Customer Experience (Ebook)


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A multidimensional version of experience marketing

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Customer Experience (Ebook)

  1. 1. 2
  2. 2. 3 contents experiences foreword intro Customer experience: a framework for the marketing of the future Elena Alfaro Partner - EMO Insights brand and communication Customer experience from the perspective of the brand and communication Javier Velilla Managing Partner - COMUNIZA management systems The role of IT systems in managing customer experience Hugo Brunetta CEO - Nexting measurement How to measure customer experience Carlos Molina Innovation Vice President - IZO 6 9 12 20 29 38
  3. 3. 4 employee The role of employees in customer experience Beatriz Navarro Marketing Director - Starbucks retail Customer experience from the retail standpoint Lluís Martínez-Ribes Professor of Retail and Marketing Innovation ESADE Business School contact center Customer experience from the contact center standpoint José Ignacio Ruiz Head of Marketing – Orange on line Customer experience from the online standpoint Enrique Burgos Chief Marketing Officer - QDQ Media multichannel marketing Customer experience in multichannel integration Fernando Rivero Marketing Director Partner - Tatum b2b Customer experience in B2B markets Santiago Solanas CEO - Sage España 49 56 67 75 83 93 contents
  4. 4. 5 innovation Innovation in creating and managing experiences Jaime Castelló Principal and Professor of MBA ESADE Business School key ideas The key ideas of customer experience Jaime Valverde Social Media Strategist - Territorio Creativo Borja Muñoz Partner and Day Trader - Factor K acknowledgements authors 103 112 119 120 contents
  5. 5. 6 Txema – Madrid “The best experience I have ever had was with [satellite TV broadcaster] Digital Plus - when I canceled my subscription, odd though it may sound. I wasn’t expecting it, but when I called and they were busy, it was they who returned the call, even though they knew I wanted to cancel my subscription. This was seven years ago, and I still haven’t forgotten.” Daniel – Barcelona “I went into the Nike store on Paseo de Gracia in Barcelona. I had a clear picture in mind: I wanted to buy my wife a pair of sneakers. A friendly shop assistant came forward to help, and told me: ‘If you like, we can create a personalized pair of sneakers just for you.’ She guided me to the Nike ID department. We sat in front of a computer, and created the sneakers step by step, specifying all the features I wanted to include. The finished sneaker would be ready in four weeks. I came out of the store with the impression that I had bought a better gift than I had expected to get, and that, even if just for a short time, Nike was working for me. Thank you!” Noelia – Madrid “I can hardly remember what my life was like before my iPhone. With my iPhone, I get a sense of not missing anything, and I become anxious when the experiences
  6. 6. 7 battery dies. And when I look at other smartphones I think, okay, but it’s not an iPhone.” Carlos – San Sebastián “I’m from Valencia, but for a while now I’ve been living in San Sebastian for work reasons. Whatsapp on my cell phone makes me feel at home, because I am constantly in touch with my closest friends and my family. Whatsapp has meant that, even though I am far from home, I feel a lot closer to my loved ones.” José Fermín – Madrid “I have had a really good experience every time I have interacted with American Express. Once, while traveling, I had my wallet stolen, with all my cards inside. I called Amex and told them about it. The person taking the call interrupted me to say: ‘Before we go on, José, are you all right? Is there anything you need?’ I explained I was fine, and all I needed to do was cancel my card. He complied, and then offered to handle any paperwork I might need to do: Sending a photocopy of my identity card, bureaucratic formalities, help with reporting the facts to the police, and so forth. Finally, they offered to send me cash at the hotel where I was staying, and promised to send me my new card in a few hours’ time so that I could pay for my stay and my return fare. I was impressed. Getting my card stolen turned out to be a treat!” David – Sevilla “I spend the week looking forward to Saturday so I can drive my Ducati Monster. That moment is priceless.” experiences
  7. 7. 8 Ana María – Barcelona “I am touched by the look of joy on my son’s face when he walks into an Imaginarium toyshop through their special child-sized doorway.” Iván – Madrid “Why do I support Atlético de Madrid? It isn’t easy to explain. It comes from the heart, that’s all - whether it makes me weep or jump with joy.” Alexa – Barcelona “Every week I have my gossip moment with Cuore magazine. It’s like a ritual… Every Wednesday - when the magazine comes out - I go out to buy my copy. In the evening when I get home, I lounge on the sofa and… Time to gossip! I enjoy everything in it and what it teaches me. It’s my moment! And I’m not shy to acknowledge that I love gossip!” Tamara – Madrid “It’s like being a little girl again, it reminds you of the feeling that fairytales are true. Magic really is out there. Disney.” experiences
  8. 8. foreword
  9. 9. 10 ZERO / FOREWORD #CEMbook Customer Experience Many businesses are facing hard times. Customer profiles and the context in which businesses operate are changing swiftly.This situation is thrown into relief by the current economic downturn and the ongoing crisis of societal values. Today, most companies operate in mature, hypercompetitive markets. Their goods and services are virtually indistinguishable, and they compete chiefly on price. Customers are more demanding, better informed, and look for personalized products. We are facing a paradigm shift.Today’s customer is no longer concerned merely to satisfy her basic needs.She wants to take her purchasing and consumption process to a higher level: she wants emotions and experiences. This is the context for this e-book. You are probably aware of most if not all the following brands: Starbucks, Harley‑Davidson, Desigual, Apple, Disney, Imaginarium, Nespresso. These are some of the businesses that have succeeded in the present climate by creating and managing their customers’ experience to leverage their strategy. Although they are all different, they have one thing in common: they meet their customers’ needs not just rationally, but emotionally. There is an abundance of literature on customer experience, also known as “experience marketing.”However, this e-book offers you a different perspective and a different format. This book is the outcome of a partnership.It brings together and pools the store of experience and know-how of thirteen marketing experts. The authors include
  10. 10. 11 ZERO / FOREWORD #CEMbook Customer Experience CEOs, directors and account managers working in a wide range of industries and businesses; and they all share their expertise at leading business schools and universities. Each author is a specialist who contributes his or her own distinctive approach to customer experience to provide a stimulating multidimensional perspective. This e-book is open to everybody, and you are invited to contribute. You can send us your feedback in the form of comments and suggestions. Please share this e-book with others using the available links to various social networks. This e-book is provided free, and is a nonprofit venture. The authors and other contributors are driven by a passion for a new paradigm of marketing. Our reward is to see this book emerge as something real, and to support the excellent work being done by Fundación Vicente Ferrer.1 Finally, we hope you enjoy reading this book, and that it will suggest questions for you and your business to think about. I would like to finish with the famous words of B.Joseph Pine II and James H.Gilmore,“Welcome to the experience economy.” 1 All contributors to this project work on a non-profit basis. Any earnings arising from this e-book will be handed over to Fundación Vicente Ferrer in full.
  11. 11. one / introCustomer experience: a framework for the marketing of the future Elena Alfaro
  12. 12. 13 ONE / INTRO Customer Experience #CEMbook “Customer experience,” “experiential marketing,” “emotional marketing.” This is a discipline that has spawned a confusing welter of concepts and terms. I have gone on company visits and talked to professionals in the field of marketing, quality, innovation, and research, and new niches like “customer insights,”“business intelligence” and even “customer experience.” And my sense of a prevailing haze in this area has only grown. One thing is clear, though: quality alone is no longer enough for success. In an increasingly complex and fast-moving environment, it is vital to understand that perceptions set off feelings and emotions within organizations, and those feelings directly impact end results.We need to bear in mind that customers and employees are people: their motives and opinions blend the conscious and the unconscious, and it is this hybrid that drives the dynamic of loyalty, referrals, repeat business, and even impassioned advocacy of a preferred brand or company.vSo organizations are now taking an interest in “experience” and what it means in terms of how they should manage their business.But nobody can agree on what “customer experience” really means. And what about within a specific organization? It gets trickier when the term is used to mean different things at different times. If we regard the concept as related to “use”or “practice,”then “experience”refers to the points of contact between a customer and a business (the Internet, social networks, physical stores, employees, the customer service center, and so on). We can assume that the more a customer uses a product or service, the more experience he or she is building up with that product, with the brand, and, ultimately, with
  13. 13. 14 ONE / INTRO Customer Experience #CEMbook the supplier (manufacturer and distributor). However, if we regard the “experience” concept as related to the terms “habit” or “custom,” then its meaning mingles with what has been a source of law for centuries: custom is a source of people’s expectations. And if we view it as related to “life,” then we are linking the term to emotion, and so complicating the message. The literature is rich in suggestions as to what emotion can mean. It can be defined as a state of affect that forms part of our experience; as a subjective reaction to the environment accompanied by physiological changes that are themselves influenced by earlier experience. Emotion helps our body adapt to its surroundings, instantaneously or on a more lasting basis. Experience, then, triggers our emotions and exerts an influence over them. Even a customer’s rational response to a company or brand is hard to measure; the issue is even more complicated when decisions are powerfully influenced by emotion - and this is the case of the customer’s “experience.”Analysis must further contend with the difficulty of the myriad concepts that have evolved in connection with “experience.” The various meanings of the term directly impact the ways in which organizations perceive and manage the fact of experience, and the ways in which the associated research is structured. In fact, it is common to come across companies that think customer experience management comes down to narrowing the customer’s expectation gap with the various channels with which he or she interacts. An increasingly widespread job title is that of the “customer experience manager,” designating the person in charge of a call center taking telephone calls from customers. Interestingly, even the research industry is unable to agree on how best to analyze customer experience. Companies spring up promising to deliver “customer experience”services,but when you look at the detail of what they do you realize they are merely repackaging other philosophies, such as “total quality management,” to embrace the latest buzzword, “experience.” Maybe their market positioning takes a deliberately ambiguous approach. In terms of the history of market research institutions, until recently, when a business wanted an answer to a specific problem (e.g., to ascertain perceptions of the asking price for a given product),it would enlist the assistance of a conventional
  14. 14. 15 ONE / INTRO Customer Experience #CEMbook research institution or company to obtain data which would enhance its decision- making. A research institute would provide a range of menus comprising fairly standardized blueprints, and would try to shepherd the client toward these patterns to address almost any given query. Typical forms of research included quantitative survey data or information elicited from the client business itself, research based on observing customers in purchasing environments, group-based qualitative inquiries (better known as “focus groups”), and in-depth personal interviews. To date, decision-making was based on research of this kind. We are all used to hearing and reading statements such as “80% of customers are highly satisfied,” “customers are unhappy with the product price,” “there is a problem with complaints,” and so forth. Little thought has been given to the methodology underlying the reported data,the way in which companies took credit for the results or deployed other strategies. But a more accurate awareness of what the figures mean, and a laser-like search for where improvement was needed, prompted us to take our analysis a step further and look for metrics that would reflect real changes in stakeholders’ behavior. For example, we discovered that the distribution of satisfaction surveys was biased toward positive views. Customers who still remained as customers were the people who were returning scores at the higher end of the scale. In addition, the fact that customers gave a low score to a particular feature did not mean that it required improvement - for one thing, the price was one aspect which from the customers’ standpoint always stood to be improved. In the search of metrics intended to monitor customer experience, there was another fad which ultimately proved uninformative. The net promoter score (NPS) was heralded as the indicator to end all indicators. However, it had almost nothing to say about the future. Bearing in mind that in recent years brain science has achieved greater forward strides than in the whole of the previous century, we are strongly placed to gain a more accurate picture of how we humans function. Research and development of innovative solutions are now being undertaken wider afield. Discoveries relating to the role of emotion in decision-making have led to improved solutions that combine conventional techniques with medical technology and neuro-marketing (attention meters, galvanometers, etc.) and even newer methods, such as quantitative approaches to qualitative research (linguistic and semantic analysis of Internet commentary, conversations between customers and call center operators,
  15. 15. 16 ONE / INTRO Customer Experience #CEMbook etc.), predictive inferences (use of statistical models that pinpoint the perceptual features shaping certain behaviors), and so forth. The rise of experiential strategy also involves the emergence of new professional profiles in a research capacity, from the fields of psychology, trend-spotting (“coolhunters”), industry experts and mirror markets (having analogous features), stakeholders and interest groups (customers,suppliers,etc.).The innovation process should be driven by those professionals whose input is needed to resolve the issue in question. For example, some time ago I was involved in creating an experience- based differential concept for a natural park. The only commodity in view was brute nature. The aim was to create wealth in the vicinity and attract visitors with a higher purchasing power. The concept development process thus enlisted: a professional whose background was in the luxury goods industry (an expert in selling expensive items), an environment professional, a trend-spotter, a local infrastructure professional,information office employees,visitors,and more.All the people involved first experienced the park so that they would be able to discuss it in the first person.The concept underpinning this multidisciplinary involvement is itself in vogue: co-creation. Given this setup, the future of research and consultancy companies is to engage in actively listening to the customer: not to offer the standard recipes of the day referencing size,capabilities and volume of human resources.Yes,that’s right - what I mean is that presentations for consultancy firms typically include phrases such as
  16. 16. 17 ONE / INTRO Customer Experience #CEMbook “we are the world leader in product X,”“we have more than Y employees, and Z computer assisted telephone interview workstations, etc.” It is less often heard that they actively listen to the customer, study the customer’s need in-depth and come up with a research solution specifically targeting the problem to be solved. What is more, customers are increasingly short of time to review the information, and want the supplier to play a more active role in resolving the issue. “Don’t believe the recipes” is my message regarding the creation of approaches to understanding stakeholders and, therefore, the people around us. The reality is that we are facing a time of aggressive competition which is leading to price wars in many industries.The speed of the changes we are witnessing and global uncertainty are catalyzed by the Internet, a world information exchange network. In the face of these changes, businesses are seeking new solutions, and the research industry has had to adapt, even if offering the same recipes in a different guise. Thinking through the problem that a given customer needs to solve, and so arriving at an answer, requires an understanding of strategy, psychology, statistics, mathematics, advertising and more. Experiential research has recently been associated with neuro-marketing. However, when addressing an experiential research project, we should think about which techniques and profiles are best suited to arriving at the intended target. Not every research target is best addressed by neuronal marketing, nor can any study population be processed with magnetic resonance imaging to produce brain maps. Research is evolving just like any other form of science: it is driven this way and that by new discoveries and the new reality, which embraces new channels and available technologies. We can neither dismiss the use of long-established techniques, nor stop evolving and rethinking the new reality that surrounds us. Research institutes must adapt to the new reality and come up with solutions that suitably provide the information required by today’s organizations. Due value must be placed on the line of work that has achieved the most significant progress in history: research. If the aim is to transform the industry and evolve in step with global and specific circumstances so as to arrive at new solutions, then an appropriate valuation must be made in terms of price. This is a reality we see every day.The capabilities and skills of two businesses, though widely different, are purportedly compared to one another simply because the goals they pursue are described by similar phrasing - “information for decision-making.”And
  17. 17. 18 ONE / INTRO Customer Experience #CEMbook we sometimes refuse to acknowledge and pay the fair value of advice that can save us millions of euros.The immediate consequence of this is a lowering of the caliber of professionals in the industry, and hence a shortfall in the quality of information that would otherwise provide us with an edge.It is urgent for businesses to undergo change in this respect to prevent an outflow of talent and thus of capability from our organizations. Customer experience management is a strategic proposal to deal with situations where the goods or services on offer have become commodities. It sometimes emerges in the form of detecting and managing experiences at all points of contact with the consumer, and sometimes appears in the guise of approaching the sale in terms of helping the customer. Either way, the goal is to set yourself apart from the competition. It is not easy to find professionals whose experiences ranges over disciplines as diverse as strategy, consumer research, operational marketing, psychology, technology solutions, quality, development of metrics and statistical modeling, and so forth: all these subjects form part of the all-embracing discipline of research.The clear outcome of this is that in consultancy only a few boutique companies have a long track record in the field, which need not be highlighted by an internationally known brand. We should not be afraid of innovation. A few years ago I was struck by the following story. In the 1980s, General Motors selected suppliers precisely on the basis that GM was their first-ever customer. Sometimes we ask for too many prior references for a product or service which is in itself new. Finally, I leave you with the following thought: “Only one percent of customers think that companies focus on emotional needs.” This was the conclusion of a study conducted in the UK. In my view, this finding has a corollary: “there is a big opportunity out there to gain an edge by the emotional management of customers’ needs,” because the data shows that this is hardly being worked on at all. I would urge you to try. Don’t be afraid of being first!
  18. 18. twoCustomer experience from the perspective of the brand and communication Javier Velilla
  19. 19. 20 TWO / BRANDS AND COMMUNICATION Customer Experience #CEMbook#CEMbook A brand isn’t what it says about itself,but what its target market says about it.In short: brands aren’t defined as much by the perception they have of themselves but, and this is the key, by the combination of the individual opinions and experiences of its target markets connected to the perspectives of third-parties such as the mass media, opinion-leaders and social networks. Unfortunately, for years customer experience has been handled in a disjointed way, with brand communication separated from customer service (amongst other divisions), as if what the brand promised and the experience of the consumer and use were two different realities. One of the consequences of this situation is that marketing departments have tended to focus on just one of the variables making up the 4 Ps in their brand strategies: promotion. Brand communication has been limited to one-way mass advertising, leaving out other crucial factors such as product, place and price. This is a reductionist approach that leads to one outcome: on many occasions we have disconnected self-expression of the brand from user experience. Marty Neumeier uses the first pages of the book The Brand Gap (Peachpit Press, 2006) to highlight a number of the sector’s conceptions: a brand is not a logo,an identity or a product. Nor are other signs of the brand identifiable, expressive and easily recalled like the terms associated to the brand (for instance, Nokia’s Connecting people or Nike’s Just do it) or personal charisma (in the case of the late Steve Jobs for Apple, for instance), although achieving an aligned organization to offer a user experience requires both elements. We perceive this role, for example, in people like Howard
  20. 20. 21 TWO / BRANDS AND COMMUNICATION Customer Experience #CEMbook#CEMbook Schultz, Jeff Bezos and Richard Branson, who act as brand guardians so that the user experience is the right one. When Amazon’s CEO Jeff Bezos says that the company mission places the customer at the heart of the company, this is an affirmation that requires a certain kind of behavior. In addition, it decisively affects all of an organization’s departments,which often suffer from a fragmented perspective.In the case of brand management,effort has often focused more on conveying and controlling messages, rather than exerting effort on the quality and consistency of contact points.Luckily, this segmented outlook is changing. A logo is just one of the many signs that a brand uses to express itself. It is a crucial element, but so too should the consumer’s first-hand experience. Both are distinguishing features as well as being hard for the competition or new competitors to imitate. Let’s take an example: there is a bar or restaurant for every 461 inhabitants in Spain. What’s on offer may seem the same: a sign over the door, a bar, cutlery, tables, chairs, food and drink… From this perspective it would be incredibly difficult to make a choice: they all seem to be the same. Yet we know that other factors are at play. The expression of brand (distinction, personality and a whole raft of psychological associations) combines with the user experience (in the form of recall, repetition or loyalty).The combination of both of these elements positions one bar over another bar in such a fiercely competitive ecosystem as our city streets. After all,this isn’t just a bar in the abstract.The brand concept forcefully emerges, generating a new reality in terms of communication and culture with its messages and attributes.The brand acts as a semiotic mechanism which triggers associations to values and ideas. It affords information, differentiation and seduction targeted at the act of buying or recommendation. This value can be pared down to the lowest common denominator of associations shared by a group of users. In this way a brand is the result of distilling associations which add value and shape a space of reference in which to position the product, service or idea in the market as a whole. The user’s experiences shouldn’t be any other reality except the materialization of brand positioning, but this time on specific actions based on consumption and use. Some years ago Stelios Haji-Ioannou, CEO of easyGroup and founder of easyJet, had a big influence on this. But, unfortunately, it isn’t often that way.
  21. 21. 22 TWO / BRANDS AND COMMUNICATION Customer Experience #CEMbook#CEMbook Concept, context and experience A brand generates a complex semiotic construction. It bases itself on a combination of elements such as expectations, experiences, needs, wants and hopes. In this process the perception of value (concept), its position in the market (context) and consumption and use (experience) are essential to create and manage a powerful brand. It is clearly becoming increasingly complicated to achieve a competitive advantage due to the appearance of new companies, goods and services, but also due to a change in some of the rules of the game. Today markets are controlled by hypercompetition: generally speaking, key variables such as price, distribution or availability are no longer differentiated from one company to another.The position of market leaders is continually in jeopardy: looking back at the last fifty years we see that company loyalty is at an all-time low, digitalization leads to disruptive processes, and new competitors and innovators enter the market all the time. One upshot of this phenomenon is that the quality of goods and services isn’t enough to guarantee an organization’s competitiveness or even survival. Quality is taken as a given.The enterprises that survive in this market are probably those that are able to enhance the value delivered to customers without continuously pushing up costs or finding another way of making a profit. The brand should draw together a kind of enhanced experience which combines and unites different experiences of use, consumption, socialization, personalization, transmedia…to equip itself with a brand promise with added value,that is different and memorable. This strategy is being rolled out by Caja Navarra with its ‘Cancha’ branch offices. This concept goes beyond conventional offices by providing spaces with enhanced experiences to meet the public’s needs and which, besides, yields an average profitability that is higher than the bank’s other offices. As Michael Porter said, a brand is, “the principal defense against price competition.”This is why more sophisticated elements push through: intangible elements. Customers don’t just acquire goods and services, in reality target markets are drawn to a particular brand because they share certain values, ideas and mindsets, and because they tie in with an experience. Few products are more undifferentiated and generic than coffee, yet Howard Shultz created a corporate story that was powerful enough to roll out the Starbucks brand across the world. The promise of value is based on an unmistakable concept, context and experience: the third place
  22. 22. 23 TWO / BRANDS AND COMMUNICATION Customer Experience #CEMbook#CEMbook between home and work.This promise represents a commitment to consumers,who need to align themselves to the mission in the form of a long-term guarantee. In this way the brand becomes the perfect agent to hold a long-lasting and profitable relationship with its target market. The brand acts as a compass for the points of contact of user experience: it takes on a competitive discourse to extract and afford optimum value of all points of contact and to all the various channels to connect intelligently and effectively in a solid and long-lasting way. Its function is to generate a long-lasting impression associated to a particular mindset with a goal: establish meanings for the product, good, service or idea and sell them.These meanings clearly generate preferences or loyalties amongst customers or stakeholders in the form of purchasing,preference or choice.In short,we are social and complex beings. We live in dense spaces in meanings and connections with intricate semiotic ecosystems in which brands are related to personal journeys, past experiences, ways of understanding reality and, above all, expectations. The brand as a guide to points of contact The brand establishes a promise and acts to make sure the experience of consumers is satisfied. For years Philips operated under the slogan Let’s make things better, now Sense & Simplicity. Both formulations are excellent brand expressions affording a powerful meaning on a sensible and simple technology that extends to the products and to the corporate brand. Extending the brand to user experience means that the corporate story needs to seamlessly permeate the group of employees,processes and organization.The brand becomes stronger the more the promise on which it is based is fulfilled, that is, the more it acts as a compass of all points of contact. For instance, the Imaginarium chain proposes the following concept: spaces shared by parents and children. This brand promise is linked to a very specific view of the world and type of consumer. Yet it is also genuinely expressed in the interior design of the establishments and in the product range, and it is relevant for its brand territory as it helps decision- making in a sensitive environment such as the family setting.The context in which Imaginarium operates is unique and free from competition. Retrieving the terminology of W. Chan Kim and Renée Mauborgne, authors of the best seller Blue Ocean Strategy (Harvard Business Press, 2005), a blue ocean
  23. 23. 24 TWO / BRANDS AND COMMUNICATION Customer Experience #CEMbook#CEMbook is compared to a red one (where brands compete for a bigger portion of a limited demand in water teeming with competitors, with falling profits and fierce and bloody behavior). Blue oceans, say W. Chan Kim and Renée Mauborgne, involve a new way of understanding positioning: they are unique market spaces where the competition becomes irrelevant due to its capacity to reinvent the category. The authors use the examples of Southwest Airlines, Cirque du Soleil and eBay, that propose a brand promise (concept and context) with an aligned, obvious and motivated user experience. Brand management should go beyond the act of selling existing stock to starting before the product or service is designed and continue afterwards in the form of customer service, loyalty and communication. Today’s major brands no longer just advertise thanks to their huge budgets, but they establish relational actions that generate 360º experiences before and after the transactions. It is becoming increasingly common for the brand concept to be rolled out throughout the company’s entire value chain, from products and services to behavior, attitude, communication and thinking of the organization. Branding from the perspective of user experience takes this approach farther as it means consumers require the guarantee that they will have experiences that are satisfactory, meaningful and memorable with the brand values in each interaction they have, in a coherent and consistent way every time. Experience as the basis of the brand The brand acts naturally in this context: it should be the semiotic container for weaving associations and connections in the brain, highlighting certain meanings and practical elements that combine rational, emotional and meaningful factors. The car industry is highly representative of these kinds of connections: Volvo is safety, BMW is the pleasure of driving, Ferrari is Italian sportsmanship and Toyota is innovation. These are connections that often last regardless of user experience and which circulate in the form of social, cultural and symbolic stories. These stories,rather than identifying a particular reference,become the reference itself. We are continuously detecting brands that go beyond the descriptive nature of the product or service: these brands become the basis of a relationship with consumers.The challenge is to not forget that user experience should be a firm basis
  24. 24. 25 TWO / BRANDS AND COMMUNICATION Customer Experience #CEMbook#CEMbook linking a brand’s value promise, providing that it aspires to survive thanks to each person’s personal experience. The process of “positioning” - a term coined in 1972 by Al Ries and Jack Trout - comprises three phases: analyze the offer, ascertain what the consumer values and determine the distinguishing features in a competitive environment. In other words, positioning defines the process that describes what a brand offers its target markets and how. Over time the term has evolved, but its essence remains: it means to occupy a space in the mind of the target markets by way of an idea or concept that is relevant, easy to explain and which is not an intangible or legal property belonging to a competitor. Positioning is nothing more than devising an idea and making it grow with a powerful meaning that is clear and easily distinguishable. Organizations need to know and interact with their customers to find out their needs and expectations, which are of a changing nature. This means keeping an eye on the market and constantly gathering data to find out where the brand can give value and that this value is perceived. One of the brands which has best understood this process is the Malaysian financial entity RHB Bank, which gives small elements of value to users while they are waiting (laying on staff who serve coffee, tea and soft drinks) or depending on the weather (handing out anoraks on rainy days). Even the bank’s call centre sets itself apart thanks to its capacity to process requests simply and at all times on a one-to-one basis. The key of this entity is that it comprises many elements that customers genuinely value in terms of their experiences with the banking sector. Let’s take a specific example: in the professional trucking market, dozens of trucks compete, each with a particular engine size and load capacity, with differing prices and production processes, etc. It’s not easy to choose between them. Let’s imagine a user who is in the middle of the buying process.They might consult their fellow truckers, surf the Internet or buy one of the specialist journals published on this subject. They might also visit a few truck dealers before making their final choice. In other words, they will have spent a significant amount of time before parting with a single euro. This whole process could be a great deal quicker if the user connects with a brand, as they will approach it with a ready supply of data, identification and differentiation.The outcome of this process is a clear decrease in the time and effort spent on the search, evaluation, choice and consumption of a product or service. Paccar, the heavy-duty truck manufacturer, is aware of this type
  25. 25. 26 TWO / BRANDS AND COMMUNICATION Customer Experience #CEMbook#CEMbook of process and provides a memorable user experience to drivers who own their own trucks.They are usually people who have a special relationship with the truck: they pay for it themselves, it can set them apart from the crowd, they live in it, and they want to customize it to some extent. To meet this expectation Paccar produces custom-made seats, cabins, exteriors and numerous features that create identity and are a source of pride.In addition it has set up a roadside assistance network across the United States to easily sort out any technical problems so drivers don’t lose working hours and pay. This brand yields a benefit thanks to the lower effort required for these buyers and of the lower presence of the price as a discriminatory element. In this way the manufacturer achieves a higher profit for each unit sold. In exchange their customers get a whole lot more than just a heavy-duty truck: they are buying a concept that they connect with and that determines their preference; that’s why they are willing to pay a little more. In this case, brand promise slots perfectly into place with positioning and user experience. The price factor falls into second place during the decision-making process, but it does so for two reasons: in this case the Paccar brand acts as a complex warehouse of information that brings together attributes, benefits, values, uses, consumption levels, user profiles... and this semiotic container is validated by user experience. Separating the brand from user experience leads to proposals that do not meet customer expectations, often because of broken promises or even due to contradictory relationships that leave the consumer feeling confused and frustrated. Honestly, no brand strategy is capable of responding to a repeatedly deficient user experience based on a poor product or service. In short, powerful brands ought to manage their customers’ experience from an all-encompassing standpoint structured around five areas: formulate a brand benefit in the shape of an idea-effort; roll out a 360º experiential platform; generate a brand capable of taking this idea on board and expressing it; build a network of interactions with customers; and, lastly, continuously innovate to ensure the correlation between brand and experience in a competitive and ever- changing environment.
  26. 26. 27 TWO / BRANDS AND COMMUNICATION Customer Experience #CEMbook#CEMbook References Chan Kim, W. and Mauborgne, Renée, 2005. Blue Ocean Strategy. Harvard Business Press. Chevalier, Michel and Mazzalovo, Gérald, 2005. Pro Logo. Por qué las marcas son buenas para usted. Barcelona, Belacqua de ediciones y publicaciones. Neumeier, Marty, 2006. The Brand Gap: How to Bridge the Distance Between Business Strategy and Design. Peachpit Press. Ollé, Ramón and Riu, David, 2009. El nuevo Brand Management: cómo plantar marcas para hacer crecer negocio. Barcelona, Gestión 2000. Pine, B.J. and Gilmore, J.H., 1999.The Experience Economy. Boston: Harvard Business Press. Ries, Al and Trout, Jack. Positioning: The battle for your mind, Warner Books - McGraw-Hill Inc., New York, 1981. Velilla,Javier,2010.Branding: tendencias y retos en la comunicación de marca.Barcelona,Editorial UOC.
  27. 27. threeThe role of IT systems in managing customer experience Hugo Brunetta
  28. 28. 29 THREE / MANAGEMENT SYSTEMS Customer Experience #CEMbook The term CRM program is used indistinctly and erroneously to refer to the strategy and the software that allows us to manage the experience and relationships with the customer. And it has been said so many times that CRM isn’t a software application that we seem to have gone to the other extreme and believe we can just do without the technological tool. Just so it’s clear, whenever we refer to a CRM program in this chapter, we are talking about the information technology, namely the software application. Otherwise we will use the terms CRM strategy or philosophy or customer relationship management. We consider CRM to be a business strategy , therefore, with the ultimate purpose of learning about customers in terms of what they have “told us” to give them what they want, how they want, so that they don’t even consider going to a competitor, or as Tom Siebel once said, “We’d got used to telling the customer how to do business with us and now there’s nothing for it except to do business however the customer wants.” Having made the distinction and going back to the issue of whether or not it is a software application, the answer is a categorical: “of course not, and of course I can’t dispense with one if I want to roll out a successful strategy,which the customer perceives at the end of the day with higher quality in the service and based on a truly memorable experiential sensation.”
  29. 29. 30 THREE / MANAGEMENT SYSTEMS Customer Experience #CEMbook But, more specifically, we ask ourselves what role the CRM system plays in a customer relationship management strategy and the answer has a number of angles, some of which we will try to expand on throughout this chapter. To begin with, to understand that when companies aren’t wholly owned by a parent entity, we can’t believe that information on customers can be shared without using a CRM software application, which processes the information from a single database; regardless of how well we get on with the members of the organization or if we are people who understand the value of sharing information, it’s not really a question of attitude, but a business issue. As customers we quickly realize when an organization is being run as a cluster of airtight compartments, as, amongst other things, they ask us the same questions every time we ring and we speak to a different employee from the one before. Sharing information affords numerous advantages for the customer and the company and just to mention a few of the most significant, let’s take a look at both perspectives: From a customer perspective: • When the customer communicates with the company, it doesn’t matter who the employee happens to be: The conservation continues from where it left off the last time and of course maintains the necessary coherence beyond the origin or cause of the contact. • The customer feels appreciated and perceives that he or she acts according to his or her needs, requirements, tastes and preferences. • Receive personalized messages, not just individualized ones. The belief that starting a communication by mentioning the customer’s
  30. 30. 31 THREE / MANAGEMENT SYSTEMS Customer Experience #CEMbook name is “personalization”is completely wrong. Customers want to be contacted about issues that interest them, not which the company thinks they should be interested in. • Receive better service in terms of what the customer considers “good” and the intelligence applied to customers enables us to understand that is “good” for each individual. • In short, it is a customer who looks for total satisfaction in terms of our service and beyond our basic product. From a company perspective: • Increase revenue coming from existing customers through cross- selling channels: buy A, but not B. • Develop customers: we want them to buy our products only and not use up their budgets on our competitors. • Pinpoint opportunities for underlying business. • Improve customer service, optimizing the available resources. Doing things better doesn’t always mean spending more money or time. • Precise segmentations to invest the necessary and appropriate effort in each customer. • Decrease the customer drop-out rate. • Raise barriers to competition. In short, CRM as total integration between systems and strategies contributes to the company’s overall profitability, as no matter what activity you are engaged in, it is highly likely that you spend too much on getting customers and too little on keeping them. And what’s the best CRM system or software? This is probably the question most often repeated at the end of each seminar. And the answer is as simple as it is complex. There are many very good ones, but in your company it won’t make any difference and the challenge is to find which system suits each company. Let’s take a look at some of the features we should be considering when it comes to choosing the best option for our company:
  31. 31. 32 THREE / MANAGEMENT SYSTEMS Customer Experience #CEMbook User-friendly: The system shouldn’t disrupt our day-to-day work too much. We have seen in some cases that one reason for a failed implementation of CRM technology, and with it of course a failed strategy, is the simple fact that the software just isn’t user-friendly enough. Let’s not forget that in many cases, we are implanting a very strong cultural change and if we don’t do it in a simple way at least from a visual point of view, we are just making things more complicated than they need to be. By user-friendly we also mean that we need simplicity in the procedure, in the loading of data, in the general operation. Remember that at first there is a lot of opposition from people whose working methods will change and if we give them the excuse, even unintentionally, that it is tedious and complicated, we can kiss goodbye to the whole project. Easy to implement: As far as possible, of course. We’re not suggesting that just by running a file our CRM software will be up and running in a few hours,working as if it was just a simple spreadsheet. Here we mainly mean that it shouldn’t be so complicated to implement that it takes years, otherwise our interest wanes before the program is even in operation. A good alternative is to organize it in stages so that users get to learn as the process advances, rather than one day after months we are told, “the CRM is up and running, start using it tomorrow please and forget everything you did before.” Easily assimilated: Unless the company is new, there’ll be a wide variety of systems in existence. The ERP, logistics systems, of human resources management, spreadsheets on each pc in the company and who knows how many other systems we’ll find that are related to the customer in one way or other. The CRM system should interact with the company’s formal systems in place, that is why it should be easily assimilated with them. The decision should also be taken regarding what to do with the information that goes through informal channels, such as those files that everyone in the company creates and in which information is stored that is essential for the organization as a whole.We should probably move this data to the integrated systems, and tell people to stop using files which start out as temporary and end up as final, albeit for a given individual only. Personalizable: The software must fit the business, not the other way around. Every process surrounding the interaction between the business and its customers must of course be scrutinized. But this review need not mean that we are invariably doing everything wrong; it just means we can sometimes improve.
  32. 32. 33 THREE / MANAGEMENT SYSTEMS Customer Experience #CEMbook One of these vital properties must be that the system should be promptly synchronizable. Customer data update constantly, and our knowledge of the customer is accordingly changing all the time. Ideally, updating should be in real time.The technology now available on the market makes this readily doable. Flexible and scalable: However much we might plan - and we should plan - we’ll always have to make changes along the way,because reality is never a perfect fit with how we imagined it would be. We therefore need to be sure that our software is not so rigid that, once we start moving, any deviation from our plan becomes a real problem. In addition, our software must be scalable: this means that a system - whatever it may be - can be made larger without any loss in service quality.The scalability of a system requires that it be carefully thought through from the outset. CRM software: the moving parts It is common to hear the words “we need CRM software,” but we never hear a reference to a specific module. What does this mean? Simple: operational CRM, collaborative CRM and analytical CRM. Until these three modules are operating an integrated way, we cannot say that our strategy has been properly implemented, nor can we realistically hope that our efforts are ready to be monetized. Operational CRM supports the business processes of the sales and marketing departments; collaborative CRM, however, integrates the various channels of communication with customers, outside of sales and service representatives’ personal calls and visits. Communication can be implemented over a website, by e-mail, IVR, or less conventional but increasingly used channels, such as Twitter. Finally - though this module is frequently bypassed by companies - analytical CRM is, simply put, the technology component that enables us to transform data into knowledge. Specifically, it comprises analysis of a customer’s data for multiple purposes, especially predictive analysis. Objectives can range from marketing campaign design and implementation to special niches and campaigns for specific customers, customer behavior analysis in aid of decision-making on goods and services, and business rulemaking to guide actions in the face of specified events and customers.
  33. 33. 34 THREE / MANAGEMENT SYSTEMS Customer Experience #CEMbook The importance of system integration We spend so much time talking about CRM that we end up imagining that ERP (Enterprise Resource Planning - centralized information software that records and integrates most business processes) is out of fashion or has been superseded. This is far from the truth. Though widely different, CRM and ERP are strongly complementary tools. It is vital to understand that both tools must be integrated and work together like the two blades of a pair of scissors. To put it differently, let’s imagine that our goal is to arrive at a business destination called “total performance control,” which involves the company’s total success in terms of shareholder value and total satisfaction for both internal and external customers. To visualize this concept, we could say that our path takes us along a “highway:”the first stretch of the highway is called ERP, the homestretch is called CRM. Obviously, we need to go along the entire path, travel both stretches of the road, in order to reach our goal. Much of the data handled by our CRM technology must be supplied by our ERP system. If not, we shall be doing little more than operating a powerful contacts and activities diary. Picture a sales representative who obtains a full history of communications with a customer via the CRM system. He is fully aware of the latest issues - e.g., a late delivery - and how they were resolved. He can see the customer’s weighting in terms of multiple variables. And the activities management module tells him that today is a good day to visit this customer. As he arrives, he greets the customer by his first name, asks after the customer’s children by name, and mentions various details making for perfect personalized treatment. So far, so good. The customer places an order, but asks for a special cash payment discount. The sales rep is pleased to comply. But since the ERP system is not integrated with the CRM technology, the sales executive is unaware that the customer still owes three bills past due, one of which carried a discount for payment in cash, which the customer obviously failed to honor. You can probably imagine what ought to have happened when the customer placed his order, and what the sales rep ought to have done, and the implications of this in financial respects. Two days later, the sales representative tells the customer that his order was (quite rightly) rejected. The incident creates unnecessary handling costs and harms the relationship with the customer, regardless of who was at fault.
  34. 34. 35 THREE / MANAGEMENT SYSTEMS Customer Experience #CEMbook This is a simple example of how failure to integrate can hurt you,and it happens all the time. Failure to integrate means that instead of having a 360° view of the customer, we only get a patchwork of partial views, and make “partly right” decisions, so to speak. Operating as a cluster of airtight compartments does no good to customer relationships or to the health of business. When the supplier of a given system tells you that ERP need not be integrated with CRM, be wary. And if someone promises to resolve the integration issue with an interface that is yet to be developed, make sure the interface really happens before starting a project that might grind to a halt before reaching its destination. Software is crucial, but companies must continue to enhance the design of integrated strategies before they make the decision to purchase any given IT technology.Tactics must not come before strategy; don’t put the cart before the horse. Source of competitive edge To conclude this chapter, my aim is to convey the insight that investing in CRM - in terms both of strategic planning and implementation via the right software - is the only source of competitive edge that is still left. It is here that you will achieve a better knowledge of your customer and will start to offer him or her better experiences with your business. Remember that competing on price is easy, and not very smart. Nor is it a strategy that is likely to see you through long term. If you lower your prices, so can your competitors - straight away - and in the end it is a zero-sum game. Competing on the basis of the benefits of a given product will not garner a long-term edge, either. Even as you read this, somebody in China or elsewhere is disassembling or reverse engineering the components of anything remotely innovative, so that they can make the same thing: quicker, possibly better, and certainly cheaper. But the one thing nobody can plagiarize is the relationship you have built with your customers and the experience you offer them. Your competitors can’t copy what they can’t see. And what they can’t see is in your database - a smart repository of relationships built painstakingly over time, brick by brick.
  35. 35. fourHow to measure customer experience Carlos Molina
  36. 36. 37 FOUR / MEASUREMENT Customer Experience #CEMbook In most organizations, CRM strategy now focuses on customer experience. Measuring customer experience has thus become one of the biggest challenges that businesses face. Let’s take an example: “Somebody goes into a store. It is clean and tidy.The customer finds what she wants and takes it to the checkout counter. The friendly store clerk takes the customer’s money in payment for the goods. Before the customer leaves, the clerk says ‘Have a nice day!’” If we look at the buying process from the service standpoint, we can assume the customer’s perception was positive. It went along without a hitch. If we called the customer and asked her if she was satisfied with her purchase and with the service dispensed by our employee, it is likely she would say yes; if we asked her to rate the experience, she would give a high score. But is this really what customer experience is about? Was her purchase experience in our store something so special that the customer will remember us by it? Crucially, will this experience influence her future buying behaviors and decisions, thus impacting our business earnings? Probably not. A customer experience measurement model must heed the basic indicators. But if what we want to do is manage and use the data effectively and create memorable experiences,we must deploy more advanced models that go beyond satisfaction and make a real fit with business performance.
  37. 37. 38 FOUR / MEASUREMENT Customer Experience #CEMbook Mapping all points of contact Customer experience is an abstract concept.Measuring it requires breaking it down into concrete,tangible elements.One such element is the Moment of Truth,or MOT. Not all of a customer’s interactions with a business are important to him. So it is not every interaction that gives a chance to really surprise him and create a memorable experience. An experience map - a concept that goes by a variety of names - is an account of a given customer’s experience over the lifecycle of the relationship; this analysis compares the customer’s expectations to his perceived experience. To build an experience map, you must: • Analyze the lifecycle of the relationship and map the main points of contact. • Design a survey capable of obtaining data on customer experience at each point of contact. We need to ask the customer the following: »» Importance: What are his expectations of the company at that specific moment of the relationship? »» Experience: How did the actual interaction with the company turn out? • Generate indicators for each point of contact. It is a good idea to use a numeric scale and focus on the results clustering in the top and bottom boxes.
  38. 38. 39 FOUR / MEASUREMENT Customer Experience #CEMbook • Graphically draw the experience map, comparing results for importance versus satisfaction. Companies must focus their effort and investment on the basis of the lessons drawn from the experience map. • First, it is important that experience basics are fully covered. If there is a point of contact where expectations are low but actual experience falls short nonetheless, these issues need to be resolved first, so we can deliver the basic experience the customer expects to get. • However, more important even than working on points of contact where the gap is greatest is to work on points of contact where the customer’s expectations are highest.These are the Moments of Truth. This is where it is feasible to impact the customer’s perception and create an experience he will remember. This same concept is also discussed under different terms - customer pathway, customer journey and customer heartbeat - but is not always applied in the same way. But, however one might go about this, it is always important that expectations and experience can be compared at each point of contact of the life cycle. Physical and emotional variables Customer experience comprises various physical variables - time, cleanliness, functionality, temperature, environment, etc. - and various emotional variables, shaped by the character traits of the person involved and her way of perceiving and processing the experience. A variable such as waiting time is open to many different interpretations, depending on the type of experience and on the specific person concerned. By adding emotional variables to our experience assessment model we can better understand how customers perceive and respond to interactions with the company; this in turn enables us to design better experiences. Experience is not measurable by focusing on conventional physical variables only. The variables informing an assessment of a customer’s experience with a company should not be viewed in isolation but with reference to a specified goal. We should accordingly use two tools operating in tandem:
  39. 39. 40 FOUR / MEASUREMENT Customer Experience #CEMbook Correlation analysis: Regression models enable us to compare two data series - the experience indicator and the business target - so that we can identify the extent to which they are correlated. Impact matrices: Impact matrices graphically represent indicators by score and correlation index.They enable us to visualize the variables of an experience and clearly distinguish existing strengths from the most urgent opportunities for improvement. Net Promoter Score: the definitive question? One of the most fashionable metrics in the field of customer experience is the “net promoter score,”or NPS.Valuable information is extracted by a single straightforward question: “Would you recommend this company to a friend or relative?” NPS partly reflects a customer’s emotional loyalty. In addition, it is highly suitable for benchmarking because many companies use it as a standard. These features, coupled with its sheer simplicity, make the NPS a favorite with company boards and executive committees. Most companies use a combination of several metrics - seven on average - to measure and manage customer experience; NPS, however, is the metric picked for presentation to management.
  40. 40. 41 FOUR / MEASUREMENT Customer Experience #CEMbook The hidden challenge in the NPS lies in the post-measurement phase, however. NPS is a general indicator of the company’s health, but it tells you nothing about where and how to improve. In addition, some circles are very skeptical of the NPS, and the scientific community says that there is no proven correlation between NPS and business growth. Customer Effort Score (CES) & Customer Advocacy (CA) NPS has inspired conceptually similar approaches. One popular metric is Customer Effort Score, which measures the effort a customer must make to do business with a given company, in a bid to reduce that effort. CESisavaluableindicatorinallmattersrelatingtocustomerserviceinteractions. Some research suggests that it is more closely correlated than conventional satisfaction metrics and the NPS with customer decisions and behavior: repeat purchases, increased spend or referral. CES is based on the following question:“How much effort did your request take?” The customer scores the question on a scale of 1 - negligible effort - to 5 - a big effort. Another metric designed to assure correlation between experience indicators and business performance is Customer Advocacy. CA is also based on a single question: “Do you think your company does what’s best for you, or only what’s best for its income statement?” So there are several approaches that reach beyond the “satisfaction” concept and attempt to build a metric that better explains customers’future behaviors and decisions. Customer experience benchmarks Rather than ad hoc models implemented by individual companies, it is necessary to obtain comparative customer experience data, rankings and research that evaluate all businesses under common criteria.
  41. 41. 42 FOUR / MEASUREMENT Customer Experience #CEMbook There are two leading surveys on customer experience: Forrester Customer Experience Index (CxPi): Conducted annually, the survey evaluates customer experience with over 150 companies in the United States. Forrester defines customer experience into the three levels of the classic needs pyramid: basics, value creation, and, finally, surprising the customer. Forrester publishes the results for leading companies and comparative data for the various industries considered by the survey. IZO Best Customer Experience (BCX): This more recent survey is the only one of its kind that focuses on companies operating in Latin America, offering data and results specific to Latin American customers and brands.The survey considers more than 130 companies in main sectors, operating in Brazil, Chile, Colombia, Spain, Mexico and Venezuela. The BCX index comprises three dimensions, including experience with the brand, experience with the product, and interactions with the company. Relationship economics You can’t measure customer experience without considering the financial angle. Customer experience is a business strategy that ought to be results-oriented. Historically, one of the mistakes made in customer management has been a failure to link metrics to the business.One of the questions we hear most often from company boards is “how much more are we going to earn if we raise our satisfaction score by one point?” We must bear in mind that this is an entirely reasonable question. The objective of an organization is to make money, and customer experience is a strategy the result of which ought to be to maximize the benefit of the relationship for the company. If we have no robust answer to that question, it is unlikely that an organization will make the investment decisions required to create the desired experience. So customer management models and scorecards must be equipped with ways of linking these metrics to business earnings.
  42. 42. 43 FOUR / MEASUREMENT Customer Experience #CEMbook But how? Most companies do in fact have the tools to do this within their grasp: we are simply not using them.CRM systems offer a rich store of information about our customers that will stand us in good stead for achieving these outcomes. The key questions we need to answer are: • Premium price: Are consumers willing to pay more for a better experience? • Share of wallet: Do consumers enjoying a better experience spend more with the company? Are we passing up business opportunities with our existing customers by not aligning ourselves with their needs and exceeding their expectations? • Relationship duration: Do customers enjoying a better experience churn less? How much longer will they continue to be our customers if we deliver a better experience? • Referral: Do customers refer our company to other people? The results of the Best Customer Experience (IZO, Q4-2010) survey for Latin America offer some answers to these questions. If we classify customers into promoters (highly satisfied),indifferent (neutral) and detractors (highly dissatisfied), we clearly see that creating experience powerfully enhances buying intention and loyalty. However, it is important to note that these benefits are achieved only when customer expectations are exceeded. The results show that simply removing the causes of dissatisfaction is not enough to impact consumer behaviors and decisions.
  43. 43. 44 FOUR / MEASUREMENT Customer Experience #CEMbook How can you measure these indicators for your company? You can replicate these survey metrics in your own organization and obtain even more accurate data by using the information available about your customers in your company’s management and information systems. To construct your business case and correlate customer indicators with business performance you need to link customer experience metrics - using some of the indicators discussed above - to real figures on expenditure, profit, customer unsubscribes, etc. drawn from your customer database. To do this, you can follow these steps: • Classify customers into experience-driven categories: detractors, neutrals, promoters. • Extract the business indicators for these customers from the CRM system and calculate them for each category: ARPU,average revenue, average cost, churn, etc. • Analyze how these indicators behave in each category and compare behaviors across categories. Your results will enable you to determine the business impact of turning detractors into promoters, and thus justify the necessary investment.
  44. 44. 45 FOUR / MEASUREMENT Customer Experience #CEMbook Some thoughts and guidelines Measuring customer experience is one of the main challenges faced by organizations today. This challenge is addressed by a range of indicators designed to implement an evolution from the conventional concept of customer satisfaction to a model that predicts impact on customer behaviors and decisions and thus on company earnings. There are various kinds of metric, each with its fans and skeptics. However, three guidelines always apply when measuring and managing customer experience: • Measure experience throughout the entire customer relationship lifecycle. • Use international benchmarks so you can compare yourself to others. • Cross-refer experience metrics with customer business data.
  45. 45. 46 FOUR / MEASUREMENT Customer Experience #CEMbook References Dixon M., Freeman K. and Toman N., 2010. Stop Trying to Delight Your Customers. Harvard Business Review. Arussy, L., 2005. Passionate & Profitable: Why Customer Strategies Fail and 10 Steps to Do Them Right! Hoboken, New Jersey. John Wiley & Sons, Inc. Reichheld, F. 2006. The Ultimate Question: Driving Good Profits and True Growth. Boston, Massachusetts. Harvard Business School Press. Online references Search Crm Customer Think The Marketing Spot Blog Forrester 1 Blog Forrester 2 Izo Systems Strativity Experience Matters Clientesfera Aiarec
  46. 46. fiveThe role of employees in customer experience Beatriz Navarro
  47. 47. 48 FIVE / EMPLOYEES Customer Experience #CEMbook How many companies regularly ask themselves “Are my employees happy to work here?” The answer is, very few. Yet employee satisfaction automatically impacts the way our customers’ experience is managed. Smiling, “good vibes,” “standing in the customer’s shoes,”empathy… All this can make customer experience rate a 10 or a 1, and our employees are 100% involved.And I can assure you that smiles can’t be faked. How can we be sure that employees create an experiential moment every time they speak to a customer, serve her a latte or show her a pair of pants? How can a truly memorable customer experience be delivered? The first line of approach is the company’s mission statement. The mission statement must make itself felt in all actions taken by any department, and must have a presence in every office and at every level.It needs to be alive! But how many companies out there don’t even have a mission statement? And how many of those that do have one haven’t updated it for years, or have never even read it? At Starbucks, our mission statement is: To inspire and nurture the human spirit: one person,one cup and one neighborhood at a time.These are the principles guiding our day to day work. And the mission statement covers several points, which, in order of importance for the company, are: • Our coffee • Our partners: We call ourselves “partners” because what we do is
  48. 48. 49 FIVE / EMPLOYEES Customer Experience #CEMbook not just our job - it is our passion. We accept diversity to create an environment in which each of us can be him or herself. We always treat each other respectfully and considerately. We are all responsible for keeping this ideal alive. We all have the same job title and treat one another equally, without regard to hierarchies. We are all equal, and that makes us respect one another. • Our customers: When we are fully committed to our customers, we connect with them,we laugh together and we cheer up their day even if just for an instant. Our work starts out from the commitment to supply a perfectly made beverage; but it is a lot more than that. In reality, our work is to nurture human relationships. • Our stores • Our community • Our shareholders So,ahead of our shareholders and in the second slot of our mission statement, we have our employees. This is because we are a company that believes that “we are not in the coffee business serving people; we are in the people business serving coffee.” These are the ways by which we enable our partners to create the Starbucks Experience every day in each one of our stores: • Giving them the freedom to manage their own business: Talk to your customer; get to know her name and her drink; anticipate what she wants, make her feel good, look after her, and enjoy working in a team. • Letting employees be themselves, be genuine: We are aware that customer service is conveyed not just by words but also by attitude. How to do it: »» Enjoy your customer and invite him to come back. »» Exceed expectations. Create details - both large and small - so that your customer feels valued. »» Anticipate his needs. Use empathy and remember your own experiences as a customer. • Letting them get involved: Make sure the values are reflected in
  49. 49. 50 FIVE / EMPLOYEES Customer Experience #CEMbook everything the employee does, nurturing the spirit and energy of the store. Be positive; set an example. • Accepting feedback: We want to hear what they think. Their ideas, views and concerns are always well received. • Establishing recognition schemes: Always saying thank you. »» MUG prizes »» Bravo prizes »» “Starbucks Spirit” Store Prize »» Green apron cards: These are cards every employee has. We give them to one another at any time just to express thanks for something you liked about the other person - she helped you out, you liked the way she worked, or you simply want to say “Thank you for being there.” It is vital to give your employees the tools to give and receive thanks for good work. The five steps towards the perfect employee are: • Hiring staff: Look past his CV to see his attitude, potential and willingness to create customer experiences and put himself in the customer’s place.How will he treat customers? Will he sell our goods just because he needs to, or because he really feels the spirit? • Train them every day to deliver experiences: Don’t just teach them set phrases and scripted conversation.Employees need to understand the crucial importance of their role for the company, and must be free to find new ways to raise the value of the experience delivered to the customer. Employees should always imagine themselves in the customer’s place so that they can personalize the offering of goods and generate experiences every day. • Give incentives and rewards: The stimuli towards creating experiences should include incentives and rewards. Incentives should be more than merely financial. The reward should be sensitive to social and cultural motivations and each employee’s lifestyle. • Measuring performance in relation to delivered experience: Employees should always get feedback on their performance in terms of experience management. What are their interactions with
  50. 50. 51 FIVE / EMPLOYEES Customer Experience #CEMbook customers like? How do they help build customer relationships that encourage repeat purchases?This aspect of performance is measurable using tools like online questionnaires and mystery shoppers. One of the main challenges being taken on by companies today is to find ways to make employees’ jobs interesting, motivating and stimulating. If an employee thinks her job is boring, she is less likely to deliver a good buying experience to customers. The key here is that employees are the company’s first customers, its “internal customers.” If employees themselves are not the company’s leading advocates, if they do not feel proud of belonging to the company and would never recommend its goods or services, then the company has a real problem on its hands. That is why we need to find out what our employees want, what they are looking for,and what their tastes,attitudes and interests are.Look at each employee as a whole human being, and realize that he or she is the most important part of the company. We need to involve our employees with our brand. Host workshops where employees can discuss the brand and its features. If they can convey the values of the brand, they will be able to satisfy their individual needs. We also need to let them suggest alternative ways in which they can “live” the brand, both throughout their working day and in their personal lives. Companies are imprinted with either one of the two basic customer service attitudes - a positive attitude or a negative attitude.Where a negative attitude takes hold, the customer does not identify the individual employee as the cause of his bad experience; he blames the entire organization. For example, if he has a bad experience with a shop assistant in a given store, he thinks “the staff is terrible at this store and I won’t be coming back.” This judgment directly and negatively links to the brand and everyone working for it. This is why it is vital that a positive service attitude is adopted by each and every one of a firm’s employees. Other considerations relevant to creating customer experiences • Outward appearance: As we all know, most people attach a great deal of importance to personal appearance. The appearance of a company’s employees - the way they dress, their hairstyle, and so forth - therefore critically impacts customers and
  51. 51. 52 FIVE / EMPLOYEES Customer Experience #CEMbook represent a person’s “first experience” of the company. It is the first step in any interaction and often there is only one chance. • Names:The name of the person helping us in a store is very important. We all like to know who we’re talking to, call them by name and be called by our own name in return. This makes the interaction closer and more human. • Environment: The environment is vital in creating an experience. Environment has been a powerful force at Starbucks, which has turned its coffeehouses into a “third place” between a person’s home and work, an oasis where she can sit down for a quiet moment, drink a coffee, and listen to good music in a perfect atmosphere. Environment forms part of the company’s success in creating customer experiences. • Words: Tone of voice and words can create a sense of welcoming or, rather, cool or hurt the relationship with a customer. Just saying “Hi” with a smile, or even without a smile, critically changes the customer’s experience. Saying“have a nice day”as the customer leaves can cheer up his whole day. Words are far more powerful than we think.Companies are not doing enough to encourage employees to use words to generate experiences in their customers. What skills do we need to train our employees in to create experiences? Skill 1. Diagnosing Real care must be taken with what is widely known as non-verbal behavior, because this is the first impression the customer gets. The employee needs to be able to read between the lines to guess what the customer needs, since every customer is different. Skill 2. Listening Listening is not the same as just hearing. How often have you felt “not listened to,”when you were trying to explain a situation and felt
  52. 52. 53 FIVE / EMPLOYEES Customer Experience #CEMbook that the person on the other side would just nod and come back with a scripted response, ignoring what has actually happened. Listening to tailor the solution to the customer’s need Skill 3. Asking Asking is the most straightforward way to get information from the person in front of you. It is a means to display interest in and em- pathy with the person you are speaking to. But you need to be careful about how you frame your question and the wording you use. Skill 4. Feeling The ability to feel conveys empathy. Feeling means putting oneself in the customer’s place; feeling what the other person feels about a specific situation or issue so that we can provide the best solution. Final thoughts Creating an experience that nurtures customer loyalty is a magic blend of three ingredients: products, stores and, especially, people. At Starbucks, customers come to us for coffee, stay with us for the friendly atmosphere and come back for our human connection. That is the experience that the customer wants: every day, every time.
  53. 53. sixCustomer experience from the retail standpoint Lluís Martínez-Ribes
  54. 54. 55 SIX / RETAIL Customer Experience #CEMbook Excuse me, what was it you were selling, again? The implications of the buying experience in the retail setting When you visit Bergen, a city in southwest Norway perched on the banks of a stunning fjord,you can take the Floibanen funicular for a 6-minute trip from the city to a mountaintop commanding spectacular views, as you can see from this webcam. In 2008, Lillian, a former student of mine at ESADE, spent some time there on a study exchange and spoke to the manager of the funicular company. She asked him who his main competitor was. “IKEA,” he replied. “We both offer the same thing: spending time with your family on a Saturday or a weekday evening.” What a notary would say A wholly reliable witness - a notary, perhaps - would say that the funicular is a type of train designed to climb up and down steep slopes, carrying passengers in coaches.The notary would also say that IKEA is a retail chain that sells furniture at prices below the industry average. So how can they be competitors? While the notary’s observations are accurate, they don’t tell the whole story. He merely reports what one can see on the surface, the tip of the iceberg.
  55. 55. 56 SIX / RETAIL Customer Experience #CEMbook But the hallmark of an effective manager is her ability to perceive reality beyond the obvious. So what is going on? What is the hidden part of the iceberg? Looking further into the matter, we see that these two widely different businesses nonetheless have two things in common: they sell direct to the public - they are both retail businesses - and, what’s more, their target public is pursuing a similar purpose in both cases. It is this common denominator that makes them competitors. In the retail world, it is not just what the business has and does that counts, but also what it is, and what it makes you feel. Funicular = furniture? Selling the right to use public transport - a funicular - is not of course the same thing as selling furniture.One thing constitutes a service,while the other represents a sale of goods. You would then assume that each business uses a different sort of marketing. The so-called “marketing mix” would appear to be widely different for each of the two businesses.So different,in fact,that the Norwegian Funicular Operator Society might host its own training course, titled “Marketing the Funicular Business: Keys to Success.” While the Norwegian Guild of Furniture Merchants could run a course titled “The Future of Marketing for Furniture Stores.” Either of these initiatives would make perfect sense.Too much sense,I would add. If one looks underneath the tip of the iceberg to see the core of what’s going on, you find that both businesses mainly target a family-oriented public. In both cases,your target customer is unlikely to be a lone shopper or passenger.And people typically visit these businesses during their time off. The ostensible purpose of the visit is to view the landscape from the top of the mountain - in the case of the funicular - and to buy furniture - in the case of IKEA. But in both cases the visit itself is a major part of the “product.”The experience of the visit is desirable for its own sake, there is “something in it” for the family. Put differently, during the time that the family is there - on the funicular or in IKEA - they have an interesting and attractive experience.
  56. 56. 57 SIX / RETAIL Customer Experience #CEMbook Both businesses succeed not so much because they sell quality goods or services, but because they make their customers’ whole day meaningful. For example: • We all enjoy ourselves, adults and children together. • We learn stuff. When we leave, we know things we did not when we got there. • And when we get home - Norway is a fairly rainy country - we’ll have something to do with the children: put together a piece of furniture or send a photo album to the grandparents. And what about selling goods and services? The sales are an offshoot of the fact that the customers achieve that particular meaning they are looking for, though sometimes they would be unable to put it into words.The sale is just the consequence. So it does not seem smart to emphasize the money aspect - “take three funicular trips, pay for two.” Rather, the key is to stimulate customers’ imagination. A less money-oriented approach may attract bigger takings. Does the retail business have to provide a buying experience? Not a week goes by without trade magazines or even - increasingly - the general media asserting that stores must “deliver a buying experience”if they want to please their customers. This assertion is technically inaccurate,however.The buying experience is already there! Whether the seller intends it or not,the customer always has an experience of some sort: it might be fun, slow, boring, surprising, confusing, empathetic, crowded, attentive, rude, high-pressure, and so on. So the operative word in that statement ought really to be the adjective that describes the experience. The buying experience perceived by the customer must reflect on the emotional plane the meaning that the store desires to convey in its capacity as a brand. The origin of the term The “buying experience” concept dates back to 1973, when Philip Kotler noted that “the atmosphere [of a store] is a marketing tool”and suggested that spaces and environments be designed with a view to their triggering certain emotional effects in the customer that influence the likelihood of his making a purchase.
  57. 57. 58 SIX / RETAIL Customer Experience #CEMbook Almost a decade later, in 1982, Donovan and Rossiter adapted the earlier work of the social psychologists Mehrabian and Russell, widely known as the Stimulus Organism Response (SOR) paradigm, to the retail setting. Stimuli such as lighting, colors or floor plan, to mention just three examples, elicit certain emotional responses, which in turn guide certain behaviors. Ten years on again, in 1992, Baker et al. undertook a more in-depth analysis of the first part of the SOR model to create a far more comprehensive classification of the specific features that could be managed. Factors were divided into three major groups: environmental, social and design. The environmental group of factors included invisible elements such as temperature, lighting, music and smell. The design factor comprised visible elements, which were divided in turn into functional features such as wide corridors, for example, and aesthetic features, the suitability or otherwise of which depends entirely on the target audience. As to social factors, the key point was that they interact strongly with environmental factors, and any given combination of environmental factors may lead to different outcomes depending on the associated social factors. A great deal more could be said about these models, but I do not intend to set out a theoretical or historical treatise. I simply wish to offer a sketch of where this concept came from. Present models adopt the several variables mentioned so far, but take the analysis much further, looking not only to the specific “moment”of the purchase but linking that moment to the brand and the possibility of creating an experience over time that involves an identification with the store/brand. The upshot of the theory might be stated as the proposition that differentiation must be sought by creating the buying experience that the brand/store requires. Can a buying experience be managed? A buying experience is analogous to “quality of life” while in the process of buying.Like any other process that is open to being managed,it should be measured, or measurement should be at least attempted,although most of the components are intangibles. In the field of marketing,“quality”is defined as the extent to which expectation
  58. 58. 59 SIX / RETAIL Customer Experience #CEMbook is matched by the thing delivered. In some sense, it constitutes the management of expectations. One of the most widely used models in this respect is the “deficiency model” developed on the basis of papers by Parusaraman, Zeithaml and Berry (1985, 1988). For the purposes of this chapter, however, I shall suggest a far simpler but nonetheless highly effective model. Applying the notion of quality to the buying experience, one would say that quality is present if the customer’s perception of her visit to the store (experienced reality) does not fall short of expectations (imagined reality). If the perception does not at least match the customer’s expectations,she will feel disappointed; we should then say the experience was low-quality. These two aspects can be compared in matrix form. The above table shows that the expected key factors are subdivided into two types: • Key success factors, which in the field of marketing are those that create the customer’s preference over a sustained period.These factors tend to be emotional, non-concious and implicit. • Key non-failure factors do not prompt the customer to form a preference for the store but, if absent or perceived as poorly executed, undermine the credibility required for continued presence in the market. For example, if a convenience store keeps going out of stock, or a restaurant serves tainted food,or a bank is regarded as unreliable, customers disappear and the store closes down.But the fact that these
  59. 59. 60 SIX / RETAIL Customer Experience #CEMbook factors are positives does not mean they are capable in themselves of creating a preference for the store. They tend to relate to the proper execution of the so-called “marketing mix.” These two sets of factors must be distinguished with some care, because they can differ widely in each specific industry and for each specific business. A key success factor may over time become a key non-failure factor. The intrinsic quality of a product may create a preference if competition is weak; but when competition strengthens, quality is demoted to a key non-failure factor. This analytical method must be put through its paces in terms of four distinct vectors: • A chronological view of the buying process. When a customer goes shopping, the process takes her through various phases, each with its own tempo and special features. The customer’s expectations are not the same when parking her car on arrival as when she is standing in line to pay at the checkout. Each phase involves a different “mental frame” for the customer, and therefore ought to be analyzed separately. What is more, it must be taken on board that the process starts before the customer even enters the store (e.g., when she plans her shopping trip, searches the Internet for information, etc.) and ends a considerable time after she leaves (e.g.,when she brings the packages home,organizes her refrigerator or wardrobe, etc.). By analyzing the process step by distinct step, we maximize the opportunities to innovate.For instance,KLM enables its customers to buy duty-free goods online before boarding the flight; purchases are delivered just before landing, thus saving the customer from being inconvenienced. • The pre- and post-store (the airplane is a store) steps also form part of the buying experience; these steps are later remembered and positively or negatively influence the customer’s next decision as to where she will shop. • The features of the product and what it may mean in the customer’s life. Expectations are not the same when buying furniture as when buying detergent. • Customer segments the store aims to attract. It is key to understand the expectations and perceptions of each segment (especially priority
  60. 60. 61 SIX / RETAIL Customer Experience #CEMbook segments), because one and the same reality at a store can give rise to widely different expectations and perceptions. Imagine, for instance, a couple buying a cot for their future newborn child.There is clearly a functional angle, but this does not gainsay other emotions those customers may be having at that moment (“we shan’t get nervous if the baby makes an early arrival”). • The tone of the customer’s own moment, situation or context. Our price sensitivity is not the same when we are on vacation as in our regular life. Stores located in tourist areas have understood this point well. The context vector and the segment vector can often fuse into one, because one of the most interesting ways of segmenting potential customers is on the basis of the context variable. At a supermarket, for example, you could segment customers into “I’m in a hurry,” “I’m on a splurge,” “I need to fill my refrigerator today,” etc. A buying experience can thus be analyzed on the basis of three vectors: The score and the concert hall The intended meaning of a given buying experience is analogous to a musical score. It may have wonderful potential, but it sounds different in each different concert hall. The store is the concert hall, and our perception of it can have a considerable effect on the beauty or otherwise of the music. A store can be credited with several roles that impact a customer’s perceived buying experience. • The store is a “buying machine,” a place where customers procure
  61. 61. 62 SIX / RETAIL Customer Experience #CEMbook supplies.This means that a stockout - a shelf devoid of the goods the customer was expecting to buy - has a serious adverse effect on the buying experience. • If the store succeeds in becoming a locus for the imagination i.e.,for anticipating or visualizing a future desirable situation (e.g., “I’ll be a hit at the party, they’ll be stunned when they see me in this dress”), sales are easier to achieve. Imagination is a distinctively human trait; we do not share it with other animals.If the store does not encourage customers to imagine a future moment, the buying experience beco- mes flat and functional. As a result, price sensitivity rises. • The store can also be a place where you learn something new.When he leaves,the customer has learned how cakes are made,the differen- ces between various types of cotton, rising fashion trends, and so for- th.This aspect is increasingly attractive, because it treats customers as rounded human beings. • The store can be a space for social interaction.The local supermarket can be a meeting point where one sees and is seen by neighbors and acquaintances. Encouraging the relational and social aspects softens the commoditized perception and humanizes the store.The visit ex- perience can be enriched in many different ways - making a notice- board available to customers, running an in-store café or providing a venue for talks and presentations. • A store provides a wonderful medium for communicating with visi- tors.In fact,it is an advertorial,several minutes long,where the messa- ge is expressed by means of the five senses simultaneously. Hence the subtle but vast persuasive power that a store can exert.This communi- cative facet has its minimal expression in the form of info about each product, and can be maximized to embrace theatrical performances. • Communication ought also to be considered in the vector running from the customer to the vendor. An essential element of the vi- sit experience is to enable customers to express suggestions, views, complaints and congratulations. Some stores reward their associates for attracting and channeling customers’ comments. Others provide a visitors’ books where customers’ written comments are visible to subsequent customers. This practice creates transparency and genui- neness, two values which are increasingly appreciated.
  62. 62. 63 SIX / RETAIL Customer Experience #CEMbook The score and the conductor To continue the analogy with music, it is not enough to have a skillfully transcribed score of notes on a five-line staff.The music must be brought to life and performed.This step depends on the instruments and the musicians, but especially on the conductor, so that customers undergo a coherent and fascinating experience. I believe that the buying experience will increasingly hinge on subtle, implicit, intuitive and anthropologically feminine features. I believe we shall soon be speaking of the “marketing of the implicit,” and this approach will find its fullest expression in retail. Those managers able to define the meaning with which they wish to imbue certain moments of their customers’ lives will write the musical score of the buying experience. And, moreover, they will probably be laying the foundations of innovation in retail.
  63. 63. 64 SIX / RETAIL Customer Experience #CEMbook References Baker, J. Levy, M. and Grewal, D., 1992. An Experimental Approach to Making Retail Store Environ- ment Decisions, Journal of Retailing. Vol 68, nº 4, p. 445-460. Donovan, R.J; Rossiter, J.R., 1982. Store atmosphere: An environmental psychology approach. Journal of Retailing. Vol 58. nº 1, p. 34-57. Kotler, Philip, 1973. Atmospherics as a Marketing Tool. Journal of Marketing. Vol 49, nº 4, p. 48-64. Parusaraman, A; Zeithaml, V.A; Berry, L.L., 1985. A conceptual Model of Service Quality and its im- plications for future Research. Journal of Marketing. Vol 49. Autumn, p. 41-50. Parusaraman, A; Zeithaml, V.A; Berry, L.L., 1988. A multiple-item scale for measuring consumer per- ceptions of Service Quality. Journal of Retailing. Vol 64. Spring, p. 12-40.
  64. 64. sevenCustomer experience from the contact center standpoint José Ignacio Ruiz
  65. 65. 66 SEVEN / CONTACT CENTER Customer Experience #CEMbook The contact center: more than a cost center Call upon call, e-mails and letters, service level and customer care, missed calls, repeat calls, claims, complaints, processes and systems, applications, dimensioning, coding, prerecorded scripts, scorecards and templates, induction training and skills upgrading, ring times, hold times, after-call times, notifications, audits, agents, supervisors and coordinators.The terminology associated with the day-to-day work of a contact center is virtually endless. But is this all a contact center is about? This is the outlook that leads many companies to regard their contact center as a cost center, rather than a profit center. But, although all these terms partake in the definition of a contact center, in reality it is something more than this. A contact center is a major channel for customer service and customer relationships. It is a key source of information and a powerful lever to create and manage our customers’ experience. From this standpoint, we could even come to view our contact center as a competitive advantage in its own right: an element giving us an edge over our competitors. Yet we must first ask ourselves, is customer experience a suitable strategic option for our business? To answer this question we would do well to give thought to at least the following two issues. We must bear in mind that customer experience is a means, not an end in itself. Customer experience is a strategic positioning that may enable us to stand out from the crowd and, leveraging this edge, to earn higher profits. This point needs