You might be wondering why customers sometimes love you and sometimes don't. Is it something you're doing or something you're not? It is like when you go to a trash-and-treasure market—sometimes you find trash and other times you find treasure—but it doesn't mean something is wrong with the items in the market. In this episode, Floris from Blok Business Consulting talks about the customer journey, the customer experience, and what it means.
• How do you improve customer experience? Understanding what your customers want and how they want to consume it, whether it's a product or service, is a very good start to understanding how you can then deliver that service to them for them to give you their hard-earned cash.
• How do you measure customer experience? It depends on customer expectations, and businesses measure customer experience differently.
• Gather data. What can be tracked can be managed, and what can be monitored can be managed.
• Plan, plan and plan. Albert Einstein said that if he's got an hour to solve the problem, he'll spend 55 minutes on understanding the problem and 5 minutes on actually solving it.
• What can you do if you feel overwhelmed? If you're a budding entrepreneur, if you're starting out, it might feel overwhelming. Focus on your breathing.
What is customer experience?
What is meant by customer experience? How can you say it’s a good customer experience?
Floris: To actually figure out what the customer experience is, you need to understand who the customer is. If you're trying to sell something to someone, you want to know who they are before you try and sell them anything. That would be your first point of call or a call to action as an organisation, as a marketing department or whoever you may be. Understanding the Ideal Customer Profile (ICP) is actually the first thing that you need to do.
Once you have a deep understanding of that, like a group of people or certain demographics or psychographic segmentation, then you can start understanding where they get their information, where they actually go out and buy stuff, what it is they are interested in, what makes them tick, etc. Once you've figured that out, you can expand and build that customer journey or at the very least identify what the customer journey is through all kinds of different ways of research and analytics.
Afterwards, you can start optimising each of those touchpoints that you have with that particular segment's ICP. There are different KPIs that you can measure. For example, if you have an e-commerce platform, one way is to use KPIs such as how many people dropped out from your website once they've done a search or how many people leave a basket with stuff in it and don't actually convert to an actual sale.
How do you identify your ideal customer?
If you've just started out in business or maybe you've decided to start a business, but have no idea about marketing or who your customer is going to be—all you know is you make really good pies or you're a little bit faster laying a concrete driveway or you've got a cool way that you're doing your accounting—how would you know who is going to pick up on your product or service? How do you work out who your customer is before you've had one?
Floris: If you are already working for an employer and you want to go on your own, then you already have that experience. You would have had exposure to the type of people that are purchasing the products or hiring services that your organisation is actually putting out into the market. You would have at least some kind of idea.
If you are completely new. Let's say hypothetically, you've just rolled out of college or university and you've got this great idea for something, like software. First, you must actually develop it into a product. There are all kinds of different things that we can talk about here—from the product management point of view and a product development point of view, like setting up your MVP or minimal viable product, and then financing, funding, etc.—so you can develop it further and all of these things.
Let's go back to your example of pies. Let's say you've just won MasterChef and now you've got $250,000 in your pocket, but your entire life, what you've done is you've basically put these pies or baked these pies for your family. Now you're sitting there with $250,000 in your pocket and they're burning a hole in it because you want to open a shop.
You need to understand what it is about your pies that people like because three MasterChef judges liking it is fantastic. They've talked about it in front of the entire Australian population that watches MasterChef and all the international ones abroad and all of these things. Kudos!
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Floris: But you need to understand what the people who are going to come into the shop are going to come in for. They need a pie, but is it a breakfast pie? Is it an afternoon lunch party? Is it a snack? These are the things you need to understand.
Once you understand what people like about your pies and what time they like to eat them, you can manage your production schedule, the marketing, your shop front or where you can actually locate your shop. We know that with COVID, there's a lot of real estate in the CBD that's emptying up because workers are not there. Are you going to move into CBD or are you going to be selling pies out of a truck? Food trucks are doing great because you can move locations and you can be in different places at different times.
Understanding what your customers want and how they want to consume it, whether it's a product or service, is a very good start to understanding how you can then deliver that service to them for them to give you their hard-earned cash.
How do you measure customer experience?
On the MasterChef example, I've got this $250,000, let's go through the process. You might have a mobile location or something that's static. If you've got these people coming to the front of the van or the shopfront, and they're ordering pies, you can obviously say the pies are selling really well and then have things like best sellers and know how to promote and critique and change different product lines and measure the analytics, the same way you could do that with an e-commerce website.
If you've then got those numbers in play, how do you know that you're attracting enough of the right audience or you're measuring things? How do you put pen to paper to actually work out the demographics and psychographics of your customers?
Floris: I can give you the theory from now up until the moon shines tonight, but I think the answer was in your question, which is analytics. Once you have the data, then you can be a data-driven organisation and you can then adjust based on the data.
For example, if the data says that you've got a meat pie that sells more than a cheese pie, you're more likely going to start buying in more stuff for the meat pie and making more meat pies and having them on hand, especially if you've got another data point that says that you've run out of them halfway through the day. A lot of this can happen quite instinctively with a lot of people.
Now we're taking an example and we're applying it to a lot more complex processes, but principles are the same. If you have a pie that sells really well and it goes out of stock midday and you still got people coming in asking for it, then you've got a great set of customers that actually know what they want and they like your product but if you run out of it, that means that you haven't forecasted enough of that product. Now you're delivering a very bad customer experience. All of a sudden, you end up having to offer an alternative product, maybe even at a discount just to keep the customers happy and coming back through the door the very next day.
It's About the Data
Floris: If you have the data and you can see where the data is actually, providing you insights. Information, knowledge and insights are three different things. Information leads to knowledge, and knowledge leads to insight, which is then applied into action in a business sense. You can translate that into future actions in order to improve.
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Data analytics can be very simple. It could be just you sitting there at the end of the day looking at your cash register or your receipts and looking at the number of pies sold and left. That's enough to give you an idea. It doesn't have to be as complex as an ERP system hooked up to a CRM that's tracking your website and all of these things.
Is scarcity a good customer experience strategy?
You brought up something that's quite interesting. You said if the pie ran out halfway through the day, it affects the customer experience. Apple intentionally creates short runs of their products so that there is scarcity in the market. How does creating scarcity affect the customer experience? Is that something that can be good or bad?
Some businesses have this line at the door and people are talking more about their pies, whereas other stores look empty because they're really good at serving people quickly so customers are coming in and out of the store very quickly, but it ends up looking like your store is empty just because they're too efficient. Is that a problem that you should be worried about?
Floris: It's a complex question and no simple answer can be given here. Let's give it a try and unpack it.
If we use Apple as an example, Apple has an enormous level of brand loyalty, right? The level of scarcity only feeds into that brand loyalty because of the marketing around it and the hype that Apple creates around its brand. In this regard, it doesn't really matter whether you are in shortage of stock.
You've got such brand loyal customers that even if they have to wait six months to get a phone, they will wait six months to have a phone. They'll walk around with a cracked screen, iPhone 11 or whatever it is, and then try and upgrade to an iPhone 12 because the Apple TV shows how you can take a great picture of your dog. That's brand loyalty for you. Apple does that almost to perfection.
On the other hand, if you've got a product like a pie store and you run out of pies, it's not going to look very good for you because it looks like you don't know how to run your business and this is a consumer product that's consumed in very high volume. It's a low-value-high-volume sales that if you don't get in our instant gratification culture right now, we're going to go somewhere else and get it.
If your competitor has a product that is of equal quality, equal taste, in this case, potentially cheaper, they're more likely going to become your competitor's loyal customer. You would have lost a customer, which is why in the service industry or in the hospitality industry, it becomes very much relational based on relationships.
If you can provide a good customer experience by making people feel welcome, making them feel that they are in a store where they are heard, whether they can get what they want and all of these things to actually make them feel good and activate these dopamine levels, they will then keep coming back.
Customer Experience Differs
We've got McDonald's, Wendy's, Hungry Jack's, or Burger King if you're not in Australia, and Grill’d, which is a gourmet burger place in Australia. All of them are doing reasonably well for different reasons.
McDonald's and Hungry Jack's are very similar, but we've been led to believe the burgers are better at Hungry Jack's through repetitious marketing. Grill’d is a bit more gourmet. But still, the customer experience could be very different for the three different places.
In my eyes, I'd say if I were to go to McDonald's, which I don't go to very often, I'd be going there because I need something quickly, not because I need a high-quality item. So the customer experience for me in going to McDonald's is because I want something now—I'm on a road trip going somewhere or in between meetings—and I know that they're consistently quick and that would be why I'd go there.
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That's also exactly why I wouldn't go to Red Rooster because they're consistently slow. In that same vein, I guess people don't go to Grill’d because they're quick; people go there because the quality is better. But the customer experience is around the demographics of the people that are coming there and the reason why they're going there. If you've got a pie shop and you ran out of pies and customers go somewhere else and the pie is better but they are slower, they still may come back to you. Is that fair to say?
Floris: Yes, it's absolutely fair to say, which is why earlier I said that it was a complex question with a complex answer because there are multiple factors. If we take it purely on price, then if you've got a competitor with a low-priced pie within the same geographic area, then there's a good chance that they'll go for that one.
But let's say, yes, it's a bit slower but it tastes better, then you're more likely going to want to have that pie because it does taste better than the quicker one.
Yes, it's fast but one of the reasons I don't go to McDonald's is because personally I'll eat a burger and within two hours I'm hungry again. Yes, they've got a great customer experience inside now with the ordering screens as well. You get your number, you pick it up, and then you can sit down. You can do the drive-thru, and you can take it home. But I don't do drive-thru because it stinks inside the car. I don't take it home because it's cold and inedible by the time I get home, in my opinion. If I go to McDonald's, I'm in a rush and I need to get something done right, and I'm more likely going to be doing it in the store. The only other reason I go to McDonald's is the kids love their Happy Meals.
Did you know that McDonald's is the largest toy distributor in the world just because of its Happy Meals?
Floris: Forget about value, just purely on volume. That's because they've done some amazing marketing on getting these kids hooked on Happy Meals.
Happy Meals and sugar, and they do great. I know a lot of people, including my sister, who love McDonald's. I'd rather eat a hundred other things before McDonald's.
They've catered to the customer, which is the little one that will nag and nag and nag the parents until the parents cave in and say, 'Yes, we'll go to McDonald's.'
Very emotional decision.
Floris: Absolutely. Not in the sense of I'm going to get something I really want. What I really want is for my kids to stop nagging me. Not to destroy the McDonald's brand, because we can't and that's not the aim of the conversation, but it's the lesser of two evils. I love my kids and I respect them enormously, but still, when they nag, it's unbearable.
It Depends on Customer Expectation
Floris: Back to the customer experience. They've created that customer experience. You go in, you get what you get.
They've got their 500 or 700-page manual that every franchise is exactly the same, so your expectations are met in each and every store that you walk into. Each and every McDonald's will give you the exact same thing, and the exact same thing is not that burger in the picture because we all know that's fake. It's consistent in its delivery and its service and in its product. The tastes are the same. They're all sourced locally, they say, but in any case, they are built all to the same standards, and therefore, you will get what you pay for.
And that's the expectation of the customers and they provide that positive experience that, regardless of the taste, you keep coming back to McDonald's, even if you go there every blue moon or something.
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Floris: On the other hand, Grill’d, you're absolutely right. It's gourmet. Location-wise, they're more into the CBDs, where you've got a high-net-worth, middle-class people who are willing to pay slightly more than what a fast-food store could give. They will sit down, eat and have a conversation. It's much more of a social event. These are the expectations they have and these are the expectations that are met by growth, which is why they're doing fine.
Businesses Measure Customer Experience Differently
It doesn't always have to be the same metrics that you're measuring, as long as you know what they are and why people are coming to you. How do you go about creating that customer experience strategy? How do you go about actually playing through that?
We do a lot of work with IT companies to better their processes. We also do a lot of work with schools, governments and small-to-medium businesses, and all their needs are very different and things that are important to them are very different. A lot of the time, small businesses could be more money-conscious. They are only just starting up. They're on an oily rag. They just want to have the smallest thing to get them through to tomorrow to be able to continue working.
Generally speaking, a more experienced business will look more towards longer-term goals and have different interests that will then market ourselves around. With pen and paper, how would you go about creating a customer experience strategy? Should you just maybe cancel out all the different things and look at whatever is bringing in the money to your business and focus heavily on that one vertical.
What is a customer experience strategy?
Floris: Let's go over the definition of strategy. In its simplest form, the word strategy means a roadmap to do A, B, C in order to get you to Objective X. It's nothing more than a roadmap on how to achieve your objective, so you need to know what your objective is.
In order to know what your objective is, you need to understand who you're doing it for so we can go back to the assignments in a golden circle.
• Why is it that you do what you do?
• How is it that you do it?
• What is it that you deliver in order to achieve it?
Let's assume for a second that you know why you do things like in your case, you have an absolute obsessive joy of delivering highly automated and optimised processes for organisations because you want to give people their time back in order for them to be able to scale up but also have a family life. You set up an organisation with like-minded people and you now have a team that will then have the same passion and the same drive as you in order to deliver the service or product to your customers. You do hosting, you do automation, you do processes and all of these things. That's the 'what.' These are your products and services.
You started off by understanding who it is that you're trying to do it for. You have your objective. Let's say this year I want to have 20 million in turnover. And now the strategy comes into play, which is how you map out how you will go from A to B in order to achieve that objective.
Now, you have all the elements in place. Let's go back to the pie store example. You know the customers like these 5 pies out of the 10 that you've got on your menu, so you're going to focus your production, stock purchases, etc. on these 5 pies. You still need the other ones because they're about 20% of your business, but you need to focus on 80% right now.
You also know that most of your customers are in or around the CBD area, and they eat around lunchtime. You need to have a location that can actually put you in the most optimal place for these people to actually come to you. Is that an actual store, a fixed store, or is it a van or a food truck?
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Floris: Once you've answered these questions, you start looking at how are you going to market services? Should you go around all the companies and drop a flyer at the reception area so that people can see when they walk into the building in the morning? Should you do targeted Facebook ads or should you do LinkedIn ads because you're targeting professionals working in CBD?
There are about 26 million residents in Australia, and 11.6 million of them are on LinkedIn.
Floris: If you would do LinkedIn targeted ads, which are a bit expensive, but you can actually market your pie to all of these professionals that are looking at their LinkedIn in the morning and getting hungry and then go look for that food truck.
You know what you want to do. You know who you're doing it for. You know why you're doing it. Now you just basically build a roadmap in order to get there, and that could very easily be a pen-and-paper type of strategy where you go like, 'This is the shop or the food truck. I need to be there from 11:30 AM to 2:30 PM. I need to have the meat pies half-cooked by then. And I need 200 of these. 600 of these. 700 of these.'
Customer Experience Strategy Doesn’t Have to Be Complicated
It's not that hard. It doesn't have to be that difficult. As I was saying at the start, you can have websites looking at the different types of traffic that are coming, the demographics of the people that are coming there and then have your website do all other sorts of stuff to make sure they're on their customer journey. But it doesn't have to be that complicated.
Floris: No, that could be your optimisation process once you get the foundations or the basics in place and they're working.
Let's say you now have another food shop that comes next to you and it's selling nachos. All of a sudden, you're competing. How can you start getting an edge? How can you start improving your business so that you can be more efficient in terms of your stock or in terms of your marketing?
How to Improve Your Business
1. Focus on the Foundation
Floris: We can go back into marketing terms like customer acquisition cost and all of these intricacies that business consultants love to talk about, which is all optimisation. This is all fine-tuning. This is all taking the basics that you have in place and just making them slightly better.
If you don't have the right foundations, you're basically just amplifying something that's not good. It's absolutely essential to actually have the foundations in place. Once you have these, then you can optimise and start looking into more details.
Customer experience and marketing are very close to each other, but it's all about testing. You've got the basics in place. If you do this, what would happen? You can do A/B testing.
Let's say you chose to sell pies in Location A on Wednesday, and you earned $100,000. You went to that same location on Thursday, and you earned $80,000. So you know that it's probably best to be there on one day and choose another location on the other day. It's about taking that data, analysing the data, finding insights out of it, and then applying it to whatever it is that you do.
2. Keep a Record of Everything
Make sure you're recording that and keeping that so you can see what the trends were. If there were things that you weren't aware of and you picked up on, that would be very important.
Floris: What can be tracked can be managed, and what can be monitored can be managed. If you're not monitoring your income, even the ATO is going to come to you.
The same principle applies to everything else. If you want to be good at what you do, you have to be able to track it, monitor it, and then draw conclusions from it or insights and turn those into business applications.
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A lot of the time, we try and think that we do A and B happens, but there could be a whole bunch of different things. Like on the Wednesday-and-$100,000 example, maybe there was a huge conference just around the corner and you had a lot of people that came out.
I'm happy to say that in October I'm going to become a dad, so I'm pretty excited. It's interesting, and I've been doing a lot of research on how babies communicate, how language works for them and things like that.
3. Gather Data Until You Get a Pattern
One of the cool things that I thought is when they see something or they're introduced to a new object, they don't start saying it until they're confident of that object and what it's called. It's the same as if you're sitting there and there are five different types of exotic fruit, and I just pointed across and said, 'That's a holla baba.' You wouldn't say anything and the baby doesn't, but then if you then saw that same piece of fruit in a completely different example someone said, 'Oh, that's a holla baba.' The baby would be like, 'All right. I now know through the process of elimination that that's what it is.'
Floris: I'm not an expert. I'm not a neurologist. I'm not a medical professional in any way, shape or form. What I do know is what you just described there is how kids learn, and I know that from my own two kids. It's pattern recognition. In order to recognise a pattern, you need data. Without the data, you can't really do anything.
If you've picked up that on that Wednesday, you made $100,000 in front of that location or at that location, that same location made $80,000 a week later, and you made $120,000 the week afterwards. It averages out quite nicely, but why were there differences? Is it just a normal everyday life or were there events during that? Observe the data points.
Two points make a straight line. With three points, you start getting a bit of a trend or a pattern.
Floris: The more data points you have, the more accurate your insight could be. But now that you have them and if you have a curious mind, which every entrepreneur should have, then you can start investigating what was happening at that location or within a kilometre or a two-kilometre range of that location.
On that day, was there a museum event? Was there a conference? Was there a street band that was playing really well? Was it good weather? Was it bad weather?
Your competitors down the road shut down.
Floris: Absolutely right. You can take all of that data. For a large corporation, it's becoming easier to actually take all of these different data points into account because they can throw it into a machine learning algorithm and then something will pop up that says, 'Hey, you've done really well on this day because you had the high exposure for the number of people that were walking on the street.'
If you were a small organisation, you can do quite a lot of this quite manually and all you need is Google for your searches and YouTube, which is the second-largest search engine in the world, for your how-tos, in case something doesn't jive really well or you need some help with some piece of software or whatever.
4. Ask the Right Questions
Floris: All you need is a curious mind. Ask yourself all of the right questions. If you are going down the route of the back questions, it's good to have some sounding boards, a coach or consultant or anyone that you have on retainer for a once-a-month check-in or accountability sessions.
Entrepreneurs sometimes might get a bit slack. They can lose their motivation for a day. It's not easy being an entrepreneur. It's not easy setting up a business. You could lose. It takes a lot of mental energy. If you have a bad day, it could impact your business. If you have employees, that could impact your employees. Having that support structure from a consulting perspective is actually quite helpful, but it's about asking the right questions.
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5. Get an Extra Pair of Eyes
You've touched on a lot of information here. If anyone is out there and they are looking for a consultant or someone to be able to talk to and make sure that they have the right strategy, they're looking at the right data, possibly not getting distracted by cat videos, make sure they have a level of accountability, they are keeping on track and looking at the right resources, is that something you can help people with?
Floris: Absolutely. As a consultant and an entrepreneur myself and as an ex-corporate myself, I have the experience and the passion, if you wish, to help people to get the answers and achieve the success they want. I'm focused quite a lot on marketing strategy, customer experience and digital transformation. When I say digital transformation, I'm not talking about IT stuff. I come at it from a commercial and business point of view.
Digitisation, digitalisation and digital transformation are three different things. Digitisation is basically analogue to digital. Digitalisation is looking at your value proposition. Digital transformation is when you look at the entire structure of the company—its culture, people, processes and technology in that order. That's where I focus on as well, and that fits quite nicely with marketing strategy.
I definitely think that extra eyes can't hurt, and having a set of eyes go over that would help anyone out. We'll get you in to check out our process. I always think that we're doing all right, and then I get on one of these conferences and I go, 'No, we're not okay.' Now, there's lots of it you can be learning. There's Always Be Learning. ABL is something I'm very fond of, and hearing from someone else's perspective is always exciting.
Floris: A word of caution: never really go down that rabbit hole. There's always that risk. Sometimes what you're doing is actually good enough, right? It's having someone affirm that sometimes that is needed.
Bonus: Plan, Plan, and Plan
I am guilty of being an engineer first, business entrepreneur second, and that means that I have a ready-fire-aim mentality. It's very difficult for me. I'll spend 90% of the time on planning, and 10% on execution. When it's executed, it's fantastic and it always works.
Floris: If that's your mantra, that's really good because Albert Einstein said that if he's got an hour to solve the problem, he'll spend 55 minutes on understanding the problem and 5 minutes on actually solving it.
What is your favourite book or what is the book that you suggest for some of our listeners to read to further understand customer experience?
Recommended Book: The Seven Habits of Highly Effective People
Floris: The Seven Habits of Highly Effective People by Stephen Covey. One of my favourite quotes is you can control what's within your reach, but you can only influence what's not within your reach. That's something that helped me quite a lot in my career as well.
Similar to you, I used to go down quite a lot of rabbit holes and I used to want to impact all kinds of things, but I couldn't and I used to build so much frustration in me. I read Stephen Covey's book, and since then I only focus on what I can manage, what I can influence is great. Anything outside of that scope is unfortunately beyond.
I have that book. I thought it was in my bag. It must have been in the car at the moment. I'm going through for a second read. It's definitely a fantastic read.
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Talk to Floris Blok!
I love having you on the show. Is there anything else you'd like to cover?
Floris’ Tip: Breathe, Think It Through, and Move Forward
Floris: If you're a budding entrepreneur, if you're starting out, it might feel overwhelming. Focus on your breathing. I tell that to all of my kids and my wife, and I use that technique. When you get overwhelmed, whatever the reason, slow down, breathe, think it through and then move forward. That applies to business, sports, even tests. Focus on not getting overwhelmed. Don't overthink.
The guts sometimes, right?
Floris: Yeah. Even now at my age, I'm still learning to listen to my gut. The older I get, the more I want to listen to it and the less I want to use my head because my head sometimes can go off on many tangents. Instinct is one of the crucial factors in business that cannot be monitored or quantified, but it shouldn't be underestimated.
I completely agree. I think everyone's played a couple of games of pool after a couple of beers and they all of a sudden become better when they stop thinking about it.
Floris: Inhibition levels drop.
What is business freedom to you?
What is business freedom to you?
Floris: Business freedom is another way to actually get life freedom. Being able to secure an income for my family so that I can actually spend time with them. Live to work and not work to live. It's the freedom of actually being able to have that good work-life balance but also have an impact on the life of the people around me. Hopefully, if I'm big enough one day to actually have an impact on people beyond our Australian borders, that would be nice.
I love having you on the show, Floris. I hope everyone else has enjoyed the time that we've had together. If you do have any questions, we will have him jump across to the Facebook group to better answer anything you might have there. Otherwise, feel free to jump across to iTunes, leave us some love, give us some feedback and as always, stay good and stay healthy.
Floris: Thank you very much for the time and for having me on the show, and thanks to your listeners for listening in.
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