Transcript Customer Experience and Customer Relationships

Customer Experience and Customer
Relationships
Customer Experience
Agenda
 What
is customer experience?
 What are the four stages of the customer
experience hierarchy?
 What goals must a firm keep in mind
when designing a desirable customer
experience?
Definition of Customer Experience
 In
general,
A
target customer’s perception and
interpretation of all the stimuli encountered
while interacting with a firm.
 On
the Internet,
 The
interpretation of one’s complete
encounter with the site, from the initial look
at the homepage through the purchase
experience, including decisions such as
abandoning a shopping cart.
The Experience Hierarchy Four Stages of Customer Experience

Stage One: Experiencing Functionality “The Site Works Well”





Usability and Navigation
Speed
Reliability
Media Accessibility
Security
The Experience Hierarchy Four Stages of Customer Experience
Two: Experiencing Intimacy –
“They Understood Me”
 Stage
 Customization
 Communication
 Consistency
 Trustworthiness
The Experience Hierarchy Four Stages of Customer Experience
 Stage
Three: Experiencing Internalization
– “It’s Part of Me”
Exceptional Value
Shift from Consumption to Leisure Activity
Active Community Membership
“The Company Cannot Manage Without Me”
The Experience Hierarchy Four Stages of Customer Experience
Four: Experiencing Evangelism –
“I Love to Share the Story”
 Stage
 Taking
the Word to the Market
 Defender of the Experience
Exhibit 6–1: Stages of Customer
Experience
What the Firm Does
Stage One: Functional
Great
design and information architecture
Useable
Deep
understanding of customer behavior
Quick,
Platform
Server
Stage Two: Intimate
independence
transactions
Warehousing
Tailoring
Overlay
and mining
of pages and offerings
human interaction
Integrated
Stage Three: Internalized
What the Customer Experiences
Consistent
Easy
site
speedy downloads
navigation
Reliability
Personalization
Increasing
trust
Consistent
experiences
data
performance over time
Constant
innovation and upgrading
(incremental or significant)
A
sense of “being in the know”
Exceptional
Repeated
experiences of value
Significant
Stage Four: Evangelists
Supports
evangelists
Acknowledges
evangelists
value
“gap” relative to other offerings
Takes
message to the market
Enjoys
benefits of community
Six Broad Goals for Creating a Desirable Customer
Experience
1.
Create a Rich Description of the Target Customer
2.
Integrate the Online and Offline Experience
3.
Articulate Clear Stages of the Desired Experience
4.
Assess Relative Levels of Hierarchy
5.
Highly Leverage the Evangelists
6.
Continuously Monitor and Adjust
Exhibit 6–2: Stages of the Customer
Experience
OtherOriented
Evangelist
Internalized
Customer
Reactions
Personal
Intimate
General
Functional
Time to Develop Relationship
EBay Screenshot
Source: www.ebay.com
Exhibit 6–5: EBay Motors
Suppose the user is interested in bidding on a vehicle in the Los Angeles area — a Volkswagen
Jetta in the $10,000 to $16,000 price range and manufactured after 1996. Users click to the
automotive section of eBay’s homepage and switch to the eBay Motors page.
Exhibit 6–6: Browse by Cars
Once inside the eBay Motors site, the user follows the path “cars.”
Exhibit 6–7: VW Jetta
Volkswagen and Jetta, leading to the current auctions that are happening
Exhibit 6–8: VW Jetta ’99
When inside the auctions listed, the user looks for the desired price range and the year
model. The user finds a VW Jetta ’99 with bids starting at $6,400.
Exhibit 6–9: Bidding on the Jetta
This model and price are of interest. The user decides to bid.
Exhibit 6–10: VW Jetta ’99 Reserve Not Yet
Met
The user is currently the winning bid, though the reserve price for this particular car has not yet been met.
The user has to continue bidding more if he or she wants to win and purchase the car.
Exhibit 6–11: Confirmation e-Mail
Exhibit 6–12: My eBay Jetta
My eBay has the necessary information to keep track of all auctions the user has been participating in,
thus users use this page as their main interface. By this means, the user can keep track of relevant
information for the car auction.
Exhibit 6–4: Stages of Customer Experience for EBay
Stages
Functional
Generic Desired Customer Experience for
Auctions
Special “Metrics” for EBay
Direct
message
Easy
to locate items
Clean
layout
Easy
to upload information to sell
Speedy
(quick browsing / searching /
bidding)
Fast
auction interactions
Easy
Straightforward
selling (“step-walks” user)
Good
market segmentation (category /
region / special interests)
Site
to understand pre / post-auction interface and rules
“works well” (no crashes, limited downtime)
Very
efficient access
User
constantly knows status of auction
Reliable
Intimate
Effective
communication
Consistent
Trustful
Only
Internalized
experience
customer service
the necessary level of personalization
Exceptional
value
Consumption
Channel
for leisure
for selling, especially B2C
Active
community members
Assist
in brand-building
Site
is consistent across all areas of site
Quick
/ effective e-mail responses
Users
make "My eBay" their main interface with the site
Enabling
transactions is regarded by eBay community as
extremely valuable
“Win
the auction” syndrome (higher value than retail prices could
be paid just for the “win”)
Small
Active
businesses use eBay as a distribution channel
users in personal and company’s feedback forums
Buying
/ selling becomes more like: “I wonder if they have this on
eBay”
Forum becomes emotion-driven: “I wonder what people
are saying about me”
Feedback
Evangelist
Taking
word to the market
Defender
“Look
of the experience
down” at competitors
Describes
eBay as the ultimate experience in terms of great deals
and trustfulness
No
need to visit other auction sites for better deals or more variety
Customer Experience — Conclusion

Customer experience refers to a customer’s perception and interpretation
of all the stimuli encountered while interacting with a firm

There are four stages to the customer experience, which are outlined by
the “experience hierarchy”:


Stage One: Experiencing Functionality — “The Site Works”

Stage Two: Experiencing Intimacy — “They Understand Me”

Stage Three: Experiencing Internalization — “It’s Part of Me”

Stage Four: Experiencing Evangelism — “I Love to Share the Story”
In the process of designing a desirable customer experience, firms should
set six broad goals: 1) create a rich description of the target customer,
2) effectively integrate the online and offline experience, 3) articulate clear
stages of desired experience, 4) effectively assess relative levels of
hierarchy, 5) highly leverage the evangelists and 6) continuously monitor
and adjust
Customer Relationships
Exhibit 7–1: Ben & Jerry’s Homepage
What is a Relationship?




A relationship is a bond or connection
between a firm and its customers.
It may be strong, weak or nonexistent.
It can be intellectual, emotional or both.
Involvement - Continuum ranging from
communal to exchange based.
Exhibit 7–2: A Continuum of Relationship
Involvement
High
Product type (cost,
level of symbolism,
risk)
Purchase situation
(visibility, social
acceptability)
Relationship
involvement for a
hypothetical
person
Consumer type
(interests, values,
attitudes)
Low
Automobile
35-mm Camera
Expensive Watch
Stereo Component
Eyeglasses
Scotch Whiskey
Hair Coloring
Wine for Dinner Party
Washer / Dryer
Face Soap
Credit Card
Salad Oil
Deodorant Soap
Insecticide
Headache Remedy
Liquid Bleach
Insect Repellent
Disposable Razor
Potato Chips
Soft Drink
Paper Towels
Toilet Tissue
Why do firms want relationships with
customers?
The long-standing buyer-seller relationship might
lead the customer to:
 Develop trust that the seller will provide good
value.
 Feel that the brand represents who they are.
 Promote the seller to friends, family and
acquaintances.
 Seek out and actively read the seller’s
promotional material.
 Anticipate the positive feelings from remaining
loyal to the seller.
Understanding the Value of Customer
Relationships
Two basic reasons why customer
relationships increase profitability:
1. Costs of serving existing customers are
lower.
2. Existing customers are willing to pay
higher prices.
Measuring a Customer’s Value
 Relationship
depth, as reflected by the
frequency and magnitude of purchases,
is a critical component of customer
profitability.
 Questions to ask when measuring the
lifetime value of customers:
 Active
and Inactive Customers
 Customer’s Net-Present Value
Expected Relationship Between Length of
Customer Tenure and Profitability
High
Lifetime
Profit
Low
Short
Long
Lifetime
Adapted from Werner J. Reinartz and V. Kumar, “On the Profitability of Long-Life Customers in a Noncontractual Setting: An Empirical
Investigation and Implications for Marketing,” Journal of Marketing, 64 (October 2000), pp. 17–35.
Harley-Davidson Screen Shot
The Stages of a Relationship
1.
2.
Awareness
Exploration and Expansion
1.
2.
3.
4.
5.
3.
4.
Attraction
Relationship Norms
Trust
Power Relations
Satisfaction
Commitment
Dissolution
Moving Through the Relationship Stages
Awareness

Exploration /
Expansion
Commitment
Dissolution
Customers can advance through the stages in
several different ways
Two Alternatives for Customers at the
Commitment Stage
Satisfied,
profitable customers
Stay
Committed
Commitment
Unsatisfied or
unprofitable customers

Dissolution
Customers can either stay committed or move
to dissolution
Example of a Website Geared Toward Creating a
Customer Relationship
Source: www.babycenter.com
Level of Interaction by Stage of Customer
Relationships
Four Key Stages of Customer Relationships
Awareness
Exploration /
Expansion
Commitment
Level of Intensity
Level of
Intensity
Intensity
Stages of Customer Relationships
Dissolution
The 2Is: Why The Web is Unique at Creating
Customer Relationships
1.
Interactivity

2.
Defined as the extent to which a two-way
flow if communication occurs between the
firm and the customer.
Individualization

Reflects the degree to which firm-customer
interactions are tailored or customized to
the individual user.
LiveClips Pageview
PwC Online Privacy Attitudes
Integrative Framework — Building Relationships
on the Web
Four Key Stages of Customer Relationships
Awareness
Exploration /
Expansion
Price
Marketing
Levers
Product
Promotion
Distribution
Brand
Commitment
Dissolution
Customer Relationships — Conclusion

The customer relationship stages are:
1.
2.
3.
4.
Awareness — The customer recognizes that the firm is a possible
exchange partner, but has not initiated any communication with the
firm or purchased its products
Exploration — The customer considers the possibility of exchange,
gathers information and perhaps initiates trial purchases
Commitment — The parties in a relationship feel a sense of
obligation or responsibility toward each other
Dissolution — This stage signals the separation of buyer and seller
— the loss of connection

The Internet allows firms to interact and to individualize in
powerful ways. As a result, firm-customer relationships can be
formed and can progress very quickly

Firms don’t always want a relationship with all customers . . . and
vice versa