Customer Touch Points and the Exchange of Value
Understanding Customer Interactions
Chapter 3 examined the concept of “customer” along with the variety of meanings that the term “customer” takes on in different business contexts. After considering the challenges of creating a single definition of customer, though, we came to the conclusion that it might be worth-while for organizations to recast the concept of “customer” in the context of the relationship between the organization and a customer. So instead of hyperfocusing on the semantics of the terminology, exploring ways to manage the different aspects of customer relationships will enhance the customer experience and eventually lead to increased profitability.
Essentially, the relationship with a customer is composed of the series of interactions between the company and the customer. Therefore, one approach to managing the different aspects of the relationship is to consider every interaction with any presumed customer entity (individual or organization) in which there is an exchange of value. We will refer to that as a customer interaction. The ability to consider all customer interactions relies on two fundamental ideas:
- Your organization has the ability to effectively identify the scenarios within any business process where two entities interact and there is an identifiable exchange of value.
- You are able to describe and quantify what that exchange of value is.
We can begin with an assessment of the business functions that are traditionally associated with customer interactions and their processes. For example, the marketing function seeks to attract and engage prospects, while the sales function looks to convert prospects into committed purchasers. There may be a fulfillment function tasked with the delivery of the purchased product or service, the finance function to collect payments, and a customer service function to deal with inquiries and complaints. Each of these business functions has some interaction with customers; the challenge is to identify (and document, if necessary) the business processes and then specify where in the process the customer interaction occurs.
The customer interaction can be divided into two components: what we will call the “touch point,” or the method by which the interaction occurs, and the exchange of value. Once those customer interaction points are identified, they can be characterized in terms of the type of interaction and the categorization of the “value” that is exchanged between the two parties. In the next sections, we will discuss the different types of customer touch points, the different means of exchanging value, and then consider what information about the customer is needed for the analyses and guidance that can be used to augment those interactions in positive ways that become memorable and thereby increase customer lifetime longevity and value.
Customer Segmentation Influences the Relationship
Customer-centric organizations adjust their lenses to operate from the perspective of the customer in building trust and loyalty by attempting to ensure that each of the customer’s interactions is a positive experience. One of the major objectives is to encourage longer term retention, since retaining existing customers incurs much lower costs than new customer acquisition. In turn, existing customers whose trust and loyalty you have already gained are more likely to purchase something from your company than they are from a business with whom they have no experience.
Changing customer-facing business processes to enable building a customer’s trust and loyalty depends on developing a profile of the customer that reflects how past interactions influence that customer’s behavior. The information used to populate that profile can guide staff members involved in those business processes in the best ways to treat the customer in the way that provides an experience consistent with the customer’s characteristics.
Developing many customer profiles allows you to perform the analyses that can identify the characteristics that similar types of customers share. These help you devise the basis of describing customer segments—groups of customers with shared characteristics who exhibit similar (and therefore predictable) behaviors under similar circumstances. Some examples include groups of customers living in the same geographic region, have similar educational background, and who have purchased products from a selected subset of your product catalog. Other examples include groupings of customers who purchase a certain set of products you have, or it may be groupings of customers who spend within specific dollar ranges each month, or groupings into different age ranges.
This process of identifying the categories and relative relevance and then placing customers in the proper grouping is called segmentation. Segmentation, which will be discussed in greater detail in Chapters 8 and 9, involves multivariate analysis in which a number of categories of interest are defined, and customers are then placed in the appropriate groupings for each category. Customer segmentation strategies can be used in two different ways: grouping and organizing customers and determining levels of engagement and treatment based on any customer’s segment. Segmentation provides some valuable benefits, and some examples include:
- Helping a company achieve a better overall understanding of the types of customer the business serves.
- Help set the stage for more precise analysis of customer types.
- Guide customer support processes and advise representatives about levels of support based on customer value.
Segmentation, Customer Touch Points, and Personalization
While some businesses have a limited use of customer segmentation and profiling, others actually take profiling a step further by trying to create unique experiences personalized for each customer. Instead of just dropping groups of similar customers into broad segments based on limited amounts of customer data, they attempt to build more sophisticated models and profiles that can drive direct personalization. When detailed customer data can be integrated into operational processes, your company can develop increasingly customer-centric experiences.
Both broad customer segmentation and unique personalization require the collection and management of data about the customer’s characteristics (which are generally static attributes that do not change often or at all, such as date of birth or home address) and behavior (which is more likely to reflect dynamic attributes such as the products purchased or durations of customer support calls).
Both of these types of data attributes can be captured about a customer at points where the customer and the business interact—those same touch points introduced earlier in this chapter. Each touch point provides an opportunity to both learn more about each individual customer as well as employ what is already known to influence customer behaviors in ways that are valuable to both the customer and to your business. As an added benefit beyond growing each individual profile, data collected about each individual also contributes to the enrichment of the broader customer segments, which can inform more business processes and corresponding touch points to enhance the general customer experience.
A track record of positive experiences will have a cumulative effect in developing a rapport with the customer, strengthening trust in the business, and intensifying the customer’s loyalty. The impact can be heightened when the details of the interactions within individual business process touch points can be tailored to unique customer profiles based on an analysis of a combination of characteristics and behavior data.
Types of Customer Touch Points
Customer interactions may take place along a wide variety of touch points, of which each organization may employ some subset. Some of these touch points involve direct human– human interaction, such as when a customer talks to a bank teller inside a branch office. Human touch points suggest a level of intimacy with customers and may be perceived as good channels for establishing and developing personal customer relationships. Other touch points are automated, such as the use of a customer service app running on a smart mobile device or through interactive voice recognition systems supporting the inbound call process. A number of different types of touch points are described in Table 6.1 .
Common examples of touch points include Point of Sale (POS), online store purchases, all activities associated with web site visits, numerous types of smartphone and other mobile device interactions and applications, engagement via self-service kiosks, both inbound and outbound call center customer representative interactions, physical and virtual surveys, emails, “snail-mail” mailings, as well as a slew of others.
|Table 6.1 Examples of Different Types of Touch Points|
|Touch Point||Example||Human/Nonhuman Interaction|
|Brick and Mortar POS||Purchasing food at a supermarket||Human|
|Online store POS||Electronics purchase from an online only vendor||Nonhuman|
|General web site visits||Searching for products from an online vendor||Nonhuman|
|Smartphone interactions||Travel delay alerts delivered to mobile device||Nonhuman|
|Self-service kiosks||Self checkout at the hardware store||Nonhuman|
|Coupon redemption||Use of a printed coupon at a Brick and Mortar location||Human|
|Coupon redemption||Use of a coupon code for online purchase||Nonhuman|
|Inbound call center customer service||Customer complaint||Human|
|Outbound call center processes||Sales call||Human|
|Survey interactions||Online marketing survey||Nonhuman|
|Email interactions||Notification of received payment||Nonhuman|
|Billing statements||Mailed invoice||Nonhuman|
|In-store merchandizing and promotions||“buy one get one free”||Nonhuman|
|Direct mail and Newsletters||Mailed advertisements||Nonhuman|
|Broad-based public communication||Press releases||Nonhuman|
|Social media (e.g., blogs, Facebook, Twitter)||Facebook “likes”||Nonhuman|
|Product use||Customer experience utilizing product or service||Human|
|Product use||Customer experience utilizing product or service||Nonhuman|
Interestingly, there are even nonobvious touch point methods that can be used to engage your customer in different ways, such as sounds and music piped through the store, pleasant odors pumped out to the street from a restaurant, visual cues incorporating signs, layout, and even mannerisms and gestures (see Figure 6.1 ).
Note to Figure 6.1: This guy1 really makes me want to get a frankfurter.
Touch points have a “direction”—they can be considered to be bidirectional when they involve two entities (such as an in-store POS purchase) or unidirectional (such as mailed advertisements). Bidirectional touch points provide a means for engagement and data collection.
Thoughtful Coordination of Customer Touch Points
It is interesting to consider the different impacts on the customer relationship in the context of each of these touch points, especially when comparing human touch points to the nonhuman ones. Often, automation has been employed as a replacement for humans as way to help organizations scale up their operations while managing the costs associated with human staff resources. As a result, in many industries there are far fewer human touch points today than there were in the past. The proliferation of nonhuman touch points emphasizes the importance of human touch points because the direct interaction often provides a more satisfying result. Direct contact may be the best way to build relationships with customers, especially when there is a concern that reduced human interactions can cause damage to a customer relationship.
1 “A Muffler Man holding a hot dog.” Image authored by Mykl Roventine. Originally posted Flickr as Muffler Man with Hot Dog. Downloaded October 3, 2013 from http://en.wikipedia.org/ wiki/File:Muffler_Man_with_Hot_Dog.jpg. This file is licensed under the Creative Commons Attribution 2.0 Generic license.
Yet while there may be many nonhuman touch points, the organization’s internal perspective may use them as means to an end—aspects of operational processes that operate solely within specific line of business functions. For example, a bank’s mortgage business may provide an online portal for managing payments, while the same bank may also provide a mobile app for credit card accounts. Often the applications associated with each touch point are designed, developed, and implemented within a virtual silo with little or no cross-organizational coordination.
This lack of coordination means that the applications are solely designed to meet functional requirements and are probably not engineered to contribute to a holistic customer experience. And because the customers are more likely to be engaged through nonhuman touch points, your company should be aware of the potential negative impact of less than stellar experiences, as they will be compounded over time and diminish the customer’s loyalty. This suggests that your company’s strategy for customer centricity must include team members whose job is to oversee the quality, consistency, and interoperability of the numerous touch points, both human and nonhuman.
The Conceptual Exchange of Value
The company’s relationship with the customer is a two-way street, implying that every customer interaction and touch point involve an exchange of value between the company and the customer. An easily recognized example of value exchange occurs when a customer decides to buy a product from a company. In this scenario, the customer exchanges money (which has value) for the purchased product (which also has value).
The objective is to look at all customer interactions and be able to describe what that exchange of value entails—what does the customer get and what does the company get? Looking at some other use case scenarios helps in isolating the conceptual value that is being exchanged:
- Customer complaint, in which a customer engages the company’s customer support team to complain about a product or service. The value that the customer is seeking is support or warranty for some perceived defect of the product or service. The value the company gains is an important feedback about the product that can be integrated into other support interactions or even fed back into the design and development cycle to improve the product.
- Prospect query, in which a prospective customer engages a salesperson for information about the product. The customer is seeking information or insight, with the value cast in terms of gaining knowledge about the product and the company. The salesperson is provided with qualifying information about the prospect, which is valuable as part of the salesperson’s engagement and sales process.
- Customer payment, in which the customer provides money (which of course has value to the company) in return for settlement of the purchasing agreement and elimination of a payment obligation (which is valuable to the customer).
Note that in each of these cases there is an exchange of value—both parties get something out of the interaction. In some cases, the exchange is perceived to be even, such as exchanging money for a product. In other cases, the value one party receives is greater than that received by the other party.
More likely, in many cases the parity (or disparity) between exchange of value is not clear. Those areas of potential confusion represent opportunities—either look for ways to eliminate the disparity in exchange of value or seek to improve different aspects of the value exchange.
A good example is the last scenario we looked at: customer payment. The immediate perception is that the value of receiving a payment is much greater for the company than giving it is for the customer. This bears further review—perhaps the value is greater to the company the earlier the payment is made, and therefore an incentive might be given to a customer who pays ahead of schedule. And in fact it is not uncommon for agreements to include a discount for early payments.
Alternatively, the value to the customer is greater in eliminating a debt obligation faster, restoring a full line of credit, thereby allowing the customer to stock raw materials from its vendors at the same time. This presents an opportunity to the company—provide a discount on future sales as an incentive for early payment, which may influence the customer to employ the line of credit to sooner purchase more of the company’s products.
The upshot is that reviewing business processes to identify the customer touch points and evaluating the exchange of value will expose opportunities for improvement that can be evaluated based on the context of the process and the identity of the parties involved.
Analyzing Touch Points to Maximize Exchanged Value
Needless to say, enhancing the customer experience is tightly coupled with the desire to maximize the exchange of value during each customer interaction. A basic approach to maximizing value might involve these steps:
- Cataloging all the customer touch points.
- Isolating the types and magnitude of the value exchanged.
- Prioritizing the touch points in terms of goals for increased value for all involved parties.
- Determining what information is needed to increase value.
- Determining the business processes to be updated to take advantage of that information.
Each of these tasks depends on a fundamental holistic understanding of how the different touch points reflect a corporate culture of customer interaction. To accomplish this, you need to inventory and catalog all the customer touch points as a prelude to identifying any lost opportunities, find any gaps in the customer interface, and importantly assign accountability for the success measures associated with each touch point. More directly, this means:
- Within each business process, identify all existing customer touch points.
- Identify the party within the organization who is responsible for the business process and for each touch point. Page 48 | Top of Article
- Validate that each touch point has a specific purpose related to the anticipated outcome of the business process.
- Ensure that there are defined performance metrics associated with the expected outcomes and how each touch point contributes to that outcome.
- Use those performance metrics to baseline the current effectiveness of the business process and the contribution of each touch point.
- Specify performance goals for each touch point and consider how increasing exchanged value can impact those performance measures.
- Determine whether there are opportunities for expanding or reducing the number of touch points within the business process.
- Explore how to improve the business processes to maximize performance.
Mapping the Customer’s Journey
While these steps may seem obvious, actually performing them can be quite complex and requires commitment throughout the organization. One approach is based on mapping the customer’s journey through various usage scenarios. This approach puts the analyst in the shoes of the customers and provides the perspective of each interaction from the lens of a customer.
This approach can be augmented by creating multiple customer personas, each of which representing one of the different customer types. The role of the customer persona can be played by people within the company, or real customers can be engaged to walk through the simulation. When real customers are used, staff members must be available to observe the process.
When each customer persona traverses the journey, each touch point is revealed and can be documented. After each persona’s journey is traversed, the results from all the simulations are then collected, sorted by touch point, and each touch point’s owner is documented or assigned if one had not already been assigned. As the simulation becomes more sophisticated, the performance measures can be applied to assess how well each touch point achieved its objectives.
Touch point owners are responsible for reviewing the performance results for their assigned touch points. The owner examines current results with those from previous reviews to see the effect of applied improvements. This also provides a means for capturing suggestions and possible improvement once the magnitude of exchanged values are determined.
This review also may expose new opportunities for characterizing each touch point: is it human or nonhuman? Is it unidirectional or bidirectional? The assessment also helps in determining if the right data is being captured at each of the interactions and any dependencies among more than one touch point.
The exercise is repeated on a periodic cycle so that improvements to business processes and customer interactions can be measured. In turn, these periodic reviews help the analysts identify areas requiring further improvement, as well as identify any recently created touch points that might not have existed or inventoried in earlier iterations.
Don’t be alarmed if the magnitude of this effort seems extreme. These assessments can be begun on a small scale by selecting specific business processes, customer journeys, and personas that are presumed to have significant influence on overall customer behavior. Over time, the analysis can expand breadthwise to include different business processes or depthwise to include more personas.
On the other hand, realize that the iterative nature of performing this analysis demands discipline and planning. It will require an investment in time and resources and therefore will require significant commitment at nearly all levels of the organization. Senior managers will need to make a particular commitment to ensure that those involved have the time and resources to engineer and perform these tasks.
Using Information to Develop a Culture of Customer Centricity. DOI: http://dx.doi.org/10.1016/B978-0-12-410543-0.00006-8
Copyright © 2013 Elsevier Inc. All rights reserved.