Daily Archives: May 28, 2009

A Framework for Customer Experience Management

Customer experience management (CEM) is not the domain of one functional area. Product developers, marketing, sales, operations and HR all have a role to play. In Part 2 of my introduction to customer experience, I’d like to present a framework which may be of use to those who plan to study, design, implement or manage customer experience (check out Part 1 if you missed it).

7-P Framework for CEM

Focusing on customer experience over brand advertising is a better way to build the brand in most cases. According to the Glen Senk, president of retail chain Anthropologie:

One of our core philosophies is that we spend the money that other companies spend on marketing to create a store experience that exceeds people’s expectations. We don’t spend money on messages — we invest in execution.

If you think of the great experience brands (Amazon, Starbucks etc.), they all “talk” (i.e., advertise) less and focus on the “walk” (i.e., execution) instead.

Anthropologie - Seattle

Anthropologie store in Seattle. Photo by Elena Spicer. Used with permission.

In the case of Anthropologie, each store is somewhat distinct. The architectural and design elements are based on the local heritage, regional climate, type of target consumer and other factors. While no two stores look alike, there is a great deal of consistency in quality and selection of the product offerings. Each store offers a different experience, while preserving the feeling of familiarity. The outcome is a great experience brand.Superior or optimal customer experience does not happen on its own. It starts with strategy. A customer experience strategy requires a firm to articulate the type of experience it will provide and how it will differentiate itself from its rivals. Needless to say the customer experience strategy has to be tied to specific business goals and outcomes. A customer experience strategy, as demonstrated by Anthropologie and other firms, requires a great deal of attention to execution. Here is my 7-P Framework for CEM (see figure below). It has three layers – strategy, infrastructure and delivery.7-P CEM Framework

  1. Positioning. Strategy is a lot more than positioning. But positioning, in my view, is a critical aspect of strategy, because it drives the marketing messages as well as the execution. If you position a restaurant as “inexpensive, clean and fast” versus “elegant, gourmet and upscale”, the execution of such positioning and consequently the resulting customer experience are likely to be vastly different. When I walk into a Tim Horton’s (which has a bit of blue collar image) my expectations regarding product quality, service and ambiance (the elements that make up my customer experience) are very different compared to when I visit a Starbucks store. The key is to consistently execute in a manner consistent with the brand values. How you choose to position affects what you do as a business and in turn affects the customer experience.Customer experience is not absolute, it is relative. It is relative to one’s expectations and past experience. If customers have a clear sense of “what to expect” from a brand, then half the job is done. It is when expectations are unclear or off target that the experience is often judged to be unsatisfactory. Unfortunately, brand positioning statements often tend to be vacuous or pure puffery. A good brand positioning statement should communicate concisely what the brand means and how it is differentiated. To the employees, a brand positioning statement should be a guide post.
  2. People. The quality of the customer experience is directly related to the quality of employees, especially in services. Do employees understand the brand values and do they follow the brand values? According to the recent Gallup Management Journal’s semi-annual Employee Engagement Index, only 29% of employees in the US are “engaged”, with 54% “not engaged” and an astonishing 17% “actively disengaged.” Customer experience cannot be great when employees are tuned off when they arrive at work. Through proper selection, training, empowerment and rewards, it is important to create a workforce that is customer-centric. It begins with employee selection. By selecting employees who fit with the brand values and are passionate about their work, the outcome for customers can be greatly influenced. The Container Store was rated No.4 on Fortune magazine’s list of top 100 companies to work for, and it is not a surprise that this company is also highly rated for its customer experience. They apparently provide each new employee 240 hours of training compared to industry average of 7 hours and reward their employees better than their competitors. Well-trained and well-treated employees do make a difference (see “The Service Profit Chain” by Heskett, Sasser and Schlesinger).
  3. Physical Environment. For service companies the physical environment as well as all the other tangibles (from stationery to napkins) can make an impact on the customer. The physical and tangible part of the business conveys and reinforces the brand image. Starbucks became the poster-child for experiential marketing by ensuring that the physical environment in the store matched its brand goals – i.e., to be the “third place” in people’s lives where they could relax. They have the reputation of being meticulous with their selection of furniture and fixtures. The comfy sofas encourage “lingering”.Anthropologie, known for its lifestyle merchandising, ensures that the architecture as well as the look and feel of each store is unique. Contrast this with the high degree of standardization that most chain retailers employ to lower costs. While stores differ architecturally and in design elements, Anthropologie ensures that there is a consistency in product selection and quality. Anthropologie takes into account the regional climate, local heritage, target consumer profile and architectural context in design each store.A design orientation to service and the customer-brand interaction environment (be it online or offline) can create an ideal mix of form and functionality. Design is emerging as a critical area in customer experience delivery.
  4. Process. A big part of creating superior customer experience is implementing customer-centric processes. Simply put, make it easy for customers to do business with the firm. Amazon.com’s “1-click ordering” is a process that is very much designed to enhance the customer experience. Same is true of the “virtual model” at Land’s End, which makes shopping online more intimate and personal.The reality is that in most organizations, processes are designed to squeeze costs out of the system. Designing customer-centric processes will involve change and, possibly, increased costs in the short-run. It will pay-off in the long-run through greater customer engagement and increased loyalty.Step into the shoes of the customer and go through every touch point and every stage in the purchase cycle. Such customer journey mapping can reveal the touch points that are pleasure points or pain points. Customer-facing processes often involve cross-functional coordination, which requires breaking down the silos. It is important to have a customer process management (CPM) system to ensure that customer-facing processes are designed to optimize the customer experience at critical touch points.
  5. Product. Some will have you believe that customer experience is all about customer service. I beg to disagree. Whether it is a computer or iced tea or a transaction at the bank, the product or service should deliver the functionality or benefits that the user is seeking. Of all the touch points that the customer comes across, one could argue that the product is the most important. It is likely to elicit the strongest cognitive and emotional responses. Companies have to get it right. There are two aspects to products or services that need attention in terms creating optimal experiences.
  6. Product Design and Usability. Design is important not just for form, but also to enhance the functionality of the product. The emergence of specialized design houses such as IDEO has brought design to the forefront. Consumers today are not just looking for products that provide a benefit, but also for products that are self-expressive in terms of style and aesthetics. In the services domain, however, the use of design seems to be a fairly new trend. Everything from the physical environment to the process of obtaining and using the service can be improved by using principles of good design. Good design can evoke positive emotional reaction toward the brand.

    Product Features and Benefits. Does the product contain the right feature-set and does it deliver the benefits the target customer seeks? The tendency these days, especially with technology products, is to bundle too many features, where many of the features are never used by the customer. Even my mortgage at the bank has all kinds of payment and prepayment features, which I likely will never use. But at the time of buying the product or service, it makes the customer feel they are getting more and the additional features act like an insurance for some customers (i.e., just in case I need it).

  7. Personalization. I use the term personalization synonymously with the term customization (some of you may not like or agree with this). If the customer experience can be personalized to some degree, if not completely, it is likely to create greater customer engagement. The process of buying and download songs on iTunes is a great example. You buy only the songs you want and buy it when you want, unlike the CD from which often contains songs that the consumer may not like.Land’s End offers a personalized approach to online shopping through features such as the “My Virtual Model” (which allows you to try clothes on a virtual model with your body shape), the “Specialty Shopper” who can provide personalized recommendations any day of the week and the ability to talk to a “live” person. Buying clothes through a catalogue or an online store is not for everyone. Land’s End has thought through the process and the experience from the customer’s point of view.Take a look at National Semiconductor’s WEBENCH, where it allows engineers to actually design and simulate products (from power systems to audio amplifiers) and then order the parts needed to make the products. They offer a complete solution to the problems that design engineers face, rather than simply focusing on selling parts. It took a lot of effort for National to understand the challenges its customers were facing. National’s conversion rates for those who use the WEBENCH is astounding.Personalization leads to a greater match between what the customer wants and what the firm delivers. It also allows consumers to feel special and that their product or experience is unique. A personalized experience creates a greater intimacy between the brand and the consumer. To be able to effectively execute this, the company needs intimate knowledge of its current and potential customers, which means turning to not just transaction data, but also creating active voice of customer programs.
  8. Performance. A product may have all the necessary features and may do the job it is supposed to, but there may yet be an expectation-performance gap in the consumer’s mind. Performance of a product or service cannot be measured in absolute terms, but it is always relative to the expectations that customers had prior to purchasing it. Creating the right expectations and delivering on the expectations are equally important. In other words, the product or service has to solve the problem the consumer has.Imagine an airline with the friendliest service, easiest check-in process, absolutely comfortable seats with great in-flight entertainment… all at very affordable prices. Before you get too excited, let me add that this fictional airline is not renowned for its safety record. Now, how do you feel about this airline? My point is that a product can have all the bells and whistles, but if it fails to do the required job on a consistent and reliable basis, the resulting customer experience will be negative.“Performance” is my catch-all term for some things that go beyond the core product or service. For instance, when a product or service failure does occur, how well does the firm recover from the failure? Does the firm provide a quick and fair resolution when there is complaint? There is some evidence that excellent service failure recovery can indeed make a favorable impression on the consumer and can turn a potentially disastrous situation into a profitable one.

Final Thoughts

To achieve excellence across these seven areas requires an unwavering commitment to providing outstanding customer experience. If a brand offers the same product or physical environment as another brand, it does not stand out. Therefore, innovation is important in each of these seven areas. Not innovation for the sake of innovation, but innovation that enhances the customer experience and eventually has a positive bottom line impact for the business.

Finally, there are other areas besides these seven that need attention. I see technology as something that enables “process” in my framework. But there are clearly other aspects to technology that I have not discussed, such as customer databases which can enable a greater understanding of the customer. Leadership, resources and even a long-term orientation (as opposed to the “quarterly earnings” mentality which focuses too much attention on costs) can affect the experience delivered.

Having said this, I hope the 7-P framework provides a comprehensive approach to understanding, designing and managing customer experience. Start with the strategy, put the infrastructure in place and focus on delivery/execution.

As always, I would love to hear your thoughts.

(This blog post originally appeared on October 7, 2007).