If you have an interest in the Customer Experience or CEM, I strongly urge you read this excerpt from Frank Capek’s latest blog, and then read the full blog.
We’ve reached the point where most business leaders understand that their organization’s ability to effectively acquire, retain, and improve the profitability of customers is a direct result of the nature and quality of the experience those customers have.
There is, however, a fundamental problem with both the literature and management practice surrounding customer experience. The issue is that most business leaders and management gurus focus on how companies “deliver” experiences rather than how people actually HAVE experiences. Without understanding how customers HAVE experiences, companies often end up wasting lots of time and money on improvements that don’t generate a real return because they don’t fit with and influence how customers think, feel, and act.
If you do a scan on customer experience literature, you’ll find that virtually all of the definitions start something like this: “A customer experience results from a set of interactions between an organization and a customer… ” In addition, most of the discussion refers to an experience as if it is a characteristic of a company. For example, people discuss the “Disney experience” or the “Starbucks experience” or the “BestBuy experience.” All of this represents a highly company-centric perspective.
What Frank is saying is that businesses and consultants need to get inside customers’ heads and understand how they think, figure out what causes emotional engagement and determine what internal changes in the customer lead to commitment, loyalty and advocacy.
One of the reasons it is easier to focus on the real-world actions companies take is that it is so tangible and seemingly under the companies control. However, consider the notion of customer engagement. Many use the term loosely to mean the customer interacted with their website or a clerk in their store. Yet, the customer might be going through the motions with psychological indifference, that is, little or no emotional or psychological involvement. Indifference indicates that the interaction has little or no meaning beyond completing a transaction. When this happens, there is little emotional residue that would compel the customer to chose this experience over similar indifferent experiences offered by a competitor. No emotional or psychological differentiation occurs and that means no basis for loyalty.
Want to learn more about the psycho-economics of customers? I invite you to have a look at my 2007 book Addicted Customers: How to Get Them Hooked on Your Company. The book lays out the psychological principles that underlie compelling customer experiences as well as business practices that put them into action
I agree with you John. There’s a lot to be said for truly understanding customer experience from the customer’s perspective. There are ways – try mystery shopping, or ethnographies of consumption, or participant observation.
Engagement has become one of those very sexy terms that are very a la mode. I have recently been supervising a PhD student who has been trying to unpack what is meant by ‘engagement’. Frankly, there is a mass of conflicting claims and counterclaims from different authorities that are, for the most part, unvalidated and untested. On the other hand, there is a massive literature on the psychological constructs of commitment and involvement that stretches back more than 50 years.
Is there some good reason for rejecting these constructs and inventing another?
Francis Buttle, PhD
The Customer Champion
Francis,
I have been tracking the key words “customer engagement” by using Google Alerts for about 18 months and astounded by what many believe customer engagement involves.
Psychological research does provide the construct but most business people don’t know what they are. All too often people in business grasp at a hot new term, take a guess at what it could mean, and become an expert. The result, the term loses meaning. On the other hand, those of use who are familiar with the psychological research have an obligation to spell out a framework that can be applied. Of course, that still leaves the chanllege of getting people to read it.
I would be very interested in what your Ph.D. student comes up with.
John
John I. Todor, Ph.D.
Author of Addicted Customers: How to Get Them Hooked on Your Company.
John: Capek’s blog helps break down the control myopia many of us suffer from. The situation has changed: social media has provided consumers with a voice that oftentimes makes Marketing’s efforts to control conversations and experiences futile. The evidence, as you point out, is to place a company name in front of the word experience in an effort to show that there’s a CXO manipulating all the strings, and that the consumer’s role is to respond like a marionette puppet. Of course, that’s not the case. There are plenty of events and phenomena that comprise Customer Experience that are completely outside an organization’s direct control.
Rob Walker, author of Buying In, provides a vignette in which consumers led a grass-roots effort to revive a flagging brand, Pabst Blue Ribbon Beer. Interestingly, the resurgent demand was completely independent of any demand generation effort from Pabst. The customer created–and defined–the Pabst experience. The increased demand could never occur had Pabst attempted to control the Pabst Blue Ribbon Experience.
In that scenario, and in others Walker describes, a more contemporary strategy would be to manage the company’s demand fulfillment rather than controlling the marketing discussion. Control would effectively stifle the appeal of Pabst’s understated brand image.
Andy,
You are hitting on a key point. When demand increases because of customer momemtum, it happens because they see value in the consumption or experience associated with the product. The they share the experience and become advocates. Demand generation by most companies means a sales push around some gimmick.
Customer demand comes from customer desire. Sure customers might have an increased demand for flashlights when the power goes off, but that is not desire that will bring them back to a brand or a store.
John
John I. Todor, Ph.D.
Author of Addicted Customers: How to Get Them Hooked on Your Company.
Good points, John. Definitions of customer experience, CEM, customer engagement and customer advocacy vary widely across companies and authors. Some define these concepts as marketing campaigns or shopping vibes; others define them as big-customer-issues escalation or new product development data-gathering activities. Ultimately, we care about these concepts because customers vote with their wallet: ‘your paycheck was made possible by satsfied customers!’ To maintain this funding we’ve got to minimize customer churn. And the main cause of churn is hassles, because actions speak louder than words! The author you reference gives some great suggestions for full-experience-voice-of-the-customer and signature service elements. In short, definitions and practice of customer experience, CEM, customer advocacy, and customer engagement should be much more holistic and systematic to achieve high dividends for companies and customers alike.
Lynn Hunsaker, http://www.ClearAction.biz, mentors executives for superior customer profitability by preventing customer hassles and churn.
John…. it’ll be a long wait. He’s expecting to graduate in 2011, about when the current recession will come to a halt. He’ll be publishing along the way and I’ll make sure that CustomerThink readers and columnists get to hear what he has discovered.
Francis Buttle, PhD
The Customer Champion
Lynn,
I understand where you are coming from. The use of terms like churn and customer retention are company-centric. They are about the company’s agenda and very often lead to one-sided agendas. Certainly it is easier to talk with clients about these issues than in terms of what attracts and converts customers from buyers to committed patrons. However, look at it from the customer’s perspective — who wants to be retained, who cares about churn — they want freedom to choose.
The challenge is to develop the psycho-economic models that business executives understand, accept and are willing to fund. In my experience, few argue that sustainable profits and growth are great goals. Unfortunately, focusing on retention rather than attracting customers and increasing desire and demand is like pushing a rock up hill.
John
John I. Todor, Ph.D.
Author of Addicted Customers: How to Get Them Hooked on Your Company.
Francis,
There is no doubt in my mind that economic conditions have changed and could be called a recession. When the word change is used, I am reminded of a Chinese proverb that states that change simultaneously brings on crisis and opportunity. I think a commitment to customer engagement, that is, reaching customers emotionally and psychologically, can lead to opportunity. On the other hand, trying to ride out a recession so one can go back to old business practices is misses the point that the context of business will never be like it was.
John
John I. Todor, Ph.D.
Author of Addicted Customers: How to Get Them Hooked on Your Company.
Hi All
A great post by Frank Capek. I will add his blog to my aggregator.
He makes the important point that much of what passes for customer experience today is company, rather than customer-oriented. Is about the touchpoints that the company delivers to customers, rather than consumption points that customers have with the company’s products, staff and partners. And as Francis points out, is based upon a thin-veneer of what one might call pseudo-management science, rather than the rather more robust version that we need to build testable theories of experiential action.
But there is some light at the end of the tunnel. For instance, Vargo & Lusch’s work on service-dominant logic is forcing the better read customer experience practioners to rethink their ideas of when, where and how value is delivered to customers. And how to evaluate the value delivered in practical terms that management can work with.
In these times of de facto recession, we need to start to understand the customer experience through better theories, better implementations of the theory and better reporting of results so that we can find out what really works, why it works and how we can apply it in different situations.
Why should we invest scarce recessionary resources in the customer experience, if we can’t even be bothered to find out if and how it works? After all, the customer experience isn’t the only management game in town.
Graham Hill
Independent CRM Consultant
Interim CRM Manager
Thanks for your reply, John. I agree that valid psycho-economic models are needed. As a consumer I’m frankly fed up with companies that focus on attracting customers at the expense of making it easy and attractive for me to remain their customer. The special deals offered to first-time-customers-only can become insulting to customers who’ve supported that brand for years, long enough to have noticed the brand’s warts, typically.
What’s needed to improve customers’ lot overall, is more attention to preventing hassles. People switch brands mostly because of disappointment or annoyance, and much less often due to a more attractive offer.
CEM is about managing expectations, and is not about removing choice. CEM is systematic, holistic, and preventive of negatives. It encourages outside-in thinking and processes. CEM demands a much broader view of what the customer experience is, as well as the necessity of viewing the customer’s experience strictly from the customer’s viewpoint. CEM values existing customers as much as new customers.
Many customer programs today are in fact self-serving — aimed at getting ideas for new product development, getting new customers, getting help for the sales force convince prospects, getting excitement about the brand, and getting revenue. With all this ‘getting’ by companies, how about scrutinizing these customer programs for how much ‘giving’ they provide to customers? Are the benefits to customers long-term, from the customer’s perspective? Are the benefits to customers reflective of the value they bring to the company, from the customer’s perspective? Do the benefits only apply if the customer shells out money to buy the next model, or can customers reap improved experiences with the model they’ve already invested in?
As we know, companies may agree with all of the above and want to do it – but unless they can see WIIFM (what’s in it for me) for their company they won’t modify their thinking and actions to do it. That’s why it’s necessary to link CEM with advantages that are easy for companies to relate to – such as churn reduction.
While a focus on attracting and converting patrons is obviously tied to revenue, it doesn’t guarantee higher profit or sustained market share. One of the great things CEM does in preventing customer hassles is it also results in lower waste inside a company, and hence lower costs and higher profitability – and greater ability to pass along savings to both new and existing customers.
Reaching customers emotionally and psychologically, as you point out, is essential. A broader and deeper application of this, as mentioned in my comment above, would greatly serve companies and customers alike!
Lynn Hunsaker is a Customer Experience Optimization consultant.
Graham,
I do believe there are good theoretical approachs with practical implications and that the better read customer experience practitioners might be tapping into them. The challenge it the ‘not better read’ group. As Lynn pointed out, the conversation with business leaders is still often about lead generation, new customers acquisition and customer retention. Then there are the people who profess to be promoters and practitioners of the importance of the customer experience who still are company-centric but don’t think they are.
I worry about these last two groups since they serious dilute the whole area of the customer experience. Frank’s blog jogged this conversation but I think we need a new manifesto that forces people to consider the underpinning and potential of the customer experience.
Maybe this discussion is a start.
John
John I. Todor, Ph.D.
Author of Addicted Customers: How to Get Them Hooked on Your Company.
Lynn,
You bring up a very good point. As customers we are feed-up with one-sided agenda that a lightly veiled as being customer-centric.
Here’s the paradox. I do a workshop called Hooked: The Psychology of the Customer Experience and in it I introduce psycho-economic principles, including the positive and negative emotions. After I introduce the principles I give examples of companies that are applying it and discuss the economics consequences. Then, I ask the workshop participants to think about situations where they experienced the negative emotional consequence — believe me, people get heated up. Next, I ask them to think about the when and where a company facilitated the positive emotional experience. Once, again people relate and are eager to share their experience and insights.
Here’s the paradox, when I ask them to apply the principle to their industry, the room gets silent and people look down at their notepads. Slowly, I will begin to get responses that are almost always about a competitor. They know about the emotional consequences from their own experience as customers but become defensive and biased when they start thinking about their own business. Or, they engage in rationalization.
I let them off the hook, a little and rather than confronting them, I ask them to make a note to discuss the implications within their company. First, identify what could be changed, they what possibilities exist for positive improvement.
John
John I. Todor, Ph.D.
Author of Addicted Customers: How to Get Them Hooked on Your Company.
In order to truly understand the meaning of experience, it is important to go back to the word origin. It is not necessary to reinvent the wheel.
Dictionary.com has this. 1377, from O.Fr. experience, from L. experientia “knowledge gained by repeated trials,” from experientem (nom. experiens), prp. of experiri “to try, test,” from ex- “out of” + peritus “experienced, tested.” The v. (1533) first meant “to test, try;” sense of “feel, undergo” first recorded 1588.
In 1377, or more than 630 years ago, experience was knowledge, but not feeling? About 470 years ago, it’s to try and test. It’s an action. Through action people experience. About 420 years ago, it’s to feel. Just feel it.
Sir Herschel was quoted as saying that “experience may be acquired in two ways; either, first by noticing facts without any attempt to influence the frequency of their occurrence or to vary the circumstances under which they occur; this is observation; or, secondly, by putting in action causes or agents over which we have control, and purposely varying their combinations, and noticing what effects take place; this is experiment.”
Observation is pre-consumption, and experiment post-consumption. But, does it matter? As Frank Capek put it, “the customers’ experience does not happen at your touchpoints!”
Daryl Choy
Make Little Things Count
wisdomboom.blogspot.com