Customer Experience Management: the Value of Moments

Because they make a connection with customers that transcends the basic functional value they offer. Unfortunately, such stellar experiences are not the norm. In Guru's survey, only 22 percent of customers agreed that companies "currently provide an excellent customer experience" in major industries like banking, air travel and electronics. The silver lining, though, is that companies that excel can build a more sustainable competitive edge based on an emotional bond. But what is the "customer experience" and how can you tap into it?

What is Customer Experience Management and how does it relate to Customer Relationship Management? And why are so few businesses focusing on the customer experience, let alone managing t well? In this paper, we'll discuss the customer experience from the point of view of the customer, based on Guru research conducted in April 2006.

In a second paper, we'll analyze CHEM. from the enterprise perspective, and highlight performance gaps and methodologies to improve customer experiences while driving loyal and profitable relationships.

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Consider what customers had to say in our recent survey.

Some key findings include the following: In earning their loyalty, customers rate their quality of interactions with an organization as equally important to the quality of the odds or services purchased. Off-shoring and IVR initiatives, popular methods to cut the cost of customer interactions, have not improved customer experiences for more than 90 percent of survey respondents. In contrast, investing in employee training and Internet-based sales and support has generally had a more positive effect, improving customer experiences more than a third of the time.

Post-sales service/ support activities are the most likely to generate a "memorable" experience, either positive or negative, because of the strong emotions that often result in problem situations. Memorable experiences build loyalty-?31 percent of customers in the survey recommended the company to a friend or colleague, and 19 percent increased their purchases. "Well-trained and helpful employees" is the top attribute of 2006 Customer Think Corporation Licensed to Right-on Technologies for Distribution What Is Customer Experience Management?

To manage customer experiences, you must first understand what "customer experience" means. It's almost as difficult to pin down as "customer relationship. " "Customer Experience" and "Management" Defined Experts interviewed for this paper offered many different definitions, but virtually all agreed that customer experiences included interactions with an organization's people, processes or systems. Some said experiences also included interactions with a product. And others said that experiences included the feelings or emotional responses generated by the interactions.

Customer perception seems at the heart of what a customer experience is about, so we asked Guru survey respondents for their perspective. When asked to pick from a list of expert definitions, nearly 50 percent chose: "The sum of all my interactions with a brand's products, services and people. But one respondent highlighted the importance of human perception in this write-in definition of customer experience: "The feelings and thoughts resulting from all impressions, tangible and intangible, from anyone or anything representing, directly or indirectly, an organization, brand or product. Well said. Customer experiences include every point in which the customer interacts with your business, product or service. For the Struck customer, for example, it includes the anticipation of going to Struck, walking up to a shop, opening the door, ordering and paying for the coffee, getting he coffee, sitting down in the atmosphere of the shop to enjoy the coffee. Each interaction point is what ASS' Carlson would call a "moment of truth. " That's the point at which your customer is engaging with your brand and at which you can make or break the relationship. Note: This paper was written with the help of a few event lattes and apple fritters served up at the local Struck! ) For the purposes of this white paper, our definition of customer experience is: The customer's perception of interactions with a brand Let's break that down to understand it more clearly: "Perception" is critical, because unless the customer thinks or feels that something happened, it hasn't. And perception can include the emotional aspect of the interaction.

An "interaction" could mean literally anything from viewing a marketing message to the actual use of a product or service to a post-purchase service/support activity to solve a problem. Finally, "brand" means far more than a logo or marketing communication. In the customer's mind, the brand is a symbol for the organization and a promise to be fulfilled. Customer Experience Management, therefore, is simply managing customer experiences. That was easy! But this begs the question: To accomplish what?

A more useful definition of CHEM. is: Managing customer interactions to build brand equity and improve long-term profitability perceive and value experiences. "It is important to note that customers intuitively judge the experiences they receive. That is, they often are not able to consciously point out why an experience resonates with them, but they know when it works or, conversely, when it doesn't," says Calf Dibbled, director of thought leadership and vice president for Beyond Philosophy, the London-based customer experience advisory and consulting firm.

Those "soft" responses are what set Customer Experience Management (CHEM.) apart from most other business strategies. They can't easily be quantified by numbers and technology. It's also what some would say differentiates CHEM. from CRM, Customer Relationship Management. When it comes to defining CHEM., you can view it as an extension of CRM as a strategy, paying particular attention to the customer's emotion and considering the product itself as an experience. How CHEM. Relates to CRM Customer Relationship Management (CRM) is a business strategy to acquire, grow and retain profitable customer relationships.

In previous research on Guru. Com, we found that more than 80 percent of business managers seem to understand that CRM is a customer-centric way of doing business, not Just technology to automate front-office processes. Managing customer experiences is an integral part of what CRM should be-?a win-win value exchange between a company and its customers. Loyal customer relationships are built on what the customer perceives and feels about the product/service purchased and interactions with the organization.

At a fair price, of course. Says CRM industry veteran and CSS Insights' partner Barry Trailer, CRM and CHEM. are really synonymous, if you look at CRM as a business strategy, rather than Just technology. " Yet, the reality is that some people do equate CRM with technology used for tactical automation projects, and many of those consider it technology that hasn't always made a business successful. (Guru's research has found that about two-thirds of IT-focused CRM projects are successful. So in some minds, the term Customer Relationship Management has become tainted and must be avoided, while Customer Experience Management is another name for a customer-centric strategy without any stigma attached. Others see Customer Experience Management as an extension of CRM to provide a true customer focus. "At its highest level, CRM defines what the company wants from the customer relationship and gathers the information and insight that is analyzed against products and service to find optimum opportunities to sell," according to David Range, managing director of Round (U.

K. ) Limited. "CHEM. is the mechanism by which the customer is engaged to optimize the potential customer loyalty and long-term value that is defined by CRM. The customer experience is the emotional part of any and author of Passionate & Profitable (Wiley, 2005), agrees that CHEM. is about managing the value proposition as the customer perceives it," while CRM is concerned with "maximizing the revenue and value to the company. " Of course, loyalty research tells us that there is a linkage between the customer's perceived value and loyalty and the company's revenue and profits.

But in practice, too many companies focus more attention on the ends (revenue and profit) and ignore the means (the customer's value proposition). "Organizations think CRM will create the customer experience for them, but it's Just a tool," author Shawn Smith, director of the London-based gunsmith+co, told us. Customer Process Improvement Many find CHEM. to be an organizational strategy for managing customer interactions. HP, for instance has placed customer experience high on its organizational chart, with a department dedicated to Total Customer Experience.

Its research director, Katherine Armstrong, calls CHEM. a "designed and structured approach to planning and managing the customer experience end to end. " In such cases, the business takes an active role in managing customer interactions, including setting expectations to protect the brand value. If you define CRM, at least in part, as a method of customer process improvement (technology-based or otherwise), then you'll see plenty of overlap between CRM and CHEM. in our recent survey.

Copyright 2006 Customer Think Corporation Licensed to Right-on Technologies for Distribution 3 The quality of the actual product or service being purchased is still critical, to be sure. However, as you can see in the following chart, the quality of sales, purchasing and service/support activities received a significant percentage (ranging from 58 percent to 66 percent) of high importance ratings. Marketing communications were not rated highly, but keep in mind that marketing messages are one way in which companies make promises that they have to keep.