Michael concludes.Back to news