What is Customer Experience and How Is It Managed?

La Customer Experience It is the business strategy with the highest growth in recent years, mainly due to its great long-term return for large companies.

Throughout this article you will be able to learn in depth all the advantages, keys and tools of this methodology.

Table of Contents:

1. What is Customer Experience?
2. How is the Customer Experience Managed?
3. Difference Between Customer Experience, User Experience and Marketing
4. How Is Customer Experience Measured?
5. Customer Experience Tools and Methodologies

1. What is Customer Experience?

Customer Experience or Customer Experience is a business strategy that focuses on achieving an economic benefit thanks to the generation of emotional bonds between customers or consumers and brands.

Customer Experience as a strategy is based on the following value chain, which explains the relationship that exists between emotions and business.

People will forget what you said, they will forget what you did, but they will never forget how you made them feel. -Maya Angelou-

This phrase by the artist Maya Angelou perfectly reflects the foundation of the strategies and vision of the Customer Experience.

Las thrills, or what brands make our customers feel, are the main ingredient of souvenir.

El souvenir It is important, because it determines our behaviours and future decisions.

these behaviours and future decisions are what have an impact on business results.

This value chain is relevant because it connects two concepts that are not as intuitive for organizations: Emotions and business. And it explains why in Customer Experience it is so important to focus on understanding and managing customer emotions, to generate an impact on results.

2. How is the Customer Experience Managed?

El EMC or Customer Experience Management is the science and art of managing experiences and of generating these emotional bonds between people and organizations.

We are talking about People and Organizations, because Customer Experience can be applied to different areas of relationships. Thus, we could talk about different specific concepts such as:

• Customer Experience. As a generic concept and also when we mainly talk about the individual consumer.

• B2B Experience. When we apply Customer Experience to the relationship between companies.

• Patient Experience. When we focus on generating emotional bonds around the world of health, focused on the patient and their context.

• Student Experience. As a personalization of CX strategies in the field of education (schools, institutes, universities and all types of training and education centers)

• Citizen Experience. When we refer to citizens and their application to government institutions and bodies, which do not seek to maximize their profitability but that can impact the citizen's perception and behavior (such as the intention to vote).

The objective of Customer Experience Management is to generate an emotional bond between the user and the organization that impacts the behaviors and future decisions desired by this organization.

To do this, organizations must have a management system (Framework) that integrates all the relevant elements to understand, design and make decisions based on the emotions and perceptions of users.

Customer Experience Framework

A Framework or Conceptual Framework is a model that organizes the different pieces of a strategy to understand and manage all the aspects that are necessary to succeed.

In the market there are different Frameworks already built that you can use to understand and manage the Customer Experience in your organization. Here we explain the main elements of the Izo Framework.

3. Difference Between Customer Experience, User Experience and Marketing

There is some confusion about several concepts related to Customer Experience. Although beyond terminology, what is really important is that organizations invest efforts and focus on understanding and acting based on the needs of their customers, we are going to try to clarify some of these concepts:

• Marketing is for us a tremendously broad concept, which refers to the strategy that organizations use to attract and retain their customers. In this sense, the concept of Marketing goes far beyond campaigns and advertisements, and affects the entire relationship with the customer.

• Customer Experience, could be considered as a type of strategy within Marketing, but it has some elements that make it go a little further, since it affects not only the areas and teams responsible for strategies to attract and retain customers, but also the way in which the company carries out its activities and has an impact on the entire organization. As with digital transformation, Customer Experience is an organizational strategy, which has an impact on culture and on the behaviors and attitudes of all people and departments.

• Experience Marketing. This is perhaps the term that generates the most confusion and causes many organizations to confuse a Customer Experience strategy with a series of actions that focus on generating an impact through the senses on the customer. In general, when the concept of Experiential Marketing is used, it is done in relation to concrete actions associated with the acquisition or purchase phases that seek to surprise the customer by making them experience a surprising moment through the senses. The fundamental difference with Customer Experience as an organizational strategy is that the latter affects the entire organization and the way in which the company works, from areas with direct impact on the customer to financial, legal or systems teams.

• User Experience or UX It is a relatively more recent concept, which speaks of the experience that a user experiences when interacting with the company through a certain device or interface. UX is a discipline within the Customer Experience that focuses on achieving the most appropriate design of the contact points where there is an interaction through a screen or display (web, digital kiosk, ATM, mobile, etc.).

4. How Is Customer Experience Measured?

”What is not measured cannot be improved”. This phrase, often attributed to Peter Druker, actually corresponds to British physicist and mathematician William Thompson Kelvin, and reflects one of the main challenges for managing Customer Experience.

In order to improve the emotional bond that customers have with the company, we must establish a way to measure this connection in order to take action and make decisions. Here we introduce you The main metrics for managing Customer Experience and the recommendation we make from Izo on how to use each one of them.

NPS (Net Promoter Score or Net Promoter System)

El NPS it is undoubtedly the most popular indicator when it comes to measuring and managing Customer Experience in organizations. It was designed by Frederick Reichheld in 2006, who established that the best way to predict customer loyalty was through the question:”Based on your experience, would you recommend this company to a friend or family member?”

This question, which included a greater degree of emotional attachment, due to the personal involvement of making a recommendation, was answered on a scale from 0 to 10 and an indicator was obtained by grouping the answers as follows:

• 10 and 9.- Promoters. Those customers with this score range are considered “promoters” and have behavior that increases loyalty and connection with the organization.

• 8 and 7.- Neutral. Those customers with this score range are considered “neutral” and their behavior does not imply a greater connection with the organization.

• 6 to 0.- Detractors. Customers in this range are considered to have behavior that decreases loyalty and engagement with the organization over time.

The NPS is calculated as the difference between the percentage of Promoters and Detractors. This metric has undoubtedly become the reference metric for Customer Experience management in organizations, thanks to the simplicity with which it is proposed and the rapid adoption that this terminology generates in organizations.

The NPS has managed to be introduced as a key metric within the strategic scorecards of companies, and to be one of the indicators that is reviewed by the CEO on a regular basis. Managing this indicator properly presents significant challenges for organizations, but its apparent simplicity has made it adopted by organizations of all kinds, both large corporations and businesses and SMEs.

In an update to F. Reichheld's book in 2011, the concept was transformed by evolving from NPS (Net Promoter Score) to NPS (Net Promoter System). This change reflects the philosophy of the NPS more like a management system, which focuses on measuring the level of recommendation, as a basis for identifying different groups of clients (Promoters, Neutrals and Detractors) and establishing a system for managing and improving the experience, beyond a score.

Customer Effort Score (CES)

El Customer Effore Score or CES is a metric that emerged in 2010, following an article in the Harvard Business Review magazine and that proposed a new measurement system, based on the idea that companies should not focus on surprising the customer, but in reducing the effort to meet their needs.

This approach resulted in the Customer Effort Index, which initially asked how much effort it took to achieve what you needed from a company, and which later became a question,”How easy it has been to achieve what I needed from this company”.

There is a lot of confusion about how Customer Effort is measured and calculated, but the official mode established by CEB (the company that designed this metric) states that It is measured on a scale from 1 to 7, and is calculated as the percentage of customers who declare that it has been at least relatively easy to resolve their need with the company (scores of 5, 6 or 7).

Best Customer Experience (BCX)

El BCX o Best Customer Experience is an indicator designed by Izo for carrying out the main Customer Experience Benchmark in Ibero-America.

This study measures the Customer Experience of more than 200 companies in 10 countries (Spain and America) and seeks to provide an element of comparing and learning best practices at the international level.

The BCX is made up of 3 dimensions of the Customer Experience, which are part of the Izo Framework as the three areas through which companies can generate an emotional bond with their customers.

• Product Experience. To what extent the company's products or services generate value to the customer experience by solving their real needs.

• Experience with Interactions. Interactions with the company are easy and pleasant.

• Brand Experience. I feel an emotional connection with the brand.

The BCX is measured on a scale of 1 to 5 and each dimension is calculated as the net index of Top2 (answers of 4 and 5) minus Bottom1 (answers 1). The final result is the arithmetic mean of the three dimensions.

Izo's recommendation regarding the use of these three indicators would be as follows:

• NPS. It is the metric that best reflects the Customer Experience at the relational level. It is a good indicator for measuring Customer Experience on a regular basis based on the company's total customer base, and it allows a good correlation analysis with business results to calculate an Experience Economics model.

• CES. It is the best metric for measuring Customer Experience at a transactional level (that is, linked to a specific interaction). The recommendation is to use the CES to measure the Customer Experience associated with the different moments of the customer relationship (information, purchase, use, complaint, etc...)

• BCX. It is a metric that complements the company's measurement system, providing Benchmark information both at the sector level and in relation to other brands in each country, and focused on identifying and learning from the best practices of other companies.

5. Customer Experience Tools and Methodologies

Around the Customer Experience, a series of tools and methodologies have been integrated that allow understand the customer experience, innovate and design memorable moments and manage cultural change and transformation.

Some of the tools and methodologies you should know are:

1. Archetypes or Buyer Persona

Los archetypes or Buyer Persona allow us to describe and segment customers based on their motivations and emotional needs, to generate value propositions and design better interactions and products for each type of user.

2. Customer Journey

El Customer Journey o Customer Hallway is a tool that allows us to describe and understand the customer experience, analyzed from the customer's perspective. This new point of view provides information that the company does not always know and that allows us to innovate by designing better experiences at the most important moments of the entire relationship.

3. Service Blueprint

El Service Blueprint provides a complete understanding of the Customer Experience, delving into mapping the elements that affect the customer experience on the visible and invisible layer (processes, policies, systems and people)

4. Design Thinking

Although it has a comprehensive approach that ranges from understanding the customer's need to implementation, the main strength of the methodologies of Design Thinking is the application of user-centered techniques and methodologies when it comes to understanding the problem and innovating in the solution.

5. Agile

Agile methodologies focus on the transformation layer, providing a work scheme that allows solutions to be developed quickly and by evolving and improving products through feedback and interaction with users.

Customer Experience Management is one of the main strategies that is present today in the plans of companies of all kinds, and requires professionals who are specialized and who know and know how to apply all these strategies and methodologies for generation of emotional bonds between people and organizations that generate a positive impact on business objectives.

If you need us to help you with your Customer Experience challenges, you can write to us at this form and we will be happy to solve it with you.

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