3 Ways to ‘innovate’ the customer experience

This is the first in a two-part series that explores customer experience innovation, originally published on Forbes.com

“Necessity is the mother of invention.”

This age-old English proverb is as relevant today as it was centuries ago when first coined. While necessity has driven many an invention over the course of history, the concept of invention has since morphed to include a much broader term: innovation.

Innovation has become a popular buzzword of the Digital Age. And today, in the experience economy, there is ample evidence to suggest a strong connection exists between necessity, innovation, and experience.

But how do those three link together? And how does innovation apply to something like customer experience?

For businesses and leaders aspiring to build and sustain loyalty among their target customers, understanding the answers to these questions is crucial to innovating — not just improving — the customer experience. Organizations that are successful in retaining their most valuable customers — and growing profitably in the process — do these three things:

1) Give customers what they need, not just what they want

The first step to innovating the customer experience is to understand necessity. In order to discern customer needs, most organizations ask for direct feedback. The savviest among them listen to feedback on unsolicited channels, like social media, as well as through solicited mechanisms, like surveys.

What happens next with this data varies in scale and sequence for each organization, but it usually involves combining that customer feedback, or experience data, with operational data, or metrics like call wait time and transaction volume. Insights from the combined data are extracted and shared with the right people who take some form of action to address pain points from the feedback, including closing the loop with unhappy customers.

This is good practice for running an efficient Experience Management (XM) program. But how many organizations, somewhere along that path, take the time to pause and reflect on their actions and whether they are truly addressing the underlying needs of their customers? In other words, are they just giving customers what they want based on their expressed feedback — or are they taking it a step further and giving customers what they need?

Giving customers what they want is not the same as giving them what they need.

When customers complain about a broken process, most companies’ first instinct is to fix the process — not change it altogether.

Addressing customer feedback is important, but acting on that data alone will create, and perpetuate, a company that is reactive and focused on just repairing or fixing — not one that will truly “innovate” the customer experience. Customers don’t always express a need they may have because they don’t know they have that need until a product or service is created to fulfill it.

Think about companies that have upended established industries based on latent customer needs. Tech titans like Apple, Netflix, and Uber created demand and fulfilled it by deliberately choosing to give people what they needed – not necessarily what they wanted. In doing so, they created, not only enormous business value, but zealously loyal customers.

2) Prioritize experience innovation over product innovation

These companies created innovative products. But they realized product innovation wouldn’t always sustain them as industry leaders and could, ultimately, be imitated by others. Long-term competitive advantage lies, instead, in customer experience innovation.

Take Apple, for instance. Not only did the company create a product that customers love, but it created an ecosystem and experience that buyers couldn’t find anywhere else. Before the pandemic, millions ventured into Apple stores every month just to explore the newest gadget. Apple turned their stores into something more akin to a town square where customers could browse, tinker, socialize, or get immediate help with their products at the Genius Bar. That unique experience is hard to replicate, even today.

Amazon has also gone above and beyond to meet customer needs. Not only did the e-commerce giant introduce two-day, one-day, and same-day delivery options to customers, but it partnered with companies like the United Parcel Service and Kohl’s to accept product returns right from the customer’s doorstep or at brick-and-mortar stores. Amazon turned a competitive disadvantage for traditional e-commerce to an advantage by innovating the experience. And it has yet to see a competitor come close to imitating what it has become.

Both companies understood that product innovation would only get them so far, and when it comes to building and sustaining loyalty, experience innovation will always trump product innovation.

3) Think of innovation as a mindset

So how can you help innovate the customer experience for your company? Apple, Amazon, Airbnb, Netflix, Uber, and others are classic examples of “disruptive innovation” — but disruptive innovation is not the only way to fulfill customer needs.

Innovation isn’t always about shiny new tech or the interruption of an entire business model but can function more like a perpetuated behavior, according to the book “The Innovative Mindset.”

“By asking yourself what it takes to be innovative — and by being honest with yourself about the answer — you can incorporate innovation into your life much in the same way that you would a behavior to help you lose weight, increase your strength, learn to play the piano, or improve your relationships,” the book claims.

Harnessing innovation to fuel experience-led business growth is more than developing new products and services or participating in a hackathon to generate new ideas to solve a particular problem. Innovation is a mindset — and can even become a habit — if you embrace creative thinking as a skill that can be learned and improved with rigorous practice, not as something that is purely innate.

In Part Two of this series, we’ll explore five guiding principles that can help broaden an organization’s perspective on innovation, how it manifests as a change in mindset, and the critical role it plays in customer experience management.