Clued In: How to Keep Customers Coming Back Again and Again

Clued In: How to Keep Customers Coming Back Again and Again

by Lewis P. Carbone

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Overview

Clued In: How to Keep Customers Coming Back Again and Again by Lewis P. Carbone

Good, bad, or indifferent, every customer has an experience with your company and the products or services you provide. But few businesses really manage that customer experience... so they lose the chance to transform customers into lifetime customers.

In this book, Lou Carbone shows exactly how to engineer world-class customer experiences, one clue at a time.

Carbone draws on the latest neuroscientific research to show how customers transform physical and emotional sensations into powerful perceptions of your business... perceptions that crystallize into attitudes that dictate everything from satisfaction to loyalty.

And he explains how to assess and audit existing customer experiences, design and implement new ones... and "steward" them over time, to ensure that they remain outstanding, no matter how yourcustomers change.

Experience as a value proposition
Building systems that reflect your customers' deepest needs and desires

The mouse vs. the orange roof
Why Disney succeeded and Howard Johnson's failed

The disciplines of experience management
Experience assessment, auditing, designing, implementation, and more

Experience stewardship for the long term
Refreshing your experiences to reflect changing needs and desires

  • Understand how your customers think and feel, and how they interact with your products and services
  • Assess, audit, design, implement, and steward any customer experience
  • Beyond Disney and Harley-Davidson: solutions for every industry, product, or service

Customer experience is your best opportunity for differentiation... often, your only opportunity.Clued In gives you the tools to craft an outstanding customer experience—no matter what you sell, or who you sell it to.

Lou Carbone reveals the sensory building blocks of experience you're already delivering toc ustomers, whether you know it or not. He shows how to re-craft these "clues" into a consistent, powerful experience that leads directly to customer preference... a preference that can help you differentiate practically anything.

Carbone covers the entire process, hands-on: organizing your "experience design" team...evaluating the experience you're already delivering... designing manageable clues that connect with customer desire... rolling out new experiences... and making customer experience both sustainable and profitable.

Your company needs to move from creating great products and services to creating great experiences.

Product Details

ISBN-13: 9780131015500
Publisher: FT Press
Publication date: 05/17/2004
Pages: 272
Product dimensions: 6.38(w) x 9.28(h) x 0.99(d)

About the Author

LOU CARBONE has been exploring the dynamics of experience creation and management for 20 years. He founded and currently serves as CEO of Experience Engineering, an experience-consulting firm whose clients include IBM, General Motors, Avis, Allstate, Audi, Blockbuster, RBC Financial, Office Depot, H&R Block, Taco Bell, Allina Health Systems, and many other leading organizations. Carbone collaborated with Steve Haeckel on "Engineering Customer Experiences," the seminal article that introduced the concept of customer experience.

Read an Excerpt

Preface

Every sound business is built around a simple proposition: It makes or does something so well that customers will pay for the value being created. Peter Drucker, perhaps the most significant management scholar of our time, reduces this proposition to two basic axioms: A business has to make money, and a business has to make customers.

It's not an either/or—the two are opposite faces of the same coin. If a business doesn't make customers, it won't survive to make money. If it doesn't make money, it won't survive to make customers. One form of value must connect with the other.

Although many people in business will find this proposition familiar, fewer have extended its reasoning to the logical conclusion—that the customer is the ultimate arbiter of the value an organization creates and delivers, not CEOs, CFOs, shareholders, or stakeholders. Though each can make important contributions to the health and success of the business, none of them will be around for the long run unless the business creates value for its customers. In recent years, many businesses—many entire industries, in fact—seem to have lost their sense of balance in this regard. In trying to maximize the value of customers to their businesses, they appear to have lost sight of the need for their organizations to create value for their customers. The evidence is depressingly familiar:

Airlines have systematically reduced the experience of flying to the feeling of being herded onto and off of an airborne cattle car (a form of experience that was ongoing long before September 11).

Banks persistently charge account holders premium penalties for the most routine services. Periodically, some even try to nick customers for the experience of talking to a real live teller. Or the customer endures a circuitous maze created by the call center instant voice response banter to get to a destination.Credit card companies have tried to continually create new ways to bump interest rates into double digits and add painful penalty charges, to boot—this in an economy where the interest rate charged to banks has been at or near record levels.

Reorienting Priorities

From your own experiences, you can no doubt expand and extend this list with examples from across the full spectrum of business to find companies of every size and industry engaged in dysfunctional value creation. As wide-ranging as your examples may be, however, they'll probably have one thing in common: In virtually every case, someone will have made a decision that emphasizes how the customer can create value for the company (the financial value of the customer's business) more than how the company can create value for the customer. In few of these cases will the desires of customers have been factored in, let alone viewed as a priority. Far from trying to find a balance between customer expectations and business realities, it's a truism today that many decisions are based on only one perspective of value—the company's.

The question of how to balance the value of the experience to the customer and the value of the customer to the company leads to an opportunity to "value engineer" the relationship between organizations and their customers, thereby making any market segment profitable.

I believe today's organizations have become extraordinarily vulnerable. By neglecting to factor in customer expectations and preferences consistently —by essentially disenfranchising the customer from the focal point of value creation—these businesses have abdicated their obligation to customers and themselves.

The result? With modern management fixated almost solely on the bottom line, the value proposition of far too many businesses has become increasingly one-sided: lots of emphasis on the company but little on enhancing the customer value. The overriding concern for maximizing short-term financial results now permeates business thinking from "mahogany row" to the front line. Even customers are prepared to concede to a rationalization that says "I guess that's what they have to do to stay in business."

As a consequence, I believe today's organizations have become extraordinarily vulnerable. By neglecting to consistently factor in customer expectations and preferences, they have essentially disenfranchised the customer from the determinations of value. These businesses have fundamentally abdicated their obligation to customers and themselves. What's more, sensing how little value such businesses place on their interests, customers today have become unpredictable free agents: increasingly disappointed, disgruntled, devalued, and ultimately disloyal.

The things businesses do to make money need to be balanced against an enhanced assessment of what it will take to make and keep customers in tomorrow's even more competitive global economy.

The point? Without the long-term loyalty of their best customers to provide stability, the foundations of countless businesses are essentially anchored in sand. Yet it appears that many executives and managers charged with running those businesses are unwilling or unable to deal with their vulnerability. They literally don't have a clue.

This is not the preface to a soft-hearted call to disregard all the hard lessons learned in recent years on the make-money side of the house. Far from it: Indulging every customer request, no matter how fanciful or far-fetched, in the name of enhancing customer experiences is no more a formula for success than is relentless and unrestrained slashing of expenses. Competitive forces will continue to make it imperative to become ever better at taking care of the financial aspects of the business. If anything, the pressure on the make-money side is only going to continue to ratchet up.

But this is precisely why it's time to address the balance by rediscovering the make-customers side of the equation, which makes this a call to re-anchor the foundation of the business itself. It's time to get "clued in"—to develop a renewed and urgent sense of customer value creation—because the consequences of disregarding long-term customer preference and loyalty in the name of short-term cost reductions and cost-laden loyalty programs are both predictable and painful to contemplate.

The premise of the analysis in this book is deceptively simple: The things businesses do to make money need to be balanced against an enhanced assessment of what it will take to make and keep customers in tomorrow's even more competitive global economy. That means reconnecting— and in some cases, connecting for the first time—with customers as intimate participants, sometimes even partners, in theprocess of value-creation. Now more than ever, the value created for customers needs to be a central consideration in the short-term growth and long-term health of any business.And experience is the key.

The Experience Differentiator

Within harsh financial realities, creating value for customers by providing distinctive experiential value is an exacting challenge. But it's far from insurmountable. Making money and making loyal customers are not mutually exclusive.

The essence of experience as a value proposition is as old as business itself. It isn't tied to or limited by geography, demographics, or economic forces. It applies whether an organization produces products, delivers services, or does a combination of both. It doesn't matter whether the customer is a consumer or another business.

The fact is, customers cannot not have an experience! They'll have one whether you want them to or not. The question is, How random or managed is the experience you are delivering?

Experience has always been both a bridge and a by-product when customers connect with organizations. But up to now, too many businesses have acted as though competitive advantage comes more from individual product and service attributes than from an ability to create a cohesive total experience within which products and/or services are key components. But as many businesses have known for a long time, the "whole" is worth far more in impacting customers than any of the individual parts.

To be sure, the customer's total experience—much of it unconscious and emotional, rather than coldly rational—has always been a component of the value proposition puzzle. But now, as product and service attributes become commoditized and evened out, experiential elements and their value are rapidly coming to the fore. The quality of the customer's total experience is being increasingly recognized as the new differentiator.

Although this might seem like a bit of a stretch to some, it has been the focal point of my own work for at least 20 years. And I've been writing about it for more than a decade. In 1994, I collaborated with Steve Haeckel, who was then chair of the board of trustees of the Marketing Science Institute, in a first article on the subject for Marketing Management, the quarterly business management publication of the American Marketing Association. In "Engineering Customer Experiences,"1 we laid out the basic principles on which I built my consulting business, and it eventually has led me to write this book.

"Customers always get more than they bargain for," Steve and I wrote, "because a product or service always comes with an experience. By 'experience,' we mean the 'take-away' impression formed by people's encounters with products, services, and businesses—a perception produced when humans consolidate sensory information." 1

In the article, we introduced the concept of experience "clues" as the manageable building blocks of an experience defined as sensory information, whether occurring by design or happenstance, that collectively influenced the experience value perceptions in the mind of the customer. We also identified the stakes involved: "Unmanaged, these clues may cancel each other out and leave no net impression on the customer, or worse, induce a strong net negative perception. But if systematically crafted into a positive net impression, the clues promote customer preference, which a company can leverage to differentiate otherwise commodity-like products and services." Other Voices

In a subsequent issue of Marketing Management, John Deighton, now the Harold M. Brierley Professor of Business Administration at the Harvard Business School, responded at some length:

This article raises fascinating questions that deserve serious scholarly attention. Here are two practicing marketers who tell us that marketing can design our feelings for us and cite enough evidence to make the assertion at least intriguing. They are claiming powers for the art of marketing that are beyond the ken of most marketing theory, and I take that to be a rebuke to the state of theory.

When marketing studies consumer choice, using the methods and models of economics, it is doomed never to see anything more subtle than an economist could have seen. This article is a call to look beyond choice to the consumption experience, where we may see phenomena that stimulate our curiosity and point the discipline in directions that no other social science is as well equipped to go. It is worth remembering that the first steam engine was built before the laws of thermodynamics had been written, and so it is said that physics owes more to the steam engine than the steam engine owes to physics.

"Experience Engineering" is being proposed before we have much understanding of the relevant science, but it just might be the spur to creating that science.

In the years since, evidence has grown steadily to indicate that both business thought leaders and pacesetting businesses are catching on. Steve Haeckel deserves some long-delayed credit for that. Creator of the sense-and-respond managerial model set forth in his book, The Adaptive Enterprise, retired director of strategic studies at IBM's Advanced Business Institute, and now president of Adaptive Business Designs of Pound Ridge, New York, he has been working with me for years to promote the idea that systematically managing the "whole customer experience" represents an unprecedented—and untapped—source of competitive advantage. And that is unavoidably every company's real value proposition.

Dr. Leonard Berry, noted author and distinguished professor of marketing at Texas A&M University, represents another noteworthy voice. Len points out that creating the kind of service customers truly value is far more than a matter of the words used in marketing efforts. "The marketed brand contributes to brand meaning," he states in Discovering the Soul of Service, "but not as strongly as the customer's actual experience with the company."

The tangible attributes of a product or service have far less influence on consumer preference than the unconscious sensory and emotional elements derived from the total experience.

On the basis of his groundbreaking research into how the human brain functions—research that is yielding some of the most important concepts and powerful tools yet brought to the field of marketing management—Dr. Gerald Zaltman of the Harvard Business School's Mind of the Market Laboratory presents the case for experience management with mantra-like precision: The tangible attributes of a product or service have far less influence on consumer preference than the unconscious sensory and emotional elements derived from the total experience.

A year before their book, The Experience Economy: Work Is Theater & Every Business a Stage, appeared, Joe Pine and James Gilmore wrote an article in the Harvard Business Review entitled "Welcome to the Experience Economy", in which they laid out their own approach to the subject. Haeckel and I wrote a letter to the editor to second their notions, emphasizing that "companies cannot avoid giving their customers a total experience. But they can and do avoid managing its production. The vast majority of businesses deliver experiences without thinking about them."

We went on to emphasize the critical importance of translating this insight into business practice, noting that "Almost no one uses a systematic way of designing high-value experiences and delivering them consistently. Systematically engineering such experiences requires new management principles, tools, methodologies, and techniques." Getting Clued In

The implications are enormous. Those "new management principles, tools, methodologies, and techniques" at last are becoming available and proving their worth. The body of research supporting the competitive value of managing the customer's total experience is both compelling and growing. And landmark advances in understanding how people—especially in their role as customers—think and make decisions promise to provide the necessary knowledge and insight to help businesses rewrite the rules of the value proposition around systems that design, manage, and leverage total experiences.

For nearly 10 years now, my firm, Minneapolis-based Experience Engineering, has been in the forefront of the transition. We have been working with forward-looking organizations to create, in effect, the first steam engines of the experiential world.

In the pages that follow, I will share what I know about that world where experience—not traditional forms of product and service quality—is the focal point of the value proposition. I'll do so openly, sharing lessons we've learned with clients from an array of industries. I've divided this exploration into two parts.

In Part 1, I'll build the case for managing experiences—the global perspective that can help you see the outlines of this profound transition as they have begun to become visible.

In Chapter 1, you'll start off with an in-depth comparison case study of two organizations whose very different fortunes reflect the way they did or didn't manage experiences over decades.

Chapter 2 traces the evolution of the value proposition, particularly in the post-World War II world, where product attributes and service quality started to become commodities and have led to the coming of experience as a value differentiator.

Chapter 3 takes a look over the edge of the "Brand Canyon" to discuss the relationship between brand and experience management and to show how focusing on experiences necessarily changes the way businesses think of themselves and what they make and do.

In Chapter 4, you'll see how experience value can be managed by exploring some basic tools and models that will help you understand the dynamics of experience and experiential value perception.

Chapter 5 narrows the focus to clues—the essential building blocks of experiences—exploring both the functional and the emotional forces at work in the mind of the customer as they are encountered absorbed and registered.Chapter 6 demonstrates how the challenge of managing clues places a premium on the development of cohesive and sustainable experience management systems that can evolve and grow over time.

In Part 2, the actual practice of managing experiences and the specific disciplines that can energize a systematic approach to experience management are featured.

Chapter 7 focuses on assessing and a richer understanding of experience as the core of the value proposition.

Chapter 8 introduces the discipline of auditing, in which you will learn to take apart existing experiences and see them as your customers do to gain insight into critical needs and true preferences in the process.

In Chapter 9, you'll see how to leverage the insights from assessing and auditing into designing the total experience by creating clues that can be managed to connect with customer desires and lead to long-term preference and loyalty.

By Chapter 10, you'll be ready to move into implementing experience designs, weaving and orchestrating the strands of individual clues into a resilient system that resonates more consistently for customers because experience and the value created is at the core.

Finally, Chapter 11 explores the transition to stewarding, in which efforts evolve into maintaining and evolving an experience management system that produces sustainable, effective ways to make money because of the way you are making customers.

Finally, I've included an appendix of useful tools that have been developed or identified from others in 20 years of building experience management systems.

Table of Contents

Introductionxix
Part 1The Case for Experience Management1
1Orange Roofs and the Mouse: A Tale of Two Icons3
The Roots of Experience3
Seeing Orange5
Making Clues Systematic7
A World Apart15
Experience by Design17
Experiential Vision18
Enduring Lessons19
A Constant Learning Process21
Experience Evolution22
References23
2Experience As a Value Proposition25
Smelling the Coffee27
A Valuable Cup of "Joe"29
Customers, Coffee, and Doughnuts34
An Alan Wrench for Your Thinking36
Taking the Next Step39
References40
3The Brand Canyon43
Brand and Experience44
Exploring Experience Motifs49
Brand Junction54
A Tipping Point?55
Below the Radar56
References59
4Experience Value Management61
The Preference Model62
Tying a Ribbon Around Experience63
Clue Math67
Principles of Experience Value Management69
Value-Added Education76
Focusing on Clues78
References78
5Getting Clued in79
More About Clues80
Works Right, Feels Right83
Clued In85
Clue Clusters85
Clues in Action86
The Mechanic Side88
Too Much of a Good Thing?89
The Humanic Side92
Connecting with Customers94
Making Clues Count97
References98
6Approach to Experience Value Management99
Managing Experience Value101
Process and Experience102
Establishing a Context103
Deliberate Systems104
Systems Perspective106
Start at the End First106
Systematic Stagecraft107
It's Really About Performance109
Casting Calls110
Realistic Expectations111
Managing the Value Proposition112
A Disciplined Approach114
The Disciplines of Experience Value Management115
Developing Competencies and Tools116
Thinking Systematically117
References118
Part 2The Practice of Experience Management119
7The Discipline of Assessing Experience121
Why Assess?122
Exploring Experience Topography124
Assessing with Purpose125
Organizational Inclination127
Audiences and Experiences128
Experience Insight Wellsprings129
Employee Experiences130
Leveraging the Moment131
Eye-Opening Discoveries133
Internal Experiences134
Creating a Sound Foundation135
References135
8The Discipline of Auditing Experiences137
Multiple Perspectives138
Auditing Components141
Transforming Experiences by Observing148
Emergency Sensitivities150
Widening the Vision152
Stretching Physical Boundaries153
Everything Counts154
Gaining Emotional Insights156
Staying on Target158
Insights Through Communication159
Obvious and Subtle160
Audit the Full Spectrum161
Expect More163
References163
9The Discipline of Designing Experiences165
Illusions and Realities165
Experience Design Practices167
References191
10The Discipline of Implementing Experiences193
Experiential Leadership193
Familiar Approaches: A Clued-in Team195
References214
11The Discipline of Stewarding Experiences215
Understanding Experience Harmonics215
Experiential Learning Quest218
Getting Clued In223
Words and Meaning224
Start Where You Want to Finish228
On a Role230
Stewards of True Value233
References234
Afterword235
Appendix245
Acknowledgments255
Index259

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