The secret to becoming a highly valuable company in 2021: transformational customer experience

Somehow I became aware of Apple Fitness+ in time for the 2020 holiday season. Having tried many other services during the pandemic to start moving more, I was naturally curious about Apple’s take on fitness. This curiosity is not triggered by many companies these days. Apple is well known for the exceptional design of its products and services. What we might not have noticed until now is that Apple has moved away from providing the best customer experience, to now providing a transformational experience. But, what is the difference?

According to the experience economy, we moved a long time ago from products and services to experiences. We’ve seen this shift in offerings from Apple, Netflix, Amazon, and more; as pioneers of delightful experiences for their customers. We keep coming back to them as an example of superior customer experience, but I’d argue some of them have not been standing still in their breakthrough. We have been trying to catch up to achieve something as special as the iPhone, but they have kept moving. With the introduction of technology that helps us better understand customers, personalized experiences become the new strategic differentiation for businesses.

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Apple is not only trying to provide the best customer experience; they are trying to transform their customers into better versions of themselves.

When I signed up for Apple Fitness+, I not only got the Apple Watch and fitness classes—I got an ecosystem of products and services that, working together like a well-oiled machine, knew exactly how to get me started, keep me motivated and nudge me in the moments where I most likely failed in the past. The previous solutions I’ve tried were a great experience but they left it up to me to keep coming back and create my own motivation.

Apple has evolved to know their customers better than they know themselves (scary!) and has developed a “ring” system based on cognitive psychology and behavioral science to bring about the change in yourself that you could not do on your own. This is a revolutionary concept with many implications in customer lifetime value, for example. If a company like Apple can influence behavior change at that level, there is no limit to how loyal customers will be to Apple’s products in the future.

Why is this important? In 2018, the McKinsey Design Index (MDI) found that design-driven companies outperform industry-based growth two to one in terms of revenue and total return to shareholders (TRS). One common characteristic of the top tier earning companies was thinking of the broader customer experience—even beyond their own ecosystem, understanding their customers and bringing those insights across the organization. It has been 14 years since the launch of the iPhone and as companies feel more and more comfortable leveraging the business value of design, I wonder how many are aware that Apple is not playing the same game they invented back then. How many companies are as unaware today about transformational experiences as they were back then about delightful experiences. The return on investment and resilience of the companies that get it is astonishing:

Airbnb wants to help customers become better travelers, stretch their limits, and expand their cultural horizons. From valued at $60 million in 2010 to the biggest IPO of 2020 achieving a $100 billion valuation—more than Expedia and Marriot combined. (Source)

Calendly wants to help their customers become better meeting hosts so that they can accomplish more in their professional lives. Bootstrapped to profitability, Calendly is set to post $60 million in annual recurring revenue in 2020, doubled from the last year. (Source)

Ellevest wants to help women become financially independent, closing the gender investment gap. Ellevest now supports the goals of more than 90,000 women with more than $635 million in funds under management. (Source)

When talking about transformational experiences, not every case is going to result in better outcomes. It all depends on leadership and whether the goal is to improve and transform customers for the better, vs using customers as a proxy for profits. Below are two examples of design misused:

Founded in 2013, Robinhood was created to democratize investing, allowing anyone to enter the market without paying commission fees. However, the experience has evolved to introduce gamification into the trading behavior of its customers, mostly millennials with low or no investment experience. Customers have become addicted to the service with negative consequences, going as far as committing suicide in extreme cases.

Facebook was founded in 2003 as a student directory to facilitate connections in universities. However, the experience has evolved to leverage user data to serve advertisers at the expense of customers. Facebook has such a grip on the behavior of its users that in the 2016 US presidential election, Facebook had a predominant stake at allowing foreign actors to influence the election via their advertising tools.

Bottom line, the companies investing in design as a strategic function for differentiation are moving away from just experiences, to lasting behavioral change. Once again Apple is the most visible pioneer, but a few others are following along. It will be interesting to see the rate of adoption of this kind of design at both leadership and team levels, as we move to ever-increasing personalization of products and services.

What kind of experience is your organization creating for customers? Leave a comment below or send me a message. I want to hear from you.