Customer Experience: Mercedes’ Last Line Of Defence?

When Stephen Cannon, CEO of Mercedes talks of transforming the company around a mission to deliver amazing customer experiences that standout from the herd and drive sales and loyalty, as a CX practitioner I rejoice.

But being a Brit, I am hard wired to look at the cloud rather than the silver lining; and so I wonder… What happens next?

Class-leading service to match the product

Mercedes is known historically for vehicles at the very pinnacle of engineering, the best of the best, evolved from race-proven technology.

Yet in the reality of selling cars that mere mortals like you and I drive, that quality gap is steadily eroding – Their cars may still be better than the rest, but not by much.

Investing in the people and capabilities behind the experience

Stephen Cannon and his team are well aware that the incredible Mercedes brand story only gets them so far and under his guidance they have been putting massive efforts into differentiating from the competition by providing a class-leading customer experience to match the quality of the cars.

They’ve invested heavily and have committed resources at every level, including training and employee incentive programs that put a clear focus on customer centricity. They invested $4 million to allow their own employees to experience what it’s like to drive and own a Mercedes.

This transformation is no mean feat, and even more so given their lack of direct control over the front-line customer experience. (All Mercedes cars are sold through independently owned and managed dealerships.)

So, the future looks bright for Mercedes. As a mature organization, they are improving, optimizing and differentiating the many facets of their service experience to retain competitive edge. They are building an empowered team with the capabilities to elevate their brand and sustain loyalty for the future. That all makes solid business sense.

Exceptional becomes ordinary

But what happens when the competition also provides amazing service?

If everyone offers an amazing experience, then amazing simply becomes ordinary.

Louis CK sums this idea up perfectly in his Everything’s Amazing, Nobody’s Happy skit

https://www.youtube.com/embed/uEY58fiSK8E

As more businesses become more sophisticated and more responsive to customer needs, and offer more highly personalized experiences across their channel touch-points, the competitive advantages of delivering an amazing customer experience will erode – becoming the new normal – just like it did with building a better product in the first place.

Disruptive innovation

So where do companies like Mercedes need to look next?

I suspect that the slightly more distant future for a company like Mercedes will defined less by building incrementally better cars and more about instigating or reacting to disruptive innovation (a term coined by Clayton Christensen of Harvard Business School to describe innovations that create new markets by discovering new categories of customers).

The form and result of that disruption is very difficult or impossible to predict – otherwise they’d already be doing it.

Technology is an enabler to disruption

While many disruptive innovations depend heavily on technology, they are still fundamentally tapping into (and in some cases initiating) human behaviour changes.

Behaviour changes can be harder to see than new technologies. They start small and unseen, and growing momentum until suddenly it’s too late to react.

Disruptive innovations usually find their first customers at the bottom of the market […] but as successive refinements improve them to the point that they start to steal customers, they may end up reshaping entire industries: classified ads (Craigslist), long distance calls (Skype), record stores (iTunes), research libraries (Google), local stores (eBay), taxis (Uber) and newspapers (Twitter).

The Economist
http://www.economist.com/blogs/economist-explains/2015/01/economist-explains-15

Just look at how Uber and the Car2Go ecosystem have disrupted adjacent industries to traditional car manufacturers by offering different and highly-focused customer experiences that built upon amazing new technologies. According a study by the University of California Transportation Center – For each shared vehicle, thirteen cars are taken off of the road. That’s going to put a big dent in the traditional automotive industry.

(Interesting side note here is that Mercedes’ own parent company Daimler AG owns and operates the Car2Go service.)

When it does happen, disruption has a habit of moving very quickly – Think Kodak, Yellow Pages, Nokia, Blockbuster Video, just a few notable examples from the big business graveyard – all of them caught napping by disruptive innovators.

Start by fixing the broken experiences

Back to today, the reality for many industries is that the bar for what is considered a “great” customer experience is still very low: Forrester Research describes the state of CX today as a race to the middle – Just don’t be the worst.

This is nowhere more applicable than when buying a new car – a process which requires a painful journey through a series of inconsistent and disconnected service experiences.

Fixing this kind of mess requires vast efforts to choreograph strategies, systems, resources and capabilities across entire organizations, and that needs to be championed from the top down and embedded into to core of the company culture to truly succeed, and that takes time.

But change is coming.

The evidence is compelling that businesses offering better customer experiences are outperforming their competitors across the Fortune 500, and where the money is, the businesses will follow.

Plan for an uncertain future

The ground is shifting and we are entering a time where no business is immune from disruption. Take a look at the lifespan of companies on the Dow Jones Industrial average – long been considered the bedrock of the US economy – today the average lifespan of companies on the DJIA today is under 20 years. (For more detail take a look at this excellent infographic from the Wall Street Journal.)

As a customer experience design leader, I see momentum building everywhere. Leaders like Stephen Cannon are emboldened by their successes, and the evidence grows that CX works. All the while, customer expectations continue to rise as they demand ever more valuable and more connected experiences from their service providers.

Fixing the basics is a great place to start, but watch out for earthquakes.

The alternative

http://tomfishburne.com/2014/07/safe-is-risky.html.

Enough said!

Need help?

I’m often tasked with working with clients to explore customer experience improvements from repairing the basics of customer experiences, through to organizational level change – because are all seeking new ways to stay relevant in our increasingly commoditized and highly competitive markets.

Through the application of transformative customer-centric strategies and design methods, we will help them get closer to their customers, and design new services, products and even entire businesses to delight their customers and grow revenues.

Footnote & credits

  1. You can find a short summary of Stephen Cannon’s talk at the Forrester Customer Experience Forum here: https://solutions.forrester.com/customer-experience and the informative Q&A here: http://blogs.forrester.com/harley_manning/14-06-18-customer_experience_qa_with_stephen_cannon_president_and_ceo_mercedes_benz_usa
  2. The Economist Explains Disruptive Innovations: http://www.economist.com/blogs/economist-explains/2015/01/economist-explains-15
  3. McKinsey – Marketing the Mercedes Way: http://www.mckinsey.com/insights/marketing_sales/Marketing_the_Mercedes_wa
  4. Tom Fishburne – Safe is Risky: http://tomfishburne.com/2014/07/safe-is-risky.html
  5. Harvard Business Review – https://hbr.org/2015/03/red-ocean-traps
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