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Managing the Customer experience
CX - “the totality of a customer’s individual interactions with a brand, over time
...
It is a blend of an organisation’s
rational performance, the senses stimulated, and emotions evoked, and is intuitively
measured against the customer’s expectations across all moments of contact’
...
It’s a great opportunity for us to look
at the old car and identify clues about the customers to enable us to deliver a great
customer experience
...
So when we hand over the new vehicle it is pre-tuned to the stations that the
customer
had in their last car
...
At the end of the day, I turned to my son
Ben and asked him if he had enjoyed himself
...
You have spoilt us!’ ”
- anecdote in Shaw & Ivens (2005, p
...

Benefits of 1-1 learning relationships …
• Customer loyalty
• The customer learns more about his or her preferences
• The organisation learns more about its own strengths and weaknesses

Customer retention drives increased profits
Reichheld and Sasser (1990) found that a customer’s profitability increased with length of
retention, based on four factors:
1
...
Reduced operating costs
3
...
Price premium (conversely, new customers usually pay lower introductory
prices)

Being customer centric pays but…
requires a unified view of the customer across the five principal business functions:
1
...
Production, logistics, and service delivery
3
...
Sales distribution and channel management
5
...
This is when the customer
forms a judgement (positive or negative) about their experience
• Moments of truth include the timekeeping of a service visit, welcome to a
restaurant, cleanliness of a dentist’s surgery, automated call systems

•

Customer Engagement
• Engaged customers are more committed to the organisation than customers
who are just satisfied
• Engagement has four dimensions …
• Cognitive
• Emotional
• Behavioural
• Social
• Engagement can be measured and managed

The three “Ds” of customer experience:
To improve customer satisfaction, organisations pursue three imperatives simultaneously:
They design the right offers and experiences for the right customers
They deliver these propositions by focusing the entire organisation on them
with an emphasis on cross-functional collaboration
They develop their capabilities to please customers again and again - by such
means as revamping the planning process, training people in how to create
new customer propositions, and establishing direct accountability for the
customer experience

CX statements are part of ‘design’:
Definition - “A description of the customer experience
which contains the elements that have been chosen for delivery, written in a way that be
easily understood and will inspire people into action” Shaw & Ivens (2005, p
...


CX statement example:
“We want our customers to have a thoroughly enjoyable experience on their holiday
...
Everything we do will be delivered in a timely and reliable manner that will be
second to none
...
89)

The thinking behind customer relationships
Why do companies work at being customer-centric?
• Customers are the main source of revenue
Customer create value in 2 ways:
1
...

2
...


Building customer relationships:

•
•
•

Use Customer Relationship Management (CRM) to cultivate customer ‘lifetime value’
(LTV)
Relationships allow transition from ‘customer catching’ (transaction-oriented) to
‘customer keeping’ (partnership-based)
The highest form of building relationships makes most sense for customers whose
lifetime value is important to the organisation

Capturing Value from customers:
• Customer lifetime value is the value of the entire stream of purchases that the
customer would make over a lifetime of patronage
...
Builds trust
Two types …
• Distributive – balance of rewards versus obligations
• Procedural – procedures appear fair
...
Understand the environment within which the customer operates
2
...
Reduce negative emotions, strengthen positive ones
4
...
Increase Engagement with customers
Environment

Engagement

Experience

The value of customer relationships

Expectations

Emotions

“No company can succeed without customers
...
Awareness - knowledge of each other
2
...
Expansion - increase in relationship benefits and interdependence
4
...
Dissolution - value of the relationship no longer worthwhile

Awareness

Exploration

Expansion

Commitment

Dissolution

Keeping customers loyal during the relationship:
Two types of customer loyalty
1
...
Behavioural loyalty - relies on customer’s actual conduct
Both are important to build and measure
• Attitudinal loyalty without behavioural loyalty has no financial benefit for a firm
• Behavioural loyalty without attitudinal loyalty is unsustainable

The IDIC framework and trust:
“In order for a firm to build customer value through managed relationships, the company
must engage in a four-step process we call IDIC
...
But while the IDIC process represents the mechanics of a relationship, generating a
customer’s trust should be the most important objective of that process
...
”

Trust and relationships happen in tandem:

•
•
•

The final characteristic of relationships – trust – is so central that it might be a
summary term for all aspects of a genuine, successful relationship
A genuine business relationship will require enterprises to treat different customer
differently
This creates a feedback loop, or learning relationship, in which feedback from each
party changes the behaviour of the other party … and the relationship gets better
and better

The IDIC Model

ICIC: Identify:
• Relationships only possible with individuals (not segments or markets)
• Structure organisational information sources to be able to take a customer-specific
view of the business
• Develop mechanism for ‘tagging’ individual customers – not just with product codes
• Be able to recognise an individual customer when they return – regardless of
channel – and
access their history
• Examples: logins, loyalty/discount cards, apps

IDIC: Differentiate:
• Customers have different levels of potential value but also have different needs, so
focus resources on customers that might bring the most value
• Develop a customer-specific strategy for satisfying individual customer needs and
improving overall customer experience
• Customer grouping (by common needs) can allow profitable differentiation,
provided you can clearly identify which group a customer ‘belongs’ to

•

There is no touchpoint associated with ‘Differentiate’

IDIC: Interact:
• Any and every interaction with a customer or potential customer or influencer
• Each successive interaction with a customer should take place in the context of all
previous interactions
• A ‘conversation’ with a customer should pick up where the last one left off
• Effective customer interactions provide better insight into a customer’s needs
• Don’t waste the customer’s time by repeating an interaction or conducting irrelevant
interactions
IDIC: Customise:
• The organisation might offer to adapt some aspects of its behaviour towards a
customer, based on that customer’s needs and value
• Might involve mass-customisation
• Needs to involve aspects that the customer values and enhances their total
customer experience

Why is trust important?
Trust is not a “soft” concept, but has practical results:
• Trust is a function of character and competence
• Trust results in quick decisions and business transactions
Trust is not required in a relationship, but its presence increases the relationship’s long-term
value

The Trust Equation (Green):
Trust=(C+R+I)/S
C = Credibility (words)
R = Reliability (action)
I = Intimacy (safety)
S = Self-Orientation (focus)
The power of self-orientation has more weight than the other three components combined
Organizations need a genuine customer-focused business model, not just CRM technologies,
to build trust

Emotions underwrite CX:
• Think of a GREAT customer experience that you’ve had recently … how did it make
you FEEL?
• Think of a BAD customer experience that you’ve had recently … how did it make you
FEEL?
• “Great customer experiences are differentiated by focusing on stimulating planned
emotions”
Shaw & Ivens (2005 p
...
43)

But emotions are tricky to work with:
1
...
Emotions are transient and thus difficult to recall
3
...
How do we evoke emotion?

Theory of Emotion:
• According to Plutchik, there are 8 primary emotions - anger, fear, sadness, disgust,
surprise, curiosity, acceptance and joy
• These basic emotions are biologically primitive and have evolved in order to increase
reproductive fitness
The emotional content of the CX will impact loyalty:
• Organisations need to PLAN what emotions they want their customers to experience
at every stage
• Organisations need to EXECUTE on those plans … consistently
• Organisations need to MEASURE the emotional content of the actual customer
experience … and fine tune accordingly

Identifying customers:
Recognising each customer as that customer at every contact, and then linking those data
points to provide a full ‘picture’ of the customer
• The first step in identifying customers is knowing one customer from another – to
recognise customers
• Sounds simple, but difficulties arise when
companies sell directly to other companies
or retail outlets, and don’t know who their
end users are
Customer-identifying information:
How much customer identification data does a company already have?

•

An inventory of all customer data already available in any electronic format is the
start point
• Finding customer-identifying information that is “on file” but not electronically
compiled completes the picture
Get customers to identify themselves
• Frequency marketing programs are an effective way to recognise customers and link
identity to actual transactions
• Online - logins and/or cookies, mobile apps

Customer database:
A customer database is an organised collection of comprehensive data about individual
customers or prospects, including geographical, demographic, psychographic, and
behavioural data
Rather than just a collection
of data, a customer database
needs careful design

Types of customer data:
Customer identity tag
• Name, address, e-mail address, user name,
...

Directly-supplied or inferred data
• Behavioural data: purchase and buying habits
• Attitudinal data: satisfaction levels, unmet needs, lifestyle, values
• Demographic data: age, income, education, household

General Data Protection Regulation (GDPR):
• EU regulations to harmonise data protection rules across Europe
• Brings all EU nations up to to a single common standard
• Very close to previous UK Data Protection rules
• Fines of up to 4% of worldwide turnover
• Includes the right to be ‘forgotten’ and the right to ‘transfer’ data between
companies
• Became law in May 2018
• Will be retained after Brexit
Key approaches for customer data:

Establish a trusting relationship with the customer, so the customer understands the
tangible benefits of sharing information and trusts the company to protect privacy
Integrate the data across as many business activities as possible – particularly to front-line
and customer service employees

Permission marketing:
Customers ‘volunteer’ to be ‘marketed’ to
By talking to ‘volunteers’, marketing messages receive better attention
Benefits both customer and marketer- a symbiotic exchange
Permission marketing is …
• Anticipated – customers look forward to hearing from you
• Personal – the messages are directly related to the individual
• Relevant – the marketing is about something the customer is interested in

A trust issue …:
If customers are prepared to trust an organisation with their data … they had better be
extra careful with it
• Only using it for the purpose for which it was collected
• Not selling it on (unless they have asked permission first)
• Not asking questions that they already know the answer to

Customer information and privacy:
Customer information is one of an organisation’s most valuable assets, but privacy concerns
exist everywhere
Privacy and personalisation are inextricably interwoven
• Consumers recognise the balance: personalisation makes ordering easier, but they
still want assurance of privacy
There is a need to strike a balance with customer data
• How much does the organisation really need?
• How far can the organisation go in collecting it?
Trust is always critical to getting a customer to give you information

Data privacy Concerns:
Customer's view:

•
•
•

Concern about criminal activity (data security)
Concern about others knowing things about them that should not be common
knowledge
Concern about being bothered/hassled when they don’t want to be (spam)

Organisation’s view:
• Getting information from customers who are comfortable giving it
• Using the information to build mutual value with each customer
• Protecting customer data as a valuable competitive asset
• Communicating data protection assurance to customers

Developing a privacy pledge:
• Itemise the kind of customer information to collect
• Specify how this information will be used
• Specify how this information will NEVER be used
• State the benefits an individual customer can expect as a result of their information
being used
• List options for directing the enterprise not to use or disclose certain information
(opt in or opt out)
• State how a customer can change or update personal information
• Identify events that would require customer notification (e
...
, if requested by a
court)
• Assign a corporate executive as “data steward”
• Specify situations in which the organisation accepts or denies liability for collecting
and using customer data
• Provide specific procedures allowing a customer to stop the company from collecting
personal data, or to purge information files

Listening allows the organisation:
To improve …
• Products
• Services
• Transactional relationships
Monitor emotions & detect problems
Improve overall customer experience … maintain trust
Build long-lasting relationships/loyalty

Customisation:
• Customisation is a response to this standardisation
...
Adaptive customisation

Standard but customisable product that customers alter themselves e
...
Dell
laptop
2
...
g
...
Collaborative customisation
Customised product that results from individual customer dialogues,
identifying which product offering best meets their needs, e
...
IT solution for
a large company, such as SAP
4
...
g

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