How ‘Customer Experience Management’ drives customer lifetime values?


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The consequence of managing customer experience has been a pivotal question for both academicians and practitioners since 2003. Recently, customer lifetime value (CLV) has received increasing attention in practice as it is gradually set as the main goal of entire marketing programs. In view of CLV, customer equity was defined as the subtotal of ‘lifetime values of all customers’. In fact, the concept of customer equity initially arose to project future income. However, it later has turned into an approach for targeting marketing strategies outcomes in leading firms. There are three sources for boosting customer equity, namely, customer acquisition, customer retention, and add-on selling.

Firstly, CEM suggests moving from brand-centered marketing to customer-centered marketing. Thus, it is line with customer equity, which considers the customer rather than brand as the main asset. Secondly, CEM is the notable initiative for the customer equity challenges. It can rise above four out of seven challenges that noted by Bell et al. (2002), namely, ‘maximize CLV’, ‘align organization with customer management activities’, ‘respect the sensitivity of customer information’, and ‘evolve CRM as a service improvement tool’. Thirdly, CEM components more or less affect the customer equity dimensions. In the light of Schmitt’s outlook, branded experience usually drives customer acquisition; engaging customer interface affects customer retention and experience innovation triggers add-on selling. In details, acquisition new customers are germane to excellent brand image and brand attraction, which can be set by experiential values. Besides, brand experience can positively alter customer mindset (e.g. awareness, associations, attitude, attachment, and activity) and results brand performance. Hence, firms can attract new customers by offering branded experiences that touch both customers’ mind and heart (e.g. by emotional, or social values). On the other hand, retention is another major outcome of CEM, since brand experience shapes both past-directed satisfaction judgments and future-directed loyalty. Therefore, customers avoid alternative brand, purchase the brand repeatedly, and recommend it strongly. Furthermore, because of high acquisition cost, providing positive experience in form of event marketing can be also efficient and practical way for retaining customers. Fourthly, experiential values induce customer to repeat the purchase and recommend the brand. For example, emotional experience (e.g. human touch) is the best way to create emotional bond (brand attachment), which evidently leads to repurchase intention and recommendation. Emotional bond between the customer and brand in form of hedonic consumption is a source of retention as well.

Finally, engaging interface can be another role player in amplifying the customer lifetime values.CEM beyond the emotional bond generates an opportunity to interface with customers and represent the brand values in the appropriate format. This privilege vividly increases the cross-selling prospect. In particular, offering convenient and pleasant interface encourages customers to repeat their purchase in many service contexts. Furthermore, appropriate interface keep firms update on customer satisfaction and expectation and consequently firms can retain customer by dynamic change in right time. To cut long story short, customer retention and acquisition are the notable result of engaging customer experience and CEM can be considered as a significant requirement to augment customer lifetime values.


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