Why It Pays To Be Selectively Excellent
Businesses across a wide range of sectors are finding that a strategy of “selective excellence” in experience design is driving success. How and why does it work?
German grocers Aldi and Lidl are pioneers of the hard discount business model that has transformed the U.K. supermarket industry. Their limited product ranges ensure low prices for customers and high margins for the grocers.
They may not cater to speciality shoppers, but they do attract the majority who are willing to sacrifice myriad brand options in return for low-cost, high-quality own-brand products.
How do these discounters manage to achieve such quality? The key to their success is to design an experience that is “selectively excellent.” This means choosing specifically where to innovate and excel in order to offer distinct value, and where to deliberately compromise in order to ensure good value for money spent. For players like Aldi and Lidl, and other category leaders, the point is to make the compromise explicit: not hidden or apologetic, but an open bargain to which customers are willing parties.
Take the airline industry. As the lines between full-service, hybrid, and low-cost carriers blur, airlines have to work harder then ever to differentiate and build customer loyalty. While each faces its own challenges, there is a simple fact that almost always rings true. An airline shouldn’t attempt to excel in every way if it wants to deliver an experience that aligns with what customers truly value.
Instead, the key to success lies in looking at the customer experience more broadly and creating an experience that is selectively excellent. Selective excellence means driving business performance by playing to a specific set of strengths and bringing them to life through the experience. For Virgin Atlantic, that means focusing on its people and the connections they create. For no-frills operator Ryanair, it is about high operational efficiency and delivering lower prices.
This follows the logic of many leading brands from other sectors, as they create clear value propositions that excel in some areas and are only satisfactory in others. IKEA customers happily accept shopping in a warehouse-style store environment and buying self-assembly furniture in order to enjoy quality, design, and personalisation at an affordable price. At Zara, customers willingly compromise on durability for affordable fashion and a premium shopping experience.
Selective excellence is the centrepiece of a strong brand platform; one that defines why a brand does what it does, what it delivers, and how it wants a customer to feel. Look at Southwest Airlines, whose commitment to “Connecting People” guides every aspect of the experience it delivers—from its overall value proposition to hallmarks such as allowing flight attendants to inject their own personality into on-board announcements. Southwest’s brand platform helps it stay focused on what it needs to differentiate itself and build emotional connections with customers.
Applying the principle of selective excellence requires a detailed understanding of both the costs involved in delivering elements of the existing experience, and how new experience innovations will impact the cost structure. With the right analytics, selective excellence can demonstrate how investing in experience innovation does not require higher costs. In fact, many experience innovators reduce costs as they create better, cheaper ways of connecting with customers.
British Gas, for example, understood that its operational communications could have as much impact on how customers view the company as its large brand campaigns. Focusing on its energy bill, the company set out to improve the experience and move it from being a demand for money to a way of saving money. By rethinking the design and simplifying the language, British Gas was able to create a world-class energy bill that reduced complexities for the customer while saving the company money.
Understanding The Customer Journey
Brands have a broad set of opportunities to innovate the experience across the entire customer journey. Looking beyond a sector can identify the most powerful insights, particularly in areas such as tech and hospitality. The most effective experience innovators start with a broad and detailed exploration of the customer journey and how it could be different. Rather than asking customers what they need, they observe how customers behave. Watching how customers react at every step of the service experience helps imagine new opportunities and pushes management to think of new spaces in which to innovate–spaces that customers will notice and remember.
Hyundai, the South Korean carmaker, has been experimenting with selling cars in the U.K. through digital showrooms. Customers are able to shop online and book test-drives at local shopping malls. By fusing online and offline retailing, Hyundai is creating a differentiated experience based on convenience and transparency for the customer, while reducing costs associated with traditional car dealerships.
Selective excellence is a powerful principle that enables brands to unlock the potential of experience innovation. When effectively implemented, it can unearth special and unexpected experiences while delivering business benefits such as cost savings and greater efficiency. In particular, taking this approach allows brands to adapt to market disruptions, like Aldi and Lidl, by offering fresh spaces for differentiation and growth.