It’s not enough to just sell a product or service—companies must truly engage with their customers. How to embed experience design in your organization? Here is a brief excerpt from an article written by Jennifer Kilian, Hugo Sarrazin, and Hyo Yeon for the McKinsey Quarterly, published by McKinsey & Company. To read the complete article, check out other resources, learn more about the firm, obtain subscription information, and register to receive email alerts, please click here.

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At one point in the movie The Best Exotic Marigold Hotel, Judi Dench, who plays a grieving widow, is connected with a customer-service agent at a call center in India. Despite being told Dench is in mourning, the call-center rep sticks to her script with a sadly predictable result: hurt feelings and a lost customer. By the end of the movie, Dench’s character has moved to India and reinvented herself as—wait for it—a call-center trainer. In her initial session, she conducts a role-playing exercise in which she demands operators go off script and respond to customers as human beings first. The result? Instead of angry hang-ups, the call-center reps make human connections and customers for life.

While the movie is fictitious, of course, the broader lesson lies at the core of a real-world business need: empathy. Using empathy to put customers, clients, and end users at the center of the problem-solving equation is the foundation of design thinking. With this focus, design becomes a tool for change, capable of transforming the way companies do business, hire talent, compete, and build their brand. To quote Nobel laureate Herbert Simon, the act of design “devises courses of action aimed at changing existing situations into preferred ones.”

From product to experience

Think about a product you recently bought. Now think about the experience you had buying and using that product. Increasingly, it’s difficult to separate these two elements, and we’re actually seeing many cases where customers prioritize the experience of buying and using a product over the performance of the product itself. In fact, customer experience is becoming a key source of competitive advantage as companies look to transform how they do business.

This fixation on customer experience isn’t just for the cool start-up world. Consider HP and the mundane task of replacing printer ink. Through HP Instant Ink, the company has executed a subtle shift away from pure transactions—customers simply buying ink when they need it—and toward establishing an ongoing service relationship, wherein HP knows when its printers will run out of ink and preemptively ships more, saving customers time and effort. And making their lives easier not only makes customers more productive but also makes them happy and generates loyalty. Similarly, heavy-industry stalwart John Deere is transforming its business by moving beyond pure equipment to provide farmers with digital services such as crop advisories, weather alerts, planting prescriptions, and seeding-population advice.

Few would dispute that these sorts of developments are good for the customer and build loyalty. But there’s a larger question for businesses: Are they worth it? While a hard metric on the return on investment of design is notoriously elusive, the value is clearly borne out in other ways. According to the Design Management Institute’s Design Value Index, for example, design-driven companies have maintained a significant stock-market advantage, outperforming the S&P 500 by an extraordinary 219 percent over the past ten years.1

At individual companies, you don’t have to look far to see the value of design. When Walmart revamped its e-commerce experience, unique visitors to its website increased by 200 percent. When Bank of America undertook a user-centered redesign of its process for account registration, online-banking traffic rose by 45 percent.2 And the business value of design has only been underscored by the recent hiring of high-profile designers by venture-capital firms; last year, for example, energy-focused Khosla Ventures appointed the former head of Google’s user-experience team, Irene Au, as an operating partner.

Many companies are committing to improve the user experience. But making design a core capability that drives growth and competitive advantage means companies need to go further.

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Customers increasingly expect products and services that are designed to meet their needs, delight them with unexpectedly great experiences, and address a heightened sense of aesthetics. Companies that meet those needs are rewarded with fierce brand loyalty and higher spending, which translates into fatter profit margins. But that kind of success only happens by design.

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Here is a direct link to the complete article.

Jennifer Kilian is a digital VP in McKinsey’s New York office, Hugo Sarrazin is a director in the Silicon Valley office, and Hyo Yeon is a digital partner in the New Jersey office.