In 2015, Gartner released its report saying that 89% of organizations planned to compete on customer experience in 2016. But what does it mean to compete on experience?

We know that customer experience matters. Studies have shown that customer experience impacts the bottom line and how customer experience leaders outperform CX laggards. One study by Temkin Group discovered a positive correlation between good customer experience and future purchase intention.

However, does simply focusing on general improvements to the customer’s journey put you in a position of competitive advantage?

Maybe. Maybe not. I would contend that overall experience improvements have the ability to create competitive advantage but to truly use experience as a competitive differentiator, you must focus on the specific pieces of the journey that make customers want to stick with you and leave your competition.

To compete on customer experience, you need to differentiate using the drivers of experience.

What Does Not Produce Competitive Advantage

Competitive advantage is rarely gained by improving the common measurements we so often use to compare our product or service to the competition.

Spinal Tap’s amps may go to 11, but as a guitar player, I can tell you that most people never take their amps past 5 or 6. Just adding more value, through additional offerings or lower prices, is rarely a strong source of competitive advantage.

The same goes for additional services or features. The key word here is additional. If your core product or service – or the experience surrounding them – are not sources of competitive advantage, additional features and benefits are unlikely to get you there.

Yet, all too often, these areas are where organizations begin, with what we can consider a more quantitative approach to trying to differentiate oneself from the competition.

It is true that a focus on quantitative improvements can lead to you being able to say that your product or service is better than the competition, but it won’t create competitive advantage because the customer simply doesn’t care.

The Strategic Approach to Competing through Customer Experience

To compete on experience, you have to compete on experience — to focus on the key aspects of the experience that truly impact customers’ behavior and attitudes.

#1. Emotion

How we remember an experience is how we rate an experience, and how we remember an experience is based on the most significant emotions we felt during it.

Look at your customer journey and each major touch point within it. How can you make the experience more emotionally resonant for the customer?

#2. Differentiation

What makes your customer experience stand out? What makes it memorable and different than your competition?

If your competition offers X, offering X + 1 gets you nowhere; offering Y or Z makes you stand out.

The roadside service AAA is a good example of this. In an industry where unkempt, uncaring roadside responders used to show up at their leisure; AAA added uniformed or at least clean service operators, regular communication through a well-trained contact center, and touches like having a cold water bottle for people who may have been sitting by the side of the road in the heat.

#3. Simplification

No matter what your customer journey is, it should be the simplest it can be without degrading the quality. While there are some exceptions to this, customer hassle is a competitive advantage killer.

No matter how many emotions you touch, no matter how differentiated your service, it can all be undone by an experience that is considered to be a hassle by the customer.

Simplification or reduced effort may not be a source of positive competitive advantage, but it can easily be a source of competitive disadvantage if it is not well tended.

How to Approach Creating Competitive Advantage through Experience

When looking for places to create emotion and differentiation, I suggest starting with the pressure points in your customer journey.

Pressure points are those touch points that are most likely to be emotionally resonant with your customers. The ones that can make or break an experience.

Does your competition have a similar touch point? Well compare them to each other and ask how you can make your experience at that tough point truly differentiated from your competition. Turn your customer experience inside out, and look at it from your customer’s perspective.

Once you are through with the pressure points, take a look at the whole customer journey. This may seem counterintuitive — to look at the key pieces of the journey over the journey as a whole – and in theory, it is not the most efficient way to approach the process.

However…

In customer experience, theory and reality rarely agree.

Approaching this process from the journey level is a massive undertaking. It takes a lot of time and effort to truly compare full experiences across organizations. By starting on the pressure points, you are ensuring that you can actually effect meaningful change in the short term.

Also, as mentioned, emotion dictates memory which dictates experience. If you nail the big moments and simply don’t screw up the small moments in between, you will differentiate yourself in a way that truly resonates with the customer.

If you want to compete through customer experience in 2018 and going forward, don’t get too mired in the details. Start at the strategic level, with emotion and differentiation, and then make your top pressure points the most incredible experiences in your industry.

It may not be the only path, but it is certainly a guaranteed path to creating and sustaining competitive advantage through customer experience.

PS. Make sure to check out my additional thoughts on this topic in this podcast episode.