Wednesday, March 22, 2017

Customer Experience, Innovation and the Slow Death of Famed Brands

Source: JMV on Flickr;
This week, Sears reported that it has "substantial doubt" about its ability to stay in business unless it can borrow more and tap cash from more of its assets. The retailer has been a bricks-and-mortar cautionary tale for so many years, you can be excused if you thought this was old news. In fact, the brand's woes have been so substantial for so long, it can be easy to forget what a powerhouse Sears once was--it helped to create the suburban shopping mall boom in the 1950s, and 60 years later, the retailer is at risk of driving a stake into the heart of those same malls.

Now is perhaps a good time to look back and consider how Sears' struggles are similar to those of other famed brands that failed, such as Borders, Kodak and Circuit City. We can also look at those competitive brands that have, if not flourished, at least survived, such as Barnes & Noble, Fujifilm, and Best Buy.

Simply put, many brands have been and continue to be too confident in their existing brand strength and business models. This confidence causes them to focus on short-term measures rather than leading indicators of success; it encourages them to believe their past history of significant customer loyalty means they do not need to rapidly evolve their customer experience for new customer expectations; and it obscures the necessity to embrace risk and innovate for tomorrow's customer needs. This is why 50% of the Fortune 500 from 1999 has disappeared from the list and why some forecast that 40% of today's Fortune 500 companies will no longer exist in 10 years.

The discipline of customer experience (CX), when done properly, solves these problems. It forces leaders to commit to leading indicators of success, such as customer satisfaction, loyalty and brand advocacy, and not just quarterly financial results. CX also demands that brands continually relearn customers' evolving needs and resolve problems to deliver on those needs across the entire customer journey. And lastly, customer experience is an effective driver of innovation, helping to identify and prioritize those technologies that will satisfy expectations tomorrow. Looking at three companies that failed and three competitors that remain in business illustrates the power of CX.

To read more on how customer experience helped Barnes & Noble, Fujifilm and Best Buy while undermining Borders, Kodak and Circuit City, please continue reading this post on my free Gartner blog.

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