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  • Price matters in Customer Eeperiences

  • 19/09/2016

  • Mohamed Latib, Ph.D 

Price matters in Customer Eeperiences

price-matters-in-customer-reperiences

There is a chorus of voices across the business landscape with a resonant message: stage positive experiences for your customers and business performance will improve! Customer experience practitioners argue that doing so will make it easier to acquire customers, reduced churn, improve revenues and profitability, and in general, create brand loyalty. This is compelling logic, often supported by data. Is this really always the case?

Human experience is a complex human phenomenon. It is defined as an event, a thing, a happening, an instance, an observation, encountering or undergoing something. So, the pervasive logic is to design or stage effective and positive experiences for customers. The method to do this varies widely from industry to industry and company to company. Underlying all these variations are some common threads- these include identifying critical customer touch points through journey mapping; incorporating design thinking in multiple organizational processes, such as constructing customer feedback solutions through structured survey methodologies or unstructured listening posts in social media channels. Insights from the latter initiatives feed into a closed-loop change management program. All of this seems perfectly reasonable, and indeed this has become common practice in the CX field.

DO CUSTOMERS SATISFICE AND SACRIFICE?

Human decision-making is also a complex phenomenon. It is often assumed that people make rational choices. These are based on ordered preferences created after a diligent search for information. Customers, as many argue, will shop the internet, visit brick and mortar sites (showrooming), engage their friends and relatives through social media, and then make decisions to purchase. Once purchased, companies chase these customers to find out if they are satisfied with the experience through their journeys and transactions. But are customers really satisfied, or have they simply done that which many behavioral scientists (e.g. Schwartz et. Al. 2002; Simon 1955) have argued: accepted what they purchased because they do not possess perfect information for ideal-or perfect- choices? Therefore, they cannot make maximizing decisions. Rather, because they cannot possess perfect information they make “satisficing” decisions. This means that they will search for information up to the point where they feel their search is not delivering added value. At some point in their search they experience diminishing returns. So, do customers just “settle” for what is available to them, rather than continue their search for the perfect product or service (Gilmore and Pine, 2007). Are companies settling to offer products and services to meet this kind of customer threshold? Gilmore and Pine (2007) argue that customers that when customers cannot find what they really want they settle for what is available. This difference, they assert is sacrifice. Imagine that! Do you ever think of your customers as just settling for something offered? Do you ever consider that your customers in fact are compromising or sacrificing? If they do actually sacrifice, should we be measuring how much they sacrifice rather than how satisfied they are? And then focus on how the magnitude of sacrifice can be reduced. Do customer touch points offer the full picture?

A CASE IN POINT

Periscope IQ, a customer research organization, collected several million consumer surveys over three years for a large national retail organization and created customer touch point metrics. Indeed, the reported data showed that brand loyalty (likelihood to recommend – LTR) and overall satisfaction (SAT) were positively influenced by all the touchpoints in the customer journey.

However, when asked about their perceived value of the price paid for their purchases, customers reported a much greater affinity for price paid as compared to brand loyalty and overall satisfaction. Price had a much higher influence than other touch points in their journey.

Their study suggest that there are numerous implications when we understand the decision-making process and the attributions customer make to purchasing influencers. There is not a single company that can be everything to everyone, but they can all ask the following to filter the best mix of approaches to stage experiences and capture revenue growth, market share and increased profitability.

  • 1. Have all the relevant customer journey touch points in the CX system been identified?
  • 2. Is the promise of the brand being delivered, or are customers settling for what is offered?
  • 3. Are customers making sacrifices? How much? Are we losing loyalty because of it?
  • 4. Are customers being lost because price is more important than a positive set of experiences?
  • 5. Are new customers acquired only through staged experiences?
  • 6. What role does price have in customer acquisition and retention?
  • 7. Are customer journey touch points, their measurement and price value relationship tied to overall company strategies?
  • 8. Is the promise of the customer journey sufficient to win loyalty?

This blog post is not intended to prove anything, but rather to propose a deeper discussion about whether exemplary experiences across the touchpoints in customers journeys is sufficient. If indeed the propositions presented here do generate further consideration of what it means to fully capture customer experiences than the purpose of this blog will be achieved.

ABOUT THE AUTHOR

Mohamed Latib, Ph.D 

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The foundation of CX University started when Latib decided to channel his expertise directly to professionals like you. With his decades of experience leading and consulting in corporate leadership and innovation, He is spearheading the wave of CX training. Having been a leader in both the corporate and academic worlds, he cohesively fuses practical knowledge with solid pedagogy, so any student of his can understand core concepts and real-life applications.

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