Archives / June 2004

I'm not a fan of carbonated sugar water, but a recent Business Week article [1] got me thinking about Pepsi. In particular, how does a soft drink company create and improve its customer experience? After all, there's not much to play with: the taste comes from a secret formula that can't change, the bottle pours the liquid with no problems, and the label is already determined by corporate design guidelines.

In other words, the product - carbonated sugar water encased in plastic - can't change much in the tangible experience it delivers.

Certainly there are ways for the company to increase sales: run a promotion or sweepstakes with prizes printed on the bottle caps, or just invest more in old-fashioned advertising. Those might improve business metrics, but they don't improve the customer experience of the product; they aren't particularly customer-centered.

How, then, is a company like that supposed to enjoy the benefits of customer experience management?

Here's one way to do it:

    Put customers first in corporate strategy.

Business Week reports that Pepsi is "defining its mission as serving the customer rather than protecting its venerable brands" of Pepsi and Frito-Lay.

"Protecting venerable brands" refers to a time-honored practice within major packaged goods companies, global corporations, and even (yes) many Internet-based businesses. The strategy is to preserve the brand, while leading customers every step along the way. Ad impressions (ad infinitum, ad nauseum) have to lead customers, sheep-like, to buy the product. Likewise, if the company makes any changes to the product, customers must be taught to accept and desire those changes. Any new product launches must be sure not to threaten the sales of the core brands.

The traditional strategy of "protecting" a brand is thus heavily company-centered, and mostly uninterested in improving the customer's experience.

Pepsi, according to the Business Week article, has engaged in a different strategy. Instead of telling customers what they want, they have become "more obsessed with understanding and catering to changing tastes than in trying to shape them." Far from protecting brands, Pepsi is LETTING THE CUSTOMERS LEAD the strategy, based on the customer experience they want.

One telling anecdote centers on snacks from Pepsi's Sabritas brands. Marketing these products could have threatened core Frito-Lay brands, but Pepsi's research showed that Hispanic customers preferred the Sabritas brands. The article reports: "Despite no advertising and minimal distribution, U.S. sales of Sabritas brands are expected to exceed $100 million this year -- double what they generated in 2002." Not bad.

Better still, the core brands have survived, and the company is thriving. Business Week reports that Pepsi is enjoying consistent double-digit growth. While I'm not a nosher of Frito-Lay or Pepsi myself, I have to admire the customer-centered strategy, and the business results it created.

[1] "Pepsi's Thousand And One Noshes," Business Week, June 14, 2004. Online for Business Week subscribers only.

Here's a quick exercise.

Which of these is a better experience?

IN A RESTAURANT:

1. When you walk into the restaurant, the hostess welcomes you warmly and takes you to your table. The interior decoration and overall ambience are attractive and comfortable; the food is delicious.

Or, at a different restaurant...

2. The restaurant is called "The Jungle Experience." Upon entering, the hostess asks you how many are in your "safari." As you sit at your table, a fine mist of water sprays from a sprinkler hidden in the plastic foliage surrounding the dining area. The menu items are all named after rare tropical animals. You have the simulated experience of dining in a jungle, although the food isn't very good.

AT THE DENTIST:

1. The dentist is friendly, starts on time, is gentle on your gums, and gets your claim form promptly to the insurance company.

Or, at a different dentist...

2. The dentist's office is decorated in the theme of Star Trek. The walls are painted like the bridge of a starship; the dentist and assistants all wear Star Trek Federation uniforms and can, on request, greet you in Klingon. However, the dentist doesn't generally start on time and isn't as gentle as you'd like.

ON AN E-COMMERCE WEBSITE:

1. You're able to access the product you want in a few seconds, thanks to prominent links with obvious titles. The search function brings back accurate and helpful results. The simple product page makes it easy to compare different products, and then it's easy to choose a product and check out. Overall, the experience is quick and easy.

Or, at a different website...

2. You're impressed by the attractive logo and the colorful appearance of the page. It looks similar to the colors and graphics in the TV commercials for the company's products. There are lots and lots of features available on every page. Everything has a very professional appearance. Overall, you get the strong impression that the company spent a lot of money on the website. Unfortunately, it's hard to find the product you want.

In each case, did you choose 1 or 2 as the better experience?

- - -

Of course, these are somewhat artificial comparisons. Certainly a safari-theme restaurant could also (theoretically) have good service and delicious food. A Star Trek dentist could be on time. And so on.

But the comparisons are important because they represent two different methods of creating a good experience:

- In case 1, the company focuses on meeting the customer's needs at each moment.

- In case 2, the company creates an "experience" with a "wow factor" in an effort to impress the customer. The customer isn't central to the experience, except as a consumer waiting to be entertained. The focus here is visual flashiness and gratuitous technology.

Which method does your company pursue more often?

If it's 1, congratulations: you're operating in the long-term interest of both the company and your customers. And knowing that, you have the added benefit of a meaningful job - creating some good in the world (even if only the business world).

If 2, I wish you the best of luck. You might get short-term gains in customers and publicity - but without a focus on customers' basic needs, your business won't be healthy for very long.

I've had this conversation with many clients over the years. In many cases, the focus on the *basics* - customers' basic needs at each moment - is THE differentiating factor between successful and failing companies. In fact, companies who invest more in the "wow factor" almost always take resources *away* from focusing on those more important (if visually less exciting) issues.

But think back to the customer. After all, we started the column with an exercise in *customer* experience. If you - as a customer in each of those situations - had to choose between the basics and the "wow factor," which would it be? If you had to design the customer experience in each of those situations, and you wanted to maximize the long-term health of the company, which would it be?