customer experience

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2

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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

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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.”

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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.”

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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

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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.”

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one / intro

Customer experience: a framework

for the marketing of the future

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“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

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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

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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

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#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

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“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

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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!

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two

Customer experience from the perspective

of the brand and communication

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20 TWO / BRANDS AND COMMUNICATION Customer Experience

#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

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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.

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#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

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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

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#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

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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

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#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.

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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.

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three

The role of IT systems in managing

customer experience

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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.”

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THREE / MANAGEMENT SYSTEMS Customer Experience

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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

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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:

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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.

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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.

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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.

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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.

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four

How to measure customer experience

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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.

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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.

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• 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:

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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.

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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.

CES is a valuable indicator in all matters relating to customer service interactions. 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

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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.

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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.

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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.

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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.

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#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

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five

The role of employees

in customer experience

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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

customer experience

contents

foreword

intro

brand and communication

management systems

measurement

employee

retail

contact center

on line

multichannel marketing

b2b

contents

innovation

key ideas

acknowledgements

authors

contents

one / intro

Customer experience: a framework

for the marketing of the future

two

Customer experience from the perspective

of the brand and communication

three

The role of IT systems in managing

customer experience

four

How to measure customer experience

five

The role of employees

in customer experience