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Introduction to CX

by Marcos González de La-Hoz 

All companies aim to differentiate themselves from their competitors through competitive advantage. They are looking for the grail by linking their purpose to their competitive advantage and making it known.

Traditionally, companies have sought to compete based on the four P’s of marketing: Promotion, Price, Product and Place (distribution). This paradigm is still valid today, but as markets evolve, the products and services offered are becoming increasingly similar or undifferentiated. This phenomenon is known as “commodity products or services” and occurs when the product itself becomes identical to the product offered by competitors and is indistinguishable for the vast majority of potential customers.

The commoditization of products and services leads companies to try to differentiate themselves through their financial structure and other elements such as price, advertising (discounts, payment methods, etc.), which inevitably leads to earning less and spending more in order to survive, thus setting in motion a vicious circle that erodes the profit and loss account and jeopardizes the company’s survival in the market.

Welcome to the experience economy as a competitive advantage

The global economy has reached a new evolutionary cycle in the development of economic value, where the new competitive arena is no longer that of services, but that of experiences.

Just as products and services emerge from an iterative process of research, development and execution, experiences emerge from a process of exploration, definition and assembly for delivery to the customer.

While not all experiences are the same, nor are they perceived in the same way, all of our customers have experiences whenever they interact with the company, whether they are under the company’s control or not – which is why such management is so important.

Conclusions:

We don’t remember the last time we did business with the company – the last time we took money out of the till – but we remember what happened on that occasion when there were so many emotions involved – the last time we lost our credit card. And when we have to make purchasing decisions or recommend one product or another to a friend or family member, we will do so based on the memory and the emotional connection we made with the company.

This consideration should lead us to think about two priority initiatives:

First, what needs to be done to identify the moments when we need to be particularly attentive and not fail (moment of truth) so that the experience we provide throughout the customer’s life cycle is remembered as a positive one.

These key moments (claims, claims settlement, loss or theft of cards, etc.) require mechanisms and processes to ensure that the experience provided by our company in these moments is truly differentiated. This means not only defining the experience to be delivered, but also monitoring and checking that it is delivered correctly

Secondly, how can we ensure that the customer experiences positive emotions by exceeding their expectations in the other transactional moments of the customer life cycle where they have normal experiences (accessing the point of sale, being invited to a business meeting, using the product, etc.)?

To this end, it is important to realize that not everyone experiences the same reality in the same way. Therefore, in order to take actions that truly exceed our customers’ expectations, we need to segment them into groups, defining behaviors and interests for each of the defined groups (behavioral archetypes, called buyer personas in digital marketing terminology).

It is about moving from the concept of “I know the customer” (Relationship Marketing or CRM) to the concept of “I understand the customer” (Experiential Marketing).

In summary, experiential marketing focuses on recognizing the differences between our customers by offering them memorable experiences with our brand, product or service. With the aim that they recommend us to others and become fans (the difference between a fan and a customer is that the former is always forgiving of our mistakes) and, therefore, advocates of our brand, product and service.

Finally, the most important thing of all is how we can ensure that all of this is sustainable over time and that we don’t end up doing what everyone else is doing just because we want to surprise. That’s why we need to work on “experience design” by regularly observing the behavior of our competitors on the one hand and best practices in other sectors that are not directly related to our business but can influence our customers’ expectations on the other. Only in this way can we achieve growth through our customers and ensure that this growth is maintained over time.

Introduction to the emotions of the individual

Only when emotions arise do we feel, and therefore we are able to build memories.

When we make decisions, such as which company to recommend, which product to buy or which company to stop being a customer of, we always decide based on a previous experience, a memory and an emotional connection we had with the company. This decision-making process has been very well studied and defined by Antonio Damásio (*).

Antonio Damásio is one of the most important neuroscientists today. He is a professor at the University of Southern California, where he conducts his research, and was awarded the Prince of Asturias Prize for Technical and Scientific Research in 2005. He is one of the leading authors in the field of neuromarketing and his research attempts to explain how emotions influence decision-making and thought processes. He has developed the theory of somatic markers, which attempts to explain the mechanism by which emotional processes control and influence behavior and, in particular, decision-making processes. And although a decade and a half has passed since its publication, his theory is still fully valid.

Damasio thus explains that we are essentially creators of solutions for our lives, sometimes in a semi-automatic conscious way, sometimes in an unconscious or subconscious way.

In our learning process, he identifies two somatic states that we associate with certain types of stimuli. Due to this effect, our organism accumulates and registers several associations of the “situation/somatic state” type, so that when faced with new experiences, we search for similar previous situations to draw on.

“Emotional processes control behavior, especially decision making” – Antonio Damasio

In other words: If we are confronted with a new experience and have previously had similar experiences with negative results, the “somatic marker” will reject it. The same happens if we have previously had similar positive or successful experiences: The somatic marker will encourage the decision, it will reinforce it and will naturally want to share it with loved ones.

In short, the customer collects a series of memories over the course of his life in continuous learning processes (customer life cycle with the company) and thus increases his level of knowledge. This results in the intangible and personal nature of experiences that motivate reactions and behaviors that are unique to each subject.

Introduction to Customer Emotion Management

Bernd H. Schimitt, one of the fathers of customer experience management and father of the term “experiential marketing”, states that “today’s consumers want products, content and interactions that appeal to their senses and stimulate their minds”.

Therefore, we should think in terms of “holistic experiences” rather than specific products. So we don’t think of a car but of driving, we don’t think of a drill but of hanging pictures or decorating, we don’t think of beauty products but of being attractive and gorgeous and appealing, and on the basis of such a “holistic experience” that synthesizes different variables (implicit and explicit), we achieve the satisfaction that has created our expectations.

A holistic experience is a sequence that combines two or more elements: Sensations, feelings, reason and interaction. The combination of several types of experiences results in a superior experience that creates a higher level of memory.

The goal of the customer experience would therefore be to achieve a holistic experience that combines all possible elements of experience in relation to the brand, product and service, thus enabling the development of a positive, memorable and complete customer experience that leads to recommendation in the closest circle.

 

Sources:
Libro, Experiencia Cliente, Editorial LID-IE Publishing. Director and co-author: Marcos González de La-Hoz
MEYER, C. y SCHWAGER, A. (2007), “Undestanding Customer Experience”, Harvard Business Review. https://hbr.org/2007/02/understanding-customer-experience
PINE II, B Joseph y Gilmore, James H. (1998). Welcome to the experience economy, Harvard Business Review. https://hbr.org/1998/07/welcome-to-the-experience-economy
BRAIDOT, N. (2013), Neuromarketing, Editorial Gestión 2000