In the context of the business world, it is important to recognise that customers are not just functional entities represented by entries in a spreadsheet. They are human beings, just like us, with needs, expectations, and frustrations. As customers ourselves, we understand the complexities of daily life and the significance of having our needs met.
Therefore, it is imperative to view customers as human beings who have needs that must be fulfilled and jobs that must be done. These needs may not always be met through interactions with a company’s products or services, and it is crucial to look beyond the present moment of interaction. By extending the focus beyond current customers, a vast array of opportunities opens up to create new services, features, and ultimately, more reasons for customers to engage with a company.
Understanding customers with the Starbucks Rewards Program
According to research conducted by McKinsey, businesses that invest time in gathering and understanding behavioural insights outperform their competitors by up to 85% in terms of sales growth. One example of a company harnessing the power of customer understanding is Starbucks.
Having once been a dominant player in the market, Starbucks faced fierce competition as other companies started imitating their successful business model. Recognising that their focus on products had diluted their distinctiveness, they began to actively seek and understand customer feedback. By gaining insights into customer needs and desires, Starbucks was able to create an effective loyalty program called Starbucks Rewards. Not only did this reward customers for their loyalty, but it also granted Starbucks with access to valuable customer data, enabling them to gain a deeper understanding of customer preferences and habits.
This data provides Starbucks with a strong basis for making well-informed decisions on where to direct their efforts, with the confidence that their customers will be willing to pay for it. Furthermore, alongside the quantitative data, Starbucks has also employed various qualitative methods to gain a deeper understanding of their customers’ needs.
It is worth noting that while having data is important, using it effectively is crucial. Instead of solely focusing on transaction sizes and customer purchases to create new products, Starbucks took a different approach; they combined data with other sources to enhance the entire customer experience. This involved refining store layouts, improving staff behaviours, and introducing digital features like mobile ordering. By doing so, Starbucks successfully enhanced the overall customer experience while also maintaining their commitment to innovative product offerings.
Embracing customer-centricity in your organisation
If your business is interested in adopting a customer-led approach, there are a few useful tips to consider. First, create a compelling customer experience vision that puts the customer at the forefront and incorporates design principles, effectively communicating what customers anticipate from your business in an engaging and emotive manner. Secondly, ensure that all stakeholders are aligned with this vision to ensure that all efforts are directed towards enhancing the customer experience. Lastly, invest in understanding your customer’ needs and preferences to gain a comprehensive understanding of their expectations.
The challenge of Outside-In is one of seven key challenges we’ve identified in our book ‘Customer-driven Transformation’. To learn more click here to download a preview or check out our accompanying podcast, Customer Experience Design.
