This is a brief discussion which will address the role of memory in customer experience, and particularly Kahneman’s “Peak-End Rule” as it pertains to emotions and their influence in judgment and decision-making. We’ll also take a look at how personalization impacts consumer emotions, memory, and marketplace behavior.
Because the emotion involved in customer experience which, in turn, creates memory is so fundamental to consumer behavior, we very much subscribe to the “Peak-End Rule”, a model co-created by Dr. Daniel Kahneman. For those not familiar with it, the peak-end rule is a concept of human emotions in which people judge experiences largely based on how they were at their emotional peak (i.e. their most intense point) and at their end, or final point. Peak-end would certainly have applied to Mary Todd Lincoln’s memory of a performance of the Tom Taylor comic play, “Our American Cousin”, at Ford’s Theatre in Washington, on April 4th, 1865.
Peak-end memory occurs regardless of whether the experience is pleasant or unpleasant, uplifting or deflating, happy or unhappy, annoying or soothing. According to Kahnaman’s concept, other emotional “information”, aside from that of the peak and end of the experience, is not lost; but it is not used. In the case of customer experience, it doesn’t get actively processed by the consumer. This includes net positiveness or negativeness, and how long the experience lasted. Again, Mrs. Lincoln would long remember her horrific experience at Ford’s Theatre that fateful Friday evening. Extrapolated a century and a century-and-a-half later, many of us can recall, as explicit peak-end memories, how we felt and how our thinking was affected when John Kennedy was assassinated or when 9/11 occurred.
Kahnemann’s work is seminal recognition of the impact of emotion and memory on customer experience. Note: Kahneman received the Nobel Prize in 2002 for his related work in behavioral economics. One of the other principal trends driving emotion and memory is personalization. Because today’s content seeking consumers have higher expectations of vendor performance – despite being inundated with marketing messages, they are more selective and quicker to reject – only highly targeted, smart, relevant value which addresses their needs will work. This is where personalization comes into play.
Almost every time personalization comes up as a topic, the questions of scale and costs are raised. In actuality, these issues have been well-addressed for close to 20 years, through the “mass customization” work of Gilmore and Pine (with the concept actually first identified by Stan Davis in his 1987 book, Future Perfect). They recognized that providing outstanding customer experience is both an imperative and a potential curse, and they stated that, as far back as the mid-1990’s, “readily available information technology and flexible work processes permit (companies) to customize goods or services for individual customers in high volumes and at a relatively low cost.” The key approaches for this were identified as:
– Collaborative – Dialogues with individual customers involving their specific needs, so that organizations can identify features of highest value, which then get translated into customized products and services
– Adapative – Beginning with standardized features, product or service can be designed so that customers can modify or alter it to fit their individual needs.
– Cosmetic – Products or services are standardized, but customers elect to receive them in different ways (such as personalized t-shirts or coffee mugs, or different packaging)
– Transparent – Customer needs are sufficiently standardized that products or services require only modest modification to appear personalized
Taken together, these dimensions identified where customers differ in their needs and also what Gilmore and Pine termed ‘common uniqueness’. They can impact a broad array of experience elements – marketing materials and communication methods, design, internal processes, how benefits are stated, where and how a product or service is delivered, and even things like packaging, pricing, ordering, and brand names. Companies that have become adept at mass customization owe this capability, at least in part, to deep understanding of the dimensions in which customers are similar, or different, in their needs.
For the sake of brevity, we can fast-forward mass customization and personalization to now. What leading-edge companies have come to realize is that every customer is his or her own market, and that it was necessary to move beyond the segmentation, or aggregation, tendencies of mass customization. As fully discussed in my 2005 book on profile data leverage, One Customer, Divisible (http://www.thewisemarketer.com/books/information.asp?id=59), every customer is in multiple markets, with need for communication, product, or service dependent upon the specific circumstances at any given point in time. It’s important to understand and apply customer preferences, circumstance by circumstance, activity by activity. That way, customers get what they truly want and need.
Personalization has a great deal to do with meeting and exceeding customers’ higher expectations. If brands or companies can leverage available customer profile data (micro-demographic/firmographic or behavioral) to create relevant, meaningful, memorable relationship experiences, this is where personalization begins. Peersonalization is easier for online B2B and B2C communication and experiences, but it is also fairly achievable and affordable to target audiences offline. At the end of the day, personalization is largely about making certain content and messages are seen by the right people, at the right time, and through the right media. It is also about assuring that experiences are personalized as well.
Just as in the tragic event at Ford’s Theatre one hundred and fifty years ago, there are emotions and ‘peak-end’ memories associated with every interaction and experience, whether personal or commercial. From a marketing perspective, the organization that can recognize and leverage these on a consistent basis will be the most successful with customers.