• 06:49:27 am on March 3, 2009 | 7
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    The End of Customer Experience Management?

    My former colleague at Gartner, and good friend, Ed Thompson is an exceptional analyst.  He probably did more to advance the understanding and knowledge of Customer Experience Management that just about anyone else in this world.  He is the one who got me more interested in this aspect of life, and we wrote a lengthy paper together on how to do CEM properly which is still one of the best read documents at Gartner.  He used to have a set of slides to explain Experiences that was outstanding, and in one of those slides he had examples of people paying more money for more exotic experiences.  For example, people that would pay more to go to an ultra-luxurious hotel instead of a 5-star hotel – just for the added experiences.  He reasoned that customers were willing to spend more in better experiences and if you provide better experiences to your customers you can then charge more and justify the cost of the extra benefits.

    I  agree with the concept, and I have helped countless clients do just that.  They enjoyed great benefits for their commitment to the idea of providing a superior experience at the same or higher cost, and their customers saw that and gladly paid for it.  Fast forward to today’s depressed economic situation (no, I did not say depression – we are a long way from that).  I wrote an entry last month about how some companies are realizing these days that they need to preserve their customers and they need to improve customer service with better experiences.  Back then I said that this behavior probably would not last the downturn, and as soon as things got back to “normal” and revenues increased these “new” experiences were gone and service would go back to what it was.  Service providers had not made the necessary investments in superior experiences, they merely had more time to provide better service (less customers, more time spent per customer).

    I have been thinking lately about all this and where does it end, or where does it go.  My conclusion? Regardless of the outcome of these economic hard times, customer experience management is approaching its long, but certain, end.  Hear me out.  I was listening to the radio today and someone was talking about “the thrift syndrome”, whereas people in bad situations committed to saving money and change their lifestyles, spend less in the future regardless of their situation (the theory is that they lived well with less they’ll continue those habits to be ready for the next downturn).

    Now, this is where it all comes together… 1) people spend more money for a better experience, 2) companies see they can provide a better experience without spending oodles in customer experience management, and 3) “the thrift syndrome”… get it? people will spend less and won’t care about the experience, companies will do better without caring about the experience – and we have the end of customer experience management!

    What are your thoughts?  Am I wrong? Am I a sophist in the making?

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Comments

  • tboehm30 2:00 pm on March 3, 2009 | # | Reply

    You are sooooo wrong. This is capitalism at its best. All companies will compete for your business, but price is fixed. Once they see that they can’t compete on price, then it becomes a competition of quality, of branding, of

    Wait for it.

    of Customer Experience.

    I guarantee that if customers are choosing between Motel 6 and a DoubleTree, at the same price they’ll choose the DoubleTree. If they are choosing between Delta and AirTran at the same price, they’ll most likely choose Delta.

    See where I am going with this? The Customer Experience will absolutely matter in competition. Oh, and even in this downturn, there are still people with money who are going to be willing to pay a little more for their experience.

    Just my 2 cents.

    • Esteban Kolsky 9:26 am on March 4, 2009 | # | Reply

      Well,

      First, thanks for the comment. I like it when people call me on my ideas. Second, while I could agree with your statement that experiences matter (in real life they do, in this economy they don’t) the example you describe comparing Motel 6 and DoubleTree relies on both hotels charging the same price – so the distinction is not made by paying more for a better room (whether or not the actual room is the experience is still to be discussed, I say it is part but not the actual experience — long story for future work). Still, in my mind, proves the point that experience as being defined of a higher price for a better “product” (similar product with added benefits or perks) is dead.

      Now, to the second point you are making… does experience matters? yes, it does. Alas, it does not become a strategic or critical driver for innovation or projects in this economy (which was my mine point) and when companies realize that the lack of a better experience does not put them at a disadvantage to compete the myriad initiatives on experience are likely to stall or end. Thus, CEM initiatives in this economy are dead due to lack of proof that they can deliver that which economic competition (i.e. lower prices) cannot deliver.

      Nice comment, thanks for posting!

      PS – the people with money don’t count now or ever, unless your entire organization is set to cater to people with money. Case in point, Nordstrom announced that even with a bad economy they are not getting rid of the personal shopper program, or their legendary customer service. Their customers come to rely on it and they would not have it any other way… but this experience is part of their business model, so they cannot get rid of it.

  • Ed 6:01 pm on March 20, 2009 | # | Reply

    Well I guess as my name was invoked at the start of the debate I should speak my piece. I don’t see the end of customer experience management in a recession. The recent surveys by Accenture, Strativity, RightNow and others show customers more willing to dump a supplier and shout about poor experiences not less. However, the dark forces of the CFO and COO will call for a focus on costs and see the customer experience as an optional extra so I fully expect funding to come under pressure and companies to go over to the dark side. I think they’ll regret it.
    My current belief is that although there are many customer specific churn patterns one of the most common is to switch for the lower price, regret the decision and switch again to get a better level of service. It doesn’t mean the customer switches back to their original supplier but it does show the power of customer experience to force a secondary churn.
    Good debate but I’m on tboehm30’s side on this one Esteban!
    Cheers

    • Esteban Kolsky 5:23 pm on March 23, 2009 | # | Reply

      Ed,

      Thanks for stopping by and thanks for the comment. I think that you hit an interesting point and one that I agree with: the money that supports these experience management initiatives is going away, and these programs are likely to follow (which, badly worded probably, was my main point). Let’s face it, loyalty and experiences were being managed long before CEM was “invented” and will continue long after. Smart companies use it for competitive differentiator for sure and this market is probably going to bring back advantage back to them.

      Either way, most of the implementations of companies that are not committed are so poor that even if they were to continue their operations they would not see the results – nor would their customers.

      Thanks for the twist that made me realize the caveat for my comment.

  • Anne Wood 9:13 am on April 2, 2009 | # | Reply

    Just adding my two pennies worth here.

    A bit ‘off track’ but a point I hope is worth making. In my experience, companies put vendors through a million hoops to ‘prove’ that their software will do this and that and the other.

    ‘Check every box, show us that we’ll get our ROI, help us improve our ‘customer experience’ with clever software. Solve our problem for us…’

    But, and it’s a big but, they then don’t follow through and change anything. IT gives this marvellous new software to the business but as they don’t understand how it works they expect to business to find out – at the same time as the business is struggling to improve the customer experience. Nothing changes, the software gets blamed and the customer experience continues to decrease. These days no-one has the luxury of changing out the software again so it gets a bad press but we struggle on whilst IT says – well we gave you what you asked for…

    What will make a difference is when vendors insist that companies have internal people who truly understand the capabilities of the software they’ve bought (not just IT people but business owners too) and that part of the deal is that the vendor helps the transit from one tool to another whilst also advising on best practice, metrics, evidence gathering etc. This should be built into the price of the software and it might take several months. Only then can the business can concentrate on the customer and improving the experience and differentiating between ok and excellent.

  • tboehm30 1:27 pm on April 6, 2009 | # | Reply

    Anne: Thanks for opening that door, do you mind if I walk through it?

    Businesses hire consultants because their employees are too busy to do the project themselves. They can come in and drive a project. If they are good, they will insist that the business does their share of learning, and business improvements. It shouldn’t be an IT project only, or a consulting project only. It needs to be teamwork.

    In that way, the business will participate in the project, and create the metrics, gather evidence etc…

  • Why Customer Experience Management is Wrong « EKOLSKY - A Passion for Customer Service 2:31 pm on April 20, 2009 | # | Reply

    […] I wrote before in my previous blog, Experiences are something that you design to attract people.  You want them to be immersed with […]


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