A differentiated customer experience is central to the competitive strategies of many companies. Differentiating the customer experience feels right. It seems a natural outgrowth of marketing segmentation and the innate desire for people to be treated as individuals and accorded specialized status. Technologies like analytics can help identify who these differentiated customers should be, but knowing who to treat differently and actually delivering that difference are entirely separate things.
Consider an airline that offers premium access to different customers based on relationship, ticket price and seat location. Such premium access offers preferential boarding to passengers based on their status with the highest status going first. Given the omnipresent land grab for overhead space the idea of boarding the plane with an expectation that you can store your bag is a powerful incentive to be part of the program. It’s a good idea and an example where segmentation design falls down in execution illustrating the challenges required in segmenting service.
It is easy to over segment the customer base. For example having mulitple levels of a premium access product. It’s easy to apply data to define these segments and have the impression that the more differentiation you have the better the customer experience.
Making everyone ‘special’ means that no one is special. In the case of a premium access type service, there is little real differentiation when about half the passengers have one form of premier access or another. This is appears to be the case on many of the recent flights and that is caused more by the design of the differentiation than by any deficiencies of the front line staff.
Here is the point. The design of the program revolves around an umbrella brand with sub levels which make perfect sense from a marketing perspective but its difficult to determine exactly which level of access you are in, all you know is that you have premium access. Everyone is told they are special, they recognized the umbrella designation but not the finer, refined definitions that are intended to deliver different service levels.
The result is that everyone tries to access his or her differentiated boarding privileges at the same time. This puts gate staff in a quandary when everyone with “premium access” piles into special line regardless of their zone 1,2, or 3 – which are all designations within the program. This makes the gate staff the enforcer of poorly structured market segmentation and differentiate service. Consider the following, what does gate staff do when a passenger from zone 2 tries to board at the front of the line.
- Gate staff can ask these people to step aside, which creates a service problem as people say “but it says premium access.” This decision supports a differentiated experience but it singles out the passenger clogging up the front of the line and creating congestion.
- Alternatively, Gate staff can let these people pass and avoid the embarrassment of taking people out of line. That decision makes sense as it avoids confrontation treats people as they expect, but it also effectively creates an undifferentiated experience upsetting the people at the top of the preferential class – who are your best customers.
It’s a case where market segmentation sounds great and makes corporate marketing rather proud, but creates a very different operational reality. Marketing people will say that the system is really no different than in the past when flights boarded by zone. All they did was wrap the service into a single brand name ‘premier access.’ They will see that as a branding exercise that the gate staff should be able to handle. The only problem is that rebranding the zones with a common wrapper makes them see and feel more alike in the eye of the customer who sees the brand before the sub designation.
It is unfair to ask operational staff to enforce a segmentation decision that creates confusion because it is not clear enough to the customers both in terms of who they are and in offering services and service levels that are truly different. Differentiation matters when it clear to both the customer and the company who is different and how those differences matter in terms of the delivered services or service levels.
Overly segmenting the customer base is inevitable given the increasing use of big data, analytics, customized interfaces, etc. will all fuel the desire to offer finer and finer segmentation and differentiation.
That is fine, but differentiation based on data does not matter unless it is integrated across the organization in ways that make sense to customers and the front line staff delivering the customer experience.