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Companies that try to create holistic experiences by emotionally engaging their consumers are flourishing
Advances in manufacturing technology and the global reach of the Internet have leveled the playing field in the product marketplace. It wasn't long ago that time-to-market was two years, then 18 months, and then 12 months. Now, a competitor can knock off your "innovation" in six months or less. Many businesses understand that being "new" or "different" is no longer a differentiator. Countless companies are elbowing their way to the top with designs that are also "feature-rich" or "patent pending." Innovation in product design has lost its meaning and, therefore, its value.
There is still one frontier that remains wide open: experience innovation. This is the only type of business innovation that is not imitable, nor can it be commoditized, because it is born from the specific needs and desires of your customers and is a unique expression of your company's DNA. Yet the design of an experience is often overlooked in the rush to market.
Creating a Complete Experience
Companies intending to be relevant today must learn the art of creating experiences that genuinely engage their customers. Choice-fatigued consumers are not looking for another product that hasn't taken their true needs and desires into consideration. They are looking for companies in which to believe and give their allegiance. They are looking for experiences that cater to their deep-seated desires. This type of engagement requires much more than the latest technological breakthrough: It requires emotional engagement.
This has the highest value to customers because it has meaning. And it even allows companies to reimagine an old idea: The product or service itself does not have value, but the way in which it is experienced makes it fresh. That means you can even charge a premium for it. At over $100 a pair, Lululemon Athletica's (LULU) yoga pants aren't popular simply because of an advance in athletic apparel design. The brand's promise of well-being and its promotion of conscious living permeate every aspect of its business, creating an experience that customers are willing to pay top dollar for. Lululemon's sales at its retail stores doubled in the fourth quarter of 2007.
Creating a meaningful experience requires thoughtful attention to your customers at every point of contact—what I call the 360-degree experience. There are four components to consider when designing the 360-degree experience:
Know where you are in the innovation cycle. There are three areas of innovation: technology, product, and experience. Companies such as Intel (INTC) or Texas Instruments (TXN) offer technology products, such as a semiconductor or wireless data transmission, which can be broadly adapted for many uses. A company such as Sony (SNE), meanwhile, has commercialized a technology and created physical products. Then there are companies that create an experience for customers; engage them and tell a story. Starbucks (SBUX), for instance, took a simple product—coffee—and turned it into a complete experience that satisfied the previously unmet need for café culture in the U.S. Understand where your mindset lies in this innovation cycle, and know what it takes to participate and perform in the other spaces. Migrating to a different area is possible but extremely difficult, and one which requires an alteration of thinking, measurement systems and, eventually, a company's DNA.
Know your DNA. The only way to attract your true tribe is to authentically be yourself. Take a stand. Do what is natural to you and you won't have to fake it. Understanding your company's DNA is central to experience design. The athletic apparel company Nau is a great example (BusinessWeek.com, 1/31/07) of a company that knows what it stands for and what it is good at. With roots in the outdoor apparel industry, executives creating the company didn't just produce another label to compete in a glutted market. Instead, they established a mission based on their personal values for conscientious business practice and built a business that reflects these values. That ranges from a product line based on sustainable product innovation to a "partnership for change" program whereby 5% of every sale is donated to an environmental, social, or humanitarian organization.
Make emotional connections. Understand your customer well enough to know the difference between what they need and what they desire. In the Western world, businesses meet customers' functional needs with ease, but often seem to have forgotten how to connect with them emotionally the way, say, the corner grocer in a small neighborhood knows what products each of his customers loves. While it may not be possible to know each customer individually, we can delve much deeper than customer research statistics usually allow to create highly contextual experiences that reflect values, behavior, attitudes, and motivations. Ferrari is a wonderfully innovative brand in this regard—not only has it designed a thrilling racecar, but it tapped into the desires of those people who secretly dream of being a racecar driver. From the sound of the engine to the design of the fire extinguisher that is affixed to every interior, Ferrari found a way to put the racing car experience in the hands of a layman.
Design for the complete experience. There is no experience killer worse than a story being told in only one place. You may have a great product, but if customer service or your Web site don't reflect the story you are telling, the experience is invalidated and you run the high risk of losing the relationship with your customer. Every aspect of your business must reflect your company's DNA—and what you have learned about the desires of your customer. American Express (AXP) is a good example here—from the breadth of its product offering to the detailed level of service, its thorough approach provides customers with a feeling of security, empowerment, and being well-cared for—a feeling for which customers will pay a premium.
Competing in the market today demands innovative, emotional engagements. Creating complete, 360-degree experiences is the only way to be relevant in a glutted marketplace.