Great Customer Experiences are Music to My Ears…

Listening to music is one of the most meaningful experiences in our lives.  I’ve been spending some time thinking about how great customer experiences have a lot in common with the great music that makes a difference for people.  Here are some initial thoughts:

• It Moves You. Great music is about the transfer of emotion not just the delivery of any kind of rational value.  If you’re like most people, music has a strong impact on how you feel; it gets you up, it makes you cry, it turns you on in other ways I won’t go into here.  Both of my kids are musicians and we are always discussing the difference between music that is expressive (influences how people feel) versus music that is impressive (well executed but sort of cold).  Similarly, great customer experiences are expressive; they have an effect on the way customers feel.  It’s most important to realize that what the customer feels about the company is secondary! Of primary importance is how the company makes customers feel about themselves.  If the experience makes customers feel great about themselves, then by association, the customer will feel great about the company.   You can be effective at executing customers transactions or efficiently and effectively answering their questions… but how you make customers feel about themselves is critical.  (See: Cognitive Ergonomics: Customer Experience and Our Search for Meaning)

• It has a Melody. Most great music has a melody.  Even the most complex, improvised jazz has a “head” or theme that ties the whole piece together.  Not only does music have a melody, but it’s kind of important that everyone in the band actually knows what that melody is.   Great customer experiences have a melody too.  It’s intentional.  Everyone in the band (organization) actually knows what it is and plays it together.  However in the large majority of organizations, the customer experience just defaults from the bunch of stuff that people do.  There’s no deliberate Customer Experience Specification and, as a result, each individual just plays their own tune… and it sounds like crap.  (See: I Got a Song it Ain’t Got No Melody… I’m Gonna Sing it to My Friends).

• It has Memorable Hooks. Think about your favorite songs.  You remember the hooks.  Sometimes you have a hard time getting them out of your head.  Do you think the songwriter left those hooks to chance?  No way!  Effective songwriters are very deliberate about the “signature” hooks they build into their songs.  Songs without those hooks may be pleasant enough to listen to but listeners will find them difficult to remember and will be significantly less likely to want to hear them again.  The same is true with great customer experiences; they have “signature” hooks.  These are the things that you do that get the customer’s attention and help them understand how your experience is different than all the other experiences they’ve had.  Think about the best experiences you’ve had as a customer.  In most cases, you remember a small set of signature hooks that got your attention and influenced your memory of the experience.  What are the signature elements of your customer experience?  (See:  Novelty Seeking and the Design of Differentiated Customer Experiences)

• It Balances Predictability and Surprise. Listening to music resonates with the way our brains continuously predict what will happen, are comforted when things are largely predictable and are stimulated by the occasional surprises.   This is one of the reasons why music is so important to us.  How often are you listening to a song and anticipating the lyrics and melodic phrases just before they happen.   The songs that people are most drawn to (in addition to the factors above) are the ones they’ve come to know well enough to be largely able to predict what will happen next… but have not heard so often that the song becomes totally predictable.  Great customer experiences also resonate with the way people continuously predict what will happen, are easy to engage with since things are largely predictable, and are occasionally stimulated by surprises.  (See: Customer Experience and the “Element of Surprise”)

• It is Naturally a Social Activity. This is the thing that’s most interesting to me at the moment.  For the overwhelmingly large majority of human history, music was a communal, social activity.  People gathered around the cave or campfire and made music together.  Everyone participated.  Something strange happened as we emerged from the dark ages.  For some reasons, the world divided into the musicians and the listeners.  Musicians were often trained “professionals” that would entertain groups of passive listeners.  Occasionally, the listeners would sing along but, unfortunately, this division started to make some people feel embarrassed about their inability to carry a tune.  During the same era, the business enterprises that emerged reflected a similar divide.  There were professional producers and passive consumers.  Today, we’re seeing a significant return to both music and enterprise as a social activity.  This is being driven by the emergence of prosumers and the enabling power of social media.  The music industry is in the midst of a major shakeup now that just about any reasonably capable person or group of people has the tools to create and distribute music.  In many cases, these people can create or just mash up music in a virtual environment… often incorporating publicly available loop or even pirated samples.   Similarly, prosumers are taking control of creating or personalizing the customer experiences they want to have… not just passively consuming the experiences that companies want to give them.   The emergence of these Next Generation Experiences is one of the most profound developments I’ll cover more in future posts.

So… there are a few initial thoughts.  I’d love to hear what you think particularly any suggestions regarding how great customers experiences are like music.  Cheers, Frank

Experience Management Maturity: Moving From “Experience by Default” to “Experience on Demand”

Over the course of our customer experience research and consulting work, we’ve found it helpful to evaluate organizations based on their level of maturity in delivering an intentional customer experience.  At each of these maturity levels, a different set of actions is required in order to improve the customers’ experience in a way that drives business performance.  One simple, effective approach is described as follows:

Level 1:  “Experience by Default”

Whether you’ve designed it or not, your customers have an experience interacting with your organization, its products, and its services.  If yours is like the large majority of organizations, the desired customer experience was never intentionally specified or designed in the first place.  As a result, the customers’ experience ends up being ad hoc; all over the map.  It may be highly inconsistent based on where and when the customer happens to touch the organization; sometimes it works, sometimes it’s frustrating as hell.

Many organizations operating at the Experience by Default level have been or still are product leaders.  Perhaps, there remains a strong belief that the organization competes primarily on the basis of product features or quality.  If so, a lot of effort may be put into the design of products.  However, the customer experience surrounding the use of even the highest quality products can be highly non-intuitive.  As products become more sophisticated, they often become more difficult for customers to use.  If you’ve ever checked into a hotel and tried to set an alarm clock you’re not familiar with, you probably know what I mean.   Beyond displaying the time, that clock has exactly one primary function; wake you up at the time you want.  Performing this function should be totally intuitive and the clock should provide visible feedback that it’s been done correctly.  Unfortunately, in most cases, it’s not so simple.

Many organizations operating at the Experience by Default level rely heavily on the creativity and heroic efforts of individual employees to make up for their lack of a clearly designed customer experience.   Executives at these organizations often say, “the key to delivering a better customer experience is our people.”  As a result, efforts to improve the experience generally are centered on training and motivating a better set of individual behaviors.  This might include customer service and sales skill training, changes in compensation to reinforce more proactive individual behaviors, etc…   Although these changes seem sensible, they miss the point.  Delivering a fundamentally better customer experience involves fixing the design of the organizational system, not training and motivating a better set of individual behaviors. Training and motivation just leads to an incrementally better state of ad-hoc.

One additional characteristic of organizations that operate at the Experience by Default level is reflected in the way they measure customers’ satisfaction or loyalty.  With these organizations, questions that appear on satisfaction or loyalty surveys tend to ask the customer about their satisfaction with a long list of “things we do” or on their satisfaction with the individual behaviors of people in front-line sales or service roles.  Since there is no clear statement of the intended end-to-end experience, there is no way to measure whether customers are, in fact, having that end-to-end experience.

There are three critical steps to moving beyond Experience by Default:

1. The first is to clearly specify the intended customer experience. For the past 10 years, we’ve been working with a Customer Experience Specification that answers the following questions for each type of target customer (personae):
   • What are the most important situations that type of customer finds themselves in… sorted by decreasing order of criticality to the customer?
   • What are the specific outcomes we intend to produce for that customer in each of these situations?
   • How will we deliver these outcomes in a way that positively shapes the customers perceptions, interpretations, and evaluations of the experience they are having with us?
2. The second step is to use this Customer Experience Specification as a requirements document for identifying and designing specific changes in the operating model required to consistently deliver this experience. This looks a lot like a reengineering project. Generally holistic changes are required in customer communications, customer-facing processes, role definitions, skills, organizational structure, performance measurement and management systems, information technology, etc…
3. In parallel with the second step, the third step is to develop an Economic Model of the Experience. This economic model is driven by: the processes involved in and the associated costs of customer acquisition, service, and retention; the expected lifetime revenue stream for that type of customer; and expected benefits associated with cross-selling additional products and services, as well as, word of mouth advertising. It is exceptionally easy to make uneconomic customer experience improvements. The economic model is critical for guiding design choices that have positive economic value and to avoid trying to improve the customer experience by “giving the customer three scoops for a penny.”

Level 2:  Experience by Design

About 20% of the organizations we’ve encountered have deliberately designed the experience they intend their customers to have; from the customers’ perspective.  Experience by Design represents the state of the art of the late 90’s and early 00’s.   Some organizations at this level, like Disney, have always designed every aspect of their business from the perspective of the customer experience.  Other organizations at this level, have adopted this perspective as they have realized that the quality of the customers’ experience is the primary driver of their ability to acquire, retain, and improve customer profitability.   One of these organizations is Wachovia, who frequently tops the list of major banks in service, particularly for it’s online banking.

The most common characteristics of organizations operating at an Experience by Design level include:

• Clear alignment on the intended customer experience. If you ask people throughout the organization what that experience looks like to the customer, you tend to get answers that are relatively if not completely consistent.   The development of a Customer Experience Specification can help get started building this alignment.
• Aligned and designed operating model.  Customer communications, customer-facing processes, role definitions, organizational structure, performance measurement and management systems, information technology, etc… are deliberately designed in order to consistently produce the desired experience.
• Experience management process.  Unless the experience is designed, it can’t effectively be measured, managed, and improved.   As a result, organizations operating at an Experience by Design level generally have ways of measuring whether the customer is having the intended experience… not just satisfied with the things the organization does.  This measurement is used to provide input for correcting design or execution issues.
• Continuous improvement.  Due to increasing customer expectations and competitive advances, not only is there a shelf-life of any differentiated experience but that shelf-life decreases over time.  As a result, organizations that operate at an “Experience by Design” level more frequently have a way of understanding the trajectory of customer expectations and a way of turning that understanding into opportunities to improve the experience.
• Ownership for customer experience management.  Key leaders in the organization are responsible for the quality and consistency of either the end-to-end experience or for each major component of the experience.   Occasionally, this takes the form of a Chief Customer Officer (CCO).  However, the presence of a Chief Customer Officer is no indication that the organization is actually at an Experience by Design level.  In fact, many organizations appoint such a role and that person proceeds to do things that lead to no more than a better state of Experience by Default.

Over the past 25 years, my colleagues and I have worked with many dozens of organizations to help them get from Experience by Default to Experience by Design in a way that leads to a measurable improvement in business performance.   Wouldn’t you know it, as soon as we know we’ve gotten the process right, the next level of experience maturity would emerge.

Level 3:  Experience on Demand (Next Generation Experience)

Recently, a Next Generation Experience has emerged.  It has been both defined and accelerated by online service providers like Google, eBay, Facebook, MySpace, YouTube, Trip Advisor, LinkedIn, and Wikipedia.   These providers have addressed and amplified a growing preference amongst customers to create the experience they want to have… rather than just consume the experience you want to give them.

In general, this next generation of customers has several important characteristics:

• Most of them have “grown up digital” and possess a high level of comfort and facility with technology
• They are comfortable networking with people they know and people they don’t know in an electronic medium
• They would really like to have the “source code” for what you do whether it’s a product or a process. This allows them to know how best to personalize your offering to meet their needs.
• The might feel compelled to “mashing up” your offering with resources from other providers in order to assemble something that more closely meets their needs
• They want it their way and have very little patience for organizations that make them do things that don’t make sense to them
• If they have a bad experience with you, they may find creative ways to tell the world about it
• They’re much more interested in what other customers have to say about you than what you have to say about yourself in your advertising.

Whether your business deals directly with next generation customers or not, their presence is stimulating a shift in the way business is done.  In particular, power is shifting to the organizations that provide a platform or context rather than content.  Witness the success of the aforementioned business and many other platforms in which the organization provides context and the users contribute all the content.

The fundamental nature of the Next Generation Experience is highly influenced by the preferences of each customer or the behavior of other customers.  These experiences blur the boundary between who is producer and who is a consumer of value.   The organizations that deliver a Next Generation Experience:

• Think like a context (platform) provider rather than a content provider. How do we provide THE SPACE where customers can go to accomplish their objectives? This might be achieved by interacting or collaborating with other customers, accessing content from complementary or even competitive providers, actively contributing to the design of your next generation of products (and possibly getting compensated for my efforts).
• Deliver a flexible toolset on that platform. This toolset might help customers envision what’s possible; configure their own products, services, or experiences; connect with other customers; own and benefit from what they create: and have creative license with peer-reinforced community norms.
• Share the source code. By being open and transparent, more customers will find it in their interests to take advantage of your platform in ways that suit their needs. In the course of doing that, they will contribute to the emergence of an offering that will be more compelling to other customers.
• Design for emergence rather than control. Although you are ceding control of the experience to customers, it’s important to have a vision for the overall direction that experience is likely to go.  That vision is necessary in order to allow you to create the conditions for the emergence of that experience.  The best way to think about designing for emergence is captured in the work of the visionary architect, Chris Alexander, who in his book “A Pattern Language” describes how an effective architect organizes physical space in a way that generates specific compelling experiences. For example, how an architect can create a town square specifically designed for the emergence of a “Dancing in the Street” experience or a compelling “Sidewalk Café” experience.

We’ll have a lot more to say about the Next Generation Experience in future posts.  For now, we’d love to hear from you.

Personae-Driven Customer Experience Design

A persona is a fictitious person created for the purpose of helping designers and decision makers understand how people actually experience their interactions with a product, service, or organization.  The use of personae was popularized by Alan Cooper in the book “The Inmates are Running the Asylum.”  In this critique of the software development industry, Cooper recommends the use of personae to help developers get a practical, visceral feel for the ways users think and behave. Since that time, the use of personae has become very popular in a wide variety of product and user interface design applications.  Personae are given a name (Bob, Sue, etc…) and a set of richly described characteristics, situations, goals, pain points, and behaviors that are relevant to the design.  For any given application, there are usually a relatively small set of personae that characterize the range of users or customers.  Cooper has suggested that one persona is usually sufficient.

The  benefits of personae in understanding and designing distinctive customer experiences are substantial.  Typically executive leaders and functional managers do not have a clear and concrete understanding of how their customers experience the world and, more specifically, their interactions with the client’s organization.   Personae are powerful because they put a specific human face on often abstract customer information.  In this way, they are fundamentally different than customer or market segments, which are generally shared characteristics of categories of customers.  This “human face” makes it easier to make decisions and design tradeoffs with an understanding of how what you do either fits or doesn’t fit for the customer.

One of the best examples of using personae for customer experience design is Best Buy, who made substantial changes to their store design, merchandise assortment, training, etc… based on the definition four customer personae.  In particular, they started to shift elements of  the experience design to work for the persona they called Jill.   Jill is a soccer mom that does most of the shopping for her family but is intimidated by electronics stores.

Unfortunately, the way most organizations develop personae appears to be very loose; more of an art than a science.  The generally accepted best practice is that personae should be based on solid ethnographic research with customers.  However, sometimes persona are just made up based on what the team thinks they know about customers (because they know so much about them already!).  Assuming research is done, the process of turning research findings into personae is also very loose.  Typically, common themes across customers are identified and clustered in a creative process that generates a plausible enough set of personae.   In addition, details are usually added to these personae in a way that “rounds them out” and makes them more believable.

Over the past couple of years, we’ve been trying to address the lack of rigor in personae development.  Our starting place for this was our emphasis on designing from “mental model of the customer” rather than the “mental model of the company.”  Not only does this perspective address the same basic objective as customer personae but the idea of defining personae precisely based on elements of a mental model is appealing.  It also provides a means of deciding how many personae are needed since the only reason to have different personae would be because there were relevant and substantial differences in the mental models of two different types of customer.

Our working definition of Cognitive Customer Personae include models that capture:  what the customer is trying to accomplish; the end-to-end behaviors the customer typically performs to accomplish those things; a structure of beliefs and temperamental characteristics that drive their rational and emotional reactions to their experience.  Each one of these personae is described by four models that are described in more detail with a few examples in the post titled:   Cognitive Ergonomics:  Designing Customer Experiences that Fit with Customers’ Mental Model.

Most Efforts to Improve Customer Relationships are Misdirected!!!

Virtually every conversation about Customer Relationship Management is focused on improving the relationship between a company and it’s customers.  While this is might be a valuable thing to think about, I believe it’s largely inconsistent with the kind of thinking required to actually improve the customers’ experience.

While customers are extremely interested in relationships… I think it is quite dangerous to assume that your customers have any interest in having a “relationship” with your organization.

So, what relationships do customers care so much about?  Your customers care about their relationships with other people.  This can include the other significant people in their lives.  In a business setting, it can include your customers’ customers, colleagues, etc…   At a much deeper level, customers care about their “relationship” with themselves; who they are and what they want to be.

We’ve learned that:

You can create a highly differentiated customer experience if you focus on improving the relationships that customers actually care about!

Here are a couple of examples from our client work:

• We worked with a leading provider of group health insurance.  Group health insurance is sold to employers through brokers.  The most critical relationship to optimize in order to sell more group health insurance is the relationship between the broker and the decision-makers in the employer organization (these are the broker’s clients).  Our experience redesign for this leading group health insurance provider focused entirely on helping the broker be more successful in meeting the changing needs of their clients.  This lead to an improvement in the brokers ability to acquire, retain, and manage their client relationships.  As a by-product, our client sold much more group health insurance.

• We worked with a leading tire manufacturer that sells replacement tires through independent tire shops.  While this tire manufacturer’s customers (the tire shops) were asking for improvements in service levels like availability and turnaround time on tire orders and improved pricing, etc…   All of these customer requests were “table stakes” sort of expectations.  What we found is that by focusing on the most critical customer relationship (the relationship between the tire shop and the consumer), we were able to identify significant opportunities to improve the relationship between the tire shop and consumer.  These were things that the tire shops would have never asked for, such as services that made it easier for the tire shop to provide tire storage, mobile mounting, enhanced product selection services to the consumer.

• We worked with a leading provider of broker-dealer services to independent financial advisors.  These financial advisers rely on a broker-dealer for trade settlement, commission processing, reporting, compliance, education, etc…   The financial advisors were always looking for improvements in these basic services.  However, we found that it was most important to pay attention to the how the needs of the end investor (the financial advisor’s client) were changing and how these changes were impacting what it takes for financial advisors to be successful.  We were able to identify significant growth opportunities by looking past what the financial advisors were asking for… to uncover opportunities to make the financial advisors more successful in meeting the changing needs of the investors.  This include programs for client acquisition, on-line client account tools, etc…

• For a leading provider of assisted living facilities (nursing homes), we realized that the most critical relationship to improve is the relationship that exists between the resident and the primary family caretaker.  This primary family caretaker was typically the youngest daughter of the resident.

• For the leading jewelry retailer (referenced in early posts), we found that the key to really innovating the customer experience was to focus on improving the relationship between the gift giver and the recipient.

• The innovative grocery chain, H-E-B, has recently been branding their experience around “Come Home a Hero!”  H-E-B operates in the southwestern US; with a high mix of Hispanic customers.  With these customer segments, the relationship between the person who does the shopping (often the man) and the person that makes the meal and the family that consumes the meal is particularly important.   If you’ve ever been sent to the store for groceries, you know getting the wrong thing can lead to tension.  H-E-B is focusing their experience on the relationship between the shopper and the shopper’s family.   This includes bundled meal selections and many family-oriented services (check out their website for more info).

This list of examples could go on and on.   When we recognized that creating a great customer experience has to do with improving the relationships that customers care about… not the relationship the customer has with the organization… we actually started to tell our clients “stop listening to your customers so much!“

Of course, we were doing this to be provocative.  You do need to listen to, acknowledge, and selectively address what customers ask for.  However, if you really want to improve their experience, you need to look past what they ask for and find ways to improve the relationships they really care about.  Listening too much to the “voice of the customer” can lead to over-delivery on table stakes expectations and simple satifiers.  The “voice of the customer” is usually not the place to go to find opportunities for creating a breakthrough experience.

In summary, if you want to improve customer relationship and different your experience in the process… get creative around improving the relationships customers’ care about.  If you can improve the customers’ experience you’ll get the business benefits indirectly.

Observation and Elicitation: We Like to Watch!

How do you get to the bottom of customers’ needs, desires, priorities, experiences… ?  Traditional means involve doing things like:  market research (interviews, focus groups, surveys, etc…),  getting feedback from your sales or service people, listening to what customers ask for or complain about on-line, etc…

In general, we’ve found that these approaches are sufficient for identifying opportunities for incremental improvements in service levels associated with your existing touchpoints with the customer.  However, if the objective is to identify opportunities to create a more innovative and differentiating experience, these approaches are limited by two very significant barriers:

• Cognitive Bias. Customers typically can’t easily or clearly explain their deeper motivations, particularly if these motivations are related to needs or desires that are currently unmet or that they’ve felt but haven’t consciously thought about.  Customers descriptions of their past experiences is particularly biased and unreliable.  Perceptual filtering ensures that the large majority of the details of past experiences are never consciously processed.   As Daniel Schacter describes in The Seven Sins of Memory, people tend to reconstruct rather than recall their past experiences.  In the course of doing that many details are lost, some are sharpened (emphasized), and some are leveled (de-emphasized).
• Motivational Bias. Customers may not want to tell you everything in an unbiased fashion.  In recalling past experiences, their is a natural tendency for the customer to cast their role and behavior in a more positive light.  In many consumer situations, when asked to describe their needs, customers are uncomfortable sharing anything that demonstrates weakness or that may be socially unacceptable.  In business settings, participating in research or talking with company representative may be perceived as part of a negotiation.  If so, customers may either make bold demands or feel that insight they share could be used to gain leverage in the relationship.

As a results, actual customer behavior is not highly correlated with what customers tell you they want.  Actual customer behavior is influenced by latent values, hidden motivations, limited awareness, information of questionable accuracy, occasionally irrational decision processes, social influence, and force of habit.

There are two types of techniques your organization can use to overcome these barriers:

• Observation. This is a branch of ethnography that studies the experiences and behavior of individual customers in depth.  It focuses on the customer’s end-to-end experience rather than just being limited by the existing set of touchpoints.  By observing customers in action in their own environments, you can develop a much more intimate understanding of how they think and act, not just what the customer remembers or is capable of articulating.  Observation surfaces customers’ latent or unexpressed needs, how they shop, actual product usage patterns, customer frustration points, as well as, compromises and workarounds that customers have developed.
• Elicitation. Rather than asking customers what they remember about their past experiences and what they want, elicitation tries to get at the mental model that underlies the customers’ experience and their behavior.  In Cognitive Ergonomics:  Designing Experiences that Fit the Customers’ Mental Model, I describe four major components of understanding the customers’ mental model (goals, lifecycle, schema, and temperament).   Elicitation techniques have been developed for covert intelligence gathering, expert systems knowledge acquisition, and investigative reporting.  These techniques include story telling, unstructured dialogue, case studies, role playing, simulation, and goal-directed exercises.

We used a combination of observation and elicitation to understand the customers’ end-to-end jewelry gift giving experience for a major jewelry retailer (referenced in “The Customers’ Experience Does Not Happen at Your Touchpoints“).  Several of the most critical aspects of the customers’ experience occurred at non-touchpoints with the retailer.  This included: how the customer shopped (the differences between “exploratory” or “intentional” shopping behaviors, how many stores they visited and how they chose which stores to visit and ultimately which store to buy from); what happened after the customer left the store with a gift they purchased (planning, anticipating, waiting to give the gift); what happened at the point of giving the gift, etc…   Observing what customers do and eliciting the way they think and feel about their end-to-end experience were critical to identifying how this company could differentiate the customers’ experience around innovative gift giving.

Experience Design: How People React to Violations of Justice

A couple of months ago, the Harvard Business Review carried a great article “Companies and the Customers Who Hate Them” by Gail McGovern and Youngme Moon.  In this article, the authors describe several situations where companies generate a significant portion of their profit by penalizing customers for bad behavior.  Examples cited by the authors include:

• Video rental stores that generate a significant portion of their profits from late fees
• Credit card companies that approve rather than decline over limit transactions and then charge the customer fees
• Banks that present checks in reverse order of magnitude to increase the likelihood that more checks will be drawn against insufficient funds
• Cellular providers that lock customers into lengthy contracts rather than creating loyalty through good service.

In addition to the examples cited in that article, there are no shortage of others including:

• Car dealers that raise the price of popular models above list if there is a shortage.
• Stores that raise the price of umbrellas when it’s raining or snow shovels when it’s snowing.

While leveraging antagonistic customer practices can generate higher profits in the short term, it also creates a competitive risk as customers can quickly migrate to more customer-friendly offerings from competitors as they arrive on the scene.

Potentially more important is a growing body of research that indicates customers will actively find ways to penalize companies they believe have treated them unfairly.  These penalties include defection and negative word of mouth (often using electronic means that now reach hundreds if not many thousands of other potential customers).

Customers intuitively and automatically sense when they are engaging in relationships that aren’t fair at some basic level.  The evolutionary path of the human brain has reinforced the development of instinctual, subconscious mechanisms for recognizing fairness in individual or group exchanges.  This capability dramatically improved the success of our hunter-gather ancestors who relied on cooperative group behavior for survival.  Every one of us has had emotional experiences of situations being “just not fair,” even if we have a hard time putting our finger on why we feel that way.  Usually our automatic emotional experience and resulting feeling of injustice happens before we can consciously label that feeling with some rational explanation or principal that tells us why it’s not fair.

One of the simplest ways to observe our instinctual fairness response is the Ultimatum Game.  This is a one-round bargaining game played by two people.  The first person, called the Proposer, is given a sum of money, say 100 dollars.  The Proposer then makes an offer to split some of the money with the second person, called the Responder.  The Responder can either accept the offer, in which case the two players each get their share, or reject the offer, in which case both players get nothing.  Since this is a one-round game, the only rational choice for the Responder is accept any non-zero offer.

However, the actual results of playing the game are very different.  In most cases, Responders reject non-zero offers that are perceived as “unfair” splits.  This experiment has been done across very different cultures and the results are essentially the same.  Non-zero offers are rejected at a rate that increases as the offer size decreases.  The overwhelming insight is the people feel an automatic, instinctual need to penalize unfairness even if that behavior involves a personal cost to them.

The Ultimatum Game is just the start.  There are a wide range of situations that reinforce the automatic drive that people have to penalize unfairness.  In essence, people are willing to spend their own capital (money, time, energy, etc…) to penalize others that treat them in ways that they perceive as unfair.  In his book “Passions Within Reason,” Robert H. Frank emphasizes that people “often do not behave as predicted by the self-interest model.”

The emerging field of neuroeconomics looks at the neuropsychological basis for decision making that does not follow rational economic theory.  It appears that our subconscious, automatic reactions to violations in social exchanges is handled by a particular area of the brain – the anterior insula.  Brain imaging of players in the Ultimatum Game demonstrate stronger activations in the anterior insula as the Responder is presented with increasingly unfair splits.  The anterior insula is also activated when people are shown objects and situations that they find disgusting.   This is one of the reasons why many people experience being treated unfairly as similar to feelings of disgust.

Across the research that’s been done in this area, three types of “justice” are important to consider in the customer experience:

• Distributive justice. Does the customer perceive the outcome they received to be fair given either their perceived investment or what they believe has been received by other customers?
• Procedural justice. Was the process that was used to arrive at the outcomes fair?  Did the customer see that their time was treated as highly valuable or did they believe they had to wait too long?  Were others who arrived after me served first?
• Interactional justice. Was the customer treated fairly and with respect by the individuals that they encountered?

How different customers perceive, interpret, and evaluate violations in justice are personae dependent.  The basic components involved in understanding these different customer personae is covered in the post “Cognitive Ergonomics:  Designing Experiences that Fit the Customers’ Mental Model.”  For example, a customers’ temperamental orientation towards Harm Avoidance acts as an amplifier in automatic reactions to perceived violations of justice.  In addition, more Reward Dependent customer personae tend to react more strongly to perceived violations in Interactional Justice.  In general, the way you design interactions with customers have to be sensitive to the personae of the target customers.

Today customers 1) have an increasing ability to communicate their dissatisfaction with other customers and 2) base more of their purchase decision on word of mouth. Regardless of the company’s policy or the fine print on the back of the service agreement, if any company doesn’t design what they do to be highly sensitive to creating an experience that customers’ perceive as fair is just…  “roadkill waiting to happen.”

The Customers’ Experience Does Not Happen At Your Touchpoints!

In an earlier post I mentioned that touchpoint mapping is a relatively useless approach for making significant improvements in the customers’ experience.  Unfortunately, touchpoint mapping is also the most frequently used approach… either followed by companies on their own or recommended by consultants who claim expertise in customer experience design.   The most important thing to realize is that… the most influential elements of the customer experience often occur at the non-touchpoints with your business.  As a result, touchpoint mapping doesn’t lead to anything more than incremental improvement that, for the customer, amount to “better sameness.”

In most situations, the lifecycle of the customers’ experience follows something that roughly approximates this simplified picture:

Of course, the details look different for each situation.  However, in most cases, an organization’s touchpoints with the customer include:  sales contacts, ordering activities, fulfillment activities, and problem resolution.  As you see, the customers’ process includes a lot of other things that have a substantial impact on their overall experience.  In addition, customers often have to integrate products and services they get from you with the products and services of other organizations in order to address their needs.

For example, one of our recent clients is a leading jewelry store chain.  Like many retailers, there is a natural tendency to think about the customer experience from the perspective of “things that happen in the store” or, increasingly, “things that happen on a website.”  However, for most jewelry stores,  70% of the customers are “male gift givers.”  For these customers, the experience is really defined by the end-to-end process they go through when they give a gift that makes a meaningful contribution to a “relationship bank account” with someone that matters a lot to them.

The customer is certainly affected by what happens in the store… but major parts of the experience have little to do with the store.  They may think about an upcoming event, like a birthday, anniversary, graduation, or holiday.  Although many male gift givers put off actually buying anything until just about the last minute, they typically engage in a “semi-conscious consideration of options” for what to buy.  These customers have unwritten or implicit “rules of thumb” that influence how they shop.  For example, “do a quick pass through three of four stores, then return to buy the best I find… or… “spend two months salary on an engagement ring.”  There are also very significant portions of the experience driven by how they give the gift, how the recipient reacts both initially and over time after receiving the gift.  If the gift giving experience does not go as planned, there are many cycles of highly emotional reactions for both the gift giver and the recipient.  One of these that is particularly important is the experience that precedes having to return an item… which many stores make very stressful.

These are just the highlights.  There’s actually quite a bit more.  In this case, the parts of the experience that happen outside the store are the primary determinants of the quality of the experience for the customer.  If a jewelry store were to focus on understanding and improving what happens in the store and/or online interactions, the best they’ll come up with is better sameness.  The opportunity for a creative jewelry chain is to leverage insight into those portions of the customers’ experience that are “below the surface.”  This provides insight that can help not only improve what happens at the “above the surface” touchpoints, but also provides insight into related services that address customers’ unarticulated or unmet needs at the non-touchpoints.

Characteristics of an Outstanding Customer Experience

A successful customer experience does more than please and engage customers.  It influences your best customers to do more and more profitable business with your company.  What makes for such an outstanding and influential experience?  We can describe its characteristics and results:

• Deliver innovative solutions to customers’ problems. Outstanding experiences leverage a deep understanding of what customers are trying to accomplish, the natural set of activities they follow, and how they think and react emotionally to what happens to them.  The best experiences find ways to solve problems the customer may not be able to articulate or even realize they have.
• Earn and carefully protect the customers’ trust. Flawlessly shaping your customers’ experience requires an understanding of both their explicit and implicit expectations.  For example, sales activities must be clearly oriented towards understanding and meeting more of the customers’ needs, not pressuring the customer to buy more than they are ready to or before they are ready to.  The “end of the quarter sales push” does a lot to undermine customer trust.
• Activity eliminate perceived “violations of justice.” This complements and extends the previous point.  Customers often have an intense emotional reaction to things that strike them as “just not fair.”  Very often these violations in justice look very different to the customer than they do to the company.  For example, many banks have changed the way they charge fees to include policies about posting checks from high to low.  This increases the likelihood that customers will bounce more checks, increasing the banks fee income while putting the bank in the tenuous position of increasing the portion of its profits derived from its most dissatisfied customers.
• Go beyond what’s called for. Outstanding experiences demonstrate the company’s commitment to the customer – and go out of the way to under-promise and over-deliver.  Ideally these are things that surprise the customer and show you uniquely value the relationship… rather than programmatic loyalty programs that quickly feel like an entitlement.
• Balance value delivered with value captured. It’s easy to create a good experience if you give the customers “three scoops for a penny.”  But it’s wasteful if you deliver more value than the customer can recognize or is willing to pay for.   Outstanding experiences maximize recognizable value for customers, rather than overserving on baseline or “table stakes” expectations.  They make explicit and effective tradeoffs to approach the “optimal economic” point of value realized by the customer and value captured by your company in the form of price and loyalty.  Outstanding customer experiences are win-win.
• Engage the “whole person.” Outstanding experiences address customers’ physical, intellectual, emotional, and spiritual needs.  They help customers clarify their goals and aspirations, visualize what’s possible, and understand and explore their options.
• Build authentic relationships with customers’. The key here is to treat customers as individuals.  Getting to know and treat your customers as individuals engenders close personal connections that require acknowledging the customers’ value and genuinely thank them for their business.
• Tell a compelling story. Outstanding experiences tell a story that is meaningful for the customer and helps them understand where you’re coming from, what you stand for, and what makes you special.  This is the real meaning of a brand – a consistent story that is told every time the customer interacts with you.   Every interaction with the customer becomes a branding event; differentiating you from your competitors.

I fully realize that these characteristics fall into the category of “says easy… does hard.”  Many of the future posts will discuss what we’ve learned from 25 years of helping companies deliver these kinds of experiences.  This includes the challenges of:  really understanding the customers’ priorities; getting aligned on the differentiated experience the organization intends to deliver; and most importantly, dealing with the fact that the customers’ experience is a product of organizational behavior… not brilliant insight or clever design.

Customer Experience and Why It’s Important

Whether you like it or not, the real growth of your business is a direct result of the quality of the experience customers have with you.  It doesn’t matter if you’re in retailing, consumer products, business services, high-tech, industrial products, or commodities.  The quality of the customer’s experience translates directly into your ability to acquire and retain customers as well as improve their profitability over time.

Over the past few years, there’s been a significant increase in the portion of business leaders that recognize these fundamental truths.  Unfortunately, despite this recognition, there’s still a big “knowing – doing” gap.  Looking across industries, there hasn’t been much progress in the overall quality of customer experiences.  Most companies, if they’ve done anything at all, have made no more than isolated, surface level improvements.  Exceptionally few organizations have ever fully described or designed the experience they intend their customers to have.  If this is true for your organization, chances are the experience is fragmented, inconsistent, and frustrating for your customers.  You are making like difficult for them in ways that may be hard to understand.

We’ve found that organizations with more complex business-to-business relationship often have the most to gain by making improvements in their customers’ experience.  Some organizations are even discovering new ways to facilitate a differentiated experience surrounding the sale and use of increasingly commoditized products and services

Based on our research and work with companies, we’ve found that companies that have made meaningful improvements in their customer experience have realized bottom line improvements of 10-25% as a result of increased retention, additional sales, reduced customer acquisition costs, and improved price realization.  In addition, we’ve found that the customer experience is often the best lens for making performance improvements in specific areas of the business.  For example, the best way to improve sales performance is by designing a sales process that matches the way target customers want to buy and simultaneously provides a differentiated experience for them.

Some companies understand these benefits and are already using the customer experience as a differentiator.  They include many of the well known “customer experience leaders” like Disney, Lexus, REI, Whole Foods, and Four Seasons, as well as emerging leaders like Build a Bear Workshop, American Girl, Umpqua Bank, and Hot Topic.  They also include business-to-business companies like: Granite Rock, who creates a differentiated experience around the ultimate commodity… sand; Selectron, an electronics component supplier with a highly transparent, customer-centric business model; and IBM, who has a long history of differentiating the management of client relationships.

Automatic Behavioral Scripts: Don’t Overestimate Your Customers’ Interest in Having an “Experience” with You

Too many companies want their customers to “have an experience” with them.  Unfortunately, customers don’t have time for this; they’ve got way too many things to do.

Alfred North Whitehead once said that  “Civilization advances by extending the number of important operations which we can perform without thinking about them.”  If you consider how busy your life has become, it’s easy to see that a fundamental requirement for maintaining sanity is your ability to run Automatic Behavioral Scripts.

Automatic Behavioral Scripts are like little subroutines your brain executes in a way that enables you to accomplish predictable tasks without thinking too much about them.   If you’re like most people, you have Automatic Behavioral Scripts for tasks like:  driving to work, getting a cup of coffee, going to the bank to make a deposit, etc…  You can accomplish these tasks on “automatic pilot”… allowing you to pay attention to more pressing matters.  So, when you go to the bank branch to make a deposit at lunch, you can be thinking about your meetings this afternoon or what you’ll do this evening.

As the customer experience design has become a hot topic, we’ve seen many companies attempt to create highly engaging and innovative experiences with their customers… and pay no attention to the Automatic Behavioral Scripts that these customers are using to execute the current experience.   In many cases, all they end up doing is distracting and annoying the customer.  If you do interrupt the customers’ script (called an Orienting Response), you had better deliver something the customer perceives as valuable in exchange for getting their attention.

As an Atlanta resident who travels frequently, I’ve gotten very used to making reservations on Delta’s website.  The previous version of their website was quite easy to use and most reservations could be made quickly from the homepage.  It was the kind of thing that fit with an Automatic Behavioral Script that worked well.  Over the last two years, however, Delta has “upgraded” their website in a way that even the simplest tasks now require navigating through layers of menus.   Now every time I make a reservation, I shake my head and think… these people just don’t get it.

Capturing the customers’ attention… creating that Orienting Response…  is a very powerful way to differentiate the experience.  However, it should ONLY be done if what you’re about to deliver is one of a very small number of signature elements of the experience… elements of the experience that are deliberately designed and clearly make it worth having gotten the customers’ attention.  In every other way, the experience should be designed to make it easy for the customer to run their Automatic Behavioral Scripts.

More on the subject of the Cognitive Ergonomics of experience design in future posts.