Performance Consulting Group “Corporate Growth: The Three Levels of Differentiation Leading to Three Levels of Customer Loyalty” Presented by Kevin Pitts July 30, 2015

Premises Strategy is Choice – The Power of Putting Customers at the Center of Your Business What is Winning – Innovative and Distinct Customer Experiences crafted from creative problem-solving processes How to Win Today – Creating Distinct Sets of Integrated Activities Centered around the Customer Experiences

Neo Cortex : Executive Thinking Limbic : Emotional Processing Brain Stem: Survival Instinct The human brain is divided into three main components each with a unique function: The Limbic brain acts as the gate keeper for which part of the brain is engaged in response to a stimulus. If the environment and the stimulus makes us feel safe, secure and motivated we engage our Neo Cortex. The Neo Cortex processes stimulus by engaging higher order thinking functions which include Business Acumen and Creative Thinking The Brain Stem’s response to any stimulus is to: Attack it or Run from it or Ignore it The Brain Stem’s response to any stimulus is to: Attack it or Run from it or Ignore it If the environment or the stimulus makes us feel threatened or stressed then we engage our Brain Stem Brain Research

How do Customers experience the interactions with your firms: – Do I feel safe? – Do I feel respected? – Is this interesting? – Is this motivating? Neo Cortex: Executive Thinking Limbic: Emotional Processing Brain Stem: Survival Instinct The Secret Formula Innovative Customer Experiences = Business Acumen + Creative Thinking + Motivation

5 Arena Where will we be active? Product categories Market segments Geographic areas Technologies Value-creation stages How will we get there? Asset Optimization Organic growth Partnerships Vehicles Differentiators How will we win? Price Differentiation Brand Service Differentiation Product Differentiation Process Innovation Staging What will be our speed & sequence of moves? Speed of expansion Sequence of initiatives Economic Logic Economic Logic How will we obtain our returns? Low cost Premium prices Customer loyalty Proprietary technology Source: Adapted from Hambrick & Fredrickson, (2001). Are you sure you have a strategy? Academy of Management Executive. Innovative Customer Experiences and Business Acumen

The 3 Levels of Differentiation “There is just nothing like this out there.” “I see why we may want to pay a bit more here.” “There is not much difference here.” Source: McKain, Scott, 2012, Create Distinction: What to do when “Great” isn’t good enough to Grow your Business, Greenleaf Book Group Press. Distinction is about creating an emotional connection with your customers. DistinctionDifferentiationSameness Margin Expansion

Large (United) Small (Frontier) Medium (China Eastern) Puppy (Jet Airways) By size Pet Employee Grandchild Dog as … Dog Business Acumen/Innovative Segmentation – Making the Customer Experience Distinctive

The 3 Levels of Customer Experience “Interesting and motivating.” “I didn’t have to work hard.” “I accomplished my goal.” Source: Manning, H., and Bodine, K. (2012). Outside In: The Power of Putting Customers at the Center of Your Business. Forrester Research. Customer experience is how your firm’s interactions are perceived by its customers. EnjoyableEasyMeets Needs Revenue Growth

Retailers Hotels Parcel delivery/shipping providers Consumer electronics Insurance providers Banks Investment firms Credit card providers Airlines Wireless service providers TV service providers Internet service providers Health insurance plans Exercise: What industries do you believe to be the top 2 and bottom 2 with respect to Customer Experience scores?

High, Low, and Average Customer Experience Index Scores by Industry Source: Forrester’s North American Technographics Customer Experience Online Survey Excellent Good OK Poor Very Poor

Distribution of Customer Experience Index Scores Source: Forrester’s North American Technographics Customer Experience Online Survey

Customer Experience Revenue Benefits Source: Forrester’s North American Technographics Customer Experience Online Survey Total Annual Impact (in millions) $252 $307 $452 $590 $1,297 $1,364

Creating distinction doesn’t mean you must be completely unique. It simply means firms must create an integrated set of unique activities that are of value and essential from your customer’s point of view. EnjoyableEasyMeets Needs DistinctionDifferentiationSameness Source: Adapted from Scott McKain, 2012Source: Adapted from Harley Manning and Kerry Bodine, Forrester Research, 2012 The Customer Experience and Innovative Strategies

Innovation Continuum incremental r u pt i v e d i s So How?????

Activity: Walk the Line Incremental Breakthrough

1.Generate a list of company norms as it relates to customer experiences. 2.Select one norm to challenge. 3.Generate ideas to challenge the norm. Norm 1 Norm 2 Norm 3 Norm 4 Challenging Customer Experience Norms A Norm is a standard or pattern, especially of social behavior, that is typical or expected of a group.

Targeting Define the bull’s eye criteria. Use “Will it…”? or “Does it…?” For example: Will it be implementable in the next year? Will it leverage new technology? Does it cost under $50,000? Define your criteria

Targeting Plot the proposed ideas on the target relative to the bulls eye. Pick an idea to strengthen. Ask yourself: “What is stopping that proposed idea from being right in the bulls eye?” Phrase as an open-ended question starting with “How to…” Example: “How to Reduce the cost?”

Targeting Generate some ideas for overcoming the challenge. Continue to work to improve and strengthen ideas to get them as close to the bulls eye as possible. After refining your ideas select those ideas that are worth pursuing further.

Why is Distinctiveness a Rarity in Business? 1.A Focus on Competitors and not Customers 2. The Paradox of Best Practices 3.Efficiency = Effectiveness

What Can You Do On Monday? 1.Clearly communicate the financial cost of retaining a customer versus finding a new one – make this transparent to all who touch the customer 2.Create a bonus pool for those who go beyond and above to ensure repeat business 3.Cultivate an innovative culture that encourages broad decision rights as it relates to customer experiences 4.Document each and every key customer touch point – and apply creative thinking principles to ensure distinctiveness

Questions