By Wendy Eichenbaum
“What we’ve been talking about is disruption, what we’re going to destroy. And the kinds of values that are often espoused by the tech industry really are anathema to the main street economy,” said Tim O’Reilly, founder of O’Reilly Media. The tech world is famous for touting disruption to revolutionize the current paradigm. But disruption is change, which can be scary to consumers and companies.
Consumers are surrounded by horror stories. We face job loss due to automation and overseas manufacturing. Our privacy is eroded as companies track our movements online, and hackers exploit our data. And we wonder if artificial intelligence will create robots that we cannot control.
Companies fear the potential economic repercussions of change. They have sunk costs, contractual agreements, entrenched interests, and an existing corporate culture. So even if their current solution is problematic, they prefer what they know.
But not all change is scary to consumers. Consumers will embrace change when the change removes pain, when it enhances the experience. And if companies don’t keep pace with experience breakthroughs, they will fail.
Blockbuster is a prime example of this fear. In 2000, they earned 16% of their revenue from late return fees. They turned down an opportunity to purchase Netflix in 2000 for $50 million because they worried that they could not make up late fee revenue with another business model.
Netflix’s success was not due to a product. Blockbuster also had movies. Instead Netflix revolutionized access to content. No longer did people have to drive to the video store. They could access movies 24/7. And there were no fiscal penalties for late returns.
There have been many other experience revolutions. Customers expect two-day shipping because of Amazon. DropBox made cloud storage a commodity because it was simple to use. And Bank of America’s credit card, which became Visa, gave people credit that wasn’t limited by industry.
Amazon, Visa, and DropBox have many competitors. And they don’t always have the best prices. But they make the process to access our products feel easy and safe, so consumers don’t want to patronize their competitors. And more importantly for the companies, these revolutions have led to huge revenue growth.
All change has some risk, but when you understand the needs and pains of your target audience, you can limit the risk and increase your revenue. Reed Hastings got the idea for Netflix after paying a $40 late fee for a movie at Blockbuster. DropBox was founded by students who were frustrated by continually losing their USB flash drives. And Bank of America wanted to cover all shopping needs, not just food and travel.
You can uncover the needs of your customers through a number of techniques including contextual inquiries, needs analysis, and customer journey maps. Then use these needs as the basis for reconsidering what your customers value and how you can redesign to deliver that value.
At their peek in 2004, Blockbuster earned $5.9 billion in revenue. In 2016, Netflix earned $8.83 billion in revenue, without any late fees. Netflix showed that it’s far more profitable to grow and retain customers with a carrot instead of a stick. Turn risk into a reward by disrupting a bad customer experience.
About the Author
Wendy Eichenbaum has been a UX professional since the early-1990’s. She began her career as a technical writer. She then earned a Master of Arts in Professional Writing at Carnegie Mellon University, studying both writing and UI design. Over the years, she has worked across verticals, from start-ups to multi-national firms, in many areas of UX including research & strategy, Information Architecture, usability testing, and focus groups. She started her own UX consulting firm in 2008, Ucentric Design. And she is an adjunct professor at Cal State University, Fullerton. There she teaches a class that she created, User-Centered Design for Web and Mobile Interfaces.
Read previous columns in ‘The Fleet CX Toolkit’ archives.