Taking a strategic cue from discounters can pay dividends for brands in all sectors
Paying discount prices used to mean getting discount quality. But no more. The discount airlines have some of the newest fleets and the most on-time departures. Foodies were delighted by the Dill pop-up restaurant in Stockholm before it was revealed all its ingredients were sourced from Lidl, which had created the pop-up to make a point.
How do these discounters manage to achieve such quality? And how can you compete with that unassailable combination of quality and price?
The key to success is to design an experience that is “selectively excellent.” This means choosing where specifically to innovate and excel in order to offer distinct value, and where to deliberately compromise to ensure good value for money spent. The point is to make the compromise explicit: not hidden or apologetic, but an explicit bargain with the customer, as pioneered by Zara and IKEA, among other leading brands.
Follow these four steps and you, too, can deliver an experience that is selectively excellent.
1. Know what makes you special
Building from a clear brand idea helps distinguish between experience elements that are ‘generically good’ and those that connect people to what is authentic and different about a brand.
IKEA’s vision “to create a better everyday life for the many people” reflects its business philosophy of making high quality products accessible to as many people as possible. While the quality of its products is exceptional for the price point, the compromise comes in the warehouse-based, self-service retail experience and self-assembly. This is a trade-off guided by its core brand idea, and one that budget-conscious shoppers happily accept.
2. Choose the moments that matter
Understanding the customer mindset is key to guiding investments across the experience. This requires both a detailed understanding of the elements customers value most, and areas where compromising the customer experience could, in fact, be advantageous.
Cosmetics retailer Sephora has mastered this over the past few years with its tech-enabled shopping experiences that both increase convenience and provide ongoing sources of inspiration beyond the store. Sephora FLASH, the company’s Amazon Prime-like subscription service, offers unlimited two-day shipping for just $10 a year. The brand has also introduced its own social shopping platform, mobile experience and online TV channel.
3. Uncover the cost implications
The right combination of analytics can demonstrate how investing in experience innovation can reduce costs, not increase them.
Hyundai customers are able to shop online and book test-drives at local shopping malls. By fusing online and offline retailing, Hyundai is creating a differentiated experience based on convenience and transparency for the customer, while reducing costs associated with traditional car dealerships.
4. Build the experience innovation road map
The most effective experience innovators blend a short-term view of immediate opportunities with a holistic view that guides the experience in the long run. Delta Air Lines has used this approach to be ahead of the competition in solving customer hassles such as device charging at the gate area and inflight Wi-Fi. Selective excellence has helped Delta come back from Chapter 11 to become a leader in both profitability and customer satisfaction among US carriers.
Innovating the experience is a creative process, and the principle of selective excellence can provide a tight brief where the process can thrive. Air Berlin’s famous chocolate heart is a small touch, but represents a touchpoint that creates a real emotional connection. It only takes a quick search on social media to see its impact.
Article originally published in Campaign on March 29, 2016.