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Goods + Services = Experience

Monday, December 17th, 2012 | Posted by Kevin Mccann

Neoclassical economics presents a pretty simple theory of supply and demand to set the equilibrium price of a manufactured good. The supply and demand theory assumes that consumers make “rational” decisions, when choosing which product to purchase. Is a person being “irrational” when choosing to fly a more expensive airline with the same in-flight services? Hardly, the consumer places additional value on the intangible experience of flying with the more expensive airline. With the American economy based 80% on services, companies must design the intangibles which attract customers to their business.

Every product includes some sort of service. The service in this case can be the interaction with the sales person, an automatic sliding door, the delivery method, or a website.  The combination of the physical product along with the supporting intangibles creates a customer experience. Each customer experience lasts longer than the direct interaction and is unique for each customer.

Excellent customer experiences are emotionally rewarding, fuel growth, drives loyalty, and inspire people to share their experiences with their peers. There is tangible proof that organizations that prioritize a clear focus on their customer’s experience enjoy widespread success. The popular brands in a specific an industry always rate in the superior customer experience category. These brands are the 3% of companies which are referenced in 90% of all industry books, articles, and blog posts. These elite organizations have a clear purpose that is visible and understood by all they create and follow a service blueprint to seamlessly synchronize their products, services, and stories to consistently meet, exceed, and often anticipate customer goals throughout an end-to-end experience.  For example, Starbucks has perfected the taste of their coffee and the cup that holds it. These items are the physical product that they sell to the customer, yet one can argue that it’s not just their coffee and cups that makes them so successful. There are a lot of intangibles which Starbucks has intentionally designed. Such as ordering process and flow of the line, the presence of free wifi, the casual conversation with the barista, the coffee names etc. Starbucks has been very successful because the design the entire customer experience, not just their product and logo.

By thinking of a brand’s product as a customer experience, and not a physical good, companies have a better chance of being successful, retaining customers and growing quickly. Build a complete customer experience first, then the “product” and customers will follow.

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