97: Why I'm betting my business and my career on customer experience
Subscribe to my new podcast, The Gobsmack Podcast here [https://podfollow.com/the-gobsmack-podcast].
Summary: In this episode I explore why customer experience, not AI, is the real competitive advantage of the future, and how service businesses can escape commoditisation by entering the experience economy.
4 things you'll learn in this episode
* Why 'predicting the future' is no longer a viable business strategy in the age of AI, and what to focus on instead.
* How AI is collapsing the margins of service industries, and why doing things that don't scale becomes your real edge.
* The four economic stages every business sits in (commodity, product, service, experience), and why climbing this ladder is the biggest unlock for premium pricing.
* The data that justifies investing in customer experience, including how it can grow revenue 25% faster and explain up to 60% of organic growth.
Transcription:
The world of business is changing in ways that are equal parts mind-bending and terrifying.
Needless to say, it's Artificial Intelligence that is acting as the absolute driving force of this transformational shifts in human civilisation.
It's not only the change, but the rate of change.
We're in the middle of the singularity. In technical terms, this is '…the point where artificial intelligence becomes capable of improving itself so rapidly that technological progress accelerates beyond normal human ability to predict, control, or understand.' (OpenAI, 2026).
Again, '…beyond normal human ability to predict, control, or understand.'
It's our inability to 'predict' that really interests me.
And the interesting part of that word is the idea that until now, the world of business has been built on the idea that by predicting human needs, desires and behaviours, we can build and position our businesses for success.
This is often referred to as 'skating to where the puck is going'.
The concept is pretty self explanatory. It's an ice hockey term. The puck in ice hockey moves so fast, that by the time you get to it, it's gone. Instead, the best players have learnt to skate not to where the puck is, but to where they predict it will be. They 'skate to where the puck is going'.
There's that word again, 'predict'. They skate to where they predict the puck will be. But remember, the pending AI singularity is characterised by changes that are '…beyond normal human ability to predict…'.
We no longer know where the puck is going. And so we don't know in which distance we should skate.
Business owners and entrepreneurs who have always built their success off the back of prediction are now playing ice hockey with a blindfold on.
This is something I've thought a lot about over the last few years. And it's made me wonder if we might be asking the wrong question. The question shouldn't be 'where is the puck going?', but 'is there a puck that's staying still?'. If the puck isn't moving, we avoid the need to make predications all together. There's another convenient ice hockey term that allows us to continue this analogy, 'freezing the puck'. It's when the goalie covers the puck to stop play.
The question becomes, 'in a world of unprecedented change, what will stay the same?' What is the frozen puck?
The answer, as best as I can see, comes down to a single word. Experience.
The human desire to live an experience. Something that they can actively participate in. Something that makes people feel a certain way. Something that gives people stories to tell.
These experiences will be the currency of the future. Singing Beatles songs while toasting marshmallows around a campfire with the people you love. Getting clay under your fingernails while crafting a bowl on a pottery wheel with your best friend. Watching the sun set with your feet in the Indian Ocean, then racing your kids up a sand dune in time to watch it set again. People are always searching for the meaning of life. These things are better and more important, because they allow you to find meaning IN life.
And so, I'm going all in. I'm betting the farm. I'm betting my business and my career… on experience. On customer experience. I'm transforming how I do things, and I'm launching Gobsmacking Consulting, to help service based businesses design remarkable customer experience. More on Gobsmack Consulting later.
For the last year, I've given every spare second I have to the deep exploration and understanding of customer experience.
What I've pieced together has been nothing short of enlightening for me.
I've found that in an increasingly transactional, impersonal and sterile business landscape, customers are aching for connection and individualisation. They're aching for a story to tell. They want to feel something. And that's the purpose of customer experience, creating remarkable experiences that make people feel a certain way.
The essayist, Maya Angelou, famously said, 'People will forget what you do but will never forget how you made them feel.' In his 2022 book, 'Unreasonable Hospitality', author and restauranteur, Will Guidara told us 'Fads fade and cycle, but the human desire to be taken care of never goes away'.
This is all well and good, but there needs to be a business case for customer experience. Unfortunately, it's not enough to elicit a feeling in someone, in business, we also need to make money.
You must be able to justify the financial value of spending resources on increasing experience.
And the data gives us strong evidence to make this justification, supporting the idea that businesses with better customer experience have better bottom lines. This evidence runs deep:
* Businesses in the top quartile for customer advocacy grow revenue up to 25% faster than bottom-quartile competitors (Marsden et al., 2005).
* A seven-point increase in Net Promoter Score (a measure of customer experience) correlates with roughly a 1% increase in revenue (Marsden et al., 2005).
* In many industries, the customer experience leader grows more than twice as fast as its competitors (Bain & Company).
* Customer experience differences can explain roughly 20% to 60% of the variation in organic growth between competing businesses (Bain & Company).
* Emotionally connected customers are more than twice as valuable as merely satisfied customers (Heath & Heath, 2017).
* Better customer experience increases lifetime value because customers tend to pay more, buy more often, and stay longer (Gingiss, 2021).
* Acquiring a new customer can cost five to 25 times more than retaining an existing one (Gallo, 2014).
Let's return to that elephant in the room, artificial intelligence.
There's no denying or ignoring the role that artificial intelligence will play in the future of business. No matter your industry, the impact of AI on your business will be nothing short of extreme. It's a revolution, and no business is immune.
Let's look at how AI will change your business, and where customer experience will fit into this rapidly changing future.
Technology blogger, Carl Cortright, writes, 'The core concept is simple. AI agents are beginning to commoditise what used to be high-margin service industries. We are moving toward a world where services that used to cost hundreds of thousands of dollars will cost tens to hundreds. The end result is inevitable. Services will become ubiquitous and embedded in everything we do, but the margins for the businesses providing them will collapse… The (AI) agents are coming. The margins are compressing. And knowledge work is about to become as cheap and accessible as flipping a switch.'
AI is basically a technology that allows for near infinite systemisation and near infinite scalability. Everything that was expensive, difficult or time consuming is becoming cheap, easy, and instantaneous.
And if you're not embracing that, you just won't keep up, we can't see your business surviving.
Implementation of AI is simply a cost of entry to running a service based business, it's something you need to be doing to just be in the same conversation as your competition.
So, in my pursuit of the 'frozen puck', here's where I see an opportunity.
With a mass global embrace of AI, the playing field will be instantly levelled. While the early days of the technology saw the use of AI as a competitive advantage, as the technology becomes mainstream, businesses will need to find something new to make them stand out.
Given a long enough timeframe, no one can predict the impact of AI, but for at least the medium term, there's a huge opportunity.
We can't compete with AI as the ultimate tool to make things that scale. So we need to ask ourselves 'What is unscalable?'. From his article of the same title, essayist Paul Graham would advise us to 'do things that don't scale'.
I couldn't agree more.
Everyone is focussing on how AI will change the future of customer businesses. But businesses need to focus on the things that won't change. We need to ask ourselves, 'what will stay the same?'.
Branding expert, Marty Neumeier, encourages people to 'zig when everyone else is zagging'. Everyone is focussed on AI-enabled systemisation and automation. And sure, you should be too. Yes, smart business owners will focus on AI tools, but they'd that while also 'zagging' to build a customer-experience-driven competitive advantage.
Everyone is looking for automation. This is what AI promises. People are going to crave things that do not scale. This is what we need to provide through customer experience.
The modern history of business has followed three distinct stages.
First, commodification, where businesses that try to compete on price, and end up losing what could make them special and unique. Think about bulk-billing medical centres, walk-in $15 hair cuts or $9 per week 24 hour gym memberships.
By 'commodifying a service', the service becomes highly scalable and very cheap, but strips away all sense of brand or emotional attachment.
Only very slightly better than commodities, are products. With products, we start to see some branding creep in, but we're still lacking any human connection.
For examples of service businesses that are productising their offering we can look to dieticians selling one-size-fits-all meal plans, psychologists selling self-help workbooks instead of therapy, and accountants selling 'tax pack lodgement kits'.
Products are slightly less scalable and slightly more expensive, but they still don't make people feel anything, and they rarely give people stories to tell.
More recently, we've been living in the service economy. This is where the vast majority of service-based businesses still operate. This era is defined by businesses doing work for customers instead of selling commodities or products. This work might be fixing your computer, painting your house or getting you the best mortgage.
Usually, the service that people receive is perfectly adequate, it gets the job done. But it still doesn't make people feel, and it doesn't give them a story to tell.
As Jay Baer and Daniel Lemin point out in 'Talk Triggers' (2018), 'people never say: 'let me tell you about a perfectly adequate experience I had recently'.
The big problem with operating a business that sells a service is that the cost of services (and the services economy in general) is trending to zero. Competition among businesses now means every business in a certain industry provides pretty much the same service.
Think about how you choose a service based business, you'll often choose the cheapest option. You choose the cheapest accountant to do your tax return because the outcome will be the same regardless of price. Need a tap replaced? You'll choose the cheapest plumber. Need a prescription from your doctor? You choose the cheapest. As long as you get your desired outcome (a completed tax return, a tap that doesn't drip and a script for antibiotics), cheaper is better.
According to B. Joseph Pine II & James H. Gilmore in their book 'The Experience Economy' (1999), 'in a service economy, lack of differentiation in a customer's mind causes services to face the price pressure usually associated with commodities, meaning customers make buying decisions based purely on price.'
One of the single greatest things a business can do is move out of this service category.
So far we've moved from commodities to products to services. With each step, the thing being sold has become less scalable for the business and therefore more expensive for the customer.
But there's one more step, the transition from services to experiences. Experiences are the least scalable and therefore you can charge more for experiences than services. Commodities are highly scalable and cheap. Experiences are unscalable and expensive.
The service economy is dead. For a business to thrive, it must enter the experience economy.
Don't get me wrong, services are still important. As are products and commodities. But on their own, they're not enough to give a business a strategic advantage.
It's no coincidence that many of the global leaders of the experience economy have arrived at the same conclusion.
In 'The Starbucks Experience' (2006), Joseph A. Michelli revealed that Starbucks considers that 'coffee is just a product that is our vehicle to start a conversation with the customer'. Former Starbucks CEO, Howard Schultz, was famous for saying 'Starbucks is not in the coffee business serving people, they are in the people business serving coffee'.
The Disney Institute shares a similar sentiment. Their 2006 book co-written with Theodore Kinni, 'Be Our Guest', emphasises that 'goods and services are simply props to engage the customer'.
The founder of Airbnb, Brian Chesky, was quoted in 'The Airbnb Way' (Joseph A. Michelli, 2019) as saying 'Airbnb is now offering experiences, not accomodation'.
And 2015's 'Driven to Delight: Delivering World-Class Customer Experience the Mercedes-Benz Way', documented Mercedes Benz's desire to shift from a '…product dominant model to a customer obsessed model'.
Starbucks sees coffee simply as a 'vehicle' to deliver an experience. Disney says that services are simply 'props'. Airbnb sells experiences, not accomodation. Mercedes Benz prioritises the customer over the car.
So yes, commodities and products and services have a place. And that place is to act as the foundation for what truly matters. Experience.
As the price of commodities, products and services drops towards zero, you have an opportunity (and an obligation to your business) to escape the service economy.
Engagement, feelings and the stories we tell will become what can't be 'cheapened'. As people ache for emotional connections, these things will attract a premium.
While everyone else is automating and systemising, there's an opportunity for you to use 'experience' as a differentiator, as the asset you're selling. People will pay more for it, they'll keep coming back, and they'll share the stories with their friends.
So that's my thesis. And that's why I'm launching Gobsmacking Consulting, an agency that does one thing and one thing only. We help service-based businesses design remarkable customer experience.
Much of the last year of my life has been about building our proprietary framework for customer experience design. We will lead the businesses that work with us through this framework.
Our model of experience design centres on 'experience mapping'. This process will define two distinct journeys that a customer will go through. First, the service experiences will be mapped. The service experience is every single touch point that a customer experiences during the course of a single service a business is providing. And then, we'll help businesses design and map the lifetime experience, every single touch point that a customer experiences across the life of the company.
Across both journeys, we'll help identify pits and plateaus of experience and turn them into peaks; we'll build experience triggers to surprise and delight; and we'll create an environment for intentional magic that will leave people gobsmacked.
We'll help create and implement unignorably remarkable experiences for a business's customers. Experiences that make them feel something and form emotional connections with a brand. Experiences that give them stories they won't shut up about.
We'll be implementing the Gobsmack Design Framework through keynotes, workshops, consulting, and courses.
I'm so excited for the future, and for the small part Gobsmacking Consulting can play in helping design it.
Your action steps:
* Identify your frozen puck: Find the things in your industry that won't change, and build your differentiation around those constants rather than chasing predictions.
* Map every customer touchpoint: Document each moment a customer interacts with your business during a single service, then again across their entire lifetime with you.
* Turn pits and plateaus into peaks: Find the average and underwhelming moments in your customer journey, and intentionally redesign them to surprise and delight.
* Use AI to free up time for experience design: Adopt AI to systemise the scalable parts of your business, then redirect the time you save into the unscalable, human moments customers cannot get anywhere else.
* Create stories worth telling: Build at least one signature moment into your customer journey that customers will feel compelled to tell their friends about.
If you enjoyed this, you'll also enjoy the following, they're some of my most popular articles and podcasts on topics similar to this one:
* Delivering an Experience: The Strategy of 'Being Different'. [https://dwbc.au/delivering-an-experience-the-strategy-of-being-different/] or listen to the podcast episode here [https://pod.fo/e/2ce1fb].
* Your missing marketing strategy. The power of storytelling. [https://dwbc.au/your-missing-marketing-strategy-the-power-of-storytelling/] or listen to the podcast episode here [https://pod.fo/e/2c8785].
* 9 unique ways to make your business stand out (to get more clients) [https://dwbc.au/9-unique-ways-to-make-your-business-stand-out-to-get-more-clients/] or listen to the podcast episode here [https://pod.fo/e/2ecddd].
