University of Economics, Prague
Master’s Thesis
2020 Bc. Mirjam Čibukčić
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University of Economics, Prague
Faculty of Business Administration
Masters field: Management
Title of the Master’s Thesis:
Customer Experience Design in the Software Industry - Specific Case of the
Company X
Author: Bc. Mirjam Čibukčić
Supervisor: Ing. Tomáš Ryška, Ph.D.
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Declaration of Authenticity
I hereby declare that the master’s thesis presented herein is my own work, or fully and specifically acknowledged wherever adapted from other sources. This
work has not been published or submitted elsewhere for the requirement of a degree program.
Prague, 26.08.2020 Signature: Bc. Mirjam Čibuk
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Title of the Master’s Thesis:
Customer Experience Design in the Software Industry - Specific Case of the Company X
Abstract:
This thesis is based on the idea of customer experience in the software industry. Customer experience is becoming one of the most famous focuses of the companies now days. The first part of the research will be dedicated to the theoretical review on the following topics: history and definition of CX, Emotional and psychological side of CX, technological evolution of CX and big data; CRM, CEM , CVM
definitions and comparisons, journey mapping and NPS. Second part of the work will be dedicated to the practical representation of the topic and research. Methods used are qualitative method and single case study. Case will show the evaluation of the CX level in the company at the beginning of research; usage of Journey mapping and measuring NPS; and change of the culture from product centric to customer centric.
Keywords:
Customer Relationship Management (CRM), Customer Experience Management (CEM), Customer Experience , Journey Mapping, Net Promoter Score (NPS)
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TABLE OF CONTENTS
INTRODUCTION ... 3
THEORETICAL PART ... 5
History and definition of CX... 5
Schmitt’s Handbook on Brand and Experience management ... 8
Morgan and 6 rings ... 11
Technology and online Customer Experience ... 15
Difference between online and offline customer experience ... 17
Measuring, capturing, and processing of the data ... 21
Methodologies used to gather data ... 24
CEM, CRM and CVM ... 24
CX tools and analytics ... 26
Net Promoter Score ... 28
PRACTICAL PART ... 29
Methodology ... 29
Research questions ... 30
Qualitative research ... 31
CX assessment ... 31
The Pyramid ... 34
Journey mapping ... 41
Net Promoter Score ... 44
DISCUSSION ... 48
Limitations and results of the research ... 49
CONCLUSION ... 50
Suggestions for future research... 51
TABLE OF TABLES ... 52
TABLE OF FIGURES ... 52
REFERENCES ... 53
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INTRODUCTION
This work is created to introduce the concept of the customer experience and to observe the channels, methodologies and tools which are used to gather, analyze and deliver data of customers.
Through the history of presuming and understanding customer experience was definitely changing with the time and invention of new technologies. Sheth (1969), (Crosby et al. (1990), Han (1992) all elaborated on the bond between customer and seller during the purchasing period of service or product. This relationship between customers and sellers was present before the technologies that customers use today evolved.
Evaluation of the focus of customers went through transformation in the past 50 years from quality and price sensitivity focus to the customer experience focus today (Chauhan & Sarabhai, 2018).
In the past 10 years significant differences can be observed on the view of customers. Before the opportunity of seeing customers as the core of the business and changing business strategy to fulfill their needs was not observed. Customers were seen as receivers of information (Schmitt & Rogers, 2008, p.113).
Emotional and psychological side of the customer experience with the company was researched by Shmitt (2008) who introduced the theory of 5 modules. Framework consists of sense, feel, think, act and relate.
Furthermore, 6 rings framework of modern customer experience explains the interrelation of the external stakeholders, channels that customer use, personalization, CRM, collaborating tools and seamless experience (Morgan, 2017). Morgan introduces the idea that customer experience starts before the purchase of the product or service.
Differences between online and offline customer experience .Moreover evolution of the usage of the online channels for the purchases of products or services was introduced as well as the creation of the urge and transfer only to the e-commerce and m-commerce in 2020 due to the COVID-19 (Polanska, 2014; Koetsier, 2020; Rose, Hair & Clark, 2011; Bilgihan, Kandampully & Zhang, 2015).
Usage of big data and CRM for the CX purposes was introduced by Halmlund et al. (2020). They introduced the framework which consist of the CX data, CX analytics, CX insights, CX actions. It covers whole process from collection to usage of the knowledge gathered with big data.
Methodologies of Customer Relationship Management (CRM), Customer Experience Management (CEM) and Customer Value Management (CVM) were introduced and discussed as well as compared by Hwang & Seo (2016), Meyer & Schwager (2007), Verhoef & Lemon (2013), Jagwindar & Shivani (2016).
4 NPS as a tool to gather customer experience information about customers with whole the structure and design was presented by Brooks & Owen (2009). Another tool and methodology to analyses data presented in this work was journey mapping. (Micheaux et al. 2019; Lemon & Verhoef, 2016;
Batra, 2017)
First part of the work is dedicated to the detailed review of the literature available on the following topics:
(i) Customer experience definition and evolution (ii) Online and offline customer experience (iii) Usage of big data
(iv) Definition of methods and tools for the collecting and analyzing customer data (v) Concepts of 6 rings and loyalty
The second part of the work is dedicated to the research conducted on the case of Company X. It consists of the methodology used, representation of findings, discussion about the results, limitations of the research, proposal for the future and conclusion.
Purpose of the study
This study aims to understand factors influencing customer experience in the online world. Also to try to understand whih methods and tools are used to gather, analyse and deliver customer experience in the software company. The following research questions are suggested as adequat to fulfil above stated goals:
1. Which methodologies and tools should be used to gather and analyse online customer experience data in Company X?
2. How should CRM be created in order to utilize customer experience on the multi channels?
3. Which steps should be undertaken to turn company culture to be a customer centric?
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THEORETICAL PART
History and definition of CX
It is complicated to precise the moment when the customer experience was determined as a concept with its definition. From the moment when the trade of goods between people began, customer experience can be observed. Table 1 presents definitions for enhanced readability:
Table 1: Definitions of the Customer Experience
“The customer experience originates from a set of interactions between a customer and a
product, a company, or part of its organization, which provokes a reaction. This experience is strictly personal and implies the
customer’s involvement at different levels (rational, emotional, sensorial, physical, and
spiritual)”
Sources: Gentile, Spiller and Noci (2007)
‘’Customer experience (CX), defined as a customer’s response to interactions with an organization before, during, or after purchase or consumption, across multiple channels, and across time, has emerged as a sustainable source of competitive differentiation.’’
Sources:
Kranzbuhler et al. (2018) Lemon & Verhoef (2016) Voorhees et al. (2017)
“Customer Experience is the internal and subjective response customers have to any direct or indirect contact with a company.
Direct contact generally occurs in the course of purchase, use, and service and is usually initiated by the customer. Indirect contact most often involves unplanned encounters with representatives of a company’s products, service, or brands and takes the form of word-
Sources:
Meyer & Schwager (2007)
6 of-mouth recommendations or criticisms,
advertising, news reports, and so forth.’’
Source: Author
As Howard and Sheth (1696) mentioned that, ‘’in its brief history, the study of consumer behavior has evolved from an early emphasis on rational choice (microeconomics and classical decision theory) to a focus on apparently irrational buying needs (some motivation research) to the use of logical flow models of bounded rationality.’’ At these moments, scientists were not aware of the impact that customer experience will bring and the level to which it will be valued in future generations.
Looking through history, the customer experience is as old as the trade of goods, but you can’t say that it has ever been the same. When people started buying and selling goods, customer experience also existed, but it was different than it is today. The purchasing process included people physically going into a store to buy goods since there was no other way to do it. So, the sellers needed to find a way to make the time spent in the shop memorable, enjoyable, and worth coming back again.
They knew customers by their names, knew their family members, their pets, problems, and concerns, so every time they would come to the store, the shop owner (usually the only person working there) would ask them about their life, health, kids and some other thing they were confined to them about. Han (1992) found that the ‘’importance of the relationship was related to structural bonds, which in turn were related to commitment to a relationship. Satisfaction, (but not trust), was found to be related to social bonds, but social bonds were not related to commitment.’’
In that way, the customer experience was all about those conversations, emotional ties, and close relationships made with the store owner. Crosby et al. (1990) stated his opinion that ‘’relationship quality is an overall assessment of the strength of a relationship and the extent to which it meets the needs and expectations of the parties based on a history of successful or unsuccessful encounters or events.’’ Due to that, people kept coming to that store exclusively, mainly because of the relationship they had with the owner. As the years went by, and the production of goods expanded, selling places became bigger and better, offering consumers a bigger variety of products.
Supporting that, Mummalaneni and Wilson (1991), think that ‘’buyers and sellers who have a strong personal relationship are more satisfied and committed to maintaining the relationship than less socially bonded partners.’’
Still, nevertheless the larger assortment, relationship with the buyer was in the first place, great efforts were made to ensure that the communication between customer and seller was on a top- level, always putting the customer's needs and demands first.
7 In the coming years, technology became more advanced, first televisions, computers, and internet connection hit the market and became available to broader masses. In their article on looking back on the history of Ecommerce, e-commerce land stated that ‘’ecommerce became possible in 1991 when the Internet was opened to commercial use.’’
People were fascinated by the fact that, at present moment, they can do everything online (since other channels still did not exist) and forgot about that warm and friendly approach made by the store owner.
Different ways of customer experience emerged, and companies now needed to shift their efforts into creating better communication channels online. According to the statement that e-commerce land made in their article, ‘’in 2000 a great number of business companies in the United States and Western Europe represented their services in the World Wide Web.’’ Since all communication was transferred to the online channels, companies had trouble responding to the huge number of emails received, the customer experience wasn’t so good, and some things needed to be changed.
So then, companies needed to find a better, faster, and user-friendly way to present and sell the product, but also solve any possible issues that may occur. By technology becoming more advanced, ways of increasing customer experience became advanced, and are still becoming so.
E-commerce land also thinks that ‘’ecommerce has a great deal of advantages over "brick and mortar" stores and mail order catalogs. Consumers can easily search through a large database of products and services. They can see actual prices, build an order over several days and email it as a "wish list" hoping that someone will pay for their selected goods.’’ Customers can compare prices with a click of the mouse and buy the selected product at best prices.
From creating web sites that didn’t offer enough details about products and had no customer back up to creating apps that offer details about every product offered by the brand, details on an online purchase, delivery, and possible return, in case something goes wrong, making it more approachable and easier to use. E-commerce land stating that the ‘’history of ecommerce is unthinkable without Amazon and E-bay which were among the first Internet companies to allow electronic transactions. Thanks to their founders we now have a handsome ecommerce sector and enjoy the buying and selling advantages of the Internet.’’ is them giving tribute to pioneers of ecommerce, which we have to thank for today's state of online purchasing. Problem-solving came from writing emails, with possible no replies, to different ways of communicating via live chats with company employees and voice-guided assistance, it all came back to the first approach that was given by the store owner, just in a different format.
The timeline of the economic trends shows that in the 1970s and 1980s, the most prominent focus was given to the quality of products and services, following to the 1990s, where the focus shifted to price sensitivity. In the past 20 years with a steep increase of different offers of products and
8 services and the evolution of web 3.0 and web 4.0 focus is shifting on customer preferences which are a valuable part of the customer experience (Chauhan & Sarabhai, 2018).
As we have seen here, the customer experience wasn’t always under the spotlight, and not so much attention was given to it, but as the years went by, companies realized that it’s not only necessary to have a good product. Having a good product doesn’t mean that the customer experience will be fulfilled to its highest potential, due to the fact that there are so many factors involved in creating a positive outcome.
In the past 10 years, we witnessed the shift, starting from customer observation, as pure information receivers (cognitive approach) to a new one which puts focus on the emotional benefits. (Schmitt & Rogers, 2008).
Having so many factors included in creating a positive experience, companies shifted their efforts from working just on creating the perfect product to making the process of customers market research, decision making, buying the product, and possible future problem solving their focus.
Emotional and psychological CX
Through his work, Schmitt (2008) introduced a “framework for managing customer experience”, where he referred to the Peter Drucker’s definition that “There is only one valid definition of business purpose: to create a customer”, adding that the ultimate goal of marketing is to create the value for customers which will eventually turn them into a loyal customer to a brand and enrich their customer experience to the fullest potential. By his theory, the experimental marketing framework consists of 5 modules which are influencing the customer experience.
The first one is sense. It includes all five senses (sight, sound, taste, smell, and touch). Sensory feelings bring us closer to the product, which leads to creating a special connection with the product itself.
The second one is feel, which is connected to the inner emotions of a customer. This type is mostly connected with the duration of a product/service. People tend to get more emotional about livelong things in their life. If the product lasts you longer, forming an emotional bond with it is the only logical step that can follow.
The third one is think, which intends to provoke the mind of customers and to surprise them. This mode is mostly presented in the tech product campaigns. The fourth one is act, where it aims to connect and influence lifestyle, behavior, and interactions. It tends to provide an alternative for the act that the customer is used to.
The fourth one is relate, which is indeed the combination of sense, feel, and act. The main difference is that it takes into consideration stuff that are influencing from the outside environment,
9 not just customers' inner feelings. This mode tends to be created for people who are seeking self- improvement and need to be perceived positively in other people's eyes. Furthermore, Schmitt states that the hybrids of previously mentioned modes are creating the biggest satisfaction.
In today's world it has become very difficult to maintain loyal customers because the offer of different products and services is higher than ever and the channels on which they are available are easy to access. (Rubio & Jesus Yague, 2019).
This is the main reason why companies need to step up their business, and create optimal environments and better conditions for their customers. By creating those, they lift themselves on the competitor scale, leaving the other companies that are selling the same product behind.
In the current market state, oversaturated with same business models, keeping up with the competition is a must. Constantly improving management creates new and unique shopping experiences for customers, leading to firming the bond between the customer and the company.
As Cachero-Martínez & Vázquez-Casielles (2018) state that these diversities created urgency to work on the creation of unique and interesting moment of purchase since, through this step, customer engages with the brand and should decide to proceed with a purchase not just because of the intention of buying the product, but also the feeling of satisfaction he/she feels at that moment.
It is very difficult always coming up with new marketing and product selling ideas, since all possible strategies have been used multiple times, and the need for new ways of creating better customer experience arising every day.
The level of the brand-customer relationship can vary in three levels:
(i) Emotional attachment (Thomson et al., 2005)
(ii) Brand love (Carroll and Ahuvia 2006; Batra et al., 2012)
(iii) Engagement (Brodie et al., 2011; Hollebeek et al., 2014; Vivek et al., 2014) One of the biggest differences between these relationships is the origin of it.
‘’Product attachment is defined as the strength of the emotional bond experienced with a product.’’
(Schifferstein and Pelgrim 2004). By forming emotional attachment with the product, the consumer takes more precise care of it and generally invests more.
Brand love is, for example, more connected with the subjective feeling that customer has about a certain product or service/service giver. Batra et al. (2012) said that by his opinion, ‘’conceptual development of brand love arose from social psychology.’’ These brands offer products that customers love, and always choose over other products that have the same quality or purpose.
By having this kind of relationship with the customers, companies gain new potential consumers that will eventually be having the same relationship with the product/brand, as the ones who suggested it to them, due to the positive impact that they shared by word-of-mouth.
10 Contrary to it, Brodie et al. (2011) and Hollebeek et al. (2014) think that ‘’consumer engagement comes from the expanded domain of relationship marketing and the service-dominant logic perspective.’’ By loving and respecting the company of choice, consumers are buying more products, recommending that same products to their family and friends, and unintentionally promoting the brand and the product. This brings future customers to the company, without any further direct actions from the company to do so.
‘’Following the definitions and models tested in empirical study, the three concepts (attachment, love, and engagement) appear to be multidimensional and reflect different constructs. Most of them reflect affective, cognitive, and behavioral dimensions.’’ (Gomez-Suarez, 2018)
All three definitions are representing the relationship between the company/product and the consumer, presented on the different levels of affection, that can be shown or felt towards the brand. They vary in intensity, hence the divide. Customer may use and love the products as they are using it, but they still might not be recommending it to people in their community, but rising up the ladder of emotions and attachment related to the product, they will engage more in recommending the product, sharing their experience and satisfaction with the product in order to get more people into buying and using it, without having any financial compensation for it.
While talking about customer loyalty, we should mention thoughts of Mehta, Steinman and Murphy (2016), implying that the main goal of customer success is loyalty. Every company should strive to have loyal consumers, which will later be their best marketing channel and someone that they can rely on when times get dark. We see that in present times, where the situation that nobody has ever dealt with came, loyal customers were the only thing that could keep business alive, especially the small ones. In the book they wrote that the general consensus regarding kinds of loyalty is that there are two kinds of loyalty that can occur with consumers:
attitudinal/emotional and behavioral/intellectual loyalty.
Behavioral/intellectual loyalty is performed when the consumer has to use a certain brand of products, or shop in a specific store, because they don’t have any other product/place to shop at.
Their loyalty is not something that they will hold on to strongly, because that is not something that they love or respect that much. This kind of loyalty is temporary, since the majority of these consumers will change their shopping habits as soon as they get the opportunity, since the emotional connection with the brand/product is not existent.
On the other hand, attitudinal/emotional loyalty is harder to achieve and it requires a lot more work, because if a brand wants a consumer who is going to stay loyal to them even after they move across the city, or they have to put higher prices because everything else is getting more expensive, you have to work and build strong connections. Emotional loyalty is stronger and has many different layers of personal connection with the brand. With this being said, the relationship
11 between consumer and the company is stronger, with consumers sticking to the brand/product in all possible situations, choosing their brand or certain new products being placed to the market.
To conclude this chapter, it needs to be said once more that the consumer-brand relationship needs to be built and nourished very carefully, which will lead to permanent and long-term connection between these two. By ensuring this, the brand gains lifelong customers, eventually being the best marketing, the company could get, since nothing beats word-of-mouth, recommending it to others in their community, sharing their experience with the product/brand and being ‘’advocate’’ to the brand. Having true, loyal customer’s means that they will trust, purchase and test your new product, just based on the previous experience and consumer-brand relationship they are having.
6 rings of modern customer experience
Opposite to the previous definitions, Morgan (2017) suggests that customer experience does not only represent the moment of purchasing the product, tracking the moments while the customer uses it and intervening with the company. In fact, it starts much earlier in the product/service creating, during the processes of brainstorming about future products. She states that you need to listen to your potential customers and your current customers as well, so that you can create great customer experience and trigger new customers to join your brand.
Even though the phrase “less is more” is right in many life situations when it comes to customer experience, she states that the phrase “more is more” is definitely more suitable and business fruitful. What is meant by this is that there is an unlimited number of things you can do to make your customers feel happy and satisfied with you. This is definitely not a onetime thing, but you need to constantly improve yourself and flourish relationships with customers.
Morgan introduced the six rings of modern customer experience which represents all levels of influence on the CX (Fugure 1)
12 Figure 1: The Six Rings of the Modern Customer Experience
Source: Morgan (2017)
By her opinion, customer experience excellence is something that differentiates you as a brand from your competitors by pointing out that you should engage in the creation of one, as much as you can, and pay attention to the smallest possible detail. Furthermore, she states that every company needs to keep up with trends on the market and constantly be innovative, so they can come up with the new trends and match their customer experience with it. Being connected to the market and innovations, naturally, technologies evolving in these areas, lead to bringing online marketing to the first plan.
Ring 6: Your Stakeholders
The sixth ring is based on customers, prospects, partners, influencers, and the general public. It refers to people talking about the brand, people who are not necessarily customers, or brand users.
They are comparing that specific brand to competitors, talking about them on social networks, and creating the image of the brand in general. With them not being direct customers, it’s up to brands to make the fruitful ground for any potential future cooperation.
13 Ring 5: Channels
The fifth ring is based on social media and in-app messaging, refers to different channels of communication between customer and brand. In present times, the number of channels used by the customer to intervene with the brand is increasing. Even though customers tend to use more channels than before, using so many of them might feel confusing, frustrating, tiring, and repeating after themselves. Showing the willingness to help with connecting them directly to the needed point of communication will surely increase customer experience and the picture they have of you.
Fernández-Sabiote & Román (2015) state that customers are sometimes afraid of using online channels and that they tend to test them and to think more before doing the action through these online channels.
Ring 4: Personalization
The fourth ring is about creating personalized messages towards customers, which will follow them throughout the whole process of trying to establish communication and problem-solving.
Companies using the old and not updated versions of CRM, which makes cooperating and communicating between different departments even harder, aside from their willingness in the problem-solving process. Trying to use personalization as much as possible is not always done right, that’s why it fails most of the time.
Ring 3: CRM
The third ring presents CRM and seamless customer journey, with a result of matched customer profiles from different channels. The ultimate goal of CRM would be to reach OMNI (org. Latin- all or every) stage, which means engaging the data from all channels used by the customer in real- time. Many companies are still not able to gather all data for the precise time of the customer's usage. Having direct communication between departments is one of the main pillars of great customer service and being able to do it has the implication of running successful customer service.
In general, not every company is able to gather OMNI experience as it would like to but striving for it is an all-time priority.
Ring 2: A Collaboration tool
The second ring is working on creating collaborating technology for contact centers with other departments. The goal is to have good collaboration between teams and departments inside of the company with customer service. By doing this customer service will be able to give valuable answers to customers on the topics they are being contacted about.
14 Ring 1: The Seamless Experience
If you want (and this should definitely be the case) your customers to be the center of your strategy, you need to focus on their journey map with you. You should ask them about the main pain points and try to resolve them as fast as possible with great efficiency.
With all this being said, Figure 2 summarizes everything mentioned about Morgan’s 6 rings.
Starting from the communication request, company, or to be even more precise, sectors in charge of it, need to take it seriously, start problem-solving, and provide the best possible experience for the client.
‘’Increasingly complex and highly competitive nature and environment of today’s business world is creating a demand for well-established internal communication and is putting more pressure in the employees and their communication skills.’’ (Argenti 2009)
Channels of communication differ from company to company, depending on the size of it, but one thing is sure, the first person/sector that gets the request about problem-solving, in most cases, is not the person that is going to solve it.
Companies have to bear in mind that complicated and numerous channels of communication decrease customer satisfaction, due to stressful and frustrating feelings of going over and over about the same thing with more than a few people. It’s extremely important to organize them well and provide the best tools, to enhance the help. Morgan (2017) states that by providing quality and modern tools, the company increases employee productivity, but on the other hand, creates and maintains customer satisfaction. By creating a satisfied customer, you gain a loyal customer, who will recommend you to others. Tools that are being provided are not the only thing that will be responsible for customer satisfaction, we also need to add the ability to establish good communication between departments in charge of problem-solving. While working on a problem, it’s necessary to keep track of time and give a response in the shortest period possible.
15 Figure 2: The Essence of the 6 Rings
Source: Morgan (2017)
Online Customer Experience
The 21st century brought the development of web 4.0, which led to the increased usage of online channels and e-commerce in general. Polanska (2014) has an opinion that ‘’Web 4.0 will be based on a universal web personality of each user, where the information flow will be highly personalized.’’
Report for global e-commerce for 2019 by eMarketer (2019) shows that there is a prediction of a 141% increase in e-commerce in the period from 2016 to 2021. Top 5 markets for e-commerce are China, the US, UK, Japan, and South Korea respectively. This increasing trend is suggesting that
16 there is and for sure will be a high increase in the portion of a customer experience driven from the technologies and online usage of products and services.
According to an article that Koetsier (2020) wrote for Forbes, total online spending in May hit
$82.5 billion, up 77% year-over-year. He had an email conversation with Adobe’s Digital Insight Manager, Vivek Pandya, who mentioned that they ‘’usually don’t expect surges like this outside of the holiday season, also stating that last year's holiday season drove $142.5 billion dollars from November 1st to December 31st, and that was a 13% year-over-year increase.’’
Thanks to technological development, we are able to live our lives online, which really came in handy in times of COVID-19. Being able to get all needed information, purchase anything or make a reservation was never so simple and easy, just a click away. Comparing present times, with ones mentioned while discussing the history of customer experience, we are aware that a lot of things related to customer experience changed, so the logical term of events is to work on creating the best possible online experience. When it comes to the usage of technology with the correlation to the CX, we need to observe it through 2 main paths.
The first one is the purchases and usage of online channels and the second one is gathering data about customers and the analysis of this data.
Rose, Hair & Clark (2011) consider that ‘’online customer activities now encompass online shopping across a wide range of product categories, online services such as banking, travel and theatre bookings, access to news and information, as well as social networking for both business and leisure purposes.’’
The current global situation with COVID-19 is certainly influencing and raising this portion at the moment. Many businesses are now investing even more in the online experience and trying to innovate as much as possible to create a unique customer experience online. Customers needed to get used to online shopping because, due to lock down, a lot of selling points were closed, so in order to get something, they had to order it online. The process of online ordering probably was stressful to a lot of people, who had to do it the first time. So, in order to get and keep new customers, companies needed to step up their online selling, making it the simplest they possibly could, to make it accessible to different age groups. Still in his interview for Forbes, Vivek Pandya, Adobe’s Digital Insight Manager, says that ‘’one in four consumers say that they’ve had a negative experience shopping online, over the past three months, suggesting retailers have an opportunity to improve their site experiences.’’ Simplifying and bringing online purchasing to a bigger audience in 2020. rose the bar for online marketing and app development, since it is obvious that a lot of people will keep purchasing things from the comfort of their home.
17 Figure 3: Number of visitors on e-commerce websites
Source: Statista (2020)
Following the topic, according to Statista’s information (Figure 3), the number of visitors on the e-commerce websites reached almost 22 billion in June 2020, which is even higher than the holiday season peak in December 2019. Many forecasts predict even bigger growth in e-commerce in the following months. This is important for the increase of the measuring and creating CX experience, because it might shift proportion of the online and in person customer experience.
Difference between online and offline customer experience
Rose, Hair & Clark (2011) mentioned three key differences between the concepts of online and offline CX. First is the degree of personal contact. For online customer experience (further be noted as OCE) in most cases there is non-existent contact and for the offline CX this contact level is usually very intensive face-to-face contact.
Amount of the information available for the research on products or services is much bigger for online than offline purchases. This represents the second biggest difference. The time represents the third difference. Thanks to the websites customers can make the purchase or receive the service whenever and wherever they want and they can spend as much time as they want for this purpose.
18 Contrary, offline experience is based on the moment when a person is eligible and present at the place of purchase or service provision.
In 2000’s only web purchases from the PC’s were determined as the option for the online customer experience. Novak et al. (2020) suggested the model for tracking and evaluating influences on the customer experience. He was among first to cover this topic and change the focus from pure offline to online customer experience and measuring data from the online channels of purchase.
Number of devices that can be used for online shopping has been increasing constantly for the past 20 years. These technological improvements are also driving the increases in the online customer experience channels and experiences. Bilgihan, Kandampully & Zhang (2015) suggest that ‘’with the introduction of mobile phones and m-commerce complexity of the online customer experience has increased.’’ M-commerce can be described as “any transaction having a monetary value that can be conducted through a mobile communication networks or a Wi-Fi network” (Dhingra &
Bhardwaj, 2015).
This way of online shopping makes even easier time and place to access the web and do purchases than it was a case with e-commerce. Furthermore, they suggest that customers are keen to use e- commerce, m-commerce and social networks independently or together.
For example, a customer can see the ad on Facebook, then go to the website and search for this product, and at the end decide to search for the website from his/her phone. When it comes to the customer experience, they suggest that it is very difficult to create a unique and good experience when all these 3 online abilities are present.
Moreover, these possibilities create opportunities for the usage of Omni-channel experience which is almost impossible to track together for the smaller companies and it is even challenging for the big corporations which are not purely online based.
Yeh & Li (2009) were examining the trust of customers in m-commerce. They were researching which factors are influencing customer experience when it comes to m-commerce. Suggestion that came from their work is that usefulness and how handy mobile devices that customer will be using is one of the main factors of experience. Website visualization and content will be the other influencing factor, they propose to have as much interactive content as possible. Third factor would be vendor image, how they build brand image and how responsive they are on the website.
Another research examined the correlation between quality of website, the customer satisfaction and intention to make a purchase. Hsu, Chang & Chen (2011) state that ‘’the purchase should be in response to the senses that customers use in the evaluation of the quality of the website offer and design. ‘’
Rajgopal, Venkatachalam & Kotha (2000) examined how online customer experiences create competitive advantage in comparison to competitors.
19 They suggest that it has positive correlation. Superior customer experience can create competitive advantage for customers.
Furthermore, they explain how the factors which are influencing it are customer service, it is really important to be easy to access, responsive and to be able to resolve the problem. Ease of use in terms of scrolling and layout, FAQ, navigation.
Third factor proposed is the security and reliability of the source on which the purchase should be made as one of the essential needs, if the customer feels it can make safe purchase chances for him/her to buy something are much higher.
Moreover, selection and offer of product/services has to be clear and ordered. Personalization plays a big role since for customers it gives the feeling of being special to the company. Last but not least one is price, in terms of online sales it needs to include shipping and any other cost. Factor that is mostly connected with the competitive advantage is trust (security and reliability).
Even though there is still some mystery and knowledge to be gathered about m-commerce one thing is sure: usage of mobile phones (mostly smartphones) and tablets is increasing constantly which show the potential to the increase of m-commerce in the following years. Following images will represent observed potential.
Figure 4: The percentage of m-commerce in the total world e-commerce
Source: Statista (2020)
According to Statista in 2020 (Figure 4), the percentage of m-commerce in the total world’s e- commerce is 70.4% and it is expected to reach 72.9% in 2021.
20 Figure 5: Forecast: US M-Commerce Volume
Source: Meola (2019)
Business Intelligence Insider suggests a potential increase in the m-commerce by 25.5% in the period of 2019-2024 so the total revenue from the m-commerce purchases should hit $418.9 billion in 2024 (Figure 5)
It’s a necessity to broaden the difference between online and offline customer experience. Through changes we passed as a society, evolving in our purchasing habits, the treatment we expect while purchasing any kind of goods changed. With the market expansion, a lot of new products coming up every day, consumers are overflowed and hesitant on what to spend their money on. Market research is not only done by the companies preparing to launch a new product, but it’s also done by consumers while trying to find the best suitable product for them. We can easily say that, with a bigger variety of products available, consumers are more cautious with spending their time and money.
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Measuring, capturing and processing data by Halmund’s framework
Halmlund et al. (2020) In a time when data is everywhere, it is very important to find the quality way to gather it but more important to know how to analyze it. Data can be gathered from the customer experience and for the improvement of CX. Big data analysis (further referred to as BDA) is crucial for the understanding of CX and the creation of support and is the main source for Customer Relationship Management (further referred to as CRM)) and Customer Experience Management (further referred to as CXM). Some of the digital native companies such as Facebook or Google are using BDA to help CXM for a very long time, but some companies with the smaller knowledge or capabilities in BDA are still struggling to impose this. In order to the backup theory of BDA usage for CXM Halmlund et al. (2020) introduced a strategic framework for CXM based on CX insights resulting from BDA.
Figure 6: The integration of CXM and BDA
Source: Halmlund et al. (2020)
The framework from the Figure 6 represents the integration of CXM and BDA for a better understanding of which types and analysis of CX can be used and found. There are 4 points of a framework: CX and CX data, CX analytics, CX insights, and CX actions.
It suggests there are 4 types of data when it comes to touch points in and out of the company.
Solicited-Structured CX data is represented numerically and the most used representative of it is NPS measurement. The biggest limitation of this data is that it can be misunderstood when it comes to the CX because CX should be more descriptive than numbers show, and some hidden potential can be wasted.
22 On the other hand, Solicited-Unstructured represents more open-ended survey questions and interviews. This data has more insights, but it is very difficult to analyze it when the company has many customers, so in many situations, companies need to outsource these services. Unsolicited- Structured represents structured data but on some independent platform where people rate company/product. This is mostly connected to social networks, IoT, cookies, and similar. Contrary Unsolicited-Unstructured is gathering unstructured data such as speech, image, tweet, or email which is difficult to track and analyze for the company. This method gathers the highest value of CX data but also raises many legal and organizational questions for the company. Public spaces and surveillance cameras can provide the company with this data but on consumer behavior and experience, but it might be too difficult for the company to gather this data and even more to analyze.
CX analysis is the second part of the framework. It represents methods, tools, and approaches of BDA to analyze CX data.
The first one out of is descriptive, better known as “what happened?”. This one is used to understand the status-quo of the company. It uses any analysis that represents charts, graphs, histograms, and other representations of evolution and history and any possible insights for what was happening.
The second one is Inquisitive BDA or “Why things happened?”. It has a goal of determining causes and examining, approving, or rejecting hypotheses of the business or research processes. It is created for the diagnostic CX in the company.
The third one is Predictive BDA: “What is likely to happen?”. This one is using methods and approaches dedicated to possible future outcomes. The best examples are forecasting tools.
The fourth one is prescriptive BDA and it tends to provide the answer for the following question:
“What should happen?”. It tries to give quantifiable answers to the given problem. The most commonly used examples are mathematical programming models for optimization and event simulations. These methods and tools should give insights to companies of the possible options and situations with the CX.
The third part of the framework is CX Insights which represents knowledge gathered through the BDA analysis for the potential improvement of the CX in the company. It is divided into 3 parts:
attitudinal/psychographic, behavioral, and market. For the attitudinal/psychographic interaction of the customers with contact, centers are in the biggest focus since the structured and unstructured data is gathered in these moments. The tone of the voice (while talking or writing) can show the feelings of the customers, both rage and satisfaction. Images that the customers are posting on social networks can be another good example of knowledge gathered. Behavioral knowledge should be captured for the creation of the journey maps.
23 One of the most valuable tools is Google Analytics which can collect trends of the customers intervening with digital channels of the company in real-time. Based on these companies can perform AB tests and gather even better knowledge insights. Another useful insight gathered from the online channels could be ad-clicking behaviors. Furthermore, not only web platforms can have bright quality knowledge, the wireless connection shows the location knowledge and devices which are connected to it. It shows from which locations are the customers buying and bring some insights on the devices they use. Market insights are very useful to predispose the position of the company CX in comparison with the competitors it can determine brand equity and market share.
Social networks tagging can help companies with their brand messaging as well as to give insights into their competitors. The keyword search is one of the best representatives of market share research.
CX actions represent the fourth part of the framework. It shows the organizational capabilities of the company for the continuous improvements of the CX. It is divided into four sections.
The first of them is touch point monitoring which shows major touch points and changes on them.
Organizations tend to establish owners of the touch points in teams and create cross-touch point monitoring by them.
The second section is named touch point prioritization is showing how in the most effective way touch points of the journey can be tracked and changed without changing the whole journey. It explains how for example only one touch point can be changed in the short-term while not changing all the other touch points of the journey. In this way labor, technical and monetary resources are used most efficiently. A good example of it could be the usage of predictive BDA and behavioral insights and quantifying drivers of CX. With this combination, new touch points can arise.
The third section is named touch point adaptation and it shows how organizations constantly need to gather insights and readjust already determined touch points. A good example of touch point adaptation is Spotify. They created personalized journey touch points for each customer by the behavioral insights which were collected through the descriptive and predictive BDA. They sent each customer a list of the songs they tend to listen to and were listening and this made the usage of their application very personalized and created a bond with customers called special touch points.
Fourth one is touch point journey design which shows how the end-to-end journey design in the company should look like. It also introduces an option of redesign which can change the whole customer journey potentially.
All together framework shows both short- and long-term options for the improvement of the CX with combining data gathering, analysis, and implementation of the knowledge created and creation of the strategy that should be tracked and revised constantly.
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Methodologies used to gather data
CEM, CRM and CVM
Meyer & Schwager (2007) suggest that there should be strong cooperation between marketing and product/service development teams. Marketing team should create messaging and track together with the customer care the feedback from customers on the messaging created. On the other hand, development team should take into consideration the feedback received from the customers in the creation of the product/service.
With this relationship and communication among department company is ready to deliver better customer experience and it can be named customer centric. Meyer & Schwager (2007) suggest further that companies tend to say the customer satisfaction with the product/service or brand is poor or great, but not all of them understand why this is happening. Many companies are not aware that the customer experience during the journey is explaining the reasons why customer satisfaction is good or bad. As fast as they understand that their focus should be on customer experience as the whole journey process, they will be able to understand how to improve customer satisfaction.
In order to understand customer experience and customer relationship with the company it is important to understand following concepts: Customer Relationship Management (CRM), Customer Experience Management and Customer Value Management (CVM).
Hwang & Seo (2016) stated that the shift between what is reported as a customer priority changed from focus on the price and quality to the experience with the company. CEM is defined by them as a strategically approach to manage all the touch points that the customer goes through the lifetime with company, it focus on the current moment. Contrary CRM is focusing on maintaining relationship with the customers through the analysis with past, current and future customers.
Verhoef & Lemon (2013) states that CVM refers to the creation of customer value and the aspects of economic value that customer relationship brings to a company. They state that the focus is on the customer relationship so the data about customers plays the main role and allows companies to improve future business performance.
Jagwindar & Shivani (2016) present that the main difference between CRM and CEM is that CRM focuses on data analysis while CEM focuses on the moment and touchpoints. They suggest that CEM is the key for CRM. Meyer & Schwager (2007) elaborate further on the differences in points how the approaches are monitored, who uses information and the relevance of the future performance.
25 Main differences between CRM and CEM are structured in the Figure 7 below
Figure 7: CEM versus CRM
Source: Meyer, C. & Schwager, A. (2007)
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CX tools and analytics
Customer data has been gathered from the late 1980’s in the moments of interaction between customer and the company. Customers purchase, postal code and age were the first data to be gathered according to Micheaux et al. (2019). From the 1980's until now the amount and the diversity of data being gathered changed significantly. This is creating the urge to structure this data and to focus on the understanding of customer journey with the company.
Micheaux et al. (2019) in the work introduces the following definition: “A customer journey is a sequence of a customer's direct and indirect contacts with a product, service or brand, each of which constitutes a positive, negative or neutral experience.” All these points of interaction between customer and the company are part of the customer journey map. Each customer has a different journey with the company which introduces the need for the creation of personas especially in the big companies. Persona represents a virtual person with the created background and personality based on the data gathered on real customers.
Lemon & Verhoef (2016) (Figure 8) proposed 3 stages of the journey map in the interaction with the company. First one is pre-purchase during which customers are understanding their need for service or product and making research on the companies offer. After this they evaluate their decision which is the last step of the pre-purchase phase. Second phase is purchase. In this phase the customer is dealing with the actual purchase and payment details. Purchase is followed by third phase called post-purchase phase in which customers are adopting and using actual product or service purchased in the previous step. Additional part of the third stage is retention. On the following image customer journey through the steps is represented visually.
Figure 8: Customer Journey
27 Source: Lemon & Verhoef (2016)
Batra (2017) suggests that the journey maps aside the touch points should contain the expectations, feelings and thinking of customers, pain and gain points and ideas and improvements for each touch point. Customers express what they feel during the touch points and what they think. This process is followed by defining gain and pain points. This moment is crucial because it shows areas and touch points for improvement and can erase new ideas for the future. Examples of the template for the journey map can be presented on the Figure 9.
Figure 9: Customer Journey Mapping
Source: Batra (2017)
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Net Promoter Score
Net promoter Score is the method used to gather the information about customer experience from the customers directly (Florea et al., 2019). It examines customers' engagement, excitement and loyalty to a brand or company. NPS is a representative of customer’s willingness to recommend you and your products/services. It shows the level of satisfaction with the product/service of a customer.
Brooks & Owen (2009) elaborated on their journey to understand correlation of customer loyalty and profitable growth. They stated that this process of research to find it in cooperation with Reichheld and Sametrix company was long but as a finding they created the NPS measure. Famous question “How likely is it that you would recommend company to a friend or colleague?” NPS is the scale from 0-10 on which customers can rate the company, service or product. Detractors represent negative referrals who rate from 0-6, they are giving negative feedback about the company, service or product to their friend and family and they are costly for the company.
Contrary to them, Promoters are the positive voice of customers and they represent positive referrals. Word of mouth that comes from them is valuable for the company because they share positive experience and are keen to recommend the company, service or product to their friends and family. They rate 9-10 on the NPS scale. In between Detractors and Promoters are Passive.
They tend to rate between 7-8.
NPS is calculated as the percentage of Promoters minus percentage of Detractors (Brooks & Owen, 2009). For the company it is better to score higher NPS because that shows that the customers are having better customer experience. It can vary from -100 to 100. The metrix is present in the Figure 10.
Figure 10: NPS Metrix
Source: Brooks & Owen (2009)
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PRACTICAL PART
Methodology
In the methodology part of this thesis design of the research will be explained as well as different frameworks and techniques which were conducted and examined to find the answers on the research questions.
The research was conducted on the global software company which will be further referred as Company X in this research for the thesis purposes and keeping confidential information.
Company operates globally on all continents and has more than 3,000 employees who are working in different offices around the world. Research was undertaken in the period of October 2019 to July 2020. Main reason for such a long research was that the creation of the customer experience takes time and it is not able to drive the changes in the company and gain knowledge and feedback from customers on these changes in a short-time period.
The main causes of this research were reported from customer support. Company X is purely a software company that only operates online. All sales and communication channels are purely online, including the customer service. The only option for the customers to establish communication with the company is through the web, social networks, phone lines, and email channels. In the past years, customer service reported bad reviews and a lot of complaints from the customers which was the first signal that the company needed to change their customer experience.
With very little, almost no knowledge about who their customers are, and with a lot of unused data this company started to examine what their limitations are when it comes to customer experience.
The examination process started with the employment of new employees whose main focus will be creating a new CRM strategy and who will understand and research who the real customers of the company X are. I was the part of the research process creation and of the gathering data process.
The first step was to understand what the company customer experience looks like at the moment, back in 2019, and how this could be transformed to the wanted level since, based on the information reported by the customer service. The online sentiment which consists of the reviews on the social networks, IT professional websites, and the web pages were showing a negative trend.
The business was slowing down when it came to the renewal level and first purchase level also.
NPS was decreasing and the general picture was not very promising.
Data that was gathered about company customers were not properly analyzed and articulated. The main focus of the company was on the first purchase customers, not on the retention customers.
There was not that big investment in the marketing activities. As a business that has a few hundred
30 million users, word of mouth is one of the strongest promotion ways and they really needed to invest in their customer experience in order not to confront negative word of mouth trends.
Due to these inside company signals that were showing negative customer experience and very limited almost no knowledge about how good customer experience should look like, Company X made a decision to drive the transformation from product centric to customer centric.
Inside company stakeholders for this thesis are customer-marketing team, customer service team, sales team and retention team.
Research questions
Core objective of this thesis is to understand and create a CRM strategy that would drive company culture transformation from the product centric to customer centric. Other objectives are to utilize usage of journey mapping and measurements of NPS to meet and correspond CRM strategy.
Objectives should be met by the employees who will understand the new CRM strategy and drive it with help of NPS and journey mapping which should bring the biggest insights in the current customer experience stage.
For the research purposes following research questions were created:
1. Which methodologies and tools should be used to gather and analyse online customer experience data in Company X?
Company X was pure product centric and the only customer experience analysis present was NPS.
This research question want to examine the potential of the introduction of some other methodologies and tools for the measuring and analyzing customer experience in the Company X 2. How should CRM be created in order to utilize customer experience on the multi channels?
This research question has a goal to determine how the data from multiple online channels can be gathered and what will be useful findings for the CRM.
3. Which steps should be undertaken to turn company culture to be a customer centric?
Third question is dedicated to the company culture. It is focusing on the employees and the management which was purely product centric at the beginning of the research. It should observe which steps should be made in order to change the company culture.
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Qualitative research
For the purpose of this thesis, a qualitative research method has been used. This type of research method is often used when the focus is put on the experience, and its quality.
Yilmaz (2013) suggests that there are few available definitions and concepts of qualitative research that represent the difference between qualitative and quantitative search. One which is mostly suggested is that qualitative data does not gather or analyze any numerical data.
While Parkinson & Drislane (2011) state that “qualitative research is research using methods as participant observation or case studies which result in a narrative, descriptive account of a setting or practice”, Baškarada (2014) backs up that “qualitative research is not focusing on any
quantification or statistical means but rather on studying people behavior and analysis of the nature of the problem”.
Case study can vary in its setup and structure. It can examine and focus on some specific problem and it can be group or individual. it tends to be used for the analysis of some real life phenomenon and it takes into consideration environmental context.(Burawoy 2009; Stake 2005;
Yin 2014). Furthermore it can be chhosen as amethod because of the analysis of some theoretical backround cause (Eisenhardt and Graebner 2007) or because specific interest exist (Stake 2005).
“Potential advantages of a single case study are seen in the detailed description and analysis to gain a better understanding of ‘‘how’’ and ‘‘why’’ things happen. In single case study research, the opportunity to open a black box arises by looking at deeper causes of the phenomenon”(Fiss 2009).
But on the other hand, Burns (2000) claim that: ‘‘The case study has unfortunately been used as a ‘catch –all’ category for anything that does not fit into experimental, survey, or historical methods.’’
In this work data analysed and information were supplied by the company in a shape of presentations and created documents. Furthermore some of the information were given in the casual talk during the workshops or meetings.
CX assessment
32 The customer experience that the company delivers is a representative of the culture and the operating processes inside of the company, and that’s why companies need to become first customer-centric oriented in order to deliver a good customer experience. It is impossible to become a customer-centric company in a very small amount of time, usually, it takes a year to come to the final level and be able to perceive your company as a customer-centric one.
The first step that a company needs to take in order to understand where it is with the level of customer experience is to evaluate itself with the 5 Phases of Customer Experience Maturity Model (Figure 11)
Figure 11: 5 Phases of Customer Experience Maturity Model
Source: Company X
The first level of maturity model has few names in the literature: ignoring level, no stage, or exploring. On this level, the company has no customer experience strategy. Priority is not given to the customer experience and employees know a little bit or have no knowledge about the value that customer experience brings to the company. They do not observe CX as a differentiator from their competitors. In 2019 the company X was on level one. Only measurements connected to customer experience were touch point NPS which will be further explained in the following chapters. Furthermore, company X did not have a CX strategy created and no department was dedicated only to CX except customer service.
The second level is the one where executives and managers start to see at least some value in customer experience and try to gather more information about it. They employ people to work on the research and start to gather data on customers which can be used later on for the creation of
33 better CX. In company X, the second level was dedicated to the channel activations. We tried to understand how the channels work, which one is mostly used by the customers, and what are possible improvements.
The third level is dedicated to the customer experience strategy creation and the special team is usually created on this level. This team can be spread across the company and proceed with this strategy on many levels. Voice of the customer programs is present on this level and a bigger focus is dedicated to the customer experience when the projects are being determined and planned. In company X, we named this level of product focus. We assessed that this is the level on which the company X is at the moment. Since the company has many products that are not aligned in the offer and some of the customers have more than 1 product, communication among product owners should be improved. Also, on this level, we started with the journey mappings and tried to evaluate the main pain points which were tested and communicated with the customers directly later on.
The bigger focus was put on the NPS which we were measuring only on one segment before now we decided to look at it from 3 different perspectives which will be further explained later in the thesis. Our strategy was improved to the more detailed in comparison to level 2 when we just created some overall one.
The fourth level already showed much higher engagement of all the customers in the company.
There is a bigger focus on the customer experience on the daily tasks of employees and all of them should be familiar with the CX strategy and try to improve it on all the different levels and departments of the company. CX should be the main focus in the creation of new products. In company X we named this level Centre of CX Expertise. The main goal for this level would be that all the employees learn how to use the CX methods and tools, deliver and create customer- centric products. Communication and the alignment between product managers should be on a much higher level. On level 3 we created an initiative of the user account which would have all the information about the customer and all his/her products since we have many users who are having multiple products. We expect that on the next level we will be able to use this account in a more efficient way than on level 3.
The fifth should already represent the company as fully customer-centric. At this level, everyday decisions and practices should be focused on the customer experience. CX should be a part of the corporate culture and leveraged the same as financial in the balanced scorecard. Employees are united in bringing to truth brand promises. All the HR processes from the hiring to performance management should be aligned with the customer-centric approach. We named this level Branded experience leaders in the company X. At this level, we expect that the company will be able to unify all the channels and create the customer experience that would show the customer the value they pay for the product.
