The Experience Disrupter

Excerpt from MIT Sloan article's The Experience Disrupter by Brian Halligan February 27, 2020

It’s not good enough to have a disruptive product. Your customer experience also needs to shine.

There’s been a massive wave of disruption happening in the consumer world. Taking a Lyft, play Spotify, package from Chewy, workout booked through ClassPass, using Dollar Shave Club, order from DoorDash, and check out movie on Netflix, to name a few.

The same shift is going on in the business world, such as collaborate on Slack, meeting thru Zoom, scarf down from ezCater.

We tend to think about technology disrupters like Google, Intel, iPhone, Tesla. Big technology companies with lots of patents. (In 2018, Intel was granted 2,735 patents, Apple 2,160, and Google 2,070.)1

Companies like Chewy  Dollar Shave, and ClassPass are not really technology disrupters. List of 20 companies like that have only about 50 patents total.

Instead, they are a new species of disrupter emerging in economy, called experience disrupters. These organizations all have great products, but they offer even better experiences. How they sell is why they win.

These companies have fundamentally reshaped what their customers come to expect in the experience of purchasing and using their product or service. This is a central insight of Clayton Christensen’s Theory of Jobs to Be Done, which tells us that customers don’t simply buy products or services. They hire them to do a job for them. Doing that job well for customers involves creating the right experiences for those customers, from the moment they begin to think about purchasing the product to their everyday use of that product. It’s an essential part of developing a deep relationship with customers: You solve their struggle for them.

Companies that outmaneuver the competition by excelling at the customer experience. Five things modern adaptations that allow these experience disrupters to run over the incumbents. 

They Give You Experiences You Didn’t Know You Wanted

While incumbent companies focus on product-market fit, experience disrupters work on experience-market fit. Product-market fit, when you’ve found the right mix of product for just the right target market, is considered by these companies as necessary but insufficient to get the disruption they’re really after. For experience disrupters, what matters is offering experiences that surround the product and that customers didn’t even know they wanted or could ask for.

Carvana, a killer experience disrupter, was founded in 2012 and was the eighth-largest used-car dealer in the US in 2018.2 It went public in 2017 and has a market cap of roughly $12.5 billion.

Typically, a car dealer inventory is necessary, but insufficient. To get the crazy growth it’s had, Carvana focused on the experience-market fit, to create a whole new way to buy a car, very Amazon-like experience. Choose the price range, mileage, condition, type of car, get alerted when available near you, and view a 360-degree inspection with annotated zoom-in areas to see wear and tear.

The company deals with the department of motor vehicles, taxes, registration, including delivery service and still you can return it. Carvana has taken the cringeworthy process of buying a car and automated it, institutionalized it, and made it awesome.

They Make Interactions Frictionless

The second adaptation is that experience disrupters pull the friction out of each customer interaction. The analogy of  mechanical flywheel, the less friction customer interactions have, the faster the flywheel spins. In businesses that are struggling to keep up with experience disrupters, their flywheels are full of friction. Experience disrupters are very good at reducing that tension.

Atlassian, a B2B collaboration software company, is a large company that growing very fast and very profitable, with a market cap near $36 billion. 

Like other B2B, it's marketing dept focusing less on generating new leads and more on activating current users and multiplying the number of users and teams within a customer. Instead of fighting the uphill battle for senior-level evaluation of their solution, Atlassian focuses on the ease with which an end user can invite a colleague to a collaborative project. 

The most of its transactions happen without the sales team. Salespeople negotiate the highest-sticker-price deals, or straightforward, with no commissions. The purchase price is online, and because they don’t negotiate changes in prices or terms and conditions, the contracting process is not complex — and it’s easily automated. All these decisions eliminate friction at this stage of the sale.

They Personalize the Relationship

The third adaptation is creating a personalized experience. The incumbents offer a more generic experience when they’re prospecting customers, meanwhile experience disrupters didn’t sound like tech people. The way they cater to each customer makes them less like tech companies than like ultramodern hospitality companies.

Thru Netflix’s database, the more we use their product, the better its gets at personalizing its recommendations to us. Netflix suggests new content based on viewing history, but even the finest details — such as the thumbnails that accompany each show — are tailored to an individual user’s browsing habits.

This is also happening at Stitch Fix, an online personal styling company, that went public in 2017 with market cap of $2.4 billion, offers customized clothing selection for customers and also sells the outfits. When Stitch Fix first got started, individual stylists recommended combinations of apparel solely on the basis of lengthy profiles completed by customers about their style preferences and specific measurements.

But Stitch Fix knew the value of data to deepen the accuracy of stylists’ recommendations and to give scale to the business. In addition to the initial customer profile, the company uses feedback from customers on their purchases, which items were purchased together and which were rejected and returned, and fastidious details from its merchandise about the precise measurements, textures, and aesthetics of each clothing option. This arms Stitch Fix with an opportunity to base recommendations that have progressively led to increased purchases over returns, and more additional purchases by repeat customers.

Netflix and Stitch Fix are playing the same game, use lots and lots of data to highly personalize experience. How they sell is why they win.

They Get Customers to Sell for Them

The fourth adaptation is that while the incumbents know how to sell to their customers, the experience disrupters are very good at selling through their customers. 

Emily Weiss, founder of Glossier -- a private company estimated valuation at $1.2 billion, started off as a blogger — Into the Gloss, was blowing up with beauty tips, then developing beauty products.

Weiss is next-level and a bona fide experience disrupter to not just create her own content but also encourage and enable her customers to create content. Glossier makes its products available to Top 20 YouTube beauty vlogger, sometimes even prior to public release to build buzz. Thousands of wannabes and micro influencers then imitate the most popular vloggers with their own video reviews. The result is hundreds of thousands of pieces of content out there about Weiss’s products — all created by her customers. 

Warby Parker, the eyeglasses company, mail  the glasses to prospect customers to try on, they can post photos on Instagram, and ask all their judgy friends which one they like.

They Empower Employees to Make Things Right for Customers

The fifth adaption: Experience disrupters enable customer-facing employees to fix things when they need to.

Traditionally, companies woo customers to make a purchase, but the second that purchase is made, it becomes the customer’s hassle to get service on it if there’s a problem. Experience disrupters make all these details much more customer-friendly.

Online pet store Chewy gives its customer service reps a discretionary budget to create opportunities to build goodwill with customers, and this empowerment allows for a customer experience that feels seamless. 

Chewy’s costs to acquire a future customer were very low, and the total lifetime value current customer is now very high.

Experience disrupters know how incredibly significant it feels for customers when there’s a genuine change in the power balance in post-sale interactions. 

These experience disrupters think differently, and the founders have a healthy disdain for conventional wisdom. They spend hardly any of their energy extracting value from their customers. Instead, they spend all their energy thinking, “How do I add value for my customers?”.

Here’s a summary of the five points:

• Don’t obsess completely about product-market fit. Obsess about experience-market fit. Embrace your inner Carvana.
• Remember that dollars flow where the friction is low. Mechanically remove friction. Automate like the superheroes at Atlassian.
• Personalize, personalize, personalize. Stop embracing automation without personalization — that’s what people call spam. Think like Netflix. Dust for fingerprints.
• Sell through your customers, not just to them. Let Glossier be your model.
• Rethink how customers get treated after the sale. Look at your terms and conditions. Give your customer-facing employees the tools to make things right. Delight people, the way Chewy does.

REFERENCES

1. J.J. Roberts, “IBM Tops 2018 Patent List as AI and Quantum Computing Gain Prominence,” Fortune, Jan. 7, 2019, https://fortune.com.

2. D. Muller, “Carvana Debuts as No. 8 on Used Ranking,” Automotive News, April 22, 2019, www.autonews.com.

3. L. Smiley, “Stitch Fix’s Radical Data-Driven Way to Sell Clothes — $1.2 Billion Last Year — Is Reinventing Retail,” Fast Company, Feb. 19, 2019, www.fastcompany.com.