How BMW is Designing a Better Customer Experience

Design isn’t just for products—it should be a careful consideration in the overall customer experience. Case in point, with its “Dream it. Build it. Drive it” program, BMW is taking the concept of a personalized customer experience to a whole new level.

It’s common knowledge that when it comes to shopping for an automobile, most people dread setting foot on a car lot. That’s because the customer experience often includes pushy salespeople and plenty of exasperating negotiation with the dealer on a final price.

That’s why a Financial Times article titled “Benefits of a Showroom Bypass” is so interesting. It mentions that BMW is offering buyers a way to circumvent the dealer showroom and custom build a car of their very own.

According to the article, BMW has long offered buyers in Germany the ability to customize their own automobile, from paint and interior colors to installation of custom features, such as grills and moonroofs. However, as the company has shifted production of some models to the United States, this option is also now available for U.S. buyers.

In designing the customer experience, BMW had to revisit many of its processes in order to offer customers a personalized encounter. First, there was website design on the front end and database design on the back end. (There are more than 70 million possible combinations of models, interiors, exteriors, and accessories.) Second, engagement with buyers throughout the process was a consideration. The company ships each customer a video of their particular car as it’s built—it’s the actual car in the video—so the process needed redesign consideration when “custom built” became an option offered to consumers.

Why would BMW go through all this trouble—especially when it doesn’t charge extra for a custom-built car? A few things come to mind, including better customer engagement and the creation of a unique and special “one of a kind” automobile that arguably enhances an image of status in the mind of the buyer. In addition, it doesn’t hurt that most buyers of a custom BMW end up spending more money to accessorize a car of their own.

There has been plenty of research in the field of customer choice—and how too much “choice” can ultimately lead to customer confusion. However, this appears to be one instance where a highly customized and personalized customer experience is leading to extremely satisfied customers and ultimately higher profits.

Questions:
• Does the concept of a customized automobile purchase appeal to you?
• Is “build to order” a concept applicable to premium products only?

The Science Behind Moving from Clutter to Clarity

Previous retailing philosophies included such gems as “stack it high and watch it fly” and “more choice is better.” However, some multi-national retailers have discovered that reducing store inventory can actually improve the customer experience and boost sales. Increasing sales by reducing customer choice may sound like a paradox, yet retail experiments validate that shoppers don’t want clutter and instead prefer clarity.

A previous column, “When Less is More in Customer Choice” cited that many marketers believe innovation and competitive differentiation arise from giving customers more choices and options. But through the strategy of offering more choice, marketers may actually end up increasing complexity, costs and causing customers “mental fatigue.” And avoiding mental fatigue is what retailers are after, especially when they learn that simplicity in store layout and merchandising can lead to sales increases!

Cleaner, simpler and less chaotic is the new mantra for retailers. This means removing towering aisles of product twelve feet high, reducing in-aisle displays, and fewer bins of “grab bag” mixed product. Inevitably though, these improvements in the shopping experience will most likely lead to fewer products stocked and potentially a drastic reduction (10-15%) in SKUs.

But how does a retailer choose which products to eliminate, especially when there are so many variables (year-over-year sales comparisons, seasonality, pricing, profitability and trade promotion dollars, etc.) to consider? More than just traditional rules of thumb or guesswork, analytics and experimentation help retailers get this mix right.

Babson College professor Thomas Davenport has identified eighteen analytical trends that are relatively well established among retailers, such as assortment optimization and shelf space allocation, pricing optimization and market basket analysis among others.

These analytical processes help optimize categories and merchandise quantities effectively allowing retailers to “give space back” to shoppers without sacrificing sales and gross profit. In addition, retailers are using analytics to help decide which categories could benefit from private label sales—or store brands—which tend to carry higher margins.

Retailers are also experimenting with control groups to project how remodels will impact sales. Through testing and experimentation, retailers can discern which changes most improve metrics such as customer experience scores, sales, gross margins and inventory reductions.

For some retail managers, the idea of removing product, reducing aisle height, and even giving space back to customers is contrary to “what works.” However, customers are voting with their feet—and subsequently their wallets.

A win-win outcome is possible where customers gain a more satisfying shopping experience via brighter stores, cleaner merchandising displays, more room to maneuver carts in aisles, and less maddening clutter. And retailers benefit with improvements in category and overall store sales, inventory carrying costs and customer satisfaction scores.

Customers are already facing too many choices on a daily basis. More choice isn’t always better and in fact, reducing customer choice may be the best option for your enterprise.

Questions:

• Are there locations that you refuse to enter or shop because of clutter or too many choices?
• Are you willing to pay more for a clutter-free shopping environment?

Customer Experience: Healthcare by Design

Image credit: Jim Roof Design

As health care insurance premiums rise year over year and out-of-pocket expenses rise in tandem, patients are beginning to realize that they no longer must accept 1960s-style doctor offices and plastic plants in the hospital lobby. In fact, in response to consumer-driven trends, some health providers are feverishly updating their office decor. Yet, these improvements cost extra dollars that some hospitals and doctors say they cannot afford. Are improvements to the overall patient experience worth the investment?

A hulking magnetic resonance imaging (MRI) machine sits in front of a painted backdrop of a country hillside, a bubbling brook, birds alive with song, and willow branches gently hovering above the water. Looking at the image behind the MRI machine, do you feel more or less anxious regarding your exam?

That’s a question that hospital administrators are asking themselves as they look to design principles to help re-engineer the customer (patient) experience.

Though shabby carpets, medical charts, and plain stark white walls remain the mainstay of hospital and doctor office waiting rooms, some medical practitioners are starting to realize that better design can reduce anxiety, increase patient satisfaction, and even lead to better health outcomes.

An article from Atlantic MagazineThe Art of Healing” cites how hospitals, doctor offices and clinics are taking cues from cutting edge retailers like Starbucks and Best Buy to redesign the patient experience. Author Virginia Postrel writes that since MRI and CT scans usually frighten patients, research shows that “simple elements like nature photos can ease their stress.” In support of this point, Ms. Postrel mentions, “Other studies with subjects ranging from the severely burned to cancer patients … have found that looking at nature images significantly reduces anxiety and increases pain tolerance.”

And it’s not just the sprinkling of nature images throughout the health care provider that’s working. Architectural configuration is also coming into play where designers are ensuring that patient recovery rooms get a good dose of sunlight and hospital rooms have access to windows with a clear view of blue skies and trees. One study cited by  Postrel found that patients with a view of nature had shorter hospital stays and required less “high-powered medication.”

The renewed focus on patient experience by some healthcare providers is long overdue, but not completely altruistic.

While the Atlantic article notes that it is certainly more costly to incorporate good design principles into the healthcare setting (sometimes an additional 10-15% expenditure), doctors and hospital administrators are realizing that patients have much more choice on where to spend their health care dollars. Indeed, such trends as more private pay patients, adoption of consumer-driven health plans, and websites ranking hospital care are pushing health care providers to up the ante in providing a better patient experience.

Ultimately, despite a renewed emphasis on designing a better health care experience, most patients would choose the best doctor in a substandard environment over a competent doctor in aesthetically pleasing surroundings. However, as consumers arm themselves with newly available information on satisfaction ratings of doctors and hospitals, error rates, and even outcomes, consumers will drive the health care system to improve not only the quality of care, but also the overall customer experience.

Questions:

1) Should your health care provider look more like a day spa?
2) Suppose you had an elective surgery where a significant portion was private pay, would you be willing to spend 10-15% more for a better patient experience?
3) Has your hospital or health care provider taken into account better design principles? Have these improvements made a difference in your perception of the provider?
4) Will the passage of the Health Care and Education Reconciliation Act of 2010 accelerate or impede health care aesthetics re-design?