Category Archives: Customer Experience

Customer experience innovation, design and management.

Online Reviews and Ratings – A Cautionary Note

Sites like Epinions offer consumer reviews and ratings on thousands of products.  Yelp allows consumers to rate local businesses – restaurants, hair salons, car repair shops and the like.  Amazon is credited with allowing consumer reviews and ratings, which in the early days of e-commerce was an important means of building trust.

Unfortunately, you can’t always believe what you read.  There is a big incentive for unscrupulous companies to promote their products or demote their competitors’ products by posting fake reviews and ratings.  Several instances of fake reviews have been uncovered.  Researchers at the University of Illinois have developed an algorithm which can detect fake reviews.  Reviews that containing overwhelming praise and absolutely no negatives should be viewed with skepticism.

Opinion mining and sentiment analysis on social media is a big focus these days.  But the value of such analytics hinges on the authenticity of opinions posted.  Angie’s List, which is an online consumer review site guards against fake reviews by checking each posting.  Their business model in interesting and quite different from others such as Yelp.  Angie’s List charges consumers a membership fee.  This ensures that they have the full name, address and credit card information of their members.  Only members are allowed to post reviews.

A 2007 study by comScore revealed that “consumers were willing to pay at least 20 percent more for services receiving an “Excellent,” or 5-star, rating than for the same service receiving a “Good,” or 4-star, rating.”  At least three quarters of respondents in that study said they were influenced by online ratings.  Clearly there is an incentive for submitting fake reviews.

Some consumers are more susceptible to social influence.  According to one study, low involvement consumers seem to sway in the direction of the reviews more than those who have a higher involvement in the product category.  Perceived trust in the reviewers does impact their effectiveness.

Some tips for consumers:

  • If reviews and ratings are completely positive with no negatives, then be cautious.
  • If same reviewers seem to post in different sites or review multiple products within a site, they either have too much time on their hands or could be paid to do this.
  • Those with extremely positive or negative views are more likely to be motivated to post them, compared to those with less extreme views or experiences.
  • For higher involvement products, see if reviews by consumers are roughly the same as reviews in reputed sources such as Consumer Reports. Use multiple information sources and your own judgment.

Sometime what you read may not be what you get.  As with everything, buyer beware.

Social Couponing Effect on Brands

Social coupon offers are all over the Internet.  It seems like you can’t visit a site these days without seeing ads by Groupon, LivingSocial or yet another site offering discounted offers on local services.  Some may remember the early aggregate buying pioneers like Mercata (backed by Paul Allen, formerly of Microsoft), which started in 2000 and collapsed a year later.  Fast forward to 2011.  Thanks to social media sites like Facebook and Twitter, aggregate buying has had a new avatar.

Using social media to spread the word, It’s a lot easier now to build the critical mass needed for the tipping point.  Groupon reported revenues of $645 million for Q1 this year (which could potentially make them a $2 billion plus company this year, although they are losing money heavily).  This rapid growth of social couponing leads to an interesting question.   For brands that use social couponing, what are the short-term and long-term effects?

Short-term benefits for the business:

  • Topline Growth.  There will be a spike in sales.  If the deal is capped at a certain number and all of the coupons are redeemed with no extra purchases occurring, fairly accurate sales projection is possible.
  • Smoothing Demand and Supply.  In the case of businesses with inventory to liquidate or perishable inventory (such as restaurants, where a vacant table is lost revenue), couponing has the potential to ensure optimal capacity usage, although the sales generated via coupons often happens at a price below cost or at the marginal cost (where price of a product equal the additional cost of producing an extra unit).
  • Inducing Trial.  For relatively new businesses, social couponing can be used to lower the risk of a product trial.  Groupon is known to prefer established/reputated brands, but there are plenty of others who are only too eager to sign up any business that wants to offer coupons.
  • Weathering the Storm.  When the economy is sluggish, this may seem like a good way to keep the business going.  It may keep employees in services businesses happy (because of tips they get) and create a sense of security (it appears like the company is weathering the storm) even when the company is losing money on every sale.

Such short-term benefits seem enticing, but one has to consider the long-term impact on bottom line and on the brand.

Long-term pains for business:

  • Lower Margins. Consumers get very low prices on a whole range of services and some products.  While most are local businesses, from time-to-time national brands participate.  As consumers get used to the low prices, will they ever be willing to pay full price?  Consumers’ reservation price (or the highest price willing to pay) is likely to diminish over time.  If fact, Groupon’s ad campaign asks, “Why are you still paying full price?” Increased use of social coupons will likely lead to downward pressure on prices.  In a study done at Rice University, 32% of companies using Groupon reported that the deal was unprofitable and 40% companies said they would not use such deals again.  Erosion of margins will make it difficult to innovate and create superior customer experiences.
  • Your Target Market.  You will likely draw clients that were not part of your original target market.  Those who were not willing to pay the price for that spa or restaurant or resort experience, now have access.  Your control over customer selection is greatly diminished.  You would hope that they will turn into profitable, good customers.
  • Brand Loyalty.  Will proliferation of social couponing diminish brand loyalty?  There are no definitive answers yet.  If customers who buy at reduced prices don’t buy other items at full prices or come back to buy the item at full price (more than once) and/or encourage others to buy at full price, the net effect might be diminished brand loyalty.  A few businesses I have talked to report that their best and most loyal customers, who previously paid full price, are showing up with coupons.  Such customers in the past would have paid a full price, but not any more.
  • Focus on Price and Not on Brand.  Widespread use of coupons will shift the focus to price and not on brand attributes that provide differentiation or a unique experience.  Brand marketers want the consumer to focus on brand benefits and appreciate the points of difference.  But if price is going to drive consumer decisions, the brand becomes less relevant.  If the brand is diminished, the business loses a strategic asset and a competitive weapon.
Groupon
Groupon

When and How to Use Social Coupons?

“Stickiness” or Conversion Potential. The hope is that those who buy at heavily discounted prices will later repeat purchase at a full price (hopefully more than once).  For instance, a fitness club membership may have good potential being renewed at full price.  The local YMCA fitness center offered a discounted 3-month membership.  If these new patrons get hooked and see the benefits of going to the gym, there is a good chance of a high renewal rate at full price.  On the other hand, a luxury spa or a beach resort or even an upscale restaurant experience do not have the same conversion potential.  These are not very essential or regular experiences.  An upscale restaurant I know sold nearly 1000 coupons and is now learning hard lesson.  The conversion potential of the category is important.

Set Limits and Be Strategic. It may make sense during a slow period or specifically for slow-moving items or entry level services etc.  Limit the number of coupons and set expiry date (if law permits). Frequent use of coupons will erode profitability and long-term brand value.   Use online coupons strategically.  Think about whether offering deep discounts is consistent with the brand positioning.

Measure. Measure and monitor the impact.  Look at new customer growth, mix of couponing using customers (new vs. existing customers), conversion of new customers to full price paying customers, margins, and impact on brand equity.

Focus on  Customer Experience. Providing a great customer experience is not optional because you offer a low price.  It is all the more important now to focus on delivering quality and a good customer experience, because that will increase the chance of the customer coming back and paying a full price.

Story of a Lost Customer – Lessons for Brand Engagement

Last year I switched to a new land-line telephone service provider.  For years I was overpaying with my previous telco.  Over an 18 year period, I reckon I’ve spent at least $36,000 with this company.   Finally, one day I called customer service and asked them why they were overcharging me when lower rates are available.  The terse response was that the rates are publicly posted and that it was the customer’s responsibility to switch plans if the one they had did not serve them well.  To adjust injury to insult, the tone of the call center agent was plain rude.

There is no doubt consumers have to be vigilant and ensure that their interest is protected at all times.  In this case the business did not do anything illegal.  But they sure didn’t look out for the customer’s best interest either.  Isn’t there a moral responsibility? What if companies operated with a different mindset?  What if they also looked out for the customers’ best interest, at least once in a while?

The company could have handled such a profitable customer in a couple of different ways.  They could have automatically switched me to lower rate and then informed me that this is their way of appreciating my business relationship with them.  Alternatively, they could have called me or written to me and proposed that I switch to a lower rate to save money.  I would have been delighted at such a call/letter.  Such communication would have presented them a great opportunity to sell me another service.  Delighted by their service, I probably would have fallen for their sales pitch.  Instead, they chose to do nothing.

If they had taken the aforementioned steps, they may have lost a little bit on my monthly bill, but I sure would have stayed with them.  Their proactive approach to saving me money, would have been worthy of blog posts and tweets.  I would have spoken about it to not only friends and family, but to my students and business associates.  I might have considered using this as a positive example in my professional writing and speeches.  Such endorsement and word-of-mouth has real value.

First they lost residential account.  They lost the opportunity to sell me a bundle of other telecommunication and entertainment services.  Then, when I needed a business line, I chose a competitor.  I should have been a brand ambassador.  Instead, I am a brand detractor.  I felt that I was taken advantage of.  Their single focus was on the high margins I afforded them.  My long-term value (from my own spending with them and the value of WoM I can provide them) was unimportant to them.

A couple of weeks after I left them, I received a standard card from the company, signed by a VP, expressing regret that I had left them and wanting my business back.  It sounded very insincere.

What is my advise to companies, based on my personal story?

  1. Treat customers fairly.  That’s the sure way to build brand reputation.
  2. Ensure every employee is trained to treat customers with respect and courtesy.  Every touchpoint and interaction with the company should create a positive impression, even if the customer’s demands are not always met.
  3. Don’t focus just on short-term profits always.  Consider the long-term value (direct and indirect) of retaining happy customers.  In an earlier post titled Select, Not Fire Customers, I talked about Sprint firing some of its “unprofitable” customers.  But too often, it is profitable customers who leave because they don’t like the way they are treated.
  4. Proactively manage customers, especially the profitable ones.  Some degree of churn is inevitable.  But there is little to be gained by losing profitable customer due to neglect.
  5. Don’t use brand engagement and customer experience as buzzwords.  If you really want to create strong brand engagement focus on delivering superior customer experience.  Often, a fundamental shift in management’s attitude is needed.  In many cases, changes to compensation plans are needed to ensure customer satisfaction and experience get the requisite attention.
  6. Last, but not least, look at the damage caused when you ignore the above five recommendations.  The negative sentiment that is expressed by unhappy/former customers can’t really help the brand.  Positive sentiment in today’s social media world cannot be manufactured.  Positive sentiment occurs when companies show customers that they really care.

Filling a Vacuum

The words “customer experience” don’t often pop-up in the same sentence as the words “vacuum cleaner.” It’s not a sexy category and it is a category where customer experience is often not satisfactory. I’ve had my share of unsatisfactory experiences with different brands over the years.

Dyson, which retails in Canada starting at about $500, claims that it never clogs. In an interview with Fortune, James Dyson, the founder, talked about how he created more than 5000 prototypes before the product went to market. That’s pretty impressive. I don’t have firsthand experience with this brand. I’ve seen a few reviews online… it’s a mixed bag really. The price and weight of the upright models seem to be the major concerns. You’ll see both positive ratings at Epinions.com and some complaints here.

The customer experience in this category is going to depend on the performance (does it clean well without clogging and easily losing power), price, durability and ease of handling (weight, attachments and cleaning). Dyson may be among the best in the category. But it seems like when it comes to clean floors, there’s still a vacuum in the market. I am not sure there’s a brand with all the ideal attributes which fills this vacuum.

This brings me to a larger issue regarding customer experience. In situations where the company controls the environment in which the product or service is used or when consumer usage situation is similar, it is easier to deliver a consistent customer experience. When Dyson says “it never clogs”, there will always be customer who’s had the contrary experience simply because the situation in which the brand is used varies from user to user (Image someone with four dogs and six cats… the vacuum cleaner will get quite a workout:-).

When the consumer does not use the product as intended, the result may be a less than optimal experience. But as you can see in the consumer ratings online, the frustration (no matter the cause of it) can turn into negative word-of-mouth. Consumer product development has to take into account the varying conditions in which the product may be used. Very few products these days are so versatile and durable.

When the situation in which the consumption occurs cannot be controlled, as in the case of most consumer products, the firm has less control over the final user experience with the product. Services have their own challenges in delivering a consistent experience, but at least they tend to have greater control over the environment in which the service is consumed.

Product quality and ease of use are important when it comes to experience. Educating the consumer about appropriate usage is also important at times. Substandard, unfriendly and incomplete user/owner manuals don’t enhance the customer experience. I recently had some problems with my treadmill. The owner’s manual has scant information on troubleshooting. It took some online research and a call to the company and finally the help of a service technician to solve the problem.

It makes sense for companies to invest some resources (online and print materials) so that customers are (a) informed about appropriate product use and (b) able to help themselves when faced with minor problems.

Any thoughts on this?

(This post originally appeared on May 25, 2007)

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).

What is Customer Experience?

Every time one reads about service excellence and superior customer experience the oft-cited examples include Starbucks, Google, Virgin Airlines, Lexus and Ritz-Carlton. A recent search on Google for “customer experience” returned over 1.4 million results and a search for “customer experience management” returned over 890,000 results! Clearly there is a great deal of interest (and chatter) on this topic. From business writers to leading consultants and CEOs, all have anointed customer experience as the new competitive battle ground. As differentiation in product and service features diminish, the argument is that superior customer experience can separate winners from losers. But what the heck is customer experience? Many pundits have written on this subject. Here is my spin presented in a three-part series.

An experience is something that one undergoes or lives through and obtains direct firsthand knowledge. It involves not only accumulation of knowledge, but also feelings during and after the experience. To use academic language, an experience results in both cognitive and emotional outcomes. Think of the birth of a child or buying your first car or the loss of a loved one. These are experiences that leave a permanent impression.

Clearly, not every customer experience will result in memorable cognitive or emotional reaction. I often buy coffee at a nearby Tim Horton’s. I can’t remember anything about my last trip there a couple of days ago. It was a thoroughly routine experience that made no lasting impression, positive or negative, on me.

On the other hand, a recent flight on Air Canada left a positive impression… for a change. As we checked in, we were told that our connecting flight from Toronto was full. My disappointment lasted only a fleeting second as the agent told me that we were being put on direct flight to our final destination and that we have been upgraded. That was a pleasant surprise.

I’ve come to expect very little good news when I travel. From lost baggage to missed connections to unfriendly (service in the) skies, air travel providers have lowered the bar on service quality. Actually, a J.D. Power and Associates study reported that in 2005 the average satisfaction across all airlines in the US was 664 on a 1000-point scale, which translates to 66% or a “C” grade. Given the low expectations, even moderately good experiences tend to stand out these days.

To me an experience has to be strong enough to register on the customer’s radar – either as a positive or a negative experience. If the experience is right on target with your expectations, it is not going to evoke strong cognitive or emotional responses. When given a choice, consumers will turn away from experiences that produces negative cognitive or emotional responses.

A customer experience with a firm does not start with or end with the purchase. Customers come in contact with touch points such as sales reps or the Web site, often sources if pre-purchase information, before they make the purchase. And in many cases, even months or years after a purchase customers seek support or go back to upgrade. So customer experience is something that happens over the purchase cycle – from pre-purchase to post-purchase (see Figure).

CEM Touch Points

Moments of Truth and Touch Points

If not all experiences evoke memorable thoughts or feelings, then it makes sense to focus on experiences that do leave a mark on the consumer. It is only these memorable experiences that are likely to affect purchase intent and the consumer’s future engagement with the brand.

Jan Carlzon’s, the former CEO of SAS Airlines, described a ‘Moment of Truth’ as one where the consumer’s perceptions of the firm are influenced, positively or negatively. Let me try to define a touch point:

A touch point is a point where the customer directly or indirectly comes in contact with the organization’s people, processes or customer interfaces, which influences, positively or negatively, how the customer thinks and feels about the organization. The touch point may be directly under the control of the firm or it could be an indirect touch point controlled by partners.

It is readily apparent that there are numerous touch points when one considers a typical service setting such as travel, hotel, banking and telecom or even with products such as cars and computers. Not all touch points are critical. Some of them are really “moments of truth” and others are hardly noticed except when there is a failure.

The touch points that evoke these strong responses are the ones that are important to consumers. It makes sense to focus on these touch points (even attempt to “wow” the customer), while ensuring that all other touch points offer satisfactory experiences, thereby avoiding the possibility of small irritants building up over time.

The J.D. Power survey of airline satisfaction highlights the fact that on average it takes 7.2 minutes to receive their boarding pass via an electronic kiosk, compared to 14.2 minutes at the ticket counter and 9.4 minutes at curbside check-in. Clearly, the check-in is an important touch point, but if the extra 7 minutes of waiting for a human agent at the ticket counter does not matter to most consumers, does it make sense to invest more in reducing the wait time?

The point is businesses need to know what experiences adversely affect consumers and then create solutions that will take away the pain. Often firms stress things that are unimportant to consumers.

What Products Mean to Consumers

Customer experience is really the result of the customer viewing the product or service through his or her personal lens. There is a lot of symbolism infused into brands through advertising and portrayal on TV and movies. Consumers buy into this symbolism and mythology when they buy certain products. That is part of the experience they are seeking.

Products and increasingly services have come to define who we are. We surround ourselves with brands that represent our self-image. What we consumes defines our place in the society. Work by marketing academics such as Grant McCracken, Russ Belk and Elizabeth Hirschman, among others, has opened our eyes to the symbolism, mythology and cultural context embedded in the products we consume.

So, when we think of customer experience one has to keep in mind that consumers seek products that satisfy many symbolic needs. Consumers interpret their experience through this cultural and symbolic lens. Consuming Coke is a mundane activity in North America, but in the developing world it could be a way of expressing that one is modern and not traditional. Two consumers could interpret a similar experience very differently.

In closing, a deeper understanding of the anthropological and sociological foundations of consumption is necessary to fully appreciate what customer experience means. Experiences are nothing but our perception. Perception is coloured by one’s background and one’s culture (see Figure below)

Factors in Interpretation of Experiences

The study and management of customer experience cannot be reduced to gathering customer feedback at every touch point. Customer experience management has to do with understanding what customer value and why they value it and then delivering this value on a consistent basis. Consumers seek not just functional product benefits, but also emotional and symbolic ones. Uncovering the consumer’s psyche is key to designing great experiences.

Customer Experience vs. Customer Satisfaction

Before we go too far into this discussion of what constitutes customer experience and why we need to manage it, it is worth considering the difference between customer experience management and customer satisfaction measurement. Isn’t it enough to measure satisfaction? To me, the answer is no. Customer satisfaction measurement has traditionally focused on product performance or functional attributes. It is a measurement that occurs in the post-purchase stage. Whereas, customer experience is really an organizational philosophy, just as six sigma is. To deliver a consistent and superior experience across all touch points, requires a concerted organization-wide effort and the breaking of silos. Customer satisfaction is a useful metric, but it remains a metric that tells us what happened. If an organization embraces the customer experience concept, it then has to align various parts, train and reward employees to deliver optimal experiences at every touch point.

Take customer experience with air travel. Virgin Airlines promises a “stress-free, fun and entertaining flight experience.” That requires everyone from ticketing agents to baggage handlers, inflight crew and caterers working together to achieve a common goal. Customer experience management has the ability to transform the way an organization functions, making it completely customer-centric.

In Part 2 of this series, I will explore the fundamentals of creating and managing customer experiences.

(This post was previously posted on October 1, 2007).