CUSTOMER EXPERIENCE MANAGEMENT THE MOST IMPORTANT DIMENSION OF THE SERVICE FIRM STRATEGY

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1 CUSTOMER EXPERIENCE MANAGEMENT THE MOST IMPORTANT DIMENSION OF THE SERVICE FIRM STRATEGY Ra iu Monica Paula Romanian-American University, Faculty of Internal and International Tourism Economy, 1B, Expozi iei Bvd., Bucharest, Telephone: Negricea Costel Iliu Romanian-American University, Faculty of Management-Marketing, 1B, Expozi iei Bvd., Bucharest, E- Telephone: Abstract: For the customer driven companies, clients satisfaction represents a marketing objective and instrument, at the same time. Companies that wish to be successful but also those which want to survive need a new way of thinking: final success belongs to those which will put the customer in the centre of their activity, and will offer him a superior value. Our paper is focusing on Customer Experience Management as a coordinated effort to accomplish specific goals by improving the quality and consistency of customer interactions or touchpoints. Using this strategy, a service company can gain important advantages like: constantly positive customer experiences, achieving differentiation, increasing sales, customer retention and referrals. Key words: customer experience, customer interactions, Customer Experience Management, customer centricity In the service industries it s crucial to be better than your competitors knowing what might lie ahead is the key to continuing success. It is obvious that a major goal of the service companies management must refer to the continuous improvement of services quality according to the dynamic consumers expectations and requirements. The service industry presents a particular challenge in regards to aligning service with the experience. The modern customer is highly educated, and has greater and greater expectations, a product or service which today is considered having an acceptable quality, tomorrow it could be considered in a different manner. Nowadays markets contain a great variety of goods and services and therefore, the sellers must offer quality products and services, otherwise they risk to throw their customers into the competition s arms. At the same time with the raise of customers exigency and selectivity regarding their choice about products and services, companies become more and more concerned about keeping their clients, based on their long term loyalty. In this respect, companies are focusing their efforts to completely satisfy customers expectations and exigencies, by permanent analysis and identification of customers wishes and demands, by transforming these into products and services with a view to develop and perpetuate lasting and economicaly advantageous relationships with the customers. Companies that wish to be successful but also those which want to survive need a new way of thinking: final success belongs to those which will put the customer in the centre of their activity, and will offer him a superior value. These companies will focus on creating their own customer not only on creating products and services and will prove their capacity of demand creators, not only of products and services creators. Attracting customers does not represent the exclusive task of the marketing activity the marketing department, respectively which must co-operate with other departments to attract and keep the customers. Even the most performing marketing department in the whole world can not sell low quality products or services, or which do not correspond to customers needs. Marketing could be efficient only in those conditions where different departments and their employees make up an unite team, who s goal is to elaborate and implement a competitive system in order to satisfy the customer through the created value. It is becoming obvious that coming nearer to the customer represent a necessity not only for companies that follow the success, but also for those which do not want to be eliminated from the market. 1169

2 Customer satisfaction and memorable customer experience For the customer driven companies, clients satisfaction represents a marketing objective and instrument, at the same time. As Peter Drucker remarked, three decades ago, the first objective for a company is to create its own customer. Customers will choose from the multitude of offers present on the market, the one that maximize the value in relation with the costs involved in searching the products, and with the limited mobility, knowledge and income they possess. As a consequence, customers will appreciate if the offer will reach the expected value level, which will influence the satisfaction and the probability to buy in the future. Even if a customer driven company intends to offer a high value of satisfaction, it should not be forgotten that the first objective is not to maximize the consumers satisfaction. Therefore, the company should focus, in the first place, on increasing customers satisfaction by improving the offer s and supplementary services quality, by decreasing the prices, by investments in research and development, by increasing the production capacity, and so on, but, at the same time, it should protect the interests of different categories of persons employees, suppliers, distributors, shareholders. As a consequence, it is recommended that the company should focus on offering a high level of satisfaction to the consumers, and at the same time, it has to ensure an acceptable level of satisfaction to the other persons involved in the company s activity. The companies have to understand that the customer should be placed in the centre of all specific marketing operations. The brand message should reflect the focus on the customer. The products and services quality should be placed in the core of the organizations commercial strategy. The offered products and services must represent exactly the solutions that customers expect. The touchpoints (or contact points) with the customers must be well mastered in order to convince them to accept the proposed solutions. Companies must be capable to look beyond customer s behaviour or product and service acquisition. Profit and growth come only after deeply understanding the customers, by listening to their needs and by offering what they are asking for. This is something that can be easily lost or even impossible to gain, if this is the single method used by the marketing team. For the marketing people in all the domains, it represents an important responsibility to share this desire to listen, to develop and to deliver at every level inside the organization. It is well known that the strategies built on consumers feedback have more chances of success than the ones based on managerial intuition. It s a real challenge to any marketer to find out why the customer chooses a service or another. Because there is always a certain dynamic of the selection, depending on the analyzed market structure, on company s positioning on the market (image, marketing communications) and on product and service development. Taking into consideration a series of factors (such as: needs, brand image, price, and product or service availability, experiences) in a comprehensive evaluation process, consumer will decide to request a specific product or service. Although modern marketing focuses on strategies (mixes) that give impulse to sales and to attracting new customers, the company s most effective defence weapon is represented by customer retention. And the most effective approach to achieve this objective consists in offering high satisfaction to the customer, and this will lead to an improved customer loyalty. Today, many companies acknowledge the importance pf customers retention. According to a recent study, by decreasing the loss of customers with only 5%, companies can improve their profit with 25 85%. Unfortunately, many companies do not appreciate the real value of customer loyalty. In this context, it is worth to mention the opinion with two prestigious authors who consider that customer relationship management represents the most important dimension of the company s strategy. In this respect, Robert S. Kaplan and David P. Norton have analyzed the four essential processes in customer management: client selection, acquisition, retention and growth. This is because the relation has to maintain on the long term the contact with the customers, due to a proactive approach which strategically integrates the four processes considering every process individually maximizing in this way the client s value, and the value creation, in general. Many companies make the mistake of considering sale as just a transaction and this is causing lose of contact with customers, without knowing exactly if these still are firm s clients. If the consumer is satisfied with the provided service in relation with his expectations, he will become loyal to the service provider, who applied, in this case, adequate marketing strategies (improving service quality; 1170

3 improving service differentiation confronted to competition services/offer, distribution, and image differentiation; increase service productivity; motivate the personnel to better serve the clients etc). Customer satisfaction is the key to customer retention. Fully satisfied customers are more likely to become loyal customers, even advocates for the firm and its products and services. Although firms put enormous amounts of money and effort into loyalty initiatives, they often are not successful in building true customer loyalty. The main ways in which firms can manage customer satisfaction and reach customer loyalty refer to: understand what can go wrong; focus on controllable issues; manage customer s expectations; offer satisfaction guarantees; make it easy for the customers to complain; create relationship programs; make customer satisfaction measurement an ongoing priority. We consider that the two most important things for delivering the best customer experience are: a great product, that emotionally connects with the customers and fulfils a basic need or desire; and a deep understanding of the customer, an understanding that allows the firm to anticipate what they need better and sooner than they know themselves. Customer relationships management Customer relationship management can be defined as a business philosophy aimed at creating and increasing customer value in ways that motivate customers to remain loyal to the firm. It is about retaining the right customers. Considering CRM as the ability to build and maintain relationships with customers, suppliers, and partners based on trust, commitment, cooperation and interdependence, it involves the creation of relationship capital. This effort refers to finding ways to integrate all these relationships toward the ultimate scope of customer satisfaction. Customer relationship management is a customer-centric business strategy with the goal of maximizing profitability, revenue, and customer satisfaction. CRM requires that firm looks beyond current transactions to examine the long-term potential of a customer, being based on creating mutually beneficial relationships where each party provides value to the other party. CRM is an information industry term for methodologies, software, and usually Internet capabilities that help an enterprise manage customer relationships in an organized way. For example, an enterprise might build a database about its customers that described relationships in sufficient detail so that management, salespeople, people providing service, and perhaps the customer directly could access information, match customer needs with product plans and offerings, remind customers of service requirements, know what other products a customer had purchased, and so forth. Improving customer-centricity through understanding customer interactions Companies are now talking about customer centricity rather than CRM and are receptive to the idea of creating alignment across the business to ensure consistency in the customer experience, which means developing all the non-it capabilities as well as the obvious CRM ones. What customer-centricity means is how the whole organization behaves towards customers, not just the touch points, the decision points, but how the whole business is organized and optimized around the needs of the customer. A customer centric approach should be incorporated into the overall CRM plan and vision that a company has. Customer-centricity should go hand-in-hand with a product focus by promoting the product by all means but be show genuine care for the customer's sensibilities and feelings. What could be more important than improving sales and customer relationships? Today, there is a fastgrowing movement among organizations interested in improving their customer-centricity through a better understanding of customer interactions, or touchpoints. Called "Customer Touchpoint Management" (CTM), the goal of this new movement is to improve customer experiences, and as a result, improve customer relationships. By improving customer relationships, service organizations improve market share, sales, and both customer and employee loyalty and advocacy. A touchpoint is all of the communication, human and physical interactions that customers experience during their relationship lifecycle with the service organization. Touchpoints are important because customers form perceptions of the organization and brand based on their cumulative experiences. CTM- 1171

4 oriented organizations know that they can best enhance relationships with customers by improving touchpoints across the entire enterprise The key to delivering outstanding customer experiences is improving the quality and consistency of touchpoints: quality in terms of meeting needs, and consistency in delivery and image. And the key to improving the quality and consistency of touchpoints is establishing touchpoint standards and best practices. Establishing touchpoint standards and best practices Improves the quality and consistency of touchpoints Enhancing customer experience Driving the quality - and profitability - of relationships Customer Experience Management Process Setting standards establishes performance expectations. Employees need to understand what the standards are in order to perform consistently. Without standards, the quality of touchpoints is left to the individual employee. In other words, without established standards, the quality of a customer experience can be in the hands of the worst firm s employee. Taking into consideration these ideas, we can define Customer Experience Management as a coordinated effort to accomplish specific goals by improving the quality and consistency of customer interactions or touchpoints. Using this strategy, a service company can gain important advantages like: constantly positive customer experiences, achieving differentiation, increasing sales, customer retention and referrals. A customer experience is not just one piece of theatre or a momentary delight. While those are great, and a step in the right direction, real positive customer experience comes from companies who show they care about the customer. Companies that have a memory (so customers don't have to tell their story repeatedly) and really provide ongoing value to a customer understand that customers are truly the most valuable entity of any business. Those companies treat their customers as not only their only source of revenue, but as a scarce, valuable resource. When companies work this way we are much more likely to see really terrific customer experiences. References: 1. Dyché, Jill - The CRM Handbook, MA Addison-Wesley Publishing House, Boston, 2002, p.4 2. Lynch, Joe - Listen and Learn, în Marketing (UK), 7 September 2005, p Kaplan, Robert S., Norton, David P. Keeping Your Balance With Customers, HBS Working Knowledge, July 14, Kotler, Ph. Principiile marketingului, Editura Teora, Bucure ti, 2005, p Philip Kotler, Kevin Lane Keller - Marketing Management, Twelfth Edition, Pearson Prentice Hall, 2005, Pearson Education Inc. 1172

5 6. Purc rea, Theodor, Ra iu, Monica Paula Comportamentul consumatorului o abordare de marketing, Carol Davila Publishing House, Bucharest, 2007, p David Rance Chairman, Round UK Ltd., November