Publication Name: Project Vendor
Date: August 2014
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Narendra Ghate explains how capital goods industries today are specifically using design to create a service differentiator.
What makes a good store? Is it the visual appeal? The personnel? The products? Or just the brand? The short answer is engaging today’s customers through all the above mentioned elements. This engagement starts from the moment they step into the store and are wooed by décor, audio visual media, product displays, and of course personnel. All of these components combine to form the complete buyer experience.
Today, retail designs have moved away from just displaying and educating customers about products, services and brands. It is now more about understanding consumers’ requirements, providing extraordinary customer experience at every touch point and addressing them through personalized interactions. This requires a new design philosophy which creates spaces that are friendlier to customer interactions whilst displaying products and services subtly and informatively. More and more B2B businesses are turning towards design to create intangible experiences for their customers as they have understood that it is crucial for businesses to show deep customer/user understanding. Understanding customers more holistically helps them create better engagement with the customer and the company’s current product or service.
Too often, retail stores are built around products and services rather than customer needs. This leads to a customer’s perception of their own importance diminished with respect to the product. All good retail experiences revolve around a customer and his/her need/wants/desires. This could entail stores being built around customer requirements/testimonials/feedback. Through this approach the customer automatically sees himself/herself as the focus of the store and therefore feels a sense of importance. A store is as much a living and breathing entity as its occupants. A well designed customer experience has the ability to engage customers and sell the company’s products and services. When the whole experience of the brand differentiates it from others in the same industry, it also creates a competitive advantage.
Service Design – A competitive edge for capital goods industries
A competitive edge or differentiator is the key to the success for capital goods which is cluttered, commoditized and requires low involvement of the buyer. In today’s competitive world of business, what separates the competition from the industry leader is really the service that comes with the product offering – the buyer experience. In order to provide a holistic experience, more and more industries are turning towards Service Design.
Simply put, Service design is the activity of planning and organizing people, infrastructure, communication and material components of a service in order to improve its quality and the interaction between service provider and buyer. It includes the complete gamut of well established processes to make experiences and service delivery better. A well designed and efficiently delivered buyer experiences enables business success for the organisation. The design of the store can be used to simplify and enhance service value by creating meaningful interactions, spaces and products.
The design of in-store merchandise, the store environment and the overall experience become crucial elements influencing the buyer behavior when it comes to capital goods as well – not a sector typically associated with retail. Influencing capital goods purchasing behaviour requires more than just price differentiation, inducing service design in capital goods and producing a holistic experience for the customer lets companies have the choice of charging higher prices for a value based differentiation. From a buyers perspective, having an intelligently designed store, allows them to actually get a feel of the product and the basket of services that are available at the store. The store is the first point of contact for the buyer, and they are able to ‘experience’ the brand through the store, so designing this ‘experience’ becomes very crucial for the business.
Paradigm shift is coming
The industry is witnessing a paradigm shift in the store design of low-involvement categories like capital goods. For example, Asian Paints has concept stores that lets the consumers experience not just the colours, but the entire home décor. What makes this store unique is that it does not sell any paints, but works on consumers’ aspirations for an ideal home, seeking to engage them in a holistic experience. Asian Paints was able to take a common commodity, a low involvement category like paint and make it so interactive and experiential for their customers that when people think of painting their homes, they relate to Asian Paints.
Another brand which had used service design to provide a first of its kind, touch and feel experience is Bosch Power Tools. Its new store format – Do-It-Yourself Square, located in Bangalore, is a first of its kind touch and feel experience, where customers often visit to create interesting objects of their choice with tools that are convenient and light to use. The compact DIY Square displays a wide range of tools under the Home, Hobby and Garden categories. Consumers get an opportunity to use these power tools to create different objects for their homes while exploring it as a new hobby as well. They are assisted by the store officials to help them create what they want. In addition, the DIY Square also conducts regular workshops during weekends, where consumers are introduced to the various uses of the tools and are taught how to create exciting new objects.
Another example that is worth mentioning is, Tata Tiscon, a premium rebar brand from Tata Steel, wanted to become a change agent in the individual home building market as well as change the way customers perceived the brand. Tata Tiscon wanted to launch “first- of- its-kind” retail cum customer experience zone – “Tata Tiscon Experience Zone’, which aims to be a one-stop solution outlet which would offer customers quality support in building their ‘dream home’. It would also bring together a complete range of superior steel products to raise the quality of construction practices in the country.
Tata Tiscon approached Tata Elxsi to create unique store experiences, implement processes to make the store approachable, accessible, interactive and informative in the usage of steel for all those involved in a building project, right from the owner to the architects, masons and contractors. The primary goal was to offer a never before customer experience to replace the typical dull and mundane setting of existing retail steel stores. Tata Elxsi acted as a researcher and translator, implementing best practices throughout the store to transform the customer experience. Service Design was implemented to enhance the experience of building and achieve brand retention and recognition and showcasing the Tata Tiscon value and quality.
Service Design – A change agent
We live in a service economy and in most western countries, service accounts for more than 75% of GDP – a share which will continue to increase in the coming years. Thus the way an organisation or capital goods brand would offer a differentiated service offering would help them to set themselves apart and attain success. Empathy for your customer is a necessity. Only a nuanced understanding of your customer will allow you to understand his said and unsaid needs. This can lead to a revamp of your approach (be it store design, product re-design, positioning, sales/service processes, etc). And this will ensure success in the coming new age of hyper-customer awareness. Service design firms like Tata Elxsi help companies in this journey towards re-relevance.