Yahoo!'s Tim Sanders reveals the three building blocks needed to create valuable customer relationships: customer experience, knowledge, and compassion.
Posted Apr 1, 2004
"A positive customer experience is not a luxury, it's a necessity," said Tim Sanders, Yahoo! leadership coach, during his keynote last night at a Center Partners customer event in New York. Addressing an audience of senior-level customer service executives, Sanders revealed the three essential elements for creating valuable customer relationships: customer experience, knowledge, and compassion.
According to Sanders, we no longer live in a services economy, rather, we live in "the experience economy." Customers buy experiences, not simply products. "The shift is dramatic," he said, explaining that people now spend more on entertainment than they save.
Organizations need to deliver not only high-quality products and services, but also staged experiences that are dramatic and engaging. It's no longer about highlighting benefits, Sanders said, it's about creating sensations. And the more differentiated a company's product becomes as a result, the more premium the pricing. Sanders cited Starbuck's as one example of a company that has created a customer experience so engaging that it can charge a premium for the product: about $3 for coffee at Starbucks, versus about 75 cents in most delis, convenience stores, and diners.
Sanders identified what he called six experience providers, or points of customer contact in which to stage customer experiences:
products and services
cobranding and partnering
Creating a memorable customer experience is just the first step. According to Sanders, companies, and their executives, must be sources of knowledge. "Everyone accepts and gets value from knowledge," he said.
Executives often get most of their information in tidbits from what Sanders calls fast food knowledge--newspapers, TV, magazines. These sources are valuable, Sanders said, but executives need to spend more time reading books on business strategy to gain in-depth knowledge, then share what they've learned within their organizations and with their customers. "Reading books is a commitment to knowledge. You can't share knowledge if you don't have it. Those who read a mix of books and [other] media will see change coming and will get ahead," he said.
Executives need knowledge, but they also need compassion, Sanders said. This is equally important whether dealing with customers or employees. "Happy employees and satisfied customers are the two most important business goals," he said. "We want people to enjoy themselves--especially employees. Most people are not resilient enough to survive a mediocre work life." Organizations must create an atmosphere of respect and belonging. Managers should tell their employees what they're good, Sanders said.
Ultimately, Sanders said, to be successful companies "must obsess over the customer experience, share knowledge, and love their people."
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