Chapter 7: Designing Products, Services, and Processes with Customers in Mind

Kerri Shields

Chapter 7: Designing Products, Services, and Processes with Customers in Mind

Chapter 7 Learning Outcomes

After reading this chapter, you should be able to do the following:

List five ways in which an organization can gather customer insights toward product innovation.
Discuss how a company can make products that are customer centric.
Discuss how a company can offer services that are customer centric.
Discuss how a company can develop processes that are customer centric.

Creating Products with the Customer in Mind

Products are created to address customer needs, solve customer problems, and create customer delight. In a customer-centric company, product innovation is all about the customer. Therefore, to launch, manage, and enhance products successfully, product teams must constantly consider their target customers. The most effective product teams partner with their customer experience (CX) counterparts. This ensures that best practice CX strategies are implemented and that the voice of the customer (VoC) is integrated into each stage in the process.^[1]

bottle of hand cream to show product design — Photo by Valeriia Miller from Pexels

When creating products it is imperative today to conduct research into customer preferences, social trends, competitor behaviour, and sales patterns. As companies get further into new product ideation, they must consider what a high-level customer journey might look like; hypothesize their target customer market segments; and brainstorm what their customer personas might be.^[2]

There are many ways in which companies can ensure they are making products that customers want and will enjoy using. Here are five ways in which companies can gather customer insights before producing products customers won’t want, like, use, or buy.

Hold focus groups. Ask potential customers to view or use a prototype of the product and gather feedback that can be used to improve the product.
Conduct surveys. Ask customers if they would use the product, what they like about it, and what they might change before spending money on developing the product.
Gather feedback. Listen to your customers and get their feedback before making products they will not use or enjoy. Often they are a source of product ideas as they make suggestions or provide feedback about a product to employees. Have employees take notes and share trends or common questions or ideas with the team.
Track clicks or emails about new products from a “coming soon” information landing page.
Observe trends. What products are selling the most? What are customers talking about on social platforms? What are competitors selling?

Customers, for the most part, want products that work as advertised, are easy to use, are reliable, and do not malfunction. The goal of customer-centric product development is to provide customers with a good user experience (or “UX”). Apple is known for making products customers enjoy using, find easy to use, and have features that delight or exceed their expectations. Making products that delight customers helps build customer loyalty and creates customer advocacy. Many Apple consumers after having purchased their first Apple product become loyal advocates of the brand because of Apple’s exceptional user experience.

“LEGO has long seen the value in co-creating products with customers (both young and old). For example, LEGO Ideas is an online community where members can discover cool creations by other fans and submit their own designs for new sets. Fans can vote on submissions and give feedback. If a project gets 10,000 votes, LEGO reviews the idea and picks a winner for an official LEGO Ideas set to be created and sold worldwide. The creator gives final product approval, earns a percentage of the sales, and is recognized as the creator on all packaging and marketing. This concept celebrates loyal customers and rewards them for innovation, creativity, and entrepreneurialism.”^[3]

Customers today are more concerned with the environment than ever before. Companies need to be environmentally sustainable both in the products they offer and in their internal manufacturing systems. Customers want to do their part to help the environment and are more likely to support companies that act responsibly toward the world around them. Modern companies can’t truly focus on their customers while ignoring our planet’s many pressing challenges. ^[4]

Disney is working to reduce indirect greenhouse gas emissions through the reduction of electrical consumption. It has zero-net direct greenhouse gas emission policies within all its facilities. Disney also has a zero-waste policy meaning that there is nothing that would end up in landfills. The entertainment giant also uses technology that saves water and is working on lowering the footprint of its product manufacturing and distribution. This is tied up to the company’s policy of having a net positive environmental impact that has made Disney a leader in environmental responsibility.^[5]

Watch the “How to Do Market Research!” YouTube video below to learn about market research.^[6] Transcript for “How to Do Market Research!” Video [PDF–New Tab]. Closed captioning is available on YouTube.

In the Spotlight: Amazon

Amazon.com^[7]

With the vision statement as “We seek to become Earth’s most customer centric company”, Amazon truly lives up to its mission by incorporating customer centricity in each activity and decision that it takes. Founded in 1994, Amazon is among the first companies to leverage the power of the Internet. While it started as an online bookstore, Amazon then went on to become a $430 billion worth company. Despite being such a large organization, how does Amazon manage to consistently rank among the most customer-centric organizations in the world? Here are the secrets:

Keeps your ear to the ground.

Every manager at Amazon, including the CEO, spends two days every two years at the customer service desk. This ensures that he is listening to the customers and understanding their needs. As a consequence, every single employee has the customer’s perspective in mind all the time. Evidently, this practice helps the entire organization become more customer centric.

Have a customer centric leader at the helm.

Founder and Chief Executive of Amazon.com, Jeff Bezos is known to be a customer-obsessed leader. His empty chair story is a very famous story among all those who have read about the company. During the earlier board meetings, Bezos would leave a chair empty in the room, asking the executives to assume that it belonged to the most critical and crucial member of the company – the customer. He’d then encourage his employees to take all their decisions bearing the customer in mind.

Innovate with the focus on the customer.

Amazon has never left any stone unturned in the process of helping the customer derive maximum gains. From The Kindle to drone delivery, all of Amazon’s innovations are aimed at adding value to the customer. During the development of the Kindle, when one of the Finance executives asked Bezos how much they had to spend on the development of the Kindle, Bezos answered by saying “How much do we have?”

Creating Services with the Customer in Mind

An amazing customer experience is one of the biggest competitive advantages a company can have. Instead of competing on price, more than two-thirds of companies now compete mostly on the basis of customer experience. ^[8] With that said the customer experience is all that a customer experiences throughout the customer journey and this will include the service customers receive from employees as well as the impression the customer gets from browsing through the physical store, how user-friendly the website is, and whether or not the product works as expected. If the customer has a bad experience using the product or a bad experience interacting with the support team then the customer may perceive that they had a bad or negative experience with the company.

Companies such as Costco, Amazon, Ritz-Carlton, Starbucks, Lowe’s, UPS, Trader Joe’s, Zappos, and Harley-Davidson are known to be customer centric in everything they do. Innovative companies are always looking for ways to better serve customers and improve their lives.

Watch the “How Tony Hsieh Grew Zappos to $1.2 billion value in just 10 years” YouTube video below to learn about the Zappos customer service strategy.^[9] Transcript for “How Tony Hsieh Grew Zappos to $1.2 billion value in just 10 years” Video [PDF–New Tab]. Closed captioning is available on YouTube.

“Employees are the foundation of a strong customer experience, which means employee experience and culture are crucial in customer-centric companies. Successful organizations invest in empowering their employees and providing them with the right tools and culture to succeed.”^[10]

“Starbucks has a fiercely loyal following, in large part because of its mobile ordering and personalized rewards program that makes it easy for customers to order exactly what they want and pick it up with a minimal wait. Starbucks has the most popular app among major restaurants. In 2020, Starbucks focused on its employees with extra hourly pandemic pay and the option to stay home with pay, even if their location was open. Starbucks also extended its mental health benefits to cover 20 therapy sessions per year for employees and their families. As a leader in environmentally-friendly dining, Starbucks also set aggressive new sustainability goals, including reducing carbon emissions by 50% by 2030.”^[11]

“If you’ve ever been to IKEA, you know it’s not just a furniture store – it’s an experience. They constantly improve to create better customer experiences, including elements in their stores like cafés and children’s play centers. Recently, they’ve even added augmented reality apps for smartphones, allowing customers to virtually design a room with their furniture.”^[12]

In the Spotlight: Southwest Airlines

Southwest Airlines^[13]

Founded in 1967 by Herb Kelleher, Southwest Airlines has bucked the trend of loss-making airlines. Its mission statement reads “Dedication to the highest quality of customer service delivered with a sense of warmth, friendliness, individual pride, and company spirit.” It wanted to make every flight an unforgettable experience for its customers and what a wonderful job it does each time! In the process, it has also achieved a fiercely loyal customer base. Everything about the brand, from the napkins that say “I’d be happy to hold your drink” to the stock market ticker that is “LUV”, talks about the fun-loving and customer-loving brand that it is. Here are a few secrets of Southwest:

Understand that “Happy employees = Happier customers”.

The airline believes in keeping its employees first and keeping them happy. The website reads a message from its founder: “Our people are our single greatest strength and most enduring long-term competitive advantage.” It empowers its front-line employees and backs them to make quick decisions that are critical for a good customer experience. Probably, that’s Why it is not surprising then that the employees stay with the airline even though they are paid less compared to other airlines.

Anticipate customer needs.

In his book ‘High tech, High touch customer service’, Micah Solomon recalls an experience when the gate agent of Southwest Airlines booked the tickets to the next flight to his destination when the one was supposed to fly was grounded due to bad weather conditions. All this was even before Micah requested it. What a wonderful example of anticipating a customer’s need and being proactive in helping the customer. What was supposed to be an inconvenience turned out to be a moment of pleasant surprise for the customer.

Apologize genuinely.

It’s not wrong to apologize when things go wrong on your end. Sometimes just an apology goes a long way and may mean as much or more to the customer than any monetary solution. And this is the mantra that Southwest Airlines lives by.

In the Spotlight: TD Bank

TD Bank^[14]

Founded in 1852, Toronto Dominion Bank has been delivering WOW!(in its own words) service to its customers for more than 150 years now. FYI, you can take your dog into the branch while you do your banking transactions. The company started as Portland Savings Bank in 1852 and through a series of M&As became People’s Heritage Bank in 1983. This was later rechristened BankNorth after some other acquisitions. Meanwhile, Commerce Bank was a very customer-focussed bank and it is here that the origin of the company’s customer-centric culture lies. Later, TD Financial Services of Canada acquired both BankNorth and Commerce Bank and became what is now called TD Bank – America’s most convenient bank.

Be convenient.

True to its tagline, “America’s most convenient bank”, TD Bank operates 7 days a week and often up to 8 PM to serve its customers. TD Bank believes that the convenience that they offer to its customers has become a huge differentiator and a competitive advantage for it. It is confident that if it opens a new one in any locality, it would have more than 25% of the local market share within the next 5 years. Another example of its worth: The bank on Wall Street had 1 billion USD in deposits in five years!!

Listen from across all channels.

Keeping up with the increasing number of channels of customer engagement, TD Bank has persistently listened to its customers through all the channels and has been responsive to every customer feedback. As Theresa McLaughlin, Global CMO of TD Bank’s Canadian banking said in an interview with Marketing Magazine, “Doing it repeatedly is what differentiates us from the rest.”

Say Thank you.

Earlier, TD Bank would thank its customers through ‘Customer Appreciation Days’ on which it gave every customer a free coffee and cake at the local bank. In 2014, this went up a notch higher when the bank turned its ATMs into “Automated Thanking Machines” and then, magic happened! In an era where we hardly find time to write a thank you card to our friends and relatives, TD Bank took the effort to give personalized gifts to its customers.

In the Spotlight: Ritz-Carlton

Ritz-Carlton^[15]

In order to justify its premium prices, Ritz makes sure that its customers receive painstakingly good and personalized service. For example, Ritz takes things to the next level in this story covered on Bloomberg:

A family who had been staying in the Ritz-Carlton in Bali had brought specialized eggs and milk for their son who had numerous food allergies. Upon arrival, they saw that the eggs had broken and the milk had soured!

The hotel’s manager and dining staff searched the town but couldn’t find the appropriate items. Luckily, the executive chef at this particular resort remembered a store in Singapore that sold them. He contacted his mother-in-law and asked that she buy the products and fly to Bali to deliver them, which she agreed to do.

The words of Ritz-Carlton’s COO Simon Cooper show the control Ritz is willing to give their employees to empower them to deliver an amazing experience: The goal is to develop such a strong emotional engagement between the hotel’s staff and their guests that a guest will not consider staying anywhere else, even if they have an option.

Ritz-Carlton gives employees incentive and control to deliver an amazing customer experience, and place their priority on customers rather than regulations.

Creating Processes with the Customer in Mind

The way in which a company gets things done can have a positive or negative impact on the customer experience. If customers must wait in long lines, can only contact the company through one channel, or have to fill out many forms before they can get service or have a problem resolved then the processes the company is using probably need to be reconsidered.

How many times, as a customer, have you become frustrated when you were asked to take a ticket and wait in line, or you were waiting on hold for an extended period of time, or you were trying to use an online system to solve your problem or get an answer to an issue only to discover the online system was not user-friendly and you could not figure out how to resolve the issue without having to use another channel to contact the company? When processes improve the customer experience and make the customer journey easy, fun, or memorable (in a positive way), customers are more likely to continue their patronage with the company, increase their spending with the company, post positive online reviews, and refer others.

Watch the “Business Process Improvement” YouTube video below to learn about making process improvements.^[16] Transcript for “Business Process Improvement” Video [PDF–New Tab]. Closed captioning is available on YouTube.

“Kaiser Permanente focuses on both employee and customer experience and uses innovative technology like virtual appointments that allow providers to see more patients more conveniently. It’s an example of making people’s lives easier and better, and we’ll only see more digital offerings from big brands.”^[17]

“Acxiom tracks more than 4,4000 health attributes in its patients to proactively connect them with the right provider and streamline referrals and check-in.”^[18]

“Best Buy, the tech store, went through a digital transformation to evolve with changing trends and streamlined its in-store and online experience to provide personalized advice, including visiting customers in their homes to find their best tech solutions.”^[19]

“Amazon, the e-commerce giant (and web host with Amazon Web Services), is constantly innovating with new customer solutions, including one-day shipping, easy returns, and creative physical locations that integrate for a truly omnichannel experience.”^[20]

“Sephora, the beauty brand, uses technology to create a personalized experience with a comprehensive app, virtual try-on of makeup products, and a strong online community for a seamless customer experience.”^[21]

“TELUS customers have a choice of how they get support help, from online tutorials to detailed instructions on any possible issue.”^[22]

“Zappos is an online retail company that is known for “going extreme” for its customers. Zappos’ customer philosophy may even seem risky for some – they offer free shipping for any number of back-and-forth transactions, offer a 365-days return policy if a customer is not satisfied with the product, and never outsourced customer service so as to capture the local culture and persona in their experience. Tony Hsieh, the CEO of Zappos says that this indeed costs them some money. However, the philosophy of Zappos is that most of the money they might ordinarily spend on advertising is being invested in customer service so that their customers will stay long-term with them and compensate for the lost marketing with positive word-of-mouth. Is it working for them? Astronomically!”^[23]

Key Takeaways

Products are created to address customer needs, solve customer problems, and create customer delight. In a customer-centric company, product innovation is all about the customer. Therefore, to launch, manage, and enhance products successfully, product teams must constantly consider their target customers.
Companies should gather customer insights before producing products customers won’t want, like, use or buy. They can do this in many ways, including holding focus groups, conducting surveys, gathering customer feedback, tracking website clicks and emails, and observing trends.
Companies need to be environmentally sustainable both in the products they offer and in their internal manufacturing systems. Customers want to do their part to help the environment and are more likely to support companies that act responsibly toward the world around them.
An amazing customer experience is one of the biggest competitive advantages a company can have. Instead of competing on price, more than two-thirds of companies now compete mostly on the basis of customer experience.
Provide employees with incentives and control to deliver an amazing customer experience, and place their priority on customers rather than regulations.
The way in which a company gets things done can have a positive or negative impact on the customer experience. Processes should enhance the customer experience (CX).

End-of-Chapter Exercises

Product Features. Do you have a product you love? Discuss with your classmates what it is about the product that makes you like it so much. Is it the product’s usefulness, design, durability, and features? What makes you like the product may not be the same for every customer. Consider various customer segments and determine what the product offers that might align with the needs and wants of each segment. For example, consider age groups: children, seniors, teens, or consider careers: construction worker, office employee, nurse, what is it about the product that each of the segments might enjoy? To make it even more confusing consider complex buyer personas such as an office manager who belongs to a cycling club and joins in cycling events each weekend, and also is the parent of three children. What is it about the product that this person would most like?
Customer Advocacy. Search the Internet for information on products produced by Apple Inc. and Harley-Davidson. What is it about the products made by these companies that customers love? How do these companies turn their loyal customers into cult-like followers? How do they build customer advocacy? Discuss with your professor and classmates.
Exceptional Service. Discuss with your classmates a time when you received exceptional service. Why was it exceptional? What happened that made it a positive memory for you? Would you refer this company to other potential customers? Did you return or buy additional products or services from the company? Did the company exceed your expectations? If so, how?
Poor Service. Discuss with your classmates a time when you received poor service. What happened that made this a negative experience? Would you refer this company? What could have happened to turn this situation around? Were there things the company could have done better to turn the situation from a negative to a positive? What expectations did you have going into the situation and how were your expectations not met? If you had lower expectations would the situation have been acceptable?
Efficient/Effective Process. Discuss with classmates a process you feel works well, either a process at your current place of employment, or a process you encountered as a customer. Why do you feel it worked well? What was it about the process that made it effective? What was it about the process that made it efficient? What was it about the process that made it customer centric?
Design a Process. Work with a partner to design a new process for a college or university. Assume there is a process for students to change courses on their timetable. What would you do to make this process customer centric? How would the process flow?

Self-Check Exercise – Products, Services, and Processes

Additional Resources

5 Trends that will Define Customer Service in 2021
10 Trends Changing Customer Expectations
20 Best Companies to Work for in 2021
Canada’s Top 100 Employers 2021
4 Self-service Trends that are Changing Customer Service 2021
100 Customer Experience (CX) Stats to Prepare for 2023

References

(Note: This reference list was produced using the auto-footnote and media citation features of Pressbooks; therefore, the in-text citations are not displayed in APA style).