Weekly Business Insights from Top Ten Business Magazines | Week 293 | Strategy And Business Model | 1

Extractive summaries of and key takeaways from the articles curated from TOP TEN BUSINESS MAGAZINES to promote informed business decision-making | Week 293 | April 21-27, 2023

Experience-led growth: A new way to create value

By Victoria Bough | McKinsey & Company | March 23, 2023

Listen to the Extractive Summary of the Article

The world’s largest companies have a thorny problem in common. Airlines, insurers, telcos, utilities, and other major incumbents are all struggling to achieve sustainable, profitable growth in a world in which their offerings are increasingly commoditized. Alongside mounting competition from their peers, they face disruption from nimble digital-native firms that are targeting their customers with innovative, convenient, and often personalized offers.

Frequently, their response is to take on the attackers at their own game—that of acquiring customers as aggressively as possible. But as they obsess about new customer acquisition, many incumbents are neglecting their most powerful competitive advantage: their vast existing customer bases.

These companies have honed a powerful strategy for driving profitable growth that their most nimble and disruptive competitors cannot emulate: providing a distinctive customer experience (CX), consistently and proactively, that entices existing customers who choose their brand. These customers change their behaviors, and such behavior changes can be measured by concrete financial metrics like share of wallet, repeat purchases, or net revenue retention (NRR).

The authors call this strategy “experience-led growth.” To succeed with it, companies start by defining their desired financial outcome and then prioritize the CX improvements that will deliver that outcome. They have the boldness to rethink their corporate culture and operating models, to ramp up innovation and technology adoption, and to build new CX measurement and analytics capabilities. Sometimes they must reexamine and redefine their very reason for being.

Indeed, a common factor in companies that fail to achieve sustainable growth is that they put too much focus on short-term acquisition measures, and insufficient investment in customer engagement and retention, thereby falling into the “acquisition trap.” CX leaders, by contrast, are masters at the art of “cultivating” growth from existing customers by making it enjoyable to use ever more of the company’s products and services over time.

Experience-led growth strategies, in the authors’ experience, rest on three pillars:  one – setting a clear growth aspiration and purpose, and a roadmap that links CX to value; two – committing to transforming the business with decisive action through redesigned customer journeys, products, services, and business models; and three – enabling the transformation through new mindsets, capabilities, technologies, governance, and effective CX measurement.

3 key takeaways from the article

1. The world’s largest companies have a thorny problem in common. All struggling to achieve sustainable, profitable growth in a world in which their offerings are increasingly commoditized.
2. Frequently, their response is to take on the attackers at their own game—that of acquiring customers as aggressively as possible – neglecting their most powerful competitive advantage: their vast existing customer bases.  These companies have honed a powerful strategy for driving profitable growth that their most nimble and disruptive competitors cannot emulate: providing a distinctive customer experience (CX), consistently and proactively – referred as “experience-led growth.”
3. Experience-led growth strategies rest on three pillars:  setting a clear growth aspiration and purpose, and a roadmap that links CX to value; two – committing to transforming the business with decisive action through redesigned customer journeys, products, services, and business models; and three – enabling the transformation through new mindsets, capabilities, technologies, governance, and effective CX measurement.

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Topics:  Strategy, Business Model, Marketing, Customers Experience