Customer experience

Customer experience is the sum of all experiences a customer has with a supplier of goods or services, over the duration of their relationship with that supplier. It can also be used to mean an individual experience over one transaction; the distinction is usually clear in context.

Growing recognition

The concept of customer experience was first introduced by Pine and Gilmore in their 1998 Harvard Business Review article. They believe that successful businesses influence people through engaging, authentic experiences that render personal value (Pine and Gilmore 1998). ^[1]

Analysts and commentators who write about customer experience and customer relationship management have increasingly recognized the importance of managing the customer's experience. ^[2] Customers receive some kind of experience, ranging from positive to negative, during the course of buying goods and services. Thompson and Kolsky say that “an experience is defined as the sum total of conscious events. As such, a supplier cannot avoid creating an experience every time it interacts with a customer” (2004). Furthermore, it has been shown that a customer’s perception of an organisation is built as a result of their interaction across multiple-channels, not through one channel, and that a positive customer experience can result in increased share of wallet and repeat business.

A company's ability to deliver an experience that sets it apart in the eyes of its customers serves to increase their spend with the company and, optimally, inspire loyalty to its brand. "Loyalty," says Jessica Debor, "is now driven primarily by a company's interaction with its customers and how well it delivers on their wants and needs." (2008) ^[3]

To create a superior customer experience requires understanding the customer's point of view, say Don Peppers and Martha Rogers, Ph.D in Rules to Break and Laws to Follow. "What's it really like to be your customer? What is the day-in, day-out 'customer experience' your company is delivering? How does it feel to wait on hold on the phone? To open a package and not be certain how to follow the poorly translated instructions? To stand in line, be charged a fee, wait for a service call that was promised two hours ago, come back to an online shopping cart that's no longer there an hour later? Or what's it like to be remembered? To receive helpful suggestions? To get everything exactly as it was promised? To be confident that the answers you get are the best ones for you?" (Peppers and Rogers 2008)^[4]

Emerging Business Requirement

With products becoming commoditized, price differentiation no longer sustainable and customers demanding more, companies – and communication service providers (wireline, wireless, broadband cable, satellite) in particular – are focusing on delivering superior customer experiences. A 2009 study of over 860 corporate executives revealed that companies that have increased their investment in customer experience management over the past three years report higher customer referral rates and customer satisfaction (Strativity Group, 2009) ^[5]. This finding is also supported by research completed by software company Chordiant in 2008 into the customer experience management performance of large organisations across Europe^[6]. The research surveyed 450 large organisations to create a maturity model and the results showed that over ¾ of the organisations surveyed achieved level 3 (of 5) or less for CEM performance (5 being best possible result). The results also showed that performance in four key business areas (market share, retention, profitability, and customer satisfaction) was directly related to CEM performance^[7].

The customer experience has emerged as the single most important aspect in achieving success for companies across all industries (Peppers and Rogers 2005). ^[8] For example, Starbucks spent less than $10MM on advertising from 1987 to 1998 yet added over 2,000 new stores to accommodate growing sales. Starbucks popularity is based on the experience that drove its customers to highly recommend their store to friends and family. ^[9]

Customer Experience Management

The goal of customer experience management (CEM) is to move customers from satisfied to loyal and then from loyal to advocate. Traditionally, managing the customer relationship has been the domain of Customer Relationship Management (CRM). However, CRM strategies and solutions are designed to focus on product, price and enterprise process, with minimal or no focus on customer need and desire. The result is a sharp mismatch between the organisation’s approach to customer expectations and what customers actually want, resulting in the failure of many CRM implementations.

Where CRM is enterprise-focused and designed to manage customers for maximum efficiency, CEM is a strategy that focuses the operations and processes of a business around the needs of the individual customer. Companies are focusing on the importance of the experience and, as Jeananne Rae notes, realizing that “building great consumer experiences is a complex enterprise, involving strategy, integration of technology, orchestrating business models, brand management and CEO commitment.” (2006) ^[10]

According to Bernd Schmitt, "the term 'Customer Experience Management' represents the discipline, methodology and/or process used to comprehensively manage a customer's cross-channel exposure, interaction and transaction with a company, product, brand or service."^[11] Customer experience solutions provide strategies, process models, and information technology to design, manage and optimize the end-to-end customer experience process.

CEM systems

One of the key features of successful CEM implementations is their ability to manage multi-channel interactions. Customer experience solutions address the cross-channel (contact center, Internet, self service, mobile devices, brick and mortar stores), cross-touchpoint (phone, chat, email, Web, in-person), and cross-lifecycle (ordering, fulfillment, billing, support, etc.) nature of the customer experience process. By contrast, CRM solutions tend to offer point solutions for specific customer-facing functions such as, but not limited to, sales force automation, customer analytics, and campaign management.

Experience-based providers also integrate both internal and external innovations to create end-to-end customer experiences. They evaluate their business models as well as business support systems and operational support systems (BSS/OSS) from the customer’s point of view to achieve the level of customer-centricity necessary to improve customer loyalty, churn and revenue (Lopez, 2007). ^[12] Chordiant, which specialises in developing CEM systems, integrates next best action marketing technologies into their systems to predict customer behaviour and provide real-time recommendations for guiding the interactions.

See also

• Customer service
• Employee experience management
• The International Customer Service Institute

References