I, for one, am happy not to get an experience. I do not seek a fantastic experience, but when I get it, I feel great. But what I hate are bad experiences and cannot seem to avoid them. They keep coming.
My parallel example is I do not want to have great health; I just want to be healthy. I do not want to be ill or sick. That really makes me feel bad, and makes me remember how good my health was.
All the bad experiences I get, and all of you get too, remind me that they are not necessary. That companies do not care enough and are choosing to seek great experiences for customers and not avoiding bad experiences: call waiting, call cuts, no return calls, problems not being addressed, wrong items being sent, service not being attended to… or my getting an air conditioner manufactured in November 2019 last month (April 2021). The company would not take it back. These problems are highlighted in my book, Customer Value Starvation can Kill, co-written with Walter Vieira, Phil Kotler’s long time friend.
How many people do you know who ask or seek an experience? Do you seek an experience? Most people want to have a normal experience. It is the bad experiences that cause people to turn away from products and services.
Why then has experience become a buzz word? It has replaced Customer Satisfaction, which was proven not to correlate to customer loyalty.
Customer loyalty can be a result of customer satisfaction, but only along with a lot of other factors.23-Aug-2017 in nicereply.com
As an example, if you are a United frequent flyer, you may have a very poor experience and are highly dissatisfied on your flight from New York to Chicago. The flight is late, the plane looks tired, the steward spills coffee on you. You return on American and everything is perfect. A great experience, and you are highly satisfied.
Will you stop traveling United and switch to American? Chances are you will not. At most you might write to United and say I am a frequent flyer; I do not expect this kind of an experience.
The real source of loyalty is competitive value created by a company over competition. Just measuring your own performance against yourself (did I get a higher score versus last year) does not give you the correct picture. The world is competitive. The customer has a choice. You must improve against competition. You must, therefore, also measure what competitors’ customers say about them.
You can see in my example of United and American Airlines, we have competitive data. This brings us to the next point. Loyalty is not created by measuring transactions or the experience. It is measured from embedded experiences or the memory of the experience. So, loyalty measurements using value have:
- Competitive data
- Measured not from the user but the decision maker who may not have the experience I described in my example above.
- As an example, a parent buys juice for your kid. The kid gets the experience and is the consumer. But the parent is the decision maker.
- A company makes a deal with a hotel group for their employees to stay in a particular hotel. The decision maker is the CXO or the Head of Administration. He himself may stay in a different (and better hotel) and so may not have the direct experience of the hotel he selected.
- Do not focus on transactions but on embedded feelings. Thus, the memory of the experience is more important for gaining loyalty. The difference between customer satisfaction surveys and customer loyalty surveys is that customer satisfaction surveys are focused on measuring customers’ current attitudes, whereas customer loyalty surveys focus on predicting customer behaviour and attitudes.
I do not know how you measure experience. Through satisfaction type studies? The actual satisfaction study based on the experience can be used for improvements. Through NPS (that gives you no data other than if you will buy again. In fact Gartner is advising to phase out NPS). I always thought satisfaction was based on the experience in buying, in use etc. Others state: Customer Effort Score, which measures how easy the customers found the interaction with your service. However, the list doesn’t end here. There are many other metrics. The Customer Health Score scores customers based on the likelihood they’ll generate an outcome; the Customer Churn Rate measures the rate at which customers stop doing business with you; also, the Customer Renewal Rate (how many customers cancelled a service vs. how many did not) can give you a sense of the quality of your customer experience. (Partly taken from Alon Ghelber, Are we measuring CX the right way?)
Mckinsey in June 2021 stated: 15 percent of leaders said they were fully satisfied with how their company was measuring CX —and only 6 percent expressed confidence that their measurement system enables both strategic and tactical decision making. Leaders pointed to low response rates, data lags, ambiguity about performance drivers, and the lack of a clear link to financial value as critical shortcomings.
We use the words a satisfied customer, or a loyal customer, not an experienced customer. Our goal is value creation which leads to loyalty.
I write this, not because I am against CX. I am for it. But I see the danger that CX will not live up to its promise, and go the way of CRM (Customer Relationship Management) or CSat (Customer Satisfaction). Customer satisfaction measurements on transactions are still relevant to make improvements and should be done more often than value studies.
Companies wishing to go into a CX program must ask: How much is it worth to me and how much is it worth to the customer, and how much should I spend. Should I go towards zero complaints first or seek the holy grail of delight instead? They must ask how important is CX in the buying decision and loyalty of a customer. Is it one of many items that makes a person buy? Value, for example compares competitive benefits (which include experience) and competitive costs as a customer would do when buying. Should I buy this shirt or that one. Is it the colour, how it looks on me, when would I wear it, is it easy to wash and iron, and how much does it cost vs. the other choices I have? I might buy the most expensive one (assuming I can afford it) or the cheapest one. But I buy the one that gives me the most value.
I thought it is relevant to also understand the definitions of customer experience
- Customer experience is the impression your customers have of your brand as a whole throughout all aspects of the buyer’s journey. It results in their view of your brand and impacts factors related to your bottom-line including revenue. (see https://blog.hubspot.com/service/what-is-customer-experience)
- Customer experience (CX) is everything related to a business that affects a customer’s perception and feelings about it. Customer experience (CX) focuses on the relationship between a business and its customers. It includes every interaction, no matter how brief and even if it doesn’t result in a purchase. https://www.zendesk.com/blog/why-companies-should-invest-in-the-customer-experience/
- Smartercx presented by Oracle gives 15 definitions, mostly on transactions (see https://smartercx.com/15-definitions-of-customer-experience/
- Blake Morgan in Forbes: Everything a company does contributes to how customers perceive it, and therefore to the overall customer experience, including the messaging you use, the products you sell, the sales process, and what happens after the sale, plus other internal factors like the interworking of the company, its leadership, and the engineering of the product or service.
- CXPA interviewed an international panel of CX practitioners, consultants, and academics to provide this independent, platform-agnostic introduction to CX.
- Customer Experience (CX) is the perception that customers have of an organization- one that is formed based on interactions across all touchpoints, people, and technology over time.
- CX Management the set of practices that an organization employs to meet (or exceed) customers’ expectations. True CX management incorporates four key interrelated elements:
- A Culture of Customer-Centricity
Every aspect of the corporate culture – from the top-down is focused on the customer.
- The Realization of the Rewards
Every customer experience gain contributes to positive business performance outcomes. Holistic Alignment of Systems and Structures
Every department and employee is united in the quest for customer experience excellence.
- Evolution Of Business Practices Through a Focus on Customer Needs and Engagement
Every thought and action is meaningful, making customers’ lives better and showing you care.
- A Culture of Customer-Centricity
- With so many options available, choosing the right resources to advance the success of your organization CX initiative is a significant decision as you are certain to invest time, money, energy, and attention – all extremely valuable resources. We have addressed common questions in this article to help you make better-informed decisions when selecting resources to strengthen your CX practice.
By and large it is about interactions and customer culture.
Let us end with Forrester’s findings quoted by Business to Community:
They summarize the four key findings that prove the value of an effortless experience approach:
Finding no. 1: The delight strategy doesn’t improve revenue and there is no need for it—loyalty doesn’t increase when customers are delighted. And in fact, the book argues that it costs more to delight.
Finding no. 2: Customer satisfaction doesn’t predict loyalty as well as brands believe. The book states that 20% of customers who reported being satisfied also reported they intended to leave the company.
Finding no. 3: Customer service interactions drive more disloyalty than loyalty, in general. Which emphasizes the need for an effortless customer service interaction.
Finding no. 4: The key to mitigating disloyalty is to reduce customer effort. In fact, 96% of high-effort experiences result in disloyalty, compared to 9% of low-effort experiences resulting in disloyalty. So, my bottom line is use CX carefully. Make it a useful tool, and do not over-use or over-extend it. Give an experience and a journey where it is needed, and minimise both because customers do not have the time and the patience (see Dave Brock’s article) to look for an experience unless they are on a holiday, and the experience is very important. Otherwise, if I buy a phone, I want it to work, I want to use it without hassles and extra work. This no-experience is the best for me. When the phone does not work, the bad experiences take over, which we want to avoid at all costs.