This study shows how companies can command a price premium in a deflationary world

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Over the past twenty years, technological advances have transformed the relationship between a customer and the sellers of products and services.

That changed relationship has empowered customers to both demand more in terms of products and features, and also secure them at the best possible price.

For many companies, it probably feels like an endless march to the bottom — a world in which price is the only way to compete. But a recent study of 15,000 people across 12 countries, including Australia, offers a clear pathway to building a sustainable and profitable point of differentiation.

In their report, “Experience is everything: Here’s how to get it right” David Clarke, global chief experience officer at PWC and Ron Kinghorn, the US consumer markets advisory leader at the firm, say that if companies “give customers a great experience… they’ll buy more, be more loyal and share their experience with friends”.

Of course, that begs the question of what customers really see as a good experience.

Clarke and Kinghorn say it comes down to: “Speed. Convenience. Consistency. Friendliness. And one big connector: human touch.”

And by “human touch” the authors mean the ability to create “real connections by making technology feel more human and giving employees what they need to create better customer experiences”.

The good news is that if a company can do that, customers will be “increasingly loyal to the retailers, products, brands and devices that consistently provide exceptional value with minimum friction or stress,” and the companies who achieve this will be able to extract a price premium for its good or service.

The authors highlight that a good customer experience “leaves consumers feeling heard, seen, and appreciated”. They also highlight that survey response showed 73% of customers say the experience is important but only 49% report good experiences.

The experience and expectation gap (source: PWC supplied)

Crucially, the report highlights “43% of all consumers would pay more for greater convenience; 42% would pay more for a friendly, welcoming experience. And, among U.S. customers, 65% find a positive experience with a brand to be more influential than great advertising”.

Think about that. “More influential than great advertising”. It makes sense though, doesn’t it? Who hasn’t had a bad experience and thought I might try something or somewhere different the next time?

Clarke and Kinghorn have 6 key take-outs from their survey.

  1. There is a price premium to be extracted of up to 16% on products and services for “valued, great experiences”.
  2. Bad experiences will drive customers away with 32% saying they’ll “walk away from a brand they love after just one bad experience”.
  3. Getting the “must do’s” right is critical, with customers reporting over 70% importance for speed, convenience, helpful employees, and friendly service.
  4. Customers still want human interaction with 82% of US and 74% of non-US consumers wanting more in the futures. Thus PwC says, “the technology supporting human interaction must be seamless and unobtrusive across platforms”.
  5. Forget the idea that demands are different across generations. Gen Z might have a different expectation about “speed and knowledge” but all generations expect instant. And convenience, the “seamless transition from tablet to smartphone to desktop to human”, is table stakes.
  6. Lift your game. PwC’s survey shows “54% of US consumers say customer experience at most companies needs improvement”.

It’s a detailed report. And while all of the above is important, two key drivers of value extraction stand out.

The first is that technology is the enabler, not the final solution. “Great employee experience brings stronger, smarter, more innovative ideas, which will drive future business and superb customer experience” Clarke and Kinghorn say.

The second is as obvious as it is important. Understand your customer well enough so you know what matters to them. “Change your customer experience goals to reflect what actually matters to customers,” Clarke and Kinghorn say, and that will allow you to “gain measurable business benefits—including the chance to win more of their customers’ spending dollars”.

If you are doing both these things, then at the very least you and your company are on the right path.

You can access the full report from PwC here.

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