Customer experience

Customer experience (CX) is the sum of all experiences a customer has with a supplier of goods and/or services, over the duration of their relationship with that supplier. This can include awareness, discovery, attraction, interaction, purchase, use, cultivation and advocacy. It can also be used to mean an individual experience over one transaction; the distinction is usually clear in context.

Analysts and commentators who write about customer experience and customer relationship management have increasingly recognized the importance of managing the customer's experience.^[1]

A company's ability to deliver an experience that sets it apart in the eyes of its customers serves to increase the amount of consumer spending with the company and, optimally, inspire loyalty to its brand. "Loyalty," says Jessica Sebor, "is now driven primarily by a company's interaction with its customers and how well it delivers on their wants and needs." (2008) ^[2]

With products becoming commoditized, price differentiation no longer sustainable, and customers demanding more, companies – particularly communications service providers (landline, wireless, broadband, cable, satellite, etc.) – are focusing on delivering superior customer experiences. A study in the year of 2009 on 860 corporate executives revealed that companies that have increased their investment in customer experience management over the past three years report higher customer referral rates and customer satisfaction (Strativity Group, 2009).^[3]

The customer experience has emerged as the single most important aspect in achieving success for companies across all industries (Peppers and Rogers 2005).^[4] For example, Starbucks spent less than $10MM on advertising from 1987 to 1998 yet added over 2,000 new stores to accommodate growing sales. Starbucks' popularity is based on the experience that drove its customers to highly recommend their store to friends and family.^[5]

Customer experience management (CEM or CXM) is a strategy that focuses the operations and processes of a business around the needs of the individual customer. Companies are focusing on the importance of the experience. Jeananne Rae says that 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." (2006) ^[6]

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."^[7]

According to James Allen of Harvard Business School, 80% of businesses state that they offer a great customer experience. This is in stark contrast to the 8% of customers who feel the same way. Allen exerts that businesses must be able to execute what he refers to as the "Three D's". The first D is about designing the correct incentive for the correctly identified consumer, offered in an enticing environment. The 2nd D is about a company's ability to focus the entire team across various functions to deliver the proposed experience. The third D ultimately determines a company's success with an emphasis on developing consistency in execution (see Allen, James, R., Frederick F, H., & Barney, 2005). A company must constantly teach, train and develop in order to keep up with the constant demands of providing an exceptional customer experience.

According to Harvard Business Review blogger, Allen Richardson, a company must define and understand all dimensions of the customer experience in order to have long-term success. Some companies segment the customer experience into technical interactions with the customer such as use of the web, smartphone or tablet. Other companies define human interaction such as over the phone customer service or face to face retail service as the customer experience. In our ever-growing global economy, where technology and bricks-and-mortar business often interact or even compete for the customer base, it is important to recognize all these aspects as having an impact on the customer experience. Every business offers a customer experience. The more aware a business is of what type of experience they want to offer, the more likely they will create a positive experience.

However, despite the best-laid plans, there are certain aspects of the experience that cannot be fully controlled. Individual perceptions, emotions and behaviors can alter the customers' experience (Richardson, A. 2010). So, too, will bad experiences with a product. For example, a piece of equipment that consistently fails to function reliably, or that does not meet longevity expectations, will generate complaints that can propagate through word of mouth or online. For these reasons, customer-experience management is no substitute for good product design and proper product engineering. No amount of customer-experience management can compensate for an unreliable cellphone network, an airline that is unsafe to fly on, a computer that fails to meet expectations, a car that repeatedly fails to start or that needs innumerable repairs, clothing that cannot survive routine laundering, shoes that fall apart while being worn, a wobbly bookshelf that collapses when loaded, a roof that leaks shortly after installation, software that runs slowly and is crash-prone, or home appliances that generate safety hazards or break down too often. The increasingly online nature of the modern marketplace does not alter the fundamentals of sound business practice: in the long term, there is no substitute for providing good products and services at a reasonable price.

Perception is about how different people interpret the same environmental stimuli in different ways. One way a company can help improve customer perception is through utilizing diversity. Diversity in hiring will offer different insight or perspectives from different genders, ethnicities or cultural backgrounds. Diversity in staffing also helps to attract and retain a diverse customer base. Whether it is, age, race, gender or life experiences, customers are more likely to become a loyal customer if the company offers someone who can understand their journey and guide them through the customer experience. (Williams, C.,^[8]2009)

References