Connected strategies can improve customer experience and reduce costs, and even help enhance the magic of meeting Mickey Mouse, say the authors of Connected Strategy
Firms are fundamentally changing how they connect with their customers. Rather than having episodic interactions, firms are striving to be connected in a continuous way, providing services and products as the needs of customers arise, sometimes even before customers have become aware of their own needs. These firms create a connected relationship with their customers.
Not only are these firms addressing a wider range of needs, they are doing it at lower costs. The potential of connected strategies is to create customer experiences that feel like magic while improving operational efficiency to enhance financial success.
How Mickey Mouse learns children’s names and remembers past encounters
The case of entertainment giant, Disney, illustrates a seismic shift in how firms create competitive advantage through what we term connected strategy. For years, Disney has organised mini-camps for children as part of its cruise operations. Stressed-out parents on a Disney cruise can drop off their kids for a few hours in order to get some private time on board. Disney has always taken its responsibility for the children in its care seriously. Until 2005, this meant stopping camp activities every 30 minutes for roll call [taking attendance], thus creating extra work for the staff and interrupting the fun. In 2005, Disney began using monitors to track their small campers – monitors originally developed in the medical field to keep track of dementia patients who were at risk of wandering off. The children were kitted out with little bracelets that identified them and pinpointed their location within the ship.
This was the starting point for a whole new Disney experience named ‘MagicPlus’. With the ability to know the identity and location of every guest, Disney soon asked how else it could use MagicPlus to enhance the guest experience and improve operational efficiency.
The answers that emerged touched on a remarkably broad range of its theme park operations. As part of its meet-and-greet programme, Disney characters routinely interact with young guests in the park. Before MagicPlus, later renamed MagicBand, Disney’s cast members posing as Mickey Mouse or Captain Jack Sparrow knew little about the children. With the MagicBand, Mickey and the captain not only knew each child’s name but were also aware of the family’s prior visits to Disney theme parks around the world. If six-year-old Sydney met Mickey Mouse last year in Orlando and this year was at the Anaheim park in California, Mickey would ‘remember’ the first encounter, making the child’s experience truly magical.
Beyond creating enhanced customer experiences, the MagicBand also improved park operations, thus reducing Disney’s costs – a truly magical outcome from a business perspective. From tracking food orders to handling guest complaints, from identifying each guest to having access on a tablet to all their prior interactions with cast members, efficiency was greatly improved. Moreover, the MagicBand allowed guests to make reservations at busy attractions for predefined time windows, slashing their waiting times. This enabled Disney to direct the stream of visitors and jump-start operations at the beginning of the day, increasing the overall number of visitors that could be handled by a theme park while maintaining a great visitor experience.
Connected strategies unfold in a rapidly changing environment. Given its success, one would imagine that Disney would equip every park with the MagicBand. But this is not the case. When Disney opened its Shanghai Disney Resort, it decided against the move. It wasn’t that people in China failed to appreciate the magic. Instead, by the time of the park’s opening, a more efficient alternative had arrived, and almost every visitor already had this magical technology in his or her pocket: a smartphone. Equipped with the right apps, today’s phones offer all the information and access to Disney that the MagicBand had provided.
Creating competitive advantage by adopting connected strategies
We are living in a world where new forms of connectivity are transforming the way companies do business. Connected strategies allow you, as an executive, to create superior customer experiences while simultaneously achieving dramatic improvements in operational efficiencies. In short, connected strategies can substantially relax the trade-off that firms have traditionally faced between providing superior customer experiences and lowering costs. Adopting connected strategies allows firms to create a formidable competitive advantage. Not surprisingly, their rapid rise is creating new winners and losers in its wake.
Firms with a connected strategy fundamentally change how they interact with their customers and what connections they create among the various players in their ecosystem. At its core, a connected strategy transforms traditional, episodic interactions with customers into connected customer relationships that are characterised by continuous, low-friction, and personalised interactions.
The technologies behind connected strategies are improving at a dizzying speed. The world’s estimated three billion smartphones pack the power of supercomputers from only a decade ago. The Internet of Things enables instant communication among systems that couldn’t talk to each other before. Wearable health and fitness trackers now rival traditional medical devices in their accuracy. And recommendation systems driven by AI deliver insights faster than humans ever could. With all these advancements, magical user experiences are coming to life in many industries.
Given their tremendous potential, connected strategies create great opportunities for you – but also for all of your current and future competitors! Connected strategies will lead to disruption in many industries. At a time when a mobility platform is valued more than some of the biggest car companies in the world, increases in connectivity can often be seen more as a threat than an opportunity. But, in almost any industry, potentially disruptive threats come and go, and at any given moment you might fear disruption from a dozen different new ventures. Which ventures will survive? Which ones are truly disruptive?
This is an edited excerpt from Connected Strategy: Building Continuous Customer Relationships for Competitive Advantage (2019) by Nicolaj Siggelkow and Christian Terwiesch. Courtesy of Harvard Business Review Press. AMBA members can benefit from a 20% discount on this book as part the AMBA Book Club – click here for details.
Nicolaj Siggelkow is a Professor of Management at the Wharton School, University of Pennsylvania, where he also serves as codirector of the Mack Institute for Innovation Management.
Christian Terwiesch is a Professor of Operations,
Information and Decisions at the Wharton School, University of Pennsylvania,
where he also serves as codirector of the Mack Institute for Innovation
Management.
