An Introduction to Experience Strategy
Chapter 1: What is Experience Strategy?
Friends, I’m starting today to write a treatise about experience strategy. I’ve been working on this project for almost five years. I suspect there are at least 200 posts that I will create for this project. Once I’ve finished writing these posts, I will assemble them into books that companies can use.
If you want to skip ahead and learn more, faster, you can join Stone Mantel’s Experience Strategy Certification Program. And if you want to see where our work is heading in the future, join one of our Collaboratives.
Connecting People’s Situations to Value Creation
Chapter Objective
You might think that you have a pretty good idea of what experience strategy is. After all, you understand what business strategy is. And you understand what a customer experience is. But do you? So much of what has been described as strategic in the Experience Economy has very little to do with experiences or with strategy. My objective in this chapter is to describe what you will need to focus on if you are to create value from future experiences.
Chapter Summary
Experience Strategy is about creating greater value for the customer and company by answering four strategic questions:
How will the company grow? Answer: Through ‘situational markets’
What makes the business model compelling? Answer: By having a ‘point of view’
What describes the customer’s need? Answer: Getting ‘the whole job done’
How is value maintained? Answer: Value is in ‘time spent’
Experience Strategy is not marketing strategy, nor is it brand strategy, however, companies often confuse it for both.
These principles apply to all experiential solutions.
Introduction:
Welcome to Experience Strategy.
If you a reading this, you are probably at a key juncture. You know that your company needs to grow. You know that creating compelling customer experiences is key. You’ve tried some things to measure your customer experience or design better experience. Those things have not led to dramatic value creation. They may have helped align the company around the importance of putting the customer’s needs first, which is good. But you want to do more, better.
Let me tickle your fear response just a little. Most of what you are doing to improve experiences for customers and employees are activities that were best practices in the late 90s. Yeah … A lot has changed since then. A lot.
The principles you thought would lead to value creation for customer and company are designed for a different time and will limit your ability to see how value is created going forward. This is not just true for experiences. It’s also true for marketing, branding, business strategy, and innovation. Companies tend to deploy old paradigms to solve new problems.
Two things you can count on: companies will need customers; and customers will value new, meaningful experiences.
So, even if you don’t think you are at a key juncture, you are! It’s time to create new ways of seeing value creation.
Jason Has Been Given No Strategy
Jason works for a tremendous brand. He’s proud to work for one of the best-run companies in the world. And every Monday, he starts his week by gathering all of the different reports, news, data, and dashboard information he needs to do his job as an experience strategist for this amazing brand. He is one of many employees at this company who use the data the company provides to create value for both the customer and the company.
He looks at weekly sales of key SKUs, updates spreadsheets using data from key business partners, and reviews both survey data and verbatims from customers. He has dashboards that help him aggregate the data. His job is to anticipate what customers are likely going to want in the next quarter while discovering pain points that are affecting the customer experience.
Unfortunately, for all of the tools at his disposal, he sees almost nothing that really matters to future value creation. His company, like most companies, is relying on the same decades-old tricks to support their customers. We dare not call these CX tactics, ‘strategies.’ Having an NPS score or a dynamic customer journey map isn’t a strategy and will not be very helpful for where business models need to go. Having a dashboard that shows quarterly trends will not prepare him for what is to come.
Jason has been trained to look for two things primarily: ways to increase loyalty and ways to identify customer friction or painpoints. Neither of which are experience strategy.
So what is experience strategy?
First, let’s ground ourselves. Pine & Gilmore ‘discovered’ (their word) the shifts that were occurring in consumer demand and shared their insights in The Experience Economy. They named the phenomenon. They predicted that experiences would be the dominate force in value creation going forward. And they provided a point of view on how to capitalize on the opportunity.
Within a matter of a few years, companies were abandoning the logic of SWOT analysis for experiences. Instead of comparing strengths, weaknesses, opportunities, and threats (like GE and other entrenched businesses did), companies launched initiatives to find out what their customers wanted from experiential solutions in the near future.
As told by Pine & Gilmore, the reason companies should focus on experiences is because customers value them, more than they do for services or goods. In fact, the economy has, as they predicted, shifted to experiences and away from services. Here’s their original framework. They show that modern economies shifted from agrarian to manufacturing to services to experiences. At each stage in the economic shifts, the output of the previous economy becomes commoditized. That doesn’t mean that we don’t need services or goods today. It actually takes more services to create experiences. Services are the infrastructure of experiences. But they are commoditized solutions. Experiences can become commoditized too. Pine & Gilmore argue that the economy is now shifting to transformations (or transformative experiences), which will hold their value indefinitely.
Now, back to defining experience strategy.
When you are focused on customer loyalty, you are focused on the byproduct of a great experience. Experience strategy doesn’t focus on the byproduct, it focuses on the solution: how to ensure that solution has real, sustaining value. When you are focus on friction, you are focused on eliminating time wasted. But value is created through time spent with an experience. So you can actually do great damage to your offering by commodifying time well spent in search of ways of eliminating wasteful time.
Experience strategy is about finding ways to increase the value of your solution to your customers. This is congruent with Pine & Gilmore’s definition of an experience.
Four Stories About Real People
My company, Stone Mantel, primarily researches customer behavior and consults on experience strategy. We spend a lot of time conducting primary research and have done so for decades. We see the disconnect between what people want and what business models actually deliver every day. Here’s four stories from people we’ve worked with.
Family dynamics in Kansas City
A family in Kansas City, Missouri, is sitting around a table. The parents are discussing the most meaningful experiences their family has had over the last few years with us. They talk about a family trip to a Disney theme park, they show us their basement movie room, decked out in Star Wars posters, then they talked about a recent camping trip. All wonderful. Full of memories.
While the adults talked, we asked the daughter (8) to draw her favorite experience. After a while, she held up picture of she and her dad taking the dog for walk, and another on of them going to store together. The drawn picture stunned the parents. The value that they placed on the big trips wasn’t nearly as important to their daughter as the everyday routines associated with handholding, parent-child time, and just being together.
We listened in as the parents and their two kids discussed those activities. The parent’s conclusion: they needed more balance in their lives. They needed to get better at the everyday experiences and put less emphasis on the big trips.
Anticipating workout plans based on modes
A group of people with memberships to a national exercise brand meet with a facilitator to talk about ways to enhance the gym membership experience. Instead of new loyalty programs, classes, or gym features, the members are focused on their mindsets, or more specifically on the ‘modes’ that they get into when they go to the gym. A mode is a mindset and set of behaviors that people get into temporarily. Thus, beast mode is different than competing mode, or dieting mode.
When these participants think about the role that AI will play in their gym lives, they want technology that anticipates what mode they are in and recommends a customized plan for the workout. They want the mode to determine the plan, not what they did the last time they came to the gym.
Headaches come with context
A pharmaceutical company is studying a new app that could potentially prescribe a better regimen for migraine sufferers. After conducting several round field research, the company conducts co-creation research to study an app that is already on the market. Participants in the study don’t like the app. It requires them to follow a very specific protocol for tracking their migraines, one that doesn’t take into account many of the variables that people think trigger the headaches. The app is only interested in biometrics: heart rate, blood pressure, calories, ovulation, etc.
What the participants point out is that they seemed to be triggered by smells, time of day, stressful meetings, air quality, temperature, specific foods, and a wide variety of other external factors. The company redesigns the concept and sends it out for quantitative evaluation. The concept does remarkably well. And migraine sufferers give high scores for allowing them to track contextual clues, as well as biometrics.
Empowered to act
A woman in Brooklyn New York decides it’s time to buy a new home. At first she’s anxious about it. She doesn’t know how to get started. She’s never owned a home before. But then she gets online and realizes that many, many people get anxious right before they start looking for a home. She is not alone. She and her husband spend hours asking questions of perfect strangers on chat sights.
From these discussions, they begin to formulate a plan. They find loan providers. They learn about resell valuations. They figure out how to compare properties. And they refine their list of requirements for their new home. All of these activities helped the woman feel in control. Shortly after moving in, the couple decides to renovate the property. She feels empowered to make the right decisions because of her experience buying the home. She says she feels anxious but ready for the renovation situation.
For each of these common instances there was value created through an experience. The Brooklyn homebuyer built her own learning experience that empowered her to keep going. It was her online activities that created the value for her time, not loan providers, real estate agent, sellers, or remodelers. The value was in her lived learning experience.
The pharmaceutical company recognized the problems with a hastily built app and took time to work with migraine sufferers to discover a key principle: the value of the solution was in the contextual factors, not just what happening inside the patient.
The value for the gym goers and the gym owners was in supporting the mode of the individual person. While the value for the family in Kansas City was in the little things they do.
At first, these four experiences may seem disparate. Not a lot in common. Maybe a bit mundane. But I submit that they actually have a lot in common and that there is untapped experiential value that more companies could profit from.
The Chapters for Experience Strategy
SECTION 1: THE FOUR PRINCIPLES OF EXPERIENCE STRATEGY
Chapter One: What is Experience Strategy?—Connecting your customer’s situation to value creation
a) The four key questions and answers for developing an effective experience strategy
i) How will the company grow? Through ‘situational markets’
ii) What makes the business model compelling? A ‘point of view’
iii) What describes the customer’s need? Getting ‘the whole job done’
iv) How is value maintained? Value is in ‘time spent’
Chapter Two: Principle 1—Growth comes by Capturing Situational Markets
The endless opportunities derived from customer situations.
a) Business growth is limited because of old ideas about markets
b) Why focus on the customer’s situation
c) What markets should look like today
d) Developing a strategy for customer situations
e) Identifying situational growth markets
Chapter Three: Principle 2—To Be Compelling Requires a Strategic Point of View
What’s more important that branding? Having a point of view.
a) Differentiation is not enough today
b) What is a strategic point of view
c) How a point of view shapes a business model
d) Finding insights about near future needs
e) Articulating the point view for internal audiences
f) Aligning business silos with a point of view
Chapter Four: Principle 3—Customers need the Whole Job Done to Get Done
Look at everything the customer does.
a) The innovator focuses on the job to be done. The experience strategist focuses on the whole job to get done
b) Why jobs to be done is still the best way to study customer needs
c) Some industries (like healthcare) don’t allow one company to do the whole job
d) People’s expectations drive what ‘the whole job’ means
e) Customer journey should be about the whole job
f) Channel strategy should be about the whole job
g) Context is about the whole job
h) Developing whole job partnerships
Chapter Five: Principle 4—Value is in Time Spent
There is no value creation without time well saved, spent, or invested.
a) Value is not in frictionless experiences, loyalty or even customer centricity
b) Value is in the time that people are willing to spend with the company
c) To maintain growth is to understand what kinds of experiences create the most time value for customers
d) The Time Spent framework
e) Meaningful experiences and time well spent
f) Stop measuring NPS; measure time value
SECTION 2: ALIGNING EXPERIENCE STRATEGY TO THE CUSTOMER OF THE FUTURE
Chapter Six: Leveraging Experience Strategy into the Future
How is customer behavior changing and what can be done to ‘win’ through experience strategy?
a) Customers, as influenced by the situations in which they make decisions, are changing preferences and behaviors.
b) Four Points of View (POV) on the critical shifts that merit attention (moments to modes; journeys to life systems; smart to genius; channels to context)
c) Research-based strategies and frameworks to thrive.
Chapter Seven: POV 1—From Moments to Modes
Experience strategists focus on moments, but people get into modes
a) POV: As technology progresses, people get into more modes
b) There is more time value in modes
c) Stories and examples of modes
d) Modes explain situations and provide context
e) How people experience modes
f) How companies can support modes
Chapter Eight: POV 2—From Journeys to Life Systems
Meaningful experiences come from the systems people create for their lives
a) POV: People today create systems for their lives. Companies who understand those systems can get the whole job done, understand situations, and be meaningful.
b) What journey maps don’t do
c) Stories and examples of people’s life systems
d) Insights by industry
e) Life systems and modes work hand in hand
f) Implications for business models
Chapter Nine: POV 3—From Smart to Genius
Even smart solutions can degenerate into stupid experiences
a) The impact of intelligence on solutioning
b) The evolution of the automobile
c) What is smart
d) What is genius
e) What is dumb
f) What is stupid
g) How to talk to customers about AI
h) Genius platforms create superpowers
i) How to do data experience design
j) How to do situational analytics
Chapter Ten: POV 4—From Channels to Context
Customers don’t ask for seamless channels, they want you to understand context
a) POV: As more channels become smart, they create a ‘personal data ecosphere’ for the customer. Companies need to understand digital context to support customers.
b) The Netflix Problem: Greater personalization does not lead to better recommendations.
c) The contextual consumer. Why people share data with companies
d) The personal data ecosphere
e) New business models: B2I2C and C2I2B
f) The four principles of experience strategy create trust
g) Context roadmapping and modeling
Chapter 11: From Experience to Transformation Strategy
a) This chapter focuses on what comes after the Experience Economy and how strategy will need change in the future.
SECTION 3: APPLICATION, FRAMEWORKS AND ACTIVITIES
Chapter 12: Processes, exercises, and worksheets for each chapter in the book.
SECTION 4: APPENDIX
Primary research conducted that supports concepts discussed by chapter.
Thank you Steve. I always love your contributions. I have two responses to your first question. First, all four principles are about how to understand the customer's needs. 1 focuses on where needs arise (in situations), 2 focuses on how to anticipate customer needs, 3 focuses on solving for the whole need, and 4 is about how to turn needs into value for customers. My second response is that current business strategy frameworks misconstrue what a need is. Those frameworks create trouble for business models. And my primary goal with this book is to help companies align their business models with the new realities of world.
That is also why I chose to talk about how value is maintained, not just measured. I'm trying to change the way companies think about value creation, not just measurement.
Hola Dave! puedes explicarme mejor, a qué te refieres con que "Cuando te centras en la fidelidad del cliente, te centras en el subproducto de una gran experiencia"... ¿a qué te refieres con que es un subproducto? gracias y saludos!