book.chapter Improving the customer journey

Managing customer experience has shifted from an operational aspect to a strategic priority, crucial for business success. With numerous quality options, customers now prioritize the overall experience a company offers. This experience-centric approach allows companies to build customer loyalty, charge premium prices, increase customer lifetime value, and maintain higher growth rates. It's a significant source of competitive differentiation, with data showing that experience leaders outperform their peers financially. Therefore, managing customer experience is not optional but mandatory for modern businesses.. Evolving value propositions Starbucks' transformation from a simple coffee bean retailer to a global brand offering a unique customer experience illustrates a significant shift in value propositions. Initially, Starbucks focused on selling gourmet coffee beans. However, when Howard Schultz became CEO in 1982, he was inspired by the sensory coffee drinking experience he encountered in Italy and aimed to bring this to Starbucks. Despite resistance from co-owners, Schultz persisted with his vision, eventually buying out Starbucks and turning it into a global brand recognized for its unique coffee-drinking experience. This evolution from commodity pricing to creating value through experiences is becoming more prevalent. Companies are realizing that they can't rely solely on cost-cutting or promotions to compete. Instead, they need to move from simply selling products to consciously engineering rich customer experiences that connect on an unconscious level. This allows for differentiation that is harder to copy and can command significant price premiums. However, this transition is not easy. It requires a shift in mindset from focusing on products and transactions to understanding the customer's perspective and designing experiences that integrate into their lifestyles and identity. It also requires aligning the entire organization around the customer perspective and embedding skills like ethnography, psychology, and design thinking throughout operations. Despite the challenges, the potential impact of successfully implementing such strategies can be immense. Companies that can connect to the unconscious emotional passions of their customers and leverage this can create almost unassailable competitive barriers while commanding outsized financial returns. As the Starbucks example shows, with commitment and patience, it is possible to create an experience customers cannot find elsewhere, leading to significant financial returns. Brand relationships The distinction between brands and experiences has often been blurred, yet they are fundamentally different. Brands reflect a company's desired perception among customers and employees, shaped by a brand statement that guides the company's approach. Experiences, however, are customer-specific, encapsulating the emotional response and value customers find in using a company's products or services, guided by an "experience motif" that influences all customer interactions. While brands and experiences are distinct, they are interconnected and both contribute to creating value. Brand value, the brand's worth to the company, is influenced by brand equity, which is how customers perceive the brand. Brand equity is, in turn, affected by experiential value, which is the value customers feel about themselves when interacting with the brand. This experiential value can lead to brand loyalty, which is reflected in a customer's preference, commitment, and advocacy, and can ultimately improve a company's financial performance through increased profit, valuation, and fiscal durability. Superficial branding cannot guarantee customer loyalty since value is customer-determined. Customers respond to the emotions and reality they perceive, rewarding companies that provide meaningful experiences and abandoning those that do not meet their deeper needs. Some companies have begun to bridge the gap between branding and experience without fully implementing sustainable experience management systems. Transitioning from a production-centric to a customer-responsive mindset presents challenges, but the potential rewards make it a worthwhile endeavor. Managing value Creating memorable customer experiences involves understanding how perceptions shape these experiences, which unfold in three stages: perception, interaction, and recollection. Customers bring preconceived ideas to the experience, engage directly with the company, and then integrate their thoughts into an overall perception that informs future expectations. Companies understand that experiences can start before the first purchase and continue indefinitely after. They use "clues"—sensory and emotional signals—to trigger reactions that color perceptions of experiences. Managing experiences as value propositions involves enhancing identifiable elements, ensuring clues consistently reflect desired motifs, and connecting offerings to customer values by understanding their experience and improving clues. Organizations follow three principles: having systems with both breadth and depth, integrating human and environmental clues seamlessly, and meeting needs functionally before connecting emotionally. Even a modest shift of resources towards experiences can yield significant returns. Small adjustments to traditional processes can have a large impact. All senses should inform memorable experiences, as they provide impression inputs. Managing experiential clues can be challenging, but the potential rewards make it worthwhile. The clues already exist in your current offerings, so managing them for greater returns is a logical step. Experience building blocks Every experience is a tapestry of sensory details that shape our impressions. Some details are consciously noted, while others are subconsciously absorbed. These details can be categorized into functional, human, and mechanical clues. Functional clues relate to the inherent aspects of a product or service and are evaluated rationally. If these do not meet expectations, disappointment ensues. Human clues, such as grooming and body language, are processed subconsciously and elicit emotional responses. Mechanical clues include ambient elements like sights and sounds, also evaluated emotionally. An effective experience design system filters these clues, enhancing the customer value proposition. In industries where functional differences are minimal, emotional clues become the differentiators. Awareness of this process is the first step in leveraging experience as a value proposition. By identifying and orchestrating these clues, businesses can shape experiences to better meet customer needs, fostering preference and loyalty. Experience management combines various disciplines to pinpoint the rational and emotional clues customers seek. These insights help create experiences that resonate on a deeper emotional level. Understanding the significance of clues in experience design is crucial, as their impact varies based on individual perceptions. A clue that delights one person may not have the same effect on another. Mastering this aspect of experience design can lead to significant benefits for a company's bottom line. Expertise development Delivering exceptional customer experiences hinges on a system that is disciplined, adaptive, and customer-centric. It requires clear processes, guidelines, and training to help all employees understand and meet customer needs, ensuring consistent application of customer service principles. Adaptability is key, as customer values change over time. Organizations must engage in continuous feedback loops, using surveys and observations to understand these changes and update their processes accordingly. A customer-centric approach involves seeing the experience through the customer's eyes, using empathy tools and personas to gain a deeper understanding of their needs and emotions. This helps in shaping services that not only meet but exceed customer expectations by addressing their pain points. Smooth transitions between different departments are crucial for a cohesive customer experience. By mapping the customer journey, companies can identify and bridge gaps, fostering collaboration and clear communication across teams. Metrics should reflect the customer's perspective, combining quantitative data like satisfaction scores with qualitative insights from interviews and employee feedback. These human-centered key performance indicators guide better decision-making. In essence, a well-designed customer experience system enables every employee to contribute to positive customer journeys, turning single interactions into lasting relationships. It's a framework that empowers organizations to consistently deliver value, adapt to changing needs, and maintain a focus on the customer's perspective.