Connected strategies replace episodic interactions between firms and customers with magical user experiences.
The power of connectivity comes from delivering magical user experiences along with amazing productivity and reduced costs. Tesla cars, for example, are digitally connected to the Tesla service team. Routine maintenance and problems are addressed proactively, without the driver ever making a phone call.
Another example is Disney’s “Magic Bands.” These wristbands track visitors throughout Disney parks and enable unique customer experiences. Disney discovered the tracking technologies in the hospital setting and launched Magic Bands on Disney cruise ships to keep track of children participating in onboard camps.
Disney then expanded Magic Bands to their theme parks. The first application was “meet and greet.” Disney characters can access information about a child’s name from his or her Magic Band and greet a child by name. Magic Bands enable Disney visitors to order meals and have them delivered to wherever they are, obtain customized recommendations for activities, have personalized experiences when playing video games, and receive custom photo memory books created from cameras in the park.
Connected strategies turn what used to be episodic interactions between firms and customers into an environment of always being connected. Every company, not just Disney, can provide these Experiences.
The connected customer relationship and connected delivery model can disrupt Markets.
The connected customer experience drives up the value that customers see, while the connected delivery model reduces the cost of serving customers. Companies that focus on both can disrupt industries. Meal kit services like Blue Apron and Hello Fresh are good examples.
These services deliver recipes and all of the ingredients needed for meals. Part of the value is the quality of the produce, but the services also eliminate other pain points, which increases customers’ willingness to pay. At the same time, meal kit companies have streamlined the supply chain and cut out middlemen, reducing costs.
Through deep connections with customers, companies can direct them to solutions with lower costs. In the case of meal kit services, local farmers can run their operations more efficiently because they know who will buy their crops. If firms increase the gap between willingness to pay and cost, they can create new competitive advantage in the marketplace.
Through connected customer relationships, companies recognize customer needs, request solutions, and respond.
A connected customer relationship has four basic elements:
- Recognizing the customer need
- Translating the information to a request for a particular solution
- Responding to the need
- Repeating the interaction, which enables the firm to improve at 1, 2, and 3
Not all connected customer relationships are the same, however. There are four different categories of connected customer experiences which align to different stages in the customer journey:
- Respond to desire. The firm tries to respond to an explicit customer request very effectively. This may be done rapidly or with a broad offering. Companies that deliver this type of experience include Amazon, Lyft, and Airbnb. Respond-to-desire experiences start the moment a customer knows what they want to order. The firm makes the last part of the customer journey as smooth as possible.
- Curated offering. As the firm learns more about the customer, it responds to and anticipates the customer’s needs by providing customized products and services. An example is Netflix’s suggestions. Curated offerings occur earlier in the customer journey. Companies help customers think about all possible options that could fulfill their needs and identify the best options.
- Coach behavior. The firm tries to nudge the behavior of customers to help them overcome inertia and decision biases. For instance, customers may want to take their medication, but they are forgetful; or they want to lose weight, but have trouble sticking to a diet. Firms may employ behavioral interventions in the form of personal feedback and social comparisons. Coaching behavior occurs even earlier in the customer journey.
- Automated execution. The firm automatically deduces and anticipates the customer’s needs, then fulfills them. For example, the firm might provide a behavioral medical intervention, re-order milk or water, deliver glucose testing supplies, or rebalance the customer’s financial portfolio. With automated execution, companies are aware of problems or needs well before the customer and fulfill the needs with the right product or service. The goal isn’t to transform every transaction into an automated execution connected experience. In fact, some customers enjoy parts of the purchase process and wouldn’t want every transaction to be executed automatically for them.