The most desirable customers you’ve overlooked

Tom Champion

Tom is based in Sydney and serves customer experience professionals across Asia-Pacific. His focus is on customer experience strategy and partnerships, experience ecosystems, digital strategy, service transformation, and developing authentic customer-centric cultures. Before joining Forrester, Tom was a senior management consultant with Deloitte within its customer and digital consultancy practice. He has advised some of Asia-Pacific's largest corporations on using customer experience as a means to growing their bottom lines. He has worked across a range of industries, notably in banking, insurance, superannuation, financial advice, telecommunications, and media.

“What will really move the needle?” This is a question that keeps leaders awake at night. And at the intersection of some of their top priorities – finding pockets of growth, redefining the customer experience, and making an emotional impact – lies a latent market: Their diverse customers.

They are the unserved and underserved: Your non-mainstream customers whose needs slipped between segments or fell on the wrong side of 80:20 rule. But how will pleasing them make an impact to a brand’s overall financial performance? And why does this matter now?

It’s because leading organisations – who are already clear on what drives profitable customer experiences – are better positioning themselves. Forrester data shows that a single point increase in an organisation’s Customer Experience index score leads to annual incremental revenue growth – of up to $135 per customer, and that emotion is the strongest driver of this change, over ease and effectiveness.

So when it comes to room for improvement, it’s important to know that diverse customers are having poor emotional experiences along all drivers of loyalty which generate revenue: Retention, enrichment and advocacy.

“One in three [diverse customers] ceased a transaction in the past 12 months because they were not treated respectfully or fairly,” according to Juliet Bourke, diversity and inclusion lead partner at Deloitte Australia and lead author of Missing out: the business case for customer diversity.“It doesn’t stop there: Diverse customers are more likely to try to protect their community from a bad experience by talking down a poor service or product. The needs of 1 in 3 diverse customers were often not met in the past 12 months, and they were about twice as likely to say that they were treated less favourably than others.”

What’s damaging – but also highlights the opportunity area for impact – is that a key emotion at play here is neglect. Forrester research has shown that feeling of neglect has the strongest impact on consumer activity, along with anger and disgust. These customers are eight times more likely to not forgive a company after a poor interaction.

The good news is leaders can act to make a difference – and many global leaders already are.

Barclays Bank in the UK has been creating dedicated experiences for customers with disabilities, and DBS Bank in Singapore invests in an ethnically-mixed workforce as a way to provide more personalised experiences of diverse customers, The Department of Veteran Affairs in the US improves outcomes of citizens with mental health problems with empathy-driven ways of working, and L’Oreal Paris launched a new foundation range with 23 shades which goes from catering for 39 per cent of women to 98 per cent, as well as men – a huge jump in market size.

A common trend among these global examples is that it started with customer understanding, which can have psychological barriers as much as a functional ones. “Eighty per cent or more of diverse customers don’t provide feedback about their experiences,” said Bourke. She believes organisations have overlooked diverse segments for so long due to three main unconscious biases at play.

“First: Over-representation bias means we overestimate the degree to which customers will like the products, services and experiences we like,” she explained. “Second: Stasis bias means we keep on designing for the past – and that was a vanilla mass market view of the end-user when customers are now much more diverse and empowered. And third: Blind spot bias, which means that we have a blind spot about the size of our blind spots. All of these add up to lost opportunities.”

Brisbane-based Allianz Global Assistance, is one brand that made the commitment to overcome these biases in its customer reorientation. To do this, the organisation has turned its attention towards millennials: 18-35 year olds.

The outside-in approach started with a deep-dive understanding of the target customers, and their behaviours when they’re in car trouble. Allianz learned what these customers think, feel, say and do when they’re need roadside assistance, and those insights powered the transformation.

Rather than taking conventional routes to appeal to millennials, such as amping up social media and digitising existing processes, Allianz spun off a separate business and product, gotU. This roadside assistance service and app is differentiated because it caters for the emotional state of the customers in question.

To remedy the stress of being stuck on the side of the road, the key design principles were around simplicity. The app shows a six-option menu of services to choose from with costs displayed upfront; and is about providing a sense of control. customers see their assistance driver’s name, number and an estimated time of arrival.

The design and app components are only the surface. Allianz Global Assistance needed to change the incumbent business model, the tone and language of its voice response systems (IVR), the channels for marketing, as well as hire more millennials so the organisation could be authentic in its commitment to these new customers.

“Changing our attitude to a different segment needed courage,” said Simon Wilson, head of Innovation at gotU. “But it’s also an opportunity that people don’t get every day.

“When we initially showed some of the first designs and concepts internally, some reactions were jarring – which showed to us we were on the right path. This shortly turned into excitement. People saw how innovative it was to be doing something from a customer-centric point of view.”

As leaders look for areas to make an impact, the growth potential is high for organisations who appropriately reorient their customer base towards subsets they’ve traditionally overlooked. In a competitive landscape, where distinctiveness is a winning criteria, companies will be rewarded for diversifying their target customers as a pillar of their overarching customer strategy.

After all, it’s the age of the customer where customers – all customers – have never been more in charge.

Tags: customer engagement, customer experience management

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