Here's What the Customer Experience and Marketing Winners Will Do in 2018

Marketing and customer experience will not only define the chasm between the companies that win and lose in 2018, together, they will be the forces that cause the widening of the gap.

We are Entering a New Economic Age

While there’s no definite line that marks the beginning of a new economic age, we have clearly evolved into something beyond the “Experience Economy” that Joseph Pine II and James Gilmore outlined in their 1999 best-selling book, The Experience Economy. I believe we are seeing the emergence of the Transformation Economy. In the Experience Economy, we bought the promise of feelings that would create memories. In the Transformation Economy we are buying the promise of a new self-identity through the achievement of our aspirations and goals.

The challenge that I have to overcome in claiming this is the dichotomy between how executives act as leaders in their companies and how they act as consumers in the marketplace. They don’t realize that they behave differently when they are being a customer than when they are deciding how to serve their customers.

As leaders they have a self-image of being logical, focused on quantitative metrics, statistical analysis and logical strategies to make decisions. They would never imagine making an emotional decision on a whim. And, when a decision is made, they don’t change course quickly or often.

As consumers they hold a self-image of a person who values the quality of the experiences they pay for. They makes decisions to return or to never return to a business based on a single experience. And, they often take pride in being a person who seeks out the best experiences even if they cost more than is perceived as reasonable.

To make this point when I am speaking to audiences, I ask them, “How many of your consider yourselves to be logical? You won’t make a decision before you have sufficient data and analysis?” Usually, everyone raises a hand. By answering as executives, they have taken the bait.

I then ask, “What happened the last time you had a really bad experience at a restaurant that you were visiting for the first time?” The executives respond by telling me that they demanded their meal for free or at least a hefty discount, they refused to return, and they told others about their terrible experiences.

I then proceed to point out that as consumers they are willing to make decisions based off of one experience, hardly a statistically accurate representation of reality, yet they would never consider doing the same in their business. Many of them chuckle as they realize the dissonance. I then ask them why they think their customers should be rational and reasonable if they are not when they are a customer. They realize they are missing a critical element of analysis in all of their rational decision-making processes. They don’t account for the irrational influences of human emotions.

Who will Win in 2018?

In 2018, the winners will be those companies that integrate the strengths of each of these approaches, the quantitative and rational with the qualitative and emotional, into decision-making for their marketing and customer experience strategies.

I see three critical shifts underway that make this outcome highly probable this year. I have seen mounting evidence for these shifts throughout the last five years and in 2017 witnessed the pace of change rapidly accelerate. I will describe them in detail below.

#1: Winners will Embrace the Transformation Economy

The economy has evolved beyond the state where consumers simply want to buy a feeling or are shopping for the promise of a memory. Of course some still want this. But as a whole, customers want more than a one-time event as a momentary high. They’ve realized that the experience treadmill is ultimately not fulfilling. They want real change. This is why the Transformation Economy, predicted by Pine and Gilmore, is already upon us. It is the natural evolution of the Experience Economy.

Twenty years ago, as Pine and Gilmore were sharing their insights about the economy, the world of psychology was experiencing the start of a massive shift. Dr. Martin Seligman was the head of the American Psychological Association. At the time, he embarked on a quest to discover what it takes for humans to thrive, not just survive, in a psychological sense. His research led to the creation of the PERMA model. This model shows that humans seek five unique experiences simply for the sake of having these experiences.

• Positive emotions - feeling good
• Engagment - finding the state of flow; being "in the zone"
• Relationships - building authentic connections
• Meaning - having a purposeful existence
• Achievement - feeling a sense of accomplishment or mastery

These experiences are powerful catalysts for building self-esteem and self-actualization. They lead to the transformation of a person and a higher quality of life. When experienced, they alter the subject’s perception of reality, her self-image, her worldview and they often have a lasting effect on the psychological well-being of the subject. In essence, the subject begins to thrive.

CX Programs Lack a Connection to Psychological Research Findings

Most customer experience programs have limited their contact with or invest little time investigating the recent research findings of psychology and no one talks about helping customers to thrive. Executives prefer instead to focus on the use of the measures that emerged out of the quality movement to dictate decision-making for customer experience improvement projects. Executives see complaints or low survey scores as an indicator of a defect that needs to be corrected. They create an action plan to do so and execute it.

The focus of most customer experience improvement projects on fixing defects means relatively little is invested in exploring the experiences that truly differentiate the company from its competitors. I call these 5-star customer experience because they are often given top ratings in online reviews or internal surveys. This lack of focus on the best experiences results in failure to make real, substantial, significant and consistent breakthroughs in customer experiences and the associated metrics.

The majority of customer experience departments have limited their use of findings from psychology. They believe they should delight customers while serving them and make it easy for customers to do business with them. While these may be beneficial, they are not enough. The science of psychology is seldom brought up beyond this. Instead, executives revert back to accepted quality standards and quantitative analysis that has dominated modern management practices. Many executives will actually tune out anything that sounds remotely like psychology.

Marketing and sales teams have considered psychology somewhat relevant, especially in the area of advertising and closing the deal. The most aggressive efforts are focused around the manipulation of decision-making for the purpose of selling products rather than being focused on using psychology to help customers thrive through the use of products and services which ‘sell themselves’ because of their results. This is about to change.

The Emergence of the Transformation Economy

Steven Kotler and Jamie Wheal published the book, Stealing Fire, in early 2017. In the book they provide the necessary evidence to prove we are witnessing the evolution from the Experience Economy to the Transformation Economy. Their research shows that we are spending $4 trillion a year to change our "ordinary" conscious state to "non-ordinary states" of consciousness. As they say, we are spending money on things or experiences that “get out of our heads.” They refer to this as the “altered-states economy”. To avoid confusion I won’t use that term in this article beyond this paragraph. I will show below, the altered-states economy is an evolutionary period that marks the emergence of the Transformation Economy out of the Experience Economy.

(From https://imgur.com/user/FlowGenomeProject)

A large portion of the $4 trillion that Kotler and Wheal identified does support the Experience Economy because customers are buying a product, service or experience for the promise of the feeling it will bring them in the moment. That is the extent of their reason for making the purchase. Customers are attempting to trigger non-ordinary states of consciousness so they can escape their ordinary state of consciousness. They want to forget work, their troubles of the day or whatever ails them. This happens through an experience that alters their emotions for a moment but it does not lead to thriving. In fact often it can result in negative effects like regret, guilt and depression. Examples include the use of drugs, alcohol, pornography or some forms of music and entertainment. These are clearly part of the Experience Economy because the consumer is buying the promise of a feeling.

On the other hand, some spending on experiences has positive consequences. Going to theme parks, some forms of travel, investing in a yoga class, and similar expenditures can lead to a shift into a non-ordinary state of consciousness. If these are impactful for more than the moment, they are may meet Seligman’s criteria for thriving and would be contribute to the Transformation Economy. If not, they too may fuel the hedonic treadmill like the escape experiences do and cause us to need to up-level our experiences to feel a new high in the near future.

The Link Between Psychology and the Transformation Economy

A portion of the four trillion dollars does go toward the Transformation Economy because customers are investing to change their self-image, how they see the world, or the achievement of a goal or aspiraiton. Examples of Transformational Economy investments include personal development, personal trainers, entertainment that evokes awe or admiration, and experiences designed to expand one’s awareness.

Positive experiences that have a lasting impact or cause an individual to thrive are important for marketing and customer experience professionals to pay attention too because they are the link between Seligman’s PERMA model and the Transformation Economy that Pine and Gilmore described.

The positive experiences that have a lasting impact or cause an individual to thrive are important for marketing and customer experience professionals to pay attention too because they are the link between Seligman’s PERMA model and the Transformation Economy that Pine and Gilmore described. Pine and Gilmore are clear in their book that the difference between the Experience and Transformation Economies comes down to what is sold.

(You can learn more in my article How Micro-Moments Are Transforming Your Customer Experience & Impacting Your Sales)

Is the company just selling an experience that makes memories (or alters one’s conscious state) or are they really selling the transformation of a person from who she believes she is and what she believes she is capable of achieving into the person she wants to become? What does their marketing promise? What do they actually provide to support the customer before and after the purchase?

This is where the research done by Kotler and Wheal comes into focus. They turn their attention toward the experiences that people seek for the sake of transformation. That transformation can be the merging of oneself with a group, the merging of oneself with an entity like God, or the seeking of deeper insights to solve real problems. Examples of these attempts can be found in the nearly $30 billion spent each year in self-help, coaching, and therapy. It can also be found in forms of recreation like mediation or extreme sports. When these experiences both alter the conscious state of the person and transform her self-identity, they are part of the Transformation Economy and they fit into the PERMA model.

It is critical to realize that the Transformation Economy is not limited to those investments that change one’s conscious state to a non-ordinary state of consciousness for the sake of insight and growth. I have shared these examples above to show the evidence of the evolution. There are many other examples where customers invest in guidance through transformative experiences to change their self-image or to achieve something and by definition are engaging in the Transformation Economy without necessarily experiencing an altered state of consciousness. Some of these examples include Weight Watchers and the EpiPen which are discussed below.

#2: Winners will Focus on Transformation Before the Sale

The companies that will win in 2018 will be those that engage in the Transformation Economy and shift their marketing and customer experience investments toward helping a person become aware of who she is, who she can be, that there is a proven path for her to follow to become who she wants to be, and to demonstrate all of these before the sale through social proof and transformative experiences. After the sale, these companies will show their customers how to achieve what they want one step at a time. They will guide their customers through transformation using experiences. These companies will win because they will look and feel so much different than their competitors who are stuck selling products, services, or experiences, not the desired transformation. Prospects will buy the promise that they can become who they want to become if they accept the winning company’s guidance, which involves the use of their products, services and experiences.

(From https://www.weightwatchers.com/us/)

Consider how Weight Watchers has changed their approach in the market over the last few years. With the new WW Freestyle™ they now focus on inspiring prospects with the idea that transformation is possible. They share the stories of success to inspire prospective customers to see that they too might be able to transform. Then they have multiple programs that enable transformation with their new tools and resources from an online app to meetings to personal coaching. These customers are not really buying food or apps. They are buying their new self-identity and they are expecting that the tools and support Weight Watchers provides will enable them to have that new self-identity.

Another example, although it may be controversial, is the way Mylan grew the market for the EpiPen before their pricing debacle in 2016. They created marketing campaigns that tapped into the fear of parents who had children with allergies. Their campaigns showed parents and kids who were transformed from living a life in worry and fear to living a life of freedom and joy, as long as their EpiPen was close at hand. Their commercials guided parents to remember to take precautions like packing their child’s lunch so they were allergy-free, staying away from situations that might trigger allergies and, of course, having an EpiPen available. Parents bought into the new self-identity that they were being good and protective parents if they had an EpiPen ready. They could rest easier believing that they were their child’s protector.

The winners in 2018 will develop marketing strategies that leverage content extensively for the purpose of creating experiences that transform leads into buyers. These companies will use far more educational content to move the lead who is unaware to become aware of their potential, then through interest, consideration and finally purchasing

Each of these steps requires a unique set of transformative experiences to move the prospect from her current self-image to her new self image. She may be unaware of a problem and of her potential, so the first content marketing must convince her of that. Then, once she is aware, she needs to have an experience that triggers curiosity or interest in possible solutions. Later, she has to transform her self-image from being a non-user to being a person who uses your product or service to achieve her goals and aspirations. After she purchases, your company must continue delivering the transformational experiences to help her through early use, normal use and challenges that arise across her lifecycle with your product or service. This can be done with how-to videos, FAQs, live events, coaching and more. All of these stages require unique experiences for the customer to transform from her existing self-image to her new self-image. As her lifecycle with one product wanes, your company must be providing content that shows her who she can become next and how to achieve that.

#3: Winners will Integrate Quantitative with Qualitative Analytics

Big data will be an increasingly important part of 2018 for marketers and customer experience professionals. Metrics matter and the behaviors that are measured need to be analyzed to improve those metrics. This is especially true in the Transformation Economy where movement from one self-image to another precedes the behaviors that the company is measuring. However, no matter how good quantitative metrics are, they can only answer “what” questions. They do not answer “why” questions.

Knowing that prospects who have done X, Y and Z are more likely to choose a particular product when it is offered in a specific timeframe is important. Yet, there is a diminishing return on investment that is inevitable with this approach. The cost of acquiring the hardware, software, analytical skills and data will at some point reach a negative return, at least for a while until new innovations are implemented. Companies that are not collecting sufficient behavioral data already may find it more profitable to buy the data and to hire the data science expertise through consulting firms. But this too will continue to become more expensive as the bottleneck for data scientists increases.

Disruptive companies in 2018 will balance their efforts to gather and analyze more quantitative data with the integration of analyzing qualitative data. Instead of asking more “what” questions, they will ask more “why” questions to reveal new insights. They will look to the words and phrases customers are using in surveys and reviews after the sale is complete. Highly disruptive companies are already examining the language used during in-person conversations, chat sessions, phone calls, or in emails during the normal course of serving customers. They are finding clues to the motivations of customer decisions. Many of these clues are hidden in plain sight because customers choose words pre-consciously. These words reveal their true intent where a direct question in a focus group or on a survey may result in too much thinking and rationalization before answering. Some disruptive companies are even identifying early linguistic indicators of readiness to purchase or clues indicating that a prospect is in a mindset that prevents her from acting on an offer.

Our Real-Life Insights

In the last two years, we’ve worked closely with companies in software development, timeshare sales, consulting and training, hospitality and high-end consumer goods to help them identify the differences in the language of a buyer vs. non-buyer. We helped them answer the “why” question behind the “what” that their current metrics show. This allowed them to alter their content marketing strategies and sales tactics to transform the non-buyer into a buyer more quickly and efficiently. And, that in itself has been a revelation.

(Watch some of our Case Studies for more information)

In the Transformation Economy, we discovered that people only buy when they believe that they can become what they desire to become by using what you are selling. This means that many companies could actually sell to a larger portion of the 90-95% who are currently non-buyers if they understood why they are not buying. We’ve helped clients increase sales by 90%-400% when we focus on the transformation the prospect needs to go through to move from the mindset of a non-buyer to the mindset of a buyer. This requires an integration of quantitative and qualitative data. The analysis reveals both the “what” and the “why”.

In the Transformation Economy, we discovered that people only buy when they believe that they can become what they desire to become by using what you are selling.

Companies that understand the “why” behind their buyers’ and non-buyers’ behaviors, can then return to their marketing strategies and prepare for greater success. The content marketing, marketing messages and sales scripts can all be updated with the intention to help a prospect transform more easily from one stage to the next in the buyer’s journey. In 2018, the companies that master this approach will separate themselves from and disrupt the market position of their competitors.

Challenges the Winners will Face

The winners who emerge from 2018 will have a significant lead over their competitors and make it harder for the next disruptors to reach them in the coming years. But, to achieve this lead they will have to overcome a some key challenges. The challenges will test the commitment of the leaders who take them on and they will defeat many of those who start out on the journey.

The most significant challenge for those companies that want to win is the lack of sufficient understanding of the psychology that drives customer experiences and decisions. While there are a growing number of articles, books and conferences available for customer experience and marketing professionals, many fail to address the topic adequately. In addition, most consulting practices charge a fortune to conduct onsite trainings and conferences that dive deeper into these topics are both expensive and often held only a few times a year.

Customer experience professionals need to transform, just as their customers transform, by having access to an expanding base of content that supports their new level of awareness and integrates the most recent findings from psychology in a platform that is available 24/7. This type of support will help them achieve their goals and aspirations and model for them what they need to create for their customers.

Throughout 2017 we took steps in this direction with the launch of two subscription-based training programs. CXDisrupt provides weekly training to demonstrate to business owners, executives and mid-level professionals how to disrupt their competition with transformative customer experiences. Brave Leadership Mastery, also a weekly training, helps leaders by giving them the tools to lead in times of disruption by summoning the courage required in the moment they facing a challenge. We have additional one-time programs available along with one-on-one or group coaching. Throughout 2018 we will be providing additional resources and programs for our clients so they can win this year and in the future.

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Tony Bodoh is the co-author of the #1 best selling book, "The Complete Experience: Unlocking the Secrets of Online Reviews that Drive Customer Loyalty". You can download your free copy of the book and message him with questions or coaching and consulting inquiries.

Visit www.TonyBodoh.com to learn more.

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