5questions about Strategic Services Marketing

E S S A Y

Managing the

Total Customer Experience

Offering products or services

alone is no longer enough:

Organizations must provide

their customers with satisfactory

experiences. Competing on this

dimension means orchestrating

all the "clues" that people

detect in the buying process.

Leonard L Berry, Lewis P. Carbone

and Stephan H. Haeckel

In recent years, managers have become increasingly aware of the need to create value for their customers in the form of experiences. Unfortunately, they have often proceeded as if managing experiences simply meant providing entertainment or being engagingly creative. The i.ssue is far more complex than that.' Restaurants that put photographs of movie stars on their walls and retailers that hang motorcycles from their ceilings — to give just two examples — will ultimately be disap- pointed in customers' responses if they fail to make such objects part of a well-conceived, comprehensive strategy of managing the customer's experience.

To carry out such a strategy, companies must gain an understanding of the customer's journey — from the expectations they have before the experience occurs to the assessments they are likely to make when

it's over. Using that knowledge, companies can orchestrate an integrated series of "clues" that collectively meet or exceed people's emotional needs and expectations. The internalized meaning and value the clues take on can create a deep-seated preference for a particular experience — and thus for one company's product or service over another's.

An organization's first step toward managing the total customer experi- ence is recognizing the clues it is sending to customers. Companies that sense trouble — in the form of failing customer-satisfaction scores or new competitive threats —would do well to consider undertaking the focused, comprehensive management of all the clues that give off signals to people. Fortunately, specific tools are available to help organizations with this process. And, as we'll show, some companies are using the tools of customer-experience management to create a competitive advantage that is difificult to match.

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Recognizing the Clues When we talk about clues, we don't mean the snippets of infor- mation or bits of physical evidence that only crime-novel detec- tives can find. In fact, the clues that make up a customer experience are everywhere, and they're easily discerned. Anything that can be perceived or sensed — or recognized by its absence — is an experience clue. Thus the product or service for sale gives off one set of clues, the physical setting offers more clues, and the employees — through their gestures, comments, dress and tones of voice — still more clues. Each clue carries a message, suggesting something to the customer. The composite of all the clues makes up the cus- tomer's total experience.

The clues that make up a customer experience fit into

two categories. The first con- cerns the actual functioning of

the good or service. Clues relating to functionality are inter- preted primarily by the logical circuitry of the brain. Did the plumber fix the leak? Did the rental car start when I turned the key? A car that starts when it is supposed to provides a clue that other aspects of functionality may also be in good working order, such as the heater or the global positioning system.

The second category concerns the emotions and includes the smells, sounds, sights, tastes and textures of the good or service, as well as the environment in which it is offered. The fee! of leather upholstery, the sound and smell of a steak on the grill, the tone of voice of the person answering the customer-service line are all clues that envelop the functionality of a product or service. This category of clues includes two types: "mechanics" (clues emitted by things) and "humanics" (clues emitted by people).^ Such clues tend to address emotions rather tban rea- son, as people consider whether to buy or move on.

It's no doubt clear that providing the right clues about func- tionality is essential — if a product is perceived as shoddy, peo- ple won't buy it, period. Providing a car that starts upon ignition, fixing the faucet so that it always shuts off when the handle is turned — these are table stakes that companies must have to enter the game. What's less clear, perhaps, is that the emotional clues, the mechanics and humanics, are just as important to the customer experience and work synergistically with functional clues. Customer value can't be reduced to func- tionality versus price. Instead, it is composed of both the func- tional and the emotional benefits customers receive minus the financial and the nonfinancial burdens they bear.-̂

The importance of sensory experience helps explain how

A company's first step toward managing the total customer experience is recognizing the clues it is sending to customers.

nonmonetary burdens (a disorganized store, long lines at the checkout) can outweigh the customer's consideration of price. Indeed, if the burden component of value were driven strictly by price, no one would ever pay to fly first-class and Wal-Mart would have vanquished Target by now. Companies that have lit- tle or no sensitivity to the customer's experience and focus only on reducing their costs to support lower prices may actually decrease the value of their offerings.

To fully leverage experience as part ofa customer-value propo- sition, organizations must manage the emotional compo- nent of experiences with the same rigor they bring to the management of product and service functionality. The way to begin that effort is by observ- ing customers and talking to

them about their experiences in

order to gain a deeper under- standing of the clues they're processing during their encounters with the company.

Building a New Competency The company's goal, of course, is to get to the point where it is providing just the right set of clues to its customers. But a com- petency in customer-experience management can't be built overnight. Fortunately, specific tools exist tbat can, when used systematically, help organizations develop this necessary skill.

The first tool is an "experience audit" in which companies get close to their customers in a literal sense. Using stationary video cameras as well as pinhole cameras hidden in a researcher's wristwatch or clothing, organizations can document a great body of actual customer experiences. (Although these activities are legal, companies may wish to post signs to inform customers that cameras are in use.) Researchers can subsequently analyze hours of tape, frame by frame, watching facial expressions, ges- tures and body language in order to understand customers' emotional states in various situations. For example, it is easy to monitor the growing anxiety of a potential car buyer after she enters a dealership. People in that situation behave almost like prey in the wild: The vehicles are the bait, the surrounding offices are like hunting stands, and the salesperson converges, in the customer's eyes, almost like a hunter. It's no wonder that so many people dread the car-buying experience.

The use of videotape alone isn't enough to conduct an experi- ence audit; companies should also conduct in-depth interviews with customers and employees to find out how people on both sides ofa transaction feel about different aspects of an experience

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and the emotional associations that go along with it. Consider what such interviews revealed about the way customers and salespeople perceived the experience of shopping for computers. Potential buyers often felt they were being talked down to by know-it-all clerks; they much preferred being assisted in a hands-on, trial-and-error manner in which they could learn about the equipment through direct experience to find what they really needed and wanted. The salespeople, on the other hand, explained that they felt enormous pressure to know every- thing about everything — in other words, to develop a knowledge of the products that would lead them, quite natu- rally if unintentionally, to con- descend to customers.

Once the audit has been completed, the team in charge

of overhauling the customer experience should use the

results to develop an "experience motif" that refiects the orga- nization's core values and branding strategy. Captured in a few words, the motif then serves as the North Star for all experience- management efforts. In other words, it acts as the unifying ele- ment for every clue in the newly designed customer experience. One financial institution, for example, wanted its customers to feel "recognized, reassured and engaged"; those terms became shorthand for the motif. Only mechanics and humanics that reinforced these watchwords were accepted as part of the newly designed experience.

The experience motif is the touchstone from which clues can be developed and detined. Mechanics can be represented graph- ically in drawings, and humanics should be described in narra- tives pegged to employee roles. For example, a bank's motif might be "create a feeling of psychological comfort" for its cus- tomers. A drawing of the bank's entry that reflected the motif would depict a message welcoming customers rather than a notice warning would-be robbers of video surveillance. And the employee narrative would indicate how tellers should greet cus- tomers to make them comfortable before they conduct transac- tions. When done thoroughly and thoughtfully, the drawings and narratives can become a critical part of an organization's road map for communicating, implementing and monitoring a customer-experience management system.

Organizations that conduct a thorough audit and then imple- ment the necessary changes put themselves in a superior position. Competitors can, of course, attempt to catch up by putting in experience-management systems of their own. And while com- petitors can reap some initial benefits by doing so, they will never

Companies must manage the emotional component of experiences with the same rigor they bring to the management of product and service functionality.

be able to replicate another system in its entirety. Meanwhile, com- panies that have gotten a head start by implementing complete systems will continue to find ways to cement their bonds with cus- tomers by improving their overall experiences.

To see how such systems work in practice, let's follow two exam- ples in which the customer experience improved dramatically.

Emergency Room Connections One might assmnc th.it emotional connections would come

naturally in any health-care setting. But past experience of the University Hospital emer- gency department in Augusta, Georgia, illustrates how the emotional needs of customers are often systematically over- looked — even when the cus-

lomers are called patients.

In 1997, University Hospital was concerned about competition from other health-care providers as well AS slowly declining customer-satisfaction scores. As a result, it went through an experience audit and implemented customer-experience management in its emergency facility. The audit revealed that the dues coming from the facility showed minimal recognition of the emotional needs of patients, and even less for the needs of their families. The hospital subsequently developed a motif and clues ihat focused on creating a reassuring, empathetic connection between the ER facility on one hand and patients and their family and friends on the other.

Eventually, the task force in charge of this project — nurses, doctors and administrative staff — created more than 100 clues, some of which were visible well before any prospective patient began his or her experience at the site. The hospital added more signs farther away in all directions; signs reading "Hospital 3 miles" reassured people, especially newcomers to the area, who might one day need to obtain emergency help quickly. The hospital also created entrances that were easy to use. Before the audit, a giant "Emergency" sign observable from the street directed traffic to an easily found entrance — one that turned out to be for ambulances only. People arriving in cars were perpetually confused about which entrance to use and where to park. Repositioned and reworded signage addressed that problem. Similarly, the site made internal signs easier to follow. Visitors no longer had to decipher the mean- ing of "Triage Station"; the sign was changed to "Care Point 1 - - Reception." And Care Point 3, the location for pediatric emergencies, could be found in the redesigned setting by fol- lowing a popsicle icon.

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The hospital also changed clues on the humanics side. In the failed setup, a stationary security guard sat behind an imposing desk; in the new design, the guard became a greeter and a rov- ing ambassador, helping people navigate the registration process. The facility also added a new position that essentially added an air-traffic controller to the ER. The person in this role keeps track of patients and their progress and updates family members in the waiting room, who are other^vise cut off from what's going on in the examination rooms.

Once the task force began looking at patients' experience through the lens of an experi- ence-management system, "a huge revelation and transfor- mation took place," according to George Ann Phillips, director of emergency services at the

hospital. No single new clue was

responsible for the change. The benefits came in the elimination of negatives, followed by the cumulative design and development of emotionally positive clues, ail of which were related to the motif. Within months of the implementation of the experience-management initiatives, the facility saw a 13% improvement in the rating of its overall qual- ity of care and a decline by one-third in customer complaints.

One example of the transformation can be seen in the way the morgue experience was improved. Sounds like a dismal task and maybe an impossible one: What can it mean to design the morgue experience from a customer perspective? But con- sider that normally someone simply wheeled n gurney with the body on it into a stark, brightly lit "storage" room where the family was left to stand briefly with the deceased. Some mem- bers of the project team decided on their own to devote part of a weekend to changing things. In a day's time, the group put up curtains to create privacy, disconnected harsh fluorescent light- ing, brought in incandescent lamps, furnished the area with chairs, and even put up a wallpaper border. Visitors to the morgue may now have an experience that makes it a little eas- ier to deal with their loss and enhances how they remember their time at the hospital.

Trying Harder — and Succeeding In [he early 1990s, Avis Rent A Ĉ ar had declining customer- service scores. In 1994, Avis applied experience-management techniques at its Newark International Airport location, one of its largest operations. The experience design was guided by a core team of eight that set broad policy and a project team in Newark that handled day-to-day implementation.

Organizations that simply tweak design elements or focus on the customer experience in isolated pockets of their business will he disappointed in the results.

An experience audit was conducted, complete with video- tape and in depth interviews, to evaluate customers' needs and desires at specific points in the car-renting experience. Insights from the audit led to the development of an experience motif based on relieving customer stress and anxiety. The motif anchored and aligned all the experience clues subsequently developed by the team.

For example, the research revealed that customers were usually anxious when they returned cars and concerned aboul making

their flights. To reduce that anxiety. Avis installed monitors showing flight departure times and gates and placed them at the dotir of the return facility where customers would be likely to see them. The research also indicated that arriving

passengers were anxious about communicating with their

offices or conducting business before leaving in their rental cars. Avis created a communication center for people who needed to make calls, send faxes or plug in their laptops.

Another set of new clues centered on the location's security guards. While continuing to maintain security, they began to double as customer-courtesy representatives, and their uni- forms and workstations reflected the change. In their new roles, they checked out cars for people who were part of Avis' growing frequent-renter express program. Customers in the program could avoid going inside to deal with counter personnel, and the outside reps received coaching on actions and dialogue that would support the experience motif.

Following the implementation of the new experience design, the Avis location at Newark Airport won the J.D. Power award for customer satisfaction the next year. Within 18 months, the company's management rolled out the experience design to other key locations that accounted for more than 65% of Avis' business. By 1999, Avis bad moved from near the bottom to twelfth in ihe Brand Keys customer-loyalty recognition survey of more than 140 national brands in 26 industries. In 2000 and 2001j Avis ranked number one in the same survey.

Competing With Experiences Customers always bave an experience — good, bad or indiffer- ent — whenever they purchase a product or service from a company. The key is how effectively the company manages the experience. Organizations that simply tweak design elements or focus on the customer experience in isolated pockets of their business — hy providing a quick hit of entertainnioni. for

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example — will be disappointed in the results.

Companies compete best when they combine functional and emotional benefits In their offerings. Emotional bonds between companies and customers are difOcult for competitors to sever. To compete successfully in this territory, a growing number of organizations are systematically applying the principles and tools of customer-experience management to strengthen cus- tomer loyalty. Unlike many product or service enhancements, the holistic nature of these experiential designs makes them very difficult for competitors to copy.

ACKNOWLEDGMENTS

The authors acknowledge the contribution of Suzie Goan, marketing director ol Experience Engineering.

Leonard L. Berry is the M.B. Zaie Chair of Retailing and Marketing Leadership at Texas A&M University in College Station. Texas. Lewis P. Carbone is president and chief experience officer of Experience Engir^eering in Minneapolis. Stephan H. Haeckel is director of strategic studies at the IBM Advanced Business tnstitute in Palisades. New York. Contact them at [email protected], Icart3one@expeng,com and haeckel@us,ibm,com.

REFERENCES

1. Readers interested in the application of axiology (theory of value) to consumer experiences will find a comprehensive discussion by M. Holbrook, "The Nature of Customer Value," in R. Rust and R. Oliver, eds., "Sen/ice Quality: New Directions in Theory and Practice"

(Thousand Oaks, Catifomia: Sage, 1994). J. Deighton describes customers as theatergoers and offers an original approach to turning performances into experiences in T h e Consumption of Periormance," Journal of Consumer Research 19 (December 1992): 362-372.

Also of interest are R. Chase and S. Dasu, "Want To Perfect Your Company's Service? Use Behavioral Science." Harvard Business Review (June 2001): 78-84. B.J. Pine and J. Gilmore. 'The Experience Economy: Work Is Theater and Every Business a Stage" (Boston: Harvard Business School Press, 1999); B. Schmitt, "Experiential Marketing: How To Get Customers To Sense, Feel, Think, Act and Relate to Your Company and Brands" (New York: Free Press. 1999): S. Haeckel, "Adaptive Enterprise: Creating and Leading Sense-and-Respond Organizations" (Boston: Harvard Business School Press, 1999); L.L. Berry, "Discovering the Soul of Service" (New York: Free Press, 1999); and D. Travis, "Emotional Branding" (Roseville, Calitornia: Prima Venture, 2000).

In "The Emotional Brain" (New York: Simon S Schuster, 1996). neurobi- ologist Joseph Ledoux provides experimental evidence that humans have two neurologically different categories of thought; rational and emo- tional. For a synthesis of research in environmental psychophysioiogy, see H.R. Rubin and A.J. Owens, "Status Report; An Investigation To Determine Whether the Built Environment Affects Patients' Medical Outcomes" (Lafayette. California: The Center for Health Design, 1996),

2. L. Carbone and S. Haeckel, "Engineering Customer Experiences." Marketing Management 3 (winter 1994); 8-19,

3. Recent neuroscience-based research by G. Zaitman and others underscores the emotional side of value creation. For a summary of some of this research, see G. Zaitman and K. Braun, "Mind of the Market" (Boston: Harvard Business School Press, 1996). Also see D.B. Wolfe, "What Your Customers Can't Say," American Demographics (February 1988); 24-29. As Zaitman stated in 1997 at Procter & Gamble's Future Forces Conference in Cincinnati, Ohio, "Consumer preference and motivation are far less influenced by the functional attributes of products and services than the subconscious sensory and emotional elements derived by the total experience,"

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