MAR 4860 – Customer Relationship Management MODULE 5 UNIT 2

Customers who are merely satisfied are usually inert or not motivated to buy a particular brand
or service. Their satisfaction simply means the "absence of dissatisfaction," not the motivation to
become a loyal customer. The challenge is to get customers beyond satisfaction to motivation.
In this unit we will go over the basic types of turnoffs, the seven pillars or components of a
customer experience, and examples of experiences with products and services, price, channels,
communication, processes, people, and physical evidence.

©2021 Sarah Cherres 1

MAR 4860 – Customer Relationship Management MODULE 5 UNIT 2

The best way to get customers from satisfaction to motivation is by responding to customer
perceptions and expectations by getting rid of customer turnoffs. Let's start by looking at the
types of turnoffs.
There are three types of turnoffs: value, system, and people. The first, or value turnoff, means
that a customer feels that they received poor value from the service or product they paid for.
Customers feel like they didn’t get what they paid for – it just wasn’t worth the price they paid. To
overcome this, companies must design products and services in the eyes of the customer. The price
must be perceived as valuable for the received.
System turnoffs can include any process, policy or procedure that a company has in place. These
are normally the responsibility of managers. These have to do with making the customer’s journey
inconvenient or longer than expected. System turnoffs can also include waiting a long time on the
phone, or a dysfunctional website. Other examples include: a company’s layout or parking
facilities; ordering process; guarantee or return policies; delivery and pick up services; customer
follow-up procedures; and billing and accounting processes.
People turnoffs are employees who don’t communicate properly with the customer. These
turnoffs occur when customers feel you don’t care. There is no empathy toward the customer.
Examples can include being rude, failing to greet a customer, giving people inaccurate
information, dirty surroundings, or poor employee grooming.
The customer journey maps and the VoC interactions will reveal these turnoffs. A company
must welcome and embrace these turnoffs as opportunities to improve the customer
journeys.

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MAR 4860 – Customer Relationship Management MODULE 5 UNIT 2

So how can a company convert a turnoff into a valuable experience?

Let’s look at the seven pillars or components of a customer experience. It is the combination of
these components, based on the customer’s needs, expectations, motivations, and perceptions, that
makes up the total customer experience - the key word being total. A GREAT experience can’t be
achieved without the right combination. The results of that right combination are greater customer
retention and more customer referrals; a better reputation in the eyes of prospective customers; and
better decision making resulting in more effective and efficient resource allocation. These results
have one outcome: MORE PROFITS!

The customer experience includes 7 Ps. You learned about the first 4 Ps in your introductory
marketing course and the marketing mix: product (services), price, place, and promotion. For
customer experiences, we need to go beyond the 4 Ps. That’s why we include people, processes, and
physical evidence. Let’s define what we mean by these three additional components.

People – These are all the participants who play a role in the delivery of service and therefore
influence the customer’s perceptions. They include: a company’s personnel, the customer, and other
parties of the distribution process like retailers and other intermediaries.

Physical evidence – This is the environment in which the service is delivered and where the
company and customer interact, and any tangible components that facilitate performance or
communication of the service. Examples include the design of a facility, the equipment used, the
signs posted, employee appearance, reports, business cards, statements, and even service guarantees.

Process – These are the actual procedures, mechanisms, and workflow of activities by which the
service is delivered – it’s the entire service delivery and operating systems. The flow of activities
can be highly standardized to highly customized. A process can be simple or complex for a
customer. Some processes require a higher level of customer involvement than others.

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MAR 4860 – Customer Relationship Management MODULE 5 UNIT 2

Products that offer better solutions to problems create more value for customers. The first way
to enhance the experience is to develop product innovations such as the Apple iPhone or the Dyson
Dual Cyclone vacuum cleaner.

Companies can also enhance the customer experience by attaching additional benefits to their
products & services. Some examples are a lawnmower that operates more quietly; a car that comes
with a 5-year warranty; a fork-lift truck that is supplied with a free options package. Sometimes
additional benefits are accompanied by repositioning the product is a different segment of the market.
For example, Lucozade had been a glucose drink for older people and was widely associated with
illness. GlaxoSmithKline repositioned Lucozade as an energy drink in the sports drink market.

Product bundling is the practice of offering customers a package of goods and services at a single
price. For example: Travel agents routinely bundle several elements of a vacation together – flights,
transfers, accommodation and meal plan. For the customer, bundling can reduce money, search and
psychic costs. For the company, there are economies in selling and marketing. Changing the
composition of a bundle can have the impact of increasing customer perceived value. Adding elements
to the bundle increases the benefits side of the value equation. Removing elements from the bundle
enables the company to establish a new price point, therefore adjusting the value equation for
customers.

A brand is any name, design, style, words or symbols that distinguish a product from its competitors.
Branding influences both sides of the value equation. Brands reduce search costs by clearly identifying
the product as different from others. Brands can reduce the psychic costs associated with purchase,
because they represent familiar attributes. Brands can also offer an implicit assurance of a particular
customer experience because of their meanings.

Synergies between products in the company’s portfolio or with brands from another company can
create value. For example, Disney is particularly good at using synergies. Snow White and the Little
Mermaid are created in Disney’s film division. The characters then appear in theme parks around the
world, in other service environments such as cruises, and retail stores, and on the Disney TV network.

©2021 Sarah Cherres 4

MAR 4860 – Customer Relationship Management MODULE 5 UNIT 2

Now let’s talk about pricing as a means of enhancing customer experiences. Value from pricing
strategies can be beneficial to the company and the customer – it depends on your objective for a
customer segment.

Price is something that customers are willing to pay if they receive significant value from all
of the other Ps. Creating affordable payment plans or offering credit options can be examples of
creating value through pricing.

Pricing can come into play after we differentiate customers (remember?). In some cases, a
company may need to increase rates to drive away unprofitable customers. The key here is to be
sure that the customers are unprofitable. Don’t make the mistake of driving away a customer that
has unrealized potential value. This objective must always be done with professionalism and
courtesy. FedEx can increase shipping rates for residential customers in expensive-to-serve areas
where volume doesn’t justify normal rates.

In other cases, when the customer value is high and could be high (both realized value and
unrealized potential value), you would want to create incentives for customers to remain with your
company. A company can offer discounts or reward programs for profitable, loyal customers. For
example, Dell offers lower prices to its larger corporate relationships than its small office, home
office customers.

©2021 Sarah Cherres 5

MAR 4860 – Customer Relationship Management MODULE 5 UNIT 2

Distribution channels create significant value for customers. It is through these that customers
interact with a company. Channels create place utility by locating them conveniently for customers.
They create time utility by having accessible hours of operation. They can add services and
complementary products that are not available from the core product manufacturer through high-tech
value-added resellers. They offer new electronic routes, such as search engines like as Goggle; E-
malls; and virtual resellers such as e-Bay and Amazon.

There are also several strategic options for electronic channel development between a producer and a
reseller. Whatever option a company pursues, it’s important to discuss it with the resellers and gain
their commitment. Otherwise, you will have channel conflicts, which will ultimately affect the
customers’ experiences.

The diagram in this slide shows the various interaction channels available and how they vary in
terms of cost to the company, speed of delivery, tangibility or ability to touch, feel and reference
information, tracking ability, and the opportunity to customize. Deciding which one to use depends
on 1) the customer/segment/portfolio preferences which you should have learned from Module 4; 2)
your company’s competencies, i.e. you may not be good at delivering all of these; 3) the nature of
your products and services; and 4) your CRM goals.

For example, personal selling requires a significant investment of time, which is costly. For some
products and customers, like businesses, personal selling is a must. It also allows for more
personalized interactions; however, the return must be there. You may decide to use this only for the
most valuable customers.

Every interaction with a customer involves an expense. By ranking or segmenting your customers
first, you can take a more rational approach to managing the interaction process. A company should
end up using different channels for different-valued customers!

©2021 Sarah Cherres 6

MAR 4860 – Customer Relationship Management MODULE 5 UNIT 2

The management of customer expectations can be controlled through integrated marketing

communications. Most companies, however, think of one-way communications as their means of
integrated marketing, where the company controls the conversation. The main goal is to attract the
audience’s time and attention only. Mass media is used so each customer gets the same message,
usually at the same time. There’s no exchange between the company and customer.
Although it’s important to have consistency in our one-way messages, the optimum way of
communicating with customers is through two-way conversations. Ask yourself: How can we
engage customers? These two-way conversations address the need to get to know your customers.
Here, companies make explicit bargains with customers to get some of their time, attention, or
information. The company makes a “deal” with the customer, collects information as well as attracts
attention and provides some compensation to the customer. Many of us have probably answered a
survey because the company included a dollar or some other reward.
Other common examples include using frequent shopper cards at the grocery store in order to obtain
the promotional prices of goods on sale. In return, you allow the store to track your baskets of
purchases over time to learn about your buying habits. Many airline passengers also become
members of frequent flyer programs to earn free flights, knowing that their flight purchases are
tracked by the airlines. Examples of two-way, addressable media are the Internet, voice mail, phone,
wireless, e-mail, fax, and even an interactive television.
Most companies continue using one-way communications because two-way conversations can be
costly for the company and customer. In order to obtain key customer information in the least costly
and time-consuming process, we can resort to several tactics, one popular one being the drip
irrigation method using golden questions. Social media is becoming more important elements of
the communications mix. They are used for advertising, selling and service purposes. When social
media is used for customer management purposes, a company needs to invest in people, processes
and technology in order to respond to potentially thousands of messages in real-time. Delays in
responses or inaccurate information on websites can make customer issues worse.

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MAR 4860 – Customer Relationship Management MODULE 5 UNIT 2

The last thing you want to do in a relationship is to bombard a customer with questions or a massive
questionnaire or survey. The drip irrigation method is what some companies call ‘smart dialogue.’
Has anyone ever played the twenty questions game with you the first time they’ve met you? How does
that make you feel? This is not a very smart way of building a relationship because TRUST must be
built first. Remember that in order for you to share information, you must feel like you are getting
something in return. This goes back to the fact that a relationship must be a win-win situation. Drip
irrigation means watering the relationship a drop at a time.
You can use golden questions to capture and reveal important information about a customer, while
requiring minimal effort on the part of the customer. This is the term Peppers and Rogers use for an
interaction with a customer designed to reveal a great deal of individualized insight without subjecting
the customer to a battery of marketing research. If it is designed well, a Golden Question can often
generate this individualized insight without even appearing to be a survey or a marketing inquiry at all,
and it can often be fun or interesting for the customer to answer.
The slide shows three other examples of golden questions from Peppers and Rogers textbook. In order
to develop a golden question, you must start by asking what your goal is. You need to identify exactly
what it is that you're striving for which is shown on the first column. Then you also need to identify
some product focused questions, although these are the ones that a company should avoid except in
situations in which the customers are trying to specify a product or service prior to the purchase.
Instead, the most productive type of customer interactions is when you're trying to reveal information
about the customer's underlying need or potential value and that's why there's a big difference between
product-focused questions and golden questions. Notice that the golden questions are very tied to what
motivates the buyer, what is it that the buyer feels, what kind of behavior is the buyer seeking? When
you understand what it is that they're seeking, then you can better design your golden questions. Be
sure to take a few minutes to analyze these questions.
Designing a golden question is NOT easy. For a premium pet food manufacturer, you can ask a
question like “do you buy your pet a holiday gift?” The answer to this question tells you a lot about the
customer’s feelings about its pet, i.e. how important the pet to them and how much they are willing to
spend on the pet.

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MAR 4860 – Customer Relationship Management MODULE 5 UNIT 2

Efficient and effective business processes are essential to a successful CRM strategy. It is the business process that
delivers the value to the customer. Therefore, companies must be willing to continuously improve and innovate their
processes, particularly those that are front-office and customer-facing and directly affect the customer experience.
Process innovation requires a business process oriented culture and lots of teamwork. But the benefits are innumerable
and the payback is immediate. Benefits include less time to service customers; faster turnaround times; better quality
output or expected outcomes; good use of resources which keeps costs down; and happier employees and of course,
happier customers!

Here are some interesting and unique takeaways that the Disney Institute showcases in Be Our Guest. Perhaps the most
unexpected finding when evaluating Disney’s passion for "magic" is the focus on business processes—the drive and
ability to optimize even the most mundane activities. Walt Disney was obsessed with the process. He knew that the
delivery of a magical experience each and every time is dependent on developing processes that allow you to do so. Walt
viewed his theme parks almost as “factories” that produced delight and entertainment. His belief was that the backbone of
Quality Service was built on designing perfect processes and then repeating them at a greater scale. It almost seems cold
to think of a wondrous place like Disneyland in such a way, but Walt knew that the magic was powered by these
processes. Think of process as a railroad engine. If the engine does not run properly, it doesn’t matter how friendly the
conductor acts or how attractive the passenger cars look, the train will still not move and the passengers will not pay their
fares. Process is the engine of Quality Service. Some examples mentioned in Be Our Guest include:
Turning around misfortune. Despite the efforts made to inform customers of height limits, often a young child will wait
with a parent to go on a ride, only to find out he or she isn’t tall enough. Disney noticed that this was a major complaint
from parents and, more importantly, ruined the experience for children. They have given staff permission to hand out a
special pass when this happens that allows the child to skip to the front of the line on his or her next ride.
Ending the experience strong. What better way to end a magic experience than with a smooth exit? Unfortunately,
Disney found many guests had problems finding their cars when leaving on trams. Tram drivers now keep a simple list of
what rows they work each morning, which is distributed to team members at the end of the day. This allows guests to
simply denote the time they arrived, and the tram drivers will know what location the guest parked in. A huge win for
ending the day without hassle.
Fulfilling unique needs. Disney cast members found that disabled guests were often frustrated with parks because they
had to constantly remind staff they were disabled, and they wanted to let staff know discretely. Disney created Special
Assistance passes and provided their cast with a wide variety of training so that they were able to identify and fulfill the
needs of disabled guests without invasive questions.

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MAR 4860 – Customer Relationship Management MODULE 5 UNIT 2

People are a key ingredient to effective CRM strategies. Without the right people in the right
places, CRM is doomed for failure. You can have the greatest technology and the best designed
processes, but if the people can’t deliver and/or use them properly, the CRM objectives cannot be
met.

Employees who come into contact with the customer are boundary-spanners. A boundary
spanning role is one that sits in the space between an organization and its external customers. Even
though they are paid by the company, they should work for the customer. Their responsibilities
include:
• Managing customer information -- collecting it, updating/recording it and distributing it to the
right people. What are the customer’s requirements, expectations, preferences? What are the
customer’s future plans? Who is involved in the customer’s buying decisions?
• Communicating with all stakeholders in a process, including internal and external customers.
• Maintaining a good relationship with all customers, internal and external.

Customer contact roles are normally the front-line in consumer markets. In business markets
where the customer is an organization, key account managers are used to manage the relationship
between both organizations. As companies become more global and disintermediation takes on
popularity, customers and suppliers want closer relationships. Unlike consumers, business
relationships take a long time to nurture and develop. Businesses do business with people, not
just with a company.

There are many skills required of an effective key account manager (KAM). They must be
proactive and always willing to learn about the changing needs of a customer. Once a KAM
becomes comfortable or complacent, the relationship begins to go downhill. A KAM must always
be one step ahead of its customers – always anticipating their needs and providing solutions even
before the customers know what they are.

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MAR 4860 – Customer Relationship Management MODULE 5 UNIT 2

Physical evidence is made up of the tangible facilities, equipment and materials

that companies use to communicate value to customers. Some examples are buildings,
décor, seating, physical layouts, cleanliness, vehicles, collateral materials, promotional
materials, brochures, billboards, pamphlets, websites, and now more importantly, social media
sites.

Be sure to review the examples noted on this slide.

Online, social and mobile presence also serve as an important form of

physical evidence. Remotely located customers and partners who don’t receive visits from
sales reps might only interact through a company’s website so this is a very influential
aspect of their perception of value.

©2021 Sarah Cherres 11