All entries for Wednesday 21 July 2010
July 21, 2010
Will Customer Experience Management be the next big thing???...or is traditional CRM still the King?
It is interesting how the creation of exceptional customer experiences is becoming a standard practice today. Customers are becoming highly sophisticated in their buying habits and those who deliver superior customer experiences gain a competitive edge. Just so you don't think I'm making this up; let me give you a few examples:
- Lego, who provide an opportunity for children to play with their toys in shops and also an opportunity for parents to experience and share their children‟s happiness;
- Starbucks, who create an exceptional service experience by providing an apt environment for social interaction and a personalized coffee shop experience.
Let's now see how all this actually unfolded. In the beginning of the new millennium (that's 2000), Customers started demanding a higher marginal utility on their purchases; which basically means that they wanted more value for what they were paying. Traditionally, CRM has just focused on customer retention and nothing else, which made it narrow in scope and highly inflexible. Thus, the concept of CEM was put forward. Pine and Gilmore first introduced the concept in their 1998 Harvard Business Review article (Titled:Welcome to the Enterprise Economy). They said that "customer experiences would drive business value and propagate financial success" and I must say; they hit the nail right on the head. It is said that forecasts are generally never accurate...guess that rule got thrown out the window this time. You would've already started getting an idea of what CEM is all about...let's have a look if you were right~
What CEM basically does is cater to the emotional aspect of product purchase. That is; what customers are not getting physically in the form of rewards, discounts & stuff like that, you are being compensated for emotionally in the form of an exceptional user experience (& the sort). This view has been clearly illustrated in the book "The DNA of Customer Experience" written by Colin Shaw. For those who still need convincing, here is a live example...Apple Inc; each time Steve Jobs makes a new product announcement, the sales figures go off the charts (ex: i-Phone, i-Pad). Most people would think it's because Apple's customers are passionate about the company, but in actual reality they are passionate about the experience that it offers. This is one of the main reasons why even after pricing their products at outrageous rates, there are still people to buy them. Apple realised the importance of CEM before most companies, and one must give them credit for that.
I believe you are now ready to comprehend this wonderful saying....“A company with a price advantage can be undercut, a company with a performance advantage can be outflanked, but a company with an emotional difference can potentially demand a price premium forever”...don't you think so now???