Contributor, Korn Ferry Institute
This Week in Leadership (July 19 - July 25)
What the Delta variant means for office returns. Solving the labor shortage with returnships. Plus, tips for how to be a great board director.
Daniel Goleman, author of the best seller Emotional Intelligence, and host of the podcast First Person Plural: Emotional Intelligence and Beyond, is a regular contributor to Korn Ferry. His latest book, Altered Traits: Science Reveals How Meditation Changes Your Mind, Brain, and Body, is available now.
What is your favorite brand? And what do you love most about them -- the products they sell or the experience they provide?
When it comes to brand differentiation, a study from Walker, a customer consultancy, has shown that to most customers experience matters more than price or product. Technology, social media and the growing awareness of sustainability means fewer buyers are basing their loyalty on cost or quality— instead, modern consumers are most concerned with how a brand inspires them to think, feel, and behave.
While it may not be self-evident, this has quite a bit to do with purpose. As Gene Cornfield pointed out in the Harvard Business Review last month, in order for brands to reap the growth benefits of purpose, they must do more than adopt social or environmental causes, sustainability practices, or pithy purpose statements.
To outperform competitors on metrics like growth and profitability, as well as customer and employee loyalty he argues, they should calibrate purpose at three levels: of the company, the brand, and the customer. Then, Cornfield says, the organizations need to optimize “products, people, processes, policies, technology, operations, and metrics to deliver experiences aligned with those purposes.”
But it’s not so simple. According to recent research, while 73% of people cite customer experience as an important factor in their purchasing decisions, only 49% of U.S. consumers say companies provide a good customer experience today.
The gap, at least in part, seems to lie in how well brands are listening. In order to design a meaningful experience for customers, brands have to know exactly what matters to the people who buy from them— not just in terms of the context in which they provide products or services, but in terms of what they find meaningful in relation to their lives and the world. This requires taking the time to ask people about the values and issues they find most important and then using that data to inform how a brand interacts with the people who buy from them.
In short, the better a company understands their customers' sense of purpose, the better positioned they are to help them achieve it. This leads to customer experiences that leave people feeling excited, joyful, happy, satisfied and wanting more.
Not only do these types of experiences engender loyalty (one study shows that roughly one third of customers are willing to walk away from a brand after only one poor experience) but they also impact pricing.
Research from American Express found that 86% of consumers are willing to pay more for a better customer experience. Other research has shown that the more expensive the item is, the more willing people are to pay. For example, customers who have a great experience with a luxury brand are willing to pay up to 13% (and as high as 18%) more. Yet another leading customer experience research and consulting firm found that companies that earn $1 billion annually can expect to earn, on average, an additional $700 million within 3 years of investing in customer experience, totaling a 70% increase in revenue.
If you are wondering where your organization should invest this year, consider this: a meaningful customer experience pays dividends. An investment in customer purpose may be key to becoming a brand that helps people feel, think, and interact in the ways that matter to them.