(Coghill et al., 1994; Derbyshire and Jones, 1998; Jones et al., 1991; Paulson et ...... e.g. Bernd Schmitt (1999), LaSalle & Britton (2003), Shaw & Ivens (2002), and ...... relationship context are relationship quality (e.g. Bejou et al .,1996; Crosby et al ., 1990; Lang and ...... Brokerage Firms,â The New York Times, (May 29), C4.
Customer Experience Management “THE EXPERIENTIAL JOURNEY”
By James Seligman, PhD,MA, BSc, BA, FCIM, FAIA
Building Experience Value in organizations. Strategies for Growth and Return on Investment. A dynamic resource on "experience marketing" and management
Book Content
Page
Prelude
6
Background
6
Authors Bio
7
CHAPTER ONE
8
Customer service
9
CRM literature
12
CEM Literature
23
Phenomena, process and outcomes
31
Internal resources (processes)
33
Customer experience (phenomenon)
39
Financial value (outcome)
44
Customer equity
46
Models of CEM (commercial)
54
Models 1-18 in the public domain
55
CEM revenues and profits
67
CEM stages of development
70
Commercial CEM summary
75
S-D Logic
75
Phenomena, processes and outcomes in CEM
77
CEM commercial success stories
79
Not for profit CEM
84
Not for profit CEM success stories
86
Emerging themes and patterns
88
Chapter summary
91
2
Book Content
Page
CHAPTER TWO
92
The experiential world around us
93
The meaning of satisfaction
94
Gaps and service quality
96
Service experience bundle
100
The creation of loyalty
101
Constructing the experience journey
105
Experience KPI measurement
109
Summary
110
CHAPTER THREE
112
Customer value
113
Service and the experience as marketing drivers
114
Service and experience success
116
Key service experience features
119
Construction of experience values
122
Summary
124
CHAPTER FOUR
125
Service in not for profit – case studies
126
Key service and support services in a experiential world
128
The role of technology in service experience
130
Technology in CEM
132
Summary
134
3
Book Content
Page
CHAPTER FIVE
136
CEM and its role
137
For profit CEM
141
Not for profit CEM
141
Quality in the service experience
142
CEM recommendations
146
Inside the head of the customer
149
Developing insight
150
People skills
153
Putting CEM together
156
CEM management and control
158
Feedback loop
158
Summary
161
CHAPTER SIX
162
The brand experience and reputation management
163
Value propositions that drive quality experience
167
Brand equity
171
Customer innovation of experience
172
The experience co-creation
173
Summary
175
4
Book Content
Page
CHAPTER SEVEN
176
Social networks and experience building
177
The conscious and unconscious mind of experience
184
Pre – during and post experience
187
The new experiential mindset
188
Summary
198
Bibliography
199
ISBN: 978-0-244-41747-5
5
Prelude Background Organizations that want to deliver required outcomes can do so by shifting gears from traditional ‘command and control tactics’, to a more collaborative way of working with customer interactions, ensuring relevant skills and capabilities are made available. By investing in technology, organizations that support the customer experience can provide accurate forecasting, customer in sight, and the skills and capabilities regardless of their location and time zone. Processes that span the back office to the front office should provide real time insight into the interpersonal experience journeys and enable co-creation of goods and services.
6
Authors Bio James Seligman was the Director responsible for the Masters in Marketing Management at the School of Management, Faculty of Management and Law, University of Southampton. An innovative 12-month international program, which uses the new DNA model of marketing theory and practice modules developed by the Marketing subject group. He joined Southampton University in 2008 and retired in late 2015. The MSc in Marketing Management degree has wide commercial support as it produces students who are trained for today's marketing challenges and considers technology as an enabler in modern marketing. He has a Masters in Marketing and three undergraduate degrees in Business Administration, Educational Studies, and Psychology. His PhD is on Customer Experience and Technology. As a Principal Fellow, he was also engaged in educational development and the student experience. The author of several books and journal articles, James research interests lie in the marketing of education, CRM and CEM, as well as the wider marketing characteristics of Brand, Strategic Marketing Intelligence, Analytics, Integrated Marketing Communications, Value Propositions, and Customer Insight. His most recent research has been on CEM and technology, Artificial Intelligence and Machine Learning in Marketing. Prior to joining Southampton he was a Curriculum Area Manager and Business Development Director, Lecturer, entering Higher Education ten years ago. Before this time, he had a successful thirty-year commercial career as an international senior executive with Coca-Cola, Pepsi, Beecham, Timberland, Commonwealth Games, and Speedo International group of companies.
7
CHAPTER ONE Introduction CEM is the management of the customer experience journey which starts with a need and wants and finishes with good after sales service providing real satisfaction through excellent service delivery. This, in turn, builds customer loyalty through repurchases and creates lifetime equity for the business. Chapter Learning Outcomes •
The background to customer service and CRM/CEM
•
The phenomena and financial benefits of CEM
•
An understanding of CEM Models
•
The age of service-dominant logic explained
•
A review of profit and not for profit CEM
•
Having completed the module, you will be able to:
•
1. Critically assess the use of CEM inside an establishment.
•
2. Assess the core elements of CEM and their financial contribution.
•
Having completed the module, you will be able to:
•
1. Conduct secondary research using both academic and practitioner sources.
•
2. Manage tasks in a group and as an individual.
Critical thinking Having completed this topic, you will be able to:
1. Critically evaluate the role of CEM within an organisation.
2. Assess the core elements of service and CEM and their financial contribution.
OBJECTIVES To obtain and appreciation into service and CEM theory and practice in a profit and not for profit setting, as well gain insight into current theoretical models of CEM in use. By understanding the background of CEM gain a substantial appreciation of CEM value to the customer and organisation. 8
Customer service Customer satisfaction has been a topic of significant attention to organisations and researchers alike. The principal objective of organisations is to make the most of profits and to minimise cost. One of the subjects that can help to increase sales is customer satisfaction since satisfaction leads to customer loyalty (Wilson et al., 2008, p. 79), recommendation and repeat purchase. Customers are essential to commerce during the marketing era of the 1950s when establishments may produce what they can sell and not just selling what they can provide. Since the start of the consumption era in marketing, the importance on customers/consumers has increased more as the consumption era moved to post-consumption; where businesses are obligated to provide more services in addition to what they offer as suggestions to their customers. (David Armano, 2009). What are the natures of these services produced to customers? Are the customers satisfied with these services? The research began from the condition that customer/consumer is fundamental to business. In actuality, their gratification is the most important instrument that helps to increase sales and yield profits in the commercial location. Moreover, the implication of customer satisfaction and service superiority has been recognised to be appropriate to aid the advancement of the overall performance of organisations. (Magi & Julander, 1996, p. 40) From the explanation of operations management, it is understandable that customers play a significant position in the organisational development (Lee & Ritzman, 2005, p. 92). Before the determination of strategies and corporate structure, the customers are the principal objects considered by management. The asked questions in tricky planning traverse from who will use these proposals, where are they and how much could they purchase. How to influence the customers, and will it produce the highest satisfaction? After these soundings, the organisation will then be able to plan the product, segment the market and provide interest. These points show the position of customers in the business environment but also the importance of satisfying them. Customers are continually seeking to get maximum fulfilment from the products or services that they buy. Succeeding in today’s market engages the need to build customer relationship and not just developing products; building customer relationship requires producing exceptional value over challengers to the target customers (Kotler et al., 2002, p. 391). Whether a company delivers quality services or not will be reliant on the customers’ reply on the confirmation they obtain from using the product, as improved levels of quality proclaim higher levels of customer satisfaction (Kotler & Keller. 2009, p. 169). Many businesses are accepting quality management programs which request to improve the quality of their products and marketing processes, because it has been recognised that “quality has an exact impact on product performance, and thus on customer satisfaction” (Kotler et al., 2002, p. 8). The reason for this is to fulfil the customer. However, are the customers satisfied with the products or service quality? i.e. does the customer respect the business producing the actual features? It has been documented that “an organisation that consistently satisfies its customers enjoy higher retention levels and greater profitability due to increase customer loyalty” (Wicks & Roethlein, 2009, p.83). For this reason, every company works to win the hearts and minds of the customer by satisfying them so that they grow into loyal customers which leads in time to increased sales and profit. When customers have high-quality perceptions about a brand, they will unendingly choose that brand, as consumers form penchants proportional to feelings and confidence about the brands contesting (Larreche, 1998, p. 152). To gain these loyal customers, companies must create relations with the customers. 9
To establish the relationship with customers, establishments need to accomplish research to reply to studies on how the customers make their buying decisions and whether they are gratified with what the association produces regarding four items product quality, service quality, price, etc. Accordingly, customers support a product or service that gives them greatest fulfilment and value. But how will the business know whether the consumers’ consumption behaviours have altered, or if they are well supported over time? How will the organisation know if competitor brands are doing well, what could catch their customers? With the enlarging number of businesses and developing competition today, each business wants to be the customers’ first selection. To achieve this, organisations need a reaction to the question above via unremitting research into this subject to advance the business objectives of satisfying the customer and creating more ROI. Since customer satisfaction is one of the primary concern of business sectors of today, researchers are always continuing research about the customer mind-set principally on what items they attach to satisfaction. Moreover, because this complexity of achievement affects the most variable participant in the business environment (the customers), satisfaction differs and vacillates among individuals, there is an obligation for non-stop research in this area. (Wilson et al. 2008, p. 78-79), Service quality has been one of the critical features of customer satisfaction when it comes to service areas. Similarly, producing quality services is one of the primary objectives when it comes to organisation of customer satisfaction in the corporate world of today. Customer satisfaction has been considered in various methods, from quantity to its associations with other business situations. Particular researchers have delivered means of evaluating customer satisfaction (Levy, 2009; NBRI, 2009). In the short-term other authors like Wilson et al. (2008) documented some influences of customer satisfaction to be product and service quality, price, personal and situational impacts (Wilson et al., 2008, p. 79-80). Abundant researchers have examined the connection between total quality management and customer satisfaction. (Wen-Yi, et al., 2009, p. 957975). With this certainty Lee et al. (2000, p. 226), reflected on the relationship between service excellence, customer satisfaction, and retailer allegiance within a retail department store setting and found that; “service quality influences relative attitude and satisfaction with department stores.” (Sivadas & Baker-Prewitt 2000, p. 73- 82). In undertaking to connect the result of this past research on non-profit organisations, Bennett & Barkensjo (2005) studied affiliation quality, relationship marketing, and client performances of the powers of service quality in charitable organisations, the result propose that “the SERVQUAL method is indeed appropriate within the non-profit domain” (Bennett & Barkensjo 2005, p. 102). To follow what Bennett & Barkensjo (2005) proposed, Negi (2009), reflected on the significance of customerperceived service quality in approving the general satisfaction of customers of mobile services.
The result was that dependability, and network quality was a pertinent issue, and to assess service quality confirmed that tangibles, understanding and guarantee should not be disregarded when measuring seeming service quality and customer satisfaction. Ahmed et al., (2010) researched customer fulfilment relationship between service quality and repurchase objectives for the telecom sector among university students, using SERVQUAL model of 5 measurements (tangibles, responsiveness, empathy, assurance and reliability)) to assess service quality which was found to be confirmed. Service quality and customer satisfaction have been learned from past research by (Baker-Prewitt, 2000; Kuo, 2003; Gera, 2011. 10
Furthermore, it has been recognized that service quality could be assessed with the use of the other two measurements of service quality, ‘technical and focused’ (Bennett & Barkensjo, 2005, p. 102; Laroche et al., 2004) from the customer viewpoint, thus the SERVQUAL example is a reasonable method of assessment for service quality. Customer satisfaction has been argued to be based on the customer’s experience on a particular service meeting, (Cronin & Taylor, 1992) it is in construction with the element that service quality is an essential cause of customer satisfaction since service quality comes from the result of the service exchange from service suppliers in organisations. One theory is that “definitions of consumer satisfaction relate to an exact contact (the difference between predicted service and perceived service) indifference with ‘attitudes’, which are more enduring and less situational-oriented,” (Lewis, 1993, p. 4-12). This is coherent with the information of Zeithaml et al. (2006, p. 106-107). Concerning the relationship between customer satisfaction and service quality, Oliver (1993) first suggested that service quality would be a precursor to customer satisfaction regardless of whether these observations were collective or transaction-specific. Some researchers have exposed rational support for the view mentioned above (Anderson & Sullivan, 1993; Fornell et al. 1996; Spreng & Macky 1996); where customer satisfaction began as a result of service quality. Even though it is stated that other factors such as price and product quality can influence customer satisfaction, perceived service quality is a constituent of customer satisfaction (Zeithaml et al. 2006, p. 106-107). This theory matches with Wilson et al. (2008): Service Quality Product Quality Situational factor Price Customer satisfaction Customer Loyalty Personal factor
The author presented a stipulation that service quality is an absorbed valuation that reflects the customer’s observation of reliability, assurance, responsiveness, responsiveness and tangibility, whereas satisfaction is more complete and it is prejudiced by perceptions of service quality, product quality and price, also situational issues and personal influences (Wilson, 2008, p. 78). Parasuraman et al., (1985) in their analysis, propose that when detected service quality is high, it will guide to an increase in customer satisfaction. Some other authors understand the idea of Parasuraman (1995), and they now recognise that “Customer satisfaction is based upon the level of service quality that is provided by the service providers” (Saravana & Rao, 2007, p. 436, Lee et al., 2000, p. 226). Bennett & Barkensjo (2005) examined relationship quality, relationship marketing, and customer insights of the levels of service quality of charitable associations. 11
Questions were asked of 100 people on their descriptions of service quality and the associations that had delivered support, their fulfilment with a charity service etc. The research shaped an example that forecast results using the technique of ‘partial least square.’ Similarly, perceived service quality was evaluated via reworking of the SERVQUAL tool divested of any estimates of the respondents' previous views about the service they would obtain from an organisation. In the results, relationship marketing was unmasked to demonstrate a functioning defence for nurturing both relationship quality and recipients' satisfaction with service delivery. The study of Bennett & Barkensjo (2005) stated that “the theory rudiments of SERVQUAL model (Tangible, assurance etc.) remained methodically associated with the service quality construct” (Bennett & Barkensjo, 2005, p. 101). In the context that customer satisfaction and service quality are meaningful variables in commercial research on customers, Gera (2011) examined the linking between service quality, value, comfort and behavioural intentions in a public sector bank, one of the results was “Service quality was found to significantly impact on customer satisfaction and value perceptions” (Gera, 2011, p. 2-20).The literature review shows up-to-date research to 2018 on the relationship between customer satisfaction and service quality. The research in this area has been covered so far is summarised below; • It has been considered that there is an association between customer satisfaction and service quality. • It has been investigated that service quality could be assessed with the use of SERVQUAL model. • It has been considered that service quality could be evaluated by other aspects of service quality that is, functional and technical and not automatically SERVQUAL model •
Some researchers have tested service quality and service quality dimensions.
CRM literature Customer relationship management (CRM) can be thought to cover a wide range of behaviours, practices and processes that businesses apply to implement relationship marketing in practice. The critical basics of CRM, recognised in the academic literature, embrace a customer-focused strategy, applied through business actions and supported by technology. CRM is anticipated to be supportively linked with long-term profitability. Conclusively, copious benefits have been credited to CRM during the literature assessment. Investigations on the quantitative advantages of CRM and customer retention show that profit advances across various industries based on shrinking customer defections. However, not all CRM schemes are successful, and further investigations have reported on CRM failures accredited to a fundamental lack of understanding of what CRM embodies. The competitive benefit is described by Kotler (2000, p. 56) as a “company’s capacity to perform in one or more ways that competitors cannot or will not equal.” Kotler et al. (2005) further progress this description by classifying ‘lower prices or greater benefits’, to substantiate higher prices, as a means of enlarging competitive advantage and giving customers better value. Thompson et al. (2007) recommend that a rational, individual strategy, that places a business markedly away from competitors creates a competitive advantage, this is a reliable means of making above-average profits for a company. A sustainable competitive advantage can be fulfilled if an attractive number of customers reinforce an organisation's products or services over the encouragements of competitors. 12
Porter (2004) recognised three reliable generic strategies for launching a secure position to entirely deal with competitive impacts, and exceed competitors in commerce. The policy identified are entire cost leadership, difference or focus. Conferring to Porter (2004), technology and customer service are amongst the methods used to distinguish an organisation’s products and create a position that is perceived industry-wide as being exclusive. Anton (1996) proposes that product benefits can be effortlessly copied and that quality CRM is the particular object that can set an institution in an area away from its competitors. CRM then can be thought of as a comprehensive, organisational strategy used to divide a business apart from its competitors in the market within which it engages. In endeavouring to advance competitive advantage through difference, a company must examine the needs and behaviours of their customers to develop what is thought necessary, valued, and what they are ready to pay for it (Thompson et al., 2007). Porter (2004) further suggests that ‘operative differentiation’ can warrant businesses to charge premium prices, enlarge unit sales, increase customer loyalty and produce entry obstacles to competitors. Thompson et al. (2007) supported this opinion and added that differentiation, based on abilities and proficiencies, have a propensity to be more manageable and problematic for competitors to duplicate or counterbalance profitably. Distinction advances profitability when it is linked to increased revenue that offsets the added cost of achieving the differentiation.
Evolution of Relationship Marketing Considerable attention from researchers and practitioners has instigated RM and CRM to increase recognition since the early 1990s. Fundamentally a great deal of the wide-ranging literature involving relationship marketing (RM) considers it as a phenomenon of the 1990s (Anton, 1996; Gronroos, 1997; Christopher et al., 2000; Stone et al., 2000), although Anton (1996) does witness Peter Drucker’s interpretation of the commercial importance of obtaining and keeping clients as early as 1979. It can, however, be argued that CRM in its present form has improved over several decades as marketing thinking and literature has become more progressive. Christopher et al. (2000), looks at the examination of marketing focus on an emerging range of marketing opinions over the past decades. In the 1950s the dominant prominence was on consumer goods and consumer marketing. Since then it has advanced through modern marketing, societal marketing and services marketing, with relationship marketing (RM) occurring in the 1990s. The researchers propose that CRM significance has developed from a ‘transactional ambition to a relationship approach.’ Stone et al. (2000) recommend that buyer supervision has in recent years advanced through some various chapters. What was initially an energetic customer marketing emphasis, has proceeded to be a comprise in customer and enterprise relationship marketing and electronic customer relationship management (eCRM) which complements the focus of today's e-business. Similarly, Novicevic et al. (2006) support that the fundamentals of CRM can be established in the work of Barnard, which they examined in detail. Barnard (1940) does positively review the importance of customer relationships and the incorporation of the customer into business developments. He recommends that the appeal of the shared performance between an organisation and its customer is corresponding to that of its workforces and that the needs to produce such relationship are similar (employee morale/customer goodwill, stimuli and incentives, management and control, examination and education and training). 13
A further study, presented that to verify if relationship marketing is a new archetype exchanging transactional marketing, supports that rather than a complete paradigm shift, relationship marketing and transactional marketing are indeed counterparts (Zineldin and Philipson, 2007). The authors cite Kotler et al. (2002) and their case is that ‘relationship marketing is not always effective in all situations.’ Harker (1999), in a comprehensive inspection of RM, claims that as an example RM will continue emerging until its essential theories are recognised and comprehended. While the literature discloses differing opinions surrounding the timing and degree of the progress of RM, there is a dominant agreement that this marketing concept is now insignificant evidence in marketing. Defining Customer Relationship Management As suggested there are abundant definitions of RM, CRM and customer relationship marketing are spacious in the literature (Gronroos 1997; Galbreath and Rogers 1999; Kotler 2000; Stone et al. 2000; Rigby et al. 2002). Stone et al. (2000) recommend that these words are frequently used by both managers and marketers but are defined in diverse ways.
This does suggest that the primary focus of actions is similar. Gronroos (1997, p. 407) represents marketing from a relational viewpoint as: "..the process of identifying and establishing, maintaining, enhancing, and when necessary, terminating relationships with customers and other stakeholders, at a profit, so that the objectives of all parties involved are met, where this is done by a mutual giving and fulfilment of promises.” Gronroos (1997) reinforces that relationship marketing progresses beyond transactional marketing, improving new central beliefs to enhance the product offer. Some of the elements of this clarification are an indication in determining the specific concept of ‘what is CRM.’ Within this description, Gronroos identifies RM as a process of acquiring sustainable, long-term, mutually beneficial relationships with pertinent, profitable customers/stakeholders where both parties profit from the relationship. This explanation accepts that RM engages a procedure of customer procedure where RM may not always be suitable for all customers. Kotler (2000) presents a similar explanation to that of Gronroos, characterising RM to the building of enduring, mutually beneficial, relations with key parties - customers, suppliers, distributors - to safeguard and keep their long-standing preference and business. Kotler, however, specifies ‘other’ stakeholders, apart from the principal customer, are applicable in RM. While both of these descriptions acknowledge the idea of relationship development, they instruct no processes involved in implementing this approach in marketing. Stone et al. (2000) describe RM as the deployment of a wide range of marketing, sales, communication, service and customer care methods to characterise and construct continuing relationships with customers and to handle the connection for shared benefits. Galbreath and Rogers (1999, p. 162) provides a more precise definition of CRM which summarises the idea of proper relationship development but also includes the business processes involved: ‘’...CRM integrates sales, marketing, service, enterprise resource planning and supply-chain management functions through business process automation, technology solutions, and information resources to maximise each customer contact. CRM facilitates relationships among enterprises, their customers, business partners, suppliers and employees.” 14
From this definition, we can now understand that CRM is a cross-functional approach involving an adaptation of the whole organisation, and alters how it conducts its business with customers. Galbreath and Rogers have combined the idea of utilising information resources as a basis for exceptional business knowledge to handle relationships more skillfully. Rigby et al. (2002) suggest that a breakdown of CRM programmes can be credited to a lack of clear understanding of what CRM implies. The researchers consider that CRM brings into line business processes with customer strategies. Research that they guided into CRM failures discloses that many managers assume that CRM is naive ‘just a software package’ that manages customer relationships. Rather than a simple software tool to maintain customer relationships, the author's counsel that CRM should be thought as a combination of customer strategy and processes, supported by software, for the purpose of nurturing customer loyalty & profitability. It appears therefore that CRM integrates a main customer-focused strategy which is applied to business processes and supported by technology. A customer strategy is regulated through segmentation analysis and marketing goals. Rigby et al. (2002) further acknowledge some of the significant business processes that should be allied to a customer strategy; job descriptions, performance measures, compensation systems and training packages, to strengthen a customer focus. This explanation of the process of CRM, advanced by Rigby et al. as a consequence of failure analysis, suggests that CRM remains in an improvement period. As previously verified, Harker (1999) proposes that RM is a method that will continue immature until its fundamental theories have been identified and understood and agreed. In Harker's paper, the researcher lists 26 various definitions of RM representing that the opposing opinions are related to ‘alterations in the backgrounds’ of the providers and also to the short lifetime of this marketing concept. Law et al. (2003), in an examination of three viewpoints on CRM, explores the basic views of each word in the term. The authors suggest that the word ‘customer’ stipulates the path, ‘relationship’ reflects the focus and ‘management’ signifies the method. The paper also emphasises that the relationship is not limited to the customer but also includes internal links and other assemblies both within and external to the company. The management method relates to the establishment of a co-creative environment for further relationship development between customers and companies. This methodology suggests communication between the customer and the organisation including, collaboration, cooperation and communication. Customer relationship management tries to ascertain the overall proposition that successful organisations need to have, and a philosophy of being ‘focused on the customer.’ CRM theory proposes efficiently using the ‘knowledge gained’ to meet the customer’s needs in a mutually satisfactory behaviour. CRM as a term can be thought to cover a wide range of responses, habits and procedures that businesses adapt to implement RM in practice. The processes and models of CRM are further deliberated in the following section. Models of Customer Relationship Management Stone et al. (2000) distinguish five management principles necessary to successful customer management, namely; customer management strategies, customer management models, customer management infrastructure (systems, data and process), people and customer management programmes (programme of change). 15
Marketing has conservatively been considered from the vantage point of managing relationships with customer sectors. Payne (1993) and Christopher et al. (2000) suggest that a much more comprehensive market position is appropriate in relationship marketing.
Model1
The authors classify the ‘markets’ model to illustrate this; the model suggests that businesses have some markets that they need to guide activity towards and develop plans to manage; customer markets, supplier markets, employee markets, referral markets, ‘influencer’ and internal markets. As earlier mentioned, customer marketing emphasises long-term relationships with both new and existing customers. Referral markets relate to a business which obtains clients from numerous sources within an industry sector, for example, existing customers, intermediaries, networks and agencies. Christopher et al. (2000) highlight the importance of acquiring such referral bases or promoters as potential channels for assembling business. The ‘six markets' model further organises a greater partnership with suppliers as a probable influence in establishing jointly profitable business through quality improvements, mix and volume flexibility, ideal products and durability of the relationship. The increase in globalisation has advocated the integration of the world economy (Giddens, 2006), which has led to supplemented competition in a business's efforts to attract appropriately qualified human resources. Hence, models of CRM undertake employee marketing as a vital component of RM. ‘Influence’ markets, such as regulatory markets and the government may also be of particular importance if a business's offerings influence the performance of the country. 16
In conclusion, the ‘six markets’ model partners ‘inside marketing’ with enhanced levels of organisational interdepartmental service and improved representation of the company by personnel (Christopher et al., 2000). Stone et al. (2000) thought on the models of customer management unlikely to that suggested by Christopher et al. (2000). They have documented some standards that can be used separately or in combination. Model 2
The authors propose that the customer relationship-marketing model accepts that the relationship is only a part of the marketing mix whereas on occasions more traditional elements of the blend may be more critical for achievement. Diverse marketing mix elements can be used in different situations to achieve loyalty. Equally hygiene factors and loyalty factors are accepted as defining the relationship proposition. A model developed by Stone et al. (2000) is that of ‘transparent’ marketing. This model is based on the evidence that customers would prefer to handle their relationship with businesses rather than the opposite. The researchers consider that one of the significant achievements in the utilisation of the Web is in delivering transparent marketing to intermediaries.
17
The Peppers and Rogers’s model (1997) of ‘one to one’ marketing (cited in Stone et al., 2000) supports most principles of the marketing mix being vigorously attuned to the (changing) individual. Pine, Peppers and Rogers (1995) propose a model of a ‘learning relationship’ as a supply of achieving mass customisation and one-to-one marketing. As customers contribute to the learning relationship, communicating with the company their needs and likings, they are more likely to uphold a lasting relationship due to likely, high switching costs.
Model 3
Four instruments are delineated in this model of relationship management, openly; a data strategy to activate appropriate channels of communication, a production/delivery strategy, an organisational strategy to handle both customers and competencies and a valuation strategy to measure performance. This model requires substantial actions, systems and data financing to realise singular customised assistance and may be more suitable for larger more valued customers. Assuming that no single definition of CRM is apparent in the literature, it is not surprising that diverse models of CRM theory are proposed. While each model can be declared to have its qualities, it would show that the appropriate model to use may be contingent on the type of business and the number of customers implicated. Goals, Benefits and Competitive Advantage of Customer Relationship Management Several benefits have been allotted to CRM throughout the marketing literature (Anton, 1996; Kotler, 2000; Stone et al., 2000). Galbreath and Rogers (1999) suggest that CRM; reinforces to a business an understand their customers, distinguish those who are worthwhile to reach and keep, those who have potential and are essential and, importantly which customers should be ended. Discussed in work by Anton (1996, p. 11), the fundamental objective of CRM is customer maintenance, increasing customer loyalty can result in some advantages to a business: • 18
Increased purchases of the existing product
•
Cross-purchases of your other products
•
Price premium due to an appreciation of your added-value services
•
Reduced operating cost because of familiarity with your service system.
•
Positive word-of-mouth regarding referring other customers to your company.
Kotler (2000) congruently identifies securing and retaining customers’ long-term first choice and business as the primary objective of RM. Kotler suggests that the intermediate outcome is the creation of an unmatched business means called a ‘marketing network.’ Moreover, he proposes that the customer profit rate have a habit to increase over the life of a connected customer. Kotler (2000) does, however, respect that relationship marketing is not successful in all settings, although CRM systems are dropping the value limit at which time it becomes suitable. Transaction marketing may be more suitable for customers who have short time prospects and can switch to competitors with little effort or cost. The ultimate appropriateness of transaction marketing, as contrasting to relationship marketing pivot on the type of industry and the needs of the customer. Stone et al. (2000) consent with both Anton’s and Kotler’s valuation of improved customer retention, loyalty and increased long-standing value. Also, the authors propose that CRM lessens recruiting costs and, as existing customers are more receptive to the business, this also cuts the cost of sales. Additionally, if customer management is associated with customer needs, customer loss rate can be lessened by at least 25 per cent as one in four customers are lost through primary service reasons. Margins may also be improved with existing customers as the strength of the relationship can result in their being more opposition to hostile competition. Reichheld and Sasser (1990) and Reichheld (1996) hypothesise the quantitative benefits of CRM and customer retention documented through their studies on customer loyalty and customer defections. Their reports signify that reducing customer defections by 5% can boost profits by 25% to 85% across various industries (Reichheld and Sasser, 1990). Reichheld (1996) acknowledges the means through which customer loyalty can lead to profits which are comparable to those recognised by Anton and Stone et al. Long-term customers purchase more, take less of a business's time to service, have no acquisition or start-up costs, are less responsive to price and introduce new clients. Given the perceptive logic that CRM should lead to the sustainable competitive advantage, it is encouraging to notice the relationship between CRM, customer retention and enlarged profitability. However, each of the abovementioned advantages and returns supposes that good CRM fundamentally results in customer retention and loyalty. It is useful to note that not all CRM systems are successful and profitable. Gartner Group, cited in Rigby et al. (2002), indicate that as many as 55% of all CRM projects do not produce positive results. A further examination by Bain (2001), also cited in Rigby et al. (2002), discloses that, apart from failing to deliver profitable growth, 20% of CRM enterprises had damaged long-standing customer relationships. Kotorov (2003) quotes a report from Meta Group Inc which approximates CRM failure rates between 55% and 75% in 2001. Rigby et al. (2002), having analysed CRM failures for ten years, suggest that one reason for the adverse results is an essential lack of understanding and poor execution of CRM. Revealing the benefits, along with the potential hazards of CRM, it can be requested that, apart from having a comprehensive appreciation of CRM, practical implementation is fundamental to the success of CRM projects. 19
Implementing and Evaluating Customer Relationship Management As proposed when defining RM and CRM, CRM is not just a software tool operated to manage customer relationships; it is a mixture of strategy, people, processes and technology to progress customer retention, loyalty and profitability. A case study examining the execution of a programme of relationship marketing (Lindgreen and Crawford, 1999) found corporate commitment fundamental to its useful application. The study found that front-line employees performed a critical role in the progress of marketing relationships. The case study documented a three-phase programme accepted by the business concentrated upon building relations with customers; a design phase, an implementation phase and an assessment phase. The design phase comprised a business audit, focus groups and questionnaires, to existing customers, to determine business strengths and weaknesses. Implementation was achieved through the creation of project teams, customer-focused staff training and operative communication using a quarterly company newsletter, with both customers and employees. The three dimensions were also used to measure the design and implementation phases; customer loyalty, customer retention and customer share and employee satisfaction elements. Included in this technique is a five-fold process for attaining employee satisfaction; setting criterions, hiring the right personnel, provide training, monitor of performance and impart rewards. The situation analysis discloses the consideration given to the strategic, process and people elements of executing CRM without the recommendation of any technological developments. Database technologies may advance what has been achieved and facilitate an efficient expansion of CRM to include other relevant markets (supplier, internal, referral, influence) but, as this occasion validates, it is not the constituent upon which effective CRM is completed. Xu et al. (2002), in a paper, tries to separate the ideal approach to fit CRM treatments into a business location, the suggestion is that although CRM is pushed by ‘cutting-edge’ technology in delivery, achievement of good CRM is very much reliant on upon a corporate culture that accepts customer-focused objectives. The researchers acknowledge CRM as an all-encompassing approach that mixes strategy, people, processes and technology, in a complete change management process, to exploit relationships with all customers. Chen and Popovich (2003) in their work concur that successful implementation is intangible to many businesses who fail to understand that CRM requires an integrated and balanced approach to three items technology, process and people. Technological applications can be implemented to collect and dissect data on customer patterns, translate customer patterns and behaviour, respond with suitable and effectual personalised communications and deliver product and service value to individual customers (Chen and Popovich, 2003). In addition to adopting technological innovations, Chen and Popovich (2003, p. 682) recognise that CRM is an ‘incessant fortitude’ requiring remodelling of core business processes starting with the customer. The authors also cite Seybold’s (1998) five steps in planning a customer-centric organisation: • 20
Make it simple for customers to do business
•
Focus on the end customer
•
Redesign front office and examine information flow between the front and back office
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Foster customer loyalty by becoming proactive with customers
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Build in measurable checks and balances to continuously improve
While both technology and business processes are central to successful CRM, Chen and Popovich (2003) further recognise the relevance of people (management and employees) to the implementation of change in organisational culture. Top management support, leadership and commitment to CRM are required through the entire procedure. The researchers propose that CRM programmes need the fulltime attention of a cross-functional project team to integrate core business methods. A customer-centric marketing model requires sharing customer data company-wide. This may mandate a vital theoretical shift in the organisational culture from silo-based data storing to sharing information and knowledge. Achieving a company-wide commitment to CRM involves on-going education and training and the revision of incentive compensation plans to reward customer orientation. In their book confronting the dangers of CRM, Rigby et al. (2002) similarly liken a cross-functional customer strategy and customerfocused business processes (incorporating job descriptions, performance measures, compensation systems and training programmes) to good CRM accomplishment. Furthermore, they propose that CRM can be achieved without huge investments in technology. The McKinsey and Co. ‘Seven S’ framework has been recognised by some CRM reviewers (Payne, 1993; Christopher et al., 2000) as a favourite tool for planning organisational change. Model 4
The framework contains seven fundamentals, specifically; strategy, structure, systems, staff, style, skills and shared values. The McKinsey research, cited in Christopher et al. (2000), stated that significant performing companies placed importance on all seven rudiments while lower performing businesses have a custom of putting most stimulus on strategy, structure and systems. 21
While differences appear in the literature as to the degree of technological revision there emerges to be a general agreement that CRM implementation begins with a clear strategy and commands transformation of businesses processes, people and technology. Payne (1993) also acknowledges that changes in market forces can create both marketing opportunities and marketing threats. With all the concerns that companies are currently confronting in a global marketplace, improved utilisation of CRM could be one solution to deal with competition, and add more value to its products.
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CEM Literature This book accepts the following definitions of the theory of customer experience. “Customer experience is the internal and subjective response customers have to any direct or indirect contact with a company.” (Meyer and Schwager 2007: 118). Shaw (2002) adds elements to this definition. “...It is a blend of an organisation’s physical performance, the senses stimulated and emotions evoked, each intuitively measured against customer expectations across all moments of contact” (Shaw and Ivens 2002). Accordingly, customer experience can be seen as a summary of interactions, mental images, and feelings that a customer on the inside accepts from the business' s engagements. Customer experience is seen as prevailing in every contact between the company and its customer via sales, service or support dealings. Such a contact usually transpires in the stages of purchase, use or service, and the customer is characteristically active in the beginning this communication. An indirect contact refers to an unplanned meeting with the customer and the business's representation of its products, services. Indirect contact can also take a start from word of mouth approval or condemnation in the customer base, advertising, media coverage or product reviews (Meyer and Schwager 2007). A direct contact, however, can take variant and unexpected forms, such as an irritation default ringtone in a mobile phone or an email conversation between two customers. The conception of customer experience spans over various stages: pre-experience, the real lesson and post - experience. An example of a pre-experience may be easy access to a particular shop which is a convincing stimulus outside the actual customer experience but a notable example of how stress-free and effortless the whole experience can be for the customer. The real adventure is the phase that a business has the most control over. Compelling customer experience also takes into observation the outside factors encouraging the involvement. The post - experience has an over profusion of different fragments to consider such as delivery, after-sales service, user manuals, customer support etc. All these various examples are considered as part of the entire customer experience. (Shaw 2007: 36) Experience extension is an idea where businesses follow impact factors outside their direct customer experience (Shaw 2007: 38). The original definition for customer experience relates to both business - to - customer (B2C) and business - to - business (B2B) businesses, though in B2B setting the customer experience in usually less decisive. In B2B service activities, sales and marketing do not join when it comes to the point of contacts with the customer. It is frequently the operations people who deal with customer projects, directly fronting their customer as equals. The relationship in a B2B setup is a functional relationship by nature and creates a complete awareness of the customer experience problems. (Meyer and Schwager 2007: 119). Customer Experience in Service Business When it comes to customer experience in service enterprises, it is the customer and organisation that work together to create an experience. According to Shaw (2007) “ (it) is a blend of an organisation’s physical performance, the senses stimulated and emotions evoked, each intuitively measured against customer expectations across all moments of contact” (Shaw 2007: 8). 23
The physical feature of the experience consists of a prize, commodity, accessibility, convenience, efficiency, and time of day, ease of use, sales and delivery channels. More meaningfully, customer experience is about customer feelings; research shows that over 50% of customer experience is based on emotions (Shaw 2007: 8). Customer experience is shaped whenever a customer comes in contact with the organisation, through its advertisement, websites, interaction with delivery personnel, physical shops, dealing with customer service and customer support. Customer experience, as defined earlier in this section, joins individuals past and present experiences with the institution (direct and indirect) and is, therefore, also present before and after a true customer service provider relationship. Not all contacts are similarly valuable. These connections, however, can be more critical for the customer than it may first appear. In this study, these interactions are called “touch points”, and this expression will be used throughout the book. When explaining a quality level of a touch point, it includes the customer expectation, customer experience and the gap in between, the variance of the pursued experience and something that is found lower. Expectations may be the consequence of the customers’ past experiences with the services, the competition, or perhaps the market environments and to an important extent the customer’s situation. (Meyer and Schwager 2007: 120) Reliable quality, short and smooth deliveries, great value for money, these are all ideal for the right customer experience. There is no substitute for having a great commodity. However other features should be considered when trying to increase the service experience. Whether the components are functional, emotional or psychological, it all results from a basic question of whether the customer wants to experience it once more. (Shaw and Ivens 2002: 21) As customer insight of a business is a subjective combination of all past encounters and communication interacting with the business, the brand communication is carefully connected to the customer experience. The brand can be defined as a ‘collection of perceptions’ in the mind of the consumer (Bates 2007). By explanation, a brand has a personal connection with customer experience. Shaw terms the relationship as, “The brand and the customer experience should be one, together, the same” (Shaw and Ivens 200 2: 137), and Goodman also emphasises the wide-ranging position of the brand and customer experience. (Goodman 2009 ). A brand experience is what happens at the time when a consumer sees, hears or interconnects with the business's brand. This does not equate to customer experience since a brand experience can become apparent when a consumer is not a current customer of the company. Human Emotions as a Driver for Experiences As research imparts, over 50% of our experiences are based on emotions (Shaw 2007: 8). Feelings are fundamentally what drives our actions and help us form opinions. Moreover, it is only in the past decade that businesses have started to address this area through their business efforts. From a natural view, humans experience the world through their emotional state. Emotions are formed in the brain which can be divided into two main parts: the core and the cortex. The core part of the brain acts in all ‘sensed’ emotions. They reside as a fundamental function of survival: hunger, sex drive, fear and the basic life processes such as the character to breath. The cortex part of the brain is the outer half of the brain encircling our capacities for logical thinking and such advanced functions that divide us from other species regarding one's intellect. 24
A way to separate out these two parts regarding how we ‘think and feel’ is the example of how we experience hunger. The core part of our brain is the cause of this reaction, and the cortex part of the brain will influence the role of thinking out how to obtain food input, or it may even create a dispute with this core emotion due to dieting or by the facts that there is no food readily accessible. When the core and cortex part of the brain is joint, decisions happen almost promptly and with smoothness. However, when there is a conflict, such as the hunger example, this creates a feeling of dissatisfaction and uneasiness (Shaw 2007: 22). Brain scan investigations show that emotions play a significant role in consumer decision-making and choice. From a psychological position, people have real opinions as fundamental persuaders. Not all people have the same objectives in life; an individual goal may be to succeed in family life or to work hard and make more money. Some other leading psychological characteristics are the standards that people have and that these values are cultured from many resources: our family, our culture, our social interface with others and not least the society one lives in. There are several other influences that affect emotions “a person’s mood of the day, their view of life, their abilities and disabilities etc. (Shaw 2007: 22 ) Therefore, the overall picture of customer ‘goal states’ is multifaceted. For a business to start purposefully creating a Customer Experience that will lead to increased profits, the opening point is to understand that people have goal states but also emotional states which will either drive or terminate value. All of the stated aspects we feel, underwrite emotions and it is therefore not accurate that service can take them all into consideration. However, regarding Customer Experience Management, an organisation should understand what signposts their experience, and is it delivering the right emotional result to the customer and brand. The smallest of negative signs can accumulate to a customer awareness of a malfunction in the quality of service. It is also noteworthy, that if people are treated poorly, they tend to look for more signs to underpin this thinking, which is a natural human inclination that functions for both positive and negative indications (Shaw 2007: 25). As can be comprehended from these examples, the brain is an immensely complex and multifaceted, and how it works is not entirely acknowledged in science. When service businesses trade with human emotions on a daily basis, this aspect of service experience is most often operated by the customer service employees, who interact with the emotional states in ‘customer interfaces’ at touch points. Trained customer service personnel can help fill in the discrepancies in the overall service delivery. The importance of a business organising to respond to emotional customer states remains the core strength of proper Customer Experience Management. Customer Experience as a Driver for Value Profit-driven businesses are originated on creating value to their customers and benefit from it financially. The essential goal for companies is, therefore, to create value and get rewarded more than it costs to produce customer value. To do this, service businesses need rudiments in their CEM actions, namely, enlarge customer loyalty, induce new customers, reduce cost as much as possible and increase customer spending. In a service business, supplying more to existing customers is usually cheaper than trying to entice new ones. Attracting new customers is thought a more costly action compared to keeping the existing customer base. In reality, new customers cost five times as much to develop based on studies (Shaw and Ivens 2002: 53). Word of mouth and recommendations are the lowest form of advertising, which relate straight to the customer experiences. Although reducing cost and increasing efficiency is a requirement for all businesses and making customers buy more is an apparent goal, it is recognised that loyal customers spend more (Shaw 2007: 12; Reicheld 2003 : 3). 25
Consequently, a clear relationship between customer loyalty and profitability does seem in evidence. The consistent customer may not always be the most profitable. However, customer profitability is an on-going analysis. Consulting Shaw and his research, there are three clusters that drive value and one group that research exposed destroys it. The three value pushing clusters are the notice cluster, reference cluster and sponsorship cluster. The value destroyer customer is the first significant focus area where a business aspires to improve the customer experience. This cluster engages negative customer emotions such as dissatisfaction, annoyance, and irritation, the feeling of being overlooked. Influencing the notice cluster includes establishing positive encouragement and raising interest in the customer. Increasing customer loyalty and building long-term customer relationships may begin by concentrating on the customer emotions in the recommendation and sponsorship clusters. The reference cluster, as the name indicates, reveals positive customer emotions and causes the productive word of mouth about the business. Feelings of belief, care, effort and ‘being valued’ and wanted a result in a likely customer recommendation of the service to others. This cluster is responsive by very nature – a customer may not proactively promote the service, nonetheless will likely recommend the service if being asked about it. When a customer feels satisfied and pleased with a service, they will proactively tell others about the quality service they obtained. This kind of CX support is the lowest and most effective form of experience value in marketing today (Shaw 2007). Therefore, by focusing the company’s resources on customers that make them satisfied and content with the service, is considered a key driver for profitable value (Reicheld 2003: 1). Consequently, customer emotions of being cared for, broaden personal customer loyalty and increasing positive word of mouth intensifies the potential for new customers. The features of emotional customer states are significant factors to what forms an excellent customer experience, but they are often not appreciated when businesses do customer segmentation or profiling. This raises the question, whether this emotional measurement should be a constituent of churn prediction or evaluating the results in the employed customer loyalty program. The ability to identify emotional customer states and stipulate how they connect to revenue generation is in the life force of a proper Customer Experience Management. The solutions for managing customer experience reclines in maintaining the quality of customer communications as a holistic method. What is documented in research, is that customer experience is not the same as customer service. As a result, CEM is a general business mindset that reflects all experience functions of an establishment. Even though customer service and sales are usually the ones interfacing the customers, a business's additional functions influence how capable a business's customer service and sales can create experiences that meet or exceed customer expectations. Multi-Channel Experience Modern businesses communicate with their customers over multiple channels, consistency of communication over multiple channels is therefore vital. Arranging to deliver a consistent experience is often a significant challenge when implementing CEM’s “ from outside in”, like the obvious “ from inside out” approach. The “ from inside out” vs. “ from outside in” expression describes how businesses have usually structured themselves to manage moments of customer contact. Although enterprises have various structures, the central principle continues, multiple moments of connection are led within organisational boundaries that are run by a top manager accountable for each corporate unit. Structuring a company functionally is rational, and indeed the majority of companies are structured in this manner, but then again not many businesses are organised ‘around the customer.’ 26
When different organisational units have their distinct assemblages with a separate budget, it is a constant challenge to hide these separate objectives from the customer. For example, if a product is purchased from the business's web shop, it cannot be returned in many cases to their stores since this would influence the store's costs and targets. These types of circumstances make it visible to customers how businesses are often unable to bring into line processes that are ‘best for their customer.’ In fact, businesses often promote themselves as being customer focused and customer-centric, but often they act based on what is best for the company (“ from inside out”) as opposed to what is best for the customer (“ from outside in”),( Shaw and Ivens 2002: 73). Sooner or later problems that the business leaves unsolved becomes the customer's problem, which results in a tarnished customer experience. It is the foundation of good CEM, therefore, to emphasise that it is ‘the customer that should own the relationship’ and it is the business that should bring into line itself to meet the changing aspects of this relationship (from outside in). In commoditised markets, the customer has the liberty to determine the instants and technologies of contact. When businesses design the contact points, which they want the customer to use, the customers often find their ‘own path’ for contact. This can result in businesses guiding the customer s to use the paths the business wants the customer to use. However, a purposeful customer experience changes to the contact paths the customer is employing and accepts the customer right to choose their pathway for contact. Moreover, when customers interact with a given network, that channel should be able to handle the completeness of that customer activity as far as possible. (Shaw and Ivens 2002: 79) At present, more and more businesses have started to appoint customer experience executives. These individuals are normally the custodians of the customer experience, and their role penetrates through the corporate political borders and makes the customer experience a constant declaration in the company. The position requires asking the essential question in all business's functions: Who is the customer? How are we segmenting our customers? How do our customer’s want to interrelate with us? And how well are we managing our customers? When a business has a well-defined portrayal of the customer experience it wants to provide; then it is central to be able to ensure that all individuals are observing it. Most importantly, the customers will eventually see the business as being ‘responsible for the customer experience.’ (Shaw and Ivens 2002: 73). Spontaneous feedback means ‘customer initiated’ feedback that is, the customer imparts information in a self - chosen way, time and place. Nurturing spontaneous feedback involves making it easy to use networks available at selected touch points, and that the feedback results are fixed to those touch points when analysing the data. In this kind of spontaneous feedback, the extremes stand out, since the nature of the feedback is usually either highly positive or highly negative and very rarely of a moderate type. Spontaneous feedback is often a chance for discourse with the customer; it can also be a chance for ‘creating value’ for customers. Automated replies do not extract several feedback pages long, a research reply coming weeks later is lost. In the modern day to communicate in real time, some level of indifference is the new feedback driver. (Löytänä and Kortesuo 2011). CEM Measurements There are numerous valid measurements accessible that can be used to gauge the customer experience business is providing. This section discusses the primary measures of CEM. 27
The Net Promoter Score (NPS) gauges service quality with questions such as: “How likely are you to recommend (a company, product or experience) to a friend?” (Reicheld 2003). The customer’s willingness to recommend a business is seen as one of the most efficient ways to measure customer experience. NPS is based on this simple yet important question. Therefore straightforwardness is its main advantage. Figure 1 describes the NPS model. Figure 1 NPS Model
Voice of Customer (VoC) sets are about a nonstop reflection of customer expectations, needs and wishes in businesses. In addition to market research examinations, VoC programs include customer data such as reaction, recoups and also employee input. (Goodman 2009: 28) VoC programs follow data from all touch points, and they are chiefly used when creating new services. Customers have both conscious needs and subconscious needs that businesses cannot understand by not receiving input. Hence, with customer experience, the databases should also vigorously seek to discover these customer needs. This is an area, where customer behaviour is expressed in more detail. For example, customers can appear very enthusiastic about a new service. However, it does not mean that they are willing to pay for it. For this reason, businesses should be careful when using VoC in business decision interpretation. (Löytänä and Kortesuo 2011: 195 ) Overall, VoC programs use similar means of data collection as when measuring customer experience, but it is not considered a complete in enclosing customer experience measurement.
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Figure 2
Mystery Shopping refers to an action where a researcher interrelates with a business's service in a given touch point and with regular customers to see the business's behaviour by concentrating on predefined features. Usually, this method is used when measuring the service experience at various sales points or customer service situations. (Löytänä and Kortesuo 2011: 197 ). Unlike in customer satisfaction studies, a mystery shopping research is used to measure the process, rather than the consequence of a service encounter. (Wilson 1998: 415) Customer Effort Score measures the effort a customer has to make when dealing with a business. The questions in this measurement are for the customer, and include “How much effort did you have to put forth to handle your request?” The score goes from 1 (shallow effort) to 5 (very high energy). (Dixon et al. 2010: 5)
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Figure 3
Consulting Dixon et al. (2010), CES works as a stable measurement for loyalty and word of mouth prediction. 94% of the patrons who reported a low effort, articulated that they would buy again, and 88% said that they would buy more from the business. Only 1% would transmit the negative word of mouth. At the opposite end of the scale, 81% of those who reported a high attempt, also stated that they would engage in the dispersal of negative word of mouth. (Dixon 2010: 5). CES has its main strength in measuring the constancy of experience customers have found in an interaction at a touch point. This is opposed to NPS, which withholds an equally rounded impression of the service provider business. Several measurements can be used for evaluating ROI for CEM. The increase in customer loyalty and reductions in churn are usually seen as the most simple ROI models used, together with NPS to accomplish a foundation for measuring the results of CEM. When a business understands the touch points that are substantial for compelling customer experience, it can shift assets away from the areas that are less critical and focus on these vital areas. This means that implementing CEM does not necessarily mean an increased cost, but instead selecting to invest in what drives greater value (Löytänä and Kortesuo 2011: 206 - 207 ). CRM captures what the business knows about a particular customer ( i.e. history of the past touch points), and CEM seeks to summarise the customer's subjective feelings about the company together with the rapid response of the customer to its meetings with its service ( i.e. the present touch point). In other words, CEM varies from CRM by focusing on the ‘current experience’ of the customer, rather than the building of a relationship with the customer (Verhoef et al. 2009). CEM endeavours to understand customer emotions at different touch points. Thus, CEM complements CRM, rather than act as a replacement for it.
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Phenomena, process and outcomes While still compliant with the fundamental rule that a good experience must holistically and reliably involve a person at different levels, and following previous conceptualisations, one needs to consider analysis on the psychological concept of ‘modularity of mind’ (Pinker, 1997). Various psychological and behavioural studies (Anderson, 1995; Brakus, 2001; Fiske and Taylor, 1991; Goleman, 1995; Schmitt and Simonson, 1997; Tavassoli, 1998) describe three basic mind systems – sensation, cognition and affect – each with its constructions, philosophies and mutual connections. Also, when considering a person with these methods, one takes into account the set of one’s behaviours, the systems of values and beliefs (from which lifestyles and practices are originated) and relationships. For instance, many neurophysiologic studies support the widely accepted notion that pain, enjoyment, satisfaction are a multidimensional experience comprising sensory, cognitive and emotional components (i.e. Fulbright et al., 2001); this is reliably strengthened by findings from human brain imaging studies showing that multiple cortical regions are triggered during the presentation of stimuli (Coghill et al., 1994; Derbyshire and Jones, 1998; Jones et al., 1991; Paulson et al., 1998; Talbot et al., 1991). Consequently, drawing from this literature, and following the flow of other scientific works (Brakus, 2001; Fornerino et al., 2006; Schmitt, 1999, 2003), one can theorise the Customer Experience as a multi-dimensional construction arranged with forthright mind mechanisms. However, one must also consider that, as the study demonstrated, customers hardly ever classify this kind of assemblies. In contrast, research accepts that customers observe each experience as a multifaceted but unitary in sensation. As above stated, the conceptualisation of the primary components of the Customer Experience has some elements in common with the model proposed by Schmitt (1999) and with the outcomes of Fornerino et al. (2006). Moving from the basic idea of ‘‘engagement at different levels’’ Schmitt (1999) suggests a modular conceptualisation of the notion of Customer Experience. Schmitt identifies five Strategic Experiential Modules: sensory experiences (sense); affective experiences (feel); creative cognitive experiences (think); physical skills, behaviours and lifestyle (act); and social-identity experiences that ensue from connecting to a reference group or culture. Fornerino et al. (2006) analysed the case of an immersive consumption experience and identified five separate dimensions: sensorial-perceptual, effective and physical-behavioural (components) and social and cognitive (facets). Therefore, drawing from the present literature, the (experiential) components have assumed core dimensions of the Customer Experience, they are: Sensorial Component: an element of the Customer Experience that stimulates and affects the senses; an influence, the intention of which is to provide useful sensorial experiences, that addresses sight, hearing, touch, taste and smell so as to stimulate aesthetical pleasure, excitement, satisfaction, sense of beauty (good examples are Juice bars or Lush stores). Emotional Component: an element of the Customer Experience which involves one’s ‘emotional system’ through the manufacture of moods, feelings, emotions; an influence can produce emotional experience in order to create an active relationship with the business, its brand or products (good examples of brands which claim a strong emotional link with their customers are Coke and Kinder Surprise). 31
Cognitive Component: an element of the Customer Experience connected with thinking or conscious mental methods; an influence that may involve customers in using their creativity or in some circumstances problem solving; additionally a business can lead the consumer to review the customary idea of a product or some common mental assumptions Pragmatic Component: an element of the Customer Experience is coming from the act of doing something; the pragmatic component includes the concept of usability (the computer offers an ideal example of what it means to design an extraordinary practical experience for users based on usability standards). In truth, it does not only refer to the use of the product in the post-purchase stage, but it can extend to all the product life-cycle stages of progress. Lifestyle Component: an element of the Customer Experience that comes from the validation of the system of values and the beliefs of the person often through the acceptance of lifestyle and behaviours. Regularly a suggestion may provide such experience because the product itself and its consumption/use become means of attachment to specific values the business and the brand symbolise and the customers like to share (as in the consumption of logo products Nike, Apple). Relational Component: an element of the Customer Experience that includes the person and, beyond, his/her social context, his/her relationship with other people or also with his/her perfect selfimage. A promise can leverage on such a component by means of a product which inspires the use/consumption together with other people (i.e. theme parks) or which the ‘principal of a common passion’ that may ultimately lead to the creation of a kinship or a tribe of fans (i.e. Harley Davidson); eventually the product (as in fashion) can also be a means of pronouncement of a social identity, provoking a sense of belonging or of difference; in this circumstance the connection with the Harley lifestyle component is exceptionally relevant. While drawing from the results of the above-mentioned research, the dimensions of the Customer Experience support some fundamental differences. First, taking into consideration Schmitt’s act module, one differentiates the physical aspects from other values and join them with the sensorial dimension. Such an approach is also coherent with recent neurophysiologic studies, whereby the physical and sensitive features are considered as a unitary dimension. Secondly, when one adds a new dimension, the pragmatic component, drawn from the literature on the user experience (Arhippainem, 2004; Battarbee and Koskinen, 2005; Forlizzi and Ford, 2000) the result takes into account the aspects related to the human-objects interaction. Internal resources (processes) Relating In the relationship marketing literature, it is understood that marketing phenomena include exchanges within networks of relationships (Gummesson, 1999). At the macro level, these actions influence one another with the results felt across time and place. At the micro level, this means that the marketing exchange is no more extended transaction bound, actually it never really was. At macro or micro levels, marketing exchange can be viewed as an open-ended procedure where connections with customers occur across time and place, as “enactments of the exchange process”(Ballantyne, 2004). 32
In the services marketing literature, the services cape or service location is the place or space in which numerous time-based connections are engaging customers are situated. This setting for service is significant to how a seller’s offer is valued (Bitner, 1992). Across time and place, and through various contact episodes, sales take place in with any luck a virtuous cycle of repeated service and sales. Also, all such exchanges can be understood as part of the customer relationship development process, a procedure in which the customer eventually decides what is of value (Christopher et al., 2002; Varey, 2002a). Relationships of some form are always present anyplace there is an interface between two or more parties. However, the quality of relationships is also emerging, derived from the experience of interacting together over time. It is the quality of the relationship that can be ‘managed’, not the link as such, and this is a common misconception. How to manage relationship quality is a result of learning together over time. This is a crucial CX issue because relationships that are advantageous to all parties provide structural support that is positive for sustaining further value-creating activities. These relational viewpoints are not new in relationship marketing, B2B marketing, services marketing, or experience strategy literature. However, consumer product dominant marketing writings tend to appendage it, conceivably because a seller cannot manage relationship development as a one-way matter, mainly through traditional unidirectional communication systems that exist today. Communicating Marketing communication is the fundamental process through which marketing activity and resources are transformed into economic outcomes. Though, if one continually emphasise results over methods, one misses the point that marketing communication is based on purposeful social interaction (Varey, 2000b). A lot of managers tend to attempt to control their destiny and that of their company, rather than anticipate and respond to service needs (including the provision of serviceable goods). A variety of ethical issues can then fade within the expected moral suitability of self-interested profit maximisation. Several related comments on marketing communication are suitable at this stage, first, the leading forms of marketing communication today function as a one-way message making system. In this setting, conventional thinking has come to accept as normal the decoupling of interaction and communication. Managers and businesses may increase short-term advantage from this, but it is unclear how societies or indeed any of a business's essential stakeholders benefit in the long term. Hegemonic communication logic remains foremost in marketing writings, and in use, notwithstanding the emergence of more interactive viewpoints represented by Integrated Marketing Communication (Duncan and Moriarty, 1998; Grönroos and Lindberg-Repo, 1998). Even these groundbreaking viewpoints give limited coverage to the rich variety of ways to reconnect communication with collaboration, generate and circulate information, co-create meaning, acquire knowledge, achieve flashes of inspired understanding, and to make value jointly with customers. As the author and academic, the proposal put forward here is that S-D logic needs to put the variety of communicative interfaces back together again, started in interaction in three ways. First, as informational; second, as communicational; and third, as dialogical. This procedure comprises pure (ideal) constructs, and some grouping overlap is likely in practice. No difference is made between communication using voice, text, image, or gesture. The informational mode includes all message making which has the valued purpose to inform. 33
The more manipulative practices of ‘transactional marketing’ and much of what currently passes as Customer Relationship Management (CRM) represent original versions of this. Next, much of integrated marketing communication’s (IMC) ambitions are based on the communicational mode, where listening and informing are both core features of interaction. Finally one considers dialogue as a broadminded form of marketing communication because it supports co-creation of value and sustainable competitive advantage. It also makes a sound counter-argument conventional (i.e. goods-oriented) marketing’s monological theories and the restrictions on innovation that flow directly from that. This is not given any density of treatment in the original S-D logic theory, though there are some helpful references made (Vargo and Lusch, 2004a: 13–14). In everyday use, the term dialogue is unreflectively taken to mean a lengthy conversation between two or more people. By way of distinction, the notion of exchange represents a pre-industrial learning perspective on human interaction in which dialogue functions as an interactive process of learning together. Knowing Vargo and Lusch have documented the fundamental importance of human skills, capabilities, and the accumulated work experiences of employees (Vargo and Lusch, 2004a). However, Nonaka and Takeuchi (1995), claim knowledge takes two forms – tacit and explicit. Tacit knowledge is employee know-how or competencies gained through observation, imitation, and mutual experience. It functions at an unconscious level of use, which denotes it tends to be under-recognised as a business (collective) resource. The second form of knowledge, explicit knowledge, is media-based and can be digitised, replicated, and circulated. Both types of experience are valued as resources but are divergent. The first is applied directly to creating value; the second is a store of knowledge that can be valuable retrieved in creating value. The first is an operant resource and the second is an operand resource, in the method that Vargo and Lusch (2004a: 2–3) define these terms. Many businesses have over-invested in acquiring explicit forms of knowledge, using expensive data-warehousing or customer relationship management (CRM) schemes (Kelly, 2005), and at the same time, overlooked the current resource inside: their operant resource, the employees’ tacit knowledge. Tacit knowledge is a result of learning together as workforces across purposeful borders to achieve cost efficiencies or functioning with customers or suppliers to advance customer value. Vargo and Lusch (2004a: 9) have contended that ‘knowledge is the fundamental source of competitive advantage’. On the other hand, as Storbacka and Lehtinen (2001) have documented, a business's tacit knowledge (know-how) tends to ‘finish’ at a faster rate than explicit (recorded) knowledge within the business. This is more obvious when the external business environment is altering rapidly. Looking at Vargo and Lusch’s intentions that it is knowledge renewal (the generation, sharing and application of knowledge) that is more fittingly designated as a significant source of competitive advantage. Competition between businesses encourages explicit (recorded) knowledge renewal. Nevertheless at least equal emphasis on tacit knowledge renewal is also desirable. Significant input to the knowledge renewal process is the readiness of people (whether customers, suppliers, or employees) to contribute and pass on their know-how, that is, their tacit knowledge. To do this, they need to trust the reasons of those pursuing their involvement through CX processes.
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The technology factor Information technology (IT) has long been documented as an enabler to considerably redesign business procedures including CX to achieve exciting improvements in organisational performance (Davenport and Short, 1990; Porter, 1987). IT supports the re-design of a business process by enabling changes to work practices and establishing advanced methods to connect a company with customers, suppliers and internal stakeholders (Hammer and Champy, 1993). CEM applications take full benefit of technology modernisations with their aptitude to collect and analyse data on customer patterns, understand customer behaviour, expound predictive models, react with timely and efficient customised communications, and deliver product and service value to diverse customers. Using technology to “optimise interactions” with customers, companies can establish a 360degree view of customers to learn from historical connections to enhance future ones (Eckerson and Watson, 2000). Inventions in network infrastructure, client/server computing, and business intelligence applications are first issues in CEM development. CEM automated solutions deliver storehouses of customer data at a fraction of the cost of older network technologies. CEM systems can accrue, store, maintain, and distribute customer knowledge throughout the whole business. The effective management of this information has a central role to perform in CEM. Information is meaningful for product adapting, service innovation, merged views of customers and calculating customer lifetime value (Peppard, 2000). Among others, data warehouses, enterprise resource planning (ERP) systems, and the Internet are now central structures to practical CEM applications.
Data warehouse technology A data warehouse is an information technology management apparatus that gives business decision makers prompt entrance to information by gathering collectives of customer data from all over the organisation and by uniting all database and operating systems such as human resources, sales and transaction processing systems, financials, inventory, purchasing, and marketing systems. Accurately, “data warehouses extract, clean, transform, and manage large volumes of data from multiple, heterogeneous systems, creating a historical record of all customer interactions” (Eckerson and Watson, 2000). The competences to examine and manipulate established data warehouses separately from other computer systems. Continually extracting knowledge about customers decreases the need for more traditional marketing research tools such as customer surveys and focus groups which are very slow and costly. Consequently, it is now possible through CEM systems to distinguish and report by product or service, geographic region, distribution channel, customer group, and individual customer (Story, 1998). Statistics are then accessible to all customer contact points in the organisation improving customer insight. Data warehousing technology makes CEM achievable because it fuses, compares and converts customer data into customer intelligence that can use to shape a better understanding of customer behaviour. “Customer data includes all sales, promotions, and customer service activities” (Shepard et al., 1998). 35
In addition to being transaction specific, many other types of data generated from internal operations can make essential influences in CEM strategy. Proof related to billing and account status, customer service interactions, back orders, product shipment, product returns, claims history, and internal operating costs all can progress clarification of customers and their purchasing patterns. The ability of a data warehouse to store hundreds and thousands of gigabytes of data make drilldown analysis possible as well as instant. Enterprise Resource Planning Enterprise resource planning (ERP), when positively applied, links all areas of a company incorporating order management, manufacturing, human resources, financial systems and distribution with external suppliers and customers into a tightly integrated system with shared data and reflectivity (Chen, 2001). Major enterprise systems vendors, who have been successful in the ERP market, and are supplying the growing needs of CEM by forming associations with, or taking over other software companies that have been operating in the CRM market.
Model 5
Noteworthy differences exist between ERP technology and CEM applications. ERP serves as a vigorous underpinning with firmly integrated back-office functions while CRM attempts to connect the front and back office uses to maintain relationships and build customer loyalty. 36
ERP systems undertake to integrate all functional areas of the business with suppliers and customers while CEM promises to improve front office applications and customer touch points to enhance customer satisfaction and business profitability. While ERP systems tackle disjointed information systems, CEM addresses disconnected customer data. “CRM/CEM applications are usually Web-enabled and designed to increase the data mining capabilities of ERP throughout the supply chain to customers, distributors, and manufacturers” (Scannell, 1999). Organizations can use CEM analytical competences to forecast and answer fundamental business questions on customer intelligence and share the results across channels. “Although ERP is not required for CEM, providing customers, suppliers, and employees with Web-based access to systems through CEM will only be advantageous if the underlying infrastructure, such as data warehouses and ERP, exists (Solomon, 2000). Establishments with an ERP system, however, need to understand where they are in the implementation process, they need to assess where CEM tools, such as data warehouses, fit in before rushing into CEM applications (Saunders, 1999). Impact of the Internet The robust growth of the Internet has also commanded new meaning to building customer relationships. More customer access points to the organisation, such as online ordering and around the clock operations, has set the platform for moving standards in customer service and CEM. The internet has revolutionised CEM by providing online access to information at high speeds which has improved the customer experience. Business process changes Companies with well-organised services and more significant resources can satisfy customer needs with uniform products, garnering advantages through productivity gains and lower production costs. Mass marketing and mass production are well liked as long as customers were satisfied with same outcomes. As more businesses entered the market, mass marketing techniques, where the objective was to sell what manufacturing produced, began to lose its effectiveness. Target marketing, or segmentation, stimulated an enterprise's focus on adjusting products and marketing efforts to fit customer needs and wants. Varying customer needs and preferences require businesses to define smaller and smaller consumer segments. Accordingly, relationship marketing was developed on the basis that customers differ in their needs, preferences, buying behaviour, and price sensitivity. By understanding of customer drivers and customer profitability, businesses can more easily change their offers to exploit the overall value of their customer assortment. In his influential study, Reichheld (1996a, b) has documented that a 5 per cent increase in customer retention increased in the average customer lifetime value of between 35 per cent and 95 per cent, leading to significant improvements in company profitability. Customer experience marketing practices concentrate on a single customer and compel the business to be operated by the customer, rather than the product. Customer-centric organisations correctly assimilate marketing and other business processes to supply customers and react to market pressures. In a product-focused technique, the goal is to find customers for the products using mass marketing attempts. In a customer-centric approach, the objective is to develop products and services to fit customer needs. 37
In Seybold’s (2003) work, five steps in designing a customer-centric organisation were proposed: 1. Make it simple for customers to do business 2. Focus on the end customer; 3. Redesign front office and examine information flow between the front and back office 4. Foster customer loyalty by becoming proactive with customers 5. Build in measurable checks and balances to continuously improve. 6. People changes Management Implementation of enterprise technology, such as CEM and ERP, necessitates alterations to organisational culture (Al-Mashari and Zairi, 2000). While both technology and business procedures are both critical to successful CEM plans, it is the individual employees, who are the real structure of a customer experience relationships. There are several essential aspects surrounding management and employees that successful CEM implementations require. Top management assurance is an essential element for bringing an innovation online and ensuring delivery of promised experience benefits to life. High management commitment in a CX context, however, is much more than a CEO giving his or her approval to the CEM project. Customer-centric supervision requires top management to underpin and commit to CEM throughout the entire CEM implementation process. Furthermore, senior management should set the stage for CEM enterprises for leadership, strategic direction and alignment of vision and business goals (Herington and Peterson, 2000). As in most major change attempts, oppositions and disagreement among various functional departments that arise in the process of business re-engineering and CEM application can only be solved at times through personal intervention by top management. The META Group Report (1998) concluded that investing in CEM/CRM technology without a business customer focus on a CX cultural mind-set is likely to fail. Dickie (1999) also warns against starting a CEM project if senior management does not primarily believe in re-engineering to a customer-centric business model. Customer Experience (phenomenon) The rise of e-commerce has had a substantial effect on physical stores and has also changed customer needs and behaviours, with customers demanding both online and offline support in the shopping situation. Offline-online channel integration, where online features are applied in the physical store, has been initiated as a resource for physical stores to respond to the rise of e-commerce as it addresses the changes customer needs and buying behaviour. A developing body of literature has conferred the importance of the role of emotions in buying behaviour, as well as the customers’ longing for enjoyment and fun (Allen, Machleit & Kleine, 1992; Arnould & Thompson, 2005; Oliver, 1993; Palmer, 2010; Richins, 1997). Many researchers highlight the importance of emotions when it comes to customer experience (Shaw, 2007; Shaw, Dibeehi & Walden, 2010), accordingly following a behavioural science method to the explanation of customer experience. For the course of this book and section, it is important to recognise that emotions perform a vigorous role in the creation of customer experience. Shaw (2007, p.10) argues that “emotions drive our daily lives... [and] are at the core of our being”. The vital role of emotions becomes apparent when examining a consumption process. 38
A good example is the purchase of a car. While the car is bought to transport the owner from A to B, this is not the chief purchase reason for the exact model. More precisely, traits such as the enjoyment of the ride, or the social status characterised with owning such a model impacts the buying process. Similarly, customers do not buy clothes to keep them covered; the brand will reflect on emotional factors such as ‘what the clothes say about the person and group belonging. In these two examples, emotions are primarily the reason for the buying actions customers take. Shaw, Dibeehi and Walden (2010), have compiled a list of reasons why the experience of emotions play a more critical role in the buying process than rational aspects: 1) Customers make decisions based on their preconceived expectations of what an experience will be, not on what it is at the moment. This expectation is formed based on the customer's “value proposition and feedback from other customers” (Zafar, 2015, p. 75). 2) Customers do not consider all elements of an experience, only those most noticeable. 3) Customers identify a moral code in what companies do, even if it is not directly relevant to the purchase in question (e.g. ethical concerns about the company). 4) Sometimes customers do not know about the aspects that influence them; they just subconsciously perceive them. 5) Emotional twinges affect they're ‘in the moment’ decision making and their behaviour. 6) Customers are prone to be wary of anything that threatens their well being. 7) What customers say they want is often not what they want. 8) The customer’s memory of an event is not perfect but subject to manipulation. 9) People like to follow the herd and to be seen as part of the group. 10) Customers get bored with what they already know. Therefore innovations for the sake of change can be significant. O’Shaughnessy and O’Shaughnessy (2003) record that “what people get emotional about can be seen as an indicator of what is of particular importance to them.” Even so, it is important to highlight that customer experience can be both emotional as well as cognitive. Subsequently, when comparing customer experience with other brand and consumption theories, a substantial difference has to be made. Invariance to, concepts such as brand attachment and brand involvement which exclusively focus on the emotional bond with business, customer experience incorporates both the emotional and cognitive experience with a company. Accordingly, customer experience considers both ‘feelings and emotions’, as well as relations with a business (Brakus, Schmitt & Zarantonello, 2009; Skard, Herbjørn & Pedersen, 2011). Customer experience is understood as a prior concept regarding customer loyalty, brand trust, brand personality and brand equity (Bruhn & Hadwich, 2012). As defined above, emotions play a necessary role in the formation of customer experience. Even so, it is significant to highlight that customer experience is also concerned with further mental modes, such as cognition. 39
Different Understandings of the Term Experience For a more considerate understanding of customer experience, the following will elucidate the knowledge of the term experience. This is essential as there is an ambiguity regarding the term. In relevant literature, the term experience is understood in different ways. Bruhn and Hadwich (2012) distinguish between two different interpretations of experience, with one view concentrating on experience in the purpose of ‘knowledge or enlightenment’ and the second on experience in the appreciation of ‘an incident.’ A customer’s experience in the ‘appreciation of knowledge’ is based on separate encounters with a business. This signifies that separate encounters will create the complete customer experience. The customer experience in the sense of knowledge is then also influenced by the acquisition of knowledge, skills and capabilities about a product over a period by the customer. This opinion is mainly used when product-experience is researched as customers establish know-how and skills concerning a product in the process of consuming it. The customer thereby becomes an ‘experienced customer.’ The view of customer experience for ‘an incident’ is mainly used in research regarding customer experience in general but then again also precisely for consumption-/ shopping-experience research. This explanation is not concerned with knowledge regarding a product or service use, but rather a personal and subjective experience of the consumption. Customer experience in this interpretation, therefore, focuses on a more short-term, emotional experience that the provider offers the customer. Thus the consumption coincidence is the ‘centre of attention.’ This view can be related to the field of research called ‘experience marketing’ (Bruhn & Hadwich, 2012). In most cases, the ‘incident’ view on customer experience is taken, especially as this view places emotions at the centre of its theory (Bruhn & Hadwich, 2012). Accordingly, this book understands experience in the sense of ‘an incident.’ This approach is an essential aspect of the book as research focuses on the customers’ perception of the physical shopping environment and converges on the shopping encounter with the provider either on or offline. Dimensions of Customer Experience This section aims to present the aspects of customer experience. These dimensions explain the customers’ response to their experience. The dimensions accordingly show what feature of the customer's perception is attempted through the customer experience, describing the result the customer experience has on the customer. Classifying the dimensions is highly appropriate as a behavioural science method to the description of customer experience. Additionally, the dimensions support the empirical research examining the formation of customer experience in channel integrated stores. Little research looks at the conceptualisation and the dimensions of customer experience. Analysis often refers to the situational and multidimensional theory of customer experience which is influenced by the interaction of a customer and a business and consists of various experience dimensions (Bruhn & Hadwich, 2012). One can suppose that ‘an experience’ influences customers at different levels, as described by a leading definition of customer experience by Gentil, Spiller and Noci (2007). Several research studies have categorised the influence of the psychological concept of cognition and its influence on customer experience and on customer behaviour (Frow & Payne 2007; Puccinelli, Goodstein, Grewal, Price, Raghubir & Stewart, 2009; Tynan & McKechnie 2009, Verhoef et al., 2009). 40
Supplementary, some researchers believe that the ‘experience affect’ may have an influence on customers’ attitudes and evaluations regarding a product or service (Cohen, Pham & Andrade, 2008). A significant influence towards identifying the dimensions of customer experience is made by Schmitt (1999). The author uses understandings from the field of cognitive science and considers the psychological concept of ‘modularity of mind’ to identify five experience dimensions. Schmitt (1999) calls these five dimensions ‘Strategic Experiential Modules’ which include sensory experiences (sense), affective experiences (feel), creative cognitive experiences (think), physical experiences including behaviours and lifestyle (act) and social experiences (relate). These aspects were further expanded by Gentil, Spiller and Noci (2007) who view customer experience as a holistic phenomenon and distinguish between six experience dimensions, these dimensions are: 1) Sensory aspect relates to the absorption of stimuli through the sense organs. This dimension is suitable for deploying well-being, excitement and satisfaction in the customer by stimulating the customer's senses such as hearing, touching, seeing, smelling and tasting. 2) Emotional dimension also called affective dimension, triggers reactions such as emotions and moods in the customer. A relationship with an offer, a company or a brand can lead to positive feelings. This dimension targets the sentimental and emotional level. 3) Cognitive dimension focuses the intellect of customers and addresses their faculty of thought. Aspects stimulated by this dimension include the customers’ problem-solving behaviour and creativity. 4) Pragmatic dimension targets the rational behaviour of customers over the complete span of usage. This includes the user-friendliness of experience artefacts. 5) Lifestyle dimension offers arguments for the affirmation of the values and opinions of a customer. 6) Relational dimension, also referred to as the social dimension, focuses on the relevant social context of an experience. It thereby considers a person’s relationship with other social actors as well as the person’s ideal self.
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Model 6
CX focused businesses use these dimensions by the characteristics of their products or services to establish unique customer experiences (Embert, 2015). Companies such as Starbucks and Swarovski mainly target the sensory and lifestyle dimensions, while Disney, for example, focuses mostly the emotional aspect. To produce a holistic customer experience, businesses should inspire as many of the six sizes as possible through the different touch-points with the customers based on work by (MayerVorfelder 2012). By Prahalad & Ramaswamy (2004), Reckenfelderbäumer and Arnold (2012) the author's reason that businesses cannot create experiences without the co-creation with customers. They can merely offer substances in the situational pertinent in the context of consumption, which will be changed into ‘experiences by the customer.’ This is supported by Carù and Cova (2007), who contend that rather than selling experiences, businesses provide ideas that ‘guide customers’ in the co-creation of experiences. These experiences are then exclusive to the customer, the customer as a motivation which targets one or more of the six dimensions observes the objects. As described in the definition of Gentil, Spiller and Noci (2007), customers evaluate their experience with a business when existing anticipation is met by a stimulus through the interaction with a company. Various experiences that a customer has consumed can influence and thereby change their expectations (Verhoef et al., 2009). There are ample factors that influence customer experience, and many of the elements identified by past researchers show high heterogeneity, and explicit categorisation of these determinants is problematic (Bruhn & Hadwich, 2012). These key factors can best be assigned to the category of business-related contributing elements as follows. ● Accessibility: The degree of convenience of the staff and the company's digital and analogue facilities are of great importance. Companies that are not, or only poorly, accessible via confident communication or distribution channels, risk losing new as well as existing customers.
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● Competence: The staff’s level of knowledge and expertise regarding their job as perceived by the customer. The attitude of employees can be a valuable signal for service quality (Baker, Parasuraman, Grewal & Voss, 2002). Additionally, a customer’s perception of an employee’s behaviour can alter his or her expectations (Cowley 2005). ● Customer Recognition: The feeling of being recognised and acknowledged is essential to customers when initiating contact with a company. ● Helpfulness: The degree to which customers see staff as helpful. A customer that feels like an employee is listening to them will be more likely to develop trust (Stock & Hover, 2005). ● Personalisation: A personalised and individual customer approach by the staff or the possibility of customisation of a product or service are essential, especially as customers increasingly have the opportunity to choose from a vast range of products in saturated markets. ● Problem Solving: The degree to which customers feel that the staff is willing to solve their problem. ● Value for Time: Just sticking to a critical factor does not precedent to positive customer experience and the significance of the different determinants needs to be evaluated based on the specific industry and target group in question (Lemke, Wilson and Clark, 2011). An example of this is that high knowledge of staff is required when procuring technically sophisticated products. However, it is not needed when purchasing simple products. Likewise, the elements can be seen as ‘moderating factors’ of customer experience. These features moderate the relationship between customer experience and the effect the perceived experience has on the customer. Foscht and Schloffer (2012) identify three types of moderators: situational moderators, social moderators and customer-related moderators. The situational moderators include economic states, competition, the season and type of sales’ channel used. Customers, for example, might have a different attitude towards a product in times of economic growth than in times of recession. Social moderators include the effect of sales staff and the referencing group as well as the stimulus of family and friends. The majority of literature focuses on the interaction of the sales personnel with the customer (Tsiros & Parasuraman 2006), but it is essential to also consider the stimulus of ‘interaction among customers’ (Verhoef et al., 2009).
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Financial value (outcome) Both basic neoclassical economics and marketing theory produce a general case for a positive association. Correspondingly, several market factors may contribute to a negative relationship. In addition to market factors, there are other conditions in which the association could be detrimental. Considering both categories and empirically analysing the stock market response to quarterly news releases from the American Customer Satisfaction Index (ACSI) (Fornell et al. 1996) provide some insight in this area. Real economic growth, rests on the productivity of financial resources and the quality of the output (as experienced by the user) that those assets generate. In the final analysis, increasing economic activity is not what is vital. Both marketing and neoclassical economics view ‘consumer value, or satisfaction,’ as the real standard for economic growth. The degree to which buyers financially reward sellers that satisfy them or, punish those that do not and the rating to which investment capital reinforces the power of the consumer are essential to how markets work. A well-functioning market allocates resources, including money, to establish the highest possible consumer satisfaction as competently as achievable. A dissatisfied purchaser will not remain a customer except if there is no choice or it is too expensive to move. Limits on consumer choice may be useful for the monopolist, however, are considered damaging to the economy. In a competitive markets that offers meaningful consumer choice options, businesses do well as they are rewarded by repeat business, lower price elasticity, higher reservation prices, more cross-selling opportunities, greater marketing efficiency, and a congregation of other things that usually lead to higher earnings growth (Fornell et al. 1996). To what amount do markets reflect the normative values of market theory? Under what conditions would information about increased customer satisfaction be a critical factor in higher stock prices? Under what circumstances would it have the opposite effect? From a view of the literature, it is appealing to assume that information about rising customer satisfaction would have an instant and positive influence on stock prices. Beginning with the early contributions of Bursk (1966) and Jackson (1985), there is a considerable theoretical reason and empirical evidence to propose that the health of a business's customer relationships is a relevant indicator of company performance. (Ambler et al. 2002; Bell et al. 2002; Berger et al. 2002; Blattberg and Deighton 1996; Srivastava, Shervani, and Fahey (1998) provide the theoretical reason for drawing the connection from the observed findings on customer satisfaction to stock returns and shareholder value. The researchers identified four significant determinants of a business's market value: (1) acceleration of cash flows, (2) increase in cash flows, (3) reduction of risk associated with cash flows, and (4) increase in the residual value of the business. "Not only is the customer an asset, (as defined by the expected future discounted net cash flow from current and future customers), customers influence all four outcomes, therefore it can also be expressed as the sum of all other economic assets of the company" (Wayland and Cole 1997); Gupta, Lehmann, and Stuart (2004) also validate this thinking. The acceleration of cash flows is influenced by the pace of buyer response to marketing efforts. It takes less energy to encourage a satisfied customer (Keller 1993), and it is more likely that receivables income is better for businesses with happy customers, and the speed of cash flow is influenced. Second, there is also a connexion between customer satisfaction and intensities of net cash flows. 44
Marginal costs of sales and marketing are lower, as are the requirements for working capital and fixed investments (Srivastava, Shervani, and Fahey 1998). Also, revenue growth and profit benefit from more repeat business. Gruca and Rego (2005) provide empirical evidence for this and display that increases in customer satisfaction lead to significant cash flow growth. One point in customer satisfaction survey (measured by ACSI on a 0–100 scale) was linked with a 7% increase in cash flow. Third, Gruca and Rego (2005) also found that the risk associated with ‘future cash flows’ is reduced for businesses with high customer satisfaction. If the unevenness in cash flows is reduced, the cost of capital goes down as well, thus producing yet another basis for stock price growth. Finally, the residual value of the business is a function of the size, loyalty, and quality of the customer base, all of which are apparently related to the satisfaction of this customer base according to research by (Srivastava, Shervani, and Fahey 1998). Customer satisfaction and repeat purchase can be influenced by excellent customer experience, as the experience is enjoyed and remembered, which in turn supports customer choice when a new need or want arises. Good CX activity that drives increased sales, drives increased margin, which encourages increased cash into the business, which then allows a reduction in the working capital (cash/ loans) in the company. Thus, the financial impact of good CX is realised. Let us consider at an example of how CX drives business profits. A woman buys her favourite perfume each month for say $80.00, and the business makes a net profit $40.00 per item sold, over a year the company generates $960 in revenues and $480 in net profit from this one customer. Over five years if the customer stays loyal and retains the same buying pattern the one customer will generate $4,800 in revenues and $2,400 in net profit. In an online feedback questionnaire, the woman exposes that she likes buying her perfume from this business because the buying experience is fast, efficient and reliable with a 24-hour turnaround from order to delivery. She trusts the provider.
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Customer equity Brand equity based on research by Farquhar’s (1989) is described as “the value endowed by the brand to the product.” Most researchers have since then delivered similar definitions (Aaker, 1991; Keller, 1993; Yoo and Donthu, 2001; Lassar et al., 1995; Washburn and Plank, 2002, Rajh et al. 2003; Myers, 2003). Lassar et al. (1995) recap five essential considerations of brand equity: 1. Refers to consumer perceptions, rather than objective indicators 2. Is a global impression of the value associated with a brand 3. Originates from the brand name, and not only physical attributes 4. Is a measure, which must be compared to relevant competitors 5. Influences the commercial brand equity positively. When it comes to the assets of brand equity, different dimensions appear in different research. Aaker (1991, 1996) and Keller (1993) are the most frequently referred in this research area. Aaker (1991, 1996) separates the brand equity in many dimensions: loyalty, awareness, perceived quality, associations and other values. Model 7
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Keller (1993) examines brand equity (brand knowledge) regarding awareness and image. Both authors highlight the same features. Both Keller and Aaker underline the importance of brand awareness and view this dimension as a prerequisite to healthy brands. The quality trait is also present in both frameworks, with the modification that Aaker reflects on it more openly, while Keller considers the perceived quality to be a component of the brand image, formulated on a more theoretical level through the terms ‘attributes and benefits.’ Features related to image or relations are also apparent in both frameworks, with the variance that Keller’s (1993, p. 3) definition is suggestively broader, as it includes all “perceptions about a brand as reflected by the brand associations held in consumer memory”. The one key feature separating the two structures is the view of brand loyalty. While Aaker considers the commitment to be a feature of brand equity, Keller views it as a result of strong brand values and brand assets. Judging the empirical research from the last decade, Aaker’s view on brand equity has come to control the theoretical analysis, conceivably because the structure is more realistic and useful, and more efficiently operative and effortlessly measured. Observed research by Yoo and Donthu (2001), Pappu et al. (2005), Washburn and Plank(2002) and Atilgan et al. (2005) all deviate from Aaker’s (1991, 1996) structure, where the researchers maintain brand equity is determined by ‘perceived quality, associations, loyalty and awareness.’ CX supports brand equity as it helps build positive brand image dimensions in the mind of the customer as well as promoting the brand in a consistent way across all channels. Awareness Brand awareness is disclosed as the consumer’s capacity to identify the brand under different circumstances (Keller, 1993) and is considered to be of “particular importance in low involvement product categories” (Keller, 1993; Ritson, 2003). When it relates to high involvement products or top cost items, like cars or other durable goods, it is credible that those consumers spend more time and effort on the decision evolution and get familiar with brands (Ritson, 2003). Silayoi and Speece (2004) argue that two trends are directing in opposite directions, are apparent: on the one hand modern consumers are claimed to search for diverse ways to save time and shorten purchase decisions (see also Hausman, 2000), but on the other hand, some consumers seems to put more and more effort into their purchase decision. Searching for information on products and services before purchase has become the standard supported in recent decades by the growth and access to the Internet and mobile devices. Awareness and experience knowledge is part of the equity process due to its ability to inform, debate before purchase. Perceived quality Brand equity implies that the brand not only should be well- known and respected, however also known for something that is considered ‘valuable’ to the consumer. A foremost aspect of the stated brand equity framework is the quality dimension (Aaker, 1996; Lassar et al., 1995), but none of these include the most essential quality attributes identified in recent quality research, for example smell taste, nutrition and packaging (see Ophuis and Van Trijp, 1995; Brunso et al., 2002; Grunert et al., 2004; Acebro ́n and Dopico, 2000; Verdu ́ Jover et al., 2004; Sanzo et al., 2003; Richardson et al., 1994). Nor have particular brand associations relevant to food, cosmetics such as health, origin, animal friendliness (Acebro ́n and Dopico, 2000; Grunert et al., 1996; Shepherd et al., 2005; Torjusen et al., 2001) been merged in theory quality. A difference between “objective physical’ quality and ‘perceived’ quality needs to be established. 47
High objective quality is, of course, worth having, though it does not automatically produce brand equity. As with customer-based brand equity, and indifference to objective quality, the perceived quality is a ‘subjective notion’ that occurs in consumers’ minds based on their knowledge. Perceived quality can be claimed to capture an ‘attitude’ towards the brand, and differs from real quality by having a higher rating of the construct (Aaker, 1996; Keller, 1993; Zeithaml, 1988). Moreover, the perceived quality is thought to be the consumer's judgement of the brand’s “overall excellence or superiority” (Zeithaml, 1988), and a primary dimension of brand equity (for example Aaker, 1996; Keller, 1993). A majority of the research focusing on perceived product quality seems to diverge from the work of Olson and Jacoby (1972), for example, and Zeithaml (1988). The dominant line of reasoning, which Zeithaml (1988) visualises in a conceptual framework, is that product quality is multidimensional, i.e. it incorporates some dimensions or characteristics. Since consumers cannot make complete and correct opinions of the condition (for example judge the truthful ingredient quality of a food product), they in its place use quality attributes that ‘they associate with quality’ (Olson and Jacoby, 1972, Zeithaml, 1988, Ophuis and Van Trijp, 1995; Dick et al., 1996; Richardson et al., 1994; Acebro ́n and Dopico, 2000). Perceived quality is, therefore ‘shaped’ as the consumer first evaluates specific product attributes, and then accumulates these to a wider judgement of the overall quality (Olson and Jacoby, 1972). It is therefore important to understand which the relevant quality attributes are about brand equity and price premium setting. Quality inexperience can manifest in many ways, for example, the quality of theme park experience, the quality experience in the taste of bread, the quality of service experience, the quality of support during the experience journey. The value to the consumer is the ‘collective experience’ ‘ we had fun, the bread was amazing, the salesperson was so kind, they answered all my questions promptly.’ Brand associations Both Aaker (1991) and Keller (1993) define brand associations as the “information in the consumer’s mind linked to the brand.” Although there is no doubt that brand associations per se are significant when understanding brand equity, it is not well defined which of the pertinent ‘associations’ are primary in experience. Aaker (1996) proposes that measures of the brand association dimension can be organised around three different perceptions of the brand; 1. the brand as a product (value), 2. person (brand personality) and 3. organisation (organisational associations). Corporate associations take the organisation owner of the brand into consideration and can be connected to ‘trust’, which both Lassar et al. (1995) and Martin and Brown (1990) have found to be essential aspects of brand equity, and corporate social responsibility (see for example Maignan and Ferell (2003). Another element of associations is uniqueness, a belief highlighted by both Aaker (1991, 1996) and Keller (1993). Alteration or originality is defined as “to what degree consumers feel that the brand differs from competing brands” (Netemeyer et al., 2004, p. 211). Hence, the experience of and with the brand in the customer mind is improved when the brand experience drives value, personality, and business commitment, a seen and judged by the consumer. If you take a brand such as Coca-Cola the brand association is the experiences of great taste, fun and good times either real or imagined. 48
Loyalty Brand loyalty has played a fundamental part both in brand literature and customer loyalty literature (Jacoby and Chestnut, 1978). Aaker (1991, p. 39) defines loyalty as “the attachment that a customer has to a brand”, and considers it to be a primary dimension of the brand's equity. Indifference, Keller (1993) views loyalty “as a consequence of brand equity,” i.e. when favourable attitudes based on experiences results in a repeated purchase. Customer loyalty, therefore, offers several business benefits: it establishes entry barriers for competing brands; it becomes possible to charge higher prices; it provides the business with time to respond on competitor inventions; and also can function as a cushion in times of intense price competition (Aaker, 1996). There are two schools of thought when it comes to defining and measuring brand loyalty: ‘behavioural’ and ‘attitudinal’ loyalty. Keller (1998) comments that the behavioural school controlled initial empirical research, where primary measures of re-purchases often were functioned. However, the movement from purchase loyalty to a more holistic conceptualisation emerged later in literature. It is extensively understood that loyalty is, in fact, a multi-dimensional construct, which is better understood when adding an attitudinal dimension (Baldinger and Rubinson, 1996; Oliver, 1999; Bandyopadhyay and Martell, 2007). Why are consumer loyal is contingent very much on the experience they ‘feel’ and have with a product or service. An experience which is greater than perceived at the beginning, makes the consumer gain the “wow’ factor. Great experiences build mindsets of loyalty: that was great we must go back, we must buy more of that bread and so on. Conversely, a bad experience can end years of loyalty in minutes. The issue here is people recall and spread their bad experiences more than good ones: the lousy flight experience, the rude salesperson, the product that did not work. The price premium is thought to be the most useful measure of substantial brand equity (Aaker, 1996; Sethuraman, 2000; Blackston, 1995), with the incentive that each dimension of brand equity should have an ‘influence perception’ on the price consumers are willing to pay for the brand. An aspect that has no impact on the price premium is thus lacked significance as a positive indicator of brand equity. Other measures are also evident in the literature (see de Chernatony and McDonald, 2003, Agarwal and Rao 1996). Current brand equity dimensions (for example loyalty), or specific measures (overall brand equity, purchase intention, satisfaction) have been employed. Another approach is to measure the brand equity by summarising the strength in each dimension to an average brand equity measure. Yoo and Donthu (2001) have developed a global standard, which according to their studies capture brand equity.
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Model 8
The “overall brand equity” model has been utilised by Atilgan et al. (2005) and Johan Anselmsson, Ulf Johansson and Niklas Persson Washburn and Plank (2002). Na et al., (1999) argues and uses satisfaction as a measure of brand equity. Table 1
Quantitative methods to the distribution of marketing resources has recently attracted augmented research interest, both in the marketing (e.g., Lilien and Rangaswamy 2003, Gupta et al. 2004, Rust et al. 2004, Rust and Verhoef 2005, Tirenni 2005) as well as in the data mining and statistics researchers (e.g., Gelbrich and Nakhaeizadeh 2000, Drew et al. 2001, Pednault et al. 2002, Rosset et al. 2003, Tirenni et al. 2005). 50
There is shared agreement that marketing ventures should be evaluated by measuring their influence on ‘customer lifetime value’ (Rust et al. 2000, Blattberg et al. 2001, Jain and Singh 2002), i.e., the long-term value created by a relationship with a customer. Customer lifetime value (CLV) is defined as “the sum of the discounted cash flows that a customer generates during their relationship with the company” (Berger and Nasr 1998). CLV is very dependant on customer valuing the experiences they have had with a business in the past, which they hope will continue. The word lifetime has a real meaning when it is thought in an experiential context; we stay loyal for a period (lifetime) when as consumers the experiences are positive and one sees value in the relationship. If one focuses on the analysis of CLV, dynamic programming and (MDP) techniques for CLV intensification are in evidence in the literature (the concept of MDP itself and its application in marketing originated from the catalogue industry in the 1950s, Howard 2002). Several approaches to CLV valuation using dynamic programming methods can be found in the marketing science literature (Bitran and Mondschein 1996, Gönül and Shi 1998, Pfeifer and Carraway 2000, Pednault et al. 2002, Ching et al. 2004). However, most of these methods present several realistic restrictions that are typically very important in marketing practice. These limitations are mainly related to the following issues: • Estimation of robust MDPs when modelling the customer relationship, and the effects of marketing actions over variable time distances. With the exclusion of Simester et al. (2006), most of the models found in the literature suppose some ad hoc state depiction, without providing any theoretical or practical justification for the choice of state definition. I n most of these models, the definition of states is based on some variations of (RFM) Recency, Frequency and Monetary segmentation. Whereas RFM segmentation is very popular in marketing practice (Kotler 2000), there is still little theoretical stimulus to justify its use for state definitions when modelling long-term customer dynamics with MDPs. • Scalability. Marketing practice typically requires the analysis of large volumes of customer transactions, which are followed over time and stored in some data warehouse. Even if a sample data set is used to estimate a model of customer behaviour, the sample size can still be large enough that common parametric approaches (e.g., Bitran and Mondschein 1996, Gönül and Shi 1998) are no longer computationally possible. • Addressing the value-risk trade-off. Current literature does not tackle the value-risk trade-off when delineating an optimal portfolio of customers to be targeted according to some marketing policy. Customary approaches exploit the expected customer value but do not consider the risk, or uncertainty, caused by the stochastic character of customer behaviour as well as the projected limits of the model. In summary, the (CELM) Customer Equity and Lifetime Management theory provides a framework that addresses such practical requirements and in which both the customer lifetime value and the risk are attuned. Lifetime value is optimised by finding the best marketing policy, resulting from a robust MDP analysis. The risk-adjusted marketing budget allocation is attained using financial engineering methods for portfolio diversification.
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Model 9
Brand equity dimensions Quality denotes that products from the brand should not only be reliable and meet consumers’ prospects but also be typically be of higher quality than other products and brands for example: . Taste of the products . Based on good ingredients . Functions and performs as expected . The texture of the products . Packaging is attractive and functional . Product colour . Durability in comparison to other products . Odour/smell. • Awareness: consumers’ awareness and recognition of the brand and its products, in the commercially relevant situation: . The first-mentioned brand in a category . Consumers know what brand, logotype and name looks like . Consumers identify the brand among competing brands on the shelf . Consumers know what the brand persona stands for. • Loyalty: consumers’ views and behaviour, as well as their desire to speak positively about the brand in front of friend and relatives: 52
. The extent or frequency to which the customer has bought the brand . Consumers encourage friends and relatives to try the product . Consumers’ first choice in the sector. • Associations: memories and information which come to the consumer's mind, when visualising or thinking about the brand: . Origin regarding continent, country or region . Health regarding nutrition, low sugar and fat, functional food, athletic . Organisational associations, innovative, successful . Environmental and animal friendliness . Social image; how other might perceived the buyer/user of the user. • Uniqueness: to what extent the brand and its products are different from competitors in the mind of the customer: . The brand or its products have one or several unique features (not necessarily relevant) •
The brand has unique features and benefits
Brand equity dimensions are established through effective communication and consistent product and service dimensions supported by sound customer experience management practice. Good experiences drive retention over the lifetime of the customer which could be once, a week, years. The longer the customer experiences positive feelings about a product or services, the more the equity increases. The economic upsides are real for example; a person buys a magazine for $ 4.00, the net margin is $2.00 per copy. If a person buys ten copies, the net margin increases to $20.00, if over time the person acquires 100 copies that person generates $200.00. If we lose the customer at 50 copies, our net margin reduces by $100.00. The equity in the magazine is seen as, great articles, excellent pictures, up to date, quality production, and lifestyle. The experience was, ease of access, expectation, association with a well-known title, reading it, enjoyment, relaxation, keeping up to date, leaving it on the coffee table for friends and family to see.
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Models of CEM (commercial) Strategy for customer experience management is missing for many organisations, according to numerous research studies, and lack of policy is a quoted widely by customer experience (CX) experts as a critical obstruction to attaining business results. As organisations are bespoke, the CEM solution is usually tailored to the organisation and customer needs and wants. Hence, many models exist, below are eight examples:
Models 1-8 in the public domain Model 1
Source: Clearactioncx.com (2018) This model illustrates the coordinated efforts required in customer experience optimisation strategy, Clearactioncx.com (2018). • Aim: the growth of profit and revenue [Loyalty (i.e. the share of the budget, recommendations) x Retention (i.e. relationship duration)] • Value
C5: CX Strategy, Customer-Centred, Customer Voice, Customer Intelligence, and Customer
o Command Module: Customer Voice o Propellant: Customer Intelligence (VoC and ops and market data) + Customer Lifetime Value (CLV) 54
o Parachute (for safe landings): Customer-Centricity (i.e. customer well-being at the centre of everyone’s decisions & actions) o
I2 Engine: CX Improvement + CX Innovation (i.e. acting on intelligence & CLV)
o Turbines: VoC Action Plans, Touch-points, Journey Maps, User Experience, Co-Innovation, Complaint Resolution, Service Excellence, Customer Care (i.e. conscience & outreach for customers’ well-being) o
B2 Thrust: Branding + Internal Branding (i.e. making + keeping promises)
o Lift: [ Internal Customer Satisfaction + Employee Engagement ] x [ Experiential Marketing, References, Community, Advocacy (i.e. word-of-mouth), CRM ] Model 2
Source: Forrester.com (2018)
Not every business needs an exceptional customer experience. Depending on your strategy, fundamental CX might be suitable. But then again even attainment of good CX is difficult these days. Eighty-four per cent of brands in Forrester’s Customer Experience Index (CX IndexTM), US Consumers Q3 2017, got “OK” scores or more reduced from customers, which is a particular notice that their present approach to CXM needs effort. Forrester’s CXM maturity framework, which was first published in 2011, defines the CX practices that every business needs to understand. There are seven steps in the maturity model each level builds upon the strategic value of each step until a lifetime customer position is attained, a point of utmost loyalty and ROI. If your business examines customers, teaches frontline staff, or makes trade-offs about what characteristics to put on a website, you are doing basic CXM. But to succeed at a scale, you cannot follow CX practices in an incompetent or unreliable method. 55
Instead, they must be distinct, deeply entrenched in organisational behaviours. Otherwise, there is no way that internal people can work jointly to reliably deliver the experiences that are associated with scores of products and services across lots of networks. Model 3
Source; Gartner.com (2018) Customer experience management is a subject that requires an on-going business focus. Application leaders should use the Gartner CX management maturity model to evaluate their organisation's CX management maturity, and then use that baseline to plan future improvements. This step process allows the organisation to maximise CEM delivery through detailed analysis and correction.
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Model 4
Source: Stratmetrixs.com (2018)
In the Stratmetrixs (2018) model there are ten elements that provide a CEM framework, each piece builds a compound. The objectives of the Customer Experience Maturity Model (CEMM) is to: • Categorise and define the organisation’s value-delivery ability to enable benchmarking against customers’ experience-requirements •
Create a clear, tactical and practical plan-of-action.
• Provide insight and recommendations that are simple to explain and conceptualise to gain peer buy-in. The StratMetrix Customer Experience Maturity Model (CEMM) can be used to: • Direct customer process improvement initiatives – The CEMM is designed to guide improvement and change programmes – its most basic benefit and everyday use. Improvement programmes should only be commissioned with a clear understanding of the organisation’s existing strengths and weaknesses, both of which the maturity model helps to clarify. • Benchmark – An accurate evaluation using CEMM creates rigorous benchmarking results and measures. Results help management define the maturity of the organisation’s business processes relative to customer expectations. 57
• Define future goals and next steps – Determine the future business capabilities that drive precise value at each point of maturity and help the organisation to reach their strategic goals.
Model 5
Source: cmswire.com (2018) The world of marketing and CEM has transformed. But what is especially interesting is the new CX-oriented goals such as increased advocacy, broader organisational alignment around the customer and full lifecycle journey mapping. At times, disagreements with more common objectives such as buy-cycle emphasis, brand awareness and reach appear. The two items do have to disagree, but many organisations have experienced friction between those pursuing the new goals and the old regime. The cmwire.com model suggested focuses on four areas: 1. Creating a customer experience framework 2. Defining goals that drive positive CX outcomes 3. Finding and normalising the CX data 4. Turning the data-driven CX insights into action
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Here is a way to look at CEM within a business: Table 2
Who This is about comprehending and getting close to customers. Delineating customer personas is the vital first step. Make these personas noticeable in the workplace, regularly validate them and avoid fundamental mistakes. Personas encapsulate the needs, the motivations and the goals for your most important clients. They are not created, they are based on real data and authentic research. When Journey maps emphasise the fundamental interactions that your customers have with your brand or business throughout their entire lifecycle. And just like personas, they are designed by reflecting on your customers’ needs, goals and outlooks. One must remember that clients do not view a brand/ business in silos‚ so your journey maps must portray the unified brand experience, just as customers will want it. In persona-driven customer journey mapping, there are typical mapping drawbacks, including starting the map too late in your scheme, plans created by silo-based teams, the ranking of the visual experience over outcomes and not least good old fashioned hurrying through the job and making mistakes. 59
What The what of the CX improvement project is the accounts, services and experiences. This is what happens when customers interrelate with your physical and digital touch points. How How is where you data mine the particulars of systems, processes and customer data?
Figure 4
Journey maps can be simple or complex based on the size and complexity of the business as well as channels and touch points. To make customer experience workplace your self in the ‘mind of the customer’ from the point of knowing the need and want exist, right through to post-purchase. Businesses can ease the experience for the customer in many ways, take a supermarket an experience that includes, good access, parking, trollies, full isles, good range of goods, fast checkout, help with packing, assistance to the car (Brick and Mortar); ease of use website, delivery slots, full range (Electronic). Making the experience journey accessible and more enjoyable resounds with customers and makes them loyal. 60
Model 11
Source: Krivich (2011) This model begins with understanding your customer in far more detail than you have ever done probably before. It is at this point that you need a formal Voice of the Customer (VoC) program. Model 12
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This model requires that the business is in continuous contact; monitoring your customers all along the touch-points, consumption and purchase process to alert the company to items done well and those still need improvement. Use the experience analysis to recognise critical internal methods, procedures, products and training to meet the customer's experience potentials. As the business improves, one will realise higher quality, efficiency and accuracy. This leads characteristically to lower operating costs, more margin, and higher levels of satisfaction. One retains customers and prevent defection to other providers.
Model 13
Source: Frost and Sullivan (2018)
Strategic Imperative Empowering superior customer experience requires effort. Businesses need to understand their position in customer experience journey process and whether or not they are adequately geared up with obligatory internal CX capabilities. They often believe that Voice of Customer analysis solely can answer all their customer problems. However, these examinations are limited to only highlighting an external view on what went wrong, and most miss the mark to uncover the foundation causes. While obtaining an external end customer perspective on one's services, products, or delivered experience this is just one feature, drilling down further and confronting the critical internal causes obstructing the right experience delivery is another vital aspect that businesses need to focus on continuously in good CX practice. 62
Top five causes of poor CEM delivery: 1.
Silos and fragmented functions and touch points
2.
Irrelevant and fragmented and customer service systems
3.
Underdeveloped people and process capabilities
4.
Misunderstood concept of customer experience
5.
Misunderstood customer expectations and preferences
Any or all of the above can be the cause for customer and operation problems, and an assessment of internal customer experience capabilities can help businesses find out which of these obstructions hinder CEM delivery and how can they improve. Model 14
Source: insightcx.com (2018) The brand promises, the experience delivers! In a hyper-competitive field, planning and reliably delivering distinctive, memorable & compelling Customer Experiences are the right competitive advantages that differentiate successful organisations. All segments of the model may be implemented as an overall strategy or just individual constituents on their own. Interestingly, this model considers that customer experience is not a constant, it moves over time due to changes internally and externally to the environments. 63
Marketing teams must change and update CX delivery to ensure the CX is still relevant to the customer and channel partners. Model 15
Source: adapted from Verhoef et al. (2009) In the model above the CEM creation model plans experience creation as a framework for CEM strategies. It inspects the various elements that influence and incorporate the customer experience; for example, social environment is defined as the orientation groups, customers' use as individuals and communication. The CEM creation model reveals the service interface; that is, the processes needed in the actual CEM practice. It also outlines, in a retail situation, the physical environment and how this environment can augment the customer experience, it also reviews price in a valued activity v a discount activity, presents the need to understand various touch points of the organisation. And poses the brand as an ‘element’ and classifies how all of these elements ‘create the service experience.’ The model considers two variables—situation arbitrators and consumer arbitrators—that comprise the cognitive result of the service experience. It is a valuable model in that it explains how customer experience may be ‘created’ and the eight elements that make up the CEM arbitrators that need to be considered by marketing teams in sound CX delivery. 64
Model 16
Source: IBM 20:20 Customer Experience Model, 2005 A model by IBM (2005) is the result of conclusions based on a research study of businesses and consumers. It was conducted in 2005 by IBM Business Consulting Services Institute of Business Value, together with Ogilvy One worldwideTM. This study was intended to comprehend how businesses manage the total customer experience. What is valuable in this model is the application of ‘value’, as it considers the value proposition, insight, recognition and predictions. The value propositions are presented to the consumer through communication (TV, radio and online), which forms a ‘value perception.’ However, the value fulfilment and the experience v. expectation may be different, from exceptional to poor (Schmitt, 2003). Value assessment are very personal, and how these constituents are used by a business is critical to customer experience achievement. This modern research demonstrates a new theoretical approach to the customer experience schema, highlighting the extended ‘value chain’ from the employee to the customer to the shareholder, and presenting both marketing and customer insights. The model appreciates the value and its expansion into CEM as a core theme where technology is the enabler. The model is technology-process fuelled and does not, however, reflect staff and the phenomena generated in the service argument. The model is highly supple and could be used by a range of businesses in a diversity of product and service situations, as the focus is on values and the technology that accepts values to be traded. 65
Model 17
Source: adapted from Price 2007 Model eleven above hypothesises that two strategies must be employed together to exploit growth from a customer base—these are the ‘two birds’. The first strategy is to decrease dissatisfaction by meeting the rudimentary hopes of customers, therefore developing followers. This will reduce the “number of detractors or negative customers who tend to leave for a competitor and berate (bad mouth) the offending organisation” (Price, 2007). Repairing the problems that cause displeasure will not in itself solve the detractor issues, though, it is contended that it can affect the doubt customers feel towards a business. Price (2007) claims “this requires another strategy altogether, which is aimed at making a company stand out above the rest.” This is the second bird in the two birds CEM theory. In literature, it is associated with the term ‘spiky experience’ (Gronroos, 2003). Establishing an experience of this kind requires a devotion to making the process unforgettable in some way. The ‘cornerstone’ for this reason is uniformity. The CEM models and related theories are based on numerous CEM activities in a wide range of industries and B2C, B2B and C2C settings and therefore are dissimilar. It is apparent that CEM has adapted to the needs and wants of the business and its customer base, therefore the wide range of qualities listed in the models. “The behavioural and financial results of service and quality are considered crucial to CEM attainment in today’s competitive business environment” (Dawkins & Reichheld, 1990). The necessary CEM supposition is there is a straight connection between quality attributes and customer behaviours, for example, repurchase intention (Anderson & Sullivan, 1990; Gronroos, 1990). If the service is performed poorly, the difference between customer perception and expectation will be adverse, or the customer will be dissatisfied and will abandon the business. 66
However, if there is a constructive experience, the customer will be satisfied and desire more, and the relationship depends on the assumption that the relationship between service qualities attributes and customer satisfaction is linear and asymmetric. Price (2007) provides further some insights into the proof that exists that CEM functions in the commercial world and how it is gauged using a three-point approach. The model is based on research completed by Price (2007) amongst commercial organisations into CEM and its impacts on revenues and profits. CEM revenues and profits Customer experience (CX) is as one now appreciates a dynamic theme, and according to a recently published study by Forrester Research, there is an essential cause for that thinking. In analysing five pairs of publicly traded companies in which one of the companies in each pair had an importantly higher score than the other according to Forrester's Customer Experience Index, Forrester found that CX front-runners showed significantly higher revenue growth between 2010 and 2015. Forrester's methodology attempted to separate revenue growth that was resulting from customer behaviour and excluded revenue from events such as M&A action and bonuses. After taking these into consideration, Forrester found that every CX front-runner it contrasted to a CX straggler outperformed. Overall, CX leaders created compound annual revenue growth rates (CAGR) of 17% over the five-year period compared to just 3% for CX stragglers. The difference between CX leaders and stragglers was most marked in the cable and retail markets, where CX leaders outperformed their straggler competitors by well over 20%. The difference was smallest in the airline industry, where CX stragglers outperformed by just 5%, however in that extremely fused market, 5% is still perhaps a meaningful change. Unfortunately for companies, even if there is a decent reason to believe that CX can undoubtedly provide an actual advantage, many do not have the abilities to exploit CX the opportunity. A study by Forbes Insights designates that just 29% of executives consider their business use of data analytics has importantly moved their capacity to deliver superior customer experience. Another 35% believe their businesses have seen changes in many parts. In the next 20 years, 42% think they will see essential shifts. That is nonetheless well under half, and resonances the findings of a study conducted by Forrester for Accenture Interactive. As summarised by eMarketer (2018), that study revealed that "less than 50% of responses said their organisations had all the necessary skills related to customer experience disciplines such as project management and data analytics." If one believes that high customer satisfaction requires spending more, you are not alone. However you may be mistaken, Mckinsey.com (2017). “Through experience with many companies, we’ve seen that there are major options to both cut costs and grow if you invest carefully in customer experience— especially in sectors like insurance, energy, telecoms and banking.” That is predominantly the case when it comes to producing a high customer journey (those series of connections a customer has with a brand to get something done). However, there is research to the contrary. Brands that can improve the customer journey and establish revenues increase as much as 10 to 15 per cent while also be lowering the ‘cost to serve’ 15 to 20 per cent. How is that contrary view possible? The realism is that there are essential inefficiencies in the typical customer journey, which often cover multiple touch points achieved by many different parts of an organisation (website, sales, call centre, etc.). A call centre may respond to a customer complaint, for example, but not categorise the underlying cause, and this means other customers will continue to complain about the same subject. 67
Or an irritated customer will have to repeat information s/he has already specified. And as customer journeys become more complicated with the proliferation of new technologies and channels, the opportunity for disorganisations increases. In many cases CX processes are duplicated, poor standardisation creates confusion and slows down the overall CX delivery process, and deep-seated habits make change difficult. Who suffers? Not just the customer; the business itself in the form of costly waste in money and human resources. Creating CX efficiencies as one now understands help deliver an excellent customer journey experience is an essential source of business growth. In industries researchers have analysed since 2009, they have found that crucial gauges like “likelihood to remain/renew’’ or “likelihood to buy another product” is 5 to 10 per cent lower each year when customer experience performance is only average. Nonetheless refining customer journeys from average to “wow” is worth 30 to 50 per cent more in those same businesses and industries. Here are four ways to deliver a stronger customer experience while cutting costs: 1. Get your CX teams organised The main problem in defective customer journeys is that there is rarely one person with responsibility for the entire CX process. Marketing might own the corporate website, PR govern social media, and operations supervise fulfilment. It’s no doubt that customers ‘fall through the cracks’ between business roles. Even if it is high a managerial issue to resolve, to make a single person responsible for all customer journeys should occur. For example, management at a leading car rental company wanted to enhance the pick-up journey at airports. They assigned one person to coordinate the process and pulled a team with agents of each ‘phase of the experience journey’, including counter staff, car cleaners, exit gate personnel, and bus drivers. It was the initial time they had all come together to discourse about the customer experience journey. Most of them had no idea what the whole customer journey looked like, just their point of customer contact. The team journey mapped the customer experience and devised on how to improve it. At one location, they uncovered that the company was short of clean cars during peak demand times. They proposed installing a buzzer between the rental counter and the car lot, to warn workers when pressure for vehicles was building, which radically reduced customers’ wait times. Marketing, meanwhile, suggested the business unit widen the range of cars provided for pickup. By the end of the study, customer service scores doubled, revenues from upselling climbed 5 per cent, and the cost of serving customers dropped ten per cent. Proof that good CEM works if understood and executed from the ground up. 2. Do not just solve immediate problems; hunt them out Customer complaints can be costly but also useful. If one understands why a problem happened and then modify the cause, the number of complaints ought to drop, and so will operating costs. One European energy business reviewed complaints from customers who were moving to a new residence and exposed that 18 stages were required to set up the new utility account. Several duplications and excessive demands burdened the process. The business was able to cut the stages to just five and thereby reduced costs by 40 to 50 per cent. The number of complaints also fell, and with this fall, the number of people handling them declined from 109 to 20 with savings in overhead costs. 68
3. Comprehend when it pays to advance the experience and when it does not When addressing CX plans with your CFO about expenditures in customer experience, it is essential to have operational ROI data on hand. In my experience, one of the most critical pieces of information is what is called “breakpoint analysis,” which establishes at what point it is no longer beneficial to the business to improve specific customer experience. For example, a car rental business's breakpoint analysis found that customers did not worry much whether they stopped in line for three minutes or five minutes. Cutting waiting times from five minutes to three minutes would be expensive, so the business decided it was not worth applying the change in practice, this kind of analytical financial accuracy a CFO wants to see from marketing. 4. Keep your metrics concentrated on what counts Figure out which key performance indicators (KPIs) make a CX difference to profits, and focus on them. It is important to establish KPIs that reproduce the whole CX journey, from call-centre times and customer perceptions of service to the influence of churn and revenue. It is also valuable to spell out the KPI measures and when they WILL be examined. However, businesses can get overcome with too much data, one energy provider had 150 KPIs and could not agree on the inside about which were most important. Then it transfused down to eight, it focused on a manageable set of core metrics, to drive the business onward. It’s also essential to reflect setting aggressive targets. Incremental targets produce incremental improvements. Researchers have found that reaching beyond what you think is likely needs to be set free on thinking and improve problem solving. This is a crucial CEM characteristic of the bestperforming businesses in customer experience. When it comes to customer experience, businesses are too often ingrained in an either/or a fixed temperament. The fact is that many companies need to have a wide-ranging view of the advantages of providing excellent customer journeys to deliver growth and savings.
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CEM stages of development The concept of Customer Experience was principally brought into importance by Holbrook and Hirschman in the mid-1980s. Later researchers have increased their view from the conventional approach, which reflected customers mostly as cogent decision makers. Lately, the ‘experience notion’ has developed as a significant component to understanding consumer behaviour (Addis & Holbrook, 2001). Furthermore, this notion has become a stimulus for many important kinds of literature in marketing CEM. Most particularly, Pine and Gilmore’s book on the Experience Economy (1999) provides a reasonable impression on how experience arose as the fourth economic contribution after other financial contributions such as commodities, goods and services. Furthermore, in later years, various research exposed the significance of experience as a way to create more value for both businesses and customers. Some marketing experts have added to the joining of value with experience, e.g. Bernd Schmitt (1999), LaSalle & Britton (2003), Shaw & Ivens (2002), and Gentile, Spiller & Noci (2007). Nevertheless, various influences, have been found, and reinforce the idea of customer experience lacks solid underpinning, mainly because the concept of “experience” is so complicated (Caru & Cova, 2007). Theory on experience conveys different meanings depending on scientific disciplines taken such as philosophy, sociology, and psychology employed. Similarly, consumer behaviour and marketing disciplines hold divided connotations of experience (Caru & Cova, 2003). CEM Structure in Experience-Centric Services There is an enlarging amount of service organisations trying to exploit the concept of experience. “Many of these companies are trying to engage customers emotionally so that they become loyal to the service and spread the positive words about their experiences to others” (Pine & Gilmore, 1999).Voss et al. (2008) theorised the term “experience-centric services”, which refers to “the services in which firms offer a customer experience at the core of the service offerings.” For experience-centric enterprises “the experience itself is the core offer for the customers” (Poulsson & Kale, 2004). The research proposes that experience-centric firms provide extraordinary experiences. “The extraordinary experiences are those that create high levels of emotional intensity, generally activated by unpredictable events. Also, customers cannot be sure of the outcome because of unclear expectations, ever-changing contexts and unpredictable behaviour of other customers” (Arnould & Price, 1993). Some experience-centric businesses intentionally add unpredictability and exhilaration to the service offering so that customers can enjoy an appreciation of originality of thought and procedure in each visit. The territory of the customer and Customer Success is a phenomenon that is starting to take influence in CX. It is apparent how many new search terms both “customer success” and “customer success manager” are now visible. Nevertheless, how did we get to where we are today with CX, what is the history of the customer? As the customer is the beneficiary of the experience and its quality drives commercial success. See (Grossberg, 2006; Aronould, Price and Zinkhand, 2004) for more detail on the outline below: Around 10,000 – 1 A.D. – With the arrival of agriculture around 10,000 B.C. the first human settlements were created, surpluses of food existed, and people commenced using tools in greater and more varied ways. At some point, someone had a bright moment and turned to another person and said something like “I’ve invented this great new thing, I call it “the wheel”, and if you give me some of your harvests, you can have it.” And just like that exchanging was born and the notion of the customer created. 70
Shifting forward 1,500 years – The industrial revolution started in England in 1760, and another concept is created: Scale. With scale arrives a wide range of new products emerged, and with it, the consumer market was born and the need for the first customer service teams considered. 1876 & The Telephone – The first significant breakthrough for customer experience takes place. It is the year when consumers no longer have to travel to have face-to-face conversations to manage a problem or receive product information. This is the introduction of the telephone. Eighteen years after, in 1894, the telephone switchboard was invented, and the telephone firmly establishes itself as a vital part of the customer/company relation for the next hundred years. The 1960’s Call Centres – Private Automated Business Exchanges come to eminence. What’s that you ask? It is now commonly referred to as a “call centre.” And while this was a change in technology and business efficiency, the real shift for the customer was that these centres were tasked with solely answering and resolving customer issues. These centres and the contact centre clarifications that were developed were the early stages of what are now customer service departments. 1965 & Email – Meanwhile over at MIT an unknown customer revolution was taking place. The first host-based electronic mail program known as CTSS was developed, and all that was needed was a more significant network for it to run on. 1986 CRM before CRM – The first contact management software is introduced to the world, which allowed the digitisation of customer information meaning greater efficiency and organisation. 1991 & The WWW – That MIT invention finds a home in the design of the World Wide Web, and email, along with living chat support that begins their journey as customer interaction methods. The 2000s & The Real CRM – Customer management software develops and becomes customer relationship management (CRM). Although invented in the mid-1990s, it is not until the turn of the century that data tracking becomes more mature and businesses can use the insights of CRM/CEM to reward customers for their loyalty. These same years also see the escalation of the online help desk. Meaning customers can now with greater ease access information and support, saving the time of both the customer and business. In the meantime, on the theoretical side, a book was published called the “Experience Economy” by Pine and Gilmore (1999), in which experiences are asserted to be the new ‘economic opportunity for businesses. This book and its ideas become the foundation for the modern-day field of Customer Experience (CX). This modern-day understanding marked a break from customer experience for the more common reason, because although the existence of the customer inherently creates the customer experience. The agreement was that as the age of the service economy decreased with products becoming commoditised, price differentiation diminishing and customer demand, an outstanding product or service was no longer a guarantee for experience fulfilment. Accordingly, for a period there had always been a focus on experience for the customer, what was missing from the viewpoint of the business as a more comprehensive representation. One that looked at the ‘sum of all the experiences’ that customers had with products and services across the whole of their relationship with a business. A New Dawn -As both CRM and CX took form, the CX supporters backed customer-centricity and could see the perfect means to put their beliefs into action through the use of CRM software. 71
The Metric Kids- Even though at this same time, another group of individuals were saying that while using customer data is terrific and it does improve Customer Experience, it was still missing something fundamental – the Voice of the Customer. With CSAT already in existence since the 1980s, NPS and CES were also created in the mid-2000s, and the age of the voice of the customer was reinforced. The significance of this move was a complete break from the past decades of market research, as these metrics were short, simple and most significantly only focused on understanding the customer’s experience. Overlapping, the increasing adoption and scope of the Internet and software improvements, examining customer insight became ever more comfortable and with the ability to quickly pair with CRM data the voice of the customer became decisively placed within CX. Customer Success - At the end of the 2000s, and the newly branded SaaS industry was agitated with a CX issue: Retention. Before subscription software, on-premise software companies would routinely have salespeople bring in new business, account managers would work on quotas and commissions and focus on upselling, and tech support would be there to resolve malfunctions. SaaS companies in the start felt they could relocate such a model. Nonetheless, it was not functioning efficiently. It was quickly within the SaaS model for the customer to switch arrangements. In the past, the old on-premise systems often meant thousands if not millions of dollars were capitalised. Switching software providers was a costly and a problematic enterprise, however with the pay-bymonth model launch exchanging was neither expensive nor difficult. SaaS had another difficulty; it was an industry that was based entirely on renewable subscriptions and yet their clients could be hesitant and disloyal. The solution was to involve their business customers by making sure their software remained relevant to their customers. By managing their relationship with each customer to give each customer the most success possible with a product, SaaS companies were able to keep customers, and with this Customer Success, it came into a broad application by businesses. While SaaS may have brought Customer Success to the forefront, it is not a branch of CX that is entirely used by subscription-based companies. What industry does not gain from proactive customer engagement that resolves problems or rewards customers? So while SaaS is notably was dependent on Customer Success for its survival, many other industries have gained from focusing on the success of individual customers. Take that of e-commerce giant Zappos whose rise to importance has, in a broad way, been due to their CX focus on loyalty and customer relationships. Economists have stereotypically grouped experiences in with services, but experiences are a separate economic offering, as different from services as services are from goods. Today we can classify and describe this fourth commercial offering because consumers positively desire experiences, and more and more businesses are responding by obviously designing and promoting them. Harvard Business Review (1998).
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Table 3
Defined as those ages between 18 to 34 in the year 2015, Millennials recently skirted Baby Boomers to become the nation’s most significant generation. According to the Census Bureau, this group now characterises one-third of the national population in most developed countries. As the forthcoming, leading consumer group, Millennials’ values and spending habits are the pointers of future behavioural and economic trends nationwide. Millennial consumers overwhelmingly prefer ‘access to goods over ownership of goods’, hesitating on purchases of large ticket items like cars and homes—and powering a new “sharing economy” in the technique. Though Millennials are often represented as intolerant, tech-obsessed and egocentric, their spending habits tell a full account. The Millennial group is highly loyal to their chosen brands, valuing philanthropy, legitimacy, and higher purpose in business practices—and paying little consideration to advertising. This group rewards brands that appreciate their independent decision-making skills. These values mean that a business that can secure a Millennial customer will be systematically repaid, and for a very long period. As Millennials begin to enter into their chapter of purchasing power and consumer dominance, their loyalty is more important than ever to businesses and CX focus. The spending habits of Millennials duplicate a belief that while material goods might provide ‘temporary pleasure’ or display status to others, capitalising in experiences means an investment in something that cannot be compromised.
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Model 18
Source: Pine and Gilmour (1998) Where Do We Stand Today and What Tomorrow May well Hold for CX - It is problematic to say what will come next; as different thoughts have arisen over the decades they have found connections with new technologies that at the time would have been thought of as having no application in customer experience. What may come in the future, could be unforeseen. However, unless radical, unexpected change happens, it would appear that Pine and Gilmore were correct in stating that the marketplace is moving into an area that is ever more alert on ‘experience.’ One clear example of this is the Internet of Things; it highlights just how unlikely it is that the current customer experience path will decline, as technologies become more immersive and integrated into our customer's everyday existences. In a hyper-competitive Experience Economy where consumers are digitally inspired, yet feel forever timestarved there is an important choice to make with one's Customer Experience strategy. At any particular moment, one may have to decide if one's product or service offer, is a stepping stone on the way to ‘experiences’, or if you are providing the ‘experience itself.’ At every communication touch point or encounter one must understand: is the business holding the customer’s attention or seizing it? The answer to that question may change over the course of the customer journey, yet the challenge remains continuous. Fail to save or seize attention, and one ends up wasting it. And wasted care is a loss of revenue and profits. 74
Here are just four changes that have brought CX to where it is today: • Digitally supercharged business models deliver everything, from food to life advice on-demand, and challenge to maximise performance. • Connected devices (with image and voice recognition and more built-in) work. Meanwhile, machine learning and enormous data trails give power to brands to better decisions on the customer’s behalf. • The switch to ephemeral social sharing via Snapchat and the Copycats is accelerating the Experience Economy. • A compendium of purpose-driven brands, big and small, promise (and increasingly deliver) a path to self-actualisation. In response to the above changes, many businesses and CX teams will concentrate and either seize or save attention. Others are a mixture, varying at each touch point. The core truth is to understand change. One must know exactly where the business stands in this conflict and make changes. Commercial CEM summary S-D Logic The of service-dominant logic (S-D logic) can be understood by the on-going development by the authors (e.g. Vargo & Lusch, 2008a; 2011) and the compelling academic discussion over the theory, (e.g. the Otago Forums in 2006, 2009 and 2011). Brodie, Saren and Pels (2011) call attention to this subject in a collection of papers edited by Lusch and Vargo (2006a), stating that “S-D logic should be treated as ‘open source’, and that academics should continue to engage in further theorising.” Co-creation of value is receiving important consideration in CX literature as it is “emerging as the new frontier and leading edge in marketing thought and gaining currency as one of the most provocative, paradigm shifting, and practical ideas in the field” (Fisher & Smith, 2011, p. 326). This belief is also evident in the research of others who discuss the significance of co- creation within S-D logic (e.g. Prahalad, 2004; Prahalad & Ramaswamy, 2004; Ramaswamy, 2011), and more recently, in the work of Cova, Dalli and Zwick (2011), Edvardsson, Tronvoll and Gruber (2011), Frow and Payne (2011), Karpen, Bove and Lukas (2012), Brodie, Hollebeek, Jurić and Ilić (2011), and McCollKennedy, Vargo, Dagger, Sweeney and van Kasteren (2012) who also support the stress on co-creation of value. Regarding ‘co-creation of value’, the importance is on the role of a service provider. “Although S-D logic does not exclude any actor from playing the role of service provider, the notion of service (provision) is strongly linked to value creation through resource integration (Vargo & Lusch, 2011). Under S-D logic, all actors are resource integrators and therefore active” (Vargo & Lusch, 2008a). This implores the subject of what a resource integrator needs to do to be evident as a service provider or to be qualified as a service provider. The answer is through value creation determination, namely ‘experience sharing’. In the following sections, there is a summary of the literature encouraging the current thinking of S-D logic on value creation, and then there is a review on two other schools of thought, which provide the supportive foundation for the conceptualisation of ‘experience sharing’. 75
S-D logic is a “logic of and for the market (and society) and marketing” (Vargo & Lusch, 2011, p. 181), developing away from goods-dominant marketing thinking. This mind-set builds upon three core foundations: service (Vargo & Lusch, 2004), value co-creation (Vargo & Lusch, 2008a) and the recent duplication of the actor-to-actor worldview (Vargo & Lusch, 2011), starting from services, relationship and business-to-business marketing. Using S-D logic theory, a value is always co-created and can be reproduced in two parts: co-production and co-creation of value (Lusch et al., 2007). Value creation is considered as a relational process of “service-for-service exchange, and a move to a service-centred model is therefore fundamental to address relational value creation in marketing,” (Lusch & Vargo, 2006b; Vargo, Maglio & Akaka, 2008). “Service is exposed as a procedure for the co-creation of mutual value, where the output of an entity is viewed as an input into a continuing process of resource integration” (Vargo & Lusch, 2008b, p. 1). Bearing in mind resource integration, the word ‘resources’ can be divided into two types: operand and operant resources. In separating the two, “operand resources are those where an action can be performed, whereas operant resources are those used by a firm or individual to perform an act on an operand resource” (Constantin & Lusch, 1994). It is of interest to CX that, human operant resources refer to the person's skills and knowledge (Vargo & Lusch, 2004) or resourcefulness, feelings and experiences (Arnould, Price & Malshe, 2006; Lusch et al., 2007). Using this service-centric explanation, value creation refers to ‘value-in-context’ (Vargo & Lusch, 2008a) as outcomes, and resource integration (i.e. how an individual or firm combines available operant resources and operand resources) as a value creation process. “Resource integration, a co-creative process by default, is a means of value creation (Chandler & Vargo, 2011). Such co-creation of value is carried out in a manner of reciprocal exchange” (Vargo et al., 2008). An exchange of ‘service-for-service’ implies that “all parties are both value creators and value beneficiaries (Lusch & Vargo, 2006c), and should be seen as resource integrators” (Vargo & Lusch, 2008a; Vargo & Lusch, 2011). Within S-D logic, the value is always co-created, and customers are endogenous rather than exogenous items to the value co-creation procedure (Lusch, Vargo & O’Brien, 2007). In more recent reaffirmations of S-D logic, Vargo and Lusch (2008b) characterise “all actors within service systems as resource integrators”, as stated in the ninth foundational premise (FP9) (Vargo & Lusch, 2008a). This augmented idea of all actors as resource integrators suggests that “value co-creation involves complex interactions among firms, customers and other value network partners” (Lusch et al., 2007; Vargo & Lusch, 2008a). Vargo and Lusch (2011) present the actor-to-actor view on S-D logic when deliberating co-creation of value and co-creators. Decidedly, this view separates some of the traditional marketing theory about consumers and stakeholders: in an A2A domain, the insights into setting, linguistic, significance, signs, symbols, experiences, customs, etc. apply not just to what has customarily been thought of as the ‘consumers’ but then equally to the ‘producers’. Likewise, what has been studied about a relationship, partnering, networks, and value, as examined in B2B, apply to the consumers’ network? (Vargo & Lusch, 2011, p. 184) The point being “any beneficiary has played some role in the value creation process”, and that under this approach, the sixth foundational premise (FP6), that ‘the customer is always a co-creator of value” (Vargo & Lusch, 2008a, p. 7) and that “value is always co-created, is appropriate if, in this integration of resources, there is no self-sufficiency.” 76
Vargo and Lusch (2011, p. 184) support that “not only is the beneficiary a resource integrator in this co-creation of value, but so are all of the external service providers, each creating its own serviceproviding resources through its own resource integrating activities’, thereby supporting FP9—that all social and economic actors are resource integrators” (Vargo & Lusch, 2008a, p. 7). Phenomena, processes and outcomes in CEM Even though the general theory about comprehensive customer experience has been proven in commercial CEM, empirical studies are limited to a few sectors (e.g., retail, leisure and tourism) see (Gronroos, 2004; Pepper & Rogers, 2003). Few, if any studies consider CEM in not for profit, and its phenomena amongst staff and customers/users. The phenomenon describes “what happens in the exchange between the provider and the receiver of CEM and relates to the discourse of information from the senders (staff), and feelings, emotions and attitudes felt by the receiver (customer/user)”, (Nguyen and LeBlanc, 2002). What happened in “the exchange or connection is important to understand to ensure strong performance” (Schmitt, 2003). CEM processes are explained as the staff that delivers CEM and the service technology available to support team (such as those used by a teller in a bank), or online systems where the customer may recover information. The technology, people, and actions are now considered the 'process elements' that push CEM. Outcomes in CEM clarify the value that the sender and receiver acquire from the service encounter, which also reflects whether it was a good or bad experience. In the present literature, the empirical research of Nguyen and LeBlanc (2002) designates that “the experiences outcomes are brought to customers by service employees and service physical evidence. The interaction between these three types of experience effects corporate and brand imagery in the customer’s mind and also may influence opinion.” The result strengthens the ‘total customer experience’ theory, and the “experiences provided to the public, customers by service employees (positive feedback) and service physical evidence (retention and repeat purchases) belong to the role of service experience” (Gronroos, 2004; Pepper & Rogers, 2003). There is inadequate literature on the role of interactions between the communication areas, service interface and related experience in the process of creating ‘customer loyalty’ both in for profit and not for profit organisations. (Schmitt, 2003; Nguyen and LeBlanc, 2002; Berry, Carbone & Haeckel, 2002). It is argued that “this shortage is through the building of a new capability in marketing, as CEM is still in its development” (Gronroos, 2004), It is established that experiences define customers as ‘always’ having an experience—good, bad or unresponsive—whenever they purchase/use a product or service from a company commercially or from a not for profit institution. The solution to positive CX is how effective the organisation manages the experience for a customer (for profit) or a member of the public (not for profit). “Organisations that compete with design elements or focus on the customer experience in isolated areas of their business—for example, by providing a quick piece of entertainment—will be let down by the outcome” (Berry, Carbone & Haeckel, 2002). Organisations compete best when they combine functional and emotional benefits in their service assistance, which develop emotive bonds between organisations and customers that are difficult for competitors to divide. To compete in this territory, a more comprehensive number of organisations are using the principles and tools of CEM to reinforce their customer loyalty. 77
Unlike many product or service enhancements, the holistic nature of these experiential designs makes it hard for competitors to copy; for example, Avis’s ‘We try harder’ copy line, which focuses on the Avis rental experience internally and provides an exceptional promise to the customer. The phenomenon in-service experience is focused on the individual’s experience of service, which is internal, subjective and context/time specific. “Service experience is personal, and the connection with the service may be direct or indirect” (Meyer & Schwager, 2007). The phenomena are held in the mind of the CEM actors in creation. It may also be a real or imagined incident. “The service experience is subjective to an individual or group at a specific point in time” (Pullman & Gross, 2004). Although literature on the service phenomenon is imperfect, the theoretical studies define critical elements as discussed on the theory of the CEM phenomenon see (Hollbrook & Hirschman, 1982; Prahalad & Ramsaswamy, 2004; Pine & Gilmore, 1999; Schembri, 2006; Berry & Carbone, 2007; Millard, 2006; Mosley, 2007). Remaining real or imagined, and subjectively makes CEM research difficult as each person has an opinion. The operationalisation of the service experience has centred on research by (Arnould & Price, 1993; Caru & Cova, 2005; Chen, Zhang, Yuan & Huang 2007; Greenwell, Lee & Naeger, 2007). Additionally, this CEM operational area is also advancing to other new types of service settings such as e-commerce, mobiles and high-tech systems in for profit and not for profit organisations; CEM is getting more multi-layered as touch points with consumers increase. Customer experience 'action' in literature currently descents into four different categories: 1) generic, 2) Web2.0 service, including a mobile service and a location-aware service, 3) public service in the municipal sector, as day-care, cultural and health, and 4) Web2.0 service iPhone mobile service. Moreover, in ten years' time, CEM will have changed. CEM and CRM are much associated with marketing theory as strategies that build a memorable experience and a long-term relationship with related CLVs in for-profit and also not for profit organisations. CEM literature describes CEM as a ground-breaking approach to interfacing with customers. According to Schmitt (2003), it may overcome and provide CEM outcomes as: •
Providing original insight into the customer’s world.
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Developing an experiential strategy platform.
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Creating a unique and vivid brand experience.
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Providing dynamic interactions at the customer interface.
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Providing continuous innovation to improve customers’ lives.
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CEM commercial success stories Starbucks (Lenati.com) Lenati was commissioned to redeveloping the drive-thru customer experience for Starbucks, commencing with primary research and observations of customers in this highly competitive environment. Realizing that speed of service was the #1 customer sticky factor, we developed an overall business strategy optimised for throughput, integrated with personalisation. During the project, we developed the overall business strategy, differentiated customer scenarios, and core functional requirements for the new customer experience. We then worked hand-in-hand with Starbucks IT to create technical specs that drove hardware and software selection processes to support operational requirements. We were able to mock-up stores and pilot several platforms to ensure stability and customer-facing benefits. Throughout the process, we created core competencies around global scale and deployment, including centralised network operations for menu-board configuration and management, digital instrumentation of drive-thru lanes, and access to a proprietary loyalty payment platform. This digital platform enabled a sizable evolution in Starbucks merchandising such as mass price changes, unified SKU management, day part offers, menuing, and most importantly, the face-toface engagement of customers and baristas. By taking the interior café experience outside, we helped create a 20% lift in average ticket, as well as improved customer experience, resulting in $400 million in new revenue. T Mobile (tmobile.ee.co.uk) As part of its Uncarrier rebranding, Lenati helped T-Mobile transition from a set of loosely connected social media actions into a cohesive strategy designed to reduce churn, drive acquisition, and save money. We defined the T-Mobile social customer journey in the scenario of current and future states, and subsequently developed a comprehensive strategy for building retention, engagement and customer service through social media programs. Essential points included driving more customers to involve with brand social channels, intercepting detractors, and leveraging highly engaged promoters to become brand ambassadors and evangelists. As a result, T-Mobile’s social media strategy has generated $14 million of added revenue just in year one. Microsoft (www.lenati.com) Lenati headed the development of a global program to focus on previous inefficiencies in Microsoft’s social marketing, covering fragmented execution, redundancy, inconsistent tools and metrics. The program was grounded in both the client’s business objectives and their customer’s journey – clarifying the roles and responsibilities for the global team while rationalising Microsoft’s local social presence across international markets. It included an in-depth execution guide for setting up auditing, measurement, governance, resourcing, content, and execution. The result was a more efficient system for Microsoft, a more consistent customer experience from market to market, and a framework for localising content and messaging. 79
Airbnb (cnxnetwork.com) Airbnb is part of the sharing economy and a tremendous competitor for established organisations within hospitality. They represent an innovative business model that has disrupted entire industries: hospitality, e-commerce and electronic payments. How did they do that? One of the core contributors to Airbnb’s boom is their exceptional customer focus. Their extreme personal approach helped them to identify consumers’ needs that had not yet been fulfilled by other companies. So, what makes Airbnb so unique? They work with each customer segment. Airbnb’s experience is available at any price point. Prices match every request, which allows engagement with broad customer segments. This way, Airbnb connects with savers, those attracted by low-cost accommodations, families who find traditional hotels too expensive and inconvenient for children, and also more sophisticated customers who are ready to pay more for experiences in some of the world’s unique homes, such as a Treehouse in Belize City. They focus on personalisation. Airbnb is looking to start owning more of its users’ “end-to-end travel experience” by placing a more significant focus on its hosts and customer leisure during the stay. Airbnb promotes the idea of cultural exchange. It promotes chances for hosts to connect with different people across the world. They share their life and travel experiences, as well as each other’s culture; this breaks down the boundaries and joins people together. With a slogan “Don’t go there. Live there”, Airbnb aspires people to experience new places just like the locals do. Airbnb is a community-driven marketplace with a mission to unite and connect people from all around the world. They also have a new initiative, Airbnb Trips, which provides not only accommodations but also unique experiences. This can take the form of a workshop, for example, a couture journey in New Delhi or a day trip to a secret surfing location in Malibu organised by locals. The new platform lets people offer services such as trips or excursions, and other short experiences. You can filter by category, from the experience you want to have to the place you want to go. This customised approach is not only a great service extension but also allows its customers (guests and hosts) to connect with each other and exchange their skills and interests. Airbnb takes the notion of customer experience in a direct meaning. Airbnb Trips gives the customers an opportunity to shape memories, and these emotions transfer into favourable associations with the Airbnb brand itself. A customer service builds trust. Airbnb’s website is the only part of the overall customer experience which is controlled by the company. The whole service is built purely on trust and faith between hosts, renting out their place, and guests who take their accommodations on the platform. 80
As expected, social proof plays an integral role in building that trust. For people to spend money on their holiday without a travel agent behind it, high levels of transparency and confidence are required. To achieve this, hosts do not own their listing on Airbnb and guests can rate and review without fear. Hosts can discuss back, knowing that poor guests will be called out by other hosts. Reviews are the right way to find whether the room/house is good or bad. Airbnb’s review system is trustworthy, and all the reviews are genuine and made by guests after they leave the accommodation. User friendliness at each touch point When you go to Airbnb website, you are instantly welcomed with a slideshow of hot visuals and a selection of featured experiences and cities. The search bar for a destination keeps a low profile; allowing the visitor to immerse themselves into what Airbnb has to offer. They have easy access to videos of hosts, company information, letting the customer get to know what this company is about and what culture stands behind it. Airbnb aims to support customers even before they become a Host or a Guest on Airbnb. For example, by helping them arrange travel plans so customers can feel that Airbnb is there every step of their journey. They make each customer feel individual, and the company strives to surprise and delight them at every touch point. For example, the new feature “Airbnb stories” shares articles and videos featuring both host and guest experiences. Conclusion The secret to Airbnb's customer service skill hinges on keeping tabs with social media and taking advantage of opportunities to connect with customers in a way that isn't strictly business. They go to great lengths to make their customers feel special.
Maersk Line ( Maersk.com / beyondphilospphy.com) Maersk Line with improving customer experience, the largest container shipping company in the world with over 500 vessels and 25,000 employees operating out of 325 offices in 125 countries. In 2010 their revenues were nearly $24bn. Over a 30 month period Maersk Line improved their Net Promoter score from -10 to +30. A 40 point improvement. How have they achieved this? What is their secret? In this case study, we will reveal the critical elements of this program and how the Maersk Customer Experience team worked together on improving customer experience. The period of strong growth in the container shipping industry between 2001 and 2006 amid globalisation and outsourcing were good years for Maersk as they acquired different companies to build a solid base globally. Also, they invested in increased vessel capacity. With the financial crisis in 2008 bringing markets to a standstill the sector found itself with overcapacity and in a vicious cycle of price competition. This was not the place the Maersk Line wanted to be, and with its margins under pressure, the leadership sought to differentiate as a Premium brand. With that goal in mind, they needed to put in place a strategy for improving customer experience that will make them stand out from the competition. The first step was trying to understand the current Maersk Line experience. 81
To do this the Maersk team, undertook Customer Mirrors in the four pilot regions, North America, Africa, Netherlands and China. A Customer Mirror involves visiting Customers and walking in their shoes. Time was spent in their offices to witness at first-hand what the Maersk experience was like and the challenges it caused clients to gain an in-depth understanding. This provided valuable insights and a series of quick wins which could be undertaken to have an immediate impact on the Customer Experience. Also, it had the advantage of reviewing the ‘end to end’ experience which hadn’t been done before. Maersk Line assessed those regions with a council and those without. The results were conclusive, those regions with a CE council and Ambassadors who received training achieved an NPS score on average 10 points higher than those who didn’t take part in the practice. The Senior Executives of Maersk Line realised that different people had different visions of the experience they are trying to deliver around the organisation and as a result, their efforts lacked focus. A total of 1270 ideas of how to improve the experience were generated. The emotional signature research was also used to prioritise the plans as it had already identified the areas that would result in the highest return. The progress of the program was to be monitored by regular regional and annual council meetings, to continue to engage the organisation. As a result of the program, the Net Promoter Score rose by 40 percentage points (from - 10 to +30 the highest level ever recorded). They also found that a 4 point improvement in NPS resulted in 1% increase in cargo volume shipped by customers. The increase in Net Promoter was more significant in those regional markets where they have set up local Customer Experience councils and received training. On average those regional offices had an NPS that was ten percentage points higher than those without committees. Netflix (Netflix.com) Netflix has revolutionised the way most people watch films and TV shows. At the heart of their strategy is an understanding that personalisation is the key to offering customers an experience that gets them hooked. Netflix uses machine learning algorithms to learn what their customers want to see. This data helps them to create personalised marketing, with recommendations tailored to each customer’s tastes. The email example below shows this strategy in action. When the recipient engages with the bold call-toaction buttons to watch, or add to a personal list, the algorithms Netflix uses will learn more about that person’s taste. Next time, the recommendation Netflix sends will be even more on point. Amazon (amazon.com) Amazon is so famous that over half of consumers bypass search engines and other retailers and head straight to Amazon’s website to search for products. One of the keys to its success is the unique customer experience Amazon offers. Central to this is the fact Amazon allows customers to find what they want in an instant with personalised recommendations and search results presented to them in one place. In this section, one can take a look the strategies Amazon uses to maintain its position as the world’s number one choice for online shopping. Amazon’s recommended products are a great example of how it curates web content around each customer’s interests. And it’s effective—an estimated 35 per cent of sales are said to come from Amazon’s recommendations proving that personalisation does work. 82
When Amazon recommends products, it’s no coincidence that you like them. Its recommendations are borne out of gathering lots of data about a customer’s behaviour. The behaviour Amazon collects data on includes what a customer has previously purchased, what they’ve put in their cart, items they’ve rated, and what similar people have viewed and purchased. Amazon feeds this information into an algorithm to return a profoundly personalised browsing experience that prompts the customer’s next move. Amazon might not send the prettiest emails, but they’re packed with content and sent at a time that’s relevant to the customer. By automating its emails, Amazon makes managing a personalised oneto-one dialogue a doddle. It uses behavioural targeting to automatically manage and deliver content that’s unique to each recipient. Amazon prides itself on giving the customer what they want as quickly as possible. The mobile site, app, 1-click checkout, predictive search engine, and fast delivery are all designed to make it easier, faster, and more convenient to shop with Amazon rather than its competitors. It’s not just speed that makes Amazon’s customer experience superior—it’s also the flexibility it offers. You can both buy and return your goods with a click of a button giving the consumer confidence in a sale that’s easy to cancel or return. This encourages more people to buy on a whim with the belief that they can change their mind later. Once you’ve made a purchase Amazon will always ask you for feedback—not only about the product but its service. It might be an automated email, but it goes a long way to show customers that the company cares. It also allows the company to pick up issues that it can address to improve the customer experience of Amazon in the future.
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Not for profit CEM As recognised by Vargo and Lusch (2008a), there is confirmation that S-D logic principles can be applied in the public sector as a not for profit setting. “The development of customer relationship applications in not for profit dates back to the mid- 1980s and the late 1990s when public institutions in England started to restructure and reorganise the operating processes to minimise costs while driving efficiency” (Grant & Anderson, 2002). This example shift was the public sector's response to amendments in legislation on how public institutions would be funded from the public purse. Not for profit institutions turned to the use of enterprise sourcing programmes (ERP) to automate the business process in areas as finance, enrolment and human resources. However, since ERP could only serve principally internal customer needs (staff members); there was an objective for a process to satisfy external customer demands for the primary user of public services, the community. “By creating a system that satisfied internal and external service needs, it provided a unique approach to connecting senders and receivers of CEM together.” (Schmitt, 2003; Aldridge and Rowley, 2008). This demand led to the presentation of customer relationship management and consideration of the service experience in public organisations recognising its value in marketing in the for-profit sector. “Relationship management and the public experience focuses on the 'automation and improvement' of the institutional process associated with managing relationships in areas as recruitment, marketing, communication management and service support”, (Grant & Anderson, 2002). Therefore, implementation of relationship management and service experience improved the connections between the administration, registration, financial aid and accommodation services as examples. Further, Grant and Anderson (2002) consider that “the use of service management applications can lead to stronger public responsiveness by expanding the practices of public service staff members who deal directly with the public and provide an actual start to finish CEM life cycle.” Conferring to Buttle (2009), “in today’s market, the public institution employs customer relationship management and experience management processes to coordinate relationships with the public.” Buttle supports this idea by clarifying that, “if a member of the public is excited by his or her experience at the institution, he or she may recommend it to others through word of mouth, which is one of the strongest marketing techniques available.” As recognized earlier, the purpose is to consider CEM models and how they can be an influence to the efforts of not for profit organisations as a means for managing relationships with stakeholders, correctly, the public at large. Considering the literature, there is proof that presents one first feature in building effective relationships with the public, which depends on the extent to which not for profit possess knowledge (Brooker and Noble, 1985). However, it is prominent that, since it is supposed that the public, are the primary customer, or client, of public services, this argument has been put forward based on the ‘importance of customer knowledge’ in CRM and CEM delivery. As Seeman and O’Hara (2006) stated, “having an insight about customers provides a competitive advantage for institutions and allows the public institution to attract, retain and serve the community more efficiently.” As quantified earlier, some previous studies have signalled the shift from the product-orientated approach towards the customer-orientated strategy in today’s business world and the public sector. 84
This inclination suggests that “organisations are no longer relying on the quality of their products and services but the quality of the relationship. The shift to quality in not for profit CEM has relevance to not for profit public enterprise as they are marketing service at times in a quasi-commercial service industry” (Brookes, 2006). According to Khalilabad, Mazandarani, Sentosa and Piaralal (2006), “the impact of the move from goods dominant to dominant service logic relates to the encounter of the transformation to a 'customer-centric community' where an organisation as a library or hospital manages behaviour online and offline in the service experience environment, CEM has significant relevance.” CEM at a public organisation strengthens the marketing of the institution as a service and also underpins the support services as having a value. Shanks and Tay (2001) also consider that “the environment was previously driven by the public institutions 'product' offerings, whereas it is now dominated by 'public needs' and preferences.” Consequently, gaining knowledge of customer habits can provide public organisations with a major advantage that can bring competitive advantage and help build strong client-centric based and public marketing strategies. “When customer relationships and service experiences are employed in not for profit marketing, the desired result cannot be accomplished correctly without obtaining comprehensive customer knowledge”, (Seeman & O’Hara, 2006). Public not for profit institutions need to take a constructive step in collecting and updating knowledge about their customer groups through various communication channels (touch points) which they can use to their marketing benefit. King (2007) observes that “the future development of public institutions in building relationships with customers rests on the way they pull together pieces of information from all types of databases and sources.” In their study, Khalilabad et al. (2006) outline “customer knowledge as a key element of the relationship between relationship management and knowledge management (KM), which can assist organisations in marketing their products, services and interactions, resulting in further tangible and intangible benefits.” Douse et al. (2005) have also recognised that “CRM and knowledge management (KM) can support public organisations as to promote their services and improve the interaction with the public while delivering active improvement in managing the relationship.” KM competence would appear to play an essential role in the success or failure of any relationship management system (for profit and not for profit) as it obtains new knowledge and recommends improvements. “Recent trends and pressures in the public sector have caused institutions to adopt a more businessoriented approach” (Shattock, 2003) to manage their operations. Simultaneously, public services are becoming more ‘experiential’ in character. Current advancements in the business-to-business operating approach focus not only on creating but also improving the customer’s experience; this has to mean to a public institution. The application of this methodology (Maringe, 2010) in the learning industry, for example, may hold strong lessons for, as understanding, managing and measuring the experience, and is a useful approach for competing successfully in the market domestic and global. Public institutions such as a university have a variety of customers: 1) specialists 2) staff, 3) suppliers 4) the community at large. “There has been a change in the expectations of today’s public from those of the past” (Maringe, 2010). The base knowledge service is no longer sufficient. Aspiring graduates, for example, are often thought of as 'wanting an education'. As education has become more experiential, so have the expectations of those attending universities. Today’s student (Oplatka, 2004) “wants a positive, memorable experience.” Are students referring to the experience associated with becoming educated? 85
In considering research on this point from a student's position, experience includes leaving home, living on their own, personal responsibility, staying up late, socialising, attending events and meeting new people as well as traditional learning. A hospital is not unrelated; the primary service is to fix the patient and make them well, however, the support services of food, transport, parking, access, rehab, care at home are all support services where the ‘experience journey’ is critical to the health of the patient. Having defined the reasons behind using CEM in ‘not for profit institutions’ and how is it being presently used, the outcomes in the educational sector provides some useful insights. Not-for-Profit CEM success stories Texas Tech, USA, Dials Up Right Now to Help Improve Communication, Recruitment and Retention of Students via Mobile Devices Goal • Allows students to engage with the college via mobile technologies create a knowledge base of FAQs and simplify the updating process •
Track all student inquiries and ensure consistent answers for students from call centre agents
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Improve incident management performance Achievements
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Simplified entire student, college communication process, improved quality of data in the FAQ.
In today’s world, parents, students and administrators are used to communicating and shopping online. We wanted to implement a CEM system that would allow us to provide a seamless web experience that is accessible from all mobile devices and helped us achieve our goal (Michele Moskos, Marketing and Communications Director, University College at Texas Tech University). MNSCU, USA, Implementations Improve Constituent Experiences across the State within Tight IT Budget Constraints Goals •
Optimise constituent experiences across all channels
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Help each institution fulfil its specific objectives
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Maximise technology return on value across the organisation.
Achievements •
Improved communications with students, parents, faculty and communities.
Familiar application suite readily adapted to diverse operational challenges • 86
Enterprise licence and on-demand delivery model to maximise budgets.
'Right Now is a powerful and highly adaptable solution that enables colleges and universities in the MnSCU system to more effectively communicate with their various constituencies and better manage institutional knowledge’ Paul Wasko, Director of Electronic Student Services, MNSCU. DeVry University, USA, Taps Right Now to Rapidly Improve Online Student Care Goals •
quickly deploy a case management system for online students
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improve student services to help minimise attrition
Retain integration/migration path to existing software investments. Achievements •
multi-channel contact centre implemented in just four weeks
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responsive service and increased staff productivity
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increased student retention supports continued business growth.
‘Our productivity increased substantially. Everyone now has better tools to do their jobs’ (Dave Trafton, Online Student Services Manager, and DeVry). Imperial College London, UK Improves Admissions Management with Right Now Goals Enhance prospective students’ experience by offering consistent, accurate and up to date information.
Reduce the overwhelming number of prospective student calls and emails asking for repeat information. Empower prospective students to gain information by serving themselves. Achievements •
98% prospective student self-service rate
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quantifiably improved service to prospective students
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Emerging themes and patterns In considering the literature and broader materials on CEM in not for profit universities, the following significant items and patterns emerge on CEM literature for ‘not for profit’ universities and public institutions consideration: Determine the touch points that affect the experience: This is a structural process that examines all service points at the institution, which forms the framework of understanding where people go for information, as well as the kind of information, they seek from each touch point (see the MNSCU example). Assess current service delivery effectiveness: This can be completed using a range of research techniques, as questionnaires and feedback forms, among staff at the public institution, as senders and receivers of CEM. This will provide insights into the problems and opportunities the service experience has and will show evidence of possible improvements (see the Imperial College example). Enrich the experience: This is intangible and relates to what can be done regarding staff and customers, who will make the customer service experience enjoyable and how satisfaction and quality can be improved (see the Texas Tech example). Integrate functions for a unified operation: In every public institution, there are administrative functions that are handled through service processes that provide information. This can be related to information related to other areas of service interest to the customer. The process needs to be coordinated to provide accuracy. Implement customer service and leadership training: The training of frontline service staff and members of the team in service experience will provide an understanding of good and bad customer service. Communicate the experience and develop the brand: Most public institutions have a name that is constructed around the central city or geographic location. Each institution has the opportunity to build a substantial collection of brand values, which stand for the vision of the enterprise. This provides a unique selling proposition to potential customers of what life could be like and the experience.
Innovate in CEM to stay ahead of the competition: Literature supports the need to innovate in CEM. This requires constant feedback from staff and customers and always examines ways to improve service delivery. Good experiences lead to strong recommendations through word of mouth. The conclusions that can be claimed from the literature and not for profit CEM user examples are that public sector institutions can learn from other industries and create its own relevant, unique experience. We can model the findings to other not for profit institutions such as hospitals, libraries, police, ambulance, fire and rescue, transport and more. CEM has a role to play in building the experience making the service more enjoyable and satisfying. 88
The competitive global climate for funding of not for profit institutions is unavoidable as government budgets tighten, and cannot be passed over as a threat and opportunity. The capability of institutions to develop and manage their preferred experiences will allow them to differentiate their brand and compete in today’s increasingly competitive market. When one looks at the nature of Customer Experience Management, there are mostly five key areas that CEM researchers or "Experience Architects" reflect upon. While these are broken down by CEM specialists in various ways, based on distinct theory, they can be described by the author, at a top level, as follows. See (Peppers and Rogers,2005; Rae,2006). 1. The Customer. CEM data examination focuses on the development of a multidimensional grasp of customers and their needs and wants. This insight includes cultural, sociological, behavioural and demographic investigation, wants, and concludes in a particular ability to express the needs, wants, desires, prospects, circumstances, setting, and intentions of various customers. This understanding provides insight on audience segmentation and guides the marketing arrangement of crucial CEM segments. Customer analysis is proactively benchmarked with clear KPI's against a company's competence to meet customer needs—both in a present and a future state ability. Organisational and customer understanding of experience, therefore, serves as the principal driver in shaping the CEM business approach, aligning strategy and investment. 2. The Environment. Considering the "landscape for brand discovery" is an essential theory of CEM. The landscape is constantly changing and is composed of market conditions, technology, competitive factors, channel use (and channel/cross-channel dynamics), the process for purchasing (steps to buying), the "real" purchasing environment (store, phone, Web, etc.), and the service environment. Leveraging this insight against customer analysis, CEM marketing strategists work to create integrated plans which consign in order the customer journey that customers commonly follow the decision making and purchasing process. These multi-path strategies work together to ensure that customers have an intuitive, pleasing experience at every step in the journey to brand encounter. As a part of external environmental analysis, marketing CEM strategists also focus on applying experience innovation (technology, theme, concept) to customer experiences to reduce barriers that complicate, constrain, dampen or de-motivate customers, and develop a more engaging, efficient, pleasing, personable or memorable environment within which to interact face to face or online. 3. The Brand. From a marketing tactical viewpoint, any analysis involves the development of a visual character, properties, taglines, communications, logos, and related brand assets that help form perception/image, and defines the brand propositions in the marketplace. From a strategic perspective, however, this analysis focuses on, USP's origination, distinction. This includes the consistent and constant evaluation, planning, and refinement of product or service features and benefits, functionality, pricing, options, attributes, benefits, and market positioning of the company, service, or product to the target market. 4. The Platform. An operational infrastructure is a framework on which customer experience is delivered. As a result, operational efficiency of CEM has a direct impact on customer experience. 89
As organisations move from an "inside-out" focus (on internal operational constraints such as production, capacity, etc.) to an "outside-in" focus (on customer-centric delivery), the operational analysis is now indispensable to understand CEM delivery at every touch point. This includes comprehensive experience evaluation and improvement of people, process, policies, technology, and systems that enable; track, and measure customer interaction and transaction within and along the experience delivery chain (production to retail). CEM Platform analysis may include workforce evaluation, fulfilment and logistics analysis, process improvement, technological analysis, policy reviews, and a myriad of other CEM tasks. The goals of CEM platform analysis include rationalisation of operations, increasing the time to market, removing barriers to customer satisfaction, lowering delivery costs, and improving the overall customer experience by creating operational excellence, speed and precision. 5. The Interface. This area of CEM analysis concentrates on the interaction between consumers and the brand, from three dimensions 1) human-to-technology 2) human-to-human, and 3) human-toenvironment viewpoint. This area focuses on improving and enhancing the customer interface within any channel to produce wanted and satisfying experience outcomes. At a physical level, CEM Interface analysis may centre on refining the usability of electronic uses or products (e.g., a Web site or a TiVo interface, or the buttons and information flow on a cell phone, Apps, help and chat line). Though, it also concentrates delivery but enhancing the interfaces within other channels, such as brick-and-mortar outlets. CEM marketing strategists ought to focus on how customers interrelate within and across the various channels, often examining the end-to-end shopping and service-delivery process. This should incorporate task-based analysis of various connections and contacts, such as a customer's discovery, browse, shop, purchase, and post-sale experience. CEM experts must focus on refining the quality and reasoning of customer dialogue. This may include conducting an examination of the call centre or voice-response systems, as well as enhancing the approaches to sales or other experience customer-facing staff. Recall ' how can I help you', sounds better than 'hullo, what is it you want'. What divides good CEM practitioners from the rest is a dedication to examining all five functional areas with organisations and customers to acquire cohesive CEM strategies and plans that result in noticeably improved customer experiences and better business outcomes, CX is a co-created process.
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Summary In chapter one we have outlined the concept of customer service and how CRM and CEM are marketing tools that support service delivery that maximises customer satisfaction and builds loyalty, which also creates a stable and profitable customer base for the organisation. CEM literature is still in its development stage, however, we do know that the experience is about a journey and there are for profit and not for profit CEM models that have been developed to understand the theory and practice of good CEM. We know for example CEM models are adapted to their environment either retail, wholesale, B2C, B2B, exchanges, product or service. We have considered the phenomenon, value, equity in this section and the CEM stages of development both commercial and public as CEM is considered contextually different. Review Question •
In 100 words using your language explain what is ‘Service’.
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Define CRM and CEM and explain their differences.
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Within CEM, in 50 words describe the word ‘equity’.
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A debate in groups of 4 discusses ‘Service-Dominant Logic,’ provide your summary to the
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CHAPTER TWO Introduction The experiential world is all around us as customers seek higher levels of satisfaction and experiences with high quality. This change is making marketing teams even more customer-centric to ensure on going loyalty through an experience journey which can be measured against set KPI’s. Chapter Learning Outcomes •
The evolution of the experiential economy.
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The role of quality in service and the gaps today.
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Key themes and practices in loyalty using service experience bundles.
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The purpose of Measurement and KPI’s.
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Having completed the module, you will be able to:
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Critically assess the use of experience management inside an establishment.
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Assess the core elements of the experience journey and their financial contribution.
Having completed the module, you will be able to: •
Conduct secondary research using both academic and practitioner sources.
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Manage tasks in a group and as an individual.
Critical thinking Having completed this topic, you will be able to: 1. Critically evaluate the experiential world around an organisation. 2. Assess the core elements of satisfaction, loyalty and their financial contribution.
OBJECTIVES With increasing channels to market, new technology and more demanding customers, organisations are pushing experience as a principal benefit and differentiator in highly competitive markets. This chapter reviews CEM theory and practice and what to measure and how to measure it.
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The experiential world around us The economy and the culture are changing, and the traditional marketing approach is not adequate to fulfil the customer needs. “It is now focused on functional features and benefits in the procedure of evaluation and choosing products and services, and it keeps its concepts on the idea that the consumer, in a variety of markets, takes rational decisions to select products and services” (Schmitt, 1999:13). Recent investigations show that this approach is somewhat flawed since emotional reasons affect the consumer decision process as well. Today, consumers “want is products, communications, and marketing campaigns that dazzle they're their hearts, and stimulate their minds” (Schmitt, 1999:22), staying related to their lifestyles, and delivering appealing experiences. Because of this context, businesses are accepting the need to change from Traditional Marketing Approach (TMA) to Experiential Marketing Approach (EMA) to keep their customers attached to and like their brand. To give just reasonable value for money to the customer today is not adequate. It is necessary to get customers to sense, feel, think, act, and relate to the business and its brand. Another approach is now seen as essential. Since 1980’s, some authors acknowledged the experiential aspects of consumption, compared to customer illusions, feelings, and fun (Holbrook and Hirschman, 1982); that “an experience occurs when a company intentionally uses services as the stage, and goods as props, to engage individual customers in a way that creates a memorable event” (Pine II and Gilmore, 1998:98); maintain that consumers “are living human beings with experiential needs” (Schmitt, 1999) mentions. “The importance to create branding and sensory awareness through touch, taste, smell, sight and sound, and producing differentiation” (Lindstrom, 2005). A concept of Experiential Marketing Approach theory is being unified. It can be considered as a set of customer experience ideas, a structure of strategic experiences modules (SEMs) for managing customer experiences (sense, feel, think, act and relate), and a model of experiential providers (ExPros – communications, characters, products, cobranding, setting, Web sites, and people). The importance of experience can be the primary driver of consumer behaviour, which occurs as a result of a meeting, experiencing, or living through CX situations. The experience happens when the business purposely prepares ExPros to provide an unforgettable incidence to the customer. It is essential that the intention in CX should be included in the business strategy to affect how the company use ExPros to provide experience to the customers, bring into line calculated and operational activities. Experience can mean “a trial, proof, experiment, an actual living through an event or events; personally undergoing or observing something or things in general as they occur anything observed or lived through” (Webster’s, 1983:645). “An experience is not an amorphous construct; it is as real an offering as any service, good, or commodity” (Pine II and Gilmore, 1998:98). To attempt to keep customers is happy with the business and their brands they should market ‘experiences’ instead of only promoting services. The “transition from selling services to selling experiences will be no easier to established companies to undertake and weather than the last great economic shift, from the industrial to the service economy” (Pine II and Gilmore, 1998). The customer experience is inherently personal; it exists in the mind of an individual, related to an emotional, physical, intellectual, and even on a spiritual level. It is “an interaction between an organisation and a customer. It is a blend of an organisation’s performance, the senses stimulated and emotions evoked…” (Shaw and Ivens, 2005:6; Shaw, 2007:8). 93
The noteworthy event is to “make the customer feel enhanced or more contented when the organisation provides positive experiences” (Schmitt, 2003:4, 37). Like goods and services, experiences have their own features (Pine II and Gilmore, 1998:101) to quote “(1) the degree of customers’ participation in the experience, from a passive one in which they do not affect the performance (e.g. observers or listeners in symphony shows) to another end where it lies active participation. When customers play vital roles in the experience, and they affect the performance (e.g. guests in a cruiser); and (2) the connection that the customers have the experienced environment, which can be absorption in one end” (e.g. people visiting London, New York, Paris) and at the other end it is engagement (e.g. people visiting London Dungeon in the UK, or the House Believe It or Not! in Orlando, USA). Since 1980’s, individual authors (Holbrook and Hirschman, 1982; Havlena and Holbrook, 1986; Pine II and Gilmore, 1998; Ahola, 2005; Lindstrom, 2005; Shaw and Ivens, 2005; Shaw, 2007) theorised that consumer behaviour and the purchase decision-making process are not just influenced by rational elements. The emotions become one of the most critical issues to the organisation’s Marketing Management because they drive human behaviour. “People buy emotionally and then justify with logic” (Shaw, 2007:10, 24). The deed of choosing and purchasing goods and services is something more ‘all-inclusive’ than the purchase itself. The individual with all his or her senses is involved in a customer experience that can build a long-lasting relationship with a business and its brand, with encouraging sensations and feelings being the motives. These are the requirements of more out-going CX focused businesses. The Experiential Marketing Approach could be helpful in creating a positive, long-lasting relationship, through the management of 5 SEMs – Strategic Experiential Modules, ExPros – Experience Providers, and the CEM framework – Customer Experience Management (Schmitt, 1999; 2003). Experiential Marketing converges on customer experiences, and the individual becomes ‘emotionally involved’ with the object of the experience, something that can be a product, a service, a relationship or all of them drawn together. Experiential Marketing, is different from the Traditional Marketing which target features and benefits, EX has four essential characteristics: (1) it is focused on customer experiences; (2) it tries to understand the meaning of the consumption situation treating it as a holistic experience; (3) it is aware that the customers “want to be entertained, stimulated, emotionally affected, and creatively challenged (Schmitt, 1999:29); and (4) it is eclectic, using different methodologies. The meaning of satisfaction Trade always starts and closes with customers, and therefore the customer must be regarded as a core element of the market. All the business enhancements, profit, status, the image of the business, hinge on having loyal customers. Consequently, it is vital for all organisations to meet all the customers’ expectations and identify that they are ‘satisfied’ customers. Customer satisfaction is the measurement of how the needs and responses work in partnership and deliver better customer expectation. It can be attained if the customer has a perfect relationship with the supplier. In today’s competitive business marketplace, customer satisfaction is a vital performance activist and primary differentiator of Good CX business strategy. Therefore, the more customer satisfaction exists, the more the business is connecting with customers. Customer satisfaction is a crucial part of customer’s experience that reveals a supplier’s behaviour on customer’s expectation. It depends on how efficiently the interaction is handled and how promptly services are provided. 94
This positive satisfaction could be related to various business facets such as marketing, product manufacturing, engineering, quality of products and services, replies to customer’s problems and queries, completion of the project, post delivery services, complaint management. Customer satisfaction is the complete essence of the impression about the seller by the customers. This imprint which a customer makes regarding a seller is the completion of all the processes they go through, right from communicating with the seller to post-delivery choices and services and managing queries or complaints post delivery. During this process, the customer comes across the operational environment of abundant departments and the nature of CX strategies engaged in the organisation. This helps the customer to build a reliable judgement about the seller, which ultimately results in customer satisfaction or dissatisfaction. Customer’s perception of the seller helps the customer make a choice among the range of suppliers by value and how well they produced products that match all the desires. The supplier’s services never stop after the delivery, as customer seeks high values post-marketing services which could help them use and adapt the delivered product more efficiently. If customers are satisfied with the post-marketing services, then there is a good chance for the supplier to keep the customer and enhance repeated purchases and make more business profits. It is a requirement for an organisation to network and converses with customers on a regular basis to strengthen customer satisfaction. In these connections and communications, it is essential to learn and determine all individual customer needs and respond suitably. Even if the products are indistinguishable in competing markets, satisfaction can provide high retention rates. For example, shoppers and retailers are engaged with regular shopping and credit cards to gain customer satisfaction; many high-end retailers also offer membership cards and discount benefits on those cards so that the customer remains loyal. Greater the satisfaction level, the higher is the emotional attachment of customers with the specific brand of product and also with the supplier. This benefits in making an active and healthy customersupplier attachment. This connecting compels the customer to be tied to a particular supplier and chances of defection decreases. Hence customer satisfaction is a critical viewpoint that every trader should focus on to enhance business and profit. Customer evaluation methods should replicate the type of exchange that is being evaluated, i.e.is it transactional or relational. Often used measures in a relationship context are relationship quality (e.g. Bejou et al .,1996; Crosby et al ., 1990; Lang and Colgate, 2003), and relationship satisfaction (e.g. Abdul-Muhm in, 2002; Rosen and Surprenant, 1998). A positive relationship between service quality and satisfaction has been well recognised in the banking sector (e.g. Ennew and Binks, 1999; Jamal and Naser, 2002; Hooi Ting, 2004). However, “the constructs are highly correlated and sometimes difficult to separate in transactional interactions” (Bitner and Hubbert, 1994), nevertheless even more so from a relationship viewpoint cites (Dabholkar, 1995). In long-term relationships perceived quality and satisfaction are likely to combine into a general customer evaluation of relationship satisfaction and positive experience.
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Gaps and service quality Model 19
Source: Gaps Model of Service Quality (modified from Zeithaml et al. 2009).
This academic model presents a collective view of the consumer-company relationship. It is based on substantial research amongst some for-profit service providers. In common with the Grönroos (1984) model, it shows the perception gap (Gap 5) and outlines contributing factors in gaps one to four. In this model, (figure 3) expected service is a role of word of mouth communication, personal need and experience, and perceived service is a product of service delivery and external communications to consumers. One of the valuable points of this model is that “the majority of the existing customer management research has not focused on methodologies for modelling the customer quality life cycle.” (Zeithaml et al., 2009). Considering quality and its life cycle in a supplement to actual adjustment, researchers found that expectations formed before purchase were also essential forecasters of customer erosion (Baker, McNeil & Sirky, 1985). By understanding the gap between perceived and expected service businesses can better manage their communications to customers and not over promise, or under deliver. Service quality was a leading concern during the 1980s as divergent to product quality that could be explained and gauged more easily; service quality was intangible and therefore harder to measure. Accordingly, “businesses could find it hard to measure and understand how consumers perceived the provided service, which made it difficult for the firm to evaluate its service quality. Services are also heterogeneous, meaning they vary from customer to customer and from day to day. Thus, consistency in service delivery, that is normal behaviour from service personnel, and hence uniform quality is difficult to achieve. Finally, because service delivery cannot be manufactured and includes interaction with consumers, it is difficult for a firm to have managerial control over its quality, especially when consumers input can affect service performance” (Parasuraman et al., 1985). 96
Parasuraman et al. (1985) defined service quality as “a measure of how well the delivered service matches customer expectations on a consistent basis.” In this position, “customer’s perception of service quality is dependent on both customers’ prior expectations of what the outcome will and should be and the actual service that is delivered during the service encounter” (Zeithaml et al., 1993). The instrument consists of the following five dimensions (Parasuraman et al., 1988, pp. 23): •
Tangibles – Physical facilities, equipment, and appearance of personnel
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Reliability – Ability to perform the promised service dependently and accurately
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Responsiveness – Willingness to help customers and provide prompt service
• Assurance – Knowledge and courtesy of employees and their ability to inspire trust and confidence •
Empathy – Caring, individualised attention the firm provides its customers
“When providing services to customers, service firms depend on their frontline employees’ interaction with the customers. This interaction is exposed to many risks depending on several factors, including employee attitude and behaviour during the customer encounters” (Hartline and Ferrell, 1996). Goodman dialogues about “People are the solution” (Goodman, 2009, p.169) signifying that a customer service function’s performance mainly rests on the people working with customer service related issues, which is why it is essential for a company to hire, equip, train and motivate people working in these positions. In this meaning, Goodman (2009) points out that “frontline supervisors lack efforts in devoting time to develop staff and providing them with constructive critique as well as not embracing good performance as the biggest management flaw when it comes to customer service.” Another mistake that Goodman points at is the “bad linkage between incentives (which is the key to improved performance) and the right metrics or measurement of customer experience” (Goodman, 2009). As a concern, “service firms are more likely to fail in their service delivery” (Hartline and Ferrell, 1996). “Due to the important role frontline employees have in service delivery and customer’s anticipation of service quality and satisfaction, the way frontline employees deal with service failures have been identified as an important strategic area in the service literature” (Ashill et al., 2008). Best (2008), suggests that “little or no customer focus undermine competitive position and customer satisfaction.” In turn, “low satisfaction translates as low customer loyalty and retention. Efforts to retain loyal customers are lower than to attract new customers to replace the lost ones” (Best, 2008). Managers are obliged to produce profits and accordingly diminish their motivation to understand and provide customer satisfaction, which translates into poor performance. There are presently customer satisfaction indexes that measure customer satisfaction comparing goods and services available to consumers in regions that help managers measuring their company’s position. "Some examples of these indexes are the American Customer Satisfaction Index or ACSI, the European Customer Satisfaction Index or ECSI, the Swedish Customer Satisfaction Barometer or SCSB, the Deutsche Kunden-barometer or DK" (Best, 2008; Fornell et al., 1996; Ciavolino and Dahlgaard, 2007). “Indexes utilisation research shows that businesses in the top satisfaction index produce significantly higher levels of shareholder value than business in the bottom levels of the index” (Best, 2012; Sun and Kim, 2013). 97
“Since customer satisfaction is considered a “forward-looking” marketing metric, it provides managers with excellent insight to take corrective actions when needed” (Best, 2008). The ACSI is a customer-based measurement method used to estimate and improve the performance of companies, industries, and economic sectors. It measures companies’ market contributions as an aggregate, regarding the actual and expected quality of the products and services, as experienced by the consumers. At this instant, it is important to note that, based on present customer expectations, the business's supplied market will have predicted expectations on how the business will please its served market in the future. This forward-looking expectancy is essential because “expected future quality is critical for overall customer satisfaction” (Fornell et al., 1996; Fornell et al., 1994). Increasing customer expectation through overpromising will decrease satisfaction in the short term while increasing customer expectations through improving quality will increase happiness in the long run (Fornell et al., 1994). The ACSI model measures variables such as the full expectation of quality, expectations on customisation related to customer’s requirements, overall evaluation of quality experience and customer experience and overall satisfaction. “Quality CX can have a bigger impact on customer satisfaction than that of value” (Fornell et al., 1996). Customer service and satisfaction for service provider businesses is a significant concern since it is part of its performance measurements. Customers’ consideration of service quality influences their satisfaction and relationship with businesses. Furthermore, “Customer perception of service quality, relationship quality, and customer satisfaction has direct positive influence the customer loyalty.” (Segoro, 2013, p.306). Consequently, it is valuable for CX managers organising customer service or related activities to recognise any gaps that obstruct the defined goals related to business's strategy. Gaps will be established through identification of mistakes made by team members or complaints in the customer service programs. Furthermore, gaps can be identified by faults in the planning or execution of such programs. Customer service related issues involve the description of the term “quality” which ends up as one now understands as a subjective judgement. “Quality characteristics should be agreed on according to customers, projects, industry standards, to develop a collaborative relationship as with a partner” (Grisham, 2011). Furthermore, “customer satisfaction is normally determined by the impression customers have following a product purchase or experiencing a service. The customer experience might be positive or negative depending on the customer’s hopes and standards. Customer satisfaction shapes, and affects customer loyalty” (Setó-Pamies, 2012). According to Goodman (2009), “the second main factor that leads to unmet customer expectations (after defective products) is employee mistakes and bad attitudes which cause 20 to 30 per cent of the problems. The cause is that employees are equipped with defective products, tools, policies and response rules to work with.” Consulting work by Behara (2013), “customer service failures is related to the following three aspects; people, product and processes. An important aspect for a successful service provider to consider is the integration of customer requirements and expectations into the service strategy.” Doing this and also developing a service strategy that achieves its organisational objectives, the service provider will increase the potentials of reducing the service gaps delivered to the customers. This is “a key concept for the service provider to understand which will result in satisfied customers” (Kumar and Kumar, 2004). 98
Zomerdijk and Voss (2009) remark that “customer engagement is to enable the customer to have a personal and memorable interaction with the service will create an emotional connection that will encourage repeat purchases.” This arrangement can be reinforced by physical and relational elements such as physical settings and social interactions and therefore “people, processes and physical evidence” are essential in the creation and influence of customer experience of a service. "This engagement is a challenge to accomplish according to Roberts and Alperts (2010) and precisely the problems with creating ‘engaged customers’ lies in the alignment of critical strategic elements which are considered to be: •
Clear customer value proposition
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Good internal culture
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Great customer experience – this book focused on this aspect
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Consistent advertising that does not deviate from its core value proposition."
“The service concept is the result of a recognised mismatch some industries were experiencing between what they wanted to provide to customers and the actual result” (Goldstein et al., 2002). "One seeks to apply the service concept so that it roles of integration of the strategic intent and the perceived performance feedback translate as value propositions, internal culture, customer experience, and consistent advertising will represent improvement opportunities for the customer experience" (Behara, 2013; Kumar and Kumar, 2004; Roberts and Alperts, 2010). Some of the explanations that make customer engagement a challenging task to achieve in business are: • Separate ownership of critical elements – e.g. brand is owned by marketing and customer experience is held by the operations function. • Designed in isolation – essential elements strategies are defined without consultations in between the tasks that own them. • Lack of unifying customer outcome or goal – different functional areas, e.g. marketing and sales, may have different goals and core drivers which is logic when looking at the practical areas in isolation, but as a whole, it is not optimal. • Voice of the customer is not taken into account – customer surveys are conducted quarterly or yearly, and that won’t allow the firm to monitor and act on time to customers’ needs. Goldstein et al. (2002) present a service design planning model which uses the service concept framework as a basis for aligning a firm’s delivery service with its strategic intent:
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Figure 5
Edvardsson and Olsson (1996, p.149) describe the service concept in the following way: “The service concept is a detailed description of what is to be done for the customer (= what needs and wishes are to be satisfied) and how this is to be achieved (= the service offer)” This can be correlated to what Goldstein et al. (2002, p.126) have outlined: “Recall that the service concept includes the service strategy of what to deliver (market position and type of customer relationship) and how that strategy should be implemented.” Service experience bundle Bundling is a marketing strategy that connects products or services to sell them as a single joint module. Bundling allows the expedient purchase of several products and services from one company. However, in CEM it is bundling service items. A services bundle is a ‘package of services.” The strategy of grouping services together is applied in many industries. It can be of benefit for both service providers and consumers. Consumers, however, typically need to review service bundles carefully because sometimes they end up paying for things that they do not need. Service bundles are managed by many different types of service providers, for example, automotive mechanics may offer a service bundle for maintenance. Satellite providers regularly provide deals if a person subscribes to a particular package of channels. Spas even offer service bundles for a variety of beauty and wellness services. A services bundle can be advantageous to a service provider in many ways. First, it can support to increase sales. A customer who is seeking one form of service may be offered a range of other services at a price that seems attractive. Instead of a person paying $35 US Dollars (USD) for an oil change, they may receive a fuller maintenance bundle for USD 55 and save. Secondly, a services bundle can acquaint an individual with services that they may never have considered before. If they are overwhelmed, they may individually pay for them later. For example, a woman may be regular at a spa for a manicure and a facial. If she purchases a bundle one day that includes her regular services and a massage, she may enjoy it enough to make massages part of her daily purchase routine. 100
A services bundle can be useful for consumers for a diversity of reasons. First, consumers usually receive more services for less if they were bought individually. Second, consumers may get to experience services without paying a full one-off price. Consumers must be cautious and ensure that any service bundle that they choose will offer these benefits. The idea behind a services bundle is to provide a package that is economical than each service. This means that consumers usually should compute the price of each section of a service bundle and compare the total with the rate at which the service bundle is being offered. Even so, if the costs are considerably reduced, a services bundle is not helpful if it contains items that a consumer does not want. Consumers also should be cautious of sales tactics that push services that are not indeed of benefit to them. For example, there is no real benefit in saving money on a sport television channels bundle that a person will never in fact watch. An example of a service bundle could be: •
Call centre
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24/7 service support by phone, fax, internet
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The range of languages spoken
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Payment options
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Guarantees and Warranties
The creation of loyalty “The concept of loyalty has different definitions in the fields of behavioural sciences and psychology” (Blunkett, 2000). Before the 1970s, the notion of loyalty was presented as a pattern of repeated purchases, portraying a behavioural action(s). “It is considered that the cycle of repeat purchase was stochastic, i.e. random shares contained and thus could not be analysed” (Blunkett, 2000). A psychological approach was desirable and delivered to present the concept of multi-brand loyalty. “The approach considered that within a small group of brands, they could be replaced with each other” (Browne et al. 2008) since they owned some core requirements for equivalent quality. Fidelity to one brand is considered possible if there was availability from other competitors. The psychological method was strengthened and concluded in the following research “in theory the act of fidelity associated with the repurchase (behavioural approach) for a specific product is not consistent because the consumer may be loyal to multiple brands that can be replaced with each other” (Borden, 2005). The suggestions remained steadfast for some years until “a new concept of loyalty was presented that ratified the psychological approach, emphasising cognitive, affective and co-native themes presented as a discussion on attitude by Borden (2005). “A single view of loyalty states that consumer loyalty is a deep commitment to repurchase a preferred brand product or service consistently in the future, despite situational influences and marketing efforts that seek behaviour to switch provider in the consumer” (Schmitt, 2003). However, this impacts loyalty in two ways: situational and situational proactive. In the dynamic context, consumers often ‘repeat buy’ the brand, not considering any alternatives. 101
In situational loyalty context, other alternatives are not considered, but the choice arises from a state. “A preferred soft drink, consumed regularly, is considered loyalty proactive, but the same brand bought only to serve the guests at a party is considered situational” (Harvey, 2004). Another problem is the fidelity of the brand since it mirrors the level of customer retention. On average, organisations lose fifty per cent of their customers in less than five years, not because of their loyalty to the mark but for ‘other’ so-called reasons ( out of stock, not carried, not found). “Those brands that pose high brand loyalty can retain eighty per cent of its customers in the period’ (Wiers-Jenssen et al. 2002). This is a significant component, for-profit organisations using CEM. Loyalty is, initially, “to do with marketing investment” maintains (Gronroos, 2004). “An organisation needs to know if, indeed, the investment is worthwhile, whether it is profitable to invest in whom, when, where and how it should make that investment. Loyalty is a natural tendency of the market because consumers do not want to be seen as another who bought a product or used any other service on a whim” (Drucker, 2009). Some models of fidelity are outlined below and relevant in a CX setting: The model proposed by Jacoby and Chestnut et al. (1978) has the innovative approach on the issue of psychological fidelity. In this model, one realises that the act by a consumer does not always replicate repurchase of the particular brand through loyalty.
Figure 6
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Three ideal conditions must exist to ensure the existence of real loyalty to a particular brand or service based on research by (Watty, 2006). The information that the consumer holds about a specific brand should put it in a position superior to its competitors; in contrast at a public institution, the public looks at an institution as a place to obtain support in the same way. It is the reputation, quality and services consumers consider in the choice decision. Information about the brand must be aligned with the position and attitude of the individual consumer; for a member of the public the image of the institution matches the public values and is confirmed by the institutions use. The consumer must have a high resolve to buy a specific brand and oppose the alternative brands in the decision-making situations; for example the public review league tables as well as the customer feedback on their experience at the chosen public institution. If this is positive, it can drive the consumer to make a choice. Dick & Basu (1994) projected another model for fidelity that was based on the ‘cognitive, affective and co-native’ presented by Jacoby & Chestnut et al. (1978), however, they have presented a discussion about the attitude on the issue of loyalty which is the primary difference of this model versus the model by Jacoby and Chestnut. Loyalty in any setting is expressed by the public in the top eight reasons for choice; it had the right services, availability of staff, quality facilities, good response reputation, availability of ‘quiet’ areas, availability of spaces for self- rehab, quality of public transport in the town/city and a friendly attitude. Perceptions of facilities are one of the main reasons for their decision to use a commodity. In conclusion, researchers have perceived and defined the concept of loyalty in some different ways. Loyalty is feigned to be positively related to the ability of a provider to both attract new customers and retain existing ones (e.g., Dick & Basu, 1994; Oliver, 1997; Henning-Thurau et al. 2001). Nevertheless, even though related aspects of brands position themselves next to each other, the power values of one brand over the other may lead the client to endure adversity (time, travel, and price) to achieve a specific brand (Shemwell et al. 2008). The relative positioning of one brand over another is what should be judged vital versus the absolute rating of the brand. There may be situations where different brands can have high ratings independently, but with low overall attitude scores. In an ideal location where all brands were given a maximum grade, there would be action on one and, all would be substitutable. This situation would cause an allegiance to multiple brands. The fidelity to a single brand may also occur in a position where the scores are low ratings, however, when a consumer supports one over the other generating a more positive attitude the fidelity is complete (Ramsden, 2001). Dick and Basu (1994) associate related attitude and repeat purchase to identify four distinct consumer behaviour: true faithfulness, loyalty, latent loyalty and absence of spurious loyalty; all have relevance for example in any setting. The fidelity attitude, in theory, is one in which the consumer has a high relative position for a particular brand and high repurchase behaviour in a given market. 103
The latent loyalty is described as one where the consumer has a strong preference or attitude toward the brand, however, also has low repeat purchase behaviour due to environmental or situational conditions. The ‘spurious loyalty’ occurs when the consumer buys the same brand all the time; even so, they do not compare the brand with different attributes of others. The periodic repurchase may occur in situations where there is no alternative, or the choice is made based on past addictions. An essential aspect of this relationship development is that it needs to be promoted by different ‘service agents’ through critical stages of the relationship and therefore, communication and customer record systems that share customer knowledge across the organisation are vital. Consequently, loyalty in a commercial setting is about the brand, the experience and leveraging consumer wellbeing for the profit motive (Rowley, 2003). The approach, in theory, uses the psychology of the customer to understand their needs and wants and how this intelligence, can be used for commercial gain (revenue and profit). Loyalty to a service provider based on the literature (Browne et al., 2008) is more about having a quality image, reputation and retention. This section has uncovered the literature on loyalty, which is built on fidelity that is driven by a positive relationship hypothesis between the seller and the buyer in the commercial world and also in the not-for-profit world between the ‘provider’ of the service and the ‘user’ of the service. The concept of loyalty and satisfaction in literature purports that these two concepts of vital inservice experience to drive what is expressed as customer value.
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Constructing the experience journey Ask yourself a simple question, where does the experience journey start from the customer position, does it begin with the need or want, or does it with a desire? This desire, of course, can be something that has established itself through exposure to communication or could be a conversation with family or being in a store or online and being attracted to a particular display or offer. Inspiration to purchase a product or service has a ‘beginning and an end’, the end, of course, can go well beyond the actual purchase. In constructing the experience journey, one has to review the key steps involved and establish a roadmap of key points in the experience journey so that one can understand the motivation, the decision-making process. Let's now examine a simple example based on washing powder or liquid. “Mrs Jones does a family wash twice a week; her need is to have clean, great smelling clothes and articles for her family. She is very particular, and so is her family they like feeling clean and comfortable, and the smell is important to them. Mrs Jones goes shopping every week and typically bias for washing liquid from her local supermarket, however in recent months she has also purchased her groceries online, but she meets friend Jane at the supermarket every week where there have a chat and catch up on local news. This week Mrs Jones is going to the supermarket washing liquid is on the list as well as fresh vegetables and being somewhat old-fashioned, Mrs Jones likes to feel see and touch her vegetables before purchase. Her journey starts at home, and she'd like taking the car as it is comfortable and convenient, it allows for the placement of her groceries in the back of the car, her journey to the supermarket takes about 10 minutes. On entering the car park she looks for a space close to the entrance and exit, finding one she parks her car. The next challenge is to see a trolley and also have the money ready to slip into the slot to release the cart. Moving from the entrance, she proceeds along the aisles of the supermarket towards items that are noted on the list. In the cleaning isle she comes across a range of washing liquids and seeks out her favourite brand; however she also notes visually that there are two specials on display, she has a decision to make maintain her loyalty or save some pennies on buying the brand on special. The choice is not simple, she has used and trusts the favourite brand and knows it will do the job and give her no problems. Tempted as she was she reaches out for her favourite brand it is on the top shelf and not that easy to get as Mrs Jones is only 4 feet tall. However, she's successful and places her washing liquid in the trolley and proceeds. At the checkout, she has to wait to be served the supermarket is very busy with lots of customers her wait is around 10 minutes, Mrs Jones just wants to get home. Finally, it is her turn, and she places her items on the counter and waits for the assistant to read the barcode using a scanner and provide her with a bill and an amount of payment. Mrs Jones likes to review the bill to ensure there are no mistakes and this takes time, she also wants to pay using her debit card so that she can track the purchases for the week and has a record of her income and expenditure. She places the card in the slot and enters her pin number and waits for confirmation. While this is happening, she is packing have bags with their purchases including the washing liquid. On exit of the till the point, she pushes the trolley through the maze of people and exits and heads towards her car. However, there is a problem she cannot open the doors of her car as other cars have been parked too closely. She looks around for help and finally waves down a supermarket trolley assistant who then assists Mrs Jones in moving her car and groceries to another location. 105
Finally, Mrs Jones packs the car and heads home, but her job is not complete she has to empty the car and place everything in the kitchen where it belongs. Disappointingly, she finds that her favourite washing liquid has a loose cap and most of the content has leaked inside her shopping bag making a terrible mess, she is annoyed and angry not only has she lost the contents of the bottle of washing liquid but she has to clean up her bag, and what's more she has no washing liquid, she has no choice but to go back to the supermarket and demand some form of compensation or replacement. In using this simple example, you can see that not all journeys are simple when buying goods and services. However, by understanding the experience journey a marketer and the organisation can plot the trip and make life easier for the customer. Some high street retailers have started to consider the experience journey across the range of products or services they promote and sell. A good example is one store provides its customers with a pre-purchase assessment form for white goods. The questionnaire for instance for a washing machine asks the customer to consider items such as; access to the location of the washing machine; the price the individual is willing to pay; the needs of the individual and the washing machine; family size and frequency of washing; power points and drainage; disposal of the old device; the size of the space available for a new device both the width and height; the length of service; required warranties and guarantees; the energy rating; this spin speeds and cycles; ease of access to the loading door; ease of placement of washing liquid or powder, price range.” Take also a need for a wristwatch what are the experience questions for the journey to examine? 1) male or female 2) large or small 3) necessary or glamorous 4) price range 5)wind or electronic 6) functions needed 7) age of person 8) reliability and creditability 9) purchase options 10) payment options 11) warranties and guarantees 12) repair facilities 13) wristband type (steel, leather). By constructing the experience journey pre-purchase both the customer and the seller have a much better idea of the practicalities, needs and wants which then makes the whole experience more pleasant. It shifts the focus from being a bother to being a fun, enjoyable experience which is remembered by the customer and therefore repeats purchases and customer lifetime value has been respected. Many customers at times do not consider in detail the physical constraints; actual needs and wants; affordability of products and services in high-level detail, it is logical therefore that the experience journey is understood, measured and that one gains feedback to enable the business to improve the experience journey and also possibly create innovation. The number of times one hears stories of people's good and bad experiences would fill many chapters of a book and many others recall stories of how people have had to cut beds and furniture in half to get it where it needs to be. Similar experiences exist in hospitality, travel, insurance, banks as examples. The message in this section is simple and clear if you want to create a good experience for the customer then understand and plot the customer journey and then develop solutions that assist the customer on one hand which makes the trip enjoyable and memorable, and on the other hand saves the organisation time and effort in creating a sale, repeat purchase. So, what question should we ask to build a good service experience, the answer lies in asking staff and customers for feedback. What is the experience journey, how can we scheme the trip from the team and customer position which will add value to both sides and co-create a meaningful service experience? 106
All business is different, and therefore the service experience has to consider the product and service offer; how it is sold; touch points; logistics; operational issues. In the first instance of a customer experience journey the place to start is establishing the customers' needs and wants when they are considering a purchase, what are they looking for and why? This is usually part of what is called the ‘enquiry stage’ where the customer is looking at options, or has a range of brands in mind and then enquires as to what is available; these are specific enquiries based on what the customer needs and wants in their opinion. The next stage is a view of options, and a recommendation is usually made by the seller to the buyer, this is measuring the need and want of the customer to a particular product and service that meets a collection of criteria (price, performance, quality, brand, values, warranties, service support). The next stage is usually the purchase, the choice is made by the customer, and money is exchanged (value) to the seller and goods or services are provided in the exchange. The experience is the relationship between the provider of the goods and services and the customer (I use this supplier because of......). The next stage in the experience journey is after sales care and follow up (are you satisfied with your new purchase?) and is the least followed up by organisations, unfortunately. I never forget after buying a car receiving a call from the sales director asking me was I happy with the car and service, I felt wanted and needed! My custom had a value to that organisation. The last stage of the experience journey is reconsidered and reflection after purchase and usage, the customer evaluates the product or service, did it satisfy my needs and wants would I repurchase it or look for something different? Along with this experience journey we need to understand the customer at the beginning, the behaviour and mind-set of the customer is there a real satiable appetite or pure curiosity at the needs and want stage. Can the product or service you have to match the needs and desires of the customer, will it amaze the customer and provide complete satisfaction? Does your product or service offer "something more" that builds value in the customer's mind, beyond competitors? Can you, and do you have compassion for the customer, one does this during interaction with the customer. Great salespeople understand and empathise with customers and pick up clues in conversation which they use to reinforce their product. For example, if a person has dust allergy this is a perfect clue for a Dyson vacuum cleaner salesperson as one of the Dyson value propositions is dust management due to filters. Another example is a family car purchase, how many kids does one have? One or Five, this defines the type and size needed. The issues and opportunities of mapping and managing an efficient Customer Journey of Experience are: Improved Customer Value Providing customers with more for the same or less price The building, or developing customer relationships in the journey. Increasing customer satisfaction by doing extras Reducing hassle for customers, and making it easy to buy. Making things quicker for customers to access and purchase 107
Make things more consistent and reliable for customers Design of product/service to fit all customer needs, and the co-creation platform of choice. Creating a better customer experience at all touch points Improved Employee Value Improving employee knowledge or skill or products and services on offer Enhancing employee career opportunities, by training and development Building employee relationships inter-department and customers Building employee pride in the experience journey Strengthening employee confidence in their ability to deliver a quality experience Enhancing employee job satisfaction by motivation and rewards Making work more enjoyable, make it fun not a chore Improved business value Growing sales to meet targets Increasing profits by selling goods and services with strong margins Reducing wastage/eliminate “ no value added” operations Saving time which equals money ︎ Simplifying processes internally and externally Lowering errors/variances in the customer experience Removing duplications of effort Saving effort in servicing customer needs and wants Improving supply assurance/incoming quality Increasing/conserving resources Enhancing business reputation - being a better business and a better neighbour.
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Experience KPI measurement In this section we consider what to measure and how to measure it when it comes to the experience; the measures cover the experience from the organisational and customer perspectives: Organisational KPIs (on and offline)
What to Measure
How to Measure it
Loyalty
Share of Customer / Retention rate
Segmentation / Targeting
Mix analysis
Quality
Usage / Consumer Franchise
Satisfaction Repeat Purchases Purchase Value
Churn rate / Retention rate Market Demand / Usage / Trade up Value per item / Value in total
Profit per Customer
Margin analysis / Return on customer
Response to Offers
Hit rate / Take up / Conversion
Phenomena
Satisfaction / Quality
Processes
Speed/ Efficiency / Recall / Recognition
Outcomes
Happiness / Feelings / Brand premium
Brand Values
Channel / Price / Benefits / Value
Innovation
Customer losses / Gains / Usage / Demand
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The measurement of experience should be completed internally and externally on a regular basis to ensure the experience process is working to a high level of satisfaction. The use of metrics and analytics can allow you, as a marketer to set targets and measure performance so that one can provide meaningful feedback to management and justify the experience expenditure and ensure the customer is satisfied with the offer. Most companies recognise the need for marketing metrics and the upside benefit they provide, but they struggle where to get started. A 2010 survey of 400 companies exposed that 75 per cent understood the need for marketing metrics, but only 25 per cent had implemented a marketing metrics program (Booze Allen, 2011). To build a performance advantage one first needs to understand how Marketing Analytics (instrumentation) drives Marketing Metrics (performance metrics). Marketing Analytics is the tools and data needed to produce Marketing Metrics that are measures of performance. The market share ladder provides marketing analytics and data that fill this set of share performance marketing metrics. The market share index is a shared metric that maps market share penetration. Their purpose is to assist marketing and product managers in managing the marketing performance and profit impact of their product-market strategies, items such as awareness, value, attraction, price, availability and purchase, experience, are just some of the ladder steps you may wish to consider measuring. Many organisations use bundles of measures such as 1) competitive metrics 2) customer performance metrics 3) market and share metrics 4) marketing profitability metrics 5) pricemargin metrics 6) pricing and value metrics. Marketing ROI indicates the marketing profits produced per dollar of investment in a marketing and sales strategy. With investments in the millions and billions, it is critical to understand the return on that investment of a CX programme. Summary In this chapter, we have reviewed the experiential world that exists and how satisfaction is a critical driver in making a pleasant experience journey and the gaps that exist in service quality. Moreover, we have debated the service experience bundle and how loyalty is created through the experience process, by considering the experience journey and managing it. The experience journey is real and also emotional, you need to combine both and show performance and empathy at the same time. A good experience is created and adds value to the journey; it drives satisfaction, loyalty and trust. We have considered measurement and the setting of KPI's and how customers see the value and how service and experience can work together as marketing drivers using the service features of inseparability, intangibility, perishability and variability. We review how value is constructed in the mind of the customer so that customers stay loyal. Review Questions • Using your own words explain your understanding of the experiential world, including a positive and negative experience you have had. • In 100 words explain the benefits to an organisation of reasonable CEM satisfaction, quality, and loyalty at the customer level. 110
• In groups of 4 map out the experience journey of buying a family holiday, present your findings to the class. • As part of Tesco, you have been asked to set measures and KPI’s for the CX initiatives. What would you measure and how would you measure it. Use examples, please.
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CHAPTER THREE Introduction Service and service experience in an experiential world of today is driven by people and also technology to provide 24/7 delivery. The features of the service experience are constructed to build positive experience values. Chapter Learning Outcomes •
To appreciate the concept of value in exchange.
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Establish an understanding of service and experience in marketing
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Be able to understand the components of an experience at the customer level
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How to build experience values in an organisation
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Having completed the module, you will be able to:
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Critically assess the use of experience as a value driver inside an establishment.
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Assess the core elements of service experience and their financial contribution.
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Having completed the module, you will be able to:
Critical thinking •
Communicate effectively with service and experience value
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Conduct analysis and plan a service based on an experience journey
Having completed this topic, you will be able to: 1. Critically evaluate the role of service experience components within an organisation. 2. Assess the core elements of experience as a marketing driver and their financial contribution. OBJECTIVES The value in the customer's mind is constructed through quality service experiences not just once but many times. By studying success and experience features a marketer can add value to the customer and gain retention thus building the bottom line.
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Customer value Understanding what the customer wants, needs and what builds customer value in an organisation seems to be necessary for business success. Customer value is even considered by some as the source of all other benefits in an organisation (Heskett et al. 1994; Hammer, 1996). In any business knowing and understanding the customer needs and wants allows the organisation to provide the right product and support services to deliver a quality experience – the unique experience. Delivering customer value requires an evident appreciation of exactly what kind of value is desired by customers; value is not always intrinsic in products as goods or services themselves; it is experienced by customers as a result of using the supplier’s goods and services for their purposes (Woodruff & Gardial, 1996). Value can be therefore specific, as the customers perceive it; every organisation must find ways of finding out from customers how they see the value—both now and in the future. Zeithaml (1988, pp.2-22) explains value as ‘perceived value as the consumer ́s overall assessment of the utility of a product based on perceptions of what is received and what is given.’ Kotler et al. (2000, pp.142-155) state it as ‘the difference between total customer value and customer cost,’ where customer value is the benefit the customer anticipates to get from a given product and service. According to Woodruff (1997,pp.139-153), customer value is ‘customers perceived preference for an evaluation of those product attributes, attribute performances and consequences arising from use that facilitates achieving the customer’s goals and purposes in use situations’. Customer expectations are linked to the customer’s perception of delivered value. The Kano model, see figure seven (Kano et al. 1984, 1996) is also called ‘the theory of attractive quality’ and is said to provide an understanding of how customers assess the value of an offering (Bergman & Klefsjö, 2003). Figure 7 Kano Two-dimensional Model
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The model shows that by gratifying the customers essential and expected needs, an organisation can achieve anticipated quality but if a company wants to create an attractive condition, to satisfy the ‘excitement needs,’ the customer must be given something extra and unexpected (Bergman & Klefsjö, 2003). Lilja (2005) deduces that quality can be defined as creating customer value by increasing the positive customer influence. Kano also claims that within TQM, much of the focus is on reducing adverse effects and that TQM could benefit from addressing the positive affect perceived by the individual. The area of attractive quality is where commercial experiences can be found, requiring ‘something extra’ being offered to the customers to delight those, (Tarssanen & Kylänen, 2005). Service and the experience as marketing drivers One of the leading trends in the business world in recent years has been the growth in services. Today, the provision of services in the US and UK accounts for seventy per cent of Gross Domestic Product (GDP), while the provision of services in the UK represented over fifty-five per cent of total employment in 1970 and 2017, it corresponds to seventy-five per cent. The Service industries (More formally termed: 'tertiary sector of industry' by economists) concern the provision of services to businesses as well as end consumers. Therefore, it includes accounting, tradesman ship (like mechanic or plumber services), computer services, restaurants, tourism, etc. Thus, a Service Industry is one where no goods are produced whereas primary industries are those that extract minerals, oil etc. from the ground and secondary sectors are those that manufacture products, including builders, but not remodelling contractors. The tertiary sector of the economy (also known as the service sector or the service industry) is one of the three economic areas, the others being the secondary sector (approximately the same as manufacturing) and the primary sector (agriculture, fishing, and extraction such as mining). The service sector consists of the "soft" parts of the economy, i.e. activities where people present their knowledge and time to improve efficiency, functioning, ability, and sustainability. The fundamental trait of this sector is the production of services instead of end products (Tangible). Services (also known as "intangible goods") include consideration, information, involvement, and discussion. The production of and dissemination information is also regarded as a service. However, some economists now attribute it to a fourth sector, the quaternary sector. The tertiary sector of industry covers the provision of services to other businesses as well as final consumers, B2B. Services may involve the transport, distribution and sale of goods from producer to a consumer, B2C, such as wholesaling and retailing, or it may concern the provision of a service, such as in pest control or entertainment. The goods may be changed in the process of providing the service, as it happens in the restaurant industry. However, the objective is on people interacting with people and serving the customer rather than transforming physical goods. For the 100 years, there has been a considerable shift from the primary and secondary sectors of industry to the tertiary sector in developed countries. This change is called tertiarisation. The tertiary sector is the largest sector of the economy in the Western world and is the fastest-growing sector. In researching the growth of the service sector in the early Nineties, the globalist Kenichi Ohmae explains that: "In the United States 70 per cent of the workforce works in the service sector; in Japan, 60 per cent, and in Taiwan, 50 per cent. These are not necessarily busboys and live-in maids. Many of them are in the professional category. They are earning as much as manufacturing workers, and often a lot more.” 114
It is projected that the UK service sector will be responsible for all the net increase in jobs by the end of 2018. Services have grown faster in the world economy, accounting for one-fourth of the value of all international trade (Ramsden, 2009). Service companies account for almost thirty per cent of all UK and US exports, resulting in a considerable trade surplus in services ‘versus’ tangible products (Ramsden, 2009). Services include not just people working in service businesses—education, commercial airline, banks, communications and others—but it covers are also people who provide services within the industries, such as prosecutors, staff trainers and health sales. The service sectors vary widely: The Government sector offers services via law courts, employment agencies, hospitals, lending agencies, military, police departments and fire brigades, post offices, universities and schools plus statutory bodies; the non-profit sector / public sector. The significance of this service growth is that as there are more service-based customers that demand quality CEM and this area will grow, as Pine and Gilmore (1999) foretold. Organisations that exist in the service economy will need to understand how CEM systems work and the benefits it can provide if performed well. The sectors of non-profit organisations are providing services by way of museums, charities, churches, universities, colleges, foundations and hospitals; these services play a significant service role in society. Much of the business sector provides services through airlines, banks, hotels, insurance companies, consulting firms, doctors, lawyers, entertainment companies, real estate companies, advertising agencies and research and retailers for profit (Perry, 2001). In supplement to these traditional sectors of services, new types are emerging all the time, delivery companies, packaging, envelopment, trekking with animals, banking and more (Patterson, 2001). Nevertheless, there are ways service marketers can influence the public, for example: •
Explicit service promises.
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Make realistic commitments.
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Ask for feedback on pledges made in society.
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Avoid price or advertising wars.
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Formalise service promises.
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Implicit service promises.
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Make sure service tangibles—a beautiful premises
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Accurately reflect the service provided.
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Ensure that a higher level of performance justifies a premium price.
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Service and experience success Unless your enterprise has a stronghold on an industry or was the first provider, everyone understands that to have a successful business; you need to have more than just a great product or service. Excellent customer service is the enhanced half of a successful business. When one talks about successful businesses, one does not mean just regarding revenue, nor only traditional customer service, nonetheless useful in the purpose of operating in the territory of positive sentiment -- so much so that the mention of your brand triggers good emotions from a customer. Yes, when customer service evolves into the customer experience. When one mention companies such as John Lewis, Amazon, and American Express? What comes to mind? Only a small percentage of companies can travel through the service landscape of social media, always-connected consumers, and the "customer is always right" mind-set unharmed. And those that raise the bar when it comes to serving their customers and surpassing not just their expectations, but the industry's, are the businesses that rise to the top. It' is not an honour to be given out, but the process of being endorsed by customer loyalty, word of mouth, and of indeed, revenue growth. What is Good Customer Service? That solicits the question, what does excellent customer service mean and how to achieve it? We all know now through this book that excellent customer service is essential, but once you get down to trying to define ‘what goes into it’, not all scholars and practitioners are on the same page. To some, excellent customer service is as simple as solving problems and offering solutions in a convenient method. To others, it means general appeal and courtesy from those who represent the forefronts of the establishment. Many define it as when a company is willing to give their customers whatever and entirety that they want, ‘the customer is always right approach’ - no matter how excessive some of those demands may be. There is no a right or a wrong theory because the influences of what makes customer service “highquality” also depend heavily upon what specific things a particular customer may hold valuable or their potentials from what industry competitors can do. Customer experience covers the conscious and subconscious relationship that a consumer has developed a brand. The discernment formed is based on judgements, past experiences, and value for money originated. Competition in every industry is moving companies to think about revamping their customer service experience seriously. A typical example is the customers of the airline industry who are offered continuously better deals, packages, discounts and offers.
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Why Managing Customer Experience is Important? While customer experience did not collect significant attention in the past, it has grown to become one of the critical indicators of customer satisfaction and repeat sales. If a customer’s experience journey is not controlled appropriately, with focus on each touch point, then there is a significant chance of losing the customer to a competitor. The world is changing fast, and establishments who would like to become successful in a highly dynamic business environment must seriously consider making customer experience part of their organisational processes. How Quality Customer Experiences Help an Organization? • A significant benefit that organisations can gain through checking the customer experiences is the reduced cost of dealing with displeased customers. The concept is to create a user experience that reduces the number of complaints and improves quality of interactions with the customer. • Happier customers are more easily persuaded to buy add-on services or products provided by the company resulting in more sales volume. • An essential part of customer retention strategy is to ensure that they get the maximum value of their investment in a product or service. Quality experiences remain on in the customer’s mind that automatically wishes to repeat business with the supplier, because of how he or she felt. • Finally, happier customers tend to share their stories with others. Social media gives them an enlarged voice, enabling them to share their experiences with friends and family members. Word of mouth marketing has become very dynamic with the advent of social media. Internal Organizational Resistance The procedure of implementing well thought out organisational guidelines is a steep path. Change in overall attitude and implementation of customer experience improvements take a lot of determination. The alteration in culture starts from the top and flows to the bottom. The clear notion of improving the customer experience will not be enough. To bring real change, customer-facing employees need to own the concept and practice it in their day-to-day dealings. Employee Job Satisfaction The principal challenge faced by organisations is to ensure employee satisfaction. Front facing staff members have to deal with all kinds of customers directly every day. Sometimes this direct interaction results in diminished levels of motivation, which can directly impact their performance. Therefore, when bearing in mind improvements in customer experience, an organisation must keep their employees stimulated at all times. One of the motivators to ensuring high levels of motivation is hiring the right people. Provide your customer service employees with growth and recognition. Finally, make their job more interesting through better management, training and empowerment.
Increasing Sales Volume Business organisations are looking for opportunities to upsell and cross-sell products. Likewise, it is not a great idea to try and push a new product or service to an already exasperated customer. 117
The training given to customer-facing employees should make them understand when and how they can clip on to the sales and when this is not possible. Being too assertive will agitate a customer and ruin the experience for them. Cost of Customer Experience Management One other problem faced by organisations is the cost incurred in improving the overall customer service experience. This can include costs of connecting new software or using new technologies for stronger management and streamlining. It can also encompass the cost of hiring more staff or experts who can help make the process smoother and quality oriented. Notwithstanding the fact that CX costs might be high in the beginning, it is indispensable to zero in on the objective at hand and ensure that customer satisfaction is not conceded, and enriching customer experiences are created. The key to retaining customers is having the ability to use digital technology to be receptive, empathetic, approachable, coupled and most of all human. There are ten key areas to focus on (see Eptica.com / ten steps to customer experience): 1. “Expand customer service beyond traditional hours. Customers now require to be able to connect with you 24×7 via their channel of choice. 2. Concentrate on speed of response. This not only covers responding quickly to customer interactions on channels such as email and social media, but also putting in place practical processes that profit the customer. This could involve notifying them before they go overdrawn or sending a text message if their credit card is declined in-store to offer assistance. 3. Be social. Ensure you are checking all social media channels and responding quickly to any issues raised by consumers. Social media also gives one the opportunity to build relationships with ‘super consumers’, customers with big online followings who can reach and influence large numbers of people. 4. Be completely multichannel. Customers want to be able to contact you through different channels, dependent on their situations. For example, in an emergency such as when their credit card is lost or stolen, they want the nearness and comfort of speaking to someone. For less time-sensitive matters, they may well be happy simply to email – provided they obtain a fast enough answer. In fact, many inquiries can be dealt with satisfactorily by providing information on a website, along with web self-service systems that understands the query in order to deliver fast, relevant and consistent answers. 5. Make it mobile-first. Merely having a mobile app is not sufficient in a world where more people access the internet on their phones than through desktop computers. Business needs to look at incorporating functions such as live chat, click to talk or even video customer service within their mobile aids, as well as utilizing more traditional channels such as SMS to engage with customers. 6. Word of mouth is more valuable than before. Consumers that have a bad experience tell more people than those that have a good one – and social media provides the means to do this quickly and easily. 7. Warrant you have the right skills. The call centre of the past handled a narrow set of issues, mainly in English, over the telephone. Consumers now want to use a whole range of channels to talk about a large number of services or products, and may not be native English speakers. And with the rising importance of technology, their queries may well be technical as well as financial. 118
Recruit and train so that your frontline agents have the training, technology and personalities to provide the right service to consumers. 8. Eliminate silos. Customers do not desire to have to repeat themselves if they change channel or are speaking to a different department. Join up your customer service so that you have a comprehensive picture of a customer’s history, updated in real-time and covering exchanges with all departments and channels. 9. Twist customer service into a revenue prospect. Obviously this is an area that has to be handled sensitively but there can be times when suggesting a new product or service will be the right resolution to a customer’s needs. Additionally, by analysing the content of customer service interactions can increase their understanding of what consumers are looking for, and potentially create new products to meet their requirements. 10. Eliminate paper. Many businesses operate in a regulated industry, but wherever possible remove paper-based processes that add time, cost and abrasion to the customer experience. Ensure that all incoming documents are automatically scanned and replace paper-based systems with online forms.” Key service experience features The factors outlined above may seem simple enough; nevertheless actually implementing them in business could take more strategy, time and resources to achieve a genuinely satisfying customer experience. Here are some more concepts for consideration for efficient CX. 1. Do not Cause Your Customers to Wait Patience is a virtue, but do not rest on it when relating with customers. In one survey conducted recently, 69% of those interviewed defined good customer service as receiving a quick solution to a reported problem. On the other hand, 72% of respondents expressed their irritations on having to report an issue to multiple employees at different stages. If one has ever had a similar experience, then you know how maddening it can be to call back or being transferred only to re-explain the issues over again (and again), while never actually getting any closer to a solution. Customer service representatives who have neither the authority nor the ability to resolve problems on their own, and are thus forced to take those problems to higher levels, one runs the risk of disaffecting customers. Regrettably, this is a common problem. In fact in the recent survey, 26% of consumers have experienced being shifted from agent to agent without any resolve. Failure to react appropriately to customers can destructively impact a business’ bottom line for years to come. Conferring to the same research, only a quarter of respondents claimed they would continue to seek out a supplier two years or longer after a bad experience, while 39% said they would avoid vendors for longer than two years. Women, B2B customers, and “Gen-Xers” are more likely to continue to circumvent a business for a more extended period. Fascinatingly, high-income households had the most reflective results, with 79% stating they would avoid a business longer than two years after a miserable experience. To prevent damaging breaks in service, make sure that the employees who will be working most closely with your customers have the authorisation and training to offer solutions when issues arise. 119
2. Transaction Transparency As a customer navigates an online store, will they see an apparent reason why a site-wide sale is not being applied to their order? Can they effortlessly access information about delivery timeframes and returns? Will they be able to comprehend when and how discounts can be applied? If the response to any of these or similar questions is a “no,” then one may be short on the customer service front—and could be losing sales as a result. According to Forrester, 45% of customers will stop an online operation if they cannot more easily find an answer to their questions. When it comes to providing information, it is always preferable to be on the side of care and provide full data transparency. Ensuring a precise commonly asked questions (FAQ) page is a definite beginning. Nonetheless, the most successful online companies take it further by presenting guidance and direction along the experience system and making sure not to hide any appropriate information that the customer may find useful. In brick-and-mortar stores, events are handled slightly differently. In this case, excellent customer service centres on signage and positive verbal communication. The last thing one wants is for a customer to make faulty assumptions while in a store. If you have a no-return policy for particular items, for example, this should be made clear to customers before they purchase. Likewise, do not anticipate customers might read the fine print; any significant data should be shared upfront -- if there is transparency throughout the transaction, you will diminish shocks and disappointments. 3. Support Them Help You In the age of e-commerce, most companies make the error of letting online shoppers fend for themselves, trusting self-service resources. Though it is correct that today’s consumers are more self-sufficient, not everyone is tech-savvy, or always in the right mood to put their self-sufficiency skills to test. Sometimes your customers do not want to work it out and want an answer by asking someone. According to e-Consultancy (2018), “ a vast majority of web customers (83%) require some amount of customer support while shopping online. Whether that is speaking to an agent in person or online, or over an email (for issues that are not as pressing) -- most customers, at some point, prefer human interface so they can move straight to the issue or complete their transaction.” To avoid a collection of abandoned shopping carts, one must warrant you are meeting the customers' needs with the support they require. Live chat is best, as this has been proven to decrease abandonment rates. If live chat is not a definite possibility, be sure to at least provide an easy-access link for email questions and a 24/7 toll-free number posted blatantly on every page of your site. Logically, if your customer feels like they have ‘nowhere to go’ to get a quick answer, then you consign the customer into a situation where they abandon their shopping cart. They may intend to come back later, or they may have determined that it's not worth the effort. Whatever the reason, the likelihood of that sale happening just fell significantly. Reduce the number of abandoned shopping carts by providing timely, well-placed service resources in front of the customer. 120
4. Construct Trust, and They Will Come (Back) If the establishment is answering a phone by the first ring, and is straightforward with all pertinent buying information, and is giving customers a personalised experience when they need it, then well done, one is building much-needed customer trust. This is the final piece of the CX support conundrum, but it is the most important. Your product or service will entice them initially, maybe even bring them back a second time, but what dependably attracts customers to return is trust that they're going to have a good, barrier-less customer experience. If you can provide the customer with what they are looking for when they need and expect it, then that trust builds between your company and the customer will with into invaluable customer loyalty. Efficient Customer Service: Case-By-Case Not all people are going to agree on what it is exactly that makes up excellent customer service, but lousy customer service is not hard to describe because while specific service standards change based on the company, industry and expectations, you can wager that customers will acknowledge lousy customer service when it happens to them. Conceivably, recognise that excellent customer service incorporates any interaction, online or off, that a consumer or potential customer may have with your organisation, and it covers the entire experience, from initial contact to final sale and beyond. Be sure to do everything in your control to keep your consumers informed, on the move, and above all happy. If your company is receptive and welcoming, and provides timely, relevant information when the customer needs it, you will build a standing for consistent good service. If your company can achieve a positive and efficient service experience wherever your customers happen to be and can scale it, then you are well on the way to defining what good customer service means to your company.
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Construction of experience values In consumer research ‘ value ’ is mostly examined as customers’ evaluation of the trade - offs between the benefits they receive and the sacrifices they make (Zeithaml et al., 1988). More recently, ‘ customer - perceived value’ (Kotler et al., 2009) or ‘value for the customer’ (Woodall, 2003) is in theory as a judgment perception of the potential economic, functional and psychological upsides customers attribute to, or expect to receive from, the marketer’s offering (Kotler et al., 2009; Woodall, 2003). Approaching value from a rationalist, cognitivist perspective, researchers are concerned with how the customers (sub) conscious evaluates, assesses, reasons about, judges, and balances against the value of something, allowing for a considered forecasts to be made as to a customers’ purchase and consumer choice. In contrast to the cognitivist approach, the ‘experience economy’ (Pine and Gilmore, 1999) moves toward the more emblematic, emotional aspects of consumption. The target is on experiences as a system for delivering positive customer value. Both the cognitivist and the experience economy approach are principally oriented towards ‘value’ as service qualities or experiential features that realise some positive outcomes or benefits for customers. For instance, researchers aim to pinpoint specific types of value (value outcomes) that tourists expect to derive from their experiences (e.g., Turnbull, 2009). Outcome-oriented measures, such as the expectancy disconfirmation approach, are implemented in service evaluation studies, with authors measuring tourists’ perceptions of service quality as gauges of value (Baker and Crompton, 2000; Thrane, 2002). Ontologically, the features - and - benefits value perspective differentiates clearly between the subject (the customer) and the object of consumption (the product or service experience), with researchers concentrating principally on how the subject perceives and evaluates the object (i.e. service or some experience attributes). While such methods can lead immediately to operational solutions for organisations, it assumes that the organisation acts as a ‘producer’ or ‘enabler’ of customer value outcomes. It endorses value creation for the customer, who rather submissively and uncritically consents to the organisation ’s offer at its ‘face value’. Yet, as some authors (Goulding and Shankar, 2011; Kim and Jamal, 2007) point out, businesses often look for more reliable ways in which to theorise and establish their experiences. For example, Selby (2004, p. 191) outlines, “consumers are dynamic social actors, interpreting and embodying experiences, while also creating meaning and new realities through their actions”. Directing to objectively determine and design value or valuable experiences so that through numerous qualities they realise benefits to consumers who might characterise a somewhat prescriptive, reductionist example for value research. Marketers benefit from more holistic value perspectives that recognise the active role of consumers as co-creators of value and experiences.
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Co-creating value with customers: the ‘value in ’ perspective. The above assessment of the features - and - benefits perspective builds on the conceptualisation of value and redefinition of the relationship between the provider and customers as proposed within the S D logic in marketing. Introduced by Vargo and Lusch in 2004, the S - D logic concentrates on the customers ’ active role in co-creating value and valuable experiences with the service organisation. Vargo and Lusch (2004) argue that by considering value as attributes that are entrenched in service and can be ‘exchanged’ to realise benefits for the customer. Marketers, therefore, contribute to a static, outcome-oriented ‘ goods - dominant ’ logic. Instead, in the increasingly dynamic, process-oriented context of service experiences, marketer’s role is limited to offering ‘value propositions ’ to customers (Vargo and Lusch, 2004). Co-creation is then examined as a shared value - realising process that occurs as the organisation and its customers co-operate (Payne et al., 2008). ‘ Value - in - use ’ (Vargo and Lusch, 2004) or ‘ - in context ’ (Vargo and Lusch, 2008) is valued as a dynamic, situational, meaningladen, and phenomenological construct that comes visible when customers use, experience, or customise marketers’ value propositions in their own experience context. Conferring to Vargo and Lusch (2004), all social and economic actors are resource integrators. Customers are therefore capable of co-creating value by assimilating their various ‘operand’ (tangible resources that can be allocated or acted upon; e.g. the physical aspects of a tourist destination) and ‘operant’ resources (those that act on other resources and over which the actors have ‘authoritative’ capability; e.g. skills and knowledge), (Vargo, 2011). Customers’ resource integration is usually studied in the business - to - customer (B2C) context (Prebensen et al., 2013), nevertheless the resource - integration approach to the study of C2C cocreation procedures is also evident in a small number of marketing studies. For instance, Baron and Harris (2010) adopt the resource-based view to study co-creation of positive experience s (i.e. value) in the social context of the gap – year student travel. Other studies (Finsterwalder and Tuzovic, 2010) note that in the context of group consumption in services, cooperation, partaking in, and identification with group goals as operant resources, play an important role in co-creating positive outcomes for individual group members, but also in co-creating shared value for the group. Some researchers based around the Nordic School of Services criticise the resource-based view, and S - D logic in general, as to provider - oriented (Grönroos and Voima, 2011; Heinonen et al., 2010; Voima et al., 2010). Introducing the term Customer - Dominant logic (C - D logic) to reflect an indeed customer-centric focus, these authors argue that rather than treating their customers as fractional workers or partners in co-creation (a business - to - customer focus in co-creation research), service organisations should endeavour to find out of what customers actually do with the service to accomplish their own goals. As Heinonen et al. (2010, p. 533) note, marketing researchers would benefit from a more “ holistic understanding of customers’ lives, practices and experiences, in which service is naturally and inevitably embedded ”. Such background enquiry into customers’ social sphere could be changed into specific ways for organisations to support and facilitate customers’ co-creation (Grönroos and Voima, 2011), including co-creation in C2C interaction. Holbrook (1999, p. 9) views value as something that “ resides not in the product purchased, not in the brand chosen, not in the object possessed, but rather in the consumption experience(s) derived from that place ”. 123
This concept is characteristic in Vargo and Lusch’s (2008) highly subjective, idiosyncratic, and phenomenological value - in - use, and expanded on within C - D logic as ‘ value - in - the - experience’ (Helkkula et al., 2012). Building on the phenomenological concept of lived experiences (Husserl, [1936] 1970), the value - in - the - experience perspective views as data, customers’ extremely personal explanations of value that emerge from these experiences (Helkkula and Kelleher, 2011; Helkkula et al., 2012). Unlike the notion of experiences as value outcomes (Pine and Gilmore, 1999), the phenomenological view of value assumes that only the consumer (him - or herself) can make sense of his or her internal, subjective experiences and value. Social constructionists (e.g., Berger and Luckmann, 1967) embrace that knowledge and meaning are shaped, comprehended and duplicated by social actors in an inter subjective manner. By expansion, a value can also be understood on an inter subjective (mutual or shared) level (Edvardsson et al., 2011; Voima et al., 2010). Co - creation as a phenomenon entrenched in the social world can then be studied by interpreting shared social structures (i.e. norms, rule and role structures), and their interface and reproduction by individuals (Edvardsson et al., 2011). Equally, it is difficult to get away entirely from the individual. While the shared, collective social forces are dominant, the needs, preferences, and habits of individuals still play a part in value co-creation and determination. Summary In this chapter, we have discussed service in not for profit CEM and service in an experiential world were the role of technology is changing and adding to the service experience. This new technology is altering the face of marketing as it is enabling how we develop; deliver new CEM practices that add value. We have discussed the experience in a definite form and negative form and how the experience is shifting to a more co-created approach in the delivery of goods and services. There are argument and theory put forward in the chapter that the future strategic capital and differentiator can be the value of co-creation which needs the organisation to be alert, gain feedback and react quickly to problems and opportunities. Customers want more engagement, say, and personalisation of items and new marketing considers the benefits. Review Questions •
In 100 words outline your understanding of ‘ customer value’, provide an example.
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On a piece of paper write down ten pointers to experience success.
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In 50 words explain in your words ‘ experience values at a mobile phone provider.
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CHAPTER FOUR Introduction Experience journeys exist in profit and not for profit organisations using essential service support tools using technology as an enabler. Chapter Learning Outcomes •
To understand how service works in a range of organisations
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Gain appreciation of the supports needed to deliver a quality experience.
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The role of technology in this process
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Having completed the module, you will be able to:
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Critically assess the use of supports in the experience delivery inside an establishment.
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Assess the core elements of experience technology, and they're a financial contribution.
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Having completed the module, you will be able to:
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Conduct secondary research using both academic and practitioner sources.
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Manage tasks in a group and as an individual.
Critical thinking Having completed this topic, you will be able to: •
Critically evaluate the role of experience technology within an organisation.
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Assess the core elements of service support and their financial contribution.
OBJECTIVES By looking at experience case studies and technology driver gain an understanding of the critical experience deliverables in CX.
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Service in not for profit – case studies Case study example 1 Higher education can be seen as a ‘pure’ service, education being the primary service delivery with support services, it falls into the field of service's marketing. (Krachenberg, 1972) Which when combined with the primary service make up the function of the university? Nevertheless, the outlined supports services are (accommodation, sport, social and cultural) are based on web site observation and literature by Brookes (2003) and Robertson, Banal and Dale (2002). Literature hence points out those educational services and that they differ from other professional services in several ways: Educational services play a principal role in the students' university lives, and students require significant amounts of motivation and intellectual skills to attain their respective objectives. Further, educational services have several service characteristics: they are intangible, perishable, heterogeneous and the academic education efforts are simultaneously ‘produced’ and ‘consumed’ with both professor and student being part of the teaching experience, in other words, co-creation of the experience. (Shaw, 1997) Services offered by a UK university are wide, and they include not just education but also accommodation, sport, leisure and entertainment, food, libraries, internet access, databases, social and cultural groups, health, travel and visa assistance and counselling. This can be seen on UK university websites. Although universities in the UK offer a wide range of services, there is a constant student pressure to offer more services to make the ‘student experience’ more satisfying. Due to these unique characteristics of university services, service quality cannot be measured objectively or accurately according to (Kaplan & Norton, 2002). Customer Experience Management (CEM) is an expression that can be translated into managing the customer experiences and therefore, is a principal service driver. It defines an entire class of tools that facilitate student/customer contact and serve as a liaison between the organisation and the experiences. It is regarded as a movement in attitude, which is intended to assist institutions to create and maintain a positive relationship with their users. Facilitating, interrelating perceptively and the development of information about student actions and interactions with the organisation are essential, and according to Drucker (2009), the education sector is no exception to these market forces. It is a services conduit for student experiences and relations between the institution and at the same time with teachers and service staff and the student community. Increasingly, there are ways to enhance relationships and information, as through example: web discourse and disclosure. The internet has become a powerful enabler in facilitating the exchange of information in universities through websites, intranet, and e-mails. Also, institutions of HE, to attract customers (students) use targeted marketing tools (Krachenberk, 1972) showing the different existing courses and experience benefits. CEM is being used as a way of connecting with the customer in most organisations, especially in Higher Education. One of the activities involves student contact, communication and that the contact records do not depend on solely on the communication channel that the student used (voice, fax, e-mail, chat, SMS, MMS, and so forth). For example, student sign up papers serve to have that information made useful through the 'profiling of students'. 126
In Higher Education, through the records made by students on enrolment, you can have access to the university community (Brooker & Noble, 1985) and disseminate through, for example, e-mail, what is extra on existing courses, internships, career opportunities, and so forth, to enhance the experience not only of new applicants, but also to the advantage of students enrolled (Wiers-Jenssen et al. 2002). UK universities are progressively driven to sustain student enrolment levels. Enrolment management programs to market the university are increasing in number, and their efforts are paying off as UK Universities enrolments grow every year (HESA, 2010). Once students reach campus, the university effort is to ‘hold them’ there. Retention undertakings have concentrated traditionally on comprehensive orientation programs, in-depth student feedback and other kinds of student-focused activities (Brookes, 2006). UK universities appreciate that an enterprisewide information scheme, concentrated on the student as a customer, could furthermore enhance enrolment and retention, in reality; many university systems are not this sophisticated (Knight & Johnson, 1981). Service quality and student satisfaction surveys (NUS, 2010) are widespread in the UK; universities are expected to supply students with environments to discover and explore, provision of teachers, and support services in line with the support needed to graduate. Most UK universities have not paid enough attention to the adequate monitoring of service quality and satisfaction concepts according to (Oldfield & Baron, 2000; Pereda, 2006) which led to the creation of some university CRM and CEM systems. New natural environments as outlined above oblige UK universities to compete for good students and the revenue that develops in the medium term (Scott, 1999). UK universities have to monitor the quality of educational services offered more strictly to maintain the right academic currency and selection appeal to new students. Moreover, due to the introduction of higher tuition fees, students in the UK are more likely to be more selective and demanding in their choice of university. This expansion will make it essential for universities to understand how students see services offered and experience as universities compete with each other to have an appeal to the better students (Fleisher & Bensoussan, 2003). All stakeholders in Higher Education (e.g., staff, students, Government, expert bodies) have their point of view of quality due to the specific needs of the university and students. Students obtain and use programmes suggested by the university, making them the primary customers of the concern of ‘educational’ activities (Pereda & Bennett, 2007). This perspective, though, does not mean that the attitudes of other stakeholders cannot be legitimate and meaningful. In this area, students have a primary role in their capacity as buyers, manufacturers and users of university services. The proposition is that organisations must improve the performance of monitoring what their student’s desire and consider the construction of data based on what students ‘receiver’ finds vital in university service information and the experience. It is proposed that the student IT skill, their improvement and experience journey should be at the forefront of any monitoring of the quality dimensions of UK Higher Education. Therefore, service in a university setting is about the first service of a Higher Education to which the student and the state co-jointly contribute which results in a degree. Moreover, the university provides a collection of support services in a wide range of areas as (e.g., housing, food, library, sport, the Internet, travel and visas). The combinations of these services are the ‘total service’ offered by the university to which a student as an individual has access and measures. 127
Case study example 2 A hospital is a service provider it has a core service of health and wellbeing and an extensive collection of support services that support the primary service of medicine in all its parts. If we accept patient satisfaction as the primary experience outcome at a hospital, we need to appreciate what makes up patient satisfaction. Research into patient satisfaction at hospitals helps us here with the experience keys, and we start with 1) responsiveness; this how the hospital responds to its patients regarding time, process and most of all empathy. The second element is 2) assurance; the reputation and history of the hospital, its ranking and reputation, staff, and the best of care. The next element 3) communication is the interface between the hospital and its users (stakeholders) how good is this exchange, it is accurate and regular. The next element 4) considers discipline; the ability of the hospital to provide services on time and regularly to patients, so there is no waiting or suffering. The last element 5) consistency is the degree of quality that drives trust in the hospital and its staff. When looking for the hospital experience, it is quite surprising what services hospitals offer beyond the primary service of health care and well being. Most NHS regional hospitals provide in health care some 220 different care services, on top of this they offer support services in some 120 service areas from transport, food, rehab, health, diet, this is a staggering amount of services all which have their own experiences. Hospitals are today a complex organisation with pressures of finance on one hand and performance and standards on the other. In more experience orientated hospitals management are looking at improving the hospital experience and use items such as 1) room service 2) valet parking 3) spiritual support 4) customer service training for staff 5) nurse liaison with families 6) transforming care at the bedside 7) safety huddles and quiet times 8) placing supplies next to the patient making service experience delivery faster and more comfortable. Essential service and support services in an experiential world Heskett et al. (1994) portray the service profit chain, a collection framework of how service develops value to the organisation as a procedure. Every element in the service profit chain delivers an operating strategy and a service delivery system, which can be evaluated by any organisation. Heskett et al. (1994) refer to the 'profit chain' by inference in that the model is based for-profit organisations. However, it has some critical points and relevance for not for profit organisations. It classifies the importance of internal service quality, which leads to service employee satisfaction, which drives employee retention and employee productivity. External service values are built into the model as well, based on input from the customer who describes what is and what are not customer satisfaction and the mechanisms that drive customer loyalty. Executed correctly the service profit chain drives revenue growth and also profitability in for-profit organisations according to (Heskett et al. 1994). The service profit chain ascertains relationships between customer loyalty and employee satisfaction, loyalty and productivity. The sections in the chain, which should be regarded as propositions, are as follows: Profit and growth are encouraged by customer loyalty. Loyalty is a direct result of customer satisfaction. Satisfaction is affected by the value of services provided to customers. Value is thus created by satisfied, loyal and productive employees. Employee satisfaction, in turn, results from highquality support services and guidelines that enable employees to deliver quality results to customers. 128
If a university has a keen student, it can try to attract the student to stay and proceed to a higher degree level, as progression education service exists. The profit chain has lessons for not for profit organisations as it considers employees, customer satisfaction, value propositions. Moreover, many organisations have a core service, which is the critical service that has support services, which complement the core service and drives what the customer perceives as the experience value. Take a commercial example and a university example: for high street retailer John Lewis, the core service is the presentation of a collection of products and services for purchase by the public. The products and services range from household items through to clothing and cosmetics. The service delivery is completed through the presentation of merchandise and also the staff. The support services that John Lewis provide encompass items as customer service; customer support services; customer credit services; access to restaurants and toilets; access to warranties and guarantees; car parks; rest areas; product advice; gift certificates; loyalty cards; the total experience. In material by Eskildon (1994) the authors debate commercial experiences from a customer perspective, and in the John Lewis example, it presents how essential key service and support services are in the delivery of the overall service. The literature frameworks that service which drive the experience have become a significant commodity in commercial organisations (O’Dell & Billing, 2005). If we take the university context of service, the framework is similar, but its structure and outcomes are considered different, for example. Take a typical university, the primary objective or service is to deliver a Higher Education to anyone in the community that wishes to improve their knowledge. The service offer includes the presentation of a collection of degree programmes which if the student is successful, the student ends up with a degree, and it is a partnership and collaborative process. The support that is required in the delivery of the primary service that of a Higher Education requires the tangibles of buildings, IT, administration and staff. This gets the student through the admission process and onto a programme at the university (Shattock, 2003). Nevertheless, many students both domestic and overseas collect on campus to obtain their education and the result of a degree. In most cases, going to university, it means leaving home and setting up camp at the university or around it. The student is looking for support services as a quality accommodation; excellent transport links; good quality food; access to a library and the Internet; administration to cover payments, visas, health and wellbeing. The support services of a university mirror the kind of support services reviewed in the commercial context (Wilson, Zeithaml and Bitner 2008). The authors present a case for building a reliable core service and expose the importance of support services in service delivery. In the John Lewis case, the core and support services are to drive revenues, profits, repeat purchases and drive customer loyalty. In the university setting as described the core service is an education that needs support services that support the student to achieve this objective. The objectives are therefore different and supported by research (Kotler & Fox, 1995; Preedy, Glatter & Wise, 2003; Pausits & Pellert, 2007).
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The role of technology in service experience There are two ways in which technology plays a role in the construction of customer experience. Firstly it influences the customers’ behaviour and prospects, and secondly, it changes the companies’ possibilities of delivering a positive customer experience (Goodman, 2014). First one can look at how technology has changed customers’ hopes and actions. Today customers are increasingly accustomed to using technologies and the internet, and it has become an indispensable part of their lives (Watkinson, 2013). A new development brought forward by the technological developments is ‘user contributed content’ (Watkinson, 2013). The internet allows customers to appraise and deliberate products they have bought, learn from other people's experiences and make choices based on recommendations of their peers (Watkinson, 2013). Such insights gained from the customer-to-customer interface can be very persuasive and can be seen as a new form of traditional word-of-mouth communication (Hagel and Armstrong 1998; Kozinets 1999). Mittal and Tsiros (2007) found that virtual communities formed by customers, can augment the customer experience and help generate customer loyalty. User-generated content moved buying power towards the customer, which was further enhanced through the introduction of social media. Watkinson (2013) argues that social media provides customers with a “means to hold businesses to account for disappointing or dishonest behaviour” (Watkinson, 2013, p. 19). The second way in which technology influences customer experience is through presenting establishments with new potentials that drive positive customer experience. Parasuraman (2000) points out the probability of the interactions among companies, their staff and customers to become increasingly mediated by technology. Soudagar, Iyer and Hildebrand (2012) argue that apart from changing a company's culture towards an enthusiastic customer-centric view, companies need to integrate technologies to deliver holistic and positive customer experience. When managed appropriately, techniques can make a customer experience memorable through a proactive service (Goodman, 2014). Bäckström and Johansson (2006) found that retailers increasingly use technology to improve the in-store experience. Technologies such as computers, display screens and the opportunity to use the internet are applied to educate the customers in the store (Bäckström & Johansson, 2006). Technological development can also lead to new encounters for companies. One major challenge is the creation of new digital touch points, such as websites and mobile devices. Companies are now required to connect these touch points to guarantee a consistent experience (Watkinson, 2013). Information technology used by companies today is augmented reality, which aims to combine the physical world with computer-generated content (Nigay, Salembier, Marchand, Renevier & Pasqualetti, 2002). An information system can be categorised as an augmented reality concept when, firstly, the physical world is superimposed with virtual objects. Secondly, the interaction between objects and the user are carried out in real time, and thirdly, the virtual objects are connected to the purposes of the physical world (Azuma, 1997). All the circumstances mentioned above highlight that technologies play an essential role in the lives of customers and therefore should not be ignored when aiming to create positive customer experiences.
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Customer Experience in E-Commerce Electronic-Commerce (E-Commerce) is comprehended as the initiation and execution of economic transactions via the internet (Meier & Stormer, 2009). Online retailing, also called detailing, is performed through websites of either multichannel retailers, which offer various channels to their customers, or websites of well-defined companies, which only provide products online (Goworek & McGoldrick, 2015). The online customer experience has become progressively crucial due to the progress of technological developments and the increasing importance of online characteristics (Elliot & Fowell, 2000). Customers benefit from online platforms by saving time and the offer of high elasticity, primarily due to the round-the-clock accessibility (Agatz, Fleischmann & van Nunen, 2008; Demmelmair, Most & Bartsch, 2012; Rigby, 2012). A particular benefit of online stores concerning customer experience is the fact that customers can contemplate, make and reflect on the purchase in the comfort of their own home (Zhang et al., 2010). Retail channels other than the physical store can, therefore, be a better complement to customers’ lifestyles (Goworek & McGoldrick, 2015). A definite advantage of online stores over physical stores is the full product selection (Agatz, Fleischmann & van Nunen, 2008; Rigby, 2012). Grewal, Iyer and Levy (2004) claim in their work that customers shop online mainly for economic reasons. Retailers on the other hand benefit through time and cost cutbacks as well as the enabled reach of new customers (Demmelmair, Most & Bartsch, 2012). Constructive user experiences play an essential role in online sales, as the cost of switching from one retailer to another is profoundly reduced in the online environment, compared to physical stores. While interchanging amongst physical stores is very time-consuming and can include longer journeys, search engines facilitate the switch of online stores rapidly (Watkinson, 2013). When it comes to creating customer experience through inspiring the senses of customers, online retail channels is a drawback. These online retail channels are more constrained regarding atmospherics compared to physical stores, and mainly focus on visual elements to stimulate the customers’ senses (Goworek & McGoldrick, 2015, p. 238). Rose et al. (2012) discovered that in the online customer experience, features such as connectedness, customisation and ease-of-use perform a significant role. These aspects enhance the customer's feeling of control, which Rose et al. (2012) acknowledged as one of the most critical factors for customers. Both offline and online retailing provide clear benefits for the customer. The next section will introduce ways in which companies try to meet all customer needs and provide all benefits described above.
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Technology in CEM The absence of technology as a topic is apparent in service encounter research and the structures and theory used by service marketers. The inter-personal focus of service encounter research is not unexpected as most encounters have traditionally been facilitated by interpersonal contact. Consumer services in diverse industries as health care, education, travel and retail have, until recently, have been delivered by human providers. The same concept embraces business-to-business services such as consulting, equipment repair and maintenance, administrative support and other outsourced services. Due to the prominence of ‘high touch’, all the service research has examined the interpersonal dynamics of the encounter. The expanding role of technology in service encounters has been principally ignored (for exceptions, see (Dabholkar, 1994, 1996; Parasuraman, 1994). However, across some industries, technology is altering interpersonal encounter relationships and, on some occasions, eliminating them, or creating new service experiences. In some cases, technology may enlarge the number of encounters a customer has with an organisation. For example, an E*TRADE client may check his or her accounts daily instead of waiting for a monthly statement or quarterly call from his or her financial advisor, or the John Lewis customer can order online. A series of articles (Rayport & Sviokla, 1994, 1995) have brought to the front position the knowledge of the 'market space' transaction being replaced by the traditional ‘marketplace’ transaction. The market space is a ‘virtual realm’ where products and services exist as digital information and can be transported through information-based channels (Rayport & Sviokla, 1995). It is comprehended from past research that customers expect and demand elasticity and customisation in most service encounters (Bettencourt & Gwinner, 1996; Bitner et al. 1990; Kelley, 1993). Customers do not like rigid rules—they want services that fit their individual needs at the time, and they do not understand when laws cannot be broken or bent (Brookes,2006). Further, customers value that the particular characteristics of services allow service providers to adjust and adapt during service construction to fit the needs of customers (Bettencourt & Gwinner, 1996). Technology in services has now provided 'enablement' the ability to cover more great customer touch points, improves speed and accuracy of service delivery. Technology has also added new forms of service (downloads, self- service, forums, data mining), it has also delivered new types of access to information (intranet, mobile). More prominently technology has made access to service provision less costly for the provider and also made CX and Service expandable as service areas develop and cover a seven-day a week opening as demanded by the customer. The advancement of communications and information technology is altering the ways that customers interface with service providers and, therefore, can impact customers’ perceptions of the service experience see (Boyer et al. 2002; Heim & Sinha, 2001b; Huete & Roth, 1988; Oliveira et al. 2002; Roth, 2000, 2001). In research by Schmitt (2003), the author explains that the right interface has to have the appropriate mix of essence and flexibility. To structure a customer interface properly, it is necessary to figure out its purpose (operations, interactions and exchanges) in the CEM delivery. Technology-based service delivery systems are becoming an important part of shopping for profit, and henceforth it is important to examine concerning their impact on customer experience. The manifestation of technology-mediated interactions in retailing as an example is demonstrated by the appearance of entirely new technology-enabled shopping method (online retailing) Verhoef et al. (2009). 132
The introduction of various technology-based systems within the traditional brick-and-mortar shopping environment (e.g., self-service checkout counters) has further added IT enablement to customer experience in numerous ways. Notwithstanding the accelerating speed at which technologybased service systems are pervading retailing, scholarly research on the impact of systems on customers’ experience is still at an embryonic stage both for profit and not for profit CEM. Much of that research to date has focused on causes of customers’ intentions to adopt and use of self-service technologies (SST). Critical scholarships in this category include Dabholkar and Bagozzi (2002), Curran, Meuter and Surprenant (2003), Montoya-Weiss, Voss and Grewal (2003), Meuter et al. (2005) and Falk et al. (2007). Some studies have also reviewed the impact of SST usage in the context of consequences on outcome theories as perceived by for example; waiting times (Weijter et al. 2007), customer satisfaction/dissatisfaction (Holloway & Beatty, 2008; Meuter et al. 2000; Weijter et al. 2007) and customer loyalty (Selnes & Hansen, 2001). Other studies have concentrated on understanding how customers assess the quality of service delivered through websites – ‘e-service quality’ – and developing scales to measure this concept (e.g., Parasuraman, Zeithaml & Malhotra, 2005; Wolfinbarger & Gilly, 2003; Zeithaml, Parasuraman & Malhotra, 2002). Supporting the holistic approach to customer experiences, it is significant to recognise that customer experience is not limited to the customer’s interaction in the store alone; it can be now be extended electronically as well. It is compressed by a combination of experiences, which progress over time, including search, purchase, consumption and after-sales phases of the experience (Neslin et al. 2006). Moreover, technology in CEM has forced many changes, into a technology-enhanced environment. Therefore, it can be viewed as a ‘system’ that emerges from the interaction of its CEM components and has become pertinent in CEM. These components are now the critical stakeholders and include producers, wholesalers, retailers, public, consumers, customers, and providers. The stakeholder groups interact with each other and carry out specific tasks that enable the CEM environment to function correctly and to a criterion. For example, customers and provider beliefs about technology may influence their adoption of the tools, which fully contributes to the establishment of a technology-enhanced CEM environment. Further, administrators’ understanding of technology-related issues may affect corporate policies. In turn, it might influence the integration of technology in a business CEM operation and reshape their environment. As an outcome of these factors, the establishment of a successful CEM technology in any environment that entails a sound understanding of each of its components in the context of its own university culture. CEM in many organisations has improved service delivery; supported face-to-face services and enquiry; it has allowed a twenty for an hour seven days a week access to services information; provided self-help. (Tellis, 1997) CEM technology has also produced a framework of processes for the delivery of service information, which enhances the experience. Summary CRM and CEM are a marketing response to the management of customers in an ever-expanding ‘service-based economy.’ They also react to the intrusiveness of new technology that has enabled marketing communications and gathering of marketing customer data. 133
CRM and CEM are a marketing response to the management of customers in an ever-expanding service based economy (Kotler, 2002). Knowledge is a powerful CEM tool in marketing and can create a competitive advantage; CRM and CEM can be in fact portals of expertise. CRM and CEM practices are widely used in the commercial and public world (Retail, Hospitality, Tourism) and are in the development stage in public sectors that are considered slow adopters. Knowledge is used to understand CEM user profiles, purchases, behaviour which in turn through data mining provides sets of information that can be used to sell more (for profit) or provide information (not for profit). Most UK organisations have a service system at different stages of sophistication. CEM is a ‘marketing strategy’ not just a ‘software programme.’ It is about managing the experience, which drives loyalty, satisfaction, brand values, word of mouth and lifetime partnerships through the alumni. CRM and CEM are different marketing concepts; however, they are closely linked. CRM manages the customer relationship, whereas CEM manages the customer experience. CEM is a method that tries to overcome the gap between theory and practice by reformulating basic marketing principals. CEM stresses four aspects of marketing management 1) focus on customer-related issues 2) combines the analytical and the creative 3) considers both strategy and implementation and 4) operates internally and externally. CEM drives satisfaction, which in turn makes value and quality. CEM has five theoretical steps 1) through analysis, what is the experiential world of the customer 2) what are the building steps of the experiential platform 3) what is involved in designing the brand experience 4) what elements are needed to structure the customer interface and 5) What is continuous experiential innovation(Schmitt,2003).
CEM focuses on satisfying the needs and wants of the customer, building a relationship. CEM has three distinct parts 1) delivery of the service experience 2) processes engaged (people, systems, knowledge and 3) outcomes (customer satisfaction, loyalty and value). By attention to these parts, an organisation can deliver a quality service experience. In industry, CEM is about sales and the profit motive, whereas in not for profit, it is a marketing tool to provide a service and quality experience. Either way quality and total quality management are key ‘managerial levers’ in CEM success (Peppers and Rogers, 2004). CEM and CRM allow the collection of data for marketing strategy development and provide valuable insight into customer needs and want. It also coordinates, manages, stores information of every customer touch, at every touch point of the organisation. The quality of delivery of the experience drives satisfaction and loyalty. From the above-reviewed literature, any CEM research objective has to define some thematic questions, which form lines of enquiry in the primary research stage The research lines of investigation based on the extensive literature search should allow for consideration of focused discussion: Do you have a service experience system, what areas are covered, what do you see as its purpose? 134
What are the service system components? How is service experience delivered? What role does the service system have in the knowledge exchange? How outstanding is ‘quality’ and ‘satisfaction’ in the service experience? How do you measure the service experience? How significant is the experience? What is right about the current service system, what is wrong with the current system? What innovation in service experience delivery would you like to see and why? The literature review has provided knowledge and understanding of the theory and practice of CRM and CEM in for-profit and not-for-profit organisations. This has formed the structure of the research process and the lines of inquiry above most relevant in answering the researchers’ question(s). Review Questions •
In 100 words explain the ‘experience delivery’ in a hospital.
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In ten points outline the critical service features needed to deliver a great experience.
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Discuss and debate the role of technology in CX delivery.
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CHAPTER FIVE Introduction CX action based on quality standards is best delivered after intense research into the mind of the customer, what are their needs and wants. Without this critical information, any CX process will not succeed. Chapter Learning Outcomes •
What is the role of CX
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The different types of CX
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Understanding the customer needs and wants through research
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The part of people in CX delivery
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How to manage a CX program
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Having completed the module, you will be able to:
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Critically assess the use of CX inside an establishment.
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Assess the core elements of CX and their financial contribution.
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Having completed the module, you will be able to:
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Conduct secondary consumer research using both academic and practitioner sources.
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Manage tasks in a group and as an individual.
Critical thinking Having completed this topic, you will be able to: •
Critically evaluate the role of marketing within an organisation.
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Assess the core elements of marketing and their financial contribution.
OBJECTIVES The use of CX is adapted to the organisation, and its customer needs and wants to build and deliver a high CX experience using technology, people and processes.
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CEM and its role For-profit CEM concentrates on return on shareholder investment in assets deployed and used by the organisation. Hence the focus of for-profit CEM is on the profit driving reason through the application of marketing techniques that entice new customers holding onto existing customers, and building a long-term customer base, that will provide the for-profit organisation with loyal customers (Gronroos, 2004; Barron, 2007). The for-profit CEM objective is entirely profit focused and although satisfaction and loyalty are developed by the for-profit organisation, it is done to drive sales for repeat purchases; crossover sales; trade up deals. For-profit, CEM in commerce employs a collection of tools to choose between buying more comfortable, and this is done by delivering in-store service centres or online buying competence via self-help. Self-help means customers can shop twenty-four seven, which provides more sales and therefore profits. The CEM tools are used to develop sales and profit and make it easier to buy goods and services. Not for profit CEM by its character emerges in organisations that are more focused on delivering a service experience that reinforces the needs and wants of the customer without considering the sales or profit motives. Libraries, Universities and Hospitals are not for profit, and they provide a primary public service and application support services to make the service offer more straightforward to use to answer questions and queries. It is a service presented to the public at large, which has a communal and social value, where, as long as the organisation covers its overheads and with support from government or taxes, it continues and develops (Davis, Nutley and Smith, 2000). In not for profit, staff delivers services, and the service experience, they understand their role as replying to enquiries and answering questions face-to-face or online. The staff objective is to help the public with material that supports their primary purpose (Elliott and Shin, 2002). This leads not for profit staff in providing information on organisational rudiments but also support services covering housing, sport, visas, travel, food, social and cultural items, work experience. The public arbitrates satisfaction and loyalty through speed and accuracy of the information they do not judge CEM on the procurement, a critical difference. Nevertheless, the public does arbitrate quality and value on the range of services on offer; how well is the services delivered; attitude of staff; quality of the content of materials or care used by the institution in providing service knowledge (Green, 2004). Not for profit, CEM is about elevating the experience of the public and ensuring the institution is providing due care and attention. The literature supports the position that a happy customer is one where life is reliable and hassle free which allows them to focus on gaining their other goals. In the process of literature discussion it was interesting to see the emergence in different attitudes and opinions between the staff of the organisation (sender) and public (receivers) there was much interruption, and values where seen as entirely different, to expand this thinking; Staff handled a problem and solution type service experience, whereas the public was looking for swiftness, precision and the quality of content and was happy to develop a co-creative partnership in CEM delivery. What is also thought provoking was the ability of staff and the public to express themselves on the topic; they understood it and were very articulate. The public was discovered to be very full of expression mainly when it came to enhancements to the CEM system and ways of streamlining the CEM system. Resolute actors are guided by their particular understandings of the processes in which they participate, CEM in a not for profit enterprise such as public services. 137
If one assumes that the actors are real and have choices, their connotations become representations of sense making and are therefore considered by them as legitimate. Their comments become a coherent representation of how not for profit institutions function. As discussed previously one can review the literature and accept its theories and models, or one can assume that the actors involved in the research are competent in their work and that it indicates valid methods of action. The ‘Service Experience’ is a wide-ranging term meaning different things to different kinds of staff and public. For example at a university: An 18-year-old undergraduate or foundation degree student, living away from parents for the first time, discovering independence, has a different experience of the university to a 40-year-old master’s student, living at home with partner and children, balancing a full-time job with part-time study. In turn, both encounter a different experience to that of a student from China, who is starting to know a new language and culture as well as new learning material (Ginsberg, 2001). A 60-year-old man who has had a heart attack and needed a pacemaker experience in a hospital is different to that of a fit 18-year-old Rugby player that has broken his arm in a match; the point is the experience is very different depending on the institution and the need and want of the individual. The 60-year-old man wants to get better to live a healthy life; the 18-year-old Rugby player just wants to heal and play again. The primary literature review has presented some useful broad concepts across four central CEM themes 1) psychology, 2) philosophy, 3) economics and 4) management science as it associates to CEM in a not-for-profit environment. In the not for profit settings of face-to-face interviews, both senders and receivers wanted to feel positive about the service experience and demonstrate these elements by giving suggestions on how CEM could be improved. This beneficial action shows a willingness on both sides of the service experience to grow and that although there are contextual differences between senders and receivers, there is a desire to work towards a common decisive goal. The psychology concept is about positive impact at the sender and receiver ends of the CEM process. The positive impact is the disposition trait that predisposes someone to feel confident, expectant and to pull themselves up quickly after disappointment or setbacks. It is the propensity towards feeling delighted about situations and outcomes and to express positive responses to antagonistic situations. Research also indicates that higher levels of positive impact tend to be connected with more engagement in social and pro-social behaviour and its influence is two way: feeling positive tends to incline people towards seeking out the shared interface, and social interaction tends to lead to a more positive mood, albeit momentarily. The philosophical concept of CEM in a not for profit setting is different from the commercial world. Service experience at a not for profit institution is not about exploitation of the customer and customer lifetime value; it is about a quality experience. Service experience at a not for profit venture is more about emotions, a comfortable life, being methodical, content and pleased, being of high value from the receiver’s position. From a sender’s view, the context can be explained as helpful, compassionate, across a collection of tangibles (physical services) and intangibles (leadership, management, and feedback, emotional intelligence the understanding of the student perspective (Zaltman, 2003). 138
By driving up the perceived value of the organisation through quality infrastructure and service, support of service experience is enhanced, as there is a reduction in loss. The primary service is a given ‘an education; healing; books or journals; pension; police; fire brigade, however, the secondary services can add quality scopes in the user's mind. Happy people it is implied will do better in their lives, the dotted line link between support services and primary service is relatively obvious in the literature (Skinner, 1973). What is clear from the primary research among senders and receivers at the not for profit the actual CEM phenomena are different from a commercial one. The phenomenon in a commercial exchange is around the purchase of goods or services (Winer, 2001) hence the atmosphere, feel-good factor, level of service, warranties and guarantees (the valueadded concept) are seen as a principal among customers in the buying experience. In not for profit, the primary research point to the phenomena of fairness and equity in two domains face-to-face and online, which are seen as dissimilar, as one does not have the human factor. The not for profit environment has been recognised and what is more significant is the co-creation of not only the primary service ‘a service which is emergent’ but also the co-creation of value where the sender and receiver are both engaged in a causal relationship in value building. Pine and Gilmore (1999) argue that businesses and organisations as a not-for-profit institution must compose memorable activity for their customers and that memory itself becomes the product—the ‘experience’. Economically advanced experience businesses and organisations can begin charging for the value of the ‘transformation’ that organisation experience offers, e.g. as education offerings might do if they were able to participate in the value that graduates could get a (better job, higher pay, status in society). This, Pine and Gilmore contend, it is a natural progression in the value added by the provider over and above its inputs. Although the concept of the experience goes beyond the business field, it has crossed its frontiers to education, tourism, architecture, nursing, urban planners and other areas. The experience economy is also considered the primary foundation for customer experience management. A core economic argument is that, due to technology, increasing competition and the expanding expectations of consumers, services currently are starting to look like commodities (Vargo & Lusch, 2006). Products can be placed on a continuum from undifferentiated (referred to as commodities) to highly differentiate. Just as service, markets build on goods markets that in turn rely on commodity markets, alteration and experience markets make on these commoditised services, e.g. Internet consulting help. The economic value of the service experience can be summed up as 1) institutional marketplace differentiation, 2) more powerful brand and associated benefits and 3) confident alumni who provide positive word of mouth. All these can drive increased use of the service, several collaborations as the organisation reputation grow which achieves the goal of financial independence. A public service encounter is an experience that extends over time. Therefore, its practical management must include the control of the timing of the delivery of each of the service’s elements and the improvement of the experience between and during the distribution of the various CX elements. The managerial conceptual structure links the duration of a service encounter to behaviours that have been revealed to affect profitability, retention, repeat consumption. Analysis of the framework in an organisation in the research literature shows a wide disparity between the behavioural assumptions made in CEM operation’s models and state of the art in the management, marketing and psychology among senders and receivers of the service experience as discussed by (Tanner, 2005). 139
This view is supported by the lack of management literature on CEM in a not-for-profit organisation. Central motivations behind this book are to help service communities and bridge this gap. By bringing to our recent attention findings from the literature and primary research, the study of the contextual differences between commercial and not-for-profit CEM has been attempted. These have consequences for management in the design of CEM models and systems for not-for-profit service organisations and to identify opportunities for further research. In this book, the researcher has sought to understand the complex factors (Tolman, 1994) which the experience of all types of staff and public in UK not for profit CEM; to identify the principal issues faced by the sector (external and internal forces); if UK public services are to continue to meet expectations and enhance their experience in the coming years. As noted above, the service experience is a wide-ranging term, swayed by a complex variety of issues that it is difficult to attempt to define it as a single item. In light of this, a more useful approach to understanding the experience is to take a ‘snapshot’, a current view of the various issues affecting customer and staff using dialectic enquiry, which draws together recent sender and receiver attitudes and opinions and identifies the challenges for the service sector to address. Hospital Sender is looking for (information, timing, explanation, logistics, healing, speed and accuracy) Receiver is looking for (solution, speed, wellness, relief, after care) University Sender is looking for (information exchange, support, direction, wellbeing) Receiver is looking for (accuracy, access 24/7, face to face and online, information) Library Sender is looking for (range, support, access, location, advice) Receiver is looking for (availability, access, advice, options) Police Sender is looking for (response, care and attention, fairness, process) Receiver is looking for (time, support when needed, visibility, safety). The changing environment of costs and expectations has brought the nature of the relationship between the public and organisations into focus based on the literature research, including a snowballing importance from some on the idea of service users as consumers; a notion that should be tempered with the recognition of the public and institutional roles as mutual partners in the development of people’s, wellbeing, knowledge, skills service experience, in order to shape their contribution to society. This is a robust finding in the literature and primary research. CEM is developing as a subject within the traditional fields of marketing management, operations and technology. 140
Much debate exists with CEM academics, consultants, vendors and commercial users as to what CEM is, how it should work, and how more efficient it should be, but there is a consensus that service and experience are linked is established. Based on work by Schmitt (2003) and other CEM specialists, there is little consensus about what CRM and CEM are or how to best execute or measure it in a commercial setting. What models do exist in literature are based on different objectives and applications. Moreover, in a not-for-profit environment, there are few models and little research on CEM. The variations of CEM for-profit and not-for-profit would seem real based on literature findings: For-profit CEM •
CEM might be used as a tool to drive revenues and profits.
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CEM can build long-term customer lifetime value to the benefit of the organisation.
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CEM can use as a data-mining tool, which is used to sell more/trade up.
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CEM helps drive customer loyalty and retention.
• CEM may be suitable in highly competitive markets to create a point of difference where product differentiation is difficult. Not-for-Profit CEM: •
CEM can be used as a support resource to exchange information.
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CEM endeavours to provide support, and respond to questions, and tries to answer them.
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CEM might explain what services are available and how to access them.
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CEM seeks to support the public in their goals and provides a hassle-free environment.
• CEM tries to help the marketing effort and as a tool can present values of the organisation to potential new users.
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Not For Profit CEM Model Copyright Dr James Seligman 2011
PHYSICAL EVIDENCE
PEOPLE
• PUBLICS • STAFF • SERVICE TEAMS • STAKEHOLDERS
• FACILITIES • MATERIALS • ONLINE • PROCEDURES
CORE SERVICE SUPPLEMENTARY SERVICES
OUTCOMES
PROCESSES
PLANS • SOFTWARE • KPI’S • RESEARCH • FEEDBACK LOOP • TRAINING •
EMERGENT UNSTRUCTURED • CONSTANTLY CHANGING • HASSLE FREE • EXPERIENCE / ADVOCACY •
•
Quality in the service experience Customer Satisfaction and Service Quality are leading constituents in the system of external relations of each organisation, as today they principally regulate its competitiveness. The objective to manage relationships with customers points to the fact that organisations are starting to focus attention on the development and implementation of service levels. Reviewing standards of customer service is part of the corporate culture of the organisation, and permits finding more effective approaches to its development and implementation. Other reasons for making an investigation are also important: • No prior research has been done in this area of studies in the company • Actively growing demand amongst customers • Personal comprehensive work experience in the service department Customers do not buy goods or services; they buy the benefits goods and services provided them with. People buy commodities consisting of products, services, personal information attention and other components. Customers are the life-flow of any organisation, and without them, a firm has no revenues, no profits, and therefore no market value (Grönroos 2000, 3). Considering the behaviour of the constraints in the organisation, they can be standardised to provide quality customer service (Ronzina 2010 ) : 142
• Speech formulas, and the language (vocabulary) • Facial expressions and gestures • Proxemics (what to position, how to communicate with the buyer) • Clothes • Makeup, jewellery • State of the environment (must be clean) • The speed of service and response times • Security in the buying process • Other Service quality must be controlled by specific external and internal factors of life of the organisation. The more consciously the particular content of these factors are, the more gentle they are exposed in the construct of Service Quality, the higher is the probability that it will be useful. These factors are outlined by ( Ronzina 2010 ) : • Standards of human rights (the laws of consumer protection, etc.) • Cultural norms that are in a society in which the organisation offers its products and services in the market • The values and mission of the organisation • Characteristics of the products and services provided by the organisation • Characteristics of target groups (clients) • Features of the premises where customers are served (close, spacious, quiet, noisy, etc.) • Other factors Customer Satisfaction and Service Quality hinge on Organization Standards (OS) of the establishment where they are applied. Therefore they work as a great benefit to improve the profit and customer loyalty (Ronzina 2010). To explain further; 1 Service Quality Service quality is a multifaceted hypothesis, which has been the target of many studies in the services marketing literature. Two schools of thought drive this literature: the Nordic school of view and the North American school of thought. In detail, the Nordic school of thought is based upon Grönroos's (2005) two- dimensional model while the North American school of thought is based upon Parasuraman et al.’s (1985) in ( Karatepe 2013) five- dimensional SERVQUAL model. 143
Other noteworthy conceptual and empirical studies in this research stream suggest that service quality is comprised of service product, service environment, and service delivery, or consists of interaction quality, physical environment quality, and outcome quality (Karatepe 2013 ). 2 Service Quality Determinants and the SERVQUAL Instrument In the mid-1980s Berry and his contemporaries Parasuraman (1985) and Seithaml (1985) began to study service quality elements and how customer evaluates the quality of services based on the Perceived Service Quality concept (Grönroos 2005). The ten determinants were found to characterise customers’ perception of the service. One of the determinants, competence, is related to the technical quality of the outcome, and another, creditability, is intimately connected to the image aspect of perceived quality. However, it is interesting to observe that the rest of the determinants are more or less related to the process dimension of perceived quality (Grönroos 2005). As a result of later study ten determinants of service quality were decreased to the following five as researched by (Grönroos 2005) : 1. Tangibles. This determinant is parallel to the appeal of facilities, equipment and content used by a service group as well as to the appearance of service employees. 2. Reliability. This outlines that the service firm provides its customers with accurate service the first time without making any mistakes and provides what it has been promised to deliver by the time that has been agreed upon. 3. Responsiveness. This shows that the employees of a service firm are willing to help customers and respond to their requests a well as to inform customers when service will be provided, and then give prompt service. 4. Assurance. This means that employees’ behaviour will provide customers confidence in the company and that the firm makes customers feel safe. It also shows that the employees are always courteous and have the correct knowledge to reply to customers’ questions. 5. Empathy. This means that the firm knows customers’ problems and performs in their best interests as well as giving customers individual personal attention and having a convenient operating hour. SERVQUAL is a mechanism for measuring how customers perceive the quality of service. This instrument is based on the five determinants mentioned above and on a comparison between customers’ expectations of how the facility should be functioned and their experiences of how the service is provided (disconfirmation or confirmation of expectations). Typically, 22 attributes are used to describe the five determinants, and respondents are asked to rank (on the seven-point scale from “ Strongly Disagree” to “Strongly Agree”) what they anticipated from the service and how they observed the service. Based on the discrepancies between expectations and experience over 22 attributes, an overall quality score can be calculated. The more this score shows that skills are below expectation, the lower the perceived quality. However, more critical is the calculating of the overall score on the individual attribute scales, perhaps summarised over determinants (Grönroos 2005, 74).
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Finding Service Quality Attributes and Measuring Quality Perceptions The issue has already been made that customers have certain expectations about the kind of performance that is suitable for a particular service. Specific services are more industrialised and transactional - based, e.g. fast food, ticket sales, and airline check-in desks. Other service encounters feature more unpredictability, and hence opportunities for customisation through situational sensitivity (Grönroos 2005). It was discovered that if the service employees, through their experience and observations of encounters, were to complete a basic list of significant service attributes they would, in turn, to be able to formulate a simple measurement system that would match the process control system of manufacturing. The study evidenced a two-step configuration of attributes - should value and could values – the above being values without which the latter could not efficiently function. (Grönroos 2005.) Service employees in confidence sampled their performance, using a pre-set scoring system. Findings indicated that using such simple measuring techniques enhanced performance where the rate of continuous improvement was known. And the performance was measured, and the rate of sustained increase was unknown, performance reduced over time. Of the number of conclusions that this research exposed, the most noticeable were as follows (Grönroos 2005, 76) : • That the act of measuring and totalling did indeed enhance subsequent performance. • That service providers are motivated by evidence and not merely by feeling that they have improved their progress. • Measurement systems benefit from the measurement effect a continuous improvement item may be seen to drive the Seven Criteria of Good Perceived Service Quality. There has been a group of studies of service quality conducted in many countries. From them,0 various lists of characteristics of features of sound quality can be gathered. As discussed in the context of the SERVQUAL determinants, such records are used as starting points for managers who want to develop a suitable list of attributes of features that describe a given CX service. Therefore, to make such records of determinants or factors of excellent service quality useful for managerial purposes, they have to be concise, yet still, provide a comprehensive list of aspects of good quality. Seven Criteria of good perceived service quality are an integration of available studies and conceptual work. Some of these studies have been examined in this section. One of the seven, professionalism and skills, is outcome related and this is a technical quality dimension. Another standard, reputation and credibility, is the image - related, thus fulfilling a filtering function. However, four other criteria, attitudes and behaviour, accessibility and flexibility, reliability and trustworthiness, and service recovery, are clearly process - related and this represents the Functional Quality dimension. Finally, the impact of Serviscape is introduced as a seventh criterion. This is apparently a process pertaining, functional quality criterion according to (Grönroos 2005). The role of price in quality is not very well defined. Usually, the cost of a service can be seen about the quality expectations of customers or their previously perceived service quality. If the price of a service is seen as too high, customers will not buy. Price also has an impact on expectations. 145
But in some situations, the price seems to be a quality criterion. A higher price level may equal better quality in the thoughts of customers, especially when the service is highly intangible. In some cases, professional services are examples of such services (Grönroos 2005). CEM recommendations 1. The book objectives were to examine the applicability of our understanding of CEM in a for-profit commercial setting. This led to a collection of CEM for-profit models being identified and discussed. The opinion drawn from their analysis was that each model was different based on commercial needs, notwithstanding that were commonalities of purpose that were identified. 2. For-profit models do not match the requirements and want of not for profit organisations specifically not for profit. It was found not for profit senders, and receivers have different needs and desire. 3. Having established these differences, and based on the data collected, patterns and frames developed models for not-for-profit organisations consideration, which contextualise what not for profit CEM should consider and include. As the objectives are different not for profit CEM has a different motive, one of exchanging information and supporting the receiver to gain an outcome. 4. Organisations staff sees themselves in a global marketplace and therefore not for profit CEM can develop competitive advantage and or strengths. To be significant service organisations have to act in marketing global with a quality service experience at every touch point. 5. The three stools of CEM found in the for-profit literature of 1) phenomena 2) process and 3) outcomes are just as applicable and should be considered for use in not-for-profit CEM but in a different form. The phenomenon is influenced by user satisfaction, which is controlled by the processes of administration, staff and in institution experience, it is emergent over outcomes of a hub of knowledge, technology, research and employability skills, differentiation, word of mouth. 6. CEM as part of the marketing effort can attract new users and help support retention rates through higher levels of satisfaction. Satisfaction in CEM is found through the performance of staff and the CEM system. 7. The three emergent models present a ‘different view of CEM’ in for-profit settings versus not-for-profit as the objectives are seen as different. For-profit CEM is about driving sales and profits from the customer and building long-term value from the customer for the organisation. Whereas not-for-profit CEM is about providing and delivering quality information to both the sender and receiver. The recommendation and objective are to apply quality information, speedily and more accurately in not-for-profit organisations. The sender wishes to provide a quality service that answers needs and questions on the range of services. The receiver hopes to gain answers to questions using a reliable CEM system, which provides a hassle-free life. 8. Moreover, CEM users are continually pushing for more support services to make their experience ‘more satisfying’, and it is defined as the complete 'service'.The public is pushing for quality accommodation; good food; well-presented libraries and sports facilities; social and cultural stimulation. 146
9. The examination of the research data provides evidence that suggests commercial CEM forprofit and not-for-profit have ideological differences, which need to be modified/extend to fully incorporate characteristics is necessary for not-for-profit CEM. The recommendation is to change notfor-profit CEM as presented in the three models, or use sections as needed as some parts overlap. 10. The strategy adopted in, for-profit CEM is focused on revenues and profits and exploitation of the customer relationship. In the not-for-profit CEM, the specific difference is the provision of information and knowledge that enhances the student journey; it is the hub of knowledge transfer. The recommendation is to understand the needs and wants of staff and the public for service and provides the information in an engaging two-way exchange format, and has constant and consistent feedback loops. 11. Not-for-profit CEM requires active co-creation between the parties to be highly efficient; it is recommended that senders and receivers of CEM work together to develop value in the CEM system. Senders and receivers in a not for profit setting see CEM. Differently, it is suggested the core needs be made compatible and consistent in and out of the classroom. 12. The phenomenon in not-for-profit CEM it is recommended is an exchange of information that helps support the experience. It is the facilitation of underlying goods in the service experience and their quality that drives a good. Software and systems play a crucial role in CEM processes; it is recommended in not-for-profit CEM that a modern fit for purpose CEM software programme be used based on a framework strategy which considers all the touch points and is in one central location, not as present in schools and faculty levels. It also needs to be expandable so that it can take on new technology as mobile CEM in their future. 13. Furthermore, not-for-profit CEM requires a collection of processes to make it efficient and reliable with set KPIs. Organisations need to manage CEM activity better. 14. The suggested outcomes for not-for-profit CEM are to construct a CEM system that drives values through satisfaction, which builds trust and loyalty and ultimately CEM quality. Benefits are seen as necessary by CEM users as a measure of service performance. 15. Not for profit, CEM can help drive innovation not just in the CEM system, but in the organisation, services and supports. Ideas that create new and efficient CEM can reduce costs and also add value to users of the CEM system. 16. Hence, values in some not for profit CEM are based on loyalty, the satisfaction that goes beyond the base service (complimentary service attributes, as outlined and debated). 17. Not-for-profit CEM it is recommended should be used tactically as a marketing tool that creates marketplace differentiation through the organisation having brand values that support a dynamic, exciting and enjoyable student experience that is unique. 18. Knowledge-based on CEM activity in a not for profit setting, as an organisation can enhance institutional innovation. Organisations should consciously manage their flow of knowledge as an evolutionary process and consider knowledge repositories, improve knowledge access, increase the knowledge environment as use knowledge as a marketing asset.
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19. CEM in a setting can provide individual profiles as nationality, qualifications, ethnicity, interests and employability. This can be utilised to better understand the individual. 20. CEM in organisations can 'aluminate' weaknesses and negative factors which are affecting marketing efforts (recruitment of customers, image, and value propositions).Addressing gaps shows management leadership and authority. 21. Not for profit, CEM can provide channel usage information by staff and users (website, media tools, phone, intranet, exhibitions, and open days). The data can help support the expansion of the CEM system and control peak times. 22. Not for profit, CEM can play a dynamic role in optimising relationship-based operations with resultant long-term relationships, beyond one experience sometimes for a lifetime. The recommendations based on the literature research completed for this book and author original investigation into CX. However, in future chapters, we explore how to put CEM together in an organisation, how to control and manage it and look at the feedback loops needed for success.
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Inside the head of the customer A customer survey is a potent tool for establishments because it enables organisations to get inside their customers’ minds to understand their needs, preferences and behaviours. This information can then be turned into information and insights which inform crucial establishment decisions including marketing, human resource, financial and competitive strategy. Nevertheless, to achieve this objective a customer survey needs to be carefully and systematically implemented. In my experience, I have found that customer studies are often not leveraged to their full potential. There are many reasons for this. However, a noteworthy cause is that the surveys are not established and organised with a unified strategy in mind. An effective strategy influences an integrated establishment determination in targeting, reaching, acquiring and serving its customers. Surveys are mainly driven by marketing research firms. These types of groups are good at and have experience with organising investigations in the field. However, experience has indicated that the bulk, do not have the strategy proficiency to create an “integrated strategic” survey and examine the results consequently. As a result, the establishment is often not able to use the survey information to deliver a cohesive and persuasive customer-focused strategy. A combined approach is critical if an establishment wants to realise the benefits of applying the customer survey results. A simple example would make this well defined. Let us accept that a customer survey indicated that “responsiveness to customer inquiries” is an essential customer criterion to a group of Company A’s clients when they selected a vendor or company to do business with. However, Company A scored poorly on this customer selection criteria. This is aggravated by the fact that Company A’s competitors were scoring highly on this necessary customer measure. The response might seem simple enough, i.e. increase responsiveness to customer inquiries. Should Company A address this item and if yes, how? Below are examples of elements that should be considered when making a decision. What are internal reasons causing this lack of customer responsiveness? How important is responsiveness compared to the other dimensions/criteria that the customer wants? Are there different competitive strategy trade-offs? Does the company need to improve its customer service personnel ability through training etc.? How does the marketing/advertising mix address this area? Is it likely that a department will improve in addressing the issue without the support from other departments? Without treating these types of integrated strategic questions, the customer strategy will disappoint. Customers Want to Feel Like They’ve Won One must provide the customer with a positive experience if you have any confidence in making an online sale. Customers of one's site want to feel like they are receiving a good deal; no one is going to purchase if they do not feel right about the product and the price. Irrespective of the product prices and one's profit margins, one must present them in such a way that the customer thinks they are getting value. Broadcast reductions in cost (50% off!) and the customer will not notice that the set price was higher than the product’s value. Provide free delivery without mentioning that the overhead on the product more than covers your low shipping and packaging costs. Whether or not the customer is getting a great deal, you must go the extra mile to persuade them of your establishment's great value. 149
You Want to Encourage Quick Actions Many compulsive shoppers experience a rush of adrenaline when they make a new purchase. This “retail high” adds to the positive feelings associated with a new product. The customer envisages all the ways that the new product will bring value to their life and rejoices in the great deal they received. Act now, or the sale is lost! You can take advantage of this customer behaviour by pushing the visitor to make quick purchases. One way to promote immediate action is by providing an exit intent cover that includes a countdown timer: “Buy within the next 5 minutes and receive 20% off!” Abruptly, the customer needs to move fast to get a fantastic deal. The adrenaline rush starts early as the visitor hurries to fill their cart and take advantage of the unique offer, and the organisation harvest the rewards of increased sales. Customers Want You to Care One of the most popular mistakes in e-commerce is to think only on the immediate sale rather than a long-term customer relationship. One's establishment will take in more money by switching visitors into loyal customers: customers who complete several purchases per year. The way to turn customers into faithful brand emissaries is by convincing them that the establishment cares about their patronage. This can be as basic as an exit intention pop-up welcoming them back to your site, or rewarding them with repeat business. “Thanks for coming back! Take 10% off your next purchase with us.” The customer knows that you have observed their contribution to the establishment and the business appreciates the particular attention. Track the behaviour of repeat customers and watch how one's CX efforts turn into rewards. Developing insight Model 20
Source: Leapfrog.com (2018) 150
How often does one-look at customers for a real understanding of their challenges? One collects an enormous amount of data on them but rarely does one use that data. Indeed, only 0.5% of the data available is ever used or analysed according to MIT Technology Review. The probable insight that data can provide is going to waste. To succeed and grow, a company needs to be able to obtain, hold, gratify and engage their customers efficiently. Customer analytics are fundamental for assessing how well your business does this process. This notion also applies to your insight research. To understand insight, we must understand the data that powers it. Customer analytics data helps to comprehend the path ones customers choose, and insight is what one derives from the data. If, for example, selling things online is the goal, then one should understand what your customers did before and after they reached the checkout. One needs to understand the pages your customers visited, the machines they use, and the channels that were used. If one is in the SaaS or app business, one will even learn how customers are using your software. The insight that customer analytics yields can have a severe impact on your business, as survey results show, widespread use of customer analytics can have a significant effect on corporate performance. Establishments that make extensive use of customer analytics are more likely to state outpacing their competitors on key performance metrics, whether it be profit, sales, sales growth, or ROI. Traditionally, customer analytics helps one understand where your customers are coming from, as well as show how and why they engage with your products and its features. But it can also guide your content marketing efforts. Customer insight allows one to pay attention to your customers' activity and look at what content is of interest. How are they engaging with that content? Which categories and forms of content are resounding best with individual segments? Using Customer Analytics for Your Content Strategy Content marketing works best when one focuses on a specific audience and create content that helps solve their challenges. This makes customer segmentation a great place to start. Segmentation can help one establish content that the audience can see themselves appearing in. In the first two or three statements of the message, customers should be thinking "yes, this is for me." From the data one has already collected, one should be able to create two or more user segments. Let us say you are selling a SaaS platform that helps both SaaS and e-commerce businesses. One should know not only which sections a customer belongs to, but then again also what their behaviours exist—including their interests and the challenges they are trying to overcome. It's also essential to maintain an understanding of how these segments are changing. Mining into the insight from one's analytics is necessary. Nevertheless one should also be communicating with customers. Ask them what they would like to see more of from content, and what other issues they may have and are looking to have resolved. One can obtain this information via an email list that allows for feedback or blog posts that encourages remarks and discussion. One can then take the insights you gain and apply them to your various customer segments, to help build or refine identities. 151
Find out which topics each section is mostly absorbed in and use it to your customer identities. For example, you might find that your e-commerce customers utilise content around acquisition, while one's other audience is all about retention. Knowing the topics ones customers are most interested in can drive further research, it will also help one to comprehend what the content should look like. Finally, customer insight gives one the ability to work on distribution. Knowing where one's customers came from can direct your content promotion efforts with more inevitability. One can also see how many conversions those sources generated (at all stages of the funnel). Now let us examine a few analytics tools that can make the job simpler. Three Tools These tools will help one keep stronger track of your customers. They will also collect behavioural and qualitative information from them. Note: content below is from the companies website. 1. Woopra The number of users visiting your site, e-commerce store, or app is already an excellent source of customer insight. How do we tap into it? Woopra is a customer intelligence tool that develops a profile for each of your users, based on the user's behaviour on your website. It also collects data from other touch points—for example, email, helpdesk, live chat, and one's CRM. You can also develop dynamic segments based on customers' behaviour. As the Woopra website notes: when behaviour changes, segments are updated. Those audience segments can help build your future content efforts. You can work on the content that a segment of ones' audience is engaging with the most. You can focus on the items you know will work and position the material in a way that answers their specific questions. 2. Qualaroo Customer development is vital. Although real-world conversations with your customers are invaluable, you need a scalable system to go with it. Qualaroo is typically used to enhance conversion rates and add context to analytics. It can also be helpful for content and topic research. For example, one may want to understand your visitor's thoughts on a blog post on your website. Using Qualaroo, you can expose an unobtrusive survey asking whether they learned everything they required. Depending on what they recall, you can then ask a follow-up question for more information—e.g., ‘What do you think is missing in this material? This approach gives you qualitative customer insight straight from the very mouth of your customers. 3. Mention So far, everything we've covered derives insight from your owned properties. What about what your audience—and the market—is saying elsewhere? To track social platforms, communities, and other channels, one can use Mention. Provide the keywords, brand names, or items you want to watch. Mention brings together all "mentions" of those terms. This information is valued because you can then segment conversations by source. 152
For example, if one finds there is too much about a topic on Twitter, making research complicated, one can filter by forums or blogs, to reduce the noise and more quickly focus on the conversations most valuable to you. Find out trends and monitor questions audiences asking outside your used properties. Use that information to ones' advantage by developing content that meets the needs of those audiences. The insight from ones' customers is valuable. It will help one reach business and growth objectives. It may also increase the effectiveness of your content marketing. People skills The most successful CX establishments are unified and energetic by an underlying purpose that is meaningful for both customers and employees. Creating experiences, communications and learning journeys for employees around this purpose can reveal massive potential from an organisation’s most significant assets: its people. Working towards the same goal appeals to both heart and minds. That emotional connection can be the difference between a brand that matters to people, and one that does not. The same is valid for employees as much as consumers. Culture. A competitive advantage Establishment culture reflects the behaviours and habits it chooses to reward and those it wants to disregard. The healthier the lifestyle, the more empowered the workforce is, and the more likely they are to understand and act on the importance of the customer experience. Questionably, a strong culture can be the only sustainable competitive advantage - something that cannot be easily duplicated and can endure the constant changes felt in any industry. It can translate into a greater sense of purpose and ownership, increased employee and customer loyalty, higher productivity and better business results. At many organisations many debate one's values - and whether we are living up to them - as a whole establishment every week. One shares stories and examples of where value has been brought alive, or where we can do better to live up to it. One measure how we are doing against our values and track our progress over time. The benefits are used to recruit and to inform ones CX team everyday behaviour. Engage the whole organisation Strategy and values cannot always be kept at the top of the CX agenda. There must be a deep understanding throughout the organisation of the impact of the company culture, and employee experience has on establishment strength and customer experience. Some establishments understand this area very well. They invest in talent and employee experiences – just think of the premises and employee initiatives provided by Google and Facebook and some of the growing creative agencies. Clients buy agency culture as much as they do agency services. The experience of visiting a creative agency can be inspiring and provocative, and many clients want some of this to rub off on their organisations. So where do you start? 153
Transforming the employee experience is not straightforward. It requires precise objectives, dedicated resources, and sponsorship from leaders. Nonetheless, a good starting point is to focus on three key areas: 1. Instances of change: identify "change stories" that connect with and inspire the rest of the organisation, and build the case for others to follow. 2. Lead by example: identify the people that can get change moving quickly and scale successful new ways of working. 3. Collaboration: create space for, and encourage people to collaborate on new, relevant initiatives across the company – some of this is about a process, but more is down to a focus on habits, values and culture. Growing numbers of establishments are coming to accept the benefits of customer-centric CX strategies, for example, higher revenues, lower costs, and stronger employee and customer loyalty. In the endeavour to transform customer journeys and refine direct interactions with clients, however, many establishments overlook the desire to engage the whole organisation, including its support functions, in a customer-centric revolution. At leading customer-centric establishments, creating great customer experiences begins with a shared vision and requires objectives that can translate individual experiences into satisfying end-to-end customer journeys. The reason for expanding that commitment inside, to support staff, is persuasive. A superior customer-experience strategy goes well beyond making products and services as good as they can be. It interlaces a seamless web of “customer first” motion that extends from the vision of boardroom directors to the activity of frontline staff in day-to-day exchanges with customers. The closer an establishment can show its dedication to customer-centricity with the interests of its team, the closer it will get to obtaining its customer-strategy goals.However many establishments strive to align themselves internally with these goals. Some establishments, such as banks, face security and regulatory limits that make it challenging to deliver internal services smoothly and quickly—for instance, stringent criteria for storing and sharing data reduce the access of employees to multiple sources of data across locations. Worries about noncompliance, some establishments place fundamental limits on themselves, harming their efforts to work efficiently, smoothly, and quickly. One bank, for example, stored all its data at the highest level of confidentiality, restricting its employees’ access to useful non-confidential information. At other establishments, silo organisational functions address individual touch points in a customer’s journey but leave no one responsible for the overall end-to-end experience. What is more compelling, in the search for efficiency and the benefits of scale effects, establishments build large teams devoted to specific topics, creating silos that disconnect support functions from their users. Still other establishments, which highlight their external image and customer-experience efforts to the disadvantage of internal services, and treat support functions not as core drivers of corporate wellbeing but as targets for cost-cutting. Such oversights can be damaging. When establishments fail to maximise the quality of their internal services, they disconnect the customer experience that their employees face at work from the one they desire to create for their frontline people in dealing with customers. 154
Establishments must comprehend their employee skill level and drivers of satisfaction with the working environment and services. The best method is a controlled one that accurately discloses the sources of happiness and the techniques to improve them. Too many establishments do not gauge employee satisfaction or the support functions’ performance efficiently and in so doing fail to comprehend the needs of the employees using these internal services. The result is a diminished opportunity to take remedial action. Defining the CX voyages of employees and arranging to survey CX staff should follow a two-step approach. First, one needs to describe a list of journeys to discover, categorised by the criteria listed above. In most situations, only ten trips account for about 80 per cent of customer-satisfaction results. These journeys are cross functional by nature. It is therefore essential that crucial people accountable for all departments that deliver services to employees meet to explain the passages and comprise the customer perspective. Prevent trying to describe journeys within organizational silos; for instance, a trip like “I am a new employee in the firm” involves HR (to provide contracts and validations), the purchasing office (to produce badges), the real-estate department (to secure an office), IT (to deliver hardware and software), finance (to share bank-account documentation), and so on. Following on next to safeguard that the list is complete and representative, test it with employees who use these internal services. To survey employees about the fine-grained elements of journeys, it is essential to expose the details. In fact, the objective of examining employees about their satisfaction with internal journeys is not just to measure it. This determination aims to understand the elements that drive satisfaction or dissatisfaction with the routes and in this way to classify and establish priorities for transformation if needed. To do so, the detailing exercise one should break up the steps staff go through in these journeys, with content from those who operate them and those who use them. Live observation of the routes should be part of the effort to ensure accuracy.
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Putting CEM together The literature designates that for most respondent organisations, the starting point for CEM initiation into their organisation was bottom-up, championed at a divisional or regional level, and in a single functional area. In these examples, the scope of CEM tended to be tactical and viewed as just an IT tool. However, a vast majority of respondents also saw CEM as a strategic enabler with an enterprise-wide scope. This implies a need for more top-down, senior management patronage and involvement. In such an environment, CEM can evolve from being an IT tool to a strategic marketing enabler, from having a limited divisional scope to having an enterprise-wide influence. For example, in a major wireless company, CEM started out as sales-force automation (SFA) tool and evolved into a strategic enabler including the corporate goals of one-call resolution, increased customer retention, and improved customer satisfaction. Regarding opportunity, CEM began in the sales function, consisting of 15 SFA tools. This progressed to a single SFA tool and, when combined with changes in compensation plans and employee job classifications, this led to enhancements in productivity, lead management, and account penetration that happened so quickly that it spurred the firm to embark on an enterprise-wide effort. At a sizeable global delivery services company, CEM started out as a tool for refining call centre activity (cf. Bowman and Narayandas 2001). Management brainstorming including “day in the life of a customer” behaviours that led the firm to recognise that CEM was a key to the competitive strategy of controlling customer service and differentiating the business on customer service. Though CEM began in the customer service division only, its results and the valuable customer information it created led to interest from marketing and sales and ultimately to plans for enterprise-wide rollout. These examples point to the significance of integrating CEM strategy and programs with a business’s marketing strategy. In both these examples, understanding the advantages from the increased possibility for CEM resulted from recognising how CEM fitted with and supported, the business’s marketing strategy. Successful implementation of CRM strategy and programs can be disadvantaged due to a resistance to change at various levels of the organisation. For illustration, marketing managers may not quickly make the transition from being responsible for all aspects of the marketing of a single product or brand to handling functions spanning multiple brands and products that are simultaneously relevant to a firm’s customers (Kumar, Ramani, and Bohling 2004). Likewise, sales personnel would need to be vigorously involved in the process of understanding data-driven campaign output files that prioritise customer choice and overcome reluctance to accept recommendations that do not suggest traditional customer touch patterns (Kumar, Ramani, and Bohling 2004). To obtain an organisation-wide commitment to CEM, the business case needs to quantify the projected ROI regarding adequate metrics and available indexes. Accurate calculation of marketing ROI requires that organisations develop a knowledge base of the effects of marketing programs on measurable indexes that span multiple marketing conclusions (Rust, Lemon, and Zeithaml 2004). These indexes and metrics then help in assessing and reviewing the success of the various stages of the project rollout. It has been shown that long-term financial returns to marketing initiatives may depend on an organisation's ability to concurrently be effective and efficient (Mittal et al. 2005). 156
For CEM to be active, it will be critical to show how it can simultaneously boost efficiency and revenue. The challenge for marketing scholars is to address this crucial gap since CEM is not a tool to accomplish one at the expense of the other. Intradepartmental and interdepartmental cooperation and coordination are significant to the effective implementation of CEM plans. Inter-functional coordination and cooperation related issues have been expansively investigated in marketing and management literature in the context of innovation and new product development. It is plausible that some of the findings reported in this book and body of research would be relevant regarding interfunctional cooperation and coordination related issues in the framework of CEM. CEM management and control The content of a CEM strategy consists of six mutually dependent criteria according to (Donaldson and O’Toole, 2002): 1. Emphasis on quality. Poor service is the primary reason for losing business. The core product alone is no longer enough, and service quality is stressed as the key to successful marketing. 2. Measure customer satisfaction but control customer service. This reflects understanding and understanding of the various benefits that a prospect expects before purchase, and the management of the division between expectations and performance after the purchase process. 3. Invest in people. Internal relationships are as meaningful as external relationships. Implementation of a ties concepts can only start from the people in the organisation knowing the objectives set and meeting the required standards. 4. Maintaining dialogue with customers. Building long-term relationships are the critical issue in CEM. Companies that listen and adapt to preferences of individual customers have a higher propensity to retain them and make them loyal. 5. Setting realistic targets and assessing performance. Organisations must have an understanding of customer perceptions of the various elements in the offering and the elements necessary to each customer. 6. Relationship-based interfaces. This means being in touch with both internal and external customers in a responsive and flexible manner. In practice, there is a gap between what firms do, what they should do, and what is most desirable to do. The means of communication should be adapted to the needs of the individual customer. The fundamental dimensions of CEM relationship strategy implementation and management are considered in research to be; Structure: organisational structure for relationships, for example, team-based structures such as key account management. Staff: people dimension of a relationship, which entails managing the social structure of a relationship cross-functionally. Of utmost importance here, are training programmes of various kinds. Style: everything that managers say and do. Beliefs and actions of managers determine the outcome of an implemented strategy. 157
Systems: set-up of relational systems like sales service processes, supply chain management system, relationship performance scorecards, and order fulfilment system. Schemes: programmes that support relationship implementation, for example, investment and adaptation patterns, loyalty and retention programmes, and relational communication. Considering the customer seriously has many benefits, and CEM can assist organisations to drive customer satisfaction which creates customer loyalty. Therefore the role of CEM is creating satisfied and loyal customers. Happiness is an outcome-orientated marketing strategy view derived from customers who believe your organisation's performance meets their expectations. CEM is about the experiential dimensions of product or service consumption that match the needs and wants of the customer first and the organisation second. When we debate aspects in CEM they include, feelings, attitudes, emotions, views and opinions, it is an emotional, experiential connection with the organisation, its products, and services. Feedback loop Figure: 8
Source: Bain.com (2018) The Net Promoter managers share the customer’s feedback—both the original responses and the follow-ups— with frontline employees. When conceivable, they share not just synopses or excerpts but also precise customer comments. For example, supervisors who “close the loop” with unhappy customers record the call (with permission) and then forward the digital voice file to the employee who served that customer. Hearing the customer’s actual voice lets the employee understand the tone and feel the emotional impression. That alone often motivates learning and changes in behaviour, with little additional coaching required (Markey, 2017). Closing the loop also permits frontline employees and managers to identify processes and policies they may need to report as a group. In one European health insurance operations, feedback implied that unexplained delays were a significant source of customers’ frustrations. 158
When representatives closed the loop with dissatisfied customers, they discovered that customers had to call back always about the status of their request and that they were expected to describe their issues again and again. The solution was to on the initial call, the company would assign a case manager to the policyholder, and that case manager would handle all contact until the matter was resolved. To help manage customer expectations, any delay in the process would activate a call or text message informing the policyholder of the claim’s status. Soon after implementing this new procedure, the CX division saw a double-digit expansion in its Net Promoter® scores (NPS®) and a significant increase in new business. Closing the loop with midlevel managers Middle managers in operations, product development, marketing and finance must translate strategies into products, processes and policies that attract and retain high-value customers. If these managers do not have a continual movement of direct customer feedback, tight budgets and other constrictions can lead them to focus on departmental goals and to push customer experience to the side. If they do receive direct customer feedback, they can avoid making poor trade-offs. For instance, instead of spreading improvement efforts equally across every touch point, managers can focus on the few that build or destroy loyalty. For American Express as an example, one of those vital touch points was the replacement of lost or stolen cards. While reconsidering the service and operational processes that created the most detractors, company specialists noticed that many initial requests for card replacements went unsettled, requiring a second service call by the customer. Even more alarming, the specialists exposed that the high-value customers experienced a need for card replacement more often than average but also that their Net Promoter scores after a card replacement action were almost 25 points lower than the medium among ‘other’ customers. Replying to these findings, operations managers removed process improvement teams from other and less urgent enterprises and focused them on card replacements. The teams developed new replacement protocols and enhanced internal processes. These changes increased first-call resolution rates by more than 20% and raised high-value customers’ NPS to parity with other customers’ scores (Markey,2012). Logitech, the computer peripherals manufacturer, gathers Net Promoter feedback for each of its products, thus closing the loop between customers and the engineers and managers who design and develop the company’s commodities. Such feedback helped product designers understand, for example, that Logitech’s MX 5000 keyboard—its first with Bluetooth competence—suffered from a range of significant drawbacks: many customers found its LCD screen hard to read. The designers were able to focus on these problems in the next model. As with frontline feedback, successful companies try to ensure that middle managers and technical teams understand the customer’s voice directly. One Logitech executive explained the importance of that process as follows. There was a real temptation to develop a staff group that could obtain the customer feedback and explain it to the engineers, whose time is valuable. But we didn’t do that. We made sure the customer scores and verbatims got moved directly to the product teams so they could review their thinking. The product teams knew the products better than any central group. 159
They understood the design trade-offs being considered for new products, and they could make the emotional connection to the end user. “Reading a statement from a customer promoter or detractor,” the manager concluded, “has far more impact than looking at a statistic on a monthly report from headquarters.” (Markey & Reichheld, 2012) Closing the loop with senior executives The job of an organisation’s top executives is to influence important strategy and resource allocation decisions. Feedback from customers has always been critical in that process, but it is more important than ever. The motivation is that markets and technologies are changing. The strategy one launched a year or even six months ago may need to be reformed in light of current market conditions. Making the right changes nearly always involves useful information about what your target customers are reasoning, sensing and performing. Most Net Promoter companies have constructed methods for senior leaders to understand customers’ issues directly. For Cancer Treatment Centres of America (CTCA), all board meetings happen at one of the company’s medical facilities rather than in a headquarters conference room. The meeting starts with a patient talking about his or her recent experience at the centre. At Rackspace, the IT system routes several customer survey responses each week to the CEO, who then calls those customers. Many large companies use software to analyse customer responses and summarise highpriority issues. Executives inspecting the customer patterns can then determine which items require immediate attention from the top and which should inform the company’s strategic priorities. Apple, for example, exposed that its favourite products and eye-catching store design were not the No. 1 reasons cited by customers who loved shopping at its stores. Instead, the top reason for promoters’ interest was the friendly, helpful and knowledgeable service received from store employees. That message reinforced executives’ commitment to investing in hiring, training and developing outstanding store personnel. Why doesn’t everyone gather feedback this way? To be most useful, feedback from customers should be both quick and layered. The general monthly or quarterly customer surveys, which aggregate thousands of responses into a statistical summary, are not appropriate. Productively, customer comments, reactions and scores should move directly to the departments and individual staff responsible for the products or services in the debate, and they should arrive as recurrently as possible. Gathering regular feedback in this way is an immense job. Schwab, Apple, Progressive and other Net Promoter leaders have invested substantial resources in establishing full-bodied feedback devices involving both sophisticated IT systems and well- defined management processes. It takes time and money to construct such mechanisms, and many establishments seem to have decided that the investment is not worthwhile, which over time will see them lose business. In the meantime, however, many establishments continue to clutter up everyone’s inboxes with surveys that are fundamentally valueless. It would be far better for organisations to spend the money to develop a dynamic feedback system and learn what their customers want to tell them. 160
Summary In this chapter CEM and its role has been explored alongside, For-profit CEM and Not for profit CEM as they are seen as having different objectives and outcomes. Furthermore, Quality of the service experience is now shown to be essential for proper CEM delivery. CEM recommendations reflect best practice based on getting, Inside the head of the customer to obtain Developing insight. People skills in CEM involve the whole organisation having a customer focus, which allows Putting CEM together in an efficient way, once in place CEM management and control kicks into place providing a CEM Feedback loop. Review Questions •
Using 100 words explain the differences between profit and not for profit-driven CX.
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Debate quality as a topic within CX delivery
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Using 100 words outline the role of people in CX
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What is a CX feedback loop?
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CHAPTER SIX Introduction The principals of branding based on value propositions drive value for the customer and the organisation as equity is built between the parties. The experience supports the brand and makes increased value. Chapter Learning Outcomes •
To understand the brand experience and how a positive reputation drives value.
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How to create value propositions
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The consideration of equity building through a quality experience
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The role of the customer and the organisation in experience co-creation
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Having completed the module, you will be able to:
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Critically assess the use of experience inside and outside the establishment.
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Assess the core elements of experience building and their financial contribution.
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Having completed the module, you will be able to:
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Utilize experience as a driver in building brand values and equity.
• Prepared able to evaluate and construct an experience journey in marketing Critical thinking Having completed this topic, you will be able to: 1. Critically asses the role of experience within an organisation. 2. Assess the core elements of experience management and its financial contribution. OBJECTIVES The chapter tries to impart an understanding of how experiences build value and equity for the customer driving loyalty and therefore increased revenues and profit.
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The brand experience and reputation management Brand loyalty is valuable for any enterprise because it can promote sustainable success. Customers who are loyal to an establishment do not only repeatedly purchase a product, but indicate a disposition to pay extra for their preferred brand (Hoyer & MacInnis, 2008; Mohammad, 2012). These loyal customers also refer to their preferred brand to peers and relatives, making the business more valuable and widely known (Mao, 2010). These benefits of achieving brand loyalty promote sustainable success for any business. Given an example of the leading English football club such as Manchester United, the company seems to already make brand loyalty as it has worldwide supporters who are not only willing to repeatedly purchase its football shirt and merchandises continually but tends to recommend the club to their friends. Luis Vuitton is also another luxury fashion brand that tends to prosper with the concept of brand loyalty among global consumers, giving the point that every new collection of its products (such as handbag) will likely to be purchased by its patrons. According to Franzen and Moriarity (2008), a primary definition of “brand” is the set of signs and symbols (such as brand name, logo and other visual characteristics) that represent a given product or set of products to consumers. However, the authors note that this description is too simple because it does not replicate modern branding practices. An expanded definition of the modern-day brand is that it represents the ‘promise of a given level of quality, service and social meaning’ such as status or image that a brand surrenders to the consumer. Although a brand may be associated with an array of visual symbols, the most important features are its intangible qualities. A brand encompasses the perceptions and expectations held by consumers that relate to a particular product or the company that produces it (Mohammad, 2012). Brands can be differentiated from products in that brands represent the significant assets that shape consumer perceptions of a given product (Martisiute et al., 2010). This indicates that regarding branding, it is not the product, but what the outcome symbolises to the consumer, that matters most including the experience. Brands go beyond the emblematic to encompass the values of the company from which they originate. When consumers choose a particular brand, they are also supporting the values that make up the corporation’s core philosophy (Tu et al., 2012). According to (Trasorras, Weinstein & Abratt, 2008), a brand’s value comprises four components: quality, image, price and customer service. Of these, there is evidence that quality is the most relevant characteristic (ClickFox, 2012; Nemati, Khan & Iftikhar, 2010) although customer service, (Choi et al., 2011; Nemati et al., 2011) and image (Mao, 2010) are also central to brand value and hence, brand loyalty. Price sensitivity, by contrast, is reduced by brand loyalty (Baig & Khan, 2011; Mohammad, 2012). In other words, loyal customers are willing to pay more for preferred brands. Given the importance of quality and the difficulty of providing quality at meagre prices, it is evident that creating a brand that stimulates loyalty offers a significant competitive edge. Brands are substantial in marketing services because they provide differentiation in the minds of consumers, based on the information about excellence, social connotation and other aspects of the brand, and what the brand represents to the public (Franzen & Moriarty, 2008). This is a significant advantage for organisations operating within a competitive market that must distinguish themselves from competitors for survival (Kapferer, 2008).
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An establishment's brand is a critical variable in determining its value as an organisation within a competitive market environment and thus is among the most valuable assets a company can acquire. A brand not only drives sales in the short term but also impacts long-term relationships with customers that can make future purchases (Mohammad, 2012). However, for a brand to be effective in providing its owner with a competitive advantage, brand loyalty is required. This concept is defined in the section that follows. Brand loyalty can be defined as a positive attitude toward the brand on the part of the consumer that leads to repeated purchasing and overall support for the brand (Hoyer & MacInnis, 2008). A definition of brand loyalty is “the biased behavioural response, expressed over time, by some decision making unit with regard to one or more alternative brands out of a set of brands, and is a function of the psychological (decision-making, evaluative) processes” (Jacoby & Chestnut, 1978, cited in Anandan, 2009, p. 159). A recent survey found that 87% of consumers would pay more or drive further to obtain the brands to which they were loyal (ClickFox, 2012), and this readiness to pay more due to brand loyalty has been confirmed by other researchers (Mohammad, 2012). However, as both Anandan (2009) and Kapferer (2008) noted, brand loyalty does not guarantee the same purchase every time, particularly for fastmoving consumer goods such as dairy products and cleaning products. Consumers may be loyal to a given brand, while at the same time sporadically choosing other brands because of convenience, price, or a desire for novelty. According to Hoyer and MacInnis (2008), brand loyalty is important for consumers because it streamlines the buying decision. For instance, if individuals have had positive experiences with a branded product in the past, it is likely that they enter the store to purchase the brand that they are loyal to without long-term consideration. The authors note that brand loyalty is also important from the retailer’s point of view because it increases the probability (though it does not make it inevitable) that a consumer will buy the same brand repeatedly. Thus, brand loyalty is how the branded product builds up a repeat purchase customer base, which it needs for market growth. It is problematic to objectively measure brand loyalty because various definitions have been used by writers and researchers. Some popular methods of measuring brand loyalty equitably have included purchasing behaviours and price sensitivity (Mohammed, 2012). Brand loyalty can be measured more informatively by surveying consumers to determine their commitment to the brand based on key variables such as favouritism in favour of the product (or against it) and stability of consumers’ opinions over time. These factors measure attitudinal loyalty, which often predicts purchasing behaviour (Mohammad, 2012). Mao (2010) provides a simple method for estimating brand loyalty empirically using a survey methodology. Consumers are divided into three groups depending on whether their scores on a given measure identify them as promoters (those with a positive image of the brand), passives (those who are indifferent to the brand) or detractors (those who dislike the brand). Then the percentage of the entire research pool that the promoter group represents is calculated to determine the general level of brand loyalty. Mao (2010) notes that the majority of companies receive scores of 10% to 20% on this measure. However, some researchers have concurred that brand loyalty can be measured through attitudinal loyalty and behavioural loyalty driven by their experience (Bandyopadhyay & Martell 2007, Chaudhuri & Holbrook, 2001; Gremlera & Brown 1996; Yi & Jeon – 2009). Attitudinal loyalty can be accepted when an individual expresses a positive feeling, opinion or view toward a brand itself or products offered by such brand (Gremlera & Brown 1996). 164
It is also closely related to a commitment toward a brand. This positive attitude usually indicates an individual’s predilection or intention to support the brand. Behavioural loyalty, on the other hand, is defined as purchase behaviour or repeated purchase of a product offered by the same brand over time (Gremlera & Brown 1996; Chaudhuri & Holbrook, 2001). Bandyopadhyay and Martell (2007) suggested that attitudinal loyalty driven by customer experiences is an aspect that a brand marketer should judiciously monitor because it can explain reasons why an individual expresses behavioural devotion (or repurchase behaviour). For example, if a consumer perceives that Costa coffee offers high quality of coffee bean, he/she would likely to purchase products offered by the brand, and if the perception of such quality is stable over time, he/she would probably to be a repeated consumer. Thus, brand loyalty is created through the customer experience. Although Mao (2010) did provide a method of how to measure brand loyalty, the present research would consider ‘attitudinal loyalty and behavioural loyalty’ as the components for measuring brand loyalty based on the reason that these two components have been widely used by other researchers as a measurement for brand loyalty. However, this combined approach does need to be evaluated, as it can quickly lead to the researcher missing unique facets of the development of brand loyalty between attitudinal (recommendation) and behavioural (repurchase) behaviours (Söderlund, 2006). This can create a one-dimensional view of consumer loyalty that may miss intricacies in aspects of brand loyalty (for example, purchase as a preferred brand due to great experiences). Another potential problem with a combined measurement approach for brand loyalty is that it does not take into account the evolving aspect of consumer loyalty, where consumers grow gradually more loyal to a brand based on repeated experience (McMullan, 2005). A useful set of brand loyalty metrics is provided by Choi et al. (2011), which integrate attitudinal and behavioural loyalty features. The behavioural features selected by Choi et al. (2011) include whether the person will continue to buy the product, which is the delineating behavioural component of customer loyalty (Bandyopadhyay & Martell 2007, Chaudhuri & Holbrook, 2001; Gremlera & Brown 1996; Yi & Jeon, 2009). However, as others have noted, behavioural loyalty can be prejudiced by other factors such as habit or convenience rather than real brand loyalty. Because of this, it is necessary to add an attitudinal component to measure brand loyalty (Choi et al., 2011). Choi et al. (2011) added four attitudinal questions to the measurement of brand loyalty, including asking about an endorsement of the brand, favoured selection, positive speech, and encouragement of the brand to others. The relative simplicity and comprehensiveness of this measurement compared to other measures of brand loyalty make it useful, despite the potential issues recognised by Söderlund (2006). Brand experience can be defined merely as the consumer’s interface and assignation with the brand and associated products on multiple levels (Brakus et al., 2009). Brand experience encompasses four dimensions: sensory, affective, behavioural and intellectual (Brakus et al., 2009; Choi et al., 2011). Sensory brand experience refers to any inert aspects of brand involvement that is encoded directly via the senses of sight, hearing, taste, touch and smell (Shim, 2012). Exciting design elements and other tangible qualities of a product are most likely to activate sensory effects. However, aspects of design may conjure feelings, trigger behaviours or even tap into the intellectual dimension as with models that use sophisticated patterns (Brakus et al., 2009). This suggests that there are spillover effects from one dimension to the next. Affective experience refers to the feelings motivated by brand-related stimuli (Shim, 2012). This domain can be defined merely an emotional response and arousal, but its effects can be profound on customers. In fact, attitudes toward a product are based mainly on ‘affective reactions’ to that product or its brand-related stimuli (Brakus et al., 2009). 165
In other words, if elements associated with the brand trigger positive feelings, the brand experience will be heightened. The behavioural domain, which incorporates concrete consumer actions, may be activated by various brand-related stimuli. For example, a slogan that encourages action, such as Nike’s “Just Do It,” appeals to the behavioural dimension (Brakus et al., 2009), which can encompass anything from a single action to an entire lifestyle change (Shim, 2012). The intellectual dimension, like the behavioural dimension, signifies an ‘active’ rather than ‘passive’ reaction. However, the activity takes place in the mind rather than obviously. This domain is activated when brand-related stimuli encourage thinking, problem-solving and overall curiosity (Brakus et al., 2009). There are key factors that may influence brand experience, including name, symbols, design elements, packaging, marketing materials and environments and others (Shim, 2012). More intangible brand-related stimuli such as the establishment's core philosophy and the beliefs and attitudes it promotes are also elements of the brand experience that can significantly influence brand loyalty (Goodson, 2011). Brand experience is essential because it provokes positive feeling among customers toward a brand (Brakus et al., 2009). Consumers with positive brand experience better remember the brand than those who do not positively experience the brand. Establishments endeavour to create the brand experience as they believe that it could lead to a positive attitude toward the brand and eventually inspire positive purchase behaviour (Goodson, 2011; Mao, 2011). Brand experience comprises the feelings, cognitions, sensations and behavioural responses triggered by brand-related stimuli, which may include everything from slogans to brand mascots to symbols (Brakus et al., 2009). Brand experience encompasses the full spectrum of involvement with a product or service, ranging from the initial search for the product to the purchase, receipt and consumption of it (Choi et al., 2011). There are some research studies that have verified the practical importance of brand experience. One study focused on the importance of the brand experience of a parent brand in the willingness of consumers to try brand extensions and to continue to purchase them (Kim & Sullivan, 1998). This study compared consumer response across three consumable goods items, finding that in each case there was an increased willingness to try brand line extensions (which are different, though often related, products sold under the same brand) and to keep buying them (Kim & Sullivan, 1998). The importance of this study is that it supports the relationship between brand experience and brand loyalty. Another theoretical research study that is particularly relevant found that ‘emotional brand experience’ is very significant for developing a service brand (Morrison & Crane, 2007). The research findings pointed out that consumers engage with service brands in large part because of ‘emotional engagement’, such as wellbeing or knowledge with service workers and service commodities, and not necessarily so much because of differences in the service offer or quality (Morrison & Crane, 2007). This means that for service brands (such as coffee shop brands), it is principally important to encourage the development of positive ‘emotional brand experience’ to promote brand loyalty for service brand customers. This both supports the relationship between brand experience and brand loyalty and reinforces the importance of emotional brand experience for the service setting. A third study of Harley- Davidson consumers in Australia suggests that brand experience represents part of the formation of its unique identity for consumers (Schembri, 2009). 166
In other words, the act of consuming the brand (or the experience with the brand) becomes part of how the consumer defines herself or himself as a social person (Schembri, 2009). The Harley-Davidson consumer experiences the brand not independently, but as part of a particular social group and setting (Schembri, 2009). Although motorcycles and coffee are not decidedly similar, this is still relevant because of the social setting of the coffee house and the social aspect of coffee consumption. Naturally, it is possible that part of the emotional experience of the Costa Coffee brand, like Harley-Davidson, is associated with its social nature and formation of distinctiveness, which will need to be considered. Measurement of brand experience was most clearly undertaken by Brakus et al. (2009). Brakus et al. (2009) offered a series of 12 items, or three items for each of the four domains mentioned above (sensory, affective, behavioural and intellectual), that showed meaningful connections to the aspects of the brand experience. Value propositions that drive quality experience Economic sociology (e.g., Beckert and Zafirovski, 2010) and economic anthropology (e.g., Carrier, 2005; Wilk and Cliggett, 2007) both have a long history of describing the social nature of ‘value.’ Emile Durkheim ([1893] 1991), Marcel Mauss ([1902] 2000), and Max Weber (Weber and Whimster [1921-1922] 2008) are seen as pioneers in this field, while lately, scholars have turned to Gabriel Tarde (1902) to underline the subjective and inter subjective character of economic quantification (e.g., Arvidsson, 2011b; Latour and Le ́pinay, 2009). Fresh developments have confirmed the ambiguities and uncertainties concerning what is described as valuable as well as the existence of a range valuation items (Stark, 2009). A broad claim among these disciplines is that there is no such thing as absolute value. Value is entrenched in the cultural characteristics of societies. Definitions of value are dependent in the sense of being “conditioned” not mechanistically determined (Herrnstein Smith, 1988) and on the figurative systems that in any given context define what is significant, evocative, attractive, or worthwhile (Graeber, 2005). For example, auctions, far from functioning as abstractly as economic theories assume, determine value bestowing unusual characteristics of specific places and specific points in time, location and history, and tradition and desire (Smith, 1990). Similarly, in standard markets (e.g., commodities) value is centred on the individualities of what is traded so that valuation is entirely independent of who the actors are; however in a status market (e.g., fashion or art), value is focused on the relative status of the actors (Aspers, 2009). The vast economy of singularities (Karpik, 2010) that is comprised of the multiple markets where people exchange things and services that are exclusive, exact, unusual, or just deeply embedded in culture illustrates daily the ‘situated character’ of value determinacy. The economy of singularities also exposes that it is not possible to distinguish between ‘use value’ and ‘exchange value,’ as Marx advocates (see, e.g. Davis, 2006), since what the buyer is happy to pay for a value proposition is an integrated part of the experience exposed from this proposition, something already noted by Veblen ([1899] 2001) in his theory of conspicuous consumption. Value is an outcome of ‘situated judgments’ (Frow, 2007). What people in a given society contemplate as being ‘of value’ cannot be reduced to a matter of individual preferences. Individual preferences are not only sharpened by families and private and public organisations and also less tangible influences, for example, political issues, the arts, social practices, technological developments, and the natural environment. 167
For example, the increase of intangibles such as brands or symbols has brought with it a new valuation reason that is dependent on mutual ethical attraction (Arvidsson, 2009) and shared productive investments (Arvidsson, 2011b). Value is created from how people conceive of the meaning of their world (Alexander, 2005). More precisely, value derives from how people imagine of worth and purposes to give logic to their choices and to give focus to their actions (Corvellec and Risberg, 2007). From asserting the value of Nature affected by an oil spill, to how specialists agree on the value of wine, through the worlds of scientific publications, subprime mortgages, or stock exchanges, value derives from the partialities of market actors. The preferences are methodically conditioned by the political dynamics of institutional contexts and embedded in the social psychology of desire and meaning (Beckert and Aspers, 2011). Not least, the value in the technical form as a measure of worth is subject values in the ethical sense of normative views of the item (Arvidsson, 2011a). Social anthropology also demonstrations that as soon as value appears, it starts to circulate as a hypothesis undergoing transformations along time and distance that encompass not only the economy but also society and the environment as an aggregate (Mauss, [1902] 2000). Valuation practices are variable regarding space. Since there is a spatiality of exchange and use, there is also a spatiality of value. The same second-hand item will be assigned different values depending on whether it is offered at garage boot sale, charity shop, or vintage boutique (Gregson and Crewe, 2003). The practice of arbitrage is a factor that prices—the most active economic substitution to value— need an encompassing social and technical support to be set across nearly perfect markets (Beunza et al., 2006), a dimension not taken into account by the Black and Scholes model (Black and Scholes, 1973), arguably the dominant understanding of arbitrage in economic theory. And the attempts made in high-frequency trading and the smoothing off of differences in the time that it takes to pass orders between computers that are immediately near the data centres of the stock exchange businesses and processors that are a few kilometres away (Patterson, 2012; Yagiz, 2012) show that even when economic information travels at the speed of electrons, differences in distance mean discrepancies in profit-making opportunities. A reason why the value is not unconditional is that value is determined, at the same time and across time, through different rules of value (Appadurai, 1986). Regimes of value are standardised ways of assessing and communicating value. They are manifestations of established understandings of what matters as opposed to what does not matter. As Frow explains in his research, “a regime of value is a semiotic institution generating evaluative regularities under certain methods of use, and in which particular empirical audiences or communities may be more or less fully imbricated.” (1995: 144) Routines of value are coherent and socially situated ways to establish value (Appadurai, 1986). They are evaluative frameworks and practices that are embedded in specific social contexts, and they rely on particular methods of calculation, which are accepted by specific sets of institutions. And as evaluative frameworks, regimes of values impose themselves on both sides of the traditional divide in service management theory between the offering side of the service provider and the beneficiary side of the service customer. 168
The concept of regime of value expresses a fundamental theory: “that no object, no text, no cultural practice has an intrinsic or necessary meaning or value or function; and that meaning, value and function are always the effects of specific (and changing, changeable) social relations and mechanisms of signification.” (Frow, 1995: 145) Different administrations of value define value differently. One regime can attribute value to something that another system considers having no or negative value. For example, a political administration might attach a particular value to democracy and believe that universal access to a supply or service is of crucial importance to national security, whereas an economical administration ascribes more importance to providing users with good value for the money, and an environmental organisation gives priority to the service’s environmental impact. Each evaluative framework is an expression of expectations, favourites, selections, modes of calculations, arbitrages, and, more generally, orders of worth (Boltanski and The ́venot, 2006) that condition which this framework points to as being ‘of value.’ The concept of regimes of value has one of its bases in the observation that ‘‘not all parties share the same interests in any specific regime of value’’ (Appadurai, 1986: 90). Stakeholders adopt different ways to gauge how well the establishment is serving their interests. Not that the idea of routines of value is merely restating the argument that value is something independent, in the sense of being personal, preferential, experimental, and situational (Holbrook, 1999). Instead, the notion of regimes of value accentuates that different institutions, calculative modes, or traditions lead stakeholders with varying systems of importance to define value in various methods. The notion of a regime of value expresses that value is determined locally, in different contexts, and by social groups that have different vantage points and employ different criteria (Frow, 1995). A good example is customer experience; its value is a perception held in the mind of the person exposed to the experience. As Stark (2009) shows, the logic for evaluating worth in organisations is not always clear; multiple and changing criteria create indecisive and uncertain orders of worth for the players. The coexistence of regimes of value, the transformation of systems of value over time so that some grow in importance while others become obsolete, and the additional fact that schemes of value are not automatically standardised and can be intersected by disagreements and disputes create a challenge for value researchers. It is difficult to distinguish in advance value, as according to which metrics the value of their action will be measured plays a role. Moreover, ways to assess value cannot necessarily be measured by the same criterion because they are not necessarily commensurable. Commensuration, articulating characteristics usually expressed in different units according to a standard metric (Espeland and Mitchell, 1998), has its boundaries. There are not necessarily precise ways to compare and rank value propositions according to different regimes of value. For example, there is no apparent scale of similarity or ordering principles between the political value of democracy, the economic value of efficacy, and the environmental value of precaution: Organizations that aim to offer services that address these three regimes of value address incommensurate evaluative regimes (Frow, 1993). Different systems of value can even be incompatible and mutually exclusive. 169
For example, education services offered on a purely commercial basis would transform the value of diplomas so significantly that they would lose their original value of being a sign of individual merit and competence (Sandel, 2012). This is why movements across incommensurable value spaces are obviously significant (Frow, 1995). This combined instability and incommensurability of a ‘regime of values’ is not necessarily a nuisance for organisations, however. It makes it possible for them to organise their value propositions according to what Appadurai (1986) calls a “politics of value.” The notion of politics of value considers that ‘‘to value’’ as a verb is a primary to ‘‘value’’ as a noun (Dewey, 1939). “It transfers the focus from the notion of value per se to the pragmatics of valuation” (Muniesa, 2011). Value results from the ‘action of valuation,’ and this action is ultimately political in the sense that it involves ‘‘relations, assumptions and contests about power’’ (Appadurai, 1986: 57). Value emerges from ‘‘relationships amongst people’’ (Harvie and Milburn, 2010) who are different and therefore of uneven social status (Zafirovski, 2000) and who act within the specific social order of, for example, markets (Fourcade, 2007). Supplementary, valuation activities are political in the sense that they produce representations that link knowledge practices to decision-making practices (Verran, 2011). Valuation ultimately rests on collective arbitrages between socially habituated individual variables such as attitudes, requirements, principles, partialities, priorities, and ambitions. Lacking technical or objective ways to combine these variables, and thus ways of combining the different regimes of value through which these variable find an expression, organizational members need to learn how to engage with the kind of things that describe politics: negotiations, compromises, and trade-offs, but also programs, moral choices, and public votes. More than value propositions, organisations make valuation propositions, to recycle Dewey’s (1939) theme (see also Muniesa, 2011), that is, propositions about how organisational activities should be valued. Value propositions (VP) are messages of critical principals that make up the core values of a commodity using communication. VP’s in many cases are reliant on the experiences of the user (theme parks to consumer commodities). The experience has a value (great rides or superb signal from a mobile device) therefore VP’s create value intangibles and intangibles.
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Brand equity Brands characterise a great deal of valuable pieces of legal property, capable of influencing consumer behaviour, being bought and sold, and enabling the security of continued future revenues to their owner. The value directly or indirectly accrued by these various benefits is often called brand equity (Kapferer, 2005; Keller, 2003). The concept of brand equity has absorbed academics and practitioners for more than a decade, primarily due to the importance in today's marketplace of building, maintaining and using brands to obtain a strategic advantage. The concept refers to the basic idea that a product's value to consumers, the trade and the organisation is someway enhanced when it is associated or identified over time with a set of ‘unique elements’ that define the brand concept (Erdem et al., 1999). Brand equity has been described as the “benefit endowed by the brand to the product” (Farquhar, 1989). “This benefit can be viewed and analysed from the perspective of either the consumer or the firm” (Shocker & Weitz, 1988). “The value of a brand to consumers is referred to as consumer-based brand equity” (Keller, 1993). Brand equity research in marketing, as demonstrated by Aaker's observations and Keller s framework, focuses on consumers brand associations. Aaker has recommended that brand associations, brand awareness, perceived quality, brand loyalty, and other proprietary brand assets (e.g., patents, name, experience) lie beneath brand equity. Keller has also emphasised brand awareness and associations as critical foundations of consumer-based brand equity. This view of brand equity is rooted in cognitive psychology and concentrates on consumer cognitive processes (Erdem & Swait, 1998). The value of a brand – and therefore its capital – is at the end derived in the marketplace from the expressions and actions of consumers. Consumers decide with their purchases, based on whatever features they deem essential, for example, which brands have more equity than other brands. Although the details of different methodologies to conceptualise brand equity diverge, they tend to share a common core: All definitions characteristically either implicitly or explicitly rely on brand knowledge constructions in the minds of consumers – individuals or organisations – as the core or foundation of brand equity. In other words, the real power of a brand is in experiences, opinions, emotions, images, beliefs, attitudes, skills and so on that exist in the minds of consumers (Keller, 2003). Foundations of brand equity arise from the customer mind-set. Customer-based brand equity occurs when the consumer has a high level of knowledge and acquaintance with the brand, and these points hold some strong, favourable, and unique brand associations in memory. Remember, that brand awareness is related to the strength of the brand in mind, as reflected by consumers ability to identify various brand elements, i.e., the brand name, logo, symbol, character, packaging, and slogan) under diverse conditions. Also, recognition processes require that consumers be able to discriminate an incentive – a word, experience, object, image, or as something they have previously perceived. Brand recognition relates to consumers ability to identify the brand under a variety of circumstances and can involve identification of any of the brand elements (Keller, 2003). According to Jeremy Bullmore (former chairman of J Walter Thompson, author and columnist) -"Consumers create an image of a brand. From the scraps and straws, they chance upon." Consequently, a brand name, logo, a single tune, experience and packaging or any visual differentiation, or any unique feeling/experience with the brand or any marketing activity. It functions as a sign for the consumer to preserve an image or perception about the brand in the memory which helps the consumer to recall and recognise the brand under different conditions. 171
Customer innovation of experience Markedly, by including the concept of ‘experience sharing’, we can see value creation as a continuing and advantageous mutual loop, representing on-going value creation relationships, rather than a linear co-creation relationship. This on-going relational view is fundamental to the existence of all ecosystems including those in complex networked environments (e.g. Fisher & Smith, 2011; Ramaswamy, 2011). To explain the phenomena ‘experience co-creation’ (ECo) framework explains how ‘experience sharing’ helps to characterises a view that value creation as continuous ‘relational loop.” This framework is based on (1) “firm and consumer resource integration” (Arnould et al., 2006, p. 92), and (2) “the contextual nature of network-to-network exchange” (Vargo, 2008, p. 214). Based on the Vargo and Lusch (2011) actor-to- actor assessment, one can make no distinction between actor types as either organisations or consumers. With a service-contributor focus, the ECo framework portrays interactions between active, engaged actors (i.e. value initiators) who potentially succeed as service providers, as discussed earlier. It describes the value creation process from a cocreation experience viewpoint and depicts that value initiators provide service for each other through assimilating and sharing ‘value-in- experience’ in an ‘experience environment’ (i.e. ecosystem or networked community), and value-in-experience as the exchange for betterment (i.e. becoming better off). This framework represents a broader view on actors’ interaction beyond exchange and captures the value creation efforts made by ‘value initiators’ and the exchanges among value initiators, which ultimately encompass all social, economic and cultural value creation phenomena.
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The experience co-creation To expand the picture of value creation, one can draw consideration to another perspective, known as the Nordic school of thought, namely ‘service logic’. Proposed by Grönroos and others, ‘service logic’ views value creation as collaboration. Grönroos (2006) suggests that value creation is based on service-for-service interaction, and makes the case that cooperation should be a substitute for exchange theory. The researcher argues that service-for-service communication originates from a customer perspective, while service-for-service exchange emanates from a firm view. Grönroos (2009, p. 14) denotes interaction as a “mutual or reciprocal action where two or more parties affect one another”, and that during this, “the customers’ and the firms’ value creation processes are simultaneously occurring.” ‘Direct interaction’ refers to “a process where the resources of the customer and firm interact through an on-going coordinated dialogical process” (Grönroos & Voima, 2012, p. 22). With a focus on (service) provider and customer relationships, three domains of value creation are identified: a provider sphere, a typical value sphere and a customer sphere (Grönroos & Voima, 2012). As a result, value emerges for involving stakeholders (Grönroos, 2011). Co-creation is regarded as the experience function of interactions, and value creation is from direct interactions between valuecreating resources and a beneficiary (Grönroos & Voima, 2012). Value is not created and delivered just by the supplier, then again it emerges during usage in the customer’s process of value creation (Ballantyne & Varey, 2006; Grönroos, 2008). Simply put, this concept, ‘value-in-use’, states that value for customers is created during the use of resources (Grönroos & Ravald, 2011). ‘Co-creation of value’ is defined as “the joint activities by parties involved in direct dyadic interactions aimed at contributing to the value that emerges for one or both parties, or all parties in a larger network.” (Grönroos & Ravald, 2011). Grönroos (2009) also suggests that market interactions such as CX can extend beyond the parties who are in direct contact with each other. He points out that, through technological enablement, there are new types of exchanges where a customer can also interact with systems or infrastructure. These interactions encompass value creation phenomena where properties are integrated, with and for the beneficiary (e.g. the customer). This view that customers can be value creators differs from the S-D logic view that customers always value co-creators, although both logics recognise ‘resource integration’ as the critical motion for value creation. While organisations can vigorously engage in customers’ value creation processes and create value for customers, customers can also create value for themselves (e.g. by initiating the development of new resources) (Grönroos, 2009). Baron and Harris (2008) support this assessment in outlining that consumers can be resource integrators through consumption and co-consumption. In supplement to discussing the process of value creation as an interaction (Grönroos, 2006), service logic also acknowledges the importance of motive for value creation, where that motive is the notion of being ‘better off’ (Grönroos, 2008). Separately from regarding other parties as resources (including interaction with physical resources), this theory explains how and why these ‘value-generating resources’ are presented to form a part of service. On a co-creational position, “service logic indicates that value creation is an interactive process driven by all beneficiaries’ intent to become ‘better off” (Grönroos, 2008; Grönroos & Voima, 2012). 173
The third focus of the service logic values fulfilment (i.e. customers’ efforts to actualise and realise value) (Ballantyne & Varey, 2006; Grönroos, 2008; Grönroos & Ravald, 2011). Value fulfilment signifies value creation efforts made by the beneficiaries associated with their interaction processes. It is an on-going process based on research by (Ballantyne & Varey, 2006; Grönroos, 2008), and value fulfilment is made up of two components that take place “concurrently”—actualisation of value and realisation of value. The actualisation of value refers to an individual observing value and making value creation efforts toward actualising this value. On the other hand, understanding of value refers to an individual realising unforeseen value by pursuing actualisation of value. Grönroos (2009) theorises that marketing is about value fulfilment using tools such as CX and not about marketing a promise of value. This assessment can be extended to suggest that the meaning of value co-creation is not only based on the value determination mind-set of making a commitment and evaluating that promise (Vargo & Lusch, 2006) but should also be associated with fulfilment and efforts made towards achieving the desired outcomes. In brief, ‘service logic’ understands value creation through interactions as an on going ‘relational value creation circle’ instead of as a linear result (i.e. a direct interaction between the beneficiary and value-generating resources leading to value creation). The experiences of direct communications make it possible for recipients to actualise and realise value. Importantly, such skills can be accrued and possibly shared during subsequent interactions. The need for managers to engage with a policy of value (Appadurai, 1986) derives from the fact that managers who make value propositions are facing a variety of valuation practices (Muniesa, 2011) that belong to a range of orders of worth (Boltanski, 2006). Management cannot forecast the outcomes of these valuation processes directly or with certainty. Faced with multiple, changeable, and incommensurable regimes of value, managers need to engage in complicated enclosing and negotiation processes. Making value propositions is a radical activity in the sense that it involves comparing incommensurable variables or adjudicating between equally important, but possibly conflicting business goals. Diverse value regimes allow different evaluative frameworks to coexist, and these frameworks can be used in many ways to conceive of the value (Frow, 2007) that a service presents. Households and companies producing commodities have structures of their own to assess the value propositions These structures change and progress over time (Thompson, 1979). For an organization to enact a policy of value propositions is not merely to acknowledge and envisage a series of idiosyncratic points of view upheld by stakeholders who occupy diverse roles or positions; it is to fully recognise that all these views about their value propositions coexist, side by side, and must ultimately be taken into account since one never knows in advance which stakeholders are going to vote, and how they are going to vote. Making value propositions is a partisan activity also in the sense that the value that is offered has significances for the broader society. Value propositions reflect trade-offs and priorities that are not always entirely technical. They are products and producers of a social order (Aspers, 2008; Fourcade, 2007) in the appreciation that they express institutionalized preferences, opinions, affects, and judgments based on ethical options, vested interests, political goals, and ideological options (Alexander, 2005; Arvidsson, 2011b; Beckert and Aspers, 2011). Value propositions are epistemic practices (Verran, 2011) that detail to what is to be considered as being of value (Graeber, 2005). 174
They are empowering, but they also define controlling limits on what stakeholders can adopt. Value propositions by companies stand as an example of partisan structures that are contingent (Herrnstein Smith, 1988) on variables such as the condition of scientific knowledge, the dogmatic interests of the parties involved, longstanding organisational habits, societal trends, and distinct judgments (Frow, 2007). These interpretations are all legitimate in the mind of those who reinforce them. Various regimes of value, produce singular (Karpik, 2010) understandings of the value propositions of management, and singular understandings lead to different priorities of actions. Therefore, ranking the value of value propositions, or merely choosing one value proposition instead of another, is inevitably an expression of judgment derived from partisan choices and trade-offs. Summary In this chapter, the brand experience and reputation management has been outlined with its importance fully established. Value propositions that drive quality experience are now recognised as a complex subject with varying perspectives within organisations driving value propositions. Brand equity relies heavily on the customer experience with a commodity from a need to postpurchase, as investment drives organisational value and shareholder returns. Customer innovation of experience and Customer experience and employee experience is a process that is now driven by The expertise of co-creation of a precise solutions, involving the exchange of communication between seller and buyer that engages and forms an alliance and feeling of partnership. Review Questions •
Using 100 words debate and discuss ‘ customer and employee experience’.
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Provide in ten points what you could do to improve the experience at your local supermarket.
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Using 50 words debate and discuss co-creation within CX.
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CHAPTER SEVEN Introduction Understanding the mind of the customer allows a marketer to build an experience journey that provides maximum satisfaction and ease of process, which in turn drives repeat purchases. The online community is a powerful voice and appreciating people’s thoughts, and ideas allow the construction of high experiences in the customer mind-set. Chapter Learning Outcomes •
What role do social networks play in experience building.
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How does the conscious and unconscious mind of the customer work?
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The experience journey.
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The experiential customer mind-set.
Having completed the module, one will be able to: •
Criticallyassess the use of social media and understand the mind-set of the consumer.
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Assess the core elements of the experience journey and their contribution.
Having completed the module, one will be able to: •
Conduct secondary research using both academic and practitioner sources.
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Manage tasks in a group and as an individual.
Critical thinking Having completed this topic, you will be able to: •
Critically evaluate the role of the customer experience journey within an organisation.
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Assess the core elements of a successful CX program and their financial contribution.
OBJECTIVES The role-played by social media, and how the customer mind-set can be positively changed through amazing experiences along the journey.
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Social networks and experience building An extensive number of online studies exist which can help characterise the probable instigators of online customer experience (OCE). They are focussed principally in three areas. First, there is a quantity of literature that looks at website value, including the growth of measurement devices. This research organises a range of aspects or aspects which result in functioning website performance. These scholarships develop measurement metrics and operational gauges which support the emarketer. Second, a significant research element thinks about online customer behaviour, predominantly about the linked pursuits of online search and online purchase. Early research tried to recognise whether specific personal factors such as scarcity of time or adoption of ‘wired technology’ are forecasters of online buying behaviour. Research that seeks to recognise the precursors of consumer aims to use the Internet to purchase has defined the importance of factors, such as Internet experience (in the sense of incidence) and the connection to the trust of the situation. The linkage between a range of influencing factors such as security, observed customer service and shopping experience to customer methods and objectives to shop online has been studied. Third, online service experience has been the topic of research enquiry, providing an expressive domain of literature on the subject. The Internet permits the delivery of a range of online services. Such services include the delivery of online banking, news and weather, travel bookings, education programmes, marketing of goods and services and knowledge localities. These three subjects of literature ascertain that consumers interact with the Internet across a different range of activities, guiding some various behaviours and, in due course, experiences. It has been suggested that the benefits afforded to the online customer change the balance of influence within the organization–customer relationship, creating a more powerful customer. Customer experience has been delineated as the quality of all of a consumer's encounters with a company's products, services, and brand. ... Reviewing a product online, using a mobile app to find a store's nearest site, searching for tech support information on a smartphone—these are all digital customer experiences. As people, customers, consumers, prospects, they all use digital channels and devices in their connections with brands and organisations, there is a growing consideration for the digital customer experience. It is accepted now that the customer experience in an end-to-end theme (as the sum of all experiences across the customer lifecycle) is fundamental for both the future growth and the current bottom-line of any business. The end-to-end customer experience is indispensable for customer retention, customer loyalty, word-of-mouth, procurement. The same thing goes for the digital customer experience including online and social CX. One cannot disregard the importance of the single customer experiences – also in a digital setting. Depending on the customer’s context, intent and expectations can be a unique – poor – customer experience that can make or break a business relationship. The developing consideration for digital customer experience is related to several developments: • The rapidly growing use of digital channels, touch points and tools/devices by a progressively “digital customer”. 177
• The extremely discriminating customer expectations that are driven by, among others, the realtime and digital experiences they enjoy in various businesses and expect everywhere. • The increasingly complex and multi-channel behaviour of today’s customer who uses multiple channels, often at the same time. The customer does not care about digital customer experience as such, they care about experiences and is it digital. The lines between offline and online are altering. Although digital interactions become so much more vital to the overall customer journey and customer experience, is there such a thing as the digital customer experience as all channels of communication are in fact digital. For many people, the concept of an “experience” can seem completely nonsensical; one simply trying to pay a bill or change a flight, or schedule an engineer as rapidly and easily as achievable. Our customer “experience” the majority of the time it is hardly an experience at all. As digital gets integrated into “offline”, those lines blur, customers only want to find what they need fast, their behaviour is channel-agnostic and device-agnostic. However, consumer behaviour and usage of the multiple channels and devices matters to marketers, customer experience experts, designers, customer service agents, as it provides insight into what area are used most. For Example how digital/social and “offline” are dissimilar in organisation practice (today) in many contact centres, as there are no agents to handle social customer service as it does require a specific skillset. The result usually is social customer service is taken attention of by a dedicated social team. This is not always available in many organisations as it is evolving, as there are lots of changes due to technology going on in customer service and contact centres. Nevertheless, it shows the somewhat “different” nature of digital and social interactions, and in time, lines will continue to combine. When one considers the single ‘digital’ customer experience, there are many variances. For example, there is a whole difference between expectations and experiences we have when looking for customer service via email, the online shopping experience and the perception of online advertising, to mention just a few examples. To distinguish between each of these connections and ‘experiences’, there are many factors to take into account: •
The intention of the customer at any specific moment of interaction.
• The device the customer uses – there is a vast difference between mobile and desktop, for illustration. •
The broader context and task within which the communication occurs.
• The channels and their specific usage context: email is not Twitter, it is not an online pricing simulator or a web chat. • The context within which (digital) brand experiences take place. Consider the perceived invasiveness and acceptance of various digital advertising formats that is closely related to the active people have at any given time in any given platform. Just compare why people go on Facebook versus their mind-set when they search on Google. 178
The online CX picture looks multifaceted, and in all objectivity, it is. Marketing and business in the digital period have not become precisely simpler. Just as customer experience or CX is a broad field that mostly looks at the volume of all experiences and the full customer lifecycle, digital customer experience superimposes a broad range of activities. Analysing this further, just as is the case with customer experience, it is crucial to improving the CX process. The explanation of the digital customer experience is one form, the reality in practice is another. Truth is about to change even more dramatically than it already has in these days of digital pervasiveness. One term in that regard: the Internet of Things. There are several spheres where ‘customer experience’ and ‘digital’ meet: • The customer experience (expectations) of a digital-savvy customer who uses more digital technologies and channels. •
The customer experience across various digital touch points.
• The digital technologies organisations can install to provide customer interactions (the frontend) and to develop the customer experience (back-office). • The experience regarding digital services and products as such. This is one element where the Internet of Things comes into play: smart digital devices that 1) are constructed by brands and thus affect the perceptions of those brands, 2) come with a different type of experience and 3) offer opportunities to develop customer experiences within the device and/or based on data regarding the usage of the invention. It is now well defined that the digital customer experience is about more than what is available today. Of particular interest IN CX is the ‘digital customer’. Simply defined as the customer who uses digital channels a lot for all kinds of purposes, this digital customer is altering due to technology access and lifestyle changes. Customer experience is the quality of all the interactions a consumer has with a business and its products and services. They embrace pre- and post-sale communications, and can be of two types: •
Direct: When a customer calls a company’s service department.
• Indirect: When a customer reads a social media post about another person’s interaction with the company. The best customer experience development strategy begins with getting the right software tools for example: 1. Mobile Customer Support The use of mobile devices to promote customer experience was an early Gartner prediction that is nowhere to stay. Everyone has a mobile device, and it is the first object they often turn to when they have a need or have a problem. And this is what businesses have to take advantage of, customers using their mobile devices to search online for customer and product support direct or via social channels. Whereas mobile web browsers have got better at the depiction of online content on small screens, it is still not as flawless as on a desktop or laptop. And when customers have a poor CX on a mobile device, they call the company directly — increasing demand for the more expensive Tier One agent support. 179
2. Live Chat Live chat is a rapid and straightforward way for customers to contact a company and obtain an immediate response without leaving the business's website. It is primarily popular with online retailers, who use live chat to answer shopper’s questions in real time ensuring nothing stands in the way of their purchase, and sale ?. Live chat is also widespread in many other industry segments, a Gartner’s report forecasts that more than 85 per cent of businesses will offer a live chat feature on their website or mobile devices by 2022. This division from the rising use of messaging apps such as WhatsApp, Facebook Messenger and We Chat by customers. Since live chat answers customers’ immediate need for quick resolutions to issues, it is an operational tool for improving CX. And many live social chat platforms offer functionality beyond simple communication. For example, some chat rooms permit for co-browsing, which lets agents take temporary control over the customer’s browser and lead them to another product and pages on the website, helping customers find answers more quickly. 3. Self-Service Management Self-service possessions are support information that is posted online for customers to find and use, such as knowledge bases and frequently asked questions (FAQ) pages. Compared to all other service channels, the many consumers prefer self-service. And so do vendors, some merchants may repel up to 90 per cent of telephone calls and deploy customer self-service instead. Though, businesses should be cautious of the plan rebounding. It would be unfavourable to offer self-service resources that are imperfect, uncertain or do not answer the actual consumer question. This can result in customers getting unsatisfied — which damages the CX. That is why businesses should offer operational self-service properties to provide customers with suitable experience. They can do this by analysing their selfservice resources using specific metrics such as Level Zero Solvable (LZS). The metric helps companies gauge and improve resource usability and completeness. 4. Social Media Support Social media is where people share experiences with their friends, family and associates. However, these groups could include people who might be one's customers, both present and potential. It also contains your competitors, whom they can switch over to in seconds. That is why social media is an authentic minefield of CX potential. However, any business cannot risk delaying a social media presence. Any delay could mean one is wasting future customers and harming CX by being unresponsive to customer complaints and queries. That why it is fundamental to closely monitor the conversations occurring on social channels. Marketing and customer service teams should monitor the channels reciprocally. While marketing uses social channels to spread awareness about the business's products and services, the service department monitors them for customers who need support. A social media support applications relieve companies from a lot of manual customer support. For example, the user actively monitors new posts and customer comments. An advanced function that is gaining popularity is sentiment analysis, which analyses customers’ language to judge whether it’s a compliment or complaint. This helps prioritise responses. Some applications automatically translate social media complaints into a complaint label, which is then assigned to an agent in the queue. 180
5. Omnichannel Support The fifth vital tool for improving customer experience is omnichannel customer support. This support display place permits customers to contact the business on all, or one of many, service channels. Presenting multiple choices ensure that most of the customer preferences are joined. The advantage of omnichannel support is that it also lets customers pick a discussion up where they changed off onto a different channel. Whether it is by social media one day and phone the next, mediators have full entrance to the customer’s interface account. This provides them to service the customers in an informed manner. The key to omnichannel support is a central customer support platform. It increases CX quality and makes agents more competent with readily available customer information at their disposal. In addition to customer support, the platform supports research and development, and marketing teams get a rounded assessment of customers, helping them improve their customer-centric strategies. The numerous features provided by for example; Online Social Networks OSNs can be classified into the categories of social link establishment, personal digital spaces, and means of communication. Social Links. OSNs link people by permitting them to list other users within the OSN that have a social relation, such as friends or equals. In addition to representing existing social ties, OSNs can also be used to re-establish lost social connections, if the people are also on the OSN platform. Social links can also be once more established, when users connect to each other after meeting in virtual space, for instance in common-interest groups. These crowds form an overlay of social links, as affiliation networks do in real-life social networks. The connections to other users and the links representing group memberships make up social displays, and by letting information flow along these displays, users have some knowledge of other users’ presence and current activities. This way, information is pushed to rather than pulled by the user. Digital Personal Space. In OSNs platforms, users have their personal digital space where others have admittance rights to study, contact, or leave messages (text or other media). In this space, consumers articulate their identity typically by posting a profile, pictures, and a standing of what they are doing or what they want to state at the moment. Users can also post links or embed media. Users’ activities can be reported to their friends in news feeds, donating to the ambient social knowledge and complementing the information the users put in knowingly. Means of Communication. Since OSNs are for users to maintain social relationships, communicating with others is the central feature of the experience. There are several possible channels of communication among users. One can assign public messages using the personal digital space, not limited to text, or send private internal e-mail-like messages. For synchronous communication, most OSNs provide instant messaging. An appealing feature of OSNs is that they are open to third-party applications. While many of these applications offer alternative means of communicating or getting in touch, there are also OSN applications that allow users to engage in joint activities, such as real-time games. Social media are online applications, platforms and media which aim to enable connections, partnerships and the sharing of content (Richter & Koch, 2007). They take a collection of forms, including weblogs, social blogs, micro blogging, wikis, podcasts, pictures, video, rating and social bookmarking. All of which improve the user's experience with a commodity, organisation. As their use intensifies exponentially, not only existing social networkers but even business firms and governmental organisations are joining and using them as CX communication tools. 181
Unlike individual social networkers, these entities actively make use of the media for advertising and marketing and making customers feel joined. Though commercial messages and interactions with consumers partner with media, events, entertainment, retailers, and digital services can be through social media; it is possible to perform cohesive marketing activities with much less effort and cost than before building a unique experience. According to Kim and Ko (2010a), social media can have a dramatic impact on a brand's reputation and customer experience. One-third of survey participants in a recent study posted opinions about products and brands on the brand's blog, and 36% thought more positively about companies that have blogs versus those without. A study by DEI Worldwide (2015) outlines the following statistics: “70% of consumers have visited social media sites to obtain information; 49% of these consumers have made a purchase decision based on the information they identified on the social media sites; 60% said they were more likely to engage with social media sites to passes along information to others online; and 45% of those who looked for information via social media sites engaged in word-of-mouth.” The report exposed that establishments are not engaging in social media as part of their online marketing strategy are preceding an opportunity to reach consumers. With a considerable percentage of people moving information to others through social media, the value of one customer is worth much more than what he or she first spends. Consequently, organisations and brands now need to factor in the cost of customers, and also the influence of social media on sound CX delivery. The value a customer brings to an organisation is not limited to the profit from each transaction but is the total profit the customer may provide over the duration of the relationship with the firm (Kumar & George, 2007). Accordingly, customers are seen as the intangible assets an organisation should intelligently attain, preserve, and exploit just like other financial assets (Blattberg et al., 2001). Customer equity, generally described as the discounted sum of customer lifetime values, has been seen as the critical determinant of the long-term benefits of the firm (Kim, Park, Lee, Knight, Xu & Jeon, 2010; Lemon et al., 2001). Lemon et al. (2001) express three types of equity value in brand, and relationship as the significant drivers of significant customer equity. First, “value equity is the customer's objective evaluation of the utility of a brand, created on perceptions of what is lost for what is received” (Vogel et al., 2008). Three critical influences on value equity are quality, price, and convenience (Lemon et al., 2001). Second, relationship equity extracts the propensity of customers to remain in a relationship with a brand, going beyond objective and subjective assessments of it. Usually, loyalty programs under an organisations influence may enhance relationship equity; however, loyalty toward a particular brand grows weaker as a diversity of alternatives are exposed to customers. What is required is to build healthy customer relationship through using CX tools, handling or acknowledgement, and community programs can be an intelligent way to boost involvement equity. Third, brand equity is a customer's subjective and intangible assessment of the brand over and above its value (Kim et al., 2008; Lemon et al., 2001). Brands are the best at building images that make customers distinguish that specialism from among others (Keller, 1998). The vital actionable levers of brand equity are brand awareness, attitude toward the brand, and corporate ethics (Lemon et al., 2001). 182
Purchase intention is a combination of consumers' interest in and the likelihood of buying a product. CX plays a major role in supporting purchase intentions as it can solidify relationships. As a result of research studies, purchase intention relates to attitude and preference toward a brand or a product by consumers (Kim, Kim & Johnson, 2010; Kim & Ko, 2010b; Kim & Lee, 2009; Lloyd & Luk, 2010) so that measuring purchase intention assumes consumers' ‘future behaviour’ based on their attitudes. Purchase intention is an attitudinal variable for measuring customers' ‘future contributions’ to a brand, whereas customer equity is a ‘behavioural variable’ accounting for actual purchasing records. As forecasting of consumers' future behaviour becomes a critical issue for an organisation, that future behaviour should be estimated more accurately using CX social platforms (Park, Ko & Kim, 2010). Loury (1977), Bourdieu (1985), and Coleman (1988) all argued that social capital is not personified in any particular person, but instead, it is rooted in people’s social relationships. At the same time, however, they also stated that social capital was realised by individuals and has an experience value to customers. Putnam, equally, has argued that social capital is a resource that individuals or groups of people enjoy or fail to possess (Portes 1998; Portes and Landolt 1996). Putnam states, “Working together is easier in a community blessed with a substantial stock of social capital” (Putnam 1993b, 36). Communities, not people, possess “stocks” of social capital. He has since made the transition from the individual to the bigger group more unambiguous and states, “Social capital can thus be simultaneously a ‘private good’ and a ‘public good’ ” (Putnam 2000, 20). What is vital to understand is that despite his emphasis on social networks and his moving social capital from the scale of the individual to the size of the group, Putnam measures social capital with a form of methodological uniqueness (Skocpol 1996), social networks add to the experience. Social networks accept discussion and debate on commodities thus improving communications and understanding between the individuals in the social group and also the seller of the product or service. In a technology-enabled world social networks to provide an experience platform of communication that is open and free which is regulated by the user, and not the brand owner, it is a free experience. As such, consumers are more likely to read and believe information on the social network site as the views and opinions are authentic. In the context, all the customer experience social networks allowing discussion and debate provides a feeling of community to the user and makes them feel part of a big family who has similar interests and uses of commodities being sold.
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The conscious and unconscious mind of experience The relation of conscious thoughts to behaviour has been represented in multiple ways in research, proceeding the full spectrum from complete control to complete irrelevance. At one limit is the common sense certainty that consciousness is in full control of behaviour. People know they are conscious. They experience their actions as stemming from conscious choices. Almost by definition, they are unaware of unconscious influences on their behaviour. (To use a metaphor from Jaynes, 1976, a flashlight in a dark room would mistakenly confirm that all the lights are on, due to whichever way it turns to look, everything is illuminated!) Looking at definitions, conscious and unconscious processes have been distinguished historically regarding several different features (e.g., Bargh, 1994)—awareness, intentionality, efficiency, and controllability, with the former two at the heart of the standings in common usage. However, due to mounting evidence that motivations and goal pursuits (roughly speaking, intentionality) function unconsciously in the same form as they operate consciously (e.g., Marien, Custers, Hassin, & Aarts, 2012; McCulloch, Ferguson, Kawada, & Bargh, 2008). The intention (purposive, goal-oriented) of quality no longer distinguishes conscious and unconscious processes. Therefore, it is the awareness and reportability of a mental process that most differentiate between what is considered an intentional versus an unconscious psychological process or experience. Without a doubt, the most recent research distinctions between conscious and unconscious methods have concentrated exclusively on the various forms of awareness people have about their mental content (Schooler, Mrazek, Baird, & Winkielman, in press). The view that consciousness enjoys full control over behaviour has mainly intuitive appeal in research. Few serious researchers endorse it because the case for unconscious causation of behaviour is overpowering. Years ago, Freud (1933/1965) made a persuasive and extensive argument for the position that people are not usually aware of many causes of their behaviour, including ones beginning in their unconscious mind. Current social psychology has repeatedly shown that people are not aware of many situational signals and stimuli that can influence behaviour. Nisbett and Wilson (1977) showed that self-examination is often unable to furnish accurate accounts of the causation of behaviour. Wegner (2002) explained in his research “that people’s subjective experiences of initiating and controlling behaviour could be incorrect in both directions; that is, sometimes people believe they have done something when they have not, and sometimes one believes they have not done something when they have.” And, of course, many types of research have devoted much of their career to demonstrating a great many ways in which “situations cause behaviour using unconscious, automatic processes, thus bypassing or circumventing any conscious control” (Bargh, 1994, 1997, 2005). A simple version of the theory of full conscious control holds that people are at ‘least conscious’ of what they are doing and that unconscious processes influence behaviour by way of ‘influencing conscious thoughts.’ Alternate to the theory of full conscious control is the concept that conscious processes have zero impact on actual behaviour. The theory that consciousness is an epiphenomenon, which is to say ‘a side effect of other processes and itself does not have a true causal impact’, has an elongated history. 184
Thomas Huxley (1874) articulated the so-called “steam whistle hypothesis” that compared consciousness to the steam whistle on a train. The steam whistle is caused by what is happening in the engine and may expose something about the inner state of the engine, but it does not drive or steer the train. By parallel, consciousness may be a fruitful subjective experience of one’s own life that derives from unconscious processes and reveals something about these ‘internal positions’, but then again it does not have any influence on behaviour. More recent research writers have persisted in questioning the efficacy of conscious thoughts. Wegner (2002) wrote of the “illusion of conscious will,” suggesting that “people’s subjective awareness of deciding, controlling, and initiating actions is liberally subject to distortion and error.” Dijksterhuis and Norgreen (2006) proposed that “unconscious thought is superior to conscious thought, and although they conceded that conscious thinking could sometimes cause behaviour, its effects are not very helpful, and people would be well advised to minimise its influence.” Wilson (2002) similarly provided evidence of the unreliability of conscious thinking and recommended that people rely on unconscious processes rather than conscious ones (see also Gladwell, 2004). In between the two extremes of seeing behaviour as mainly ‘conscious versus mainly unconscious’, there are emergent new models that seek to regard conscious and unconscious processes as matching instead of competing systems. One approach would accept that conscious thoughts are highly influential in guiding behaviour, but that unconscious and automatic processes can have considerable influence using shaping the content of consciousness. This position is acquiescent to the common sense view that conscious thoughts are ultimately in charge of the action, but it assigns an essential role to unconscious processes as providing support and input. The other compromise view, which many researchers support, is that behaviour is naturally carried out by unconscious, automatic processes, while consciousness can occasionally intercede to overrule, control, readdress, and then alter the stream of action often at a distance, with unconscious processes filling in. As Baumeister and Masicampo (2010) proposed, the idea that “consciousness plays a supporting (but powerful) role in human functioning has not had traditional advocacy, intuitive appeal, and other advantages of the rival theoretical views, but it may provide the best fit to the currently available evidence.” Most human behaviour comes from a mixture of conscious and unconscious methods working together to meet the person’s significant needs and enable essential goal pursuits. Baumeister et al.’s (2011) survey of the literature provided no convincing evidence that any action is caused entirely by conscious processes, and it is doubtful that this would even be possible. In attitude, a few behaviours could be wholly produced autonomously of consciousness, and the exact execution of the action is probably the result of unconscious and automatic progressions, but in most cases, knowledge may have some influence, especially about upstream influences such as planning, logical reasoning, interpreting experiences, and communicating. The unconscious advanced primarily to produce adaptive responses in the immediate present. Conscious processes evolved to do other things. They are necessary for people to move away from the direct today, and to anticipate, simulate, and plan for the future. They are both essential to communicate verbally with others adding to the exchange experience, thus gaining the capacity to share knowledge with others and individual coordinate efforts successfully. 185
One prime adaptive advantage of being able to communicate with others seems to have been the production of sound arguments, discussion and debate both to persuade others to help one pursue one’s own vital goals. In so far as consciousness progressed to facilitate communication, and human interaction continues to take new forms such as CX, and present new challenges and opportunities, it is tempting to speculate that human consciousness itself may continue to advance. The mental state that defines human doings may be a work in progress. However, there is no reservation that understanding conscious and unconscious behaviour is vital to one's knowledge of consumers and the experience journey. It would be fair to say experience is a conscious notion in the ‘here and now’, however, it could be that our unconscious mind is driving us to explore. In exploring experience, it is traditional to understand ‘what we know’, our past experiences. These past experiences it is argued mould our thinking, as it is ‘what we know’ that drives our present and future behaviour. In a CEM context, past good experiences make us consciously gravitate to goods and services that we have enjoyed in the past. It is one bad experience that may drive a customer to change loyalty as in our mind's eye the lousy experience we do not want to be repeated. It is our ‘conditioning’ or knowledge that drives our behaviour; however, knowledge is gathered and stored based on past exposure to ‘ our experiences’. We grow up with values, these have been collected and form our opinions in life, these values, could be real or in fact untrue. Many people hate spiders, why? It is due to our knowledge that spiders are harmful, when in fact left alone spiders are harmless. In a real-world setting one might prefer one brand over another, it is our knowledge of the past that drives choice today.
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Pre – during and post-experience Ones customers’ perceptions and evaluations of customer experience often develop over a series of contact, procuring, and consumption incidents. Most services require customers to engage with an organisation multiple times over an extended period (Klaus & Maklan 2013). These experiences are dynamic, and managers need to understand how the customers’ needs change as the interactions with the organisation progress. To understand the motivating causes of these changes is even more significant to the organisation given the importance of expanding customer retention and loyalty and building profitable long-term relationships with their customers. As these customer experience incidents increase over time, marketers need to understand what qualities of these interactions drive the desired customer behaviour at the different stages of the relationship with their respective customer (Klaus & Maklan 2011). First is the stage of pre-purchase and ancillary interactions, also known as the brand experience. Brand experience includes brand perceptions influencing the customer perception and the decision process of the customer. Brand experience reflects customers’ value perception of products, pricing, the brand, and of competitors’ offerings in the ‘search process’ of appraising offers. This stage is often preceded direct interactions with the organisation or personnel. These observations can be based on multiple sources, often outside the direct control of the organisation, such as guidance or reviews from peers or other customers. After customer’s pre-select choices, they move on to the second stage, the service (provider) experience. The Service (provider) experience incorporates three subjects associated with the experiences customers meet when they interact with an organisation's physical existence, employees, guidelines, and practices. The first theme connects to the process experience, comprising customers’ perceptions of progression ease, or process hindrance, and the challenges associated with using the organisation's multiple channels. The second theme relates to direct evaluations of encounters with the organisation's personnel, such as standard basis or the existence of personal relationships with the staff. The third theme describes the influence of the physical environment of the organisation, the so-called services cape. However, the customer-organisation exchanges do not end here, leading to the stage describing the influence of what happens ‘after’ the encounter. This stage is categorised as the postpurchase/consumption experience. It defines the customers’ experiences encountered post-purchase and consumption of the offer in question. It covers perceptions of understanding, withholding and service recovery. This is the phase wherein the most cases relationships between customers and the organisation will either develop or be damaged. These dimensions combined have a substantial and positive influence on customer satisfaction, loyalty, and word-of-mouth behaviour. Brand experience, the interactions related to pre-selecting the organisation, have elevated importance on customer satisfaction, word-of-mouth behaviour, and loyalty intents. The actual dealing with the organisation in the purchase process, the service (provider) experience has the highest influence on all three dimensions of customer satisfaction. However, it is essential that the organisation takes care of their customers after the customers signed up for the product or service in demand. One study highlights that post-purchase/consumption experience demonstrates by far the highest effect of all dimensions on loyalty and word-of-mouth behaviour, and a high impact on customer satisfaction. 187
The research finding is authenticating the notion that the customer evaluation of their experiences goes beyond the direct service encounter, and includes direct and indirect contacts with all organisational roles of the organisation and possible channels and touch points, such as marketing communications, advertising, internet presence, and after-sales care. This phenomenon the “Customer Experience Continuum” (Klaus 2011) highlights how ‘all interactions’ with an organisation impact the customers’ perception and overall satisfaction with their supplier. Furthermore, the research findings establish that the more positive experiences customers have with one organisation, the less likely they are not to leave. In summary, the “Customer Experience Continuum” corroborates that customers evaluate the customer experience in three successive stages, explicitly: pre-purchase and consumption (brand experience); during purchase and consumption (service provider experience); and postpurchase/consumption experience. These assessments of the customer experience drive import marketing outcomes, not only customer satisfaction, but also loyalty, and word-of-mouth behaviour. Organizations and CX teams should manage their customer experience on these three pillars of customer experience due to their unique influence on their customers’ behaviour and behavioural aims. The similar customer management strategy will communicate the importance that the experiences have by focusing on all three dimensions of the customer experience and its progressive consequences. Marketing and CX teams need, therefore, to manage the customer experience before, during, and after the purchase and consumption of their offerings. All business areas that contribute to these experiences need to be involved. This strategy can only be realistic, operative, and dependable if the results are owned and accepted by all business functions, and to raise awareness that they are all responsible for delivering the experiences desired by their customers. Because of its importance as a critical cause of customer satisfaction, loyalty, and word-of-mouth behaviour, managers should consider the “Customer Experience Continuum” model as a principal strategic objective. This supports the view that an understanding of the customer experiences is vital to an organisation's strategic marketing objectives and productive interactions with different customers (Klaus & Maklan 2007). The new experiential mindset Behaviour has an ‘experiential dimension’ was first introduced by Holbrook and Hirschman in their research from 1982. However, they also outlined that up until 2004 no methodical attempts had been made to describe marketing terms for what constitutes experience. This illustrates how new the concept of experiential marketing as a marketing discipline. Even though it has been a critical concept in consumer behaviour as well as marketing management and service marketing for the last twenty five years, experiential marketing as a different subject or area within marketing is relatively new and is conceivably one of the most contemporary marketing initiations (Williams 2006, Schmitt 1999, Tynan, McKechnie 2010, Close et al. 2006). Pine and Gilmore were the first to introduce Experiential Marketing as a section of their research on the experience economy (Williams 2006, Pine, Gilmore 1998) . Certain may refer to CX as so-called emotional branding, and it is believed to have emerged as a term in brand management as a way to counter earlier marketing approaches which focused only on unique selling propositions (Schmitt 2012). 188
Experience with a product or brand may be direct and indirect as explained in this book. To reiterate direct experience is when there is some physical contact with the commodity whereas indirect reflects an experience which is either presented virtually or in an advertisement (Brakus, Schmitt & Zarantonello 2 009). The fact that consumers are fostered to be actively involved with the brand is what makes event and experience marketing so unique (Wohlfeil, Whelan 2006). McNickel (2004) describes experiential marketing as enterprises within marketing which provide consumers with sufficient information to enable a purchasing decision by giving them in-depth tangible experiences (as written in Williams 2006). This experience is obtained “when a company actively uses services as the stage, and goods as props, to engage individual customers in a way that creates a memorable event” (Pine, Gilmore 1998, p.98). CX is about persuading the customers positively when it comes to impression, approach, knowledge and emotional attachment to the brand. This is done by “staging a 3 - dimensional and interactive hyper-reality for consumers” (Wohlfeil, Whelan 2006). Additionally, according to Zanger and Sistenich (2006), “event marketing acts as a stage for personal and interactive dialogue between everyone concerned from participants to spectators”, as well as brand representatives (as composed in Wohlfeil, Whelan 2006). Taking the actual core of a commodity and turning it into tangible, physical and interactive experiences is what experiential marketing tries to obtain. “Consumers buy experience to enhance spending time developing new memories and becoming engrossed in a personal way as opposed to the buying of a service where the consumer just buys a set of intangible items which are then carried out on their behalf” (Pine, Gilmore 1998, Williams 2006). Many different goals can be accomplished by the use of event marketing. These include brand awareness, improvement of the image as well as increased sales (Close et al. 2006). Moreover, it gives establishments an opportunity to engage their customers with its brands and community. The involvement level increase by customers creates an intensified level of receptiveness to marketing messages and brand associations. This additional aspect of consumer interaction benefits establishments accomplishes their communication goals is what makes event and CX marketing so widespread. Based on research by Poulsson and Kale (2004) “a marketing experience should typically include the following elements; 1) provide personal relevance to the individual customer, 2) be innovative, 3) have some form of surprise and finally 4) stimulate learning and engage the customer” ( see Tynan, McKechnie 2 010). However, according to Brakus, Schmitt & Zarantonello (2009), a brand experience can be either unexpected or expected. It is thus not a requisite for the experience to be surprising to be efficacious. It emerges that the most important aspect of event and CX marketing is that of customer involvement. Many scholars state how consumers should be involved with the brand and are therefore encouraged to become ‘active participants’ to experience the brand authenticity (Weinberg, Nickel 1998, Wohlfeil, Whelan 2006). What makes this experience more enjoyable to consumers is the fact that no two experiences will ever be the same. As people are enthusiastically involved in the experience their interaction with the brand will, therefore, be based on their precise involvement as well as the individuals‟ state of mind at the time” (Pine, Gilmore 1998, Schmitt 1999, Maghnati, Choon Ling & Nasermoadeli 2012). The most important CX objective is to find a way to engage customers in a memorable way (Petkus 2002, Williams 2006). 189
“Eventually the experiences that consumers have with the brand will move on to influence their decision-making process” (Holbrook 2000, Maghnati, Choon Ling & Nasermoadeli 2012). “Brand experiences support but are not limited to insight through the senses, feeling, sensation, cognition, action as well as behavioural responses” (Brakus, Schmitt & Zarantonello 2 009). It is considering “identifying, experiencing, integrating, signalling and connection with the brand” (Schmitt 2012, p.7). No two consumers will have the same degree of psychological engagement to a particular brand. This is expected due to the differing levels of needs, motives and goals of the consumer (Schmitt 2012). In experiential marketing it is entirely possible for the company to combine existing logos, trademarks and other packaging designs to events and CX activity, thus creating synergy across marketing campaigns (Close et al. 2006). The style and feel of a game can be the difference between success and failure. Aesthetics can add value to a company in many different ways, but if misused it can result in the deterioration of a company’s reputation and thereby alienate the customers instead of attracting them. Aesthetics is particularly crucial in situations where the commodities available are observed to be identical to those of the competitors by consumers. In these instances, “aesthetics can offer a way for the company to distinguish otherwise identical offerings thus stimulating purchase and receptiveness” (Schmitt, Simonson & Marcus 1995). Pine and Gilmore (1999) noted that staging experiences do not equal entertaining customers. Instead of staging experience is about engagement. From this theory, consumers develop the ‘four realms of experience.’ The framework shows how knowledge can engage customers in a variety of ways. On the horizontal axis, the level of guest involvement is presented going from passive participation to active participation. On the vertical axis, the customers‟ contact to the event is described. At one end of the spectrum lies absorption whereas the other end entails immersion. Together they form the four realms of an experience namely the Entertainment, Educational, Esthetic or Escapist realm. Through several books and articles, Schmitt advanced the concept of customer experience management (CEM) as a way to strategically manage the entire experience that customers have with an enterprise or product (Schmitt 1999, Keller, Lehmann 2006). He further divides the different types of experiential marketing into five dimensions, called Strategic Experience Modules (SEMs) namely: 1) Sensory Experiences (SENSE) 2) Affective Experiences (FEEL) 3) Creative Experience s (THINK) 4) Physical Experiences, Behaviours and Lifestyles (ACT) 5) Social - identity Experiences (RELATE) (Schmitt 1999, Maghnati, Choon Ling & Nasermoadeli 2012, Brakus, Schmitt & Zarantonello 2009) . Sensory experiences are defined as experiences that “ appeal to the senses with the objective of creating sensory, experiences through sight, sound, touch, taste and smell ” (Schmitt 1999). 190
The message sent by the establishment is consequently formed in the customer's mind by using their senses (Maghnati, Choon Ling & Nasermoadeli 2012). Feel experiences appeal to the inner feelings and emotions of a customer with the intention to create practical experiences (Schmitt 1999). By being exposed to the experience, the customer gets to “feel the brand” (Williams 2006). Once emotions are stable and confident, it should improve the overall relationship management between customer and seller (Maghnati, Choon Ling & Nasermoadeli 2012). Think experiences, on the other hand, aims to create cognitive and problem-solving experiences in such a way that customers participate with the brand in a creative way (Schmitt 1999). Physical experiences provide customers with different ways of doing things. Through action experiences, customers will “ develop a sense of sensation, influence and relationship with the products and services offered ” (Schmitt 1999). Finally, Social - identity experiences possess rudiments of all of the above. However, while ‘relate marketing’ incorporate aspects of Sense, Feel, Think and Act marketing, it widens the private feelings of the individual, by relating to something outside of the individual's closed condition thus creating a sense of self - improvement (Schmitt 1999) To expand the experiential appeal, many enterprises choose to engage in two or more SEMs. However, according to Schmitt (1999) marketers should ideally strive to create experiences that include all of the five SEMs - Sense, Feel, Think, Act and Relate, thus creating holistically integrated experiences. Besides the five SEMs, (Schmitt 1999) reasons the concept of Experience Providers (ExPros) as they are also fundamental to experiential marketing. ExPros include the visual and verbal expression of the brand, signage, communications and product presence as well as co-branding, the overall environment, electronic media and people. Simultaneously Strategic Experience Modules and Experience Providers form the two most important concepts of experiential marketing (Schmitt 1999). According to research made by the MPI Foundation in 2005, event and CX marketing is utilised in promotional actions in more than 96% of U.S. corporations (Close et al. 2006). The popularity of event marketing has grown in Continental Europe with establishments in countries such as Germany, spending 22% of the total marketing communication budget on event marketing in the year 2000 (Wohlfeil, Whelan 2006). The increase in its popularity stems from changes in the population mix, from consumers gradually taking products and their features for granted thereby expecting more of the marketing efforts using great experiences to get their attention. Customary marketing was initially developed in response to the industrial age. It “presents an engineering - driven rational, analytical view of customers, products and competitions that is full of untested and outmoded assumptions” (Schmitt 1999, p.55). Traditional marketing is defined as print media, TV spots, Radio and billboards. The main features of traditional marketing are the concept of consumers being rational decision makers who mainly focuses on the functional features as well as benefits of a given product (Schmitt 1999, Williams 2006). Experiential marketing theory, accept as valid that consumers are not only rational people but rather emotional human beings who emphasise achieving enjoyable experiences. Decisions are therefore structured on either rationality and emotions ( Schmitt 1999, Williams 2006). Experiential marketing has been created as a response to the change from the industrial age towards that of the information, branding and communications period (Williams 2006, Schmitt 1999). Experiences include communication, visual and verbal identity as well as presence and mainstream media. 191
There is an increased marketing focus on forming synergies between meaning, perception, consumption and brand loyalty. Williams argues in his research that “to do experiential marketing a more diverse range of research methods are required to fully understand the consumers” (Williams 2006). Schmitt argues that “the ultimate goal of experiential marketing is to create a holistic experience that integrates individual experiences and lifestyles, which provides sensory, emotional, cognitive and relational values to the consumer. ” (Williams 2006). Schmitt (1999) argue that experiences enhance the value of a product, a brand, or an enterprise (Maghnati, Choon Ling & Nasermoadeli 2012). Moreover, brand-related stimuli are what create the brand experience. “This includes sensations, feelings, cognitions, and behavioural responses, which are elements of the design and identity of a brand as well as packaging, communications and their environments” (Brakus, Schmitt & Zarantonello 2009). The soundest brands are those that excite people on a subconscious level (Moré 2011). The concept of considering ‘producers as producing and consumers as consuming’ is in the end what is being confronted. Modern marketing theory argues that in today's world producers and consumers ‘both produce and consume.’ This has led to a need for mutually negotiated experiences as well as expanded collaboration and a shared vision (Tynan, McKechnie 2010). To reiterate, experiential marketing has been theorised by scholars in a variety of ways. The term was first used by Schmitt (1999) who saw experiential marketing as being focused on customer experiences: “ Experiences occur as an outcome of encountering, undergoing or living through things. Experiences provide sensory, emotional, cognitive, behavioural and relational values that replace functional values ” (p.57) Other definitions have since followed including: Experiential marketing is a memorable memory or experience that goes deeply into the customers‟ mind (Lee, Hsiao & Yang 2011) “ Event marketing is defined as the interactive communication of brand values by staging marketing events as 3 - dimensional brand - related hyper-realities in which consumers are actively engaged on a behavioural level and which result in their emotional attachment to the brand” (Wohlfeil, Whelan 2006, p.644). “Experiential marketing refers to the customer experiences with a brand, product or service that allow users to interrelate in a tactile way. It drives motivation more than any other channel of communication and promotes strong word of mouth (Moré 2011).While many enterprises acknowledge a need for experiences as an integral part of their business a new line of thinking has emerged. Especially more prominent corporations are seeking to not only create experiences but to create lifelong conversions with their customers by altering the character of their need satisfaction. Transformation theory can, therefore, act in two ways: 1) to propose elements necessary in achieving involvement and 2) as a measurement for attaining successful experiential marketing events. According to the Oxford advanced learners dictionary, ‘transformation’ is explained as “ a complete change in somebody/something” (Oxford, 2014c). 192
Transformations can be seen as one-time experiences that change the need satisfaction thereby evolving the customer's mind-set who are subjected to the experience. Alterations cannot be undone, and no two experiences will ever be the same. Pleasures of the Mind Many scholars have tried to research the question of ‘pleasure’ (Duncker 1941, Pine, Gilmore 1999, Marković 2012, Dube, Le Bel 2001, Kubovy 1999). Duncker (1941) proposed three distinct types of pleasure; 1) aesthetic preferences, which is either man-made or offered by nature (such as music or sunsets), 2) accomplishment pleasures, that use the mastery of a skill by creating a pleasant emotional response and 3) sensory preferences, for example the feel of silk against the body or the taste of good food ( see Dube, Le Bel 2001) . Marković (2012) defines an Aesthetic Experience as “ a psychological process in which the attention is focused on the object while all other objects, events, and everyday concerns are suppressed”. Experiences can drive pleasure in people which are seen as a positive experience. Other scholars such as Tiger (1992) identified four types of pleasures; Socio, Physio, Psycho and Ideo pleasures, i.e. pleasure of the company of others, desire from physical impressions, comfort from the satisfaction of actions by others and finally, the joy of privately experienced emotions. An article on the pleasures of the mind was written by Kubovy (1999) who build on frameworks such as Duncker and Tiger. Nonetheless, the author differentiates between ‘pleasures of the body’ and ‘pleasures of the mind.’ Kubovy positions that pleasures of the body can be divided into two areas; tonic pleasures and relief pleasures. Tonic pleasures are activated by sensory contact creating positive hedonic states, such as eating something sweet, whereas relief pleasures come from the relief of discomfort or tension such as sneezing (Dube, Le Bel 2001, Kubovy 1999). Pleasures of the mind, are collections of emotions distributed over time ‟. Desires of the brain are emotions that arise when the initial expectations are disrupted thereby causing a search for interpretation. Expectations are often implicit and are formed by individuals based on their past experiences. If an experience surprises the individual, it can be said that it has violated their expectations (Kubovy 1999). This violation of expectations could be caused by different factors such as curiosity or virtuosity. Curiosity Kubovy (1999) defines interest “as obtaining pleasure from learning something that you did not previously understand.” This is consistent with the usual meaning of the word which is “ a strong desire to know about something” (Oxford Dictionary, 2014c). Kubovy (1999) it adds to the feeling of curiosity by contending that the old survival needs of finding shelter and looking for food have led to the evolution of interest. The central motivation to explore and learn from the unknown is what drives human curiosity (Kubovy 1999). In this sense, people seek out the hidden to satisfy their curiosity. It can, therefore, be suggested that to gain the attention of an individual, something unknown has to come about, such as a great experience. Virtuosity The standard definition of virtuosity is “a very high degree of skill in performing or playing” (Oxford Dictionary, 2014c). Nevertheless, in Kubovy’s theory virtuosity is more about the pleasure one achieves when doing something well (1999). ‘Virtuosity is when an individual does something that he or she was not historically able to do.” Whether the individual is more capable of it than others is not of importance (Kubovy 1999). 193
While Kubovy divides pleasures of the mind and pleasures of the body, he also recognises that often-tonic desires of the brain may be entrenched in pleasures of the mind, whereas the relief pleasures rarely are so. Furthermore, it is important that expectations are disrupted positively for the individual to achieve the satisfaction of the mind. If the violation is perceived negatively, the individual will instead achieve displeasure of the brain. Moreover, it should be distinguished that the customer experience should be careful not to violate the perceived expectations, as this could cause an unpleasant response from the individual. For a positive transformation to take place, the pleasure of the mind has to be present. To explain the phenomenon is by use of an example. Kubovy (1999) shows the following illustration: “You are having a dinner at a superb restaurant with great company and a nice atmosphere. The meal is much more than a meal as it is well presented and nicely decorated. If one then removes all of the surroundings and only leave the actual food, then the possibility of achieving the pleasure of the mind would also be removed, leaving the only pleasure of the body.” Subsequently, it can be argued, that pleasure of the mind is achieved due to the surroundings rather than the actual consumption. To explain, it is the experience that promotes the desire of the brain. While this area of research remains at a general level of inquiry without providing any form of illustration as to which pleasure categories the different experiences belong to, it can still be valuable for controlling which factors play an essential part in creating lasting memories and possible changes in the minds of the consumers. The theoretical foundations for the structure of the proposed CX framework it can be revealed that one of the significant advantages of experiential marketing lies in consumers being able to experience the brand in a non - sales environment. This leads to a higher emotional connection and the possibility of people sharing the content online thereby bringing the brand to life. In theory, experiential marketing has the benefit of being able to communicate, involve and excite people in new and innovative ways in their environment (Williams 2006). Brands not only can provide ‘sensory stimuli’ but then again can also evoke feelings such as joy, happiness, anger and sadness. This becomes more exposed when consumers engage with the brands in a more personal form (Schmitt 2012). Experiential marketing can furthermore, help enterprises to be more involved in the community (Close et al. 2006). The main upsides of implementing an experiential marketing strategy can be summarised as follows (Moré 2011): • Generate awareness • Create an emotional connection • Develop positive perceptions • Show off attributes • Gain credibility • Guide preferences • Stimulate purchases 194
As Pine and Gilmore debate “ from now on, leading-edge companies, whether they sell to consumers or business, will understand that the next competitive battleground lies in staging experiences ” (Pine, Gilmore 1998, pp.97 - 98).While several scholars (Schmitt 1999, Pine, Gilmore 1999, etc.) have endeavoured to provide frameworks for the types of events one can stage, none seem to go the step beyond this. Developing a framework that depicts how an experiential marketing event should be structured to be successful concerning increased brand equity and lasting positive transformations in the minds of the consumer is therefore needed. Model A
Experiential Journey Model CONTEXT EXPERIENCE BRAND EFFECT DESIGN PEOPLES EVENTS EQUITY ELEMENTS PERCEPTIONS Add Value Gain Loyalty New Users Service Design Insights Measures Metrics
Mapping journey Website Call Center Mobile CRM CEM Comm’s
Awareness Familiarity Preference Loyalty Image Personality Associations Availability
Access Information Purchase Channels Share of wallet Empowerment Co Creation Org Values
Research Planning Shopping Post Buying Events
Pleasure Experience Entertainment Emotions Perceptions Repeat Sales
IMPACT IMPROVED CUSTOMER SATISFACTION – REPEAT CUSTOMERS – ADVOCACY & REFERRALS – COMPETITIVE ADVANTAGE INCREASED REVENUES & PROFITS – STRONG CUSTOMER BOND Copyright: Dr James Seligman- 2018
A model which also takes into consideration the company values, essential design elements, people’s perceptions and the overall feeling of the event. By combing the proposed model for designing Experiential Marketing Campaigns with the framework for achieving Pleasure of the Mind a comprehensive framework for generating successful experiential marketing events is therefore obtained. The model above provides six key areas in the construction of the experience journey that can be applied to any organization. Details are provided below. 195
1. Context For any CEM to achieve its goals it has to be placed in the proper context within the organization, its primary value is that it can provide incremental sales and profits to the organization both short and long-term. This can be achieved couple of ways for example gaining loyalty of the existing and new customers, providing outstanding service, having a well defined CEM program. Customer insight must be utilised at the beginning and also through the life CEM program to ensure the context of provided CEM is consistent with the changes in the external environment. To provide proper feedback to management it is recommended that measures and metrics be used so that the CEM team obtains proper support and funding. 2. Experience events The mapping of the experienced journey is vital in the construction of a good CEM program, it should start with the consumer recognising that there is a need and want and finish with after sales support, guarantees and warranties. To achieve experience of events the organization has to utilise Technology available not only to provide the right message to the consumer but also handle any questions common queries and also complaints. In our technology world the use of mobile devices, websites, social platforms enable the delivery of experiences to the consumer 24/7. 3. Brand equity Through the use and application of CEM brand equity can be built within the minds of the consumer, constructing long-term loyalty and therefore sustainable business. Equity is constructed using awareness through powerful communications and also the right image and personality that engages the consumer in a positive way and also shows where and how the products or services can be obtained. 4. Effect The effects of goods CEM should provide the consumer with a clear understanding of access to the product or service and provide sufficient information so that the customer can purchase the item easily and efficiently. This should empower the customer to co-create the right product or service with the correct features and benefits which in turn drives extra business and supports the organizations objectives. The use of events can be very powerful in motivation, furthermore millennials have a preference for dynamic experiences they pay for because it is the experience that is recording remembered 5. Design Elements Designing good CEM requires you to understand the needs and wants the customer and to interpret this knowledge using research and gathered knowledge that makes your companies CEM stand out. Consider the shopping experience through the various channels and also what events would attract and maintain customer interest 6. Peoples Perception Ask yourself the question what sort of experience do you wish your customers to obtain? 196
Causes such as pleasure, excitement, enjoyment and entertainment using CEM can lead to short and long-term customer loyalty. Positive perceptions and the emotions are the psychological drivers along with the physical elements of the experience. By driving these six themes correctly in CX the result will be impact on customers and business performance as the CX execution will drive improved customer satisfaction, repeat business and trade ups. Further great CX drives word of mouth and advocacy drives new referrals. This in turn will by implication drive more sales and profits and provide a competitive edge hard to copy. The financial benefits of strong XC are hard to ignore!
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Summary In this chapter, we have discussed the value of Social networks and experience building as a free flow of discussion and learning. The conscious and unconscious mind of experience is a complex area which in many ways lacks clarity in research, however, understanding how the mind works provide insight into how experience journeys can be developed to maximum performance. The Pre – during and post-experience reflects how consumers see their experiences in stages as each one is different and relies very much on the customer's historical experiences which provide them with opinions as to what to use and why the justification. The new experiential mind-set frames a new dimension in marketing, where the experience itself supports consumer satisfaction and feelings of pleasure, the ‘ wow factor’. Events and communication technology now allow marketing to make experiences real through staged events or digital communication adding value to the experience journey. Review Questions •
In 100 words outline how social networks can build a customer experience
•
List ten points on why the mind-set of the customer is critical to CX success
•
Using 50 words discuss and debate the term ‘experiential world’. Use examples.
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