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Stop satisfying your customers – and start impressing them – using the strategies of Apple, Costco, Disney, and other industry dominators.

If you're aspiring to satisfy your customers, then you're aspiring to mediocrity. That's the fascinating premise of From Impressed to Obsessed, a book that will fundamentally change how you think about creating a successful, beloved business.

Renowned customer experience expert Jon Picoult takes you on a mesmerizing journey, showing how customer loyalty is as much about shaping people's memories as it is about shaping their experiences.

Through captivating stories and eye-opening studies, Picoult explains the 12 breakthrough, psychology-based strategies that successful companies use to impress customers – leading them to become obsessed with the business's products and services, and to encourage others to do the same.

Filled with actionable examples, you'll see how you can...

Year:
2022
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McGraw-Hill Education
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english
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Praise for

FROM IMPRESSED TO OBSESSED

“From Impressed to Obsessed is an enlightening read. Excellence is never an accident, and Jon Picoult brilliantly pulls the curtain back to reveal how great companies inspire customer loyalty. If you endeavor to be the rare business that customers find magnetic or even magical, then this is the book for you.”

—Horst Schulze, cofounder and former President and COO, The Ritz-Carlton Hotel Company

“What a great, insightful, practical book! With his 12 Principles, Jon Picoult gives us an incredibly thoughtful and actionable guide to delivering lifelong fans, which is the dream of any business.”

—Hubert Joly, former Chairman and CEO, Best Buy

“From Impressed to Obsessed is one of the few books that made me look at leadership differently after nearly 40 years of executive coaching! Picoult deftly illustrates how the very techniques that help cultivate loyalty between a customer and a company, can also be used to accomplish the same between a leader and an employee. No matter what type of constituency you serve in your role—customers, colleagues, employees, or others—this book will help you do it with distinction.”

—Marshall Goldsmith, New York Times #1 bestselling author of Triggers, Mojo, and What Got You Here Won’t Get You There

“A welcome primer for any organization seeking to understand the possibilities and leverage of an extraordinary customer experience.”

—Seth Godin, author of This Is Marketing

“An exceptionally practical and well-researched book. From Impressed to Obsessed captures the essence of a positive customer experience and provides a clear road map for building customer loyalty. Picoult has a deep command of what drives customer-centric behavior and he shares the science behind it. As CEO of a trusted, customer-focused company, the lessons I’ve learned from this book are invaluable.”

—James DeVries, CEO, ADT

“Putting the customer first and building relationships that create brand advocates is essential to growing any business today. By sharing rea; l examples and practical approaches, Jon shows how anyone can design engaging customer experiences that create peak moments while avoiding valleys. In this quick, easy, and entertaining read, Jon expertly crafts a set of core principles—used by some of the world’s most customer-centric brands—that can be easily followed to shape great customer experiences and create lifelong fans for any brand.”

—Jenifer Robertson, Executive Vice President and Chief Customer Officer, AT&T Consumer

“I was absolutely captivated by this book. Picoult is a master storyteller, weaving in fascinating case studies to make his points. It’s an incredibly actionable book, free from the usual customer loyalty platitudes. I walked away with countless ideas for better engaging both customers and employees. Picoult truly provides the definitive road map for turning people into ravings fans. This is a must-read for any organizational leader who’s trying to solve for stronger and faster growth.”

—Bob O’Leary, Chairman, Philadelphia Insurance Companies

“There is a new standard in customer engagement: You can’t just satisfy your customers, you’ve got to IMPRESS them! With hard numbers and meticulous research, Jon Picoult takes you on a fascinating journey about creating indelible impressions that turn customers into truly obsessed fans. This book is not a nice to have, it is a must-have road map for the new standard in customer engagement. Study and enjoy!”

—Chester Elton, bestselling coauthor of The Carrot Principle, Leading with Gratitude, and Anxiety at Work

“Too often, books about customer experience are long on platitudes and short on practical advice that can be implemented. This book is the rarity—a book about creating great customer experiences that is well-researched, supported with a wealth of facts and illustrative case studies, organized in a way that makes it easy to understand, and containing a plethora of actionable steps someone can take to implement real change and create a great customer experience. The author took his own advice here—the experience reading this book was a pleasure, and I am a raving fan!”

—Matthew Winter, President (retired), Allstate Corporation

“From Impressed to Obsessed is one of the best business books I have ever read. It’s an eye-opening and highly enjoyable read that will fundamentally change how you look at customer experience. Picoult provides a master class in how to better engage sales prospects, customers, and even employees. If you want to set your business apart from the crowd, then this is your guidebook.”

—Michael Morrissey, Chairman, Protective Life Corporation

“From Impressed to Obsessed is a master class for any business leader looking to create the ultimate customer experience. Anchored around 12 behavioral principles, this book plots a road map for driving a culture of customer centricity. Picoult teaches you precisely how to engineer truly great, memorable experiences for your customers, generating the kind of sustainable competitive advantage that fuels exceptional shareholder value.”

—Dave Hickey, EVP and President, BD Life Sciences (Becton, Dickinson and Company)

“Customer centricity drives financial performance! Picoult’s research proves this relationship. ‘Customers first’ is not just the right thing to do; it makes good financial sense. In my work as Chief Experience Officer at Cleveland Clinic, Picoult’s model helped our leaders understand that patient centricity was more than just a nice thing to do. In his new book, Picoult teaches us how to transform our businesses into customer-obsessed organizations, ensuring that we are not only meeting, but exceeding customer expectations at every turn.”

—James Merlino, MD, Chief Clinical Transformation Officer, Cleveland Clinic

“Simply brilliant! Jon Picoult delivers a master class on client service, satisfaction, and devotion. Based on a lifetime of research and experience consulting to enterprises of every type, this is a customer satisfaction bible. Jon provides a proven recipe for success in a logical, thorough, practical, powerful, and actionable format. Brimming with useful and profitable information, the 12 Principles are a blueprint for greatness. If you want raving fans, this book is a must-read . . . and follow.”

—Joseph Deitch, Chairman, Commonwealth Financial Network

“Just when you think you’ve learned everything there is to know about improving the client experience, Jon Picoult introduces an array of new ideas for the modern-day entrepreneur. Backed by an extensive amount of research and proven with intriguing case stories, this book gives you the tangible takeaways to take action immediately and unveils a formula to reinvent the way your clients form a relationship with your business. From Impressed to Obsessed is a wake-up call for those who have forgotten about their most vital asset to exponential growth: their very own clients and stakeholders.”

—Ron Carson, founder and CEO, Carson Group, and New York Times bestselling author of The Sustainable Edge

“Impressively researched and engagingly written, every CEO should read this book with their management team. With his 12 Principles, Picoult has created a must-have toolbox filled with actionable ideas for strengthening both customer and employee engagement. From chief executives to frontline service reps, I’m convinced this book will help anyone reexamine and reinvigorate the experience they deliver to others.”

—Nathan Henderson, Chairman and CEO, BILT Incorporated

“Jon Picoult gives us the inside scoop on how to captivate customers and capture the hearts of employees. These lessons are a must for anyone doing business in a world of fast clicks, high churn, and limited attention spans. The bottom line is that if you want loyalty, you must be exceptional, and this book shows you how.”

—Steve Hoffman (Captain Hoff), CEO of Founders Space and author of Make Elephants Fly and Surviving a Startup

“From Impressed to Obsessed offers a brilliant road map for achieving two of the most critical imperatives for any top performing business—delivering a unique and memorable customer experience and creating a highly empowered and engaged team. Wherever you are in the pursuit of these strategic imperatives, Jon’s work will serve as a great accelerant.”

—John Marchioni, President and CEO, Selective Insurance

“Want to build extraordinary customer and employee loyalty? Read Jon Picoult’s From Impressed to Obsessed. With a compelling storytelling style, Picoult shares a clear, practical blueprint for shaping people’s thoughts, feelings, and memories about your business—be they customers or employees. The book’s lessons are invaluable for anyone wanting to engender fanatical brand loyalty in order to achieve market dominance.”

—Richard Mucci, President (retired), Group Protection Business, Lincoln Financial Group

“For anyone who is serious about customer experience, From Impressed to Obsessed is a must-read. As Jon points out, effectively engaging customers—during sales or service interactions—is all about making great memories. His 12 Principles provide a clear, practical process for accomplishing precisely that. Every organization can benefit from the techniques outlined in this book.”

—David O’Leary, President and CEO (retired), US Life Companies, Genworth Financial

“From Impressed to Obsessed will become the definitive modern guide to customer experience. I tore through the book in one sitting, but stopped every page to make notes with ideas for my business and case studies I should share with my executive team. Picoult has defined and validated an incredibly thoughtful framework for delighting customers. The book is fun to read and digest, yet provides actionable suggestions that could keep a business leader or entrepreneur busy for years. I know this book will sit on my desk as a reference for a long time to come.”

—Susan Tynan, founder and CEO, Framebridge





Copyright © 2022 by Jon Picoult. All rights reserved. Except as permitted under the United States Copyright Act of 1976, no part of this publication may be reproduced or distributed in any form or by any means, or stored in a database or retrieval system, without the prior written permission of the publisher.

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For Rebecca, Josh, Alex, and Matty





CONTENTS




Acknowledgments

Introduction

PART ONE

CUSTOMER EXPERIENCE DEFINED

CHAPTER 1 Lessons from Wrap Rage

CHAPTER 2 Know Your Customer

PART TWO

THE CASE FOR CUSTOMER EXPERIENCE

CHAPTER 3 The Economic Calculus

CHAPTER 4 The Competitive Bar

PART THREE

STAGING A GREAT EXPERIENCE

CHAPTER 5 Onstage and Backstage

CHAPTER 6 The Choreography

PART FOUR

THE 12 PRINCIPLES FOR CREATING LIFELONG FANS

CHAPTER 7 Create Peaks and Avoid Valleys

CHAPTER 8 Finish Strong

CHAPTER 9 Make It Effortless

CHAPTER 10 Keep It Simple

CHAPTER 11 Stir Emotion

CHAPTER 12 Give the Perception of Control

CHAPTER 13 Be an Advocate

CHAPTER 14 Create Relevance

CHAPTER 15 Pay Attention to the Details

CHAPTER 16 Personalize the Experience

CHAPTER 17 Deliver Pleasant Surprises

CHAPTER 18 Recover with Style

PART FIVE

THE POWER OF THE PRINCIPLES

CHAPTER 19 Great Performances

CHAPTER 20 Start Impressing

Want More?

Notes

Index





ACKNOWLEDGMENTS




I’ve been fortunate to work with many great companies and executives over the years, all of whom have shaped my views on customer experience and informed the strategies described in this book. Credit goes to them for having the courage to embrace customer experience differentiation as something more than just good annual report copy.

I’m grateful for all the people who generously gave their time to help with my research (some long-standing clients among them). The backstories and perspectives they shared were invaluable.

Thanks to Jill Marsal, who took a chance on me, exhibited great patience, and always provided really helpful guidance. Thanks to Donya Dickerson for her genuine enthusiasm about this book’s subject matter and her keen interest in bringing my point of view to a much wider audience.

Thanks to everyone in my family for having me on speed dial to share stories of both the amazing and awful customer experiences they encounter on a daily basis. Thanks to Jodi Picoult for being a great sister and aunt, and for making me look bad since I have to write 28 more books to catch up to her. Thanks to Myron Picoult for showing me early on that business writing doesn’t have to be boring. Thanks to Jane Picoult for gently but consistently prodding me to finally write the darn book. Thanks to both of them for being my first readers, and for the boundless support and encouragement they’ve always given me.

Thanks to Josh, Alex, and Matty, who never cease to impress me. And thanks to Rebecca, for being my sounding board and confidant, and for making all of this possible, on every level imaginable.





INTRODUCTION




If you’re aspiring to satisfy your customers, then you are aspiring to mediocrity.

That’s the stark reality in today’s business environment, where customers who are seemingly “satisfied” defect all the time.1 With a few clicks of a mouse or taps on a smartphone, it’s easier than ever for people to find and switch to alternative products and services. How can a business possibly compete in an environment like that, one where it’s increasingly difficult to stand out from the crowd, one where even satisfying customers doesn’t ensure success?

It’s a question that vexes many a business leader, yet a select number of organizations seem to have found the answer. They’ve figured out how to flourish in good times and bad, how to combat the scourge of commoditization, how to succeed in even the most challenging environments. Consider these examples:

In 2008–2009, during the height of the “Great Recession,” Hyundai Motors grew its revenue by double digits and increased its market share by an astounding 40 percent. What makes their feat all the more impressive is that they achieved these gains in the middle of a historic economic meltdown, when almost every other auto manufacturer was seeing their sales plummet.

From its humble beginnings as a local Texas-based air carrier, Southwest Airlines became the largest and arguably most successful US domestic air carrier, earning a profit for 47 consecutive years. It’s an accomplishment that would be impressive in any business, but even more so in the airline business—a notoriously competitive industry that has struggled to make a single dollar of cumulative profit over the past century.

In 2003, Apple launched the iTunes Music Store, which allowed customers to purchase and download music for 99 cents a song. In its first week, people bought more than one million songs on iTunes. It was an excellent debut, made all the more impressive given that iTunes users chose to pay nearly a buck a song for music that was available for free on other file-sharing platforms.

During the early 2000s, ING Direct became the fastest-growing financial institution in the United States. The upstart (now a unit of Capital One) entered the brutally competitive, high-volume, low-margin banking business and proceeded to win against larger and more established institutions. In less than a decade, ING Direct became the largest savings bank in the United States. But what was most impressive was that they did it by eschewing some of the banking industry’s most reliable practices for revenue generation.

In 2012, electronics retailer Best Buy—like most every other brick-and-mortar retail chain—was struggling to survive in a post-Amazon.com world. How could one possibly compete with the ease and convenience afforded by Amazon and its patented “1-Click” purchase button? Fast-forward five years later and Best Buy was thriving, having pinpointed the one thing they could provide to customers that Amazon would never be able to replicate. Even Amazon CEO Jeff Bezos was impressed, calling Best Buy’s turnaround “remarkable.”

Hyundai, Southwest, Apple, ING Direct, and Best Buy are among the companies that have achieved extraordinary success despite facing enormous economic and competitive headwinds. And while they all operated in very different industries, facing very different hurdles, their ultimate success was born out of the same strategic playbook: they focused on the customer experience.

The impressive success of these firms was a consequence of the impression they made—on sales prospects, on customers, and even on employees. And in response, people became obsessed with these firms and their offerings, going out of their way to patronize (and rave about) them.

It’s a strategy that has relevance to companies large and small, public and private, business-to-consumer (B2C) and business-to-business (B2B). That’s because these days, many sources of competitive differentiation can be fleeting. Product innovations can be mimicked, technology advances can be copied, and cost leadership is difficult to achieve let alone sustain.

But a great customer experience, and the internal ecosystem that supports it, can confer tremendous strategic and economic advantage to a business in a way that can be difficult for competitors to copy.

Businesses that effectively employ this strategy have a number of things in common. They’ve realized that “customer experience” is about far more than just “customer service.” They’ve recognized that cultivating customer loyalty is as much about shaping people’s memories as it is about shaping their experiences. And most important, they’ve discovered a discrete set of science-based techniques that help them turn more sales prospects into customers, and more customers into raving fans.

This book is the story of those techniques and the widely admired organizations that have used them to great effect. More than that, however, this book is also your personal road map, a guide for leveraging these proven principles within your own business so you can turn your company’s customer experience into its greatest competitive advantage.





PART ONE


CUSTOMER EXPERIENCE DEFINED





CHAPTER 1





Lessons from Wrap Rage


In 1978, inventor Thomas Jake Lunsford patented a new form of plastic packaging and unknowingly triggered the ire of hundreds of millions of consumers.1

His invention was the “clamshell”—a type of packaging that envelops a product in two form-fitting, sealed plastic shells. The public frustration that Lunsford’s creation ultimately triggered was so widespread and long-lasting that an entirely new term was coined to describe it: wrap rage.

If you’re not familiar with that term, here’s how Jeff Bezos (Amazon’s founder and former CEO) defines it: “Wrap rage is the frustration we humans feel when trying to free a product from a nearly impenetrable package.”2

Surely you know the frustration and aggravation of wrap rage, even if you didn’t realize there was a term for it. As any consumer can attest, clamshell packages are notoriously difficult to open, particularly given the razor-sharp edges that get exposed when cutting or ripping the plastic container.

What you might not know, however, is that in the United States alone, about 6,000 people a year end up in the emergency room with injuries inflicted from wrap rage.3 People are trying so hard to extricate products from this ridiculous packaging that they actually lacerate their bodies so badly they must seek immediate assistance from an emergency room physician.

It’s worth noting that this isn’t just an American problem. Consumers worldwide struggle to open these clamshell packages. Two-thirds of Britons, for example, report suffering wrap rage injuries, as do nearly three-quarters of Canadians.4, 5

Many more people suffer minor scrapes and puncture wounds from wrap rage that (as Figure 1.1 shows) don’t require a hospital visit, but nonetheless leave a painful mark. We also can’t ignore other “casualties,” such as all the kids who experience emotional trauma as they watch their parents maim themselves while attempting to open the child’s birthday present or holiday gift.



FIGURE 1.1

The source of wrap rage, “clamshell” packaging.

Photo Credit: Amazon.com “Wrap Rage” Photo Gallery

Wrap rage is an amusing, if not acute, challenge. But why talk about wrap rage at the beginning of a book about customer experience? Because Amazon’s response to the phenomenon of wrap rage is a great example of a company truly appreciating what the customer experience is and what it takes to effectively manage it.

As Jeff Bezos himself told the New York Times in a 2008 interview, “I shouldn’t have to start each Christmas morning with a needle nose pliers and wire cutters, but that is what I do, I arm myself, and it still takes me 10 minutes to open each package.”6 He wasn’t alone in his frustration. Amazon even established a “Gallery of Wrap Rage” on its website, providing an outlet for customers to vent about difficult-to-open packaging. The gallery featured dozens of customer-submitted photos and videos, like the one in Figure 1.2, where a customer laid out all of the tools they relied on to open up the packages Amazon sent them.7



FIGURE 1.2

“Wrap Rage” note and photograph sent to Amazon by a customer.

Photo Credit: Amazon.com “Wrap Rage” Photo Gallery

In 2008, Bezos and his management team hatched their response to wrap rage, and it was called “Frustration-Free Packaging.”8 Amazon negotiated with their suppliers to take products out of the clamshells, as well as get rid of those annoying steel-wire ties and other difficult-to-remove packaging fasteners. With the products liberated from the anger-inducing packaging, they were placed in an easy-to-open recyclable cardboard box and shipped to the customer. When people received the Frustration-Free Package, they were able to remove the product effortlessly—no lacerations, no scrapes, and no impatient, crying kids.

Customers loved Frustration-Free Packaging. It was both easier to access and more environmentally friendly. Indeed, Amazon found that its Frustration-Free products earned, on average, 73 percent less negative feedback on its site, as compared to products in regular packaging.9

Frustration-Free Packaging has actually become something of a competitive advantage for Amazon, as brick-and-mortar stores can’t replicate the approach since they use the clamshells to prevent shoplifting. Moreover, Frustration-Free Packaging has become yet another proof point for the Amazon brand, underscoring for consumers just how easy it is to purchase from and interact with the company.

For any business that aims to differentiate itself in the marketplace, Amazon’s response to wrap rage offers three important lessons that help explain what the customer experience really is and what it takes to deliver an excellent one:

1. The customer experience is all-encompassing. First, Amazon clearly embraced a broad view of what constituted its customer experience. They recognized that it was about much more than just customer service. They appreciated the wide spectrum of touchpoints and interactions that comprised the experience. They realized, for example, that people’s perceptions about Amazon would, in part, be influenced by something as subtle as how easy or difficult it was to open the product packaging. So Amazon chose to manage that final touchpoint in the purchase experience—the act of opening the package—as carefully and intentionally as any other in their customer life cycle.

The irony is many people would argue that that final touchpoint was outside of Amazon’s wheelhouse, that once Amazon shipped the product from their warehouse, their job was essentially done. But Amazon didn’t see it that way (nor should you, with regard to your business).

The customer experience encompasses all of the live, print, and digital interactions that a customer may encounter, from presale to postsale: learning about your products, purchasing your products, unpacking your products, using your products, servicing your products. It begins earlier than you’d expect (even before someone’s a customer, such as when you’re marketing to a sales prospect) and extends longer than you’d imagine (up to and even including the point of defection, should a customer leave your business).

Managing the customer experience is about consciously shaping all of these touchpoints—not just customer service, not just digital interactions—but everything a customer might see, hear, touch, smell, or taste during their encounters with your business.

2. What matters most is the customer’s perspective. Amazon has long prided itself on being a customer-obsessed company, a philosophy that is illustrated, in part, through the company’s focus on listening to customers. Remember, it was customer sentiment, including that of Jeff Bezos himself, that first led Amazon to develop Frustration-Free Packaging.

How many companies do you know that emblazon their shipping boxes with a URL dedicated to soliciting customer feedback about product packaging? Amazon has done it, and it reflects their strongly held belief that what matters most is what the customer thinks of the experience. Not what the internal company metrics say, not what company executives believe. It is the customer’s perception that matters; the customer is the ultimate arbiter of quality.

3. Customer perspectives are shaped by feelings as much as they are by thoughts. Frustration-Free Packaging was about eliminating or at least mitigating customer frustration. Frustration is an emotional response, and Amazon’s attention to that aspect of their customers’ experience reflects a critical understanding: The impression a company leaves on its customers won’t be driven by some algorithmic, logical evaluation of the interaction. Rather, it will be based on how the customer feels.

Effective management of the customer experience requires a focus not just on rational components of the interaction (e.g., did my package arrive when it was promised?), but also on emotional ones (e.g., how did I feel opening the package—excited or exasperated?). Both of these dimensions of the experience must be actively managed to leave a positive, indelible impression on the customer.





Customer Experience Defined


There are lots of definitions out there for the term customer experience (or CX for short), though many come off as bookish and bloated, better suited for an academic textbook than an organizational rallying cry.

To inspire behavioral change, you want a definition that will resonate with your workforce, one that they’ll easily understand and be able to internalize. With the context provided by the Amazon wrap rage story, we can form such a definition, a clear and concise articulation that goes like this:

Customer experience is “how customers feel about their interactions with you.”

That’s customer experience in less than 10 words, but it’s important to unpack that definition to reveal some important nuances (as I’ve done in Figure 1.3).

While the definition in Figure 1.3 attempts to distill the essence of customer experience into a few words, it may have triggered other questions in your mind.



FIGURE 1.3

What is “customer experience”?





Is Every Customer Interaction Part of the Customer Experience?


The answer in a word is—yes!

When someone explores one of your company’s offerings, be it on a website or in-person with a sales representative—that’s part of the customer experience.

When someone sees a comment about your company on social media or hears about it from a friend—that’s part of the customer experience.

When someone actually purchases your products and services—that’s part of the customer experience.

When someone has your product installed or configured, and then receives training on its operation—that’s part of the customer experience.

When someone actually uses your product or service—that’s part of the customer experience.

When someone calls your customer service team for assistance—that’s part of the customer experience.

These are but a few examples of the types of interaction episodes that collectively make up the end-to-end customer experience. In addition, each episode is comprised of touchpoints, which are like the fundamental building blocks of the experience.

For example, during the exploration and purchase episodes, touchpoints might include live interactions (a conversation with a sales representative), printed interactions (a “leave behind” piece of marketing material), and digital interactions (your company website or a recorded informational webinar).

While some touchpoints and episodes are more important than others, they all influence customer perceptions to some degree, even if subconsciously. Creating a great experience requires stitching together a series of touchpoints and episodes that in totality leave a highly positive impression on the customer.

What’s important to remember is this: with every customer interaction, you have an opportunity to shape the customer experience—for better or for worse.





What’s the Relationship Between Customer Service and Customer Experience?


As mentioned earlier, customer service and customer experience are not interchangeable terms. Customer service is but one component of the end-to-end customer experience (others, depending on the nature of the business, might include activities such as product/service exploration, purchasing, contracting, installation, etc.).

One unique thing about the connection between customer service and customer experience is that in many types of businesses, the need for the former can actually suggest a problem with the latter. That’s because customer service is often required only when something has gone wrong elsewhere in the customer experience, thereby triggering a service inquiry: A product may not be working as expected. A shipment may not have arrived on time. Assembly instructions may not be clear. Sales and marketing material may have set inaccurate customer expectations.

Whatever it is, something happened upstream that created a problem or question for the customer downstream. That translates into a less appealing customer experience that’s actually more expensive to deliver! Indeed, for certain businesses, one hallmark of a great customer experience is that there is little need for traditional, postsale customer service because everything works perfectly up front, the way it was intended.





What About When Customers Don’t Interact with a Company—Is That Part of the Experience?


As strange as it might sound—yes! How customers feel about your company, even when they haven’t had any recent interaction with you, is an important gauge of customer experience quality.

The absence of interaction, in and of itself, could actually shape customer perceptions in potentially negative ways, for example, if a customer feels uninformed or abandoned in some way. Companies that are adept at managing their customer experience pay careful attention to “silent periods” in their customer life cycle. Sometimes, they’ll choose to add entirely new interactions to their customer experience, in an effort to punctuate the silent periods and more proactively engage customers.

• • •

A final component of the customer experience definition in Figure 1.3 that may have caught your attention is the broad use of the term customer. It’s one thing to know how to deliver a great customer experience, and another to understand whom you should be delivering it to. Indeed, as we’ll see in the next chapter, answering the question “Who is your customer?” is not as simple as it might appear.

CHAPTER 1 KEY TAKEAWAYS

• The customer experience encompasses all of the live, print, and digital interactions that a customer may encounter when working with you and/or your business. It is formed by a series of episodes (e.g., product exploration, product purchase, or service requests), which are in turn comprised by touchpoints (e.g., a website, a piece of marketing material, an automated menu greeting on a toll-free service line).

• The experience begins before someone is even a customer (such as when they first hear about your brand from a friend, a social media post, or an advertisement) and extends through the entire customer life cycle (up to and including the point of defection, if the customer ever leaves your business).

• A great customer experience doesn’t happen by accident. It’s the consequence of deliberate, intentional management of all the touchpoints that comprise the experience—even subtle, seemingly insignificant ones.

• The quality of the customer experience is in the eye of the beholder. How the customer perceives the experience is what’s most important, regardless of what your internal business metrics might say.

• Customer perceptions about the experience are influenced as much by emotional considerations (e.g., how do I feel after interacting with your business), as they are by rational ones (e.g., did I get what I ordered on time).





CHAPTER 2





Know Your Customer


When you hear the word customer, who comes to mind?

If you’re like many people, you associate the word customer with external consumers of your company’s products and services—the people who actually purchase and use your business’s offerings. To create a great customer experience, however, it’s important to define the term customer more broadly.

While the individual (or institution) that actually buys your goods is the ultimate customer, there are often other constituencies involved in the transaction that your company is also serving. These stakeholders represent a type of customer, as well, and so there is an opportunity to engineer a customer experience that impresses them, too.

Let’s consider some examples: If your business sells goods directly to individual consumers, say through your website, then that’s pretty straightforward. The online buyer is your customer.

But what if your product is purchased by consumers from an intermediary, such as a third-party distributor or a retail store? In that scenario, the intermediary is another type of customer—and an important one to serve well, particularly if you’re competing against other businesses for the distributor’s attention or retail shelf space.

If you’re in the B2B arena, and your products or services are purchased by other entities, those businesses certainly qualify as your customers. However, within each of those businesses are many different constituencies that play a role in your success. There’s a decision maker, of course, but there are purchase influencers, too, such as product users, procurement staff, chief financial officers, and so on.

Take medical equipment, for example. A hospital administrator may make the ultimate decision about what brand of equipment to purchase, but the doctors and nurses who actually use the equipment will no doubt have some input. And that input will be based on their personal experience using the equipment, which will, in part, be shaped by how patients feel when the equipment is used on them.

Therefore, there can be many levels of customers involved in the experience value chain. That’s an important thing to recognize, because in certain types of businesses, success comes from not just making your customer happy, but also making their customer happy.





Does Everyone Have a Customer?


There are typically many people in an organization who don’t have direct day-to-day contact with the customers who buy and use the company’s products. Does that mean those employees don’t really have a customer?

Absolutely not! Everyone in an organization has a customer, and often more than one. Sometimes, however, that customer might be internal—a colleague in another department or a teammate just a few steps away. This again underscores the importance of defining the term customer broadly.

An internal customer is any colleague who relies on you to fulfill their job duties. That’s an important idea to take to heart, because behind every great external customer experience lies a great internal customer experience.

For example, in many organizations, information technology (IT) staff provide the systems that call center reps rely on to serve customers. When IT delivers a great experience to the call center (in the form of helpful, user-friendly systems), then the call center is better equipped to deliver a great experience to their external customer.

Marketing staff develop the materials that sales staff rely on to inform and influence their prospects. When marketing delivers a great experience to sales (in the form of engaging and compelling communication pieces), then sales is better equipped to deliver a great experience to those prospects.

Manufacturing staff build equipment that field representatives install at customer sites. When manufacturing delivers a great experience to those field reps (in the form of high-quality, easily assembled equipment that works perfectly out of the box), then the field reps are better equipped to deliver a great experience to their customers.

Human resource staff hire people into the company who then help manage and run the business. When human resources delivers a great experience to the business leaders it serves (in the form of finding and attracting top talent), then the organization gets the skilled and competent workforce it needs to deliver a great experience to its customers.

Perhaps the best way to get all employees to appreciate that they have a customer is by stressing to them one simple, fundamental truth: no matter what title you possess or what position you hold, there are only two roles in any organization—you’re either serving the customer, or you’re serving someone else who does. Period.

By describing every employee’s responsibility in this simple manner, it helps frame the concept of customer-centricity in a way that’s relevant and actionable for the entire workforce. It promotes a culture that rightfully accentuates the value not just of the traditional, external customer experience, but also of the oft neglected but equally important internal customer experience.





How Do I Know Who My Customers Are?


This might sound like a silly question. Isn’t it as simple as following the money? Whoever pays me for my products and services, well, they must be my customer, right?

In the most traditional sense, that’s true. But as noted earlier, there can be many different types of customers in your business’s value chain, some of whom will never be paying you a dime, directly. In addition, there are likely a whole host of employees in your organization who exclusively serve internal customers, an important constituency but one that’s never going to pay their colleagues for the internal support they receive.

Anyone that you serve or support in some fashion, internal or external to your company, can be considered a customer. To help pinpoint those individuals, consider these questions:

Who uses or benefits from the work you do—whether it’s the equipment you manufacture, the reports you prepare, the inquiries you answer, the research studies you conduct, the systems you support, and so on? The people who benefit from your work are your customers.

For whom does the output of your work serve as an input? The work you do might not translate into a final product. You might build a component that someone else uses to build a product. You might compile data that someone else uses to complete a report. When you produce something upstream that someone else depends on downstream, then that person is probably your customer.

Who relies on you (or your work product) to achieve something? This simple question might be the easiest and most straightforward way to identify the people to whom you should be delivering a great customer experience.





Are My Employees My Customers?


Let’s answer this question by using the previously described litmus test. If you’re in a supervisory role, does your staff rely on your assistance to fulfill their job duties?

Absolutely. One of the most critical responsibilities organizational leaders have is to set their teams up for success, to remove obstacles they can’t remove themselves, and to provide those teams with the resources and guidance they need to reach their potential.

Granted, employees are a very different type of customer, one that falls outside of the traditional definition. After all, instead of them paying you, you’re paying them. Yet regardless of the direction the money flows, one thing is clear: employees, just like other types of customers, want to derive value from their relationship with the organization. Not just monetary value, but experiential value, too: skill augmentation, career development, camaraderie, meaningful work, a sense of purpose, and so on.

If a company or an individual leader fails to deliver the requisite value to an employee, then—just like a customer, they’ll defect. They’ll quit, driving up turnover, inflating recruiting/training expenses, undermining product/service quality, and creating a whole lot of unnecessary stress on the organization.

So even though a company pays its employees, it should still provide them with a value-rich employment experience that cultivates loyalty. And that’s why it’s prudent to view both current and prospective employees as a type of customer.

The argument goes beyond employee engagement, though. There’s a whole other reason why organizational leaders have a lot to gain by viewing their staff as a type of customer. That’s because, by doing so, they can personally model the customer-oriented behaviors that they seek to encourage among their workforce. How better to demonstrate what a great customer experience looks like than to deliver it to your own team? After all, how a leader serves their staff influences how the staff serves their customers.

Want your team to be super-responsive to the people they serve? Show them what that looks like by being super-responsive to your team. Want them to communicate clearly with customers? Show them what that looks like by being crystal clear in your own written and verbal communications. There are innumerable ways for organizational leaders to model the customer experience behaviors they seek to promote among their staff. It has to start, however, by viewing those in your charge as a type of customer you’re trying to serve.

Of course, viewing staff as customers doesn’t mean that leaders should cater to every employee whim or that they should consent to do whatever employees want. Leaders sometimes have to make tough decisions for the greater good. In those situations, effectively serving employees means showing respect for their concerns and interests, and thoughtfully explaining the rationale behind what might be an unpopular decision.

The key point is simply this: with every interaction in the workplace, leaders have an opportunity to show their staff what a great customer experience looks like. Whether you’re a C-suite executive or a frontline supervisor, that opportunity must not be squandered.

• • •

Actively managing and differentiating your company’s customer experience requires thinking broadly about all the types of customers you serve. Strive to create a great customer experience for all of those constituencies, because each of them plays an instrumental role in shaping people’s perceptions about you, your business, and your brand.

CHAPTER 2 KEY TAKEAWAYS

• Effective management of the customer experience requires a broad definition of the term customer. While there may be only one purchase decision maker, one person “writing the check,” there are often many constituencies in a business’s value chain, all of whom need to be served with distinction.

• Behind every great external customer experience is a great internal customer experience. Some employees may never have regular contact with end consumers of a product/service—but that doesn’t mean they don’t have a customer. Everyone has a customer, even if it’s a colleague just down the hall.

• Before considering how to engineer a better customer experience, think carefully about who all of your customers are. Anyone who relies on you or your work product to accomplish something or to satisfy a need is probably worth viewing as a customer.

• Business leaders should view staff members as a type of customer, since a principal responsibility for managers is to facilitate the success of those in their charge. Leaders, by virtue of the perch they inhabit, have a unique opportunity to demonstrate and teach customer-focused behaviors through their own personal interactions with employees.





PART TWO


THE CASE FOR CUSTOMER EXPERIENCE





CHAPTER 3





The Economic Calculus


Imagine if customers were willing to pay 16 percent more for your products and services, choosing to do business with you despite the availability of cheaper alternatives. Imagine if you could reduce operating expenses by 13 percent while simultaneously improving your customer experience and earning top consumer ratings for your industry.

You don’t have to imagine, because these are both well-documented examples of the impact that a great customer experience can have on a company.

To understand the economics and return on investment (ROI) of customer experience, look no further than your company’s income statement, because the customer experience influences two key line items in that ledger.

First, a great customer experience helps raise revenue; here are a few examples why:

Better retention. Happy, loyal customers stick around longer. As such, you can derive greater lifetime revenue from each of them, thereby driving top-line growth.

Greater wallet share. When customers are impressed by and obsessed with your business, they’re more likely to entertain offers for other products and services. That means more successful cross-selling, which further lifts revenue.

Reduced price sensitivity. People are willing to pay more for a great customer experience (up to 16 percent more in some industries, according to a PricewaterhouseCoopers study).1 This is why so many people flock to Starbucks and willingly pay $2.50 or more for a cup of coffee that they could conceivably make in their own homes or buy for much less at any number of local stores.

More referrals. When customers love your products and services, they’re more likely to recommend your business to others. That means you derive entirely new revenue streams from all those referred prospects.

The revenue boost is only half the story, however, because the other place that customer experience impacts your income statement is on the expense line. Here’s why:

Reduced customer acquisition costs. When happy, loyal customers are referring so many of their friends, family members, and colleagues to your business, it means you can spend less on new customer acquisition (e.g., marketing, promotions, advertising). That helps reduce expenses.

Fewer complaints. When customers are happy, they complain less, which in turn, reduces the stress on your operating infrastructure. Dissatisfied, complaining customers drive expenses up, because resolving their sometimes complex issues requires staff time and energy, all of which comes at a cost. Fewer complaints mean better controlled, if not lower, operating expenses.

Less need for service. The best kind of customer service is the kind you never need, because everything just works perfectly, as expected, obviating the need for customers to contact you for assistance. Wireless carrier T-Mobile, for example, restructured their service teams to facilitate greater “one and done” ownership of customer requests, thereby avoiding call transfers and callbacks. That led to a 13 percent reduction in service expenses, even while the carrier topped industry rankings for customer service quality.2

Less handholding. One of the many things that’s great about happy, loyal customers is that they become familiar with your products, your services, and your way of doing business. That means they require less handholding as compared to entirely new customers, which, again, puts less stress on your operations and allows you to deliver a great customer experience at a more competitive cost.

Reduced employee turnover. A strong customer experience doesn’t just help reduce customer turnover, it has a similar impact on employee turnover. That’s because when customers are dissatisfied, frustrated, or angry, it creates stress for the frontline staff who interact with them. Every phone call, every email, every in-person interaction becomes emotionally charged, because customers are upset and lash out at whichever company representative engages them. In a word, it’s exhausting, and as recent research led by the University of British Columbia has demonstrated, it inflates turnover.3 That drives a whole host of direct and indirect expenses that can cost an organization between 90 and 200 percent of the departed employee’s salary.4 By fostering a less stressful work environment, great customer experiences help companies avoid these significant employee turnover expenses. T-Mobile, for example, saw a 48 percent reduction in staff turnover after the aforementioned improvements to their customer service model were implemented.5





Take Stock in Customer Experience


Perhaps the most compelling evidence of the financial rewards associated with a great customer experience (and the penalties tied to a poor one) comes in the “universal language” of business leaders everywhere—shareholder value.

For over a decade, my firm, Watermark Consulting, has published a “Customer Experience ROI Study” to track the total shareholder return of companies that rank highest in customer experience (CX) versus those that rank lowest (based on third-party consumer surveys). The study’s data is derived from two equally weighted, annually readjusted model portfolios—one comprised of “CX Leaders” and the other comprised of “CX Laggards.” The results, as shown in Figure 3.1, have been striking:



FIGURE 3.1

Results of stock performance study for CX Leaders and CX Laggards.

Over the 13-year period, the CX Leaders portfolio outperformed the broader market (as represented by the S&P 500 Index) by more than 100 percentage points. The CX Laggards portfolio, in contrast, trailed the index by a similar margin. Overall, the CX Leaders posted a total shareholder return that was more than three times that of the CX Laggards.6

This is the exclamation point on the case for customer experience. The companies in the CX Leaders portfolio are enjoying all the benefits of the “loyalty lift” described earlier: higher revenues, better controlled expenses, increased profitability. The performance of those in the CX Laggards portfolio is weighed down by just the opposite: anemic revenue growth, higher expenses, and weaker profitability.

The Watermark study is not alone in these conclusions. A second well-known stock performance study from the American Customer Satisfaction Index (ACSI) produced similar findings. Over a 16-year period, the ACSI found that a portfolio of customer-experience-leading companies (derived from an annual survey of half a million consumers) outperformed the S&P 500 Index by a nearly 5-to-1 ratio.7

Even if your organization is not publicly traded, the results of these shareholder return studies are still pertinent. What these analyses really demonstrate is this: the marketplace believes that companies that deliver a great customer experience over the long term are simply more valuable than those that do not. And that’s a conclusion that has clear relevance to both public and private entities.





The Limits of Customer Experience Differentiation


It’s important to note here that as critical as customer experience is to a business’s long-term success, it is not a panacea. The Watermark Consulting and ACSI studies reflect the average performance of CX-leading (or lagging) companies, since the analyses are based on the aggregated results of model portfolios. Could a CX Leader deliver poor financial results and shareholder returns? Yes, though that should be the exception rather than the norm, and it shouldn’t be interpreted as undercutting the case for customer experience.

The fact is, there are a whole host of bad strategic decisions and poor business practices that, independent from customer experience quality, can doom an organization. Case in point: Borders Books, which filed for bankruptcy in 2011 shortly after it earned the highest customer experience ranking in Forrester Research’s annual Customer Experience Index Study.8

Even Borders’ delighted customers couldn’t offset the negative impact of the retailer’s strategic missteps: an ill-fated international expansion that took executives’ attention away from the core US business, the outsourcing of the retailer’s online book sales to Amazon (its most formidable competitor), the financial drain of long-term leases that limited the company’s ability to adjust to changes in local real estate markets, and disorder ensuing from unbelievably high turnover in the C-suite (four CEOs in three years).9, 10

Borders-type mismanagement stories aside, a strong customer experience clearly puts wind in a company’s sails, creating fans on both Main Street and Wall Street. And while the economic calculus behind CX excellence is convincing, the case for customer experience is made even more compelling when considered in the context of the competitive environment, which is what we explore in the next chapter.

CHAPTER 3 KEY TAKEAWAYS

• There is a very clear and well-documented economic calculus that underlies the case for customer experience differentiation.

• A great customer experience helps raise revenue, as a result of better customer retention, less price sensitivity, greater wallet share, and increased frequency of referrals.

• A great customer experience also helps better control (if not reduce) operating expenses, via decreased new business acquisition costs, fewer cost-inflating customer complaints, and reduced employee turnover.

• Shareholder return studies, comparing the performance of CX Leaders and CX Laggards, provide further evidence that the economic advantages conferred by customer experience excellence are quite real and quite tangible.





CHAPTER 4





The Competitive Bar


Despite years of trying, the sad truth is that many companies are leaving no better impression on customers today than they did 25 years ago. The statistics are eye-opening.

In the summer of 1994, Dr. Claes Fornell launched the American Customer Satisfaction Index (ACSI), a broad cross-industry measure of customer experience quality (first referenced in Chapter 3). Fornell developed the index to fill a void he saw, which was the absence of any national gauge of product and service quality.1 Over a quarter century (and millions of consumer interviews) later, the ACSI remains a prominent customer experience metric that is frequently cited in the media.

ACSI scores range from 0 (the worst) to 100 (the best). In the third quarter of 1994, the ACSI’s first national, cross-industry measure of customer satisfaction came in at 74.8. Over 25 years later, in the first quarter of 2021, it stood at 73.6.2*

So after decades of businesses’ purported customer experience advances—fueled by everything from Total Quality Management to Lean Six Sigma, from big data to predictive analytics, from customer relationship management (CRM) systems to artificial intelligence (AI) algorithms, from voice-of-the-customer programs to chief customer officers—it’s all resulted in a decrease in overall US customer satisfaction (a 1.60 percent decline, for those of you keeping score at home).

Sure, the ACSI has had its ups and downs over the years, but the bottom line is, this overall measure of customer satisfaction was, in 2021, pretty much unchanged from where it was in 1994. How did that happen? There are a few explanations, which together underscore why companies must focus on customer experience, as well as the competitive advantage they can gain by doing so.





Expectations Are Rising


People no longer evaluate the quality of their customer experiences within industries; they do it across industries. If Amazon lets me track the status of my order through every step, then why can’t my auto repair shop do the same, letting me monitor the status of my vehicle? If Zappos always promptly answers my call with a courteous, knowledgeable, live human being, then why can’t my health insurer do the same?

The fact is, while the overall state of cross-industry customer satisfaction may be uninspiring, there are companies that have succeeded in differentiating themselves and delivering an experience that impresses. Those are the organizations that are setting the customer expectation bar for all others. As a handful of firms have gotten very good at customer experience, it’s shown people what’s possible—and then they start to pine for that when working with other businesses.

Those higher, reset expectations don’t just apply across industries, they apply across business models, too. Eighty-two percent of business buyers say they want the same quality customer experience in a professional capacity as they do in a personal one.3 So if you’re in a B2B business, your client’s expectations aren’t just being shaped by their last experience with another corporate supplier, they’re being shaped by the last great experience they had at Starbucks, Amazon, or Apple.

Customer experience improvements at many organizations simply haven’t kept pace with these elevated customer expectations. As a result, even if businesses are making gradual advances in customer experience quality, it’s not translating into a commensurate rise in overall measures of customer satisfaction, such as the ACSI.





The Delivery Gap Is Widening


As customers become primed for a higher quality customer experience but companies fail to deliver, a disparity ensues. What once might have been described as an expectation/delivery gap has become something of a chasm, as evidenced by a variety of research studies:

A PricewaterhouseCoopers survey found this gap apparent in each of the 14 industries the firm analyzed.4 From healthcare to hotels, from restaurants to retail, from insurance to investments—every industry but one (media) showed a double-digit disparity between the experience consumers said they expected versus what they actually received.

That gap was also evident in the B2B sphere, where a Salesforce study found that only 27 percent of business buyers believe that companies are effective at delivering a client experience that meets desired standards.5

In their 2019 “Customer Expectations Report,” Gladly, a provider of customer service technology, found that fully three-quarters of people say that customer experience reality falls short of their expectations.6

The 2020 “National Customer Rage Study,” an annual study sponsored by the W. P. Carey School of Business at Arizona State University, found that the vast majority of US households experience problems with the products and services they purchase.7

Last, perhaps the most shocking statistic illustrating how customer experiences tend to disappoint comes from the Oracle Corporation’s “Customer Experience Impact Report.” Their research found that only 1 percent of people felt that their expectations for a good customer experience were consistently met.8

Customers are simply not happy, and while their expectations may be rising, their satisfaction surely is not.





Companies Are Delusional


There’s another variable in the mix that is likely hindering satisfaction improvement, and that’s the tendency for companies to think they’re delivering a better customer experience than they really are.

An oft-cited Bain & Co. study found that 80 percent of business leaders believed their organization was delivering a superior customer experience. When Bain asked those firms’ customers the same question, only 8 percent of them agreed with the executives’ rosy assessments.9 A more recent Capgemini study reaffirmed Bain’s findings, showing a huge disparity in the degree to which companies view themselves as customer-centric (75 percent of those surveyed) versus their customers (only 30 percent of those surveyed).10

This chasm of perception—companies viewing their customer experience much more favorably than their patrons—is dangerous. It fosters complacency, leading companies to approach customer experience improvement efforts with far less urgency than is warranted, which means those expectation/delivery gaps never get narrowed, let alone closed.

There’s another form of delusion that some companies engage in that is also worth mentioning. These firms are clearheaded about the quality of the experience they deliver; they know it’s subpar. However, given the competitive environment they operate in (e.g., the lack of substitute offerings, or their domination of the market), they convince themselves that a better customer experience isn’t necessary or even financially prudent. They convince themselves that whatever customer experience delivery gaps and customer annoyances may exist, people will be compelled to tolerate them because they won’t have any other choice. Cable television providers and health insurers—two industries consumers love to hate—are good examples of businesses that often fall victim to this mindset.

What these companies don’t appreciate is that today’s competitive environment rarely looks like tomorrow’s, and by the time that becomes apparent to a firm, it’s often too late. The annals of corporate history are littered with the carcasses of companies, and even whole industries, that thought they had a lock on the market, thought they were untouchable, thought they didn’t need to challenge themselves to innovate and improve the customer experience.

Blockbuster Video. Yahoo. Blackberry. A&P Groceries. The entire taxi industry. They were all, at one time, the biggest players in their arenas. Now, they are either dead or shells of their former selves—victims of their own arrogance, unable to foresee the threat that was posed by new and existing competitors, namely, Netflix, Google, Apple, Whole Foods, and Uber. Those other companies simply figured out a better way to serve customers, a better way to eliminate common frustrations, a better way to distinguish their offering in the marketplace. And the rest is history.

Whatever the reason, be it complacency or conscious decision, the end result is the same. Many companies don’t really understand what it feels like to be their customer or what it could be made to feel like in the future. As a result, they lumber along on the path they’ve chosen, sowing the seeds of dissatisfaction and laying a foundation for failure.

• • •

Customers are expecting more, but many companies are not rising to meet that challenge. Therein lies the competitive opportunity, or the competitive threat—because the other force at play here is that customers are more empowered than ever. With a wealth of information at their fingertips, people can explore their options in an instant. Competing products and services are often just a few clicks away, and that emboldens people to be more demanding and discerning of the companies they choose to patronize.

It’s these competitive dynamics that further strengthen the case for customer experience and underscore how differentiation along the customer experience axis can set a business apart from the crowd and pave the way for success.

CHAPTER 4 KEY TAKEAWAYS

• People are increasingly evaluating their customer experiences across industries rather than within them. That has set the bar higher for all companies, as customers’ expectations of what constitutes a “good experience” is being informed by the great encounters they have with customer-experience-leading companies.

• On the whole, companies are not keeping pace with these rising customer expectations. Cross-industry customer satisfaction has been stagnant over the past quarter century, and studies point to a widening customer experience gap between what people want to see from the businesses they patronize and what they actually receive.

• Complicating matters is the fact that companies tend to have an overly favorable view of their customer experience quality, as compared to their customers. That chasm of perception fosters complacency, which means the customer experience expectation/delivery gaps never get narrowed, let alone closed.

• These competitive dynamics strengthen the case for customer experience differentiation. People are often unimpressed with the businesses they deal with, and that creates a clear opportunity for those firms that can consistently deliver an exceptional customer experience.



* Note that in the year before the COVID-19 pandemic hit the United States, the ACSI was hovering around 75 to 76. So, while the score dropped further during the pandemic, it alone can’t account for the dismal state of customer satisfaction.





PART THREE


STAGING A GREAT EXPERIENCE





CHAPTER 5





Onstage and Backstage


Armed with an understanding of just what the customer experience is and why it matters from a business perspective, we’re ready to move on to the primary focus of this book: How can you create a great customer experience that turns more sales prospects into customers, and more customers into raving fans?

Let’s start by focusing on that term raving fans. It conjures up images of an audience for whom an outstanding performance has been delivered. That’s actually a perfect visualization, because a great customer experience is a lot like a beautifully choreographed performance. Every player knows their part, every piece of dialogue is thoughtfully crafted, every physical gesture is carefully orchestrated—nothing is left to chance. And when the show goes off as planned, it elicits an emotional response from the audience, bringing them to their feet in admiration for the genius they just witnessed.

The “customer experience as performance” analogy is not a new one. Disney theme parks have long referred to their employees as “cast members,” whether they’re playing the part of Cinderella in the Magic Kingdom or just working at the front desk of a Disney resort. Whatever the role, everyone at Disney Parks recognizes that they’re always onstage, part of the “show.” Perhaps the subtitle of Joseph Pine and James Gilmore’s seminal book about customer experience, The Experience Economy, put it best: Work Is Theater & Every Business a Stage.1

Taking that performance analogy a step further, it’s helpful to think about customer experience as having both an “onstage” and a “backstage” component. Both are instrumental in creating a performance that earns raves.

The onstage component refers to all the things the customer can directly observe or sense by sight, sound, smell, taste, or touch. It encompasses all of the live, print, and digital touchpoints that customers may encounter when engaging with a company. While business leaders may not be familiar with the term, it’s the onstage piece that many of them have in mind when they think about customer experience.

But there’s a second, equally important ingredient in the customer experience, and that’s the backstage piece. It refers to all the behind-the-scenes business practices, cultural norms, and infrastructure that, while not visible to the customer, can nonetheless influence the quality of the delivered experience. Backstage, for example, is about getting the right “actors” in front of the audience (hiring practices), preparing them for their part (employee onboarding, training, and job design), giving them the necessary props (workplace tools and technology), and motivating them to deliver a great show at every performance (metrics and reward/recognition programs). The backstage piece sets the tone for the players, equipping them—and hopefully inspiring them—to bring the house down.

To better understand how backstage influences can shape the customer experience, consider the common, but misguided, practice of customer service call centers that evaluate employees primarily on how quickly they handle the incoming calls (technically known as average handle time). That creates a customer experience conflict for the service staff, where they may be forced to choose between fully addressing a caller’s needs and delivering a great experience versus rushing them off the phone to avoid exceeding internal time service standards.

Another potential failing could arise if an employee’s job is structured so parochially that it makes it virtually impossible for them to own resolution of customer issues. Metrics and job design are both examples of backstage workplace practices that inevitably influence employee behavior, potentially to the detriment of the customer.

Bringing it back to traditional business terminology, onstage and backstage really reflect the distinction between customer experience and employee experience. The two are inextricably linked, opposite sides of the same coin, each feeding off the other. Happy, engaged employees help create happy, loyal customers, who in turn help create even more happy, engaged employees. The value of this virtuous cycle cannot be overstated, and it underscores the key to success in almost every business, large or small, which is simply this:

Be the company everyone wants to do business with.

Be the employer everyone wants to work for.

Those two aspirations are really the ultimate goal of customer and employee experience management. And if you nail those two dimensions, you can pretty much write your own ticket and roll over your competitors.

As important as the backstage component is to a business and the experience it delivers, that’s not the focus of this book. It’s referenced here because organizational leaders must understand that a great customer experience isn’t just about the customer, it’s also about the people who serve them. And those people’s ability to effectively serve customers will always be a function of the workplace in which they operate. Their onstage actions will be shaped by backstage features: training and development, communication and coaching, tools and technology, plus a variety of other structural workplace cues (both explicit and implicit) that influence on-the-job behaviors.

Our focus here, however, is with the other, equally important component of experience design, the onstage piece: the techniques for effectively choreographing all of the touchpoints that are discernible to the customer, so as to create an impression that will have them coming back for more and raving to others about the experience.

CHAPTER 5 KEY TAKEAWAYS

• A great customer experience is like a well-choreographed performance that’s thoughtfully produced, carefully staged, and flawlessly executed. Nothing is left to chance, and everything is intentionally designed.

• Extending that analogy further, there are two parts to the customer experience equation: onstage and backstage. The former refers to all of the things customers can directly discern (live, print, and digital touchpoints), whereas the latter refers to behind-the-scenes practices and infrastructure that indirectly influence customer experience quality.

• Long-term business success requires outperforming on both of those dimensions. First, it demands an employee experience (the backstage piece) that attracts the best talent and keeps them engaged, inspired, and equipped to serve customers well. Second, it demands a customer experience (the onstage piece) that is deliberately designed and, for lack of a better word, staged to impress.





CHAPTER 6





The Choreography


When you think of legendary companies—businesses that are renowned for the customer loyalty they inspire—you can’t help but ask yourself: How do they do it, day in and day out, so consistently?

Here’s the answer. The impression these companies leave on their customers doesn’t happen by accident. It’s very intentional, it’s very deliberate, and it’s really the consequence of them all dipping into the same time-tested set of principles for shaping their interactions with customers. Based on decades of studying companies that excel at customer experience, I’ve distilled their “onstage choreography” into 12 Principles, shown in Figure 6.1:



FIGURE 6.1

The “12 Principles” for creating great, loyalty-enhancing customer experiences.

These aren’t the well-worn, eye-roll-inducing customer experience and customer service platitudes we’re all familiar with (e.g., be courteous and professional, listen to your customers, put customers first, focus on quality). No, the 12 Principles are different than that, and here’s why:

They are “universal truths” of customer experience design. The 12 Principles can be applied to practically any business (B2B, B2C, or B2B2C) and most any type of customer (individual consumers, institutional clients, sales intermediaries, employees, and even employment candidates). The principles are broadly applicable across any audience, any customer persona. No matter what constituency you serve, the principles will help you choreograph an onstage experience that leaves a positive, memorable impression.

They are grounded in research. As you’ll see reading through subsequent chapters, replete with references to fascinating psychology and consumer studies, the 12 Principles are grounded in science. They were conceived not on a whim, but through an in-depth review of relevant research and case studies, firmly positioning them as essential instruments for customer experience differentiation.

They shape both reality and perception. Imagine if you could make customers feel better about the experience you’re already delivering to them—without actually changing anything about the underlying experience. Sounds too good to be true, right? Yet that’s exactly what many of the 12 Principles can help you accomplish. With their roots in cognitive science, these principles can be used to enhance how people perceive and remember the experience you deliver to them, which is arguably just as important as the mechanics of the experience itself.

They strengthen engagement with customers and employees. As mentioned in the last chapter, happy customers help create happy employees. The workday is a lot more fun when you’re not dealing with dissatisfied customers at every turn. For this reason, using the principles to improve the customer experience has the ancillary benefit of also enhancing the employee experience. Beyond that, though, many of the principles can even be applied directly to the employee audience, which as explained in Chapter 2, is a “customer” constituency in its own right. That means business leaders can also leverage these experience design techniques in their own personal interactions with the workforce, thereby helping strengthen employee engagement and loyalty.

The next section of this book is dedicated to exploring the 12 Principles in detail. Each chapter in Part Four will introduce a single principle, in part by showing you how successful organizations have used the technique to enhance their customer experience. And perhaps more important, each chapter will end with very specific, actionable ideas for how you can immediately apply that principle in your own role to your “customers,” be they individuals, institutions, employees, or some other constituency.

Before proceeding, let’s cover a couple of important notes regarding the company case studies you’ll read about in the coming chapters:

First, many (though not all) center around B2C business models. If yours is a B2B business, you might question if there’s anything you can really learn from B2C customer experience legends like Starbucks, Southwest Airlines, or Ritz-Carlton. Rest assured, you can, because the 12 Principles are as relevant to institutional customers as they are to individual ones.

As it’s often said, B2B is ultimately P2P—person to person. Institutions don’t make purchase decisions, they don’t request customer service, and they don’t spread word of mouth (positive or negative). It’s always individuals at an institution who do that. For this reason, the very same customer experience design techniques that successful B2C companies use to influence and impress individual consumers can also be applied, with great effect, to a B2B audience.

The second thing to be aware of with the companies featured throughout this book relates less to customer experience and more to business in general: competitive differentiation and the market advantage it accords can be both robust and fragile. An organization that’s held up as a model for others today could lose its luster tomorrow.

That shouldn’t come as a surprise, as no source of competitive advantage is eternal. A stellar brand reputation carefully forged over many years can be undone overnight, if a firm’s strategic missteps are severe enough, or if it gradually loses focus on the very characteristics that first set it apart in the marketplace.

Some of the organizations I’ll highlight for you in these pages have, through decades of consistent excellence, cemented their position in the pantheon of customer experience greats. Others are striving to get there themselves and are doing really interesting things that warrant their placement in this book. However—5, 10, 15 years from now—the companies highlighted here could fall out of favor. That’s less a statement about the fragility of a customer-experience-oriented business strategy and more a reminder that customer experience excellence is never really “achieved.”

It is an endless journey that requires a sustained commitment, and a relentless focus on continuous improvement and customer-focused innovation. It’s an endeavor that while not for the faint-hearted, can be enormously rewarding on many levels for organizations as a whole, as well as their leaders, employees, and customers.

So buckle up, because you’re about to discover the customer experience design secrets that great companies rely on, as well as learn how to capitalize on those strategies to impress all with whom you do business.

CHAPTER 6 KEY TAKEAWAYS

• Businesses that excel in customer experience are really all leveraging the same proven set of techniques to shape those “onstage” customer interactions. This book distills those techniques into the 12 Principles that are the focus of subsequent chapters.

• The appeal of these principles is that they are “universal truths” of customer experience design, applicable to practically any type of business and customer. In addition, with their roots in cognitive science, the 12 Principles can be used to shape not just the mechanics of an experience, but also how people perceive and remember it.

• There are many parallels between how great companies cultivate engagement with customers, and how great leaders accomplish the same with their employees. For this reason, the 12 Principles are also quite valuable for shaping and enhancing workplace interactions between managers and staff.





PART FOUR


THE 12 PRINCIPLES FOR CREATING LIFELONG FANS





CHAPTER 7





Create Peaks and Avoid Valleys


No matter how hard you try to improve your organization’s customer experience, the reality is that your customers won’t remember much of it.

That’s because our brains aren’t wired like a video camera, recording every second of every experience. Rather, what we remember are a series of snapshots. And those snapshots aren’t taken at random. The camera shutter opens to capture the peaks and the valleys in the experience—the really high points and the really low points. Most everything else, all the parts of the experience that are just “meh,” fade into the background and disappear from our memory.

This insight about the inner workings of our memory was first explored in 1993 by the renowned behavioral psychologist Daniel Kahneman, who dubbed this the “peak-end rule.”1 Years later, management professors Richard Chase and Sriram Dasu built on Kahneman’s research and considered how the peak-end rule could be applied to service interactions.2 (Note that we’re going to focus on “peaks” in this chapter and “ends” in the next.)

Kahneman’s work led to a surprise conclusion: what we experience in the world can actually be quite different than what we remember about our experiences in the world. In our encounters with people and businesses, we might live through the minutia of an experience, but we won’t consciously remember all of those details.

Our recollections are less “streaming video” and more “still photograph,” and that has important implications for the customer experience, because what smart companies recognize is that they’re not just in the business of shaping customers’ experiences, they’re in the business of shaping customers’ memories.

Indeed, how customers remember their interactions with you is arguably more important than the interactions themselves. When someone asks you, “What do you think of [Company X] or [Product Y]?” the next thing that comes out of your mouth won’t be based on your experience with those companies or products; rather, it will be based on your recollection of the experience.

That recollection (which will be the basis for your repurchase and referral behavior) won’t be derived from some meticulous calculation of the ratio between pleasantness and unpleasantness. Rather, you’ll be making that judgment based on the snapshots that your memory has captured from the encounter: the peaks and the valleys.

If the experience has relatively more (and higher) peaks, then customers will emerge with an overall positive memory of the interaction. Conversely, if the experience has relatively more (and deeper) valleys, then it will sour the customer’s recollection of the encounter.

This is the cognitive science behind customer experience. To leave a lasting, positive impression on customers, one must influence what they remember, strategically creating peaks in the experience that will outnumber and outweigh the valleys.

Let’s look at an example to see how this works.

Figure 7.1 is a rudimentary customer journey map. Journey maps are essentially visual depictions of how the average customer feels while interacting with a particular business. In this case, we’re looking at a journey map for the customer experience associated with being a new patient at a doctor’s office.



FIGURE 7.1

Customer journey map for the “new patient” customer experience.

The columns at the top of the diagram outline (in sequential order from left to right) the principal interaction points associated with this customer experience: The new patient first contacts the doctor’s office to make an appointment. Then on the day of the appointment the patient checks in at the front desk, fills out new patient paperwork, waits in the waiting room, gets examined by the doctor, and then checks out at the front desk to pay the bill or make a follow-up appointment before leaving the office.†

On the left axis of the diagram, there is a five-point scale for gauging how the typical customer feels at various points in the experience, from very negative to very positive.

At this particular doctor’s office, things get off to an average start when the new patient first makes an appointment. There appears to be nothing about that interaction that is meaningfully positive or negative.

That changes on the day of the appointment, where an emotional peak is apparent at the point of check-in. Perhaps the check-in area is well adorned, taking on an almost spa-like appearance, and the check-in personnel are extremely bright and cheery.

Then things go downhill. The patient is asked to fill out some paperwork and wait in the waiting room. Whatever’s happening in that waiting room isn’t good, because it’s leaving a very negative impression on the patient. Maybe the wait was excessive, there was poor cell coverage and no free Wi-Fi, or it was crowded without enough seating.

Things improve a bit when the patient sees the doctor, but ultimately the visit ends on a slightly unfavorable note at check-out.

Now here’s the key takeaway: the typical new patient at this doctor’s office will really only remember two things about this experience—the peak (checking in upon arrival) and the valley (waiting in the waiting room). Everything else about the experience will just sort of evaporate from memory and not play a meaningful role in shaping the patient’s impression. (There is one caveat to that statement, regarding how the customer remembers the end of the experience, which we explore in the next chapter.)

The “fragility” of our memories has important implications for customer experience design. It means a business’s customer experience doesn’t have to be perfect. Parts of it could be decidedly mediocre—even somewhat unpleasant—provided there are positive peaks in the experience that will serve as the ultimate memory makers.

Lots of people enjoy going to Disney World, even though the park can feel hotter than the surface of the sun through much of the year, and guests need to wait in long lines to see the attractions. Costco has legions of raving fans, even though finding what you need in the retailer’s cavernous warehouse stores can be quite challenging. Grocery store Aldi is a perennial leader in customer experience rankings, even though patrons must pay a quarter to get a shopping cart (which is refunded when returned) as well as bag their own groceries.

These are all examples of companies whose customers love them, even though there are parts of their customer experience that are far from delightful. They succeed, however, and customers reflect on their patronage positively, because these businesses are creating memorable peaks in other parts of the experience. (We’ll see examples in later chapters about exactly how Disney, Costco, and Aldi create those peaks.)

The challenge, then, when designing and delivering the customer experience is to create more and higher peaks, as well as fewer and less-deep valleys. So, do more stuff well, and less stuff poorly—right? That’s the big secret?

Not quite. Yes, infusing your customer experience with more good stuff (peaks) and less bad stuff (valleys) is obviously a smart strategy to follow. However, there are also more nuanced ways to create peaks and avoid valleys.





Spread the Pleasure


In 2013, Southwest Airlines (an air carrier that routinely tops customer experience rankings) teamed up with Dish Network to offer live, streaming television on its flights.3 The service was simple. Just connect your laptop, tablet, or phone to the aircraft’s Wi-Fi, and you’re ready to stream live TV as well as on-demand content. There was no mobile app to download, no preflight preparation required.

Why, then, did Southwest go through the trouble of emailing passengers (shown in Figure 7.2) the night before their flights, with the jubilant subject line, “Your Southwest Flight Tomorrow: Watch TV For Free!”



FIGURE 7.2

Preflight email communication from Southwest Airlines.

Passengers surely didn’t need to be reminded to bring their mobile devices onboard; most everybody already traveled with those. There was nothing they had to download or purchase in advance. So, why the email?

One might just chalk this up as good marketing, but it’s also smart customer experience choreography. By virtue of messaging passengers the night before, Southwest was essentially creating a second, memorable peak from one element of its onboard experience that it already knew was unique and positive.

Live, streaming TV was not a common inflight entertainment option on US airlines at that time. As such, when Southwest passengers fired up the Wi-Fi and laid back, relaxing, watching live TV, it created a memorable peak in the experience.

The email the night before, by teasing the TV streaming service and creating a sense of anticipation around the inflight entertainment, helped create a second peak, derived from the same experiential feature. That additional peak would be especially pronounced with customers who were new to Southwest and weren’t familiar with the Dish streaming service.

What Southwest essentially did in this example was to “spread the pleasure.” They were not just offering live, streaming TV once onboard. They were also accentuating the service in a preflight communication that created excitement and anticipation. That’s one peak in the experience that gets multiplied by two, thereby creating more snapshots to positively influence the customer’s recollection of their experience with Southwest.

If there’s something that’s already positive in the customer experience you deliver, a component that you know is well-received by your clientele, consider how you can spread that pleasure more widely across the experience. That could involve “parceling out” the good stuff in the experience, such as sharing positive news or developments with your customer in pieces, rather than all together. Or it could be accomplished by strategically reminding your customers of all the peaks in the experience that they’ve already enjoyed, such as a year-end communication recap of all the value they’ve derived from your goods or services.





Compress the Pain


If creating more peaks in the experience requires spreading the pleasure, then minimizing valleys in the experience necessitates the opposite—compressing the pain. By combining unpleasant interactions in the experience, by aggregating the ugliness, it’s possible to turn what could have been multiple experience-degrading valleys into just one bad touchpoint.

Think of it this way: it’s better to put a customer on hold once for six minutes than to put them on hold twice for three minutes. Nobody enjoys being put on hold, and the total hold time in these two scenarios is, of course, the same. But if during the course of the call, the conversation has to be paused twice while the customer is put on hold, that’s going to create two distinct valleys in the experience, each one weighing down on the caller’s impression of the interaction. However, by putting the customer on hold just once (even if it individually is a longer hold), it will feel less onerous to the customer and leave him or her with just one instead of two unfavorable snapshots.

To be sure, the resulting valley can’t be so deep, so agonizing, that it leaves a scar on the customer’s memory from which no recovery is feasible. Put a customer on hold once for 15 minutes, and even though it’s just a single valley, it’ll surely send the individual over the “cliff of dissatisfaction,” as it’s often called. That’s the point-of-no-return in customer experience, where nothing you can do can eclipse the negativity that’s created.

Most every type of customer experience has its share of ugliness—elements that are annoying, aggravating, or frustrating. Once you identify those unpleasantries, explore ways of lumping them together into a single (or at least a smaller) set of interaction points. That way, instead of creating multiple iterations of customer pain, you can limit the duration and intensity of the distress felt by the customer, paving the way for a better remembered experience.





Create Tentpoles


In 2014, the customer insight team at one of the largest publicly traded US insurers pored over volumes of the company’s policyholder survey data in an attempt to answer one key question: What customer touchpoints should they focus on to elevate policyholders’ overall impression of the insurer’s experience?

As they sliced and diced the data every which way, they stumbled across a surprising finding. When policyholders were happy with their insurance agent, they tended to be happier with all other aspects of the insurer’s customer experience—even those that had nothing to do with the insurance agent.

Customers who gave high marks to their agents also expressed greater satisfaction with the insurer’s website, billing statements, coverage parameters, and even premium rates—which are all things that the local agent had no influence on or control over. It was as though the positivity of policyholders’ interactions with their agent “bled” into their perceptions of completely unrelated components of the insurer’s customer experience.

The customer insight team was seeing the impact of what I call the “Tentpole Effect.” Imagine the pole at the center of a circus tent. As you lift the center pole higher and higher, what happens to the rest of the surface of the tent? It rises, even though it’s not directly above the center pole.

This is how our perceptions of an experience work, as well. One very positive part of the experience can actually elevate our impressions of entirely different parts of the experience—like the surface of a tent rising with the center pole, or a tide that lifts all boats.

This concept is a descendant of the “halo effect,” a type of cognitive “confirmation bias” first described by Edward Thorndike in his 1920 paper, “A Constant Error in Psychological Ratings.”4 Thorndike observed that people’s perceptions of others are (inappropriately) influenced by unrelated attributes. For example, we tend to view people who are physically attractive as being more intelligent and knowledgeable than those who are unattractive. One appealing personal characteristic casts a positive glow on everything else, as we have a tendency to see and hear things that confirm our beliefs, rather than refute them.

(The converse is also true. A single negative characteristic can unduly influence people’s overall impressions, leading them to view a person or thing more unfavorably than would otherwise be the case. That’s the “horn effect,” which is the opposite of the halo effect.)

The halo effect bias manifests itself in similar fashion when people are evaluating their customer experiences. An insurer with great local agents gets high marks for its billing practices, even if they aren’t objectively all that good. A retailer with a slick, visually appealing website is viewed as being more reliable and trustworthy than a competitor whose online presence looks more amateurish. An airline with super-friendly flight attendants is perceived as having better on-time performance.

The lesson to be learned here is that it’s important for you to excel in at least one aspect of your customer experience. It could be how you onboard new customers, or your responsiveness to inquiries, or the ease of product installation. Whatever it is, just make sure to create at least one high peak in the experience, because that tentpole will actually make your customers feel better about the rest of the experience you deliver—even if you don’t lift a finger to improve those other parts.

PUTTING THE PRINCIPLES INTO PRACTICE

How to “Create Peaks and Avoid Valleys”

Be deliberate in how you “sculpt” the customer experience, paying particular attention to the creation of peaks (really good parts that people will remember) and the avoidance of valleys (really bad parts that people, unfortunately, will also remember). While that’s obviously an exercise in doing more things well and less things poorly, a customer’s memories of the peaks and valleys can also be influenced by how the experience is sequenced and presented.

• Compress the pain. Make unpleasant parts of the customer experience less memorable by aggregating them into a single touchpoint, so as to avoid creating multiple negative impressions that could weigh on people’s perceptions of the encounter.

• Lump “homework assignments” together. One way of compressing the pain can be found in how you engage customers when you need something that might create a burden on them (giving them “homework,” if you will). For example, if you need customers to fill out forms or complete paperwork, give it to them all at once, rather than “dripping” it on them over a period of time. Similarly, when requesting information from your customers, go to the well once—try to avoid saddling them with multiple inquiries spread out over a period of time.

• Limit the number of steps in unfavorable transitions. Waiting in a waiting room. Having your call transferred to another department. Being put on hold. Navigating through multiple levels of an 800-line menu. These are all examples of transitions in the experience, where customers navigate across touchpoints in a way that (from their perspective) adds little value. In these situations, it’s advisable to minimize the number of transitional steps, as each one might leave a valley-like impression on the customer. In a doctor’s office, for example, instead of making patients wait in a waiting room and then wait again in an exam room, just bring them into the exam room when the physician is ready to see them. Similarly, avoid putting customers on hold repeatedly or transferring their call multiple times.

• Spread the pleasure. Look for ways to amplify and extend favorable aspects of the customer experience by strategically sequencing the pleasurable parts, creating multiple positive peak impressions that will help enhance people’s recollection of the encounter.

• Create anticipation. One way to create additional peaks is through communication that helps heighten the customer’s anticipation for some other appealing part of the experience. For example, you could email customers as the product they ordered is being manufactured, assembled, or customized for them. Or as Southwest did with their livestreaming entertainment, service providers can message customers to preview the benefits they’ll soon enjoy. Either way, the key is to pique customers’ interest in all the goodness they’re about to experience.

• Establish echoes. Peaks can also be spread by creating “echoes”—communications that essentially serve to remind the customer of earlier high points in the experience. For example, you could use a year-end message or an annual stewardship report to recap all of the value you’ve delivered to a customer or that the customer has derived from your products/services during the course of the past 12 months. The same approach can be used with workforce communications to highlight significant individual or team accomplishments, thereby fostering pride and engagement.

• Parcel out the positives. If you have good developments to share with a customer or achievements to celebrate, break the communication up into parts. Instead of highlighting all the positive news once, consider separating the message into parts to create distinct memorable peaks, provided it won’t be confusing as a result. In the employee arena, this translates into “parceling out the praise,” meaning that—for deserving staff—compliments are more impactful if communicated across multiple interactions instead of a single one.

• Do at least one thing exceptionally well. Select one aspect of your customer experience where you will be sure to overperform, creating the tentpole that will help elevate customers’ impressions of the entire