Measuring Customer Experience

How to Develop and Execute the Most Profitable Customer Experience Strategies

Philipp Klaus

• Verlag: Palgrave Macmillan
• Jahr: 2014
• ISBN:
  9781137375469
• Thema: Business
• Thema: Marketing

Now, more than ever, customer experience plays a pivotal role in the success and longevity of a company. Based on rigorous scientific tools and global data, this bookoffers a simple but thorough guide on how to master the challenges of the market, and how to deliver superior performance through effective customer experience management.

chapter 1

Customer Experience: The Origins and Importance for Your Business

Today’s organizations have a new, overarching, and often overwhelming challenge to successfully manage the customer experience. This challenge ranges from seeking how to create compelling customer experiences through all stages of the customer’s engagement, to managing the customer’s expectations and assessing it, before, during, and after the buying process (Berry et al. 2002). There is widespread agreement that customer experience is different from, and more complex than, service quality (e.g., Schembri 2006) and customer satisfaction (e.g., Verhoef et al. 2009), and that it is context specific (Lemke et al. 2011). This makes it difficult for scholars, researchers, and consultants both to assist managers in understanding customer experience and suggest generic “best practice” to them. It is therefore up to managers to interpret this emerging concept and make sense of its implementation (Maklan & Klaus 2011).

customer experience is different from, and more complex than, service quality and customer satisfaction

In order to understand Customer Experience (CX), we need to first explore its origins – the history of the phenomenon. Understanding the history of the CX concept is important as it will allow us not only to see how CX evolved over time, but also give us the ability to learn from others’ choices, mistakes, and opportunities. CX management is about applying knowledge, and managers are wise if they use knowledge that someone created and applied before them. After all, an intelligent man learns from his own mistakes, but a wise man learns from others’ mistakes. Learning about how researchers viewed, explored, and defined CX in the past is important so we can start where they left off and move on, instead of just repeating what they did.

To survive in today’s economy, offering high-quality goods and services alone is not sufficient. Companies have to compete on a more complex level by creating a satisfactory customer experience through all stages of the buying process, managing the customer’s expectations and assessments before, during, and after the sale.

Definitions of CX are truly broad. They range from a customer’s actual and anticipated purchase and consumption experience, a distinctive economic offering or the result of encountering, undergoing, or living through things, to the notion of the new, experience-seeking consumer as co-creator of value and experience. The term “co-creation” highlights the influence of customer experience on experiential marketing strategies, such as the ones desired and executed in the luxury goods/services, tourism, travel, and hospitality contexts.

Research links customer experience to most of the outcomes that managers want to measure, or, are actively measuring. These may be intentions and a customer’s state-of-mind (e.g., customer satisfaction, a customer’s intention to become and/or stay loyal, or the likelihood of them giving a recommendation), or actual behavior (e.g., actively recommending the firm’s offerings, purchasing, and repurchasing behavior, share-of-category, or word-of-mouth behavior). However, while the phenomenon of customer and consumption experience can be traced back as far as to the contributions of economists Adam Smith and Alfred Marshall in the early twentieth century, the recent significant number of managerial, academic, and consultancy publications in the field still lacks both a solid foundation and coherent messages about the nature, and more importantly, the management of customer experience. By this I refer to the fact that we still cannot grasp CX’s true meaning – what CX actually is, and how to explore knowledge leading to managerial actions.

Psychologists, consumer behavioralists, business, management, and marketing scholars, philosophers, economists, managers, and consultants try to approach and make sense of customer experience from their unique viewpoints. Measuring Customer Experience provides you with an extensive review of what has been written about CX as of today. The following historical summary and evolving categories reveal and explain the different CX perspectives and their crucial interconnections.

Table 1.1 shows the structure of the literature review, indicating a broad chronological representation of the CX literature. However, the categorization into ten streams does not imply a smooth evolution from one stream of research to another. These streams are not mutually exclusive – some are complementary and overlap. These ten streams of literature are subsequently divided into three categories, content, process, and practice, which represent the main foci – a typology – of CX thinking (see Table 1.1).

The content category is concerned with describing different concepts of CX, establishing its foundations and representing different theoretical views about it. The process category includes a range of perspectives on how the customer experience arises and evolves during interactions with consumers. The process category builds on the research discussed in the content section, emphasizing the role and degree of involvement of the customer experience provider and the customer in designing and influencing the customer experience. The practice category assesses the CX practice and CX management literature. This category includes the newer contributions of recent service marketing and CX research, positioning customer experience as a new competitive imperative for companies, leading to insights on how to successfully measure and therefore manage it.

TABLE 1.1 Customer experience research foci

Category	Literature streams
Content – The concept of customer experience	Economic perspectives
	“Rational” cognitive theories
	Experiential “emotional” theorists and the role of affect
	Peak experiences
Process – How customer experiences arise and evolve	Unidirectional perspectives of customer experience
	Co-created experiences
	Dialogical perspectives
	Brand communities and customer experience
Practice – The portrayal of customer experience management literature	Consultant/analyst perspectives of customer experience
	Services marketing perspectives

Content – the concept of CX

Economic perspectives – first traces

The importance of customer experience as the driver of consumption has been indicated in the early economic literature (e.g., Keynes 1936), in which it is described as the measure on which consumers decide what goods and resulting experiences to purchase (Parsons 1934).

The power of rationality

Despite these early acknowledgments of the importance of customer experience as a “sufficient choice criterion” (Howard & Sheth 1969, p. 26) for buyers’ behavior, the rational (i.e., cognitive-focused) examinations of early behavioral researchers insisted on explaining consumer actions as a purely rational cognitive process (e.g., Ajzen & Fishbein 1977). This view, linking cognition, affect, and behavior (CAB), suggests that customers are involved in a rational assessment of their past, present, and imagined future experience and use this information to determine their behavioral intentions. According to CAB, customers base their decision process on a sequential rational assessment of expectations versus outcomes (e.g., Gronroos 1997). CAB researchers believe that customers collect sufficient information to evaluate choices by constantly assessing their expectations one by one, which, in turn, drives their intentions. However, despite complications and inconsistencies in their conceptualization, CAB researchers uphold their definition of rational consumer behavior as the leading theory in buying behavior. Predictably, experiential researchers challenged this notion.

It’s not all brain – the role of emotions

Experiential researchers suggest that emotions play a, if not the, critical role in consumer behavior. Subsequently, they re-introduce the significance of emotions, and the emotional customer experiences in consumer behavior (e.g., Hirschman & Holbrook 1982). This shift towards a non-utilitarian focus to explain consumer choices is supported by the distinction between buying and consuming behavior, affirming that using a product or service (i.e., the customer experience), will ultimately determine a consumer’s choice (Alderson 1957). This transference from the functions towards the hedonistic properties of products and services highlights emotions’ importance for CX management (Klaus 2011).

The fascination of the extraordinary

Building upon emotional factors as a cornerstone to explain consumer behavior, researchers now turned their focus towards the differences in these emotional experiences. From this research two streams of knowledge emerged: extraordinary experiences and the overall assessment of customer experience (Klaus & Maklan 2011). Extraordinary experiences research, based on a social science framework, challenges the notion of the traditional, service-quality-grounded thinking that the customer experience is a summation of all the elements of a holistic customer experience (Verhoef et al. 2009). Extraordinary experiences research refers to the idea that, while encountering extraordinary experiences, such as the often-cited river rafting experience (Arnould & Price 1993), tourism, vacations, dining, being in entertainment parks, and taking part in sports and leisure activities, consumers both cannot and do not follow the traditional confirmation–disconfirmation paradigm facing these experiences (Klaus & Maklan 2011). This paradigm states that customers simply judge their experiences by comparing their expectations to their perceptions. Among extraordinary experiences, the most developed categories are flow and peak experiences. Schouten et al. (2007) coined the term “transcendent customer experience” to refer to flow and/or peak experiences. Flow experiences occurrences are events in which we are completely involved in an activity for its own sake. Our ego takes a backseat, time flies, every action inevitably follows the previous one, and we are completely involved. This is often referred to as “being in a zone,” and can occur during creative activities (e.g., drawing or writing) or while engaging in the sport of our choice. Peak experiences are often described as moments of pure joy and excitement – moments that stand out from everyday events. People often connect the lasting memories of peak experiences with a spiritual, even divine, experience. Both flow, and peak experiences are related (Privette 1983) and sometimes overlap in the same activities. Carù and Cova (2003) highlight, though, that we should not forget about the ordinary experiences and their interlink relationship with extraordinary experiences. Their key message is that without comparing ordinary experiences derived from our daily mundane life – in fact, benchmarking them – no experience can be called “extraordinary.” Thus, those ordinary experiences are also important parts of our lives, and can consist of different levels of intensity. As a result, researchers propose that the customer experience exists on an ever-shifting continuum between ordinary to extraordinary, rather than being mutually exclusive to either one (Klaus and Maklan 2011).

While we can establish that customers’ actions are more and more experience-driven, this fact provides little guidance to managers to determine which kind of experience drives which kind of behavior at which particular stage. Managers often do not know if and when the design of extraordinary experiences is required to drive the important behavior they are looking for, such as purchasing, repurchasing, loyalty, and positive word-of-mouth. Moreover, if experiences are indeed a blend between extraordinary and ordinary experiences, how can managers understand at which stage and through which channel, these different experiences need to be designed and delivered? Perhaps the knowledge of how experiences arise and evolve – the customer experience process – can provide us with some answers to these burning questions?

Process – how customer experiences arise and evolve

Based upon the findings of the kinds of customer experiences consumers can have, researchers moved on to explore the various perspectives on how the customer experience arises and evolves during the interactions between the firm, their channels, their products, their employees, their products and services, and consumers (e.g., Schmitt 2003). In particular, the role and degree of involvement of the CX provider and the customer in designing, delivering, and influencing the customer experience have stimulated multiple research domains.

Let’s get together – from unidirectional to co-creation

The research ranges from a more provider-driven, unidirectional (the firm’s) perspective to customer-driven, co-created experiences (Palmer 2010). On the one hand, researchers suggest that every firm can, with the support of their customers, aim to carefully craft the delivery of a customer experience (Payne et al. 2008). This perspective highlights the role of knowledge-sharing processes, as the firm seeks to understand every facet of the customer experience throughout all direct and indirect encounters and interaction with their existing and potential customers (Frow & Payne 2007). And, let’s be quite clear, both viewpoints (the firm’s and their customers’) play a vital role in developing, executing, measuring, and managing the customer experience. On the other hand, researchers indicate that the involvement of customers in the experience design and management process will add little more than costs, and confirmation of already existing knowledge. Or as the Chief Marketing Officer (CMO) of a telecommunication company mentioned in an interview with me, “We already know what they [the customers] want. They want it cheaper, faster, and more reliable. How could that possibly help us?” Other internal market research groups, such as consumer electronics, raise similar questions by highlighting that often consumer simply “don’t know what they really want. So, how could this help us in our research and development process?” In addition, of course, there is always the notion of managers just knowing their customers “better than they do themselves.” However, a famous study highlights that while 80 percent of Chief Executive Officers (CEOs) claim they deliver great customer experiences, only 8 percent of their customers agreed with this judgment.

Co-creating experiences requires interactions between the customer and the firm. While researchers link these approaches with customer experience, sometimes the connection is vague (Klaus & Maklan 2011). Unlike the peak experience perspective, the co-creation perspective regards the customer experience holistically, including all interactions in a sequential order (Payne et al. 2008). Co-creation considers every interaction as imperative to the customers’ evaluation of their experience (Ballantyne & Varey 2006). The function of the firm is therefore to facilitate the customers’ ability to attain an optimal experience (LaSalle & Britton 2003). One limitation of the co-creation idea is its insufficient explanation of the impact of social context on the customer experience, such as peer-to-peer interactions. We all know how influential these peer-to-peer, or, if you like, consumer-to-consumer/customer-to-customer interactions are. Just think about the power of peer review in e-commerce, or the influence of rating websites such as TripAdvisor. An individual experience of a product or service may be highly dependent on the social experience of a group or wider social context (Gentile et al. 2007). After all, we experience having dinner by ourselves, with our loved ones, or with a group of friends, in entirely different ways, simply because of the company (or lack of it) we are in. Researchers argue that the social context, perhaps more accurately labeled as the “customer context,” indicates that the customer experience is dependent on customer,...