The Value of Strategic UX, Part 1 : Combating Commoditisation

In this article, the first in a series on strategic UX, we’re going to look at commoditisation. This has become a tangible and ever-increasing threat in many markets—that may well include yours.

We’re going to look at how strategic UX and humanistic insights from big data can play an intrinsic role in combating this threat.

First, we need to agree some definitions.

What is Strategic UX?

User Experience activity, when it’s done well, should have a strategic impact on a business, as we explore in our white paper ‘Journeys with Unicorns: Excellence in User Experience.’

You likely already conduct usability tests, interviews, wireframing, and many other UX activities in order to make a measurable impact on individual projects.

This UX activity typically yields returns at the level of implementation: an improved journey flow here, a more intuitive interaction there. This is all extremely valuable.

However, strategic excellence in user experience works at a higher level.

When executed well it can create a new value curve, that in turn creates an inflection point, changing the way people behave and act. Expectations about experience are then reset.

This kind of impact can be measured and are direct indicators of your business’success.

So, based on all this, how do we define Strategic UX?

“UX activity and thinking that has a measurable impact on KPIs, the bottom line, or other company-wide indicators of success.”

What is commoditisation?

Commoditisation is (broadly) the process by which goods or services become indistinguishable from each other in terms of their features.

This means they start being seen as ‘commodities’ to consumers – with prices driven down and scant margins to enjoy as a result.

An easy example is the humble pencil. For most people, a pencil is a pencil, and any company’s pencil does the job when you need to write or sketch.

It is difficult to compete on price in this mature market.

A company would have to work incredibly hard to differentiate their brand of pencil from another, so that enough people would deliberately seek out their brand when making a purchase.

Commoditisation is a threat to many markets today, due to factors such as dramatically increased global competition (thanks to the reach of the Internet) and the exponential decline in the costs of many key technologies – from solar panels to drones to Bluetooth chips.

Energy, healthcare, cable services, mobile, and many other markets are also under threat.

They need to strengthen their differentiating features, and fast, to stay relevant.

Excellence in experience to combat commoditisation

The beauty of an excellent experience is that it is incredibly hard to copy. This is music to the ears of product owners, who thrive on differentiating factors.

Sure, you can copy a product’s features, or a service’s attributes. Many do, and quickly.

This ‘feature leap frogging’ is being played out in social networking apps, mobile phone development, and other prominent markets all the time.

And in the digital space, it’s easier and quicker than ever. The latest functionality is a short-term differentiator at best!

But all is not lost. Because the experience of and around a product is woven deeply into its fabric.

And this is very hard to replicate. It is not only the design, presentation and interaction, it also encompasses how it matches our needs and desires; the naturalness and emotion of how we interact with it; the familiarity across touchpoints; and over time – the comfort and effectiveness of customer service.

Often, an excellent experience means something just ‘feels’ better – much to the annoyance of those wishing to copy it, or challenge it!

The easiest example is the iPhone, launched 10 years ago in 2007.

Some people just didn’t get why it was successful— “No camera! No 3G!” they cried. And the consequences of that mindset are exemplified by the demise of Blackberry’s handset division, and many others left in the wake.

Time after time, people make choices based on the excellence of the experience. And one company that gets this—because of their smartness, and sheer necessity—is Spotify.

Spotify: Differentiating streaming music through strategic UX

When Apple Music launched in 2015, Spotify suddenly had a large and threatening competitor in the streaming music space.

Apple Music’s collection was larger and they had an extraordinary customer reach through their ecosystem, combined with deep pockets to play the long game.

It’s easy to see how commoditisation could drive out Spotify. So, what made their music streaming service different?

The answer is: experience. And it turned out that Spotify had been laying the foundation for experience differentiation years before Apple Music came on the scene. They had been planning a new sort of experience: music discovery.

Discovering new music is a core part of today’s music experience. And it’s one we’ve started to take for granted. If you’re not sure if you agree, consider BPI research , that shows the easy discovery of new music is important to 90% of paying streamers.

Now let’s look more closely at Spotify and their discovery experience.

How do we decide what we “like”, let alone have technology help us in that process?

We humans like new things. Especially when it comes to music. We know that listening to music is pleasurable.

Discovering new music can be even more pleasurable, especially if the new music is in our favourite style or genre.

Neuroscience revealed the brain’s reward system, and the influence played by certain neurotransmitters, pathways and structures.

Further research identified different regions of the brain within the reward system, that increase in activity, trigger more rewards, when we perceive a stimulus, such as new music that we like.

In helping people discover new music, Spotify is therefore supporting human pleasure-seeking behaviour at a neurological level. This is both profound and revolutionary, and represents a value innovation that can be exploited.

There are patterns in our listening habits that help provide insight into music we will like. But identifying those patterns requires a high degree of technical skill and machine learning expertise.

Get it wrong, and you end up with frustrated users distrusting your service and switching off. Get it right, and you have an experience differentiator that is hard to mimic, and a devoted customer base.

Spotify knew this, and in 2014 acquired The Echo Nest, a music intelligence company specialising in machine learning to unearth music insights.

Look at how Spotify CEO Daniel Ek, at the time of The Echo Nest acquisition, talked about the importance to Spotify of both user experience and music discovery:

“At Spotify, we want to get people to listen to more music. We are hyper focused on creating the best user experience and it starts with building the best music intelligence platform on the planet.”

According to Spotify blogs, the company took The Echo Nest IP and went on to develop what is essentially a personalisation insights platform.

Teams within Spotify not only build machine learning models to identify these music insights, but can also share the models internally so other teams benefit and then build on those successes—at scale. (Spotify has over 140 million active users, and many Petabytes of data to work with.)

Did it pay off? Does it work? Look at this 2016 Fast Company review of Release Radar – Spotify’s personalised weekly selection of the newest releases it rolls out to its users:

“Release Radar uses logic about your listening history and taps the machine intelligence of The Echo Nest to algorithmically curate a list of songs for you. […] For listeners, the payoff is obvious: Release Radar is very good at helping people find new music they’ll actually enjoy.”

And from the end users’ perspective, look at these tweets from Ryan Hoover, Founder of product discovery service ProductHunt, and Sam Sheffer, Social Media Manager at technology news network The Verge:

Conclusion

The market is changing, and quickly. Strategic UX helps differentiate companies in an increasingly global market, where shrinking margins and easily-copied attributes dictate the need for a new approach.

Through machine learning and humanistic insights from big data, Spotify is delivering experience differentiation with Release Radar, Discover Weekly, and other service features.

So how can you act? If you’re ready to embrace this transition, Nomensa are ready to ensure you’re successful.

We can recommend changes that measurably improve customers’ lifetime experience with your company, and identify experience-led propositions that can differentiate you for long-term success.

You may also be interested in reading part two in our series on strategic UX.