Research Paper: Critique and Empirical Study of “Customer Experience Management”

The paper is focused on the problem of Customer Experience Management. The paper discusses the definition of the notion and its basic characteristics. Than it is analyze in relation to the marketing aspect. The paper combines both theoretical assumptions and practical examples. The general idea is that Customer Experience Management is a very perspective though not deprived of some disadvantages and needs to be modified and improved.

Introduction

Customer Experience Management is one of the most arguable questions concerning the contemporary trends in the market of different countries, basically developed ones. It is necessary to realize that the current economic situation makes relations established between a company or a product and customers particularly important because customer is the primary care of any company that attempts to operate successfully and for a long period of time in a definite segment of the market. In fact it is impossible to organize a business without taking into consideration customer’s needs, demands and experience.

The latter is particularly important because in the contemporary market situation companies’ brands play more and more important role and in such a situation customers prefer to buy product or services of famous brands they already know or they once experienced to have a deal with.

Consequently the understanding of customer experience and development of Customer Experience Management becomes vitally important for any company since it permit to develop the company’s market share and its sales rates etc.

However, there are a lot of critique concerning Customer Experience Management and some times it is said to be ineffective or weak marketing tool. Naturally it is necessary to critically evaluate both views on Customer Experience Management in order to have a clear understanding of this phenomenon that is a necessary condition of taking a decision to what extent use the methodology of Customer Experience Management, especially in marketing aspect.

The Definition of Customer Experience Management

As any other notion Customer Experience may have different interpretations and in fact it really has but in general there may be found some key elements that are essential for all correct interpretations of this notion. Actually the problem is that Customer Experience Management is a relatively new notion and hypothetically it may be applied in different situations, as a result there appears different interpretations.

Nonetheless it is quite possible to single out some universal interpretation of the notion of Customer Experience Management. For instance, the definition given by B. Schmitt may be treated as a universal one. So, according to him Customer Experience Management is “the process of strategically managing a customer’s entire experience with a product or a company” (Schmitt 2003, p.17).

Naturally, such a definition, being quite universal and accepted by many specialist working on the problem of Customer Experience Management, may be to a certain extent too universal and as a result it can and probably needs to be extended. What is really important here is the fact that at any rate this definition should be explained and analyzed otherwise it would be useless and probably unclear.

In fact it is necessary to understand its entity and key elements for better understanding of the notion of Customer Experience Management. It is obvious that in the marketing aspect it is especially important to manage a customer’s experience with a brand and it would permit to achieve a truly management concept focused on the customer. This needs a clear understanding of goals that have to be achieved and consequently it is necessary to define them and constantly work on their achievement.

Traditionally several, namely five, steps are singled out and these steps are considered to be essential for managers since they should help them to understand and manage the customer experience.

The first step is analyzing the experiential world of the customer. This step implies the analysis of socio-cultural context of the customer. It means that it is necessary to analyze the customer’s needs, wishes, habits, and lifestyle in general. Also the manager has to analyze concept that includes current requirements and possible solutions.

The second step is building the experiential platform. At this point it is necessary to take into consideration such fact as the connection between strategy and implementation, which specifies the value that the customer can expect from the product. In literature it is traditionally called EVP, i.e. experiential promise value.

It should be underlined that the first two steps mentioned above form the basis for Customer Experience Management while the following three steps are rather focused on its implementation in practice.

So, the third step is designing the brand experience. This step implies the development of the brand experiential features, product aesthetics, a so-called ‘look and feel’. An example of such experiential features may be logos. It is obviously a very important step since it is extremely significant for the prospective development of the brand and its promotion in the market.

The fourth step includes the structuring of the customer interface. What is meant here is the development of all sorts of dynamic exchanges, and contract points with customers intangible elements, among which may be emphasized such elements as customer’s values, attitude, behavior and others.

The final, the fifth step, is traditionally defined as engaging in continuous experiential innovation. Obviously this step is oriented on a long-term prospective relations between the customer and the company and its basic aim is to improve customers’ personal lives and customers’ working lives, or at least it is necessary to make customers to feel like their lives are changing for better if they buy the company’s product or service.

Finally it should be said that it is impossible to use all five elements separately, on the contrary, it is vitally important for the general success of the company, and it is probably the cornerstone of the Customer Experience Management, that all five elements were combined and supported each other since all of them are really essential. At this respect it may be said that, to bring all five pieces together, “a holistic approach is required that provides a linkage between the different steps and connects them with the organization” (Schmitt and Simonson 1997, p.254). Thus, effective Customer Experience Management implies not only the knowledge of objectives but also the five steps, which, in combination, would lead to the achievement of these goals.

The Importance of Customer Experience Management Related to Marketing Aspect

Basically, Customer Experience Management is the methodology that tries to overcome the gap between theory and practice by reformulating basic marketing principles. In fact it may be called an innovative methodology and in a way it is the continuation of Customer Relationship Management. As a result Customer Experience Management stresses four aspects of marketing management.

Firstly, it is the fact that Customer Experience Management focuses on all sorts of customer related issues. Secondly, Customer Experience Management the analytical and the creative that provides its high effectiveness since on the basis of careful and thorough analysis managers are supposed to build a structure engendered by their creative abilities in such a way the more gifted, or creative a manager is the more effective his/her work would be that is particularly important in the age of great technological and informational progress.

Furthermore, Customer Experience Management takes into consideration both, strategy and implementation. Consequently it is possible to say that it is not simply a theoretical or strategic management that defines the general policy of a company. It is obviously more important since it is, being strategically important, is practically implemented that means that has a direct and it is even possible to say quite quick effect. Moreover, Customer Experience Management implies the combination of strategic goals and their practical achievement as essential components of the company’s policy.

Finally, the fourth aspect that is quite important is the basic principle of Customer Experience Management. This principle is the realization of the idea that Customer Experience Management should operate both internally and externally. Consequently it influences not only customers but the company as well as a result the effect of Customer Experience turns to be dubious or it would be better to say mutual. As a result, the effect proportionally influences both sides this is why if the effect is positive normally it is positive for the customers and the company, or vice versa.

However, besides the fact that Customer Experience Management influences or even changes the basic principles of marketing, it also influences other branches of marketing and management. In fact, it is impossible to speak about Customer Experience Management as absolutely independent branch separated from all the others. Such idea is obviously erroneous because it involves other branches and some specialists even estimate that “it appears as if Customer Experience Management might be following Customer Relationship Management as one of the leading concepts for the years to come” (Schmitt 2001, p.201). Despite the fact that this statement sounds a bit too optimistic, it is quite reasonable regardless the criticism that often is directed against such attitude to Customer Experience Management and considers it as not so important and prospective as one might think. But still, its role and importance in contemporary market are undeniable.

Recent marketing research has shown that about 70 to 80% of all products are perceived as commodities, that is seen as being more or less the same as competing products. Naturally this makes marketing the product extremely difficult. This is why marketers have taken various approaches to this problem. Among them were used such approaches as branding product differentiation, market segmentation, relationship marketing and some others. Remarkably Customer Experience Management has turned to be one of the most effective tools especially for the companies that just started their business.

In such a situation the importance of Customer Experience Management is obvious because along with other methods and approaches it may have a positive influence on the development of company-customer relations. Moreover, Customer Experience Management gradually involves customers in a sort of dependence on the company’s brand, products or services.

However it is the general role of Customer Experience Management but speaking in details, it is necessary to underline its role in the aspect of marketing from the point of view of four aspects of marketing management mentioned above, namely: Customer Experience Management linkage to customer related issues, the combination of the analytical and the creative, as well as the combination of strategy and implementation, and its internal and external impact. Regarding this aspects of marketing management it is possible to make a clear conclusion about the significance of Customer Experience Management for marketing at large and for the aspects just listed above in particular, because its first concern are undoubtedly customers, their attitude to the company, its brand, products and services and what is probably more important it is the research of customers’ experience and further corresponding development of relations between company and customers.

Finally, Customer Experience Management makes the company and its employees, working in this direction, progress since it provokes their analytical and creative abilities, provides implementation of strategic decisions in practical life. Anyway, many specialists agree that Customer Experience Management will progress as an important part of the marketing development.

The Limitation of Customer Experience Management Related to Marketing Aspect

Naturally Customer Experience Management is not an absolute and cannot be treated as the only and the most effective concept that may be applied in marketing. Not surprisingly that it has certain limitations.

First of all it should be said that Customer Experience Management tends to overcome marketing borders and moreover it seems as if it interferes in other spheres of life. What is meant here is the fact that, being based on customers experience, Customer Experience Management is focused on customers needs, wants, habits, etc. However, customer experience may be treated in a wider sense and as a result it may be formed by factors which are not related to some economic conditions or the current situation in the market. Consequently, in such a situation Customer Experience Management can hardly be applied in its marketing aspect.

Probably some explanations are needed here. In fact it is simply necessary to realize that there may be economic or market factors shaping customers needs and experience at large but there are also so to say external factors that derive from other spheres of life, for instance cultural or political. There may be found a variety of such factors, for instance, cultural traditions of some communities may limit their consumption. Consequently the company which is out of the limits would be unable to develop a desirable customer experience the only thing it would be possible to do is only to assess the market and its perspectives. If a food industry and food consumption were taken in terms of example it would be possible to say that for some cultures there are some limitation on consumption of certain types of food, for instance Jewish community, which members cannot eat any food forbidden by their religious laws.

Naturally, they do not have any experience in consumption of any sort food and they would hardly develop it if only they do not change their lifestyle at large.

It is also possible to speak about political aspect as a factor influencing on the development of Customer Experience Management and overcoming borders of the marketing aspect. For instance, political conflicts may influence the situation in the market because some quotas or embargos may be implemented in relation to some products or services of some countries. As a result, the companies operating in such countries would hardly be able to work in the markets ‘closed’ for their products or services and naturally even perfect Customer Experience Management would be of no use since as a rule in such a situation there is practically total lack of the experience of consumption. An example of such country may be Iraq which used to suffer from international sanctions and many companies which could and really wanted to operate in this market have failed to do it because of economic sanctions which made the local population inexperienced in the consumption of the products and services suggested by these companies because did not have practically no contacts with customers. So, there was neither experience nor perspective of its development that means that in such a country Customer Experience Management would have a limited, if not to say no effect.

Thus, it is obvious that Customer Experience Management has its limitations related to the marketing aspect, which in fact may be the result of external, i.e. not economic, factors but influencing the situation in the market at large.

Pros and Contras of Customer Experience Management

Despite the growing popularity of Customer Experience Management, it is still quite arguable whether it good or bad or more precisely whether it has more advantages than disadvantages. This is why it is necessary to analyze its positive and negative sides and find out what are the pros and contras of Customer Experience Management and only after that it would be possible to make some concrete conclusions.

Basically principle advantages of Customer Experience Management have been already mentioned now it is necessary only summarize and critically evaluate them. Ideally, Customer Experience Management has to analyze firstly customer experience, needs and wants. So the customer’s interests seem to be the primary concern of Customer Experience Management but, unfortunately, in actuality the only real reason the most of the companies are so concerned about their customers is their own well being since it is the customers the companies are interested in but not their needs and wants. Viewed from this angle Customer Experience Management is not so good as one may believe because it turns to be quite pragmatic and cruel in a way since the companies’ focus on customers is the result of the current situations in the market because otherwise the company that does not care about its customers experience would probably fail to succeed.

Furthermore, it is obviously positive fact that Customer Experience Management aims at the development of companies brand, based on high quality and reliability and the formation of stable interests of customers to this brand and its products and services. But it is also necessary to realize that such ‘brand-addiction’ is crucial for new companies which just start their business and have problems with the promotion of their own brands and the more developed Customer Experience Management is the more difficult the position of new companies will be because even nowadays brand is one of the most important contributors to the company’s image and value.

Also, it should be pointed out that the fact that Customer Experience Management reformulated some basic marketing principles is treated by many specialists as a pro of this concept. And really it is very hard to argue that the focus on customer related issues, combination of the analytical and the creative, strategy and implementation, both external and internal effect are not advantages of Customer Experience Management. However, on the other hand it is also important to realize that certain negation of other marketing concepts can have a rather negative effect because they are also very important, for instance Customer Relationship Management or the concept of Customer Satisfaction.

Thus, it is obvious that Customer Experience Management, having a number of positive features, can face a strong opposition of those who are against such a revolution in marketing since other concepts that were used before were and obviously remain quite effective. As a result it is possible to say that Customer Experience Management is a dubious phenomenon, on the one hand it has a lot of supporters who believe in its effectiveness and they really have their reasons, on the other hand, there are a lot of those who are against it because it is probably too innovative and revolutionizing and speaking objectively it is to a certain extent too focused on customers’ needs and experience that sometimes it is difficult to be applied in marketing aspect only and hypothetically it may undergo a shift into socio-cultural sphere, rather than economic one.

Critique of Customer Experience Management

Naturally, Customer Experience Management is not an absolutely positive or negative phenomenon. As many other things in the contemporary business world it is quite a controversial notion. On the one hand it ahs a lot of positive aspects, while on the other, on critical evaluating the entity of the process, it is possible o find enough disadvantages that significantly deteriorate the first impression. As a result, it is necessary to be very careful in assessment Customer Experience Management, especially, if one takes into consideration the critique that is not so rare as its supporters wish to have. Anyway, in order to understand the nature of this critique and correctly assess all aspects that are criticized it is necessary to return a bit back in history of the question and reassess some of Customer Experience Management advantages.

On the other hand, it is necessary to realize that the existing marketing model is not perfect too and Customer Experience Management modifies it to a certain extent and probably, under certain circumstances, improves it especially if it is used effectively.

In the context of critique of Customer Experience Management it is important to remind that the development of customer experience management originally started with a critique of three existing marketing concepts. Consequently it is possible to speak about Customer Experience Management as an alternative to the marketing concepts prevailing in that epoch. Obviously it symbolized that the following three marketing aspects were not effective enough.

So, marketing concept, taken at large has started to be discussed over and over again. Since the 1970s there has been a gradual shift from a product-, technology- and sales-focused orientation toward a customer- and market oriented approach by determining the wants and needs of customers and satisfying them more efficiently or effectively as compared to competitors. In other words the role of customers and their needs, inclinations and finally habits eventually has become extremely important and in perspective it could define the future of the marketing and management development. Consequently as an alternative Customer Experienced Management was suggested as more perspective approach and more customer-oriented one.

However, the approach is still functional, with similarities and differences between the competitors being defined mostly by product features and customer benefits. In addition, the customer is perceived as being rational, which is traditionally not a case, as some of the theories have proven, for instance Kahneman and Tversky’s Prospect theory.

Also, it is supposed that the market research is mostly analytical leaving little room for qualitative assessment of customer relationships toward products, services or brands. Some specialists, including Shultz, estimate that “traditional marketing, in practice, takes an inside-out approach (starting with internal variables like production capabilities and available capital than moving to external variables like customer needs), rather than taking an outside-in approach as marketing theory requires” (Pine and Gilmore 1999, p.238).

Another concept that turned to be ‘non-perfect’ and which was supposed to be improved by Customer Experience Management was Customer Relationship Management. This concept is claimed, basically by followers of Customer Experience Management, to be deficient because it primarily consists of database and software programs used in call centers and thus, focuses too much on quantitative data. In such a situation it has obvious disadvantages be fore Customer Experience Management, which, as it has been defined above, combines both quantitative and qualitative aspects, or at least it should tend to it. By doing this, it is led by transactions rather than by a desire to build lasting relationship with customers that also seems to be erroneous in a new market situation when customers and their tolerance to certain brands, products, etc. is crucially important.

Finally, such concept as customer satisfaction is also very significant. However, this concept, being not bad at first glance, has been also severely criticized by followers of Customer Experience Management. In actuality, customer satisfaction is an outcome-oriented attitude deriving from customers who compare the performance or value of product with their expectations of it. It is claimed that the customer satisfaction approach depends too heavily on outcome oriented measures like satisfaction and too superficially on direct experiential measures. In fact Customer Experience Management was supposed to fill such a gap.

Furthermore, a customer is said to be satisfied when a product’s performance is above the customer’s expectations. Thus, traditional customer satisfaction techniques are deficient if they do not help companies to understand and manage customers’ experiences that lead to the following equation: good experience = satisfaction.

Naturally, in such a situation Customer Experience Management seems to be a very perspective concept that to a certain extent revolutionized marketing management and company-customer relationship. The explanation is quite simple since Customer Experience Management recognizes, as in fact does all of marketing since the early 1970s, that customers are the company’s most valuable assets. What makes Customer Experience Management different from traditional marketing is that it claims that the marketing theory has seldom been implemented adequately.

At the same time, it is necessary to realize that Customer Experience Management, being a kind of alternative to other marketing concepts, should not be idealized since it has a number of disadvantages mentioned above and it cannot be implemented in real life as the theory implies. Naturally there would be some mistakes and in all probability it is practically impossible to develop an ideal concept but still it is obvious that Customer Experience Management is rather perspective since its first concern is a customer and his/her needs, wants, habits, basically formed and developed by his/her experience. Thus, the higher is the degree to which practical implementation is close to theoretical ideal the more efficient and effective Customer Experience Management will be.

The Necessity to Modify Customer Experience Management

Obviously it is necessary to modify Customer Experience Management because of its contradictive character and critique. At this respect it is necessary to return to the basis of this concept and analyze in details the five steps the Customer Experience Management traditionally involves and correspondingly find out the best realization of each step.

As it has been already said there are five basic steps, they are as follows: analyzing the experiential world of the customer, building the experiential platform, designing the brand experience, structuring the customer interface, and engaging in continuous experiential innovation.

Ideally on the first step, i.e. analyzing the experiential world of the customer, it is necessary to decide what it should be like. On modifying the current model, the first step should consists of identification of target customer. At this respect it is necessary to take into consideration that there are two types of customers: individual consumers, which goal is that products meet individual needs, and business, which goal is to meet business needs. Than it is necessary to track the customer experience and to understand how the experience can be enriched for the customer. Than, on information searching and processing, it is possible to make a choice but it is necessary to take into consideration the position of the main competitors which may be of three types: direct competitors, new entrants and players outside the industry. Such analysis, being difficult to make, can really be effective.

The second step is building the experiential platform involves positioning and strategic planning. Building the experiential platform should be achieved through three parts. Firstly, experiential positioning used to depict what the brand stands for. It should be tangible enough to immediately make any changes if necessary. Secondly, experiential value promise specifies precisely what the experiential positioning will do for the customer. The right choice of experiential value promise can determine tangible outcomes, such as sales, market share and profitability. And finally overall implementation theme should link the positioning and value promise to actual implementation. It is noteworthy that it provides the input for the implementation elements and it states the sequence of the elements.

The third step, designing the brand experience, involves deciding what the brand experience should be like. It consists of all the static elements that the customer encounters, such as the product itself, logos, etc. It is necessary to underline that there is the need to protect the brand experience and keep the competitors from copying it otherwise it will be ineffective. During the designing the brand experience four key elements should be taken into consideration, they are: a) the product experience, including functional attributes of the product (how well the things work), experiential features (how the product works), and aesthetics (design, colors, etc.); b) look and feel, including the visual identity (logo, name); c) experiential communications, including the advertisement, which should provide value, inform and entertain the customer; d) customer service.

The fourth step should structure the customer interface. The customer interface refers to the dynamic exchange of information in service that occurs between the customer and a company. Basically it should deal with three types of exchange and interactions: face-to-face, personal-but-distant and electronic. The effectiveness of structuring the customer interface may be achieved through three key elements: a) essence and flexibility, which underlines the importance of what is communicated to the customer when a direct contact exist; b) style and substance, which refer to the manner of expression of essence and flexibility and tangibles associated with it; c) timing, for interface exchanges and interactions extend over time.

Finally, the fifth step, engaging in continuous experiential innovation also should be modified as follows. In fact it can be achieved by any improvement to the customer experience. The innovations should be experience driven and not product or operation focused. Customer experience is also very important for the development of new products and therefore should be implemented in the innovation strategy and plan. At the same time, the innovation plan should not be too narrow because it may limit the company in seeking new opportunities. Customer should not be integrated in the whole development process, but the once the company has a clear idea or even a prototype, it should definitely be tested with the customers in an experiential way.

Thus, if these recommendations and modifications are used than it will be possible to speak about effective and efficient Customer Experience Management.

Companies Using Customer Experience Management in Marketing Aspect

On analyzing theoretical aspect of Customer Experience Management, it would be logical to draw some examples of the companies which use it in their practice. Actually, Customer Experience Management is quite popular and widely used but still it is not a one hundred percent guarantee of commercial success but, on the other hand, made a significant progress due to the use of Customer Experience Management.

One of such companies is Jamba Juice. In fact this company is particularly successful in experiential positioning. Jamba Juice has managed to create a really positive image and developed its brand due to a wise promotion and positioning. In the current situation its ideology of fun and health experience could not fail to succeed, especially in developed countries where the problem of health becomes probably the most important.

Another example of successful implementation of Customer Experience Management is Red Bull. The company also is extremely successful in its experiential positioning and has gained the world recognition. The motto ‘Energy in the bottle’ has eventually become a very effective and stimulating customers to consume the company’s products that naturally led to the development of customer habits, experience and tolerance to the brand and made Red Bull quite popular in many countries of the world.

The examples described above may serve as a good illustration to the rational and effective implementation of Customer Experience Management but still it is necessary to remember that it is the company that defines its future but not the methods it uses only.

Conclusion

Thus, taking into account all above mentioned, it is possible to make the conclusion that Customer Experience Management is quite a perspective field for further work but it has both advantages and disadvantages that makes its implementation not an easy task. Moreover, Customer Experience Management is often criticized but still it is necessary to remember that this approach is quite innovative and to a certain extent revolutionary in relation to market aspect and consequently noteworthy. This is why the further research and development of Customer Experience Management seems to be very perspective and many companies successfully implement it in their business.

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