The Customer Experience Portfolio

November 24th, 2015   •   no comments   
The Customer Experience Portfolio

By Jennifer Rice

Who are your priority customers and how do you serve them? Classic brand and customer experience theory says to focus on the “best fit customer” to drive relevance, yet it is rare to find a case where pleasing only one customer type can help achieve your goals. Case in point: when I took this position at Forrester, I started flying… a lot. Yet my 25,000 miles in 3 months on a certain airline didn’t align with their pre-set qualification period, so I didn’t receive status nor am I recognized in any way when I fly with them. That lack of recognition undermines loyalty, yet I’m precisely the type of customer whose loyalty they should be eager to gain.

This airline puts emphasis and resources into maintaining an improved experience for their defined priority customer – existing loyalty program members – and doesn’t consider the experience for attracting new customers like me into the fold. While they have a terrific app, the rest of their relatively generic flying experience (including wi-fi on only 1 of 10 flights I’ve taken) does little to motivate me, or any business traveler, to choose this airline over another brand.

When portfolio thinking comes into play

It’s true that by trying to be all things to all people, you become nothing to anyone. Imagine Apple trying to appeal to both innovators and technology laggards, or Southwest Airlines trying to cater to both bargain and luxury fliers. It doesn’t work. Good brands have the courage to stand for something.

This is typically where brand portfolios come into play. Companies in highly experiential categories like hospitality and retail create dedicated brands for specific customer types, ensuring the entire experience is highly relevant for each audience. Think Gap Inc. with Banana Republic at the higher-priced end and Old Navy at the low, or Starwood’s diverse brand portfolio for psychographic segments like the sustainably minded (Element) or the trendy (W Hotels). High relevance creates an emotional connection with a brand, and our research shows that emotional connection is the top driver of loyalty-based revenue.

However, creating new brands is a very expensive proposition and often hard to sell. An airline could create a sub-brand or entirely reposition itself for business travelers, creating exponentially higher relevance and connection, yet these approaches are often challenging to sell to stakeholders and shareholders of large public companies. Sub-brands also don’t make sense for many companies that, by their nature, attract a wide range of customers, those in which the purchase decision is not under customer control like: utilities; health insurance; 401k programs; office technology; location-dependent categories like convenience stores, grocery stores, banks, etc; or B2B companies selling to multiple decision makers and influencers across small and large customers.  Even experiential brands with a clear psychographic audience, like Apple or luxury hotels, sell to both businesses and consumers with different experiences for each.

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