strategy+business: Corporate Strategies and News Articles on Global Business, Management, Competition and Marketing

Special Isn’t What You Think

David Clarke

David Clarke is PwC’s global chief experience officer and leads PwC’s Experience Center. A principal with PwC US, he is based in the Florida area.

 

 

News flash: You’re not as special as you think. Your brand is probably not as special as you think. Indeed, it might be quite ordinary. Forgettable, even.

Maybe you sell an interesting product or run a tight ship. On a personal level, you might even be a great person to work for, the living embodiment of your company’s truly compelling mission. But if all companies were as special as the people running them thought they were, then we’d have many more Apples, Teslas, and Starbuckses in the world. These companies offer customers such a holistic relationship that they transcend regular business; they sell an experience, an aspiration, a lifestyle.

One of the factors that makes companies special is that they manage to turn a want — something that you may feel a strong desire and impulse to buy, but that is not truly necessary — into what feels like an unavoidable need. People can get through the day (and have done so for millennia) without feature-laden smartphones, electric sports cars, and $6 Frappuccinos. Nobody really needs any of those items, and yet hundreds of millions of people feel as if they do.

We’ve all sensed that kind of desire at some point in our lives. It’s a deep emotion that we might feel when we meet someone we suddenly realize we can’t live without. Or maybe that emotion is tapped by a comfort food we ate as children, one whose very aroma calls to mind a special connection that can’t be satisfied with a substitute.

Four Ways to Assess Your Company

How can you tell if your company really is special? Here are four observations that might tip you off. And if you discover you’re not so special after all, these insights will provide you with some direction on how to get there.

Your friends and family have workplace envy. When you or colleagues tell people where you work, does a crowd gather around to ask questions? Do people randomly ask about what your company is working on? Or when its next product release is coming out? People who work at special companies, for special brands, find this happening to them all the time.

For instance, people who work for the streaming music service Spotify, which has seen its subscriber base explode from 15 million in 2015 to about 70 million in early 2018, will surely be peppered with questions by friends. They’ll want to know when Drake is dropping a new album, or they’ll pester them for details on how customized playlists, one of the company’s core features, really work.

If you and your staff are constantly asked questions about your work by enthusiastic friends and family, it’s a sign that your brand is special.

You’re spending less on media. Very few companies have been able to build their business on word of mouth or so-called earned media alone. According to Gartner’s 2017–18 CMO Spend Survey, companies with US$5 billion in sales spend more than 11 percent of their annual revenue, or $550 million, on marketing. A substantial chunk of that goes toward advertising and paid media.

Of course, the best (and most economically efficient) form of advertising is word of mouth. Given a choice between a brilliant 30-second ad and a host of evangelizing customers who preach the gospel of your product to everyone around them, most professional marketers would choose the latter.

There are special brands that spend next to nothing on advertising. Think about Costco (2017 sales: $129 billion). Have you ever seen a television ad for Costco? Probably not. While Costco spends very little money marketing itself, it has nonetheless managed to attract more than 90 million members worldwide — and an impressive 87 percent of those members renew each year.

How does Costco do it without a spend-and-splash on advertising? Its customers believe the retailer provides a one-of-a-kind-experience that they feel they simply need in their daily lives. Surely you’ve complimented a friend on a specialty item only to have her enthusiastically respond with something like: “Costco! It was only $11 for all six.”

If you and your staff are constantly asked questions about your work by enthusiastic friends and family, it’s a sign that your brand is special.

The money that companies like this don’t spend on advertising is partly being spent on providing a better experience for both customers and employees. Costco, for instance, pays its employees more than its peers. Turnover is reportedly below 6 percent per year for staffers who have been there for more than a year; retail industry turnover hovers around 69 percent for part-time staff, according to the Hay Group, and around 59 percent across retail as a whole. Such special companies also can use funds that might be otherwise spent on billboards and radio ads on expansion and product development.

If you’re spending virtually zilch on advertising and media buys, if your ad budget is smaller than your competitors or is shrinking while your customer base and sales are growing — you’re special.

People love to work for you — like, really love it. Take a quick look at your employee referrals. Are they going up? Barely existent? What about your turnover rate compared to that of your competitors? Are you spending more or less time and money on recruiting in this extremely tight labor market?

Special businesses don’t just create experiences or aspirations that make their customers feel like they need to patronize them. They also create an environment in which employees feel a strong attachment to the company. It’s a cliché for CEOs to note that their most important assets go home every night. But it is a truism that, every morning, employees have a choice. Your staff is constantly deciding whether to stay or leave. (In July 2018 alone, 3.6 million people in the U.S. quit their jobs.) The ones who stay and recommend their friends and contacts in their network are probably the ones you and your leadership team have given opportunities to — opportunities to be creative and collaborative, opportunities to help push the business in new directions. They believe in the company.

 
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If you can create a business in which people want to work, you’re not just getting the best out of existing talent — you’re able to spend much less time and money recruiting and on training new talent. (According to a 2014 ADP report, companies spent, on average, $308,000 per year on training.) Oh, and happy employees help create products and experiences that make customers feel deeply satisfied and loyal. And they’ll pay more for them: According to the 2018 PwC Consumer Intelligence survey, 42 percent of customers worldwide say they would pay more for a friendly, welcoming experience, and 65 percent of U.S. customers find a positive experience with a brand to be more influential than great advertising.

This kind of special can exist in any type of company, in any industry. Take Ritz-Carlton, for instance. The global hotel chain is known for its intense focus on the customer and employee experience (pdf); its loyal travelers, who can generally afford to stay wherever they want, feel a need to stay at a Ritz-Carlton. Many of its 40,000 employees have been there for decades, and it has retention rates above the industry average. Staff are empowered to go the extra mile to create a better experience for customers.

You’re not a want anymore, you’re a must-have — a new need. It is possible to transform your company and its products from a want to a need. Apple might be the classic example. In the 1980s, when Microsoft’s PCs dominated the market, Apple computers were primarily of interest to graphic designers, tech aficionados, or those who just wanted to try something different. Many analysts and prospective customers expected Apple to fail or sputter along, even after it released its line of colorful iMacs, which gave the business a boost, in 1998.

But when the iPod was released in 2001, everything changed. Yes, there were other MP3 players on the market. But with the iPod, as it has with all of its ensuing products, Apple focused not just on making the technology special, but on making the customer experience special, too. Steve Jobs intuitively understood that customer experience is vital: As the PwC Consumer Intelligence survey found, 73 percent of people point to customer experience as a critical factor (pdf) in their purchasing decisions, and they’ll pay a premium of up to 16 percent for a superior customer experience.

Apple put a great deal of thought into how its customers would use its devices because the company knew people wanted something that would make them look good, too. Next, Jobs and his team went a step further by creating an easy-to-use ecosystem — iTunes — that gave an advantage to customers who used more than one product. By the time the iPhone was released in 2007, Apple’s transformation from want — Ooh, these products are cool, I really want one! — to a need was complete. For well on a decade, iPhone devotees have been telling the world they simply can’t live without their music, their apps, their information, their photos and books, their connections. And that’s special, too.

Not every company can achieve Apple’s dominance over its customers’ lives, Ritz-Carlton’s employee retention, or Costco’s word-of-mouth credibility. But every company can take steps toward turning their products and services from wants into needs.

Think about how you do business. Is the customer experience the focus of everything you do? It should be. Look at every aspect of your business and make sure the customer comes first everywhere. Think about what kind of user experience it would take to turn your product into a must-have item. If you can begin to create a deep emotional connection with your customers, you’ll be on your way to becoming truly special.

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Special Isn’t What You Think