Companies failing to recognise the importance of customer emotions

While customer experience management (CEM) provides an excellent platform for differentiation, the industry is at high risk of becoming misunderstood into extinction, according to a new report

The Beyond Philosophy 2011 Global Customer Experience Management Survey study asserts the highest risk factors include use of the term to re-brand projects that have little to do with the customer experience, failure to take account of customers' emotional viewpoints, limitations in adoption of true CEM and the time it takes to execute a CEM programme.

"78 percent of CE executives were redeployed with no background in the practice. Additionally, customer experience is being used as a buzzword, with many CRM programmes being re-branded as CE," said Steven Walden, senior head of research and consulting, Beyond Philosophy. "Emotions account for more than half the typical customer experience, thus proper CEM must consider emotions in order to deliver any significant value."

Despite this, the ‘big-four’ industries - telecoms, banking, retail and IT - spend significant resources on CEM, comprising 63 percent of the CE market, but customer experiences with these organisations remain largely poor.

The information gleaned from the study is designed to assist companies with understanding customer experience management in a way that helps to differentiate their products and services in the face of increasing commoditisation.

The study also sought to establish benchmarks for which regions are most CE-centric, which industries are most CE-active, which companies allocate the most resources to CE, where growth potential is greatest and which companies are most admired by CE leaders.

The regions with the highest allocation of resources to CE are North America and the United Kingdom. Yet, the need for a clearer understanding of CE means there are significant growth opportunities in these regions.

Across all industries, HP (IT) has seen the greatest allocation of resources to customer experience over the past year, largely due to its Total Customer Experience campaign. The other companies that have allocated the most resources to CE, in descending order, are HSBC (banking), Vodafone (telecom), GAP (retail) and American Express (financial services).

According to Walden, "It's important to note that resource allocation does not automatically mean excellent customer experience. In many cases, the companies allocating the most resources are working toward a solution for lackluster CE performance."

"With the exception of American Express, which frequently earns accolades for its customer experience, the companies we see allocating the greatest amount of resources are widely recognised for providing disappointing customer experiences," added Walden.
The top three companies most admired by CE experts for the customer experience they deliver are technology companies, with Apple ranking first, followed by Amazon and Zappos.

"Apple has married all the elements of its experience and connected with its customers in a deeply emotional, irrational way," said Walden, adding, "Amazon put a stake in the ground when it announced it would become the world's most customer-centric company, and Zappos claims to be a customer service organization that happens to sell shoes."

"Well-established CRM technologies allow these companies to use the data they collect to deliver a highly-personalised experience," said Walden. "But there's something more inherent to the way these leaders deliver the experience; they use the copious data they collect to truly understand customers and their motivations in order to deliver a satisfying experience in a meaningful way."

Other companies ranking in the top 10 most admired for customer experience include, in descending order: Starbucks (retail), Disney (entertainment), Tesco (retail), Virgin Atlantic (aviation), Vodafone (telecom), Nordstrom (retail) and First Direct (banking).

The development of a high-value consumer segment in countries such as UAE and China has raised demand for luxury experiences, but customer empowerment through social media is the single biggest driver for future customer experience management.