The Right Customer Experience Strategy

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Most companies lack a customer experience strategy, and those that have one must adjust because of the explosion of digital channels. As a result, their leaders struggle with decisions about funding and prioritizing projects meant to improve customer experience at the enterprise level.

What exactly is a customer experience strategy? To put that question into perspective, consider customers’ expectations of Costco Wholesale versus Apple. Costco customers expect bare-bones service in return for low prices, while Apple customers expect innovative products at relatively high prices. Those are very different experiences, but they both delight customers. Should your company model Costco or Apple—or someone else?

Align Customer Experience With Business Strategy
Forrester defines a customer experience strategy as a plan that guides the activities and resource allocation needed to deliver an experience that meets or exceeds customer expectations. A successful strategy consists of these components:

• Describes the intended experience. The strategy paints a vivid picture of how the company would like customers to perceive it across the three key dimensions: meeting customers’ needs, being easy to work with, and being enjoyable to work with. It should call out the aspects of customer experience that are most critical to a company’s aspirations for differentiating itself.

• Directs the activities and processes. Companies differentiate themselves by performing different activities than their competitors or by performing the same activities differently. An effective strategy informs customer experience professionals’ decisions about what their companies need to start doing, stop doing, or do differently.

• Guides the allocation of resources. When customer experience professionals know the endgame, they’re better equipped to justify funding and prioritize the projects that need funding.

Three Strategies To Build Your Brand
Here are three examples of how customer experience strategies can be aligned with business strategies:

• Self-service optimization for cost leaders. Companies pursuing cost leadership strategies compete on the ability to deliver the lowest prices for products or services. Their strategic position depends on creating operational efficiencies that drive down internal costs. Examples include Costco, Ikea Systems Vanguard, and Southwest Airlines. Companies like those should focus on optimizing customer self-service to deliver simple, efficient, and error-free experiences that support the low-cost value proposition. This strategy needs to beef up user-centered design on the array of self-service channels: in stores, interactive voice response (IVR) systems, Web sites, and mobile apps.

• Proactive guidance for differentiators. Companies pursuing differentiation strive to delight customers with breakthrough product and service innovations that wow the market. Examples include Apple, Intel, Nikon, and Disney. A customer experience approach that focuses on “proactive guidance” ensures that customers use the features of innovative products and services and realize the value proposition. Customers should feel that their new purchases offer high value in return for a reasonable investment of effort in learning how to use and integrate them into their lives and workplaces.

• Tailored intimacy for segmentors. Unlike cost leaders and differentiators, segmentor companies compete by offering products and services for a narrowly targeted customer segment. A narrow focus lets segmentors tailor their value propositions to the unique needs of their customers. Examples include USAA, W Hotels, and Timbuk2. A “tailored intimacy” experience strategy creates deep connections with customers via highly attuned, empathetic, and personalized interactions. Relationships are built on an intimate understanding of market segments’ lifestyles and identities. Customers should feel that employees go out of their way to meet their needs. As a result, products are “tailored to my needs” and “just feel right.”

To craft their strategies, customer experience leaders should start with their companies’ overall strategies, which define competitive positions and set customer expectations of the brand.

William Band (wband@forrester.com) is vice president and principal analyst with Forrester Research Inc. His research focuses on helping organizations establish and validate CRM strategies and plan for project success. Paul Hagen (phagen@forrester.com) is a principal analyst whose latest research focuses on the relationship between business strategy and customer experience design.

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