Before the new millennium began – when applications lived in the backend, clouds only held rain, and uber was just an adjective – the experience economy was theorized in Harvard Business Review. Two decades later, we’ve reached the future those authors forecasted, where it’s no longer just about creating and selling better goods and services, it’s about delivering value in the experience.
Gartner analyst Christy Pettey wrote that “a superior customer experience (CX) is one of the few remaining means of sustainable competitive differentiation.” In fact, the firm expects 2019 to be the year when the vast majority (81 percent) of marketers rely almost completely on CX to win.
A compelling experience can create a powerful emotional connection that drives loyalty and satisfaction. People today make brand decisions based on a range of factors — not just price. They embrace companies that embody their own values and reject those that fall short. And consumers today have more choice than ever.
Mind the (experience) gap
While billions of consumers are in control like never before, many companies are missing the mark – Capgemini estimates that 75 percent of companies believe they’re customer-centric, but only 30 percent of consumers agree. The discrepancy creates an experience gap.
To close this gap and succeed in the experience economy, companies need to redefine how they understand their customers and employees — not just as “personas” but as a people, to form deeper relationships and build closer bonds of trust. Today’s high expectations also require brands to anticipate an individual’s needs and respond immediately.
These actions call for new insights pulled from a different kind of data – experience data (X-data) – which can assess true sentiment and is the key for companies to unlock more meaningful experiences with their customers.
Of course, enterprises have long been swimming in data, but traditional operational data (O-data) does not paint the full picture. X-data reveals the decision-influencing feelings customers and employees have towards brands and products. Put another way, O-data is the “what happened,” X-data is the “why and how did this happen?” It provides a richer, more opportune, and precise understanding of the emotion around an experience.
A customer’s story is not truly complete without X-data — the lack of which contributes to the experience gap. That disconnect, between what users expect and what’s actually delivered can cause (at best) lower trust, lost customers, and employee turnover. At worst, business is interrupted, and returns are diminished. Estimates suggest that U.S. businesses lose $75 billion each year due to defections and abandoned purchases brought on by poor CX.
The X factor
Knowing is only one aspect of competing in the experience economy. Success also depends on a fast response and constant nurturing. People have more options than ever and will move on to competitors without hesitation if their expectations are not met.
As Michael Voegele, CIO of Adidas put it, “To change people’s lives, we believe you need to create direct relationships with consumers. You should not put out one-directional messages. It should be a bidirectional, joined conversation.”
X-data measures the often-fleeting intangibles not included in operational data. It captures every interaction a customer or employee has with an organization, whether it be email, SMS, social, web, or mobile. The combination of the two, both feelings and facts, can be turned into quick improvements.
Imagine being able to stop and remedy an unfavorable experience instantly or surprise a customer with something unexpected. Joanna Geraghty, EVP of Customer Experience at JetBlue, says experience management is allowing the company to communicate “human to human” and “create heroic moments”— for example, doing something special for a couple traveling on their honeymoon or lessening the impact of an impending storm on passengers.
X-data is equally vital for understanding how employees are experiencing an organization. Employees are a company’s frontline ambassadors; if not satisfied, they can’t adequately champion a brand. Acclaimed author and speaker Simon Sinek recently shared a story at an event I attended of a particularly engaged coffee barista at the Four Seasons Hotel. When Sinek asked the employee if he liked his job, the employee responded, “I LOVE my job.” That emotional connection was due to the fact that his managers were receptive to his feedback and supported him with what he needed to be successful.
Imagine the possibilities if you could cultivate more meaningful, personalized employee experiences? Through the combination of X-data and O-data, companies can be empowered with real-time insights that to make genuine improvements, drive employee retention and advocacy, and help employees become more enthusiastic and vested in delivering exceptional customer experiences.
Welcome to the experience economy
Twenty years ago, Harvard Business Review labeled experience the “fourth economy.” They could not have predicted the app and on-demand economies that came first, nor imagine just how profoundly experience has permeated all industries.
Today, digital technologies and connectivity speed make communicating so easy, the importance of listening can often get lost. Even more, companies must clearly translate what they hear into real, tangible improvements. Fortunately, we now have massive amounts of customer information at our fingertips. No more guessing games and no reason for experience gaps.
Connecting our X’s and O’s fills the void. The link is essential to creating the types of experiences that result in customer loyalty, employee engagement, and greater retention. The better the experience, the higher the trust, the deeper the relationships. This is the only way to succeed in today’s experience economy.
DJ Paoni is President of SAP North America.