Keywords Customer loyalty, Customer relations, Customer satisfaction, Buyer-seller relationships, Value chain. Paper type General review

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1 Lasting customer loyalty: a total customer experience approach Oswald A Mascarenhas, Ram Kesavan and Michael Bernacchi College of Business Administration, University of Detroit Mercy, Detroit, Michigan, USA Abstract Purpose Understanding and delivering total customer experience (TCE) in order to sustain lasting customer loyalty (LCL) is increasingly important given the pressures of commoditization, globalization and market saturation in developed countries The purpose of this paper is to review the concepts of TCE and LCL Design/methodology/approach The concepts of TCE and LCL are discussed and defined and their combined importance for marketers is outlined and few key cases of their best practices are analyzed in order to derive a set of managerial frameworks for strategizing TCE to achieve LCL Customer loyalty as a hierarchical ladder starting from random casual awareness in the bottom rung to high bonding loyalty of brand communities in the topmost rung is derived Findings TCE is captured in its three essential interactive elements: physical moments, emotional involvement moments, and its value chain moments Accordingly, a typology of customer loyalties is proposed as a function of high vs low levels of the three constitutive elements of TCE Practical implications The loyalty ladder is a useful classification tool to monitor customer loyalty and dollar-effectiveness of customer loyalty programs Each rung offers a managerial challenge to ascend to the next rung of loyalty Originality/value Linking TCE with LCL is unique and challenging Adding the third dimension of value chain moments makes TCE more focused and loyalty-driven The typology of TCE-based customer loyalty is new and offers a broad strategic canvas for marketers The loyalty ladder with each rung buttressed by differentiated value, interactive relationship and TCE makes it credible, viable and a strategic destiny TCE and LCL are also distinguished from related concepts in marketing to derive managerial implications Keywords Customer loyalty, Customer relations, Customer satisfaction, Buyer-seller relationships, Value chain Paper type General review Traditionally, marketing activities have focused on success in the product marketplace by examining the physical aspects of products and services such as quantity, quality, functionality, availability, accessibility, delivery, price and customer support More recently, marketing managers have shifted their emphasis to creating value for their customers (eg Clutterbuck and Goldsmith, 1998; Fudenberg, 2000; McAlexander et al, 2002) The current trend in marketing is to create engaging and lasting experiences for the customers (Macmillan and McGrath, 1997; Carbone, 1998; Pine and Gilmore, 1998; Rowley, 1999; Wyner, 2000; Calhoun, 2001; Arussy, 2002; Berry et al, 2002; Gilmore and Pine, 2002; Lamperes, 2002) About 85 percent of senior business leaders interviewed in a recent study agreed that differentiating solely on the traditional physical elements such as price, delivery and lead times is no longer an effective business strategy (Shaw and Ivens, 2002) The new differentiator today is customer experience The competitive battleground of differentiators is also changing In the 1970s, the differentiator was quality or functionality; in the 1990s it has been brand and price; in the early 2000s, it is service, information and delivery (Shaw and Ivens, 2002, p 2) All these attributes are considered as givens The current issue and full text archive of this journal is available at wwwemeraldinsightcom/ htm 23/7 (2006) q Emerald Group Publishing Limited [ISSN ] [DOI / ] today; that is, customers take them for granted and feel entitled for them Currently, in the mid-2000s, it is customers emotional attachment with the brand, the brand community and the brand company via customer experience that is gaining importance in the literature (Anderson et al, 2006; Barber and Strack, 2005; Bendapudi and Bendapudi, 2005; McGrath and Macmillan, 2005; Mascarenhas et al, 2004; Narayandas, 2005; Selden and Macmillan, 2006) Delivering total customer experience (TCE) goes beyond mere customer satisfaction and is a relatively new concept since satisfied customers could still defect (Jones and Sasser, 1995) In the past, companies have primarily focused on the physical aspects of the product, while totally neglecting the emotional and value aspects and hence, losing many customers in the long run (Nunes and Cespedes, 2003) To compete successfully in this customer experience territory, a growing number of organizations are systematically applying the principles and tools of TCE to generate, strengthen and sustain enduring lasting customer loyalty Marketers today believe that engineering TCE and lasting customer loyalty (LCL) are important for maintaining customer focus and creating customer preference In this paper, we review the concepts of total customer experience (TCE) and lasting customer loyalty (LCL), discuss their related importance for marketers, analyze a few key cases of their best practices and as a result, derive a set of theoretical and managerial frameworks for strategizing TCE for LCL We also distinguish TCE and LCL from related concepts of marketing to generate managerial implications for attracting and retaining customers 397

2 Oswald A Mascarenhas, Ram Kesavan and Michael Bernacchi Importance of TCE and LCL Brands are at the heart of marketing and business strategy Brand loyalty is a fundamental concept of strategic marketing and is generally recognized as an intangible asset (Wernerfelt, 1991, p 229) Successful brands create wealth by attracting and retaining customers as certain loyal customers may be willing to pay more for a brand Brand loyalty discourages brand switching to competing brands (Dick and Basu, 1994) But at the same time, the increase of competing new products, the competitive prices of new brands, and attractive promotions of new brands can quickly erode customer loyalty (Schiffman and Kanuk, 1997, p 224) Hence, it is all the more important to investigate the determinants of long-term customer loyalty Engineering TCE and LCL is an important strategy for establishing and sustaining customer focus for an institution It should, therefore, be in the capability portfolio of any firm investing in long-term customer relationships (Carbone and Haeckel, 1994) An organization should be successful only when TCE and LCL are the focus of its improvement (Calhoun, 2001) Understanding total customer experience We review a few of the many cases from the literature to develop our definition of TCE Disney World As a pioneer in experience management, Disney is dedicated to the delivery of unique customer experiences Disney theme parks with their hundreds of engineered cues are all coordinated and networked to generate that consummate mix of excitement, entertainment and adventure that ensure a TCE Disney has a holistic approach to TCE every adventure, every Disney character, every employee, every shop, and even the long waiting lines systematically manage positive sensory and emotional experience in a commercial setting that achieve a level of differentiation far beyond the commodity zone (Carbone, 1998) Experiences have always been at the heart of Disney s entertainment business (Pine and Gilmore, 1998) The American Girl Place Here, mothers and daughters (and occasionally, fathers and grandparents) spend the better part of a day, together They can enjoy The American Girls Revue at the American Girls Theater, a 70-minute stage production; or they can go to The Café for a grown-up dining experience Girls can pose for a photo shoot and take home a copy of American Girl Magazine with their picture on the cover Others can have their American doll s hair styled in the Hair Salon The American Girl Place is no more the store paradigm It is where experiences are grown, enjoyed and repeated (Gilmore and Pine, 2002) Avis Rental Car With a pronounced decline in its customer-ratings, Avis applied the TCE technique at one of its largest operations, Newark International Airport After an experience audit, Avis developed an experience motif focused on relieving customer stress and anxiety, both of which are commonplace at airports For instance, customers dropping off cars were worried about making their flights, so to reduce this flight anxiety Avis installed monitors showing flight departure times and gates and placed them at the door of the car-return facility Avis also established a new communication center to make calls, send faxes or just plug-in laptops Within 18 months, Avis rolled out the experience design to other key locations By 2001, Avis had moved from a bottom rank to rank number one in the Brand Keys customer-loyalty recognition survey of more than 140 national representative brands of 26 industries (Berry et al, 2002) Apple s imac computer The imac is an all-in-one computer that requires little wiring or setup The base model needs little upgrading, software comes preloaded and the process of selecting a model has more to do with picking a color than understanding processor speed It reinforces the message with packaging and graphics and backs its products with excellent customer support Television ads of imac communicate how simple it is to do a task with an imac The purchasing experience enables the customer to undertake a comprehensive comparisonshopping by models, price and other features The imac attracted many first-time buyers, including the elderly, by providing positive TCE (Cuffaro et al, 2002) Blyth Industries Blyth Industries, a candle manufacturer, differentiated and re-differentiated its products to suit the entire consumption chain and to create additional positive customer experiences Blyth grew from a $2 million US producer of candles for religious purposes to a global candle and accessory business with nearly $500 million in sales and a market value of $12 billion This is an excellent performance in an industry that has been declining over the last 300 years (Macmillan and McGrath, 1997) Analyzing total customer experience The five TCE cases outlined above have some features in common: Anticipating and fulfilling customer needs and wants better than competitors All five providers anticipated and understood the specific needs, wants and desires of their target customers and fulfilled them uniquely and way beyond the normal call of duty Too many companies put all their marketing efforts on the selling side of the product life cycle, forgetting that long-term loyalty requires attention to customers needs throughout their experience with a product Handling things when the product does not work out can be as powerful as meeting the need that motivated the initial purchase (Macmillan and McGrath, 1997, p 140) Providing real consumer experiences All five firms provided customers with real experiences that competitors did not The experiences they provided were not an amorphous construct but something as real as any service, good or commodity Providing real emotional experience All five products/ services generated customer experience that was beyond physical attributes such as quality, quantity, delivery, price-product bundling, safety, security and privacy They also triggered an emotional experience of meaning, value, entertainment, friendly and caring service, belongingness, 398

3 Oswald A Mascarenhas, Ram Kesavan and Michael Bernacchi brand community, and memorable and engaging experience (Shaw and Ivens, 2002) Experiences as distinct market offerings All cases offered experiences that were distinct economic offerings For instance, although imac s design was critical to its success, it was just one component of its TCE The overall strategy was simplicity The message was that the product would enable users to do high-tech things in a simple way Economists have typically lumped experiences with services, but consumer experiences are a distinct economic offering, as different from services as services are from goods (Arussy, 2002) Experiences as interactions These experiences arose from the value-adding interactions of customer involvement and producer participation (Berry et al, 2002, Hoch, 2002) Disney theme parks thrive on customer interactions Several interactive experiences occur at the American Girl Place Avis Rental customers interact with various stress and anxiety reduction services offered in the rental premises These strategies paid off handsomely Experiences as engaging memories These experiences engage the customers to create memories within them (Gilmore and Pine, 2002, p 5; Hoch, 2002) An experience occurs when a company intentionally uses services as the stage and goods as props, to engage individual customers in a way that creates a memorable event (Pine and Gilmore, 1998, p 98) Thus, Disney keeps customers engaged and excited for days on end; mother-daughters are often repeat buyers at the American Girl Place; Avis customers are lifetime loyalists; imac buyers swear customer loyalty, and Blyth has candles to capture engaging memories for almost every customer event Defining total customer experience From these cases we could extract a workable definition of TCE: it is a totally positive, engaging, enduring, and socially fulfilling physical and emotional customer experience across all major levels of one s consumption chain and one that is brought about by a distinct market offering that calls for active interaction between consumers and providers This definition has several implications: TCE is generated by two components: a distinct market offering that invites and thrives by high involvement between consumers and providers TCE must have a right blend of both physical and emotional elements along all the stages of the customer experience and value chain, that is, all moments of customer contact with the producer What defines TCE is the joint interactive participation of the provider and the customer The higher the interaction and its quality, the higher is TCE and, consequently, the higher is LCL TCE is a powerful form of product/service augmentation Graphically, if we can locate the core product in the innermost circle, and its service component in the circle that surrounds it, then experience belongs to the outermost circle and is dependent upon the inner two circles of product and service, but clearly transcends it This is because experience is created by the active involvement and interaction between provider and the customer The resulting TCE has an internal or subjective component (emotional, intellectual and social experience), and an external or objective component (distinct and real product offering, real experience potential, producer-customer interaction potential along all points of the production-consumption chain) While economic offerings such as commodities, goods and services are external and impersonal to the customer, involvement and experiences are inherently internal and personal They exist only in the minds of customers who are engaged on an emotional, physical, intellectual or even spiritual level (Carbone, 1998) The customer cherishes such an enduring experience before, during and long after product use Hence, the distinct market offerings that generate such experiences must have sustainable competitive advantages over most competing products (Gilmore and Pine, 2002) TCE as an emotional and subjective experience is uniquely personal and changeable with the customer, product or service Even the same person may experience a different quality and level of TCE with the same product/service at a different time The product is staged to provide engaging, memorable, and lived moments; that is, it is highly personalized In this sense, the provider stimulates the experience while the customer must undergo it (Hoch, 2002) Some customers may also internalize and customize it Defining lasting customer loyalty In marketing, customer loyalty is often associated with a brand Conceptually, a brand is a name, term, sign, symbol or design, or a combination of these, intended to identify and differentiate the goods or services of one seller from those of competitors Operationally, a brand conveys its identity (name, fame) that embodies a specific set of unique features, benefits and services to the buyers Currently, brand building is a major marketing cost and undertaking to attract customer loyalty Brand loyalty gives sellers some protection from competition and greater control in planning marketing programs (Kotler, 2003) Brand loyalty is a deeply held commitment to re-buy or re-patronize a preferred product/service consistently in the future, thereby, causing repetitive same brand set purchasing, despite situational influences and marketing efforts having the potential to cause switching behavior (Oliver, 1999, p 34) This definition helps us to distinguish loyalty as behavioral, attitudinal and situational (Chaudhuri and Holbrook, 2001; Uncles et al, 2003) Behavioral loyalty is mainly expressed in terms of revealed purchase and usage behavior, often conditioned on customer satisfaction, and is measured by historical purchasing of one s brand and competing brands (this is divided loyalty or polygamous behavior) Attitudinal loyalty is often expressed as an ongoing relationship to a brand, often conditioned on positive customer preferences towards the brand, and is strongly influenced by significant others (this is strong loyalty or monogamous behavior) Lastly, situational loyalty is often expressed as a contingent relationship to the brand (eg I will buy it if it is available, or if it is on sale) that is often determined by the shopping and purchasing situation (weak loyalty or promiscuous behavior) All three types of loyalty are important, even though the first two are more critical for long term sales and market share In 399

4 Oswald A Mascarenhas, Ram Kesavan and Michael Bernacchi the face of tough competition, having brand loyal customers not only ensure sales, but also significantly reduce marketing costs (Datta, 2003) In this paper, we include both behavioral and attitudinal aspects of loyalty Creating TCE to optimize LCL Table I captures the customer experience process as a blend of the physical, emotional and value aspects of the search, purchase, use and post-use stages TCE spans across all moments of customer-seller contact Table I implies that TCE occurs when the sellers and manufacturers create a product/ service system that consistently exceeds the physical, emotional and value expectations of its target customers The traditional business strategy was primarily focused on delivering the physical elements (column 2 in Table I) to the customers But given that the markets are becoming increasingly crowded and more competitive than before, this strategy is currently unsustainable Saturated markets and tough competition have leveled the differences between brands to their physical elements That is, most of today s products and services have become commoditized Imitation has become commonplace Hence, the TCE strategy focuses on the blend of the physical elements and the emotional elements (columns 2 and 3 in Table I) in delivering customer experience While this is promising, it may not be lasting because emotions are fleeting and vacillating Hence, if TCE should build lasting customer loyalty (LCL), we need to add a third and necessary dimension to TCE the value dimension What business strategy should aim is a TCE that builds LCL by blending the physical, emotional and value elements (columns 2-4 in Table I) of the target customers This is because consumer loyalty is a function of one s perception of congruence in values with the product or service provider The higher the congruence in values, the higher is customer loyalty Value is the consumer s perception of the benefits minus the costs of maintaining an ongoing relationship with a provider (Zeithaml, 1988) Relational benefits include the intrinsic and extrinsic utility provided by the ongoing relationship (Gwinner et al, 1998), while associated costs include monetary and non-monetary (time, effort, anxiety) inputs that are needed to maintain the loyalty relationship (Zeithaml, 1988) Values, in turn, are a function of one s underlying goals that consumers expect to attain through loyalty relations Some of these goals are superordinate or terminal (eg happiness, love, self-actualization) while others are instrumental values (eg product quality, security, privacy, immediate product/service gratification, satisfaction, best value for the dollar, and store convenience) Building customer value through market offerings is a consumer-value-centric competence that should be the driving obsession of an organization (Srivastava et al, 1999, p 172) Customer value is the fundamental basis for all marketing activity A typology of TCE and LCL Following Table I, we submit that when marketers offer products and services that consistently have strong physical attributes-based satisfaction, provide high emotional experience, and high perceived value summing to a high TCE, they will automatically generate high and lasting customer loyalty (LCL) Conversely, when market offerings are low on physical experience, emotional involvement and customer perceived values, they fail to generate LCL Between these extreme positions there may be other contingent circumstances that will generate partial TCE and, therefore, partial LCL This dynamic categorization is captured in Table II Incidentally, Table II depicts a typology of TCE and LCL, and offers marketers several strategy options when generating varied levels of TCE and LCL Managerial implications Given Tables I and II, Figure 1 suggest a multidimensional loyalty ladder as a function of major TCE variables: value differentiation, provider-interaction, and engaging experiences These three TCE variables interact both horizontally (by rows) and vertically (by columns) to impact each rung of the loyalty ladder bottom-upwards Loyalty ladders feature in the marketing literature For instance, Raphael and Raphael (1995) proposed a five-rung Table I Capturing the customer experience process Experience stage Physical moments Emotional involvement moments The value chain moments Searching Finding Using Post-usage Print media search Audio-visual media The Website Search The place- in store Availability The product The brand The solution Delivery Brand community Maintenance Support service Complaints Referral Replacement Repeat buy What do I dream? Seeking information via ads Viewing radio, TV, Internet Seeking advice and direction Salesperson interaction/accessibility Touching, feeling, seeing, believing Color, shape, texture, material Perceived problem solution Excitement, surprise, curiosity Personal satisfaction-delight Visibility, prestige, status Brand community belongingness Satisfaction-dissatisfaction Displeasure, anger, rage Positive or negative referrals Commitment, lifetime loyalty The right motivation The right product The right advice The right shop/location The right price The right package The right solution The right financing The right use-experience The right social visibility The right community The right warranty The right feedback The right complaint The right re-purchase The right lifetime brand 400

5 Oswald A Mascarenhas, Ram Kesavan and Michael Bernacchi Table II A typology of customer experiences and loyalties Product s physical experience Product s emotional experience Product s value experience Combined characterization Customer loyalty High High High High performance zone Consumer actualization Customer delight Low Market challenge zone Customer high expectations Customer ambivalence Low High Functionality zone Customer rationality Benefits quantification Low Commoditization zone Consumer conformance Consumer alliance Low High High Personalization zone Consumer passion Country of origin Low Mass customization zone Mass emotions appeal Consumer Indifference Low High Low customer expectations Low self-esteem Low-buying power Low Disaster zone Customer disgust Customer agony Platinum loyalty Lifetime loyalty Family loyalty Plastic loyalty Precarious loyalty Unpredictable loyalty Performance-based loyalty Reasoned loyalty Objectified loyalty Standardized loyalty Compliance loyalty Acceptance loyalty Subjective loyalty Fleeting loyalty Ethnocentric loyalty Multi-brand loyalty Emotional loyalty Polygamous loyalty Trend-based loyalty Poverty-based loyalty Needs-based loyalty Indigent loyalty Platinum disloyalty Lifetime disloyalty Global disloyalty ladder of prospects (people who may be interested in your products), shoppers (people who visit your business), customers (people who purchase one or more of your products or services), clients (people who regularly patronize your business) and advocates (people who give positive referrals to your products) Banks and Daus (2002, p 107) suggest another rung after advocates: evangelizers Loyal customers evangelize, often trying to convert friends who use competitors products Narayandas (2005, p 136) associates a certain hierarchy of customer behaviors with the loyalty ladder For instance, loyalty may be initiated by some random first-time brand purchases and reinforced by repeated purchases if net benefits remain consistently positive If repeat purchases are also followed by frequent purchases and volume purchases, they may indicate higher levels of loyalty that prompts lifetime endorsements Figure 1 reflects loyalty ladder hierarchy as suggested by Narayandas (2005) Real lasting loyalty means faithfulness, an unswerving devotion, despite doing so may run counter to your own interests (Nunes and Dreze, 2006) Lasting customer loyals should overlook company s faults of commission or omissions For example, the quality of Chevrolet cars may not compare well with competing Toyota cars (see Consumer Reports), but some Chevrolet loyals may still prefer to patronize the brand TCE and customization TCE transcends standardization, mass customization and personalization, as may be deduced from Table II Regardless of best customizations, some customers may capture TCE in highly standardized products and marketing messages For instance, Disney s adventures are standardized; The American Girl Place has standardized product assortments and marketing promotions; Avis has neither customized cars nor marketing messages; imac is not a customized product, and Blyth has candles for every occasion but not customized products What generates great TCE in all the five cases is the unique customer-provider interaction, it is an engaging experience that the product-service stimulates Customization emphasizes the role of the provider, but not so much of the customer TCE emphasizes total customer focus TCE enables the customers themselves to customize the product-service and marketing promotions Marketers cannot sell packaged or canned experiences across all target customers Marketers must dovetail TCE with specific target customer needs and times (Macmillan and McGrath, 1997) The test of the quality and reliability of TCE is its capacity to leverage re-buy, exchange positive word-of-mouth (referrals), and generate LCL Understanding the TCE-LCL dynamic Figure 1 implies several new concepts and managerial implications: 1 Loyalty is not a one-step process, but a long ascending process consisting of many sequential steps 2 Each rung of the ladder is partial or quasi loyalty (eg, repetitive behavior, brand interest) 3 Loyalty can move upwards or downwards, depending upon how the customer experiences the impact of the TCE variables at a given point in time 401

6 Oswald A Mascarenhas, Ram Kesavan and Michael Bernacchi Figure 1 The ladder of customer loyalty as a function of total customer experience 4 Loyalty, therefore, is an interactive and interdependent process, a buyer-seller relational process generating relational equity 5 Higher in the ladder, the stronger is customer loyalty 6 Conversely, lower in the ladder, more vulnerable is customer loyalty 7 Loyalty is an accumulative process, a step-by-step function 8 Given the volatility of consumer preferences and lifestyles, an ascending loyalty is a slower process than a descending one TCE and LCL result when organizations build themselves around what is good for the customers, and change their organizational structures, systems and processes to build great customer experiences this is an outside in approach, while the conventional approach has been an inside out strategy that defines companies by what is good for themselves, rather than what is good for the customer (Shaw and Ivens, 2002, pp 8-9) The reason for this new approach is that the customer is progressively becoming an emotional equity holder in the brand There is, of course, no substitute for offering a product with best value to the customer dollar In short, your product should have an emotional appeal, a value statement, and a personal identity Customers should own their brand They should proudly and fondly talk about it at home, in the workplace, at the bar and at various sports stadia and arena These are great positive referrals for your product Any product or service triggers a series of physical, emotional and value contact points that marketers should be aware of Table I indicates most of these customer contact points That is, real TCE should build a brand community of lasting loyal customers (McAlexander et al, 2002) Lasting customer loyalty as an intangible asset Strategy scholars define an asset broadly as any physical, organizational, or human attribute that enables the firm to generate and implement strategies that improve its efficiency and effectiveness in the marketplace (eg Barney, 2001) Assets can be tangible or intangible, on or off-the-balance sheet, and internal or external to the firm Regardless of the type of asset, however, the value of any asset ultimately is realized, directly or indirectly, in the external market place (Srivastava et al, 1999) Developing total customer experiences that are engaging and lasting are intangible 402

7 Oswald A Mascarenhas, Ram Kesavan and Michael Bernacchi assets that add immeasurably high brand equity and are extraordinarily valuable in terms of customer loyalty, referrals and the lifetime brand value they create The locus and focus of creating a competitive advantage has moved from physical assets to intangible service assets to managing long-term buyer-seller interfaces (Srivastava et al, 1999) It is no longer even ownership of capabilities that matters but rather a company s ability to control and make the most of critical capabilities (Gottfredson et al, 2005, p 134) This is what makes modern successful TCE enterprises, such as Build-a-Bear, Harley Davidson, Hard Rock Café, Panera Bread, and Starbucks Coffee, surpass their rivals TCE and LCL need more than customer orientation The centrality of customer orientation is the backbone of the new marketing concept proposed by Webster (1994) The true mission of the firm is to create value for three key constituencies: customers, employees, and investors But, according to the marketing concept one must treat customers as first among equals because their loyalty is the most fluid (Reichheld, 1994) Customer orientation means organizational commitment to customers such that customers and firms share interdependencies, values, and strategies over the long term TCE and LCL are outcomes of customer orientation but go beyond it Customer orientation as a strategy is a necessary but not a sufficient condition for TCE and LCL Customer orientation does not necessarily imply high and interactive producer-involvement along all the production-consumption stages as TCE and LCL do (see Figure 1) Minimally, TCE requires that the provider focuses on the customer along all the rungs of the loyalty ladder depicted in Figure 1 Everyone in the firm must be charged with responsibility for understanding customers and contributing to developing and delivering value for them To do this, firms must foster direct customer contact, collect information from customers about their needs and then use customer-supplied information to design and deliver products, services and positive branding experiences TCE and LCL demand more than customer relationship management Customer relationship management (CRM) refers to the relationship the customer has with the firm, stores or with individual sales associates But in the final analysis, customers build bonds of trust and expectations with company employees in general, and sales associates in particular but not directly with the firm (Reichheld, 1994) TCE and LCL should be enterprise-wide strategies like CRM TCE and LCL require strong CRM, but they transcend CRM Minimally, CRM requires that there is a low to medium provider involvement in the backend of production points, but a high involvement and interaction with customers at the front end of all marketing and consumption points Achieving TCE and LCL implies an integrated business strategy that goes well beyond single-point solutions in areas such as branding or customer service The TCE-LCL strategy should consider all the elements that go into a relationship and how they fit together To do this, the organization must manage complex relationships holistically and over an extended period This strategy calls for a top-down commitment to make deep and enduring customer relationships and experiences a firm s top investment priority (Crosby and Johnson, 2002) TCE and LCL must optimize value along the total consumption chain TCE is realized when the manufacturer-seller optimizes customers perceived values via differentiation at every stage of the consumption-chain A total consumption-chain is all the points the customer encounters with the product and its environment (see Table I) If companies react to the customers entire consumption-chain experience they can uncover opportunities to position their offering in ways that they and their competitors would never have considered as possible (Macmillan and McGrath, 1997) Customers are not pure rational decision makers; they combine mind and heart, reason and emotion (Wind and Mahajan, 2002) Opportunities for differentiation in relation to the consumer search process include making your product available when competitors do not Examples include: 24-hour print shops or drug stores; offering your product in places competitors do not offer (eg the McDonald outlets in Wal-Mart stores, Krispy Kreme donut booths in gas stations, cellular phone shops in remote villages) Other examples include making your product ubiquitous (eg Coca-Cola) and your service available all the time (eg GE has an enormously popular 800 number that is available 24 hours a day to help people with problems regarding all their products) These strategies make the search process less complicated, less expensive, more convenient and more habitual something that renders customer-shopping experience total and customer loyalty lasting (Wyner, 2000) TCE can also engage the customer at the production-stage (eg Lands End) For instance, the customer could be an active co-conceiver, co-designer, co-producer, co-packager, co-pricer, co-promoter and co-distributor of the product (Lengnick-Hall, 1996) The same strategy underlies customerization (Wind and Mahajan, 2002) The more the producer engages the prospective customer, the higher is the potential for TCE and customer loyalty Obviously, by definition, TCE is customer-dependent and hence, is different for each customer Compared with service outlets such as restaurants, hotels or banks, there is potential for great diversity in customer experience, because the customer may seek a wide variety of different services or products Each stage of this consumption-journey involves an experience that the provider must try to optimize and the customer must capitalize If and when one s product or service does not match the competitor s in quality (which is often the case:, eg Ford vs Toyota), then all is not lost; one can still maximize the TCE with non-product related emotional and value attributes, benefits and services, such that TCE leads to LCL This could be a blue ocean strategy that avoids head on competition when it cannot successfully fight it (Kim and Mauborgne, 2004) Concluding remarks Consumers unquestionably desire experiences, and more and more businesses are responding by explicitly designing and promoting them From now on, leading-edge companies, whether they sell to consumers or businesses, will find that the next competitive battleground lies in delivering lasting 403

8 Oswald A Mascarenhas, Ram Kesavan and Michael Bernacchi experiences (Pine and Gilmore, 1998) To realize the full benefit of delivering such experiences, businesses must deliberately design engaging experiences in what they produce, design and offer Companies manage and compete best when they combine functional and emotional benefits in their offerings Emotional bonds between companies and customers are difficult for competitors to imitate or sever References Anderson, JC, Narus, JA and van Rossum, W (2006), Customer value propositions in business markets, Harvard Business Review, March, pp 90-9 Arussy, L (2002), Customer experience management: the heartbeat of your business, Center CRM Solutions, Norwalk, CT available at: wwwtmcnetcom/ccs/ oe1000htm Banks, D and Daus, K (2002), Customer Community: Unleashing the Power of your Customer Base, Jossey-Bass, San Francisco, CA Barber, F and Strack, R (2005), The surprising economics of a people business, Harvard Business Review, Vol 83 No 6, pp Barney, JB (2001), Gaining and Sustaining Competitive Advantage, Prentice-Hall, Englewood Cliffs, NJ Bendapudi, N and Bendapudi, V (2005), Creating the living brand, Harvard Business Review, Vol 83 No 5, pp Berry, LL, Carbone, LP and Haeckel, SH (2002), Managing the total customer experience, Sloan Management Review, Vol 43 No 3, pp Calhoun, J (2001), Driving loyalty: by managing the total customer experience, Ivey Business Journal, Vol 65 No 6, pp Carbone, LP (1998), Total customer experience drives value, Management Review, Vol 87 No 7, p 62 Carbone, LP and Haeckel, SH (1994), Engineering customer experiences, Marketing Management, Vol 3 No 3, pp 8-19 Chaudhuri, A and Holbrook, MB (2001), The chain of effects from brand trust and brand affect to brand performance: the role of brand loyalty, Journal of Marketing, Vol 65 No 2, pp Clutterbuck, D and Goldsmith, W (1998), Customer care versus customer count, Managing Service Quality, Vol 8 No 5, pp Crosby, LA and Johnson, SL (2002), CRM and management, Marketing Management, Vol 11 No 1, pp Cuffaro, DF, Vogel, B and Matt, B (2002), Why good design doesn t always guarantee success, Design Management Journal, Vol 13 No 1, pp Datta, PR (2003), The determinants of loyalty, Journal of the Academy of Business, Vol 3 Nos 1/2, pp Dick, AS and Basu, K (1994), Customer loyalty: towards an integrated conceptual framework, Journal of the Academy of Marketing Science, Vol 22 No 2, pp Fudenberg, D (2000), Customer poaching and brand switching, The Rand Journal of Economics, Vol 31 No 4, pp Gilmore, JH and Pine, JB II (2002), Customer experience places: the new offering frontier, Strategy and Leadership, Vol 30 No 4, pp 4-11 Gottfredson, M, Puryear, R and Phillips, S (2005), Strategic sourcing: from periphery to the core, Harvard Business Review, Vol 83 No 2, pp Gwinner, KP, Gremler, DD and Bitner, MJ (1998), Relational benefits in the service industries: the customer s perspective, Journal of the Academy of Marketing Science, Vol 26 No 2, pp Hoch, SJ (2002), Product experience is seductive, Journal of Consumer Research, Vol 29 No 3, pp Jones, TO and Sasser, EW (1995), Why satisfied customers defect, Harvard Business Review, Vol 73 No 6, pp Kim, WC and Mauborgne, R (2004), Blue ocean strategy, Harvard Business Review, Vol 82 No 10, pp Kotler, P (2003), Marketing Management, 11th ed, Prentice-Hall, Upper Saddle River, NJ Lamperes, B (2002), The entertainment factor, Business Week, 25 March Lengnick-Hall, CA (1996), Customer contributions to quality: a different view of the customer-oriented firm, The Academy of Management Review, Vol 21 No 3, pp Macmillan, IC and McGrath, RG (1997), Discovering new points of differentiation, Harvard Business Review, Vol 75 No 4, pp McAlexander, JH, Schouten, JW and Koening, HF (2002), Building brand community, Journal of Marketing, Vol 66 No 1, pp McGrath, RG and Macmillan, IC (2005), Market busting: strategies for exceptional; business growth, Harvard Business Review, March, pp Mascarenhas, OA, Kesavan, R and Bernacchi, MD (2004), Customer value-chain involvement for co-creating customer delight, The Journal of Consumer Marketing, Vol 21 No 7, pp Narayandas, D (2005), Building loyalty in business markets, Harvard Business Review, September, pp Nunes, JC and Dreze, Z (2006), Your loyalty program is betraying you, Harvard Business Review, April, pp Nunes, PF and Cespedes, FV (2003), The customer has escaped, Harvard Business Review, Vol 81 No 1, pp Oliver, RL (1999), Whence consumer loyalty?, Journal of Marketing, Vol 63 No 4, pp Pine, JB II and Gilmore, JH (1998), Welcome to the experience economy, Harvard Business Review, Vol 76 No 4, pp Raphael, M and Raphael, N (1995), Up the Loyalty Ladder: Turning Sometime Customers into Full-time Advocates of your Business, Harper Business, New York, NY Reichheld, FF (1994), Loyalty and the renaissance of marketing, Marketing Management, Vol 2 No 4, pp Rowley, J (1999), Measuring total customer experience in museums, International Journal of Contemporary Hospitality Management, Vol 11 No 6, pp Schiffman, LG and Kanuk, LL (1997), Consumer Behavior, 6th ed, Prentice-Hall, Upper Saddle River, NJ Selden, L and Macmillan, IC (2006), Manage customer-centric innovation systematically, Harvard Business Review, April, pp Shaw, C and Ivens, J (2002), Building Great Customer Experiences, Palgrave Macmillan, Basingstoke 404

9 Oswald A Mascarenhas, Ram Kesavan and Michael Bernacchi Srivastava, RK, Shervani, TA and Fahey, L (1999), Marketing, business processes, and shareholder value: an organizationally embedded view of marketing activities and the discipline of marketing, Journal of Marketing, Vol 63 No 2, pp Uncles, MD, Dowling, GR and Hammond, K (2003), Customer loyalty and customer loyalty programs, Journal of Consumer Marketing, Vol 20 No 4, pp Webster, FE Jr (1994), Defining the new marketing concept, Marketing Management, Vol 2 No 4, pp Wernerfelt, B (1991), Brand loyalty and market equilibrium, Marketing Science, Vol 10 No 3, pp Wind, J and Mahajan, V (2002), Convergence Marketing: Strategies for Reaching the New Hybrid Consumer, Prentice-Hall, Upper Saddle River, NJ Wyner, G (2000), The customer s burden, Marketing Management, Vol 9 No 1, pp 6-7 Zeithaml, VA (1988), Consumer perceptions of price, quality and value: a means-end model and synthesis of evidence, Journal of Marketing, Vol 52 No 3, pp 2-22 Further reading Ganesan, S (1994), Determinants of long-term orientation in buyer-seller relationships, Journal of Marketing, Vol 58 No 2, pp 1-19 Kalwani, MU and Narayandas, N (1995), Long-term manufacturer-supplier relationships: do they pay off for supplier firms?, Journal of Marketing, Vol 59No 1, pp 1-16 Rosati, M and Alban, OA (2002), Measuring the reality of the customer experience, Customer Solutions, Vol 20 No 11, pp About the authors Oswald Mascarenhas is the Charles H Kellstadt Professor of Marketing in the College of Business Administration, University of Detroit Mercy, Detroit, Michigan, USA, where he teaches and researches marketing ethics, new product development, internet marketing, and business turnaround management He has published in the Journal of Marketing, Journal of the Academy of Marketing Science, Journal of Consumer Affairs,, Journal of Nonprofit and Public Sector Marketing, and other outlets Ram Kesavan is Professor of Marketing in the College of Business Administration, University of Detroit Mercy, Detroit, Michigan, USA and specializes in marketing strategy, global marketing, and small business entrepreneurship His research outlets include the Journal of Consumer Research, Journal of the Academy of Marketing Science, Journal of Consumer of Marketing, and Journal of Nonprofit and Public Sector Marketing Ram Kesavan is the corresponding author and can be contacted at: Michael Bernacchi is Professor of Marketing in the College of Business Administration, University of Detroit Mercy, Detroit, Michigan, USA and specializes in marketing law, marketing communications, social marketing, sports marketing, and corporate social responsibility His research outlets include Journal of Advertising, Journal of Consumer of Marketing, Journal of Consumer Affairs, and Journal of Nonprofit and Public Sector Marketing To purchase reprints of this article please Or visit our web site for further details: wwwemeraldinsightcom/reprints 405

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