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Date: 10/08/2010

Title: New Perspectives on Customer Experience

Teaser: The impact of customers experience on business interactions, motivation and behavior can help to gain a competitive advantage, when closely watched and acted upon continuously.

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New Perspectives on Customer Experience

The latest findings of psychologists on customer experience are worth looking at. Their impact on business interactions, motivation and behavior can help financial service providers to gain a competitive advantage, but this needs to be watched and acted upon continuously due to ongoing development. Synpulse expanded its services in this promising field.

Author: Vladimir Dimitroff

Customer experience (CX) has established itself as a widely practiced business discipline over the last decade. Today there is hardly a company without some formal structures, or at least initiatives, to address it. However, the initial interest and enthusiasm for action were driven by more direct commercial objectives, like retention or increased spend. Emerging methodologies and tools were trying to manage company processes, rather than the experience itself, and understanding CX was mostly from an insight into its rational and measurable aspects. This has brought efficiencies and performance improvements in many places, but has also puzzled many businesses with disappointing customer feedback and behaviors, despite measured progress. A major shift in the understanding of CX and attempts to improve it for mutual benefit has come from progress in psychology and behavioral science. Modern CX methodologies recognize that experience is highly perceptual and subjective in nature and that behaviors are largely driven by emotions. Now the best CX insight comes from understanding emotions. Some of the successful efforts involve experience design with an emotional component.

It is also increasingly recognized that customer experience is inseparable from that of employees and their emotional state and motivation regardless of their place in the end-to-end process. This trend requires that companies revisit their human capital strategies and practices, and introduce motivational measures for an engaged and customer-focused work- force.

All experiences do not «just happen» but are the result of organized effort, of planned business processes, and managed touchpoint events. This obliges practitioners to embrace the discipline of experience design, which increasingly borrows approaches from the Design Thinking toolkit to create prerequisites and induce positive behavior-driving emotions.

While much of this has been happening in the mass consumer space, there is solid evidence of benefits in B2B situations and in niche-segment B2C operations. Private Wealth Management is one of those narrower sectors. Its historic attention to customer experiences and relationships is nowadays taking new dimensions aligned with the described trends.

Importance of emotions for customer experience

Business thinking is intrinsically connected to measurement (of anything and everything) for the purpose of improvement. This was the case when CX started becoming a legitimate business discipline: understanding it was equated to measuring it in some way and managing it meant having standardized key performance indicators (KPI). Discovering that customer satisfaction (an older and still widely used metric) is a poor predictor of behaviors, thought leaders and operating practitioners looked at alternatives like the currently ubiquitous net promoter score (NPS). While it has its merits and can be useful in many ways, NPS provides a rather one-sided and unreliably biased perspective on the experience itself, and its impact on customer behaviors. Then there was the customer effort score (CES), reflecting a very tangible aspect of CX: most people prefer things to be easy, rather than difficult and this can be measured objectively (in most cases physically). Although it is an important tool, it only reflects the rational aspect of the experience. Psychologists, however, almost unanimously insist that our rational decision-making is the tip of an iceberg of subconscious and emotional drivers of our behaviors.

In translating that rather mechanical understanding of CX into business actions, most practitioners embraced tools like «journey mapping». It is indispensable in analyzing and designing customer experiences, but the limitations of a rational-only view have led many journey mapping methods and tools to become de-facto «process mapping» ones. Those tools are indeed useful, but they are too company-centric and detached from the real experiences of customers.

Scientists and practitioners are gaining new insights into the into the connections between stimuli, responses, and the resulting motivation for customer behaviors that can be beneficial or detrimental for the business.

All this is rapidly changing with the arrival of CX in the last three to four years of a growing community of behavioral psychologists, equipped with increasingly sophisticated analysis techniques. They are gaining new insights into the connections between stimuli (events and business actions that invoke emotions), responses (activated emotions), and the resulting motivation for customer behaviors that can be beneficial or detrimental for the business. One early successful example was the «Emotional Signature™» methodology and tool introduced by «Beyond Philosophy», the customer experience consultancy. Some of the adopters in real business have had eye-opening revelations where their planned efforts have undesired effects or how underestimated factors drive more value.

Emotional signature (ES) is a snapshot, a relatively static view of the emotional impacts on customer behaviors. Leading academics and practitioners are now seeking to establish models that reflect the «dynamic», constantly changing nature of experiences, emotions, and behavior drivers. One such approach is the «Customer Experience Vector™» (CXV) developed at «Teletech», a business process outsourcing company, which looks at the emotional state of every single customer, at any point in time (and step along a journey), as a trending vector with a direction and velocity, impacted by external modifiers and indicative of likelihood to behave in certain ways.

This emerging arsenal of means for a deeper understanding of CX is bringing new insights all the time, accelerated by the parallel trend of new technologies in the field: from recording customer interactions for analysis, to applying artificial intelligence (AI) to extract meaning from unstructured data (like the narrative in documents and communication exchanges). Synpulse possesses significant expertise in customer strategies and operations, including customer intelligence and CX. The firm partners with both thought leaders like the above-mentioned, and innovative technology providers that facilitate the deployment of their models.

An evident current trend is to seek insights into the emotional dimension of employee behavior and harness the uncovered dependencies for engagement and motivation, leading to customer-centric work practices.

Employees also have experiences and emotions

Back in the days when «customer loyalty» was the prevailing mantra and business goal, businesses made another «surprising» discovery: you cannot have happy customers with unhappy employees. Academics and thought leaders brought up a number of reasons for this circumstance. Methods were proposed and adopted to manage employee happiness. For years, this boiled down to standard employee satisfaction surveys and «motivational» measures like pay raises, bonuses, and perks. Those have some impact, but are far from delivering the desired engagement and motivation.

To understand what really drives desired employee behaviors, psychologists and business practitioners have started looking at the «employee experience» in the same way as CX is being assessed and managed. We now recognize that employees are human beings whose experiences are highly perceptual and whose decisions are largely driven by emotions.

An evident current trend is to seek insights into the emotional dimension of employee behavior and harness the uncovered dependencies for engagement and motivation, leading to customer-centric work practices. Understanding the intricate and complex relationships between employee and customer experiences can provide powerful mechanisms for maximizing ultimate customer happiness and driving desired behaviors. It is also both the business case and enabler for building a strong customer-centric «culture» inside and throughout the organization, an objective increasingly recognized as inseparable from the creation of shareholder value.

The use of the philosophy and techniques of Design Thinking in combination with the latest methodologies for emotional insight and influence opens fascinating opportunities for companies committed to a customer-centric strategy.

Design emotionally engaging experiences

The wider adoption of customer experience practices and deeper understanding of underlying mechanisms is fueling yet another major trend: «CX design». In a business context, experiences cannot be allowed to «just happen», they are methodically planned and engineered to produce beneficial results. While process design as a solidly scientific business discipline has been around for decades, it has always been very company-centric and driven by the need for efficiency, error reduction and cost optimization. Customers and their emotional experiences are rather peripheral in process design, if even in the picture at all. The more recent discipline  of «service design» has brought the customer more prominently into the focus of attention, albeit still with error avoidance and efficiency in mind. At best, service design recognizes CX and seeks to improve it, but mostly its rational, measurable aspects (like the described «effort score»). A significant contributor to CX trend shifts is the growing and influential «Design Thinking» (DT) movement. Design thinkers have their roots in the way designers approach new creations, but have taken this mindset well beyond visual and product design – into the design of business processes, organizational structures, and as a systematic method for managing innovation. The Design Thinking process starts with an essential step of «empathy», recognizing that whatever is being designed will ultimately affect human individuals. It is often called «human- centric  design»  and  has  permeated  established  areas  like «user experience» (UX) and «user interface» (UI) design in technology development.

DT is currently CX (and, to an extent, service design) – resulting in the «hybrid» activity and competence of emotion-aware CX design. The use of the philosophy and techniques of Design Thinking in combination with the latest methodologies for emotional insight and influence opens fascinating opportunities for companies committed to a customer-centric strategy. It is still a nascent, emerging area, but we see great potential and expect important developments. Synpulse is also investing into expanding the firm’s expertise in this direction.

Benefits for private bankers and wealth managers

Customer experiences and relationships are the proverbial «bread and butter» of private wealth managers. For centuries, the focus on wealthy clients has required extreme attention to their needs and an adequate response to their wishes. The wealth at stake has always justified exceptional experiences and investment in the skills and supporting infrastructure to provide them. Yet, not everything is smooth and carefree in this area: changing times are introducing client behavior trends that demand attention and strategic adjustment.

Make your CX strategy emotions-aware, align it with your digital strategy, and engage employees in a Design Thinking effort to create value-driving experiences and client relationships.

Cross-generational loyalty and commitment are now replaced by growing promiscuity, with a growing number of clients using multiple providers to look after their wealth. This is accelerated by digital trends, which bring ease of interaction (and of switching providers), as well as unparalleled access to information – giving the client reasons to question advice and investment decisions unlike historic reliance on the provider’s competence and best intentions, (often) resulting in blind trust. While private banks and wealth management firms are actively digitizing their processes and services, they are increasingly becoming aware that the new interaction modes and client expectations need to be addressed through new approaches in CX design and management.

In our view, private wealth organizations now need to re-examine their priorities in order to:

  • develop a CX strategy and start managing CX in a structured and planned manner
  • align CX strategy closely with digital strategies and activities
  • adopt an emotions-aware perspective on CX and seek relevant insights and change methods
  • embrace Design Thinking in CX and make it central in product, process and service design
  • look closely into the employee experience and launch initiatives towards emotions-aware motivation, engagement, and client-centric culture

Experiences, a highly perceptual part of business interactions, are undeniably influencing attitudes, motivations, and behaviors of customers, employees, and other value chain stakeholders (like suppliers or shareholders). Today there are methodologies and respective tools based on understanding emotions, for a more holistic and effective creation and management of those experiences. The rapid advancement of technology and the ubiquitous digitalization of financial services pose new challenges, but also open up opportunities. Companies with a strong customer orientation and an up-to- date understanding of behavioral mechanisms will have a distinct competitive advantage in the unending contest for the clients’ trust and value co-creation.

Contact

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Marouane Bakhtar

United Kingdom

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