Knowing where you lose… And win

Commonly used CRM tools provide important insights, but they don’t actually show where companies lose customers along the customer journey.

Jan F. Klein, 23.08.2016

As today’s customer journeys are increasingly complex, knowing where you lose and win customers becomes crucial for marketing budget allocation, says Jan F. Klein from the Aalto University School of Business.

Consumers no longer narrow down an initial evoked set of brands until they reach a final decision. Today’s customer journeys are much more complex and non-linear: customers experience a variety of different touchpoints with companies (e.g., advertising), retailers (e.g., stores), and other customers (e.g., customer reviews); based on these diverse experiences, they constantly add and subtract brands to their evoked set.

The experience along the customer journey determines whether a brand will be bought or dropped.”

“The experience along the customer journey determines whether a brand will be bought or dropped. The problem is that most companies focus on measuring customer interactions that are under their direct control, while the customer experience that results in losing a customer might very well be with another customer, the retailer, or a competitor. As a result, the company’s actual weak spots along the customer journey remain undetected”, says Klein.

To solve this problem, companies need to take the customer’s and not the company’s perspective. This requires a shift from currently used CRM tools to customer experience management (CXM) tools. CXM describes the tracking and management of customer experiences along the customer journey. Going beyond simply recording customer interactions with the company, CXM tools measure the customer’s encounter and perception of their diverse experiences along the customer journey.

Acknowledge the Dynamics of the Customer Journey

Four different stages along the customer journey are most relevant for the customer experience: consideration, evaluation, purchase, and post-purchase. Insights into the dynamics of customer experience across these different stages can help companies avoid losing money.

The separation of the pre- and post-purchase experience not only wastes marketing budgets, but can also impede future purchases.”

“The worst case scenario is to heavily invest in advertising to win at the consideration stage, but then to lose at the evaluation or purchase stage due to bad consumer reviews or an unfavorable appearance at the retailer’s. Increasing advertising investments to boost consideration at the early stages, while losing at the later stages, will simply burn money.”

Tracking behavior in the post-purchase stage can also provide valuable insights into how customers engage and bond with other customers via social media, communities, or offline interactions.

“While many companies provide touchpoints targeted at engaging the customer in the post-purchase stage, recent research shows that this stage is usually not well integrated in the overall customer experience. The separation of the pre- and post-purchase experience not only wastes marketing budgets, but can also impede future purchases.”

Strategic Priority: Journey Experiences, Not Single Interactions

In order to win customers along the journey, the focus has to move away from single touchpoints. Instead, it is essential to create a consistent overall experience along the customer journey. This requires staging the customer experience by aligning existing and new touchpoints with respect to format, content and process.

After all, customers do not buy products, they buy experiences.”

“The customer experience is like a mosaic. Every little piece adds to the big picture. Depending on how well the pieces are aligned, the picture of the brand will be more or less clear. Providing a seamless experience can make the difference between making a sale or losing the customer to competitors. The alignment of experiences across the journey stages provides a very powerful – yet largely untapped – tool to win customers along the journey.”

Apple and Nike provide great examples of companies that have mastered the alignment of their customer experience within stages, across stages, and also consistently over time. This is rewarded by having loyal customers who are willing to pay a premium for the brand.

“After all, customers do not buy products, they buy experiences. Knowing where you lose and win along the customer journey enables effective allocation of marketing budgets and can provide a competitive advantage.”

Dr. Jan F. Klein is Postdoctoral Researcher at the Aalto University School of Business. He has conducted several research and consultancy projects on customer experience management and customer journey tracking in Europe, Asia, and the US.

Jan F. Klein’s previous Aalto Leaders' Insight blog article: It’s Time to Manage the Journey Experience.

Currently reading: Aalto Leaders' Insight: Knowing where you lose… And win

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