The Customer Experience Compass

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The Customer Experience Compass brings together the key elements that influence the customer experience. This whitepaper describes the elements of the model in more detail to help assess and shape the customer experience roadmap of your organization.

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The Customer Experience Compass

  1. 1. 145-157 St John Street London, EC1V 4P United Kingdom www.thinkstrait.com The Customer Experience Compass Finding your way to memorable customer experiences
  2. 2. The Customer Experience Compass 2 The Customer Experience Compass™ The Customer Experience Compass brings together the key elements that influence the customer experience. This whitepaper describes these elements in more detail to help assess and shape the customer experience roadmap of your organization. Customer Needs The first step in navigating by magnetic compass is finding North. All the rest follows. Getting your bearings in Customer Experience Management is no different, with customer needs taking the place of North on the compass. Two dimensions are particularly important when it comes to customer needs: 1. Functional needs (related to utility) vs Emotional needs (related to feelings) 2. Manifest needs (of which the customer is aware) vs Latent needs (of which the customer is not aware)
  3. 3. The Customer Experience Compass 3 Emotional needs and latent needs are less salient and therefore often overlooked in customer experience initiatives. In addition, needs can change over time and differ per customer. Therefore, it’s not only important to set up the methodology to identify latent and emotional needs but also to continuously recalibrate and find North again. Expectations Customers form expectations about the product or service they will receive and these lie at the heart of the customer experience. One could argue that to create a superior customer experience all that organizations need to do is find out what customers expect and exceed these expectations. The quality of the service or product in absolute terms plays a secondary role. This explains why an airline like Southwest has a higher customer experience score than most other airlines, although on an absolute level it offers less in some areas. The Customer Experience Compass shows a number of different factors that can affect expectations: • Customer variables Customer characteristics such as age, education, experience, income, and gender • Third party influencers Third parties that have a stake in customers’ decisions but that are not under the direct control of the organization, such as intermediaries (e.g. real estate agents) and salesmen from competing organizations • Customer education & promises Information distributed by the organization that can plant expectations in customers’ minds such as the organization’s help pages on the web • Previous experiences with competitors Dealings with organizations that are comparable in some way • (Social) media Opinions of others about the organization, products or services • Advertising & PR Deliberate positioning of the organization by the organization itself • Relative pricing A higher price generally raises expectations • General trends in society Expectations evolve with developments in e.g. technology and what used to be top-end might now be standard • Previous experiences with company Customers expect something similar to what they experienced before
  4. 4. The Customer Experience Compass 4 Clues There’s a difference between the actual performance of an organization and how customers perceive it. This gap is explained by the fact that customers don’t have insight into all the details but rely on salient clues instead. These can be intangible (i.e. processes), mechanic (i.e. look and feel) and humanic (people) in nature1. These clues can significantly steer perception away from the actual performance of a product or service, even if they’re not relevant to the performance. Clothing –ever wonder why consultants like to were suits?- is a clear example of a mechanic clue that can shift perception. Perceived Performance and Consistency The overall customer experience depends on two separate concepts: performance and consistency. Performance deals with how well customer needs are met within one particular touchpoint, channel, or customer journey. Consistency deals with meeting needs across touchpoints, channels, or customer journeys. Performance can be divided into Satisfaction and Delight whereas Consistency can be split into Reliability and Identicality. Satisfaction Satisfaction is the degree in which the perceived performance matches the expected performance. Customers are generally aware of their expectations (i.e. expectations represent manifest needs). In addition, customers are generally more aware of functional needs than emotional ones. As a result, satisfaction is predominantly associated with the fulfillment of functional, manifest needs. Delight Delight is the degree in which the perceived performance matches the ideal performance. Unlike in the case of Satisfaction, emotional and latent needs do play a central role here. 1 Adapted from Berry, L.L., Wall, E.A., Carbone, L.P. (2006). Service Clues and Customer Assessment of the
  5. 5. The Customer Experience Compass 5 Holistic Consistency Holistic consistency is the degree in which the experience at a high, non-granular level is perceived as consistent across touchpoints, channels, or time. Atomistic Consistency Atomistic consistency is the degree in which the experience at a granular level is perceived as consistent across touchpoints, channels, or time. It is considered ideal when the experience is identical in every detail. To illustrate the difference between the two types of consistency, imagine the following: Bob calls his company’s travel agency to book a flight for the next morning. Before hanging up he agrees to answer a short question about the service he received. Although he didn’t think the service was very efficient he still rates the experience a 4 out of 5 because of the very friendly service representative. That evening he calls again to amend his itinerary and this time the service is extremely fast albeit less friendly. Again he rates the service a 4 out of 5 in the survey. The 4 out of 5 indicates that Bob had a pretty good experience overall on both calls. So, holistic consistency is high. However, the calls do differ in some ways. In this case the experience profile of the two calls isn’t idential (i.e. less efficient but friendly vs efficient but less friendly). Therefore, atomistic consistency is low. Even if the differences can seem insignificant at first, atomistic consistency matters. One of our clients in Logistics and Express had a Domestic and International service department. One customer called Domestic with a question aout a shipment and was told to provide the parcel number. When she called International the week after she hung up in confusion when customer services asked for the the air way bill number. In an interview she later told us “I now know that it’s essentially the same thing but I did feel stupid”. Consistency is one of the most important concepts in Customer Experience Management for Contact Centres2 . However, few organizations pay enough attention to it. 2 Rowley, I., Mostowfi, R., Lees, R. (2002). Contact Centres: Strategies for Success. Business Insights Management Report.
  6. 6. The Customer Experience Compass 6 Processing by the customer Immediate customer experience versus remembered experience Dawson3 makes a distinction between two types of happiness: interaction happy (i.e. in response to a particularly good stimulus) versus abstractly happy (i.e. thinking positively about the organization without any recent stimulus). Several studies point out that it is not the immediate, momentary experience (interaction happy) that serves as a basis for behavioral choice, but the summarized, remembered experience instead (abstractly happy) 4 5 . In addition, when people form summary assessments of experiences, they do not combine the individual momentary components. Instead, studies repeatedly demonstrate that neither the sum, nor the average of momentary experiences corresponds closely to overall evaluations of their components6 . Instead, it’s the weighted average of the momentary experience at the most intense and final moments (often referred to as the peak and end, respectively) that can accurately predict the summarized, remembered evaluations7 . Overinvesting in humdrums As the remembered experience is the best predictor for future behavior and as this remembered experience is the weighted average of the most intense experience and the end experience, wouldn’t it be wise for an organization to dedicate its resources to these important opportunities? Research by McKinsey8 on the customer experience in the banking sector shows that opportunities arise when the customer has a problem or receives financial advice. By contrast, humdrum transactions generally don’t offer the same opportunity to create an emotional bond with the customer. Many companies make the mistake of overinvesting in humdrum transactions but fail to differentiate themselves in the customer experiences that really matter. 3 Dawson, D. (november 2005 CCF) The science of customer happiness. 4 Schwarz, N., Kahneman, D., Xu, J. (2006). Global and episodic reports of hedonic experience. In: Using calendar and diary methods in life events research (in press). 5 Wirtz, D., Kruger, J., Napa Scollon, C., & Diener, E. (2003) What to do on spring break? The role of predicted, on-line and remembered experience on future choice. Psychological Science, Sep 2003. 6 Ariely, D., Carmon, Z. (2002). Summary assessment of experiences: the whole is different from the sum of its parts. INSEAD R&D 7 Frederickson, B., & Kahneman, D. (1993). Duration Neglect in Retrospective Evaluations of Affective Episodes. Journal of Personalitly and Social Psychology, 65: 45-55 8 Beaujean, M., Davidson, J., & Madge, S. (2006) The moment of truth in customer service. McKinsey Quarterly, issue 1, p62-73
  7. 7. The Customer Experience Compass 7 The implication of consistency As the concept of consistency points out, one cannot design a superior customer experience without looking across all touchpoints. One barrier in delivering a consistent customer experience is a functional silo structure. Improving the customer experience can require a huge cultural shift and the breaking down of internal silos9 . Having one person in place who is responsible for the End-to-End customer experience, across all departments, and who has sufficient influence to align these departments can make all the difference. Key take-aways • Make sure you have the methodology in place to identify customer needs, including latent and emotional ones (Customer needs) • Identify the specific influencers of expectations for your organization, monitor customer expectations, and manage them wherever possible (Expectations) • Eliminate unhelpful clues and shape clues to your advantage to influence the perceived performance (Clues) • Measure performance as well as consistency and be constantly on the lookout for negative outliers: it just takes one instance to ruin the perceived consistency (Perceived performance and consistency) • Invest in peak and end moments (Processing by the customer) • Put one person in charge of CEM (Implication of consistency) 9 Driggs, W., Piotroski, S. Experiencing the brand; branding the experience. Accenture white paper

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