BCG What Really Shapes Customer Experience

8/17/2019 BCG What Really Shapes Customer Experience

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What Really Shapes theCustomer Experience


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please visit bcg.com.


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September

Dag Fredrik Bjørnland, Cyrus Ditzel, Pedro Esquivias, Jody Visser, Steve Knox, andVictor Sánchez-Rodríguez

What Really Shapes theCustomer Experience


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W R S C E

AT A GLANCE

Four things get people talking about a brand: value for money, customer service,

product satisfaction, and emotional connection. Word-of-mouth recommendations

oer a critical way to measure and improve a company’s performance on each

dimension—and ultimately to boost growth.

W G C FPeople who have excellent customer experiences become strong advocates for a

brand; they also spend signicantly more and are much more loyal than customers

who have poor experiences.

T U

Companies in every industry can use these insights to improve their customers’

experience and thereby generate signicantly higher growth.


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T B C G 3

People who have good

customer experiences

become strongadvocates for a brand.

I ’ , consumers have many more ways to learnabout and purchase products and services—such as through websites and socialmedia, in a store, and on a device while on the go—than they have had in the past.

With so many channels, platforms, and devices to get right, companies frequently

struggle to coordinate and prioritize the many dierent ways that customers

interact with brands. Worse yet, they have diculty dening the right metrics tomeasure success.

The good news is that companies can assess and improve their customers’ experi-

ence through a simple yet powerful indicator that BCG has found to be one of the

best predictors of business performance: word-of-mouth recommendation, or brand

advocacy. The better the experience, the more customers will talk about it with the

people they know—while the worse the experience, the more they will spread the

bad news. Our research has found that four aspects of the customer experience

have an impact on brand advocacy: value for money, customer service, product sat-

isfaction, and emotional connection.

To holistically measure word-of-mouth recommendation, companies can use BCG’sBrand Advocacy Index (BAI), the only measure of customers’ experience that is

highly correlated with growth. BAI measures customer experience by means of ac -

tual recommendations—not just good intentions—among customers, noncustom-

ers, and former customers. It asks simple yet powerful questions, such as “Have you

recommended the brand, and why?”

For this year’s report, we used BAI to measure the experiences of more than

227,000 customers—roughly double the number of customers surveyed in our

previous report—with 650 brands in eight countries and seven industries. (See

Fueling Growth Through Word of Mouth: Introducing the Brand Advocacy Index, BCG

Focus, December 2013.) Our survey revealed the companies whose customers’ ex-

periences have earned them the strongest word-of-mouth recommendations. (Fora list of the top brands by BAI, see the sidebar “The Most Recommended Brands

2015.”)

Our survey also revealed the sources of growth as a result of good customer experi-

ence. We know that people who have excellent customer experiences become

strong advocates for a brand, spend significantly more, and are much more loyal

than customers who have poor experiences. Companies in every industry can use

these insights to improve their customers’ experience and thereby generate signifi-

cantly higher growth.


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W R S C E

BCG’s Bran Avcacy Inex (BAI)shines a spotlight on the companies

that have achieved the pinnacle of

word-of-mouth recommendations:

bran avcacy.

To learn about where companies

stan, we surveye mre tan

227,000 cnsumers in Canaa,

France, Germany, Italy, Japan, Spain,

te UK, an te U.S. (See te exibit

“Bran Avcacy Inex Rankings f

Brans, by Cuntry an Inustry.”)

Te results igligt pckets f

superb perfrmance acrss markets.

Fr example, te nnluxury autm-

tive inustry as an average BAI scre

of 52 percent—well above the average

levels in ter inustries. Brans suc

as Tyta an Vlkswagen perfrm

well acrss multiple cuntries, en

utsie teir me markets. Tyta

was in te tp tree brans in ve f

te cuntries we surveye. Becausecustomers tend to have strong

emotional connections with their

cars, te cars are en tpics f

conversation.

However, we have noticed that, in

many cases, te biggest r mst

cmmnly knwn brans nt

always scre te igest in avcacy

in a market. Cnsier retail grcery r

retail banking, fr instance: te tp

three most recommended brandsinclue many fairly small, fcuse

players tat prvie an excellent

experience espite teir lack f scale.

In sme cases, tey s by prviing

relatively g value fr mney (suc

as Lil an Ali in retail grcery) r

strng emtinal cnnectins (suc

as Traer Je’s an Cstc).

Some bigger brands do not show upon our list of most recommended

brans fr several reasns. BAI

measures relative scores among

customers and noncustomers, so

even wit a lw BAI, a cmpany migt

have more advocates in absolute

numbers. Small brans als typically

create a lyal fan base, en elpe

by teir specic psitining r

unexpected excellence compared with

large brans. In aitin, establise

large brans smetimes simply avefewer new things to announce, giving

peple less reasn t talk abut

them.

Wie ierences in scres amng

cuntries n te list typically result

from the overall sophistication and

stanars f any given natin’s

inustries, le by key players in te

market. Fr example, Mutua

Marileña’s ig scre pulls up te

entire car-insurance inustry in Spain.Wie ierences amng inustries

en reect varying levels f spisti-

catin f custmers’ experiences in a

given inustry, as well as custmers’

levels of interest in a particular

product or service.

In all inustries, wever, we ave

found a large gap between the

highest- and lowest-performing

companies. The results show that

avcacy is relevant in every inustryan can be imprve. (See te exibit

“Wie Variatins in Bran Avcacy

Exist Acrss Inustries.”)

ThE MoST RECoMMENdEd BRANdS 2015


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T B C G

I N D U S T R Y

TOPBRANDS,BY BAI (%) GERMANY

UNITEDSTATES

UNITEDKINGDOM FRANCE ITALY JAPAN CANADASPAIN A

V E R A G E

B A I ( % )

Trader Joe’s(U.S.)

Wegmans(U.S.)

Esselunga(Italy)

R E T

A I L

G R O C

E R Y

A U T O M O T I V E

( N O N L U X U R Y )

52

26

1

2

3

1

2

3

Volkswagen(Spain)

Volkswagen(Italy)

Toyota(Spain)

Honda

Toyota

Chevrolet

Trader Joe’s

Wegmans

Costco

5673

74

74

50

50

53

65

67

50

50

53

Hyundai

Mini

Škoda

Lidl

Waitrose

Aldi

Škoda59

59

63

35

42

44

55

60

67

24

25

30

55

55

65

66

73

74

64

66

74

41

44

45Volkswagen

Volkswagen

Volkswagen Volkswagen

Toyota

Toyota

Kaufland

Globus

Aldi Süd

Toyota

Toyota A lfa R omeo Mazd a

SEAT

19

21

22 Lidl

Mercadona

Aldi

Nissan Daihatsu

43

44

46

46

47

50

11

12

12Esselunga Max

Valu

Eurospin SEIYU

Lidl Seven-

Eleven 31

33

41Costco

Longos

No Frills

Nissan

Lidl

U

E.Leclerc

Simyo(Spain)

Yoigo(Spain)

Aldi Talk(Germany)

M O B I L E

T E L E C O M

25

1

2

3

TracFone

T-Mobile

Virgin48

50

62

31

31

34

O₂

TalkTalk

Three

16

21

26

Congstar

Fonic

Aldi Talk

30

37

48 Simyo

Yoigo

ONO 46

50

62

33

35

39

9

13

19Wind Docomo

Fastweb KDDI

TIM SoBank 30

31

44Koodo

Wind

Fido

USAA(U.S.)

Genialloyd(Italy)

Direct Line(Italy)

C A R

I N S U R A N C E

31

1

2

3

USAA

AAA

Geico48

51

64

46

47

64

TescoBank

Aviva

LV

34

38

40

LVM

R+V

HUK-Coburg

26

27

35 MutuaMadrileña

LíneaDirecta

CatalanaOccidente 38

41

47

47

48

51

23

27

28Genialloyd AXA

Direct

Direct Line Sony

Genertel Mitsui

Marine 35

38

41RBC

Desjardins

TD

Fineco(Italy)

USAA(U.S.)

EVO Banco(Spain)

R E T A I L

B A N K I N G

18

1

2

3

USAA

UnionBank

HuntingtonBank61

61

68

40

43

61

TSB

TescoBank

FirstDirect

17

20

43

La BanquePostale

CréditMutuel

Boursorama

Generali

MAAF

MAIF

30

31

41 EVO Banco

ING Direct

Bankinter20

31

55

32

32

41

DKB

Comdirect

ING DiBa 31

57

61

56

57

68

15

18

20Fineco

SBISumishinNet Bank

Mediolanum Sony

Bank

CheBanca

JapanPostBank

24

37

42Tangerine

President’sChoice

TD

TechnikerKrankenkasse(Germany)

MutuaMadrileña(Spain)

BarmerGEK(Germany)

H E A L

T H

I N S U R A

N C E

26

1

2

3

Humana

Blue CrossBlueShield

United-Health-care

38

39

49

21

24

29

Groupama

CréditAgricole

31

38

49 MutuaMadrileña

Sanitas

MAPFRE28

34

36TechnikerKranken-kasse

BarmerGEK

AOKSuisseLife 35

36

39

27

29

32AXA

SonyLife

TokioMarineNichido

TekSavvy(Canada)

ONO(Spain)

Sky Italia(Italy)

B R O A D B A N D

14

1

2

3

VerizonFiOS

DIRECTV

DishNetwork38

41

51

15

18

28

Sky

TalkTalk

VirginMedia

6

12

18

Unitymedia

KabelDeutsch-land

1&1

10

13

20 ONO

Jazztel

Or ange 15

34

41

34

34

38

5

10

10Sky Ita lia KDDI

Tiscali SoBank

Infostrada Docomo 15

16

51TekSavvy

Eastlink

Vidéotron

Sources: IntelliSurvey of more than 227,000 customers in the U.S., the UK, France, Germany, Spain,

Italy, Japan, and Canada; BCG analysis.

Note: BAI = Brand Advocacy Index. Scores reflect customer opinions only. Blank boxes indicate

industries or countries for which the sample size was too small to list brands.

Brand Advocacy Index Rankings of Brands, by Countryand Industry


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W R S C E

How the Customer Experience Fuels GrowthCustomers spread the word about their experiences—whether positive or nega -

tive—far and wide among people they know. Those opinions matter a great deal.Direct word-of-mouth recommendations from friends and family are by far the

most important source of information for customers thinking about buying a prod-

uct or service: such brand advocacy is about four to five times more influential than

the more indirect recommendations associated with newspapers, magazines, televi-

sion, and social media, for instance. (See Exhibit 1.) These results are consistent

across countries and industries.

Conversations about the customer experience also boost financial performance.

Our research shows definitively that brands with high levels of advocacy signifi-

cantly outperform those that are heavily criticized. In the sample of brands studied,

we found that the average difference between the topline growth of the highest-

and lowest-scoring brands was 27 percentage points.

Consider, for example, how one company in a traditional industry created an excel-

lent omnichannel experience that resulted in growth that is much faster than that

of its competitors. Techniker Krankenkasse (TK), founded in 1884, is the largest

health insurer in Germany, and it is growing at a rate of up to 7 percent per year.

The company was named the best insurer in Germany by Focus Money magazine for

nine years running. TK is the top-rated health insurer on BCG’s list of the most rec-

ommended brands, with a BAI of 49 percent—the highest score of any company in

the health insurance industry in the countries we studied, and 11 percentage points

ThE MoST RECoMMENdEd BRANdS 2015(cntinue)

Healthinsurance

Retailgrocery

Mobiletelecom

Retailbanking

Broadband

Minimum Average Maximum

Brand Advocacy Index (%)

Carinsurance

Automotive(nonluxury)

0-20-40 20 40 60

Sources: IntelliSurvey of more than 227,000 customers in Canada, France, Germany, Italy, Japan,

Spain, the UK, and the U.S in 2015; BCG analysis.

Wide Variations in Brand Advocacy Exist Across Industries


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T B C G

higher than the second-highest company in Germany. BAI reveals that a key driver

for that performance is TK’s attention to customer service. (See the sidebar “Tech-

niker Krankenkasse: Excelling in a Traditional Industry.”)

In this report, we have strengthened the proof of BAI’s impact on growth and identi-

fied the precise sources of that boost in performance. Our research shows that strong

advocates for a brand spend more, as measured by higher rates of cross-selling, larg-

er shares of wallet, and other industry-specific metrics. In car insurance, for example,

strong advocates buy 74 percent more products than strong critics. These findings

prove that a better experience leads to greater revenues, loyalty, and growth.

A company’s BAI also predicts whether customers will stick with a brand or leave

it. A company’s strong advocates have much higher levels of loyalty. For example,

39 percent of the strong crit ics of retail banking brands were thinking about leaving

the company, while only 3 percent of the strong advocates were considering doingso. Thirty-six percent of the strong critics of health insurers were thinking about

leaving, compared with only 4 percent of strong advocates. (See Exhibit 2.)

What’s more, we have found that once a customer leaves a brand, word of mouth

often doesn’t stop. Thirty-seven percent of all former customers continue talking

about their experience with a brand—almost half of them negatively—after they

have left. By contrast, 54 percent of current customers talk about the brand, but

only about 6 percent do so in a negative way. Results vary by market and industry,

especially in the smartphone and nonluxury automotive industries, where former

Percentage of people

consulting eachsource before

purchasing1

Newspapers

and magazines

TV

35%

50%Friends and family

Blogs and forums

Radio

Social media

39%

3%People are about

4X-5X more likely to consult friends and

family than newspapers, magazines,

television, and social media

Company websites

13%

13%

10%

Sources: IntelliSurvey of more than 227,000 customers in Canada, France, Germany, Italy, Japan, Spain, the UK, and the U.S in 2015; BCG analysis.1The average of all countries and sectors covered in the survey; multiple answers were possible.

E 1 | People Most Oen Consult Friends and Family Before Making a Purchase


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W R S C E

customers remain highly vocal. Industries with contractual relationships—such as

mobile, broadband, and retail banking—often feature higher levels of critics than

other industries, such as automotive and retail grocery.

When companies lose customers because of a negative experience, they lose both

the direct revenues from those customers and the indirect revenues that result from

strong negative advocacy. This reinforces the imperative of providing excellent cus-

tomer experiences and preventing good customers from leaving.

Tecniker Krankenkasse (TK), a

public ealt insurer in Germany,

excels at customer service, one of the

four elements of the customer

experience tat we n eavily

inuences peple’s ecisins abut

recmmening a bran. Custmer

service fuels the highest number of

recommendations for TK among all

the brands we studied in the health

insurance inustry.

histrically, TK fcuse n emplyees

in industries such as automotive,

ig-tec, an aviatin. In te

mi-1990s, te market fr ealt care

in Germany pene up, an regula-

tors allowed TK to cater to people in

ter inustries. In Germany, public

health insurers must all provide the

same coverage and services, so to

capture market sare, tey must

ierentiate in ter areas. In 1996,

TK’s CEo at te time, NrbertKlusen, began t make signicant

investments in building the brand.

Ten, in te rst few years f te

2000s, he paired that focus with a

centralized, low-cost organizational

structure.

Te majrity f ealt insurance

custmers in Germany are typically

not in regular contact with their

insurers. TK tus ierentiates itself

with a focus on customer service that

is unusually strng fr te cuntry’s

ealt-insurance inustry. Te

approach is modeled on that of

leading companies in industries such

as nline retailing an retail banking,

rather than on competitors in the

traitinal ealt-insurance inustry.

TK as a relatively small netwrk (200

brances) an empasizes nline an

phone contact with customers. The

cmpany was te rst insurer inGermany t set up a call center an a

meical-avice line stae by ctrs,

both available 24/7.

The call center aims to answer calls

witin 15 secns an as a rst-

cntact slutin rate f 82 percent. It

uses spisticate ata analysis f its

8 millin custmer cntacts per year

t imprve ealt care elivery an

increase customer satisfaction.

Patients with chronic diseases alsoigly value its pne-base cacing

program, which helps them under-

stan teir cnitins an make

psitive canges in teir ealt. TK’s

current CEo, Jens Cristian Baas, is

builing up te cmpany’s igital

capabilities, exploring opportunities

to create long-term relationships with

clients through online channels such

as e-mail, social media, and apps.

TEChNIKER KRANKENKASSEExcelling in a Traitinal Inustry


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T B C G

The Aspects of the Experience That Matter to CustomersIn addition to understanding how advocacy fuels growth, we now understand the

precise rational and emotional factors that shape the customer experience. The mix

of the four dimensions we have identified—value for money, customer service,

product satisfaction, and emotional connection—can vary widely by industry and

segment. (See Exhibit 3.)

In retail banking, for example, the personal service that customers receive at

branches traditionally plays a major role in the overall experience. But some on-

line-focused institutions, known as direct banks—which have the highest BAIs in

the retail banking industry in most countries—have been disrupting the industry

with a customer experience that emphasizes value for money and a mostly online

experience. For example, Boursorama Banque is the top retail bank in France on

our list of the most recommended brands. Its BAI of 55 percent is a full 24 percent-

age points higher than the second-highest bank. Banking is not usually considered a

fun experience. But Boursorama shows how, even in a traditional industry, a direct

bank can make the experience as fast and painless as possible, giving people some-

thing to talk about . (See the sidebar “Boursorama Banque: Succeeding as a DigitalUpstart.”)

Value for money, customer service, and product satisfaction are certainly important.

They remain the top factors in every industry, and without superior performance

on these dimensions, a brand is unlikely to earn customers’ strong recommenda -

tions. But we find that once companies master these rational factors, an emotional

connection often separates the good from the great. Emotional factors, which vary

by industry, can include brand identification, social responsibility, innovation, and

trustworthiness.

Additional products purchased by strong advocates vs.strong critics (%)2Churn rate of advocates and critics (%)1

Mobile telecom

Strong advocates Strong critics

Retail banking

Car insurance

Health

insurance

19

30

255

4

3

39

74

36

5

43

5

36

Sources: IntelliSurvey of more than 227,000 customers in Canada, France, Germany, Italy, Japan, Spain, the UK, and the U.S in 2015; BCG analysis.1Customers who are willing to leave a company, are actively looking for better oers, or are already switching brands.2Any product that a customer purchased in addition to the original product.

E 2 | Advocates Are Less Likely to Leave Than Critics, and They Spend More


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W R S C E

High performers often score well in both value for money and emotional connec-

tion, for example, but an emotional connection is more important—by 13 percent-

age points—than value for money for advocacy among leading brands.

Top-scoring brands Samsung and iPhone illustrate the power of an emotional con -

nection. When it comes to smartphones, key emotional factors include how muchconsumers identify with a brand and how much they perceive it to be innovative. For

Samsung, value for money fuels recommendations twice as often as for iPhone, but

iPhone scores higher on emotional factors. For iPhone, emotional factors can trump

lower cost, allowing the brand to charge premium prices. Emotional factors cause

iPhone to score higher than Samsung in the U.S., Spain, and Japan, for example.

Trader Joe’s shows how an emotional connection can play a starring role even in

a relatively low-tech and store-based industry such as retail grocery. With a BAI of

53 percent, Trader Joe’s is the top retail grocer in the U.S. on our list of most recom-

mended brands. It scored the highest on BAI among retail grocers in the countries

we studied, ahead of highly popular brands such as Wegmans and Costco in the

U.S. and Esselunga in Italy (each with a score of 50 percent). (See the sidebar“Trader Joe’s: Leading in a Store-Based Industry.”)

How to Improve the Customer ExperienceCompanies typically have their core product, service, and brand marketing well un-

der control, since these areas lie close to traditional core capabilities. The key chal-

lenge today involves managing the increasingly complex, omnichannel customer

pathways that define the overall experience with a brand, and then to create posi-

tive brand advocacy as a result of that experience.

VALUE FOR

MONEY

CUSTOMER

SERVICE

EMOTIONAL

CONNECTION

Smart-phone

Retailbanking

Automotive(nonluxury)

Healthinsurance

Mobiletelecom

Broad-band

Retailgrocery

Carinsurance

28

18

35

19

24

30

24

22

22

19

32

27

20

28

29

23

17

24

29

30

16

24

31

29

15

27

28

30

20

27

23

30

PRODUCT

SATISFACTION

Sources: IntelliSurvey of more than 227,000 customers in Canada, France, Germany, Italy, Japan, Spain, the UK, and the U.S in 2015; BCG analysis.

E 3 | Factors Aecting the Customer Experience Vary by Industry


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T B C G

BAI can guide companies as they pinpoint efforts that will generate a step change

in improvement of the customer experience and therefore in the levels of advocacy,

loyalty, and—ultimately—growth. Advocacy levels reveal the key sources of growth

as well as the underlying reasons for over- or underperformance. This allows target-

ed interventions and investments to improve a company’s performance compared

with competitors.

Bursrama leas te retail banking

inustry in value fr mney, ne f

the four elements of the customer

experience tat we n eavily

inuences peple’s ecisins abut

recmmening a bran. Value fr

mney—te primary reasn fr te

bank’s ig BAI scre—fuels te

highest number of recommendations

fr Bursrama in te retail banking

inustry acrss all te cuntries we

stuie. Backe by parent cmpanySciété Générale, Bursrama ers

a full prtfli f retail banking

products and focuses on a more

auent segment f te market. Still,

it eavily prmtes itself as te least

expensive bank in France, isplaying

fees prminently. Many f its services

are free.

Bursrama als scres ig n

customer service relative to others in

te retail banking inustry. Te bankhas created a strong culture of put-

ting te custmer rst, lking fr

inspiratin utsie te banking sectr.

It selects emplyees n te basis f

teir custmer centricity an peple

skills, an it trains tem in te ay-

t-ay reuirements fr teir jbs.

Emplyees receive incentives tat are

based on such aspects of the experi-

ence as waiting time, customer satis-

faction, and service levels—not on

selling additional products or generat-ing iger fees. “Clients buy prod-

ucts,” says Marie Ceval, cairpersn

an CEo f Bursrama. “We n’t

sell pructs.”

Te bank as a relentless fcus n

eciency t minimize te time tat

custmers spen n banking. It

cnstantly lks fr ways t spee up

the self-service process—reducing the

number f uestins tat custmers

are aske an te cuments tat

tey ave t sen—wit te gal fkeeping custmers mstly nline t

reuce call center csts. “We feel te

clients even tug, as a irect bank,

we never see tem,” says Ceval. “If

tey are nt appy, tey call us, wic

csts us mre mney.”

Te bank als stans ut fr its

ability t prvie a service tat is

exclusively nline an mbile. It’s te

rst bank in France t er a cm-

pletely nline mrtgage applicatin,fr example. Custmers can als take

advantage of other innovations for the

Frenc market, suc as increasing

their withdrawal and credit card limits

in real time and reporting a lost card

via a secure mobile-phone app.

“We align te interests f te bank

with the interests of customers—a

win-win situatin,” says Ceval.

“Custmers feel it—an tey recm-

men us.”

BoURSoRAMA BANqUESucceeing as a digital Upstart


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W R S C E

Companies can take the following steps to improve the overall experience oftheir customers and to manage customers’ perceptions of, and advocacy for, that

experience.

Improve the omnichannel customer experience. The best companies develop a

clear vision on the basis of insights about customer preferences. For example, a

company may aim to provide personalized and relevant service, enabling customers

to perform most operations across all touch points, resolve questions on the rst

interaction, and learn about the best uses of a product and about available support

services.

Retail grcer Traer Je’s ranks near

te tp f its inustry wen it cmes

t custmers’ recmmenatins f its

pructs an custmer service. But

te cmpany leas te pack in terms

f custmers’ emtinal cnnectin

with the brand—another dimension of

te custmer experience tat we n

can eavily inuence peple’s

decisions about recommending a

bran. In fact, an emtinal cnnec-

tion is the main factor behind Trader Je’s ig BAI. Te cmpany als as

the highest emotional-connection

levels in te retail grcery inustry

across all the countries we studied,

even though emotional factors tend to

rank relatively lw fr te inustry

verall. Traer Je’s experience sws

that companies that foster an emo-

tional connection, in addition to

performing well on the other dimen-

sions, have an advantage over those

tat n’t wrk t create suc aconnection.

Interestingly, Traer Je’s ig rates

of product satisfaction and customer

service also fuel some of the highest

number of recommendations for the

cmpany in te retail grcery inus-

try, swing w te majr imen-

sions of the customer experience

reinforce each other. These high

ratings could compensate for the

relatively merate inuence f value

fr mney n Traer Je’s BAI.

Traer Je’s scres ig n BAI

without competing on four of the

tp-ve key factrs tat grcery stre

cnsumers say are mst imprtant t

them: convenient location, low prices,

good sales and promotions, and

ne-stp spping. Traer Je’s asnly 450 stres acrss te U.S. Its

prices are g, but tey are nt te

lwest. It escews sales, cupns, an

prmtins. Its relatively small stres

ave nly 2,000 t 4,000 SKUs—f

which more than 80 percent are

private label—compared with 40,000

t 70,000 SKUs at a typical full-size

grcery stre, suc as Publix r

Wegmans. on pruct imensins

suc as ig-uality meats, pruce,

an rganic ptins, Wle Fsbeats ut Traer Je’s.

Wy, ten, i Traer Je’s rank

secn ut f 68 supermarkets in

Consumer Reports’ 2015 rankings an

acieve ne f te igest ranks in

custmer experience as measure by

tw inepenent bencmarks? hw

can it pruce mre sales per suare

TRAdER JoE’SLeaing in a Stre-Base Inustry


15/19

T B C G 3

Leading companies also detail key customer pathways, with a focus on so-called mo-

ments of truth, which determine whether a customer will buy a product or choose

to switch companies. They recognize that each channel has a defined role at each

step on the customer pathway. At any point along the path, a customer may transi-

tion seamlessly among channels depending on what’s most convenient. For exam-

ple, a customer may browse online with a mobile device, receive relevant offers

through e-mail, and obtain service and support in a store. Companies can create an

attractive business case by optimizing the key pathways on the basis of lifetime cus-

tomer value and return on investment across channels, with each channel making a

clear contribution to the major sources of value in the customer relationship.

ft tan any supermarket cain in

the U.S. with at least a comparable

number f stres?

Traer Je’s es tis trug a

selectin f simple yet buzz-wrty

pructs an marketing tat is aime

suarely at prucing an emtinal

connection with its target segment of

educated and adventurous shoppers.

Te cmpany’s target custmer as

been escribe as an unemplyePd w as te intelligence an

eucatin t appreciate te stre’s

pructs but nt necessarily te

buget t buy tem at ig retail

prices.

Traer Je’s secret is tat it treats

f like fasin. Te cmpany’s

buyers travel te glbe t bring back

minimally prcesse pructs tat

set trends, rather than follow them.

Its stres feature istinctive pructssuc as frzen Inian f, Tai

lime-and-chili cashews, dried mangos,

an inexpensive wines. Simplicity is

te key: unlike te typical U.S. super-

market, Traer Je’s esn’t carry 40

kins f nut butters; instea, it as

abut 10. But all f tem are carefully

selecte t appeal t te cain’s

target custmer. one f tse pr-

ucts is te aictive Speculs Ckie

Butter, wic resembles peanut

butter an tastes almst (but nt

uite) like gingerbrea. Jars f te

tp-selling sprea reprtely isap-

pear te mment tey it te selves.

The chain reinforces its homespun

bran image by iring lcal artists t

create signage uniue t a given

lcatin. An unusual style f custm-

er service also sets the chain apart.For example, managers wear Hawai-

ian shirts and have titles such as

captain, cmmaner, an rst mate,

wic reect te stre’s seafarer

theme.

Traer Je’s stres are s ppular tat

tey freuently acieve signicant

wr f mut befre tey ave even

entered an area—despite minimal

external avertising, wic usually

cnsists f mailing a flksy newslettert nearby custmers. Suc psitive

word of mouth will not surprise

anyne w as steppe ft in ne

f te cmpany’s stres.


16/19

W R S C E

Effective companies also create the conditions for success: organizational capabili-

ties, culture, KPIs, processes, and systems. For example, collaboration among chan-

nels can be reflected in KPIs, while processes may encourage self-service through

online channels. Finally, the best companies develop a transformational roadmapfor success, with a clear end point in mind and realistic milestones along the way.

Proactively fuel higher advocacy. Companies with great customer experiences have

a clear focus on specic and well-dened target customer segments, whose mem-

bers share the same values as the brand and are aligned with the brand’s market-

ing goals. The crucial, most inuential advocates—typically only 2 percent of a

community—can be found in those segments.

Next, such companies build relationships with these informal opinion leaders that

go beyond the transactional. For instance, the most effective companies offer gifts

that matter to target customers and increase affinity with the brand without ex-

pecting anything in return. This move simultaneously develops an experience thatdisrupts the status quo and compels people to talk about the brand. In addition,

such companies foster ongoing, two-way communications and relationships across

online and off-line platforms.

A separates the winners from the losers inthe battle for the word-of-mouth recommendations that generate the mostsales. That advantage leads companies to grow faster than those with less compel-

ling experiences.

Companies in any industry can precisely measure the customer experience with

BAI. They can then use this knowledge in tangible ways to improve the most im-

portant areas of their customers’ experiences. Companies that do this will create

lasting reputational advantage.


17/19

T B C G

About the Authors

Dag Fredrik Bjørnland is a partner an managing irectr in te osl ce f Te Bstn

Cnsulting Grup an te leaer f BCG’s custmer experience tpic area. Yu may cntact im

by e-mail at [email protected].

Cyrus Ditzel is a principal in te rm’s Amsteram ce. Yu may cntact im by e-mail at

[email protected].

Pedro Esquivias is a partner an managing irectr in BCG’s Lnn ce. Yu may cntact im

by e-mail at [email protected].

Jody Visser is a partner an managing irectr in te rm’s New Yrk ce an a cleaer f

BCG’s marketing eciency an eectiveness tpic area. Yu may cntact er by e-mail at

[email protected].

Steve Knox is a senir avisr t BCG’s Marketing an Sales practice in te rm’s Cicag ce.

Yu may cntact im by e-mail at [email protected].

Victor Sánchez-Rodríguez was a principal in te rm’s Mari ce an is nw a BCG alumnus.

AcknowledgmentsTis reprt wul nt ave been pssible witut te erts f ur clleagues Jan Crtenbac,

Maria Eneriz, hemant Sangwan, Jsé María Sanz, an davi Vig.

Te autrs are grateful t Mickey Butts fr is writing leaersip an t Katerine Anrews, Gary

Callaan, Lilit Fnulas, Kim Frieman, Abby Garlan, an Sara Strassenreiter fr teir cntribu-

tins t te reprt’s eiting, esign, an pructin.

For Further Contact

If yu wul like t iscuss tis reprt, please cntact ne f te autrs.


18/19

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