Customer experience

Customer experience (CX) is the product of an interaction between an organization and a customer over the duration of their relationship. This interaction includes a customer's attraction, awareness, discovery, cultivation, advocacy and purchase and use of a service.[1] It is measured by the individual's experience during all points of contact against the individual's expectations. Gartner has recognized the importance of managing the customer's experience.[2]

Customer experience implies the customer’s involvement at different levels such as rational, emotional, sensorial, physical, and spiritual.[3] Customers respond diversely to direct and indirect contact with a company.[4] Direct contact usually occurs when the purchase or use is initiated by the customer. Indirect contact often involves advertising, news reports, unplanned encounters with sales representatives, word-of-mouth recommendations or criticisms.[5]

Customer experience can be defined as the internal and personal responses of the customers that might be line with the company either directly or indirectly. Creating direct relationships in the place where customers buy, use and receive services by a business intended for customers such as instore or face to face contact with the customer which could be seen through interacting with the customer through the retail staff.[6] We then have indirect relationships which can take the form of unexpected interactions through a company's product representative, certain services or brands and positive recommendations or it could even take the form of “criticism, advertising, news, reports” [6] and many more along that line.[6]

Customer experience is created by the contribution of not only the customers values but also the company providing the experience.[7]

All of the events experienced by customers before and after the purchase can known as a customer experience. When a customer is undertaking the experience it is seen as personal and unique, as well as it provides stimulation to all sensory, emotional, rational and physical aspects of which can help to create a memorable experience for the consumer of which they will never forget. The concept of customer experience can be investigated in various types of organizations and industries throughout the world, but many studies on customer experience in the retail industry have been developed. Both the company and customers play a big role in creating a customer experience in the retail industry.[6]

Description

Forbes says that customer experience is the "cumulative impact of multiple touchpoints" over the course of a customer's interaction with an organization. Some companies are known to segment the customer experience into interactions through the web and social media, while others define human interaction such as over-the-phone customer service or face-to-face retail service as the customer experience.[8]

According to Fast Company, the six disciplines for great customer experience are strategy, customer understanding, design, measurement, governance and culture.[9] A company's ability to deliver an experience that sets it apart in the eyes of its customers will increase the amount of consumer spending with the company and inspire loyalty to its brand. According to Jessica Sebor, "loyalty is now driven primarily by a company's interaction with its customers and how well it delivers on their wants and needs."[10]

Wharton's Professor of Marketing Barbara E. Kahn has established an evolutional approach to customer experience as the third of four stages of any company in terms of its customer centricity maturity. These progressive phases are:

  1. Product orientation: Companies just manufacture goods and offer them the best way possible.
  2. Market orientation: Some consideration on customer needs and segmentation arises, developing different marketing-mix bundles for each one.
  3. Customer experience: Adding to the other two factors some recognition of the importance of providing an emotionally positive experience to customers.
  4. Authenticity: This is the top maturity stage of companies. Products and service emerge from real soul of brand and connect naturally and on long term sustainable basis with clients and other stakeholders.

In this present day it requires more than just low prices and innovative products to survive the climate and competitiveness of the retail business. Customer experience involves every point of contact you have with a customer and the interactions with the products or service of the business. Customer experience has emerged as a vital strategy for the all retail business’s that are facing competition.[6] According to Holbrook & Hirschman studies[11](1982) they say that customer experience can be defined as a whole event of which a customer comes into contact with when interacting with a certain business. This experience often affects the emotions of the customer. The whole experience occurs when the interaction takes place through the stimulation of goods and services consumed.[6]

The type experience seen through a marketing perspective is put forward by Pine & Gilmore (1999)[12] which they state that an experience can be unique which may mean different individuals will not have the same level experience that may not be memorable to the person therefore it won’t be remembered over a period of time. Certain types of experiences may involve different aspects of the individual person such as emotional, physical, intellectual or even spiritual.

Shaw & Ivens (2002)[13] say that customer experience is as much as an interaction between the organization or business and a customer. This interaction involves a blend of characteristics within an organization’s physical performance, the senses stimulated and emotions that are each subconsciously measured against that customer experience across all moments of contacts from the business. Customer experience is the stimulation a company creates for the senses of the consumers, this means that the companies and that particular brand can control the stimuli that they have given to the consumers senses which the companies can then control the consumers reaction resulting from the stimulation process, giving more acquisition of the customer experience as expected by company.[6]

Kotler et al. 2013, (p. 283) say that customer experience is about, “Adding value for customers buying products and services through customer participation and connection, by managing all aspects of the encounter”. The encounter includes touchpoints. Businesses can create and modify touchpoints so that they are suited to their consumers which changes/enhances the customers’ experience. Creating an experience for the customer can lead to greater brand loyalty and brand recognition in the form of logos, colour, smell, touch, taste, etc.[14][15][16]

Development

The customer experience has emerged as the single most important aspect in achieving success for companies in all industries.[17][18] With products becoming commoditized, price differentiation no longer sustainable, and customer demand, companies – particularly communications service providers (landline, wireless, broadband, cable, satellite, etc.) – are focusing on delivering superior customer experiences.

Along with developing various integration and automation tools to organize customer information better, companies are implementing principles to improve customer perception, satisfaction, and customer commitment. One method some companies use to accomplish these goals is through diversity in hiring and staffing, which attracts a diverse and loyal customer base.[19][20] Companies are also working to differentiate their brand from competitors, which increases sales effectiveness and reduces customer attrition.[21] A 2009 study on 860 corporate executives found that companies with increased investment in customer experience management over the past three years reported higher customer referral rates and customer satisfaction.[22]

As the world becomes more advanced with technology marketing strategies also grow. “Customer value from the customer-dominant logic perspective of services emphasise the need to move away from the service-dominant perspective and adopt a customer-based approach that considers value within the broader context of a customer’s life world” (Tynan, McKechnie, & Hartley, 2014, p. 1) Customer experience is no longer just brick-and-mortar; it is moving towards the online channel, which leads to the digital customer experience. There is a larger significance on the person/people rather than appealing to a mass audience (Tynan, McKechnie, & Hartley, 2014, p. 1). This new outlook opens up the opportunity for businesses to further their customer experience management. Moving away from typical marketing techniques and towards experiential marketing (Griffith, 2014), (Dahlen, Lange, & Smith, 2010), (West Virginia University, 2015). [23][24][25]

Development of a positive customer experience can be difficult as there are many aspects associated with a customer’s experience. The customer service, a brand’s ethical ideals and the shopping environment is but a few examples that can effect a customer’s experience. Understanding and effectively developing a positive customer experience has become a staple within businesses and brands to combat growing competition (Andajani, 2015[6]). In today’s world, many consumers are well informed. With the help of the internet, they are able to easily compare two similar products or services together. Therefore, consumers are looking for unique experiences that can fulfil their intentions and create a positive overall experience. (Ali, 2015[26]). A brand that can provide this gains a competitive advantage over their competition. A study by Ali (2015[26]) found that developing a positive behavioural culture created a greater competitive advantage in the long term. He looked at the customer experience at resort hotels and discovered that providing the best hotel service was not sufficient. To optimise a customer’s experience, management must also consider peace of mind and relaxation, recognition and escapism, involvement, and hedonics. The overall customer experience must be considered. The development of a positive customer experience is important as it increases the chances of a customer to make continued purchases and develops brand loyalty. (Kim & Yu, 2016[27]). Brand loyalty can turn customers into advocates, resulting in a long term relationship between both parties (Ren, Wang & Lin, 2016[28]). This promotes word-of-mouth and turns the customer into a touchpoint for the brand. Potential customers can develop opinions through another’s experiences. Males and females both respond differently to brands and therefore, will experience the same brand differently. Males respond effectively to relational, behavioural and cognitive experiences whereas females respond greater to behavioural, cognitive and effective experiences in relation to branded apps. If female consumers are the target market, an app advert focused on the emotion of the product will provide an effective customer experience (Kim & Yu, 2016[27]).

Today, retail stores tend to exist in shopping area’s such as malls or shopping districts. Very few operate in areas alone (Tynan, McKechnie & Hartly, 2014[29]). Customer experience is not limited to the purchase alone. It includes all activities that may influence a customer’s experience with a brand (Andajani, 2015[6]). Therefore, a shopping centre’s reputation that a store is located in will effect a brands customer experience. This is an example of the shopping environment effecting a customer’s experience. A study by Hart, Stachow and Cadogan (2013[30]) found that a consumer’s opinion of a town centre can affect the opinion of the retail stores operating within both negatively and positively. They shared an example of a town centre’s management team developing synergy between the surrounding location and the retail stores. A location bound with historical richness could provide an opportunity for the town centre and local businesses to connect at deeper level with their customers. They suggested that town centre management and retail outlets should work cooperatively to develop an effective customer experience. This will result in all stores benefiting from customer retention and loyalty.

Another effective way to develop customer experience is by actively engaging a customer with an activity. Human and physical components of an experience are very important (Ren, Wang & Lin, 201[28] 6). Customers are able to recall active, hands-on experiences much more effectively and accurately than passive activities. Participants within a study were able to recount previous luxury driving experiences due to its high involvement. However, this can also have a negative effect on the customer’s experience. Just as active, hands-on experiences can greatly develop value creation, it can also greatly facilitate value destruction (Tynan, McKechnie & Hartly, 201[29] 4). This is related to a customer’s satisfaction of their experience. By understanding what causes satisfaction or dissatisfaction of a customer’s experience, management can appropriately implement changes within their approach (Ren, Wang & Lin,[28] 2016). A study on the customer experience in budget hotels revealed interesting results. Customer satisfaction was largely influenced by tangible and sensory dimensions. This included cleanliness, shower comfortability and room temperature, just to name a few. As budget hotels are cheap, customers expected the basic elements to be satisfactory and the luxury elements to be non-existent. If these dimensions did not reach an appropriate standard, satisfaction would decline, resulting in a negative experience (Ren, Wang & Lin, 20[28] 16). These dimensions also relate to the statement above about how participants were able to recall their luxury driving experiences. Luxury driving exhibits both tangible and sensory dimensions, therefore, it is not surprising that these experiences were easily recalled. A change in a company’s culture is an effective way to improve the customer’s experience on a large scale. DHL freight, a road transportation solutions company, decided to prioritize the customer’s experience. Throughout the whole organisation which is based in multiple locations, they implemented this change. The change included a vision and purpose evaluation and improved customer interactions. This improved customer perception, changed employee’s mind-set, and improved customer dialogues. Customer experience can only be changed when it becomes a business’s top priority.

Customer experience management

Customer experience management (CEM or CXM) is the process that companies use to oversee and track all interactions with a customer during their relationship. This involves the strategy of building around the needs of individual customers.[1] According to Jeananne Rae, companies are realizing that "building great consumer experiences is a complex enterprise, involving strategy, integration of technology, orchestrating business models, brand management and CEO commitment."[31]

According to Bernd Schmitt, "the term 'Customer Experience Management' represents the discipline, methodology and/or process used to comprehensively manage a customer's cross-channel exposure, interaction and transaction with a company, product, brand or service."[32] Harvard Business Review blogger Adam Richardson says that a company must define and understand all dimensions of the customer experience in order to have long-term success.[19]

Although 80% of businesses state that they offer a "great customer experience," according to author James Allen, this contrasts with the 8% of customers expressing satisfaction with their experience. Allen asserts that for companies to meet the demands of providing an exceptional customer experience, they must be able to execute the "Three Ds":

  1. designing the correct incentive for the correctly identified consumer, offered in an enticing environment
  2. delivery: a company's ability to focus the entire team across various functions to deliver the proposed experience
  3. development ultimately determines a company's success, with an emphasis on developing consistency in execution[20]

CEM has been recognized as the future of the customer service and sales industry. Companies are using this approach to anticipate customer needs and adopt the mindset of the customer.[33]

CEM depicts a business strategy designed to manage the customer experience and gives benefits to both retailers and customers.[34] CEM can be monitored through surveys, targeted studies, observational studies, or “voice of customer” research.[5] It captures the instant response of the customer to its encounters with the brand or company.

The aim of CEM is to optimise customer experience through gaining the loyalty of the customers in a multi-channel environment.[35]

Utilising surroundings includes using visuals, displays and interactivity to connect with customers and create an experience (Kotler, et al. 2013, p. 283). CEM can be related to customer journey mapping; a design tool used to track customers’ movements through different touchpoints with the business in question. It maps out the first encounters people may have with the brand and shows the different route people can take through the different channels or marketing (e.g. online, television, magazine, newspaper). Integrated marketing communications (IMC) is also being used to manage the customer experience; IMC is about sending a consistent message amongst all platforms; these platforms include: Advertising, personal selling, public relations, direct marketing, and sales promotion (Kotler et al. 2013, p. 495).[14] [36] [37]

CEM holds great importance in terms of research and showing that academia is not as applicable and usable as the practice behind it. It needs to be noted that there isn’t a specific set of rules or steps to follow as companies (in their various industries) will have different strategies. Therefore, development into the conceptual and theoretical aspects are needed. This can be seen through different scholarly research.[38] The reasoning behind the interest in CEM increasing so significantly is because businesses are looking for competitive differentiation.[39] Businesses want to be more profitable and see this as a means to do so. Hence why businesses want to offer a better experience to their customers and want to manage this process efficiently. In order to gain success as a business customers need to be understood. In order to fully utilise the models used in practice, academic research that is conducted can assist the practical aspect. This along with recognising past customer experiences can help manage future experiences.

A good indicator of customer satisfaction is the Net Promoter Score (NPS). This indicates out of a score of ten if a customer would recommend a business to other people. With scores of nine and ten these people are called protractors and will recommend other to the given product but on the other end of the spectrum are detractors, those who give the score zero to six. Subtracting the detractors from the protractors gives the calculation of advocacy. Those businesses with higher scores are likely to be more successful and give a better customer experience.[35]

Not all aspects of CEM can be controlled by the business (e.g. other people and the influence they have).[34] Besides, there is not much substantial information to support CEM claims in terms of academic research.

Managing the communication

The classical linear communication model includes having one sender or source sending out a message that goes through the media (television, magazines) then to the receiver. The classical linear model is a form of mass marketing which targets a large number of people where only a few may be customers; this is a form non-personal communication (Dahlen, et al. 2010, p. 39). The adjusted model shows the source sending a message either to the media or directly to an opinion leader/s and/or opinion former (Model, actress, credible source, trusted figure in society, youTuber/reviewer), which send a decoded message to the receiver (Dahlen et al. 2010, p. 39) The adjusted model is a form of interpersonal communication where feedback is almost instantaneous with receiving the message. The adjusted model means that there are many more platforms of marketing with the use of social media, which connects people with more touchpoints. Marketers use digital experience to enhance the customer experience. (Dahlen et al. 2010, p. 40). Enhancing digital experiences influences changes to the CEM, the customer journey map and IMC. The adjusted model allows marketers to communicate a message designed specifically for the ‘followers’ of the particular opinion leader or opinion former, sending a personalised message and creating a digital experience.[40]

Persuasion Techniques

Persuasion techniques are used when trying to send a message in order for an experience to take place. Marcom Projects (2007) came up with five mind shapers to show how humans view things. The five mind shapers of persuasion include:

  1. Frames – only showing what they want you to see (a paid ad post)
  2. Setting and context – the surrounding objects of items for sale
  3. Filters – previous belief’s that shape thoughts after an interaction
  4. Social influence – how behaviours of other impact us
  5. Belief (placebo effect) – the expectation

Mind shapers can be seen through the use of the adjusted communication model, it allows the source/sender to create a perception for the receiver (Dahlen, Lange, & Smith, 2010, p. 39). Mind shapers can take two routes for persuasion:

  1. Central route, this route requires a thought process to occur, the content of the message is important. People think thoroughly about their reaction/reply. This can be seen in the purchase of homes, Internet providers, insurance companies.
  2. Peripheral route, does not require very much thought, the brain makes the connection. Marketers use recognisable cues like logos, colours and sounds. This type of marketing is used when the decision is about something simple like choosing a drink, food (Petty & Cacioppo, 1981).

Marketers can use human thought processes and target these to create greater experiences, they can do so by either maker the process more simple and creating interactive steps to help the process (Campbell & Kirmani, 2000). [41] [42] [43]

Customer relationship management

According to Das[44] (2007), Customer Relationship Management (CRM) is the “establishment, development, maintenance and optimization of long-term mutually valuable relationships between consumers and organizations”. The official definition of CRM by the Customer Relationship Management Research Center is “a strategy used to learn more about the customers need and behaviours in order to develop stronger relationships with them”. The purpose of this strategy is to change the approach to customers and improving the experience for the consumer by making the supplier more aware of their buying habits and frequencies.

The D4 Company Analysis is an audit tool that considers the four aspects of strategy, people, technology and processes in the design of a CRM strategy. The analysis includes four main steps.

  1. "Define the existing customer relationship management processes within the company.
  2. Determine the perceptions of how the company manages their customer relationships, both internally and externally.
  3. Design the ideal customer relationship management solutions relative to the company or industry.
  4. Deliver a strategy for the implementation of the recommendations based on the findings".[44]

Digital customer journey

In the classical marketing model, marketing is deemed to a funnel: at the beginning of the process (in the "awareness" stage) there are many branches competing for the attention of the customer, and this number is reduced through the different purchasing stages. Marketing is an action of "pushing" the brand through few touch points (for example through TV ads).

In the digital era, there are many more touch points: digital media channels (Facebook, Twitter, YouTube, etc.) and other Internet platforms, such as forums, blogs, etc.

As a result, this process has become a type of "journey":

  1. The number of brands does not decrease during the process of evaluating and purchasing a product.
  2. Brands not taken into account in the “awareness” stage may be added during the evaluation or even purchase stage
  3. Following the post-purchase stage, there is a return to the first step in the process, thus feeding the brand awareness.[45]

In relation to customers and the channels which are associated with sales, these are multichannel in nature. Due to the growth and importance of social media and digital advancement, these aspects need to be understood by businesses to be successful in this era of customer journeys. With tools such as Facebook and Twitter having such prominence, there is a constant stream of data that needs to be analysed to understand this journey.[46] Business flexibility and responsiveness is vital in the ever changing digital customer environment, as customers are constantly connected to businesses and their products. Customers are now instant product experts due to various digital outlets and form their own opinions on how and where to consume products and services.[47] Businesses use customer values and create a plan to gain a competitive advantage. Businesses use the knowledge of customers to guide the customer journey to their products and services.[47] Due to the shift in customer experience, in 2014 Wolny & Charoensuksai highlight three behaviours that show how decisions can be made in this digital journey. Moment of truth is the first interaction a customer has through social media with a service or product. This moment affects the consumer's choice to explore a product further or not at all. These moments can occur on any digital device. Showrooming highlights how a consumer will view a product in a physical store but then decide to exit the store empty handed and buy online instead. This consumer decision may be due to the ability to compare multiple prices online. On the opposing end of the spectrum is webrooming. Consumers will research about a product online in regards to quality and price but then decide to purchase in store. These three channels need to be understood by businesses because customers expect businesses to be readily available to cater to their specific customer needs and purchasing behaviours.[46]

Retail environment

Retail environment factors include social features, design, and ambience.[34] This can result in enhanced pleasure while shopping, thus positive customer experience and more likely chances of the customer revisiting the store in the future. The same retail environment may produce varied outcomes and emotions, depending on what the consumer is looking for. For example, a crowded retail environment may be exciting for a consumer seeking entertainment, but create an impression of inattentive customer service and frustration to a consumer who may need help looking for a specific product to meet an immediate need.[48]

Environmental stimuli such as lighting and music, can influence a consumer’s decision to stay longer in the store, therefore increasing the chances of purchasing.[34] For example, a retail store may have dim lights and soothing music which may lead a consumer to experience the store as relaxing and calming.

External and internal variables in a retail environment can also affect a consumer’s decision to visit the store. External variables include window displays such as posters and signage, or product exposure that can be seen by the consumer from outside of the store.[48] Internal variables include flooring, decoration and design. These attributes of a retail environment can either encourage or discourage a consumer from approaching the store.

Sales experience

Sales experience is a subset of the customer experience. Whereas customer experience encompasses the sum of all interactions between an organization and a customer over the entire relationship, sales experience is focused exclusively on the interactions that take place during the sales process and up to the point that a customer decides to buy.

Customer experience tends to be owned by the Marketing function[49] within an organization and therefore has little control or focus on what happens before a customer decides to buy.

Sales experience is concerned with the buyer journey up to and including the point that they make a purchase decision.

See also

References

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  49. ↑ B-to-B CMOs: It's Time to Own the Customer Experience, Sheryl Pattek. September 02, 2015. AdAge. "43% of CMOs told us that they owned customer experience in their organization"
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