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The Paradoxes of Customer Experience (CX) 

Mohamed Latib, Ph.D. | Oct 28, 2014 330 views 1 Comment

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The chorus of voices about customer experience (CX) is loud and clear. The assumption, validated in many instances, is that if a company stages positive experiences the business will thrive. This is, many claim, the new normal.



Well, is it?

If you are already wondering about the question it would be worth exploring areas for further probing as CX solutions are considered. This posting is not crafted to prove, but to propose, as such, it seeks to generate discussion rather than persuade. If it does that among executives and CX practitioners, then it has achieved its goal.

Experience…
Human experience is a complex human phenomenon. It is defined as an event, a thing, a happening, an instance, observing, encountering or undergoing something. So, the pervasive logic is to design or stage effective and positive experiences for customers. The method to do this varies widely from industry to industry and company to company. Underlying all these variations are some common threads- these include identifying critical customer touch points through journey mapping; incorporating design thinking into the process, crafting effective questions for feedback, planting listening posts in various social media channels, and a myriad of other strategies to capture customer experiences, and then to influence these through close loop change management strategies. All of this seems perfectly reasonable, and perhaps even overwhelmingly legitimate.

Paradoxes…
But there appear to be paradoxes in this entire landscape of customer experience. A paradox is something (such as a situation) that is made up of two opposite things and that seems impossible but is actually true or possible. Remember, my goal is to stimulate some conversation. My assertion is that unless one is sensitive to the realities of paradoxes in CX, one could miss some fruitful insights in the entire design, development and implementation of robust CX systems in organizations.

Do Customers Satisfice and Sacrifice?
Let’s begin with a basic description of human decision making. It is often assumed that people make rational choices. These are based on ordered preferences created after a diligent search for information. Customers, as many argue, will shop the internet, visit brick and mortar sites (showrooming), engage their friends and relatives through social media, and then make decisions to purchase. Once purchased, companies chase these customers to find out if they are satisfied with the experience of the journey and transaction. Most companies that do this report results and make changes to maintain and/or enhance those experiences, and where there might be problems, solve those.

But are customers really satisfied, or have they simply done that which many behavioral scientists (e.g. Schwartz et. Al. 2002; Simon 1955), have argued: accepted what they purchased because they do not possess perfect information for ideal-or perfect- choices? In other words, they make “satisficing” decisions in their purchase journey, rather than maximizing one. This means that they will search for information up to the point where they feel their search is not delivering added value. Perhaps they are experiencing diminishing returns. So, do customers just “settle” for what is available to them, rather than continue their search for the perfect product or service (Gilmore and Pine, 2007). Are companies settling to offer products and services to meet this kind of customer threshold?

In fact, Gilmore and Pine (2007) assert that customers really are making a sacrifice- the difference between what they really want and what they actually receive. Imagine that! Do you ever think of your customers as just settling for something offered? Do you ever consider that your customers in fact are compromising or sacrificing? If they do actually sacrifice, should we be measuring how much they sacrifice rather than how satisfied they are? And then focus on how the magnitude of sacrifice can be reduced. One wonders what the impact of sacrifice would be on loyalty?
Do customer touch points offer the full picture?

A typical business to consumer enterprise will identify touch points such as those reported in Table 1 below (and this is only an example to support the point being made). We (PeriscopeIQ) have been harnessing customer feedback for one such enterprise for the past three years (with over 1 million data points for each year), and indeed noted that their touch points were very well received. When examined for their relative contribution to likelihood to recommend (LTR) the brand, and their overall satisfaction (SAT) with that brand, all customer touch points made a positive contribution of varying magnitude.

But when asked about their perceived value of the price paid for their purchases, customers reported a much greater affinity for price paid. When we included the perceived value of price paid for products in our analysis of the relative contribution of all touch points, it surfaced as the most important variable contributing to the likelihood to recommend and overall satisfaction. Price, in other words, had a much higher instrumental value than other touch points in their journey. Yes, customers will ostensibly pay more for better experiences, as many have argued, but it appears that it is still very important to customers, and at least from the reported data, indicates that price is more important than other satisfaction or recommendation touch points.

Table 1: Relative Contribution of Customer Journey Touch Point Metrics on LTR and SAT

Touchpoint

2012

2013

2014

LTR**

SAT**

LTR

SAT

LTR

SAT

Price Paid

14.2***

12.5

19.4

15.6

13.7

12.2

Friendliness of employees

10.7

10.3

12

10.5

10.7

10.4

Pleasant display

10

9.2

10.4

9.2

10.4

9.2

Checkout speed

9.5

9.8

9.2

9.5

9. 0

9.8

Facility layout

9

7.5

8.6

6.1

8.9

7.6

Availability of merchandize

8.9

11.8

8.4

9.1

14.1

11.1

Employee helpfulness

8.9

9.4

9.7

11

9.9

10.3

Cleanliness of Facility

8.5

8.1

7.9

7.3

8.4

8.3

Neatness of goods

7.8

7.7

6.5

6.7

7.6

7.7

Space comfort

6.6

6.7

4.8

5.2

6.5

6.9

Employee availability

6

7.1

3.2

4.7

5.8

6.6

N= Over 1 million/year *Likelihood to recommend ** Satisfaction

*** All metrics normalized to 100 point scale

So What?
There are numerous implications when we understand the decision-making process and the attributions customer make to purchasing influencers. There is not a single company that can be everything to everyone, but they can all ask the following to filter the best mix of approaches to stage experiences and capture revenue growth, market share and increased profitability.
1. Have all the relevant customer journey touch points in the CX system been identified?
2. Is the promise of the brand being delivered, or are customers settling for what is offered?
3. Are customers making sacrifices? How much? Are we losing loyalty because of it?
4. Are customers being lost because price is more important than a positive set of experiences?
5. Are new customers acquired only through staged experiences?
6. What role does price have in customer acquisition and retention?
7. Are customer journey touch points, their measurement and price value relationship tied to overall company strategies?
8. Is the promise of the customer journey sufficient to win loyalty?

1. James H. GilmoreB. and Joseph Pine II , “Authenticity”, Harvard Business School Press, 2007.
2. B. Schartz, A. Ward. J. Monterosso, S. Lyubomirsky, K. White and D. Lehman, “Maximizing Versus Satisficing: Happiness Is a Matter of Choice”, Journal of Personality and Social Psychology, 2002, Vol. 83, No. 5, 1178–1197
3. Simon, H. A. (1955). A behavioral model of rational choice. Quarterly Journal of Economics, 59, 99–118.

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One Response to The Paradoxes of Customer Experience (CX)

  1. Michael Lowenstein November 3, 2014 at 8:04 am (1309 comments) #

    Lots of interesting paradoxes in your insightful paradox blog. Perhaps the most controversial is price. In understanding the contribution, or influence, of price on customer behavior at each life stage – acquisition, retention, defection, recovery – it is often a red herring for other experience and relationship factors which are not as obvious. When price is viewed on a correlation analysis, simple regression basis, it can often come up as the leading driver of behavior. However, in our research, which utilizes techniques like discriminant function analysis to identify, on a priority basis, what is really driving advocacy and bonding behavior, it is frequently other elements of value delivery that have more weight. Importantly, companies that focus principally on price will have strategic challenges sustaining desired customer behavior. We can look at retailers like Ames, Value City, Bradlees, Caldor and others to see the truth in this: http://customerthink.com/one-trick-ponies-and-customer-loyalty-behavior/

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