Occasionally, we feature popular blogs written by our sister programs at CEB. This week we feature a blog from the Customer Experience Leadership Council on how the age of consumerism is reshaping the customer experience.
Is it time to get serious about Customer Experience?
A few days ago, IKEA’s head of sustainability, Steve Howard, made news at a conference by declaring that the developed world had hit “peak home furnishings.” The broader point he was making was that household consumption patterns are beginning to show signs of dramatic change within most advanced economies. And while IKEA still targets a doubling of sales over the next 5 years largely through growth in developing markets, the days of uncritical and overly-acquisitive consumer spending in the US and other countries has come to an end. Howard noted that as a retailer operating in these geographies, IKEA is looking to innovate on an idea they are calling “circular stores,” where customers can return to the store to repair and recycle their products.
Macro data may add context here as well. According to the Federal Reserve, US personal consumption spending averaged 3.8% annualized growth over the past two years (by comparison, over the 5 years prior to Q4 2008, the average growth rate was 5.5%). But despite this solid, if unspectacular growth, a number of businesses appear to have begun to sense the shifts indicated by IKEA.
Indeed, if we examine this trend a bit closer, I think it helps explain what is driving the broad emphasis on customer experience across today’s business landscape. (See below for data from a recent CEB survey of sales and marketing leaders, in which 70% stated that their company’s highlighted customer experience as a principal source of differentiation at least sometimes, and 40% reported doing so often or always). Because if we believe, as IKEA does, that consumers in many geographies no longer desire more “stuff” – even if it is well-designed and aesthetically pleasing stuff – then they will increasingly have to recast their offering in terms of the experience it provides. And in competitive markets, they will have to go deeper, innovating and competing on their customer experience.
In truth, we see many companies – from entrenched players to potential disruptors – doing just this. While we often use business model shorthand to classify these moves – for example: the sharing economy, cloud services, open APIs, crowdsourcing, mass customization, etc. – it is clear that any number of categories of products now fundamentally depend on their explicit experiential benefits. While we cannot predict where this ends, in an age of abundant stuff, the importance of customer experience is clearly growing.
Originally posted by Geoffrey Campen