CUSTOMER RELATIONSHIP

MANAGEMENT AND
CUSTOMER EXPERIENCE
Chapter 6
 Chapter 6 Outline
 What is Meant by Customer Experience?
 The Planned Customer Experience
 Customer Experience Concepts
 How to Understand Customer Experience
 Experiential Marketing Strategies and Tactics
 What is Meant by Customer
Experience?

 Today, companies are becoming more focused in

managing and improving customer experience.
 Example: Amazon states that its mission is to
deliver ‘ high quality end-to-end, order-to-delivery
customer experience ’ .
 Customer experience is defined as the cognitive
and affective outcome of the customer’s exposure to,
or interaction with, a company’s people, processes,
technologies, products, services and other outputs.
 What is Meant by Customer
Experience?

 When customers do business with a company they not

only buy products, but they are also exposed to, or
interact with, other types of company output.
 For example: Customers may be exposed to
company’s television commercials, they may interact
with a customer service agent in a call center or they
could place an order at a company’s sales online store.
 All these actions impact the customer experience of
each customer.
 What is Meant by Customer
Experience?

 During all these interactions customers form both

cognitive impressions (beliefs, thoughts) and
affective impressions (feelings, attitudes) about
value and quality, which in turn affects future buying
and word-of-mouth intentions.
 For example: A study in the hospitality industry
indicated that 75 percent of restaurant customers tell
others about their poor service experiences while
only 38 percent tell others about their excellent
experiences.
 What is Meant by Customer
Experience?

 Enhancing customer experience has two referral

benefits.
 1) It can decrease negative word-of-mouth (WOM).
 2) It can also increase positive WOM.
The Planned Customer Experience
 Customers always encounter an experience
whenever a service is performed.
 Example: Customers experience viewing a movie
or going to a supermarket.
 Customers can also experience goods as they are
consumed or used.
 Example: driving a car or wearing a suit.
The Planned Customer Experience
 Customer experience may be the core product that
customers buy or a differentiating value-add.
 Today some companies are now in the business of
staging and selling customer experiences as a core
product.
 Examples: white water rafting, swimming with
dolphins, feeding elephants, paragliding, bungee-
jumping, driving a racing car, going on safari or
climbing Sydney Harbor Bridge.
The Planned Customer Experience
 Many marketers are attempting to add value to, and
differentiate, their service by improving customer
experience.
 Customers can see this when the variety of
experiences in a service category is very different.
 For example: An experience on a charter flight is
different than an experience on a scheduled flight.
 An experience at the Hard Rock Cafe is different
than an experience at McDonalds McCafé.
 Customer Experience Concepts
 The following are core concepts that are
connected with customer experience
management:
 1) Touchpoint
 2) Moment of truth
 3) Engagement
 Customer Experience Concepts
 1) Touchpoints: are found wherever a
customer comes into virtual or actual contact with a
company’s products, services, communications,
places, people, processes or technologies.
 Touchpoints include:
 Websites , service centers ,warehouses, contact
centers, exhibitions, trade shows, seminars,
webinars, direct mail, e-mail, advertising, sales
calls, and retail stores.
 Customer Experience Concepts
 2) Moment of Truth (MOT): can be defined
as any time the customer interacts with, or is
exposed to, any company output which leads to the
development of an impression of the organization.
 Moments of truth take place during customer
interactions at touchpoints.
 Moments of truths are the moments when customers
develop evaluative judgments, positive or negative,
about their experience.
 Customer Experience Concepts
 For example: when a customer calls a call center
and interacts with an interactive voice response
(IVR) robot, receives a visit from an account
executive or enters a branch office, these are
moments of truth.
 If a service technician is late for an appointment,
this negative moment of truth might ruin the entire
experience, even though the service task was well
performed.
 Customer Experience Concepts
 Customers usually have expectations of what should
happen during moments of truth, and if those
expectations are not met, dissatisfaction will occur.
 3) Engagement: is the customer’s emotional and
rational response to a customer experience.
 Companies intentionally design customer experiences
that produce strong, positive engagement.
 Customer experience can become boring over time,
and boring experiences are not engaging.
 Customer Experience Concepts
 Example: Repeat business from customers at
Planet Hollywood and Rainforest Café is low
because the customers became bored with the
experience quickly.
 Companies need to always refresh the customer
experience, surprising customer by doing the
unexpected.
 How to Understand Customer Experience

 Companies can use several methods to improve

their understanding of the customer experience.
The methods are:
 1) Mystery shopping
 2) Experience mapping
 3) Process mapping
 4) The Customer Activity Cycle (CAC)
 5) Participant observation
 6) Non-participant observation
 How to Understand Customer Experience

 1) Mystery shopping: entails the recruitment of paid

shoppers to report on their customer experience with the
company sponsoring the research.
 These paid shoppers may perform a comparative shop during
which they compare the sponsor’s performance with
competitors.
 Mystery shopping is heavily used in B2C environments such
as retailing, banks, service stations, restaurants and hotels.
 It is sometimes used in B2B environments.
 For example: an insurance company might use mystery
shopping to evaluate the performance of its broker network.
How to Understand Customer Experience

 2) Experience mapping: is a process that

attempts to understand, chart, and enhance what
happens at customer touchpoints.
 Focus groups, face-to-face interviews or telephone
interviews are conducted with a sample of
customers who describe their experience at the
company’s touchpoints.
How to Understand Customer Experience

 Companies focus on two questions when talking

to the sample of customers: The two questions
are:
 1) What is the experience like?
 2) How it can be improved?
 The company can then begin to focus on strategies
that close the gaps.
 Strategies usually involve improvement to people
and process.
Experience Map of a
Hotel Guest
 How to Understand Customer Experience

 3) Process mapping: is a type of blueprinting.

 Blueprints are graphical representations of business processes.
 Process mapping is for:
 Developing ways to improve customer experience
 Improving back-office internal customer–supplier relationships
 Setting service standards
 Identifying fail-points
 Training new people
 Eliminating process redundancy and duplication.
Example of Process Mapping
 How to Understand Customer Experience

 4) The Customer Activity Cycle (CAC): CAC

seeks to show the processes that customers go through
when they are making and reviewing buying decisions.
 CAC has breaks down the process in three main
stages according to Sandra Vandermerwe: They
are:
 1. Deciding what to do (Before)
 2. Implementing the decision (During)
 3. Reviewing what was done (After)
How to Understand Customer Experience

 The CAC allows companies to simplify a complex

process into more basic elements and to collect
data on the customer’s experience at each point in
the cycle.
 The company can then look for ways to enhance
the experience.
The Customer Activity Cycle (CAC) Example
 How to Understand Customer Experience

 5) Participant observation: Companies can

enhance their understanding of customer experience by
participating in the customer experience at different
touchpoints.
 Some companies require their senior level managers
to learn about customer experience by participating in
front line customer service.
 For example: McDonald’s requires its senior
managers to regularly work as staff members in
restaurants.
 How to Understand Customer Experience

 6) Non-participant observation: Some

companies require their senior level managers to
observe customer interactions at customer
touchpoints.
 This method is useful when the main customer
touchpoint is a call center.
 Senior managers can listen in to customer calls to get
a better understanding of the customer experience,
but not actually make or receive calls themselves.
 Experiential Marketing
Strategies and Tactics

 Managers wanting to enhance customer experience will

need answers to a number of questions, such as:
 1. What kind of outcomes do customers want to experience?
 2. What is the current customer experience?
 3. What tools and strategies are available to close any gap
between current and desired experience?
 4. How can companies measure whether they have
succeeded?
 Experiential marketing is a strategy that engages
consumers using branded experiences.
 Experiential Marketing
Strategies and Tactics

 Len Berry states that it is very important for

companies to manage the experience clues which
customers are exposed to or interact with.
 An experience clue is anything that can be
perceived or sensed – or recognized by its absence.
 Experiential Marketing
Strategies and Tactics

 Bernd Schmitt established a number of experience clues that

can be crafted by customer management, whether in sales,
marketing or service, to impact experiential outcomes. They
are:
 1) Communications
 2) Visual Identity
 3) Product Presence
 4) Co-branding
 5) Spatial Environments
 6) Websites and Electronic Media
 7) People
 Experiential Marketing
Strategies and Tactics

 1) Communications: includes company-generated

messaging such as advertising, brochures, newsletters
and annual reports.
 Today, companies are allowing customers to produce
their own product or service-related messaging through
user groups, chat sites and blogs.
 As far as advertising, it takes a great advertising
campaign to stimulate a strong emotional response
from consumers by standing out among the thousand
of ads that they are exposed to daily.
 Experiential Marketing
Strategies and Tactics

 2) Visual Identity: is communicated through brand

names, logos and livery.
 For example: BP, formerly British Petroleum, has
been repositioning itself as an energy company instead
of an oil refiner.
 BPs flower logo has helped the company in
repositioning itself indicating that the company is
now Beyond Petroleum.
Logo Example
 Experiential Marketing
Strategies and Tactics

 3) Product Presence: is made up of a number of

product-related variables, such as product design,
packaging, display, brand characteristics and point-of-
sale.
 Innovative design can stimulate strong emotional
responses.
 For example: James Dyson’s dual cyclone vacuum
cleaner completely restored the vacuum cleaner market
that had suffered the same low-tech industrial design
values for the previous 80 years.
Design Example
 Experiential Marketing
Strategies and Tactics

 Packaging is very important, having only fractions

of seconds to get the attention of the consumer.
 For example: the next slide shows an Australian
packaging design innovation award winner: a
supermarket package for a NESCAFÉ coffee line
extension.
 The design the very core of “ short black ” : neat,
dark, concise.
Packaging Example
 Experiential Marketing
Strategies and Tactics

 4) Co-branding: is made up of a number of activities such

as event marketing, sponsorship, alliances, partnerships,
licensing, product placement, and other cooperative campaigns.
 Many companies have been connected with the excitement
generated from the Super Bowl, FIFA World Cup and the
Olympics.
 Product placement in TV shows, movies, books and video
games has become part of the marketer’s tools.
 There is little doubt that much of Aston Martin’s brand
distinction is connected is to the James Bond movie franchise.
 Experiential Marketing
Strategies and Tactics

 5) Spatial Environments: Areas such as retail

stores, office spaces, lobbies, car parks, buildings,
gardens and public spaces can strong strong cognitive
and emotional responses.
 For example: Traditional bank branches feature
classical architectural styles, oversized and heavy
doors, solid timber furnishings, all carefully
constructed to promote a sense honesty and integrity.
 Experiential Marketing
Strategies and Tactics

 6) Websites and Electronic Media: offer great

opportunities to create customer experiences that are
compelling and exciting.
 The use of sound, animation, audio and video clips,
chat rooms, blogs, RSS feeds, and the ability for site
visitors to customize their own pages offers great
potential for emotional engagement.
 Experiential Marketing
Strategies and Tactics

 7) People: In many service contexts, people are

vital.
 They can produce the service (chef), sell the service
(account manager), and represent tangible evidence of
the service (consultant).
 The performance of people can stimulate strong
approach and avoidance behaviors in customers.
 Pushy salespeople may make one-off sales, but they
can not build long-term relationships with customers.
 Experiential Marketing
Strategies and Tactics

 Customers can become attached to specific service

providers.
 Research shows a clear connection between
employee experience, customer experience and
business results.
 Reference
 Buttle, F., & Maklan S. (2019). Customer
Relationship Management: Concepts &
Technologies, 4th edition, Routledge.