THE BLOG

What Is Customer Experience?

01/08/2016 05:13 pm ET | Updated Jan 08, 2016
  • Don Dodds Managing Partner and Chief Strategist, M16 Marketing

Forrester Research defines customer experience as: "How customers perceive their interactions with your company."

Forrester did a fine job reducing the complex and multi-faceted integration of physical, emotional, and often, psychological processes that make up the customer encounter. Perception and interaction are the two essential elements of any customer experience definition.

Perception is guided by emotional and psychological responses to stimuli presented during the interaction between the customer, the company, or brand, and the immediate environment whether it be in-store or online.  Please note that in this context the "company or brand" is considered the salesperson, representative, call center rep, or live chat operator.

The physical aspect of any encounter addresses the elements of value, product availability, functionality, and quality. The factor of time also comes into play here as value can also be determined by the timeliness and the ease with which the consumer gains access to the product.

The earliest customer experience examples depict some of the same fundamental expectations the modern consumer has today.

The British Museum in London is home to the first known customer complaint. The carved clay tablet on which Nanni, an ancient Babylonian consumer, engraved his complaint is thought to have originated in 1750 B.C. The focus of his anger was a merchant named Ea-nasir, and etched on the clay tablet was a demand for a full refund of the purchase price.

Thousands of years later, there was no need for such a laborious effort as pen-to-paper became the medium of complaint. Dubbed as the "ultimate letter of complaint," on November 20, 1905, Mark Twain poured out his contempt for a snake oil salesman by the name of J.H. Todd.

These examples, thousands of years apart, describe the basic notion that the consumer expected an honest appraisal of the product, value for their money, and functionality.

In the Middle Ages, merchants and craftsmen organized guilds which were actually intended to work as a system united in fighting against runaway taxes on good and services, and to bring regulation to the trades. The benefit for the consumer in the formation of guilds was that regulation led to applied best practices of the day, uniform codes for quality, and price points that were more uniform and consistent.

Eventually, general stores, markets, and specialized shops refined customer service to include environment and atmosphere, cleanliness, and defining ways to please the shopper. Through these measures, customer service would eventually evolve into the customer experience.

Evolutionary timeline of the customer experience:

1894 - Switchboard invented which opened the door for communication between buyers and sellers.

1896 - Sears and Roebuck's first large-scale general catalog. The establishment of the railways allowed for the first U.S. mail-order catalogs. This customer experience provided access to goods that were not available locally, protected the consumer from exorbitant prices, and introduced the process of home delivery.

1911 - The Ritz Carlton redefined the concept of customer service to include personalized services and purposeful staging of a customer experience.

1916 - Piggly Wiggly opened its doors for the first time with a unique concept which revolutionized the customer experience. Clarence Saunders founded the self-service customer experience when his grocery stores first allowed customers to freely circulate throughout the store, inspecting all of the products and choosing their purchases prior to bringing the items to the counter. Self-service proved to be powerful for the consumer and garnered so much favor that Clarence Saunders patented the conceptual practice in 1917. By the mid-20th century the self-service model was instituted nationwide.

1967 - 800 numbers changed the way that customers were able to communicate with companies. Businesses eager to develop new means of creating customer satisfaction, and nurturing retention, expanded the technologies available to enable customers to call and reach a person over the phone to conduct transactions and or resolve complaints. Initially, used by the airline industry, it was the beginning of the modern customer call center.

1979 - Michael Aldrich in the UK originated online shopping potential with invention of the first transaction processor which worked in real-time. It allowed customers to make purchases with a credit card over the processor.

1983 - Apple and the first personal computer incorporating a graphic user interface (GUI) using clickable icons. Shoppers could transact purchases over the computer.

1991 - World Wide Web. Early on the web was used mainly for information display. The concept of on-line shopping came with Amazon when the first large-scale commercial site was created in 1994. The World Wide Web saw an amazing growth of 2300% percent.

1996 - Email and live chat support which opened the channels of communication for the consumer.

1999 - Zappos improved the online shopping experience with next-day shipping. This took the potential of shopping over the internet to new heights. Consumers could order items that they would normally not be able to order online prior to the availability of next-day shipping due to the factor of time and necessity.

2001 - Self-checkout. Retailers began to offer the advantage of self-checkout as a method of express checking services. This was intended to make it a faster process for the consumer as well as a real advantage for the retailer in terms of saving capital by employing fewer cashiers. While the process is in use and is popular with the consumer, it is not clear that the advantages for the retailer have been realized overall. Many shoppers still prefer being helped by a cashier rather than checking out in the self-serve manner.

2006 - Crowdsourcing. Editors for Wired magazine, Jeff Howe and Mark Robinson, first coined the term "crowdsourcing" in 2005. Howe first published the definition of the term in a blog post in June of 2006. The Merriam-Webster definition of crowdsourcing reads: "The practice of obtaining needed services, ideas, or content by soliciting contributions from a large group of people and especially from the online community rather than from traditional employees or suppliers."

2007 - Social media support. Individuals easily share and access information through online communities and social networking sites (SNSs). Consumers make relevant social connections and participate in consumers experiences, which facilitate product and brand recommendations, influences trust, and creates shared values. The opportunity that social media support offers suppliers and retailers is through positive brand exposure, enhancing the image of the brand, reaping the benefits of word-of-mouth brand recommendations, generating a network of support for the brand and products, marketing support, and increased sales.
 
2008 - Shopping apps. Beginning with eBay and Amazon's "textbuyit," the mobile app has expanded the customer experience by allowing the consumer to research products and make purchases with a click of their phone or to simultaneously shop online while in-store to realize the best deals and price. For example: A shopper researches products and price for a specific item. Once in the store, the shopper sees that the in-store price is over $8.00 more than the store's online price. The customer proceeds to the customer service counter where they request the online price. Once the representative confirms the difference the shopper is allowed to purchase the item for the cheaper price.

2014 - Pinterest and expanded brand marketing through crowdsourcing. The exceptional popularity of Pinterest lies in the multiple layers of content to which users have access. Large brand-name companies, startups, and crafty individuals at home all have the same advantages when it comes to crowdsourcing on Pinterest. The popularity of any item or brand can reap the awards of the consumer draw. The ultimate asset for businesses and retailers is that they can achieve multi-level marketing with relatively little maintenance and expense as do not have to directly constantly monitor the multitude of social media sites separately.

Customer experience strategy:

The gulf between customer experience strategy and the substantive encounter is reflected in a quote by Tim Suther, Vice President, Global Multichannel Marketing Services, Acxiom:

"Eighty percent of CEOs believe they offer a superior customer experience; only 8 percent of their customers agree."

A good customer experience strategy considers emotional variables which are inherently shaped by the independent traits of each consumer, their perception of the experience, if the experience meet or exceeds expectations, and how they come to process it. This allows us to better understand the whys and hows of customers perception and how to best respond during interactions.

Sabrina Wiewel, Chief Tax Network Officer for H&R Block is quoted as saying, "Client retention is the new acquisition."

When considering how to improve customer experience, keep these eight all-important aspects of the consummate customer experience in mind:

1. Value - Product availability, functionality, and an acceptable price point.

2. Help to create positive emotions - Positive emotions are shown to broaden customer attention, adding the potential for extended sales beyond the intended purchase. A customer with a positive viewpoint will possess a more global view of the possibilities offered rather than a limited local view. In-store retailers can use sensory perception to induce positive emotions. Online retailers use visual and auditory inducements.

3. Physical dynamics of the transaction - Appropriate initial contact and good first impression including proper sales rep demeanor, politeness, and helpfulness. Layout, appearance and engaging presentation. Ease of purchase and smooth, efficient transaction.

4. Promptness - Response time, and prompt problem resolution.

5. Full transparency - Information readily available and offered in a clear and concise manner. Information to include discounts, shipping and handling, product information, reviews, refund and return policy.

6. Communication - Online support, live chat, personal interactions, and questions always answered.

7. Post-sale customer service - Transaction updates, shipping and tracking, ensuring full satisfaction with purchase.

8. Encourage and direct customer loyalty - Be a trusted site, have the right products and services available, be dependable and responsive to the needs of the customer. According to the White House office of Consumer Affairs, customer loyalty is noted as being worth, on the average, up to 10 times the amount of the customer's first purchase.

Customer experience metrics such as the NPS, CSAT, and CES provides valuable information for companies as it is imperative to understand if, and where, there may be problems with customer experience. These metrics serve to create a benchmark from which companies can gauge their performance. The CSAT, Customer Satisfaction Score, measures the immediate satisfaction of customers surrounding a single transaction. The Net Promoter Score (NPS) provides indicators of whether or not products and services would be recommended by a consumer post-purchase using the simple question, "would you recommend this company to a friend or relative?" CES, the Customer Effort Score, is an indicator of the lifetime value of a particular customer. The question "How much effort did you personally have to put forth to handle your request?" rates responses on a scale from 1-5. An effort score of 5, the most effort, carries with it little or no chance for expected retention of that particular customer on a long-term basis.

"If you do build a great experience, customers tell each other about that. Word of mouth is very powerful." -- Jeff Bezos

When all is said and done, the consumer wants value for their dollar and wants to feel valued by the companies with which they do business. Everything that goes into creating a positive customer experience serves these two simple needs. It is, however, due to advances in technology and service options, a world marketplace that is constantly in flux. This state of flux allows the needs of the consumer to evolve in ways with which companies must adapt and expand their best practices.

Don Dodds, Managing Partner and Chief Strategist of M16 Marketing, is an innovative digital marketer with more than 18 years of experience demonstrating his idiosyncratic combination of creative, technical and business acumen.

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