Understanding the Four P's of Customer Experience

By John D. Moses,

vice president

and client executive

Over the past few years, the business, software, and consulting communities have placed a much greater emphasis on the functional nature of customer relationship management (CRM), and its complexity from a business reengineering perspective. With its origins in the sales force circa 1993, CRM has since taken the entire front office by storm, with the solution now unmistakably comprising the marketing, sales, and service functions.

More and more, however, we are seeing other important but less obvious functions being linked with CRM departments like Order Management, Return Materials Authorization (RMA), and Billing are commonly part of CRM initiatives these days. This broadening of CRM not only makes sense but also has become more feasible now that the technology is capable of integrating these systems (for example, Enterprise Application Integration or "EAI") and supporting the necessary business collaboration (for example, workflow technology).

Many people believe that CRM solutions consider customer touch points first, and then work backward to the functions necessary to support them - regardless of where they may lie within a business. While better than a technology-centric perspective, this functional view still fails to adequately capture the full spirit of CRM.

Today, CRM is generally accepted as a business philosophy which holds the customer, and perhaps more accurately, customer data, at its heart. It represents a fundamental shift in the way many companies do business. This change in perspective has ridden, or quite possibly driven, a greater paradigm shift in global business: The migration from product- to customer-centricity.

Understanding this shift is not the easiest process in the world for a couple of reasons. This article explores one of those reasons, which involves a case of mistaken identity. Companies often fail to recognize 1) the limited role that technology plays in the delivery of a meaningful customer experience, and 2) the required investment in the factors that do.

When it comes to CRM, most companies wouldn't deny they are seeking a shift towards customer focus or want to offer "a better customer experience." These are mighty words, but often the only action being taken is the deployment of software. Companies have failed to recognize that technology does not manifest customer focus. As a rule, technology does not deliver the customer experience; it just enables it.

The 4 P's of Customer Experience

When examined closely, it is clear that customer focus and the delivery of a customer experience is almost entirely derived not from technology, but from four other foundational elements: Product, Process, Policy, and People. Even when delivered over the Web and without human intervention, a customer's interpretation of their experience will be largely influenced by what they can buy, what procedures they have to follow, what rules may govern them, and what people may be reachable if and when they want personal contact.

Not only have companies falsely relied on CRM technology to improve the experience of their customers, they have isolated it to the front office. By only designing and deploying CRM capabilities within the sales, marketing, and service functions, companies have not addressed some of the most fundamental elements for improving the customer experience. They have overlooked the importance of basic practices such as offering clear product definitions and configuration rules, uncomplicated pricing, smooth order processing, and accurate billing. Achievement of these fundamentals is critical for any business to satisfy customers and to achieve industry-leading customer focus. They are dependent on a commitment to cross-functional process design and collaboration, not just front-office software implementation.

Once the basic building blocks for accurate orders, timely shipment, straightforward invoices, and so forth are in place, the company can truly begin to offer customer intimacy. This intimacy is manifested almost entirely through specialized products and service that recognize some expressed or implied preference of the customer in question. Customers only will recognize that a company has an intimacy defined as a "close familiarity or association" with them when they begin to see targeted products and solutions (for example, bundles, customization), tailored process (for example, 24-hour shipment, auto-renewal of contracts, web service), unique policy (for example, price overrides, free reports), and knowledgeable people (for example, access to transaction history, understanding of customer value drivers).

Product, Process, Policy, and People

If these are the items that customers aggregate to make judgments about their experience with a vendor, in what order should a company pursue them? Not surprisingly, customer experience is delivered first-and-foremost by the 'product' itself. As consumers, most of the feelings we hold about vendors come from the satisfaction or dissatisfaction we have with the product or service we received. The second most influential factor in shaping our beliefs about a company is the 'process', the ways in which they require us to interact with them to investigate, buy, pay, and get help; and the collection of experiences associated with those events. Thirdly, we make note of the parameters that are placed on us, the 'policies' - the exceptions that are made, the specials that are offered, the terms that are applied - that tell us they have an idea of what's important to us, and that we are known by them. And contrary to popular belief, the last thing that makes customer experience happen, the "face" of customer experience, are the 'people' we deal with in person, over the phone, and through post, e-mail, and fax. These interactions are the finishing touch, the "icing on the cake," so to speak.

While the tendency is to assign all of the responsibility for a positive customer experience to the employees, the truth is that there are limits to what human beings can do. Ultimately employees are not able to overcome a system of poor products, processes, and policies - which leads to bad cake that no amount of frosting can overcome. Human heroics are simply not enough. Maybe one time, two times, or even three; but to consistently provide a positive customer experience to its customers, a company has to architect a system which enables the employees to deliver it without superhuman effort.

At the heart of an employee's ability to serve customers is information. Ironically, this is where most companies begin to handicap their customer-facing staff. Too often, they are forced to interact with customers blind to the facts that might have generated the customer's inquiry or those that might resolve it.

Despite the technical reality in most organizations, customers assume that you have all the data about them in one place, so that every person in the organization can see it. The customer thinks, "Why wouldn't customer service and billing both have access to the information that describes my product complaint and request for a refund?" As you can imagine, it is not going to impress a customer if a single, universal customer database is where the CRM solution starts and ends.

Going forward, most companies can expect this to be "table stakes," or the price of admission to compete in a given industry. Increasingly, the 4 P's will constitute true "customer focus." Therefore, the challenge for the enterprise is to develop a technical solution that doesn't do customer focus, but instead enables customer focus, through the dynamic arrangement of products, process, policy and people in combinations that are meaningful for unique customer segments.

John Moses is a vice president and client executive at Inforte, a customer strategy and solutions consultancy. For the past 13 years, he has played critical roles in the successful delivery of large-scale, enterprise-wide strategic technology and change projects for companies in a broad range of industries. For more information, visit www.inforte.com.

Copyright © 2004 IDG Communications, Inc.

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