Why HX, Why Now?

Why HX, Why Now?

By Ray Poynter, 10 February 2020

HX (Human Experience) is a key trend that is gaining traction around the world at the moment. The shift has been from product, to service, to experience, initially to CX (customer experience) and UX (user experience). The next step in that process is to move from an inside-out view (looking at customers and users from the brand’s view), towards an outside-in perspective (focusing on people and working out what brands and services can do to help). This post explores why HX is so important now, how it manifests itself and what steps can you take to be people-centric.

Why now?

The key reason that HX is so important is that most other routes for brands and organisations are no longer delivering responses. For example:
1. Product parity – few products or services can sustain an actual advantage i.e. a product/service difference that can’t be replicated.
2. Service parity – for a given cost structure, a provider can’t sustain a service advantage i.e. offering things that others can’t compete with.
3. Supply parity – partly because of markets and partly because of legislative rules, organisations cannot normally have better distribution systems than their direct competitors.
4. Advertising dollar parity – with only occasional exceptions, the impact of advertising is determined by the level of expenditure – spend more to get more, this is dollar parity.

Because of this parity, there are three key trends in markets around the world:

1. From products to experiences
2. From product-centricity to customer-centricity
3. From customer focus to human focus

Some companies have made the change because that is the sort of company they are, they believe in being people-focused and in helping people deal with problems. However, for most organisations, the change is because focusing on people is the best available option for the business.

Experience brands are succeeding

It is not just my opinion that focusing on experience, rather than the product or service, is the right option, the evidence is mounting. For example:
• Best Western organised itself around the concept of ‘Hotel with a personality’, generating an extra £11 million in one year and a 7.4% lift in NPS.
• Virgin Atlantic used ethnography and research to find out which elements of its existing service were not delivering value, saving £10 million a year.
• Forrester found that CX leaders grew their business at 17% a year (on average), but the CX laggards only grew at an average of 3%.
• McKinsey Digital found that, over a ten-year period, CX leaders grew company valuations by more than four times the growth of CX laggards

One size does not fit all

The implications for not delivering the right experience vary by country, by vertical, and by demographic. PWC has studied the gap between levels of satisfaction and levels of delivery and found there are wide disparities by vertical. For example, in Sports the levels of satisfaction are relatively low, but the importance is also low, leading to a gap of 10%. By contrast, in Healthcare, satisfaction is more than twice as high as Sports, but the importance is much, much higher, leading to a gap of 25%.

The PWC study also looked at the price premium that a good customer experience can deliver. In a field like Car Insurance, the premium is 7%, but with Coffee the premium is 16%. What this means is that when setting goals for the customer experience, you need to find out what the rules are for your vertical, in your markets, for your target groups.

People do not rotate around brands!

Brands can fall into the trap of thinking people rotate around them, one giveaway phrase you might hear is ‘pathway to purchase’ – an assumption that people are seeking to buy your product or service. In fact, brands rotate around people, seeking to find opportunities to interact and to offer solutions to needs when they are identified. Management guru Seth Godin makes this point when he says “Don’t find customers for your products, find products for your customers”.

Three elements creating HX

There are three elements that define what HX means:

1. Empathy
2. Belonging
3. Authenticity

1. Empathy

A great example of empathy is the work Dove have done looking at what real beauty means. A few years ago, Dove evinced their empathy with a campaign that talked to pairs of women. They first asked women to talk about aspects of their body they liked, and the women struggled to identify things they were happy with. They then asked their friends to describe aspects of their friend they liked, all of sudden the floodgates opened, and people had no problem listing positives about their friends. This campaign was based on prior research that showed that women find it much easier to describe positives about others, rather than themselves. This campaign used empathy to support Dove’s general proposition that beauty comes in many forms, and all forms of beauty are to be valued.

A key development in understanding empathy are empathy labs. For example, finance company Guardian commissioned a session with an empathy lab where people with different disabilities answered questions, and staff from Guardian experienced sessions which showed what it was like to lack manual dexterity, or to be visually impaired. For most brands, the people running the company need to remember that many (sometimes most) of your customers are not like you.

2. Belonging

Belonging is about being loyal to your people, even when what they are doing is not central to your business. This is because belonging is a reciprocal thing - if you want your customers and users to have a feeling of belonging to you, you need to have one for them. One good example of building belonging is the way that footwear brand Vans converted underground tunnels in London into a skate park and event centre – skateboarding is something people who wear Vans belong to, with this initiative, Vans showed they belonged too.

Another example of a brand showing belonging is the way vodka brand Smirnoff sponsored the Soho Angels. In London, Soho is a key area for the LGBTQI+ community, with a wide range of bars and clubs. Within the community, the people are relatively safe, but the Soho Angels help make sure people get home safely. By sponsoring the Soho Angels, Smirnoff showed it belonged to its people, even after they had finished drinking for the night.

3. Authenticity

Brands can’t just wear the right labels, their empathy and belonging needs to be authentic. When Pepsi used Kendal Jenner in an ad designed to link to the #BlackLivesMatter movement, it was immediately highlighted as not being authentic. If you plan to do something, but you can’t be authentic, don’t do it.

Adopting a people-centric approach

Once you have decided to adopt HX, the first step is the mental switch from product-centric to focusing on people. This means finding out about your customers, users, viewers, voters etc when they are not interacting with you and your products and services. For example, brands like Nando’s and Kimberly-Clark are using their online communities to find out about their customers as people. What are their views, activities, plans, aspirations and challenges? When you understand more about people, you will be able to see opportunities for you to help them to achieve their goals and to tackle their problems.

In Summary

In summary, here's what brands need to do to succeed:

1. Focus on Empathy
2. Shift from Product to Experience
3. Focus on People not Transactions

What to learn more about how to utilise HX in your business and organisation? Contact us today at: info@potentiate.com

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