Which came first, the chicken or the egg? People have wrestled with this conundrum for thousands of years. Personally, I’m inclined to think it was the egg. But what do I know?
And, more importantly, what does any of this have to do with utilities and customer experience?
Well, back in June of 2019, I was in Amsterdam to attend the TA Cook Connected Customer utilities event. A gentleman presenting for one of the utilities had proposed that the focus should be on products, not the customer experience.
Now, he wasn’t arguing that customer experience was unimportant, but rather that providing a great or at least a “good enough” customer experience has already been commoditized; and given the law of diminishing returns, it wasn’t worth the extra money.
It should come as no surprise that my knee-jerk reaction was, “Sacrilege! Of course customer experience is more important! Hasn’t he read about the Experience Economy? How 70% of buying decisions are based on the way a customer feels about their experience? Next thing you know, he’ll be saying that mobile isn’t all that important; and millennials…well, they’ll grow up.”
The outrage!
Once my blood pressure returned to normal, I wondered, What if he’s right?
- What if my life is one big lie?
- After all, doesn’t everyone want the best product at the best price?
- And can you even have a customer experience without a product?
- But on the other hand, how do you become a customer without a customer experience, even if it’s a bad one?
- Is no customer experience still a customer experience?
So, which is more important: The product or the experience?
Inquiring minds, as they say, want to know! And even more importantly, inquiring wallets want to know: Is a better customer experience worth the money?
After some research, I reached a conclusion. And that conclusion is: It depends.
This doesn’t sound like any kind of definitive answer because it isn’t, but this is as conclusive as it gets.
This question of value depends on a few factors:
- How good or innovative is the product or service offered?
- What’s the demand?
- How widely available is it?
- How competitive is the pricing?
- What’s the worst experience I can put up with?
The innovation is the offer: Or, the medium is the message
Everyone is familiar with the mad rushes for a great product and differentiation, whether that rush is the long line down the sidewalk or the “notify me when it’s available” option on an app or e-commerce site. Stories of people standing in lines for hours to get the latest must-have thingamajig are not at all uncommon.
But does this happen in utilities? And if it does, how relevant is it?
Well, differentiation certainly doesn’t happen in base commodity products themselves. They’re great products and it’s hard to imagine life without them. But are utilities like gas or electricity differentiated? No. One kilowatt looks like any other kilowatt to me.
Then where’s the value of investing in customer experience? One could argue that in regulated markets the customer experience doesn’t really matter, except as a requirement by regulatory boards forcing utilities to meet certain standards of service.
In unregulated markets, providing a better customer experience than your competitor will reduce churn, plain and simple.
What makes customer experience as important as the product?
The experience gap, for one. Although 80% of brands feel they are delivering great customer experiences, only about 8% of their customers agree. The experience gap—and the opportunity to differentiate in a standardized industry—is vast, to say the least.
That experience maybe seems less important for existing customers, but no company can survive long-term on just a product. Not anymore.
Even for utilities with the best product available, the customer experience is still important. The ease or annoyance customers feel when evaluating your offering is already part of the customer experience.
It’s a good indicator for customers what it will be like working with your company. The better and easier that customer experience, the higher the sales.
My experience with many companies is that they think they’re smarter than the competition, which is rarely the case.
Offers get copied.
Patents are hard to get and even tougher to defend.
Competitors catch up.
It’s only a matter of time.
Customer experience buffers against the “latest and greatest” mindset. Even if you are a leader in innovation, breakthroughs aren’t on a timeline.
So, chicken or the egg? Does it matter?
Consider your own personal experience. What are the odds you’ll do business with a company you don’t like because of a bad customer experience? I know that for me the answer is zero – even if I think their offer is slightly better. Most of the time I won’t even look at it.
Let’s go back to our original question of the chicken or the egg – way back, in fact, to Aristotle, who contemplated this dilemma and concluded that both must have always existed, “For there could not have been a first egg to give a beginning to birds or there should have been a first bird which gave a beginning to eggs; for a bird comes from an egg.”
I think it’s fair to say that this analogy applies just as well to the question of the product or the customer experience. For as long as products have been offered, customers have had experiences; except we didn’t care enough about it to give it a name until recently, when metrics proved it to be a valuable competitive factor.
Giving priority to one over the other at this point is an exercise in futility, because doing so all but guarantees the demise of the other – and, in the end, both.
The bottom line is that delivering exceptional CX is a necessity across industries, and smart utilities are differentiating themselves by improving customer experience.
