Experience-based Differentiation is defined by a systematic approach to interacting with customers that consistently builds loyalty. There are three main principles when it comes to Experience-based Differentiation:
- Prioritize customer needs instead of product features;
- Reinforce brand messaging in every interaction;
- Face customer experience as a competence.
Customers have grown to desire personalized and differentiated experiences. Businesses must respond to these desires in order to survive in the market and still be seen by consumers as relevant in their field. How can retailers offer a great customer experience and differentiate themselves?
- Consultation: professional and expert advising;
- Convenience: easy check-out processes and simple decision-making, giving power to the consumer;
- Customisation: add value to your customers through personalized product suggestions.
Before going in detail on each of the points above it is important to understand key concepts regarding consumer experience.
Photo by stephan sorkin on Unsplash
Customer Experience Concepts
Customer Experience, also known as CX is the perception customers have when in contact with your business or brand, based on the result of every interaction customers have with it. Everything you do impacts the perception customers have of you and their decision to keep buying from you or not. A great customer experience is crucial to every business and a key to success. There are several benefits that come from implementing a good CX, such as:
- Increased customer loyalty
- Increased customer satisfaction
- Positive reviews and recommendations
It is also important to measure customer experience through customer analytics, which is based on the tracking and visualization of customer behavior data. These analytics can serve as a starting point to check how good your overall customer experience is. To measure this, there are some metrics you should analyze, such as retention rate, customer lifetime value and the churn rate (customer attrition).
Now that we got that covered, let’s dive into the 3 actions retailers can take in order to offer a great customer experience and differentiate themselves!
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In physical stores, staff is held accountable for a great number of sales. For many people, they are the memories that stand out from a specific store and have a major impact on whether the customer will or not return. Retailers must provide tools to their employees so that they are well-informed and go above and beyond to deliver a seamless shopping experience.
Store associates are are the voice and face of the brands
Greg Jones, North America Retail & Consumer Goods Lead
Consumers are searching for convenience more than ever as 83% of shoppers say that convenience in shopping is more important today than 5 years ago. Customers generally prefer convenient goods and services. That factor has a great impact on buying decisions. It has been shown that convenience affects how customers perceive and evaluate such products or services.
A study conducted in 2007 found that convenience is the most relevant factor when it comes to the use of mobile devices for online shopping. Consumers are more likely to choose a brand that ensures a convenient experience. According to the National Retail Federation, nine in ten are more likely to do so. Since customers are so busy these days, they are willing to pay extra price for a convenient experience, if that means saving time and effort.
Convenience in each type of purchases, based on a NRF report
How to achieve convenience?
According to UXMagazine, the best way to understand and implement services that are perceived as convenient to your customers is to research and design based on their needs. Monitor your customer journey when buying or using your product and discover which pain points it encounters on the way. Solving those pain points will set you on the path to achieve convenience.
Where consumers want convenience?
Convenience is perceived differently for each person. It depends on each person’s context, where they are on their shopping journey and most importantly what they are buying. The NRF (National Retail Federation) published a report answering the question: “At which part of the shopping experience is convenience most important?”.
Where customers want convenience in their customer journey, based on a NRF report
Nowadays, customers expect a personalized shopping experience. They are not just looking to buy the product but seeking added value in the shopping experience through personalized actions. An effective personalized shopping experience can help retailers meet the customers desires.
Just applying traditional differentiation strategic approaches in retail (promotions and discounts) is not proving to be as effective as they once were. However, differentiation is still possible if we think about other strategies that bring added value to our customers’ shopping experience. This type of approach is especially important since several researches indicate that a more personalized experience leads to an increased customer loyalty.
Personalization now extends to the whole customer experience, which means that every touchpoint the customer has with a brand is personalized. These personalized actions are not targeted just for the alike customer, but for the customer as an individual. Through AI mechanisms, and data collection it is possible to provide product suggestions, offers and communications that are uniquely relevant for an individual.
How does personalization work?
Responding to the current market demand, retailers have adapted to create personalized solutions for their customers. This allows them not just to survive, but to thrive since personalization has become means to differentiation.
Personalization programs lead to loyal customers – crucial in a retailer’s success. In general, it also provides a positive customer experience that makes the customer feel unique. According to McKinsey, “customer experience leaders in the retail space have provided their shareholders with returns that are three times higher than the returns generated by retailers with low customer satisfaction scores.”
Regarding personalization, Amazon has shown to be the pioneer. Helped by fenomenal analytics, Amazon has managed to expand their personalization program and become a pioneer in this field. As you probably have already bought from Amazon, you are familiar with these actions. The website shows customers products that are often purchased with the item they are viewing, displays items that can be bundled, and recommended additional products.
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