Differentiated Experiences, Universal Outcomes
Arguably, one of the most daunting challenges businesses face today is one of scale: how to study and understand a myriad of customer needs then be able to turn around and tackle them at a personal level. Basically speaking, most businesses look to standard metrics to help understand whether they’re meeting customers’ needs. Are customers satisfied? Might they recommend the brand or product? These metrics are intuitive and relatively easy to collect, but there’s one problem with this approach: it’s flawed.
Traditional approaches to measuring business performance are missing the mark – and hurting the bottom line.
Businesses that rely on standard KPIs like Share of Wallet and Net Promoter Scores (NPS) as a proxy to gauge customer sentiment operate under the illusion that “active and satisfied customers’ needs are being met.”
The problem lies within what is being measured. What these customer KPIs illustrate is the likelihood customers will buy from them again down the road, and how much; in other words, the value customers are creating for the business. But where they fall short is providing an understanding of the value the business is creating for its customers. Without digging deeper, brands risk losing ground to competitors that are tuned in to what customers really want, and are likely to overlook opportunities for customer-centered innovation and growth.
Needs change over time – but universal goals remain.
What can trip up businesses is yet another common myth: it’s too complex, if not impossible, to truly understand and act on customers’ individual needs. It makes sense, given the limitless spectrum of potential needs, and the fact that humans are in a constant state of evolution and flux.
The key is to shift focus and look instead at what drives customers’ motivations and behaviors by evaluating what underlies and shapes those needs. We can refer to these as universal goals or core values, but the idea is the same: they represent customers’ human hardwiring, and they don’t change appreciably over time. This is the core concept of the values-based approach to understanding consumer behavior developed by Bain, futurist Andy Hines, and others; why try to track thousands of shifting needs in real-time when we can focus on a fixed, stable set of metrics?
Our research in this area reveals three universal goal categories, comprising a total of 15 customer performance indicators (CPIs) that help customers to function, thrive, and succeed as human beings over time. Our analysis has validated the positive relationship between each CPI and future customer value (FCV) outcomes, reflective of business growth. As the number of CPIs executed on for a consumer increases, growth in FCV accelerates.
Moreover, it’s an approach at the heart of a truly customer-centric strategy that:
- Offers a window into customers’ needs and aspirations.
- Is easier than other metrics for employees to internalize, empathize with, and activate on.
- Complements and elevates the actionability of traditional KPIs discussed.
Changing needs, universal outcomes.
Of course, not every CPI matters equally to every consumer. There’s a long line of research that shows clear differences between people whose universal goals tend more towards material security, and those who prioritize the pursuit of personal fulfillment and inner meaning.
We also expect different industries—and even different brands within an industry—to have different balances of CPI relevance. Think of a rideshare service, where functionality is likely to be paramount, compared to a wellness brand, whose customers’ emotional goals may be central; or the contrasting goals of customers shopping for economy cars vs. luxury cars.
Businesses that apply the CPI model are setting aside the differentiated experiences and expectations that customers bring in favor of understanding universal outcomes. They also understand there are different ways to deliver on CPIs, provided that their strategy centers on the universality of customer goals. Here are a few examples of CPI execution in action:
EMOTIONAL: Reduces my anxiety/risk
- The navigation app Waze has integrated a Zero-Speed Takeover function that promotes nearby dining options; it only kicks in when the vehicle has stopped, which feels less intrusive and eliminates distracted driving.
- Although it wasn’t the first DTC bed-in-a-box company, Casper popularized the trend in 2014, along with its 100-day no-risk trial to entice customers who might be nervous about investing in a mattress they couldn’t try out first; today, the extended home trial has become a standard for this growing industry.
FUNCTIONAL: Makes my life simpler
- Health insurance is notorious for its Byzantine complexity; Oscar bases its approach on reinventing the member experience, offering information and services that are refreshingly simple, easy to understand, and access.
- Discount grocer ALDI, recognized as a global leader in simplicity, has built its model on efficiency: by streamlining brands and slashing prices, ALDI eliminates endless product comparisons and cross-shopping, enabling shoppers to “conserve time and attention”
SOCIAL: Provides me with a sense of belonging
- Harley-Davidson’s brand centers on the strong connections formed by the avid Harley riders who “Live to Ride” with each other, and also creates opportunities for the company to build durable connections with its customers.
- Southwest Airlines is renowned for its positive employee culture, which in turn generates an environment and experiences that make its customers “feel celebrated as passengers”
Understanding customers doesn’t have to be complex when we shift focus away from their changing needs, experiences, and expectations, and drill into a fixed set of universal goals they share—emotional, functional, and social.
This serves as the north star for both a customer-centric mindset and business ethics because it creates an understanding of what businesses offer their customers, as opposed to just the value that customers are creating for the business. It’s also a path to a better business strategy that realizes potential, finds new opportunities, and maximizes returns.