Customer Experience as an access to & source of business disruption and transformation

What do the failures of three high street chains disclose about Customer Experience?

Over the last week or so, three brand name high street retailers – Blockbuster, HMV, and Jessops – have failed.  What do these retailers disclose about the Customer Experience?

I say that these retailers disclose that Customer Experience is both an access to business transformation. And at the same time, a source of business disruption.  Yes, digital technologies often enable a superior Customer Experience. Yes, someone has to figure out a viable business model. And yet, it is the superior Customer Experience that attracts customers and thus enables business disruption and transformation.

I also say that the demise of these retailers shows something else.  What? It shows that most of the companies that are talking about / using Customer Experience are using it as a tactical tool. And that is a mistake.  How can I point this out clearly? Let’s take the airline industry.  I say that as and when a company invents a ‘teleporter’ (think Star Trek, Blakes 7) it is the end of the airline industry no matter how much money the airlines spend on improving the Customer Experience associated with flying. And even with a ‘teleporter’ the people who go on sea cruises will continue to go on sea cruises.  I hope you get that which I am pointing at.  Just in case, I have failed to communicate, I am going to take a look at the demise of Blockbuster.

What lesson does Blockbuster disclose?

Why did I turn to Blockbuster?  To do a job.  What job?  The job of entertaining myself and/or my family.  What role did Blockbuster play?  Blockbuster provided the means for me to get that job done?  What was ‘the means’?  The video.

What did I have to go through to get the job of entertaining myself and my family done? I had to drive 12 minutes to the nearest Blockbuster store only to find that the car park was full. Then I had to drive around and find somewhere to park – not easy. Once I parked the car, I had to walk to the store. Then hope the right video was in store.  Select a video, queue and pay. Then walk back to the car and drive home. Watch the video. Tell myself to remember to take the video back. Next day, drive to the store, find somewhere to park, walk to the store, return the video.

Do you notice something?  The Blockbuster Customer Experience imposed costs – time, effort, worry – on me.  I did not want to drive.  I did not want to find somewhere to park. I did not want to turn up at the store and find Blockbuster had no more copies of the movie I wanted to watch.  I did not want to have the threat of late fees hanging over my head. I did not want to go back to the store to return the video.  These were the costs imposed on me by the Blockbuster Customer Experience.  I put up with them because I did not have a better alternative.

When the better alternative came – a better Customer Experience – I left Blockbuster. With Netflix and/or Lovefilm I select the movie I want to watch and I can watch it instantly on TV, on the PC, on the iPad, on the iPod. And if I don’t like that movie? I stop it and instantly start watching another one. All for a flat monthly fee which is better value than Blockbuster ever was.  Actually, it is better than that because I don’t watch many movies, my family does. Now, they do it themselves and I have no work to do!

What are the fundamental insights/lessons here?

It occurs to me that there are two lessons.  First, digital is disruptive. Digital technologies, used imaginatively, used courageously, hold the potential and promise of business disruption. Why? Because they enable companies to craft and offer superior customer experiences.  How?  They collapse time-distance-effort-worry. And thus enable smart companies to come up with value propositions and customer experiences that customers value. Which probably explains why the bulk of my work over the last two years has been concerned with digital strategy and digital customer experience.

Second, the real leverage in Customer Experience is not tinkering with what it is – which is what most companies are doing.  The real leverage is using insight and imagination to design fundamentally new and disruptive customer experiences.  The ones that enrich the lives of customers (by delivering unexpected benefits) and at the same time take out costs – time, effort, delay, worry  – and deliver greater value for money.

And finally

It occurs to me that if you want to get strategic value out of Customer Experience then go back and read/study The Experience Economy.  The point is not merely to improve the experience associated with a product, service or solution.  It is more than that.  What it says is that you can choose to compete at a completely different level – the experience level.  What are you selling?  An experience.  What kind of experience? The kind of experience that Build-A-Bear has come up with for bears for children.  The kind of music experience that Apple has created through iPods, iTunes, iCloud.  Or the membership experience that the MVNO giffgaff has put together for mobile telecommunications.  The kind of experience that Netflix and Lovefilm deliver for movies.

Please remember that if your business is open to digital disruption then it will be disrupted.  You can choose to do that yourself. Or you can wait for someone else to do it.  Blockbuster and HMV could see the disruption, they chose not to act.  As for the folks at Jessops, hindsight says that they should have got out of the camera business and into the business of selling smartphones.  What do you say?

Author: Maz Iqbal

Experienced management consultant working at the intersection of strategy, customer, and technology. Combine a tendency to think strategically with a penchant for getting my hands dirty at the coalface of implementation.

4 thoughts on “Customer Experience as an access to & source of business disruption and transformation”

  1. Maz,

    You are right, digital does bring disruption, and digital was the end of all 3 stores.

    But I think there will still be a lucrative market for a chain renting videos. and a high street camera shop and a store that sells CD’s. It just won’t be BlockBuster or Jessops or HMV holding those positions.

    Because they were lousy stores.

    I din’t really like shopping in them and I don’t mourn their passing.

    Maybe the art of survival has a lot to do with not being lousy?

    James

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  2. Hello James
    Let us wait and let time play then we will get the answer. At heart I am an experimental physicist – lets do the experiment and see what turns up. Which is my way of saying you could be right, I could be right. We will have to wait and see.

    maz

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  3. Hi Maz,
    I would agree that experience is paramount but digital is not the whole story. Check out this story: http://www.telegraph.co.uk/culture/music/9811238/Music-megastore-thats-keeping-the-customer-satisfied.html
    where they have focused on the real store experience that their customers want with very little digital in sight. The are getting it right where HMV didn’t because they are staying closer to what their customers want.

    Adrian

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    1. Hello Adrian

      I thank you for sharing this piece with me. It occurs to me that there is value in ‘digital is not the whole story’. So let me clarify my position. To stay in business every offline retailer has to offer value that digital does not / cannot deliver and which enough buyers value so that they will make the effort to go to the store. It is as simply as that. My test of this value is that the offline retailer charges an entry charge to the store and the customers pay it.

      Clearly this retailer in LA is offering an experience. The experience of an independent music store on a huge scale. It it offers nostalgia – vinyl records, old records. It offers an experience that you can talk to your friends about. It kind of reminds me of the craze some years ago for the old – really old – fireplaces that swept certain parts of the UK.

      And, I say it is foolhardy to ignore digital. If digital can disrupt your business it will disrupt your business. The days of high street retailing where a shop is simply a warehouse with windows are passing away. If it is simply a warehouse then Amazon is the best warehouse there is for many categories.

      Maz

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