You are on page 1of 22

Supported by :

The 12th INTERNATIONAL RESEARCH CONFERENCE IN SERVICE MANAGEMENT


La Londe les Maures, France

May 29, 30, 31 & June 1, 2012

Developing a Typology of Customer Experience Management


Practice From Preservers to Vanguards

Philipp KLAUS
Bo EDVARDSSON
Stan MAKLAN

Developing a typology of customer experience management


practice from preservers to vanguards
Philipp KLAUS
Bo EDVARDSSON
Stan MAKLAN
Abstract
The phenomenon of customer experience (CE) is of increasing interest to both
academics and business executives. Researchers believe that successful CE programs
improve customer value since it is experiential. The link between customer value and
firm performance is widely assumed. In order to determine which strategies and
practices most influence performance, we first have to understand and develop a
typology of CE practice. Based on a review of the literature and 14 in-depth interviews
with CE managers, this article presents a typology of current CE management practice.
The typology classifies CE management based on five dimensions: CE definitions,
scope, and objectives; governance of CE; management of customer experience; CE
policy development; and CE challenges. The three emerging categories from the data
differentiate CE strategies and management by preservers, transformers, and
vanguards. The insights gained from our study increase our understanding of current
CE management practice and its crucial link to performance.
Keywords customer experience; customer experience management; customer
experience strategy; customer experience practice; marketing practice; typology
Philipp KLAUS (corresponding author)
Professor of Customer Experience and Marketing Strategy
ESCEM School of Business and Management
11 rue de lAncienne Comedie, 86001 Poitiers, France
Phone: +33 549 60 64 07
email: pklaus@escem.fr
Prof. Bo EDVARDSSON, CTF Service Research Center, Karlstad University, Sweden
email: bo.edvardsson@kau.se
Dr. Stan MAKLAN, Cranfield University School of Management, United Kingdom
email: s.maklan@cranfield.ac.uk

Developing a typology of customer experience management


practice from preservers to vanguards
Introduction
The phenomenon of customer experience (CE) has received much attention among
academics, consultants, and businesses. Organizations realize the strategic role of CE
management and the subsequent necessity for developing a CE strategy (Klaus, 2011).
Organizations need to gain understanding of how CEs are formed and how CE affects
customer behavior and ultimately their performance (Maklan & Klaus, 2011). Moreover,
Research argues that customer value is more and more experience-driven, co-created
with customers, and context-dependent (e.g. Vargo & Lusch, 2004; 2010). Service
providers, such as South West Airlines, IKEA, and Ritz Carlton recognize the crucial
value created by providing unique and memorable, favorable CEs as the foundation of
their business success. This is confirmed by the research of Gentile et al. (2007)
positing favorable CEs as the crucial component for company success (Gentile et al.,
2007). However, not much attention has been devoted to different types of strategies for
managing and governing CEs in practice.
Scholars identify the importance of understanding, designing, and managing CE in
creating customer satisfaction and loyalty (Pine & Gilmore, 1999; Haeckel et al., 2003;
Pullman & Gross, 2004; Voss et al., 2008), but no widely accepted definition or typology
has been developed. The literature portrays CEs in varied and abstract ways, but has
not developed the managerial insight needed for practical guidance (Klaus & Maklan,
2012). In spite of many different definitions and conceptual frameworks, there is still a
need for both theoretical development and empirical research to determine which
strategies and practices have the most positive influence on performance (Mittal et al.,
2005). In order to investigate this crucial link between CE management and
performance, marketing scholars have to first conduct descriptive research to
understand current CE management practice (Klaus, 2011). Based on this
understanding, a typology of CE practice needs to be developed as a foundation for
further research exploring the link between these practices and organizational
performance (Verhoef et al., 2009). The overall aim of our article is to develop a
typology to better describe and understand CE practice. Our typology is grounded in
both relevant literature and an empirical study.
Based on an extensive review of the literature and an exploratory study, the article
proposes a typology of CE strategy and management based on five dimensions
emerging from the data: (1) CE definitions, scope, and objectives; (2) governance of CE;
(3) management of CE; (4) CE policy development; and (5) CE challenges. The three
emerging categories from the data differentiate CE management practice as preservers,
transformers, and vanguards. The differences between these three categories of
practice, together with the implications of the typology and a resulting research agenda
for the study of CE, are discussed.

Literature review and theoretical framing


The literature on CE in a marketing context has a long history, but no unifying or widely
accepted theory or typology has emerged. Most often CE has been studied as empirical
phenomena. Abbott (1955), cited in Holbrook (2006, p. 40), noted that, What people
really desire are not products, but satisfying experiences. Experiences are attained
through activities. People want products because they want the experience which they
hope the products will render.
Customer experience research
Experiences are constructed by customers based on their interpretation of a series of
actions, encounters, and interactions designed by a provider (Hume et al., 2006). In
their book, The Future of Competition, Prahalad & Ramaswamy (2004) argue that value
is now centered in the experiences of consumers (p. 137) and not only embedded in
products and services. This is in line with Vargo & Lusch (2008) portraying value as
idiosyncratic, contextual, experiential, and meaning-laden (Vargo & Lusch, 2004).
Different ways to portray CE have been presented. Studies in psychology have
identified two central components in human experience: a cognitive and utilitarian
component and an affective and hedonic component (Blumler, 1979; Forgas, 2000).
Palmer (2010, p. 197) argues the literature indicates a drift in time away from Abbots
essentially utilitarian view of experience, towards definitions based more on the
hedonistic properties of a product. Various definitions of CE are found (e.g. Berry et al.,
2002; 2006; Haeckel et al., 2003; Carbone, 2004; Edvardsson et al., 2005), with the
common denominator that CE is holistic in nature (Verhoef et al., 2009) and that it has a
process as well as an outcome component (Johnston & Clark, 2008). The term
customer experience in this article refers to the customers personal experience as a
result of interactions with the company, including the brand and frontline employees as
well as using products or services (Meyer & Schwager, 2007; Johnston & Clark, 2008).
The core belief of these definitions is that the customers experience perception drives
value for the organization and needs to be the focal point of their efforts. Still, little
guidance is given on how exactly the organization can manage the variety of clues and
influences encompassing the CE.
Customer experience practice research
Understanding and enhancing the CE sits atop most marketing and chief executives
agendas, both in consumer packaged goods manufacturing and retailing fields and it
remains a critical area for academic research (Grewal et al., 2009, p. 1). Shaw & Ivens
(2002) find that 85% of senior business leaders agree that differentiating solely on the
traditional physical elements such as price, delivery, and lead times is no longer an
effective business strategy. The new differentiator is CE. Value is no longer embedded
in tangible offerings but is co-created with customers and other actors in interaction
experiences (Normann, 2001; Vargo & Lusch, 2004; 2008). Instead of delivering preproduced offerings, firms can only offer value propositions, which customers then
transform into value through use (Gupta & Vajic, 2000; Normann & Ramirez, 1993) in
their specific life or business context. Therefore, CE management represents a business
strategy designed to manage the CE (Grewal et al., 2009). However, few scholarly

empirical studies and conceptualizations focus on managing CEs in practice or


company strategy for designing and managing CEs.
Customer experience practice
A company strategy for designing and managing CEs is realized and tested in practice.
Thus, we need to study practices. Differences in practices moderate the realized CE
strategy and thus shape the CE outcome (value in context). The CE strategy must thus
be grounded in practice and based on an understanding of the forces shaping
customers experiences in their contexts or practices. Experiences may be formed
through interactions with multiple services from multiple organizations that go beyond
the firms offerings (Patricio et al., 2011). We posit that CE practice therefore needs to
take the entire value-creating network into account.
Researchers suggest that customers evaluate experiences holistically (Verhoef et al.,
2009), and therefore firms need to thinking broadly when designing and managing CE
(Grewal et al., 2009; Payne et al., 2008; Verhoef et al., 2009). This generates calls for
empirical assessments of CE practice (Verhoef et al., 2009). A typology of CE will
enable us to describe and understand CE practice. This typology improves our
understanding of how managers perceived and subsequently CEs.
We define CE management as follows: The strategic approach to designing experiencebased value propositions and aligning resource constellations that enable customers to
co-create value. Customer experience management results in the intended customer
experiences in practice as well as business value for the provider. CE practice includes
pre- and post-service encounter experiences, addresses emotional as well as functional
dimensions of quality and includes the customers social context (Klaus & Maklan,
2012). It includes an assessment of value-in-use, and is formed over multiple channels
(Lemke et al., 2010).
Creating a typology for CE strategy and management
With the current level of interest in CE, it is important that managers have a clear
strategy for its development if they are to profit from their programmes. Marketing
managers should learn from previous investments (e.g. CRM), where a lack of clearly
articulated strategy, calibration of ambition, and development of necessary dynamic
capabilities created a very high level of failure, at least initially (e.g. Maklan et al., 2011;
Krasnikov et al., 2009). Implementing CE is challenging because of its broad-reaching
definition potentially covering a very extended time frame, every customer touch-point,
and emotional as well as functional results. Unless firms have a clear scope for their
programs and articulate an achievable development plan for building their dynamic
capabilities, there is every chance that managers will repeat the mistakes of previous
process-led change management in marketing (Boulding et al., 2005). To date, in brief
sections on managerial implications, scholars exhort managers to do everything, in an
unchallenged assumption that only the truly committed and ambitious can succeed.
However, a large-scale, comprehensive CE programme may well be beyond the
immediate reach of most firms, and it is not universally desirable (e.g. budget airlines).
Into this gap, we posit that a typology of CE practice will at least allow managers to

determine their type, the extent of their ambition, in order to scope their programs and
calibrate their investment and commitment appropriately. A typology of CE management
is proposed as a starting point for firms seeking to understand the quality of their
practice and plan for its development in a systematic manner.
Method
In order to develop a framework of customer experience strategy and management
design choices we developed an interview protocol to articulate the meaning and the
domain of these design choices and management practice challenges. The protocol is
based on our literature review and other well-cited studies exploring marketing practice
(e.g. Coviello et al., 2002). We explored the practices and challenges of CE strategy and
management design through in-depth interviews with managers responsible for the CE
strategy or CE management program of their organizations. While some marketing
scholars create awareness of the context-specific nature of the customer experience
(e.g. Lemke et al. 2010), our study explores which approaches are common across
different types of service providers. The interviewees selection was guided by four main
factors, namely: qualifies as an expert informant for the phenomenon of interest,
theoretical reasoning for choice of services, importance of service sector for the overall
economy of the country in question, and influence on the chosen sub-sector on the
overall service economy. Therefore, we chose managers responsible for the customer
experience strategy development and/or strategy execution/implementation of their
companies. Our study adopted and extended the reliable and validated Silvestro et al.
(1992) service classification scheme (e.g. Auzair and Langfield-Smith 2005).
Subsequently, to ensure cross-validation (Guenzi and Georges, 2010), we choose
service organizations from the three archetypes, namely professional services
(Management consultancy, corporate bank, investment banking); mass services
(Telecommunication, Skype, online banking, transport, fuel stations); and service shops
(Retail, hotel, retail banking, airlines). The interviewees companies headquarters were
located in countries demonstrating a service-economy orientations, such as North
America, the United Kingdom, Sweden, Italy, Germany, Luxembourg, and Spain (World
Bank, 2009). The chosen sub-sectors represented eighty per cent of all service sectors
according to the World Bank Report Service Classification (2009). The majority of the
organizations are publicly traded and considered market-leader in their respective
industries, either worldwide, or in their individual countries.
We achieved data saturation (Glaser and Strauss, 1967) after conducting individual indepth interviews with 14 managers, each interview lasting between 30 and 90 minutes.
The interviewees were recruited from the existing network of the primary research team
and were not offered any compensation for their participation. Due to the highly
confidential nature of the information shared throughout our interviews we are not
permitted to name the participating organizations of the study. The interviews were
transcribed and coded with the support of NVivo 8.0 (Di Gregorio, 2000). Coding follows
the grounded approach described by Ryan & Bernard (2003), which draws heavily from
Strauss & Corbin (1990). The primary researchers incorporated independently a
systematic and far-out comparison approach and hierarchical coding to ensure that we

observed all the data thoroughly and explored all its dimensions (Strauss & Corbin,
1990). The initial categorization of all attributes was the outcome of an extended
workshop involving the primary researchers. Each attribute was named and defined. In
a subsequent stage, researchers discussed differences in their attribute categorization
and agreed on revised attributes and category definitions. Some constructs appeared in
more than one interview. The three researchers examined transcriptions and individual
codes to identify such repetitions and define standardized construct names, resulting in
a coherent coding structure. The analysis generated a pool of 47 items in five
dimensions of CE strategy and management. To maximize the content and validity of
the dimensions generated from the exploratory research, a panel of expert judges
reviewed the item pool and the generated dimensions (e.g. Klaus & Maklan, 2012). The
expert panel comprised six marketing academics familiar with the subject of CE
practice. First, the expert panel commented on the clarity, conciseness, and labeling of
the items and defined their own labels for the items. Panel members were asked about
the similarity of items, the clarity of phrasing, and the terminology used in the scale.
They then rated each of the 47 items with respect to its relevance to the item
description. Ratings were given on a seven-point scale, anchored by 1 (not at all
representative) and 7 (strongly representative). Item purification began with the
exclusion of any item rated by the panel members as either a 1 or a 2 on the rating
scale. Three members of the panel had to rate the item as a 6 or 7 on the rating scale
for an item to be included in the final scale. Finally, the panel judges were given the
conceptual description of the five dimensions and asked to rate them as either very
applicable, somewhat applicable, or not applicable relative to the respective
dimension. Items needed to be rated at least as somewhat applicable to be retained.
This procedure resulted in retaining all 47 items in five dimensions. Five CE managers,
confirming the conceptual model, then reviewed the readability and applicability of the
five dimensions and corresponding items. The corresponding coding structure, detailed
descriptions of each item and dimension are attached as Appendix A. The
corresponding five dimensions and validated descriptions of CE management practice
are as follows: CE definitions, scope and objectives; Governance of CE, describing the
need for the systematic management of CE under the leadership of an identified
responsible manager; Management of CE, Reporting a model of ideal experiences and
a set of business processes against that ideal, i.e. existence of a CE business
plan/model and business processes; CE policy development, describing the instigating
force behind the introduction of a CE program, and how the objectives were formulated;
and CE challenges, describing the key management challenges organizations face in
CE practice.
Findings
Based on our qualitative research we will now posit the findings according to the
individual dimensions of CE management practice as follows.
CE definitions, scope, and objectives
Managers proffer a wide range of objectives for their firms initiating CE programs. The
researchers conclude that only two or three of the managers present a coherent and

clear view as to what their firms are trying to achieve and how, therefore, they define
CE. Most articulate very broad and ambitious objectives, if somewhat vaguely. Firms
believe that CE, however defined, represents a new frontier of competition. This
assertion is often supported by anecdotes of extremely positive or negative CEs,
therefore laying out the case for improvement heuristically. Regardless of whether the
motivation is to respond to customer expectations or a desire to differentiate, the
mechanisms connecting CE management to outcomes are brand and customer service.
Almost all managers relayed their organizations view that experience management
reinforces their brand by delivering its core benefits and values coherently across
customer touch-points and channels. A prominent thread through the interviews is the
view that the goal of CE management is to ensure better delivery of compelling brand
promises, leading to an increase in loyalty. Most struggle to articulate a concise
expression of CE and well-defined scope of their program: definitions are typically very
broad and related to customer points of contact. Experience is often described as
holistic and expressed through story telling as opposed to an obvious set of building
blocks.
Well, there is not an established definition, but we tend [to use] the sum of all
interactions that customers have of our brand.
There is a range of opinion as to the how much involvement the customer wants to have
or the saliency of the experience desired. For some, the service should be ubiquitous,
smooth, and unobtrusive; the customer should not even be aware of the provider. This
utility-like perspective is contrasted by the literature on immersive experiences. The
nature of the businesses for which most of the interviews cover suggest a middle ground
and use CE as a means of embedding an emotional attachment to a service function:
The opportunity for building the relationship is where you run your business where
customers truly value the idea of getting it fast and help and understanding and caring
and those things.
If the goal of CE management is to enhance customers emotional attachment to the
firm, its antithesis is disconnected service across touch-points, indifferent customerfacing stages, and/or undifferentiated delivery to a rigidly enforced service level
agreement. Managers therefore define experience management programs in the context
of integrating their organizations around delivery at the point of customer contact and,
most importantly, from the customer perspective. Whereas TQM and service quality
start from a statistical analysis of the process performance, experience management
focuses upon customers assessment of an overall experience.
The single idea [was] that we should look at the experience from the eyes of the
customer.
Most of the managers interviewed have a strong focus on back- and front-office
integration. Those firms with a highly articulated program and definition of customer
service have extended this integration to include their own suppliers. This is particularly
true where supplier performance is visible to customers. In addition to process control
and integration, CE programs exhibit an overt concern with the training and
development of customer-facing employees in delivering high quality service
consistently. In almost all interviews, delivery through people is core to the definition.
One manager describes the challenges synthesizing human capital policies across
human resources, brand marketing, and operations (customer service). In some cases,

support for such wide-ranging changes is slow to develop, and this is seen to limit the
development of experience management practice in the firm.
Management of customer experience
The central thread of implementation is the integration of customer touch-points
achieved through front- and back-office integration, supply chain partnerships, and
people development. For most, the process starts with some form of touch-point
mapping that identifies the critical moments at which CE is enhanced or degraded. The
process is often supported by outside consultants and process-mapping tools. There is
a risk, and therefore the experience management, like TQM before it, focuses
excessively upon process and insufficiently upon customer. Most managers are aware
of this and ensure the mapping is done from a customer-centric perspective. The
essential role played by customer-facing staff is often emphasized with at least one
manager from the hotel sector identifying, by name, the concept of the service profit
chain (Heskett et al., 1994). There is recognition amongst managers that if CE is difficult
to define (but important), it is difficult to operationalize through rigid procedures; this is
pronounced in business services where CE and the development of key customerfacing managers are linked tightly:
We let people try to make their own mistakes. We guide [them] through best practice
we take a group of site managers round different other people sites and say have a look
I think thats a much better way to get into peoples heads and then lets say
someone dictating to them and say do this.
Appreciating the role of peoples judgment in-situ and commitment to CE, sophisticated
practitioners look to hire people with emotional maturity and personal values supportive
of the program:
We much more hire on attitudes do their core values match up to our core values?
Whats their mind set towards the clients?
The CE program, once the right people are hired, influences training. There is a range
of mechanisms revealed in our interviews: mentoring and communication one even
talked about a staff academy where CE features. Those with well-developed programs
reward customer-facing people using a combination of financial targets (e.g. Sales,
Profit), service quality measures (e.g. on-time, right first time), and customers overall
assessment of the experience. Where the program extends to suppliers, the focal firm
assesses and rewards them against measures of CE. In the firm demonstrating the
most advanced practice in this area, CE management, the firm and its suppliers
embrace a more open and trusting relationship.
Governance of customer experience
Measurement is universally seen as essential to the purposeful development of a CE
program, and respondents are surprisingly consistent and the focus of respondents
discussion of governance. Virtually all managers interviewed measure experience
through surveys, and most use the net promoter score (NPS) (Reichheld, 2006),
although the very same managers express dissatisfaction with that metric.
Im very sceptical Its reactive rather than proactive, and you can measure the history
but you wont tell anything about what youre going to do. its very hard to come down
to a specific number or anything like that.

Experience managers suggest that their Boards appreciate the simplicity of NPS but are
not convinced that it tells them more than the customer satisfaction results that have
been reported previously. Therefore most employ a battery of measurements and
research instruments to guide the program and act as a voice of the customer.
We are aware that customer experience goes beyond quality of service, that is why we
try to be up to date with all the tendencies and all the academic research [and] add all
the [relevant] metrics to our research
Surveys remain a core method of assessing experience and setting the agenda. Most
firms have modified existing customer surveys to include that which they believe
captures experiential elements of their marketing strategy.
Weve redesigned (our) questionnaires to focus much more on the experience rather
than the (operational elements).
One firm links CE surveys to projects financial success at least it believes that it can
explain unprofitable projects by looking at the customer survey and the poor results on
satisfaction and experience items. This precision promotes experience within the firm.
An opposite anecdote from our research is a bank that is finding it harder to articulate
the value of experience and feels hindered in developing its program.
It was difficult to come up with a single platform to put all the information, the input,
together [into] metrics and then weight them in terms of importance or relevance for
customer So we found ourselves in a situation with lots of input and information but
without any solid framework or system to put them into a map or to management
properly.
Most managers commented on the degree of top management commitment to the
concept of CE; not surprisingly, all felt that it was essential for its implementation. The
interviews convey an almost emotional or sentimental quality of the idea that customers
are promoting the firm; NPS seems to evoke greater top management support than
traditional measures of customer assessment.
I think that [net] promoter is usually driven by senior management where customer
satisfaction usually is driven by marketing. I think where its driven from marketing it
doesnt [work] and that is ... the history of 15 years of customer satisfaction
programs.
CE policy development
Responsibility for the CE management program is very diffuse. In a few organizations,
very senior managers nominate themselves as its champions. Often, those with the title
of CE manager are in middle, or top management staff positions. They co-ordinate
customer insight and communication, and act as a catalyst for organizational
development around the concept of experience. Such people represent the majority of
our interviewees. The extent to which they feel that their efforts are widely supported
varies enormously. As one manager stated, its companys project started from
marketing and research but the team realized it required change across the organization
and were unable to marshal sufficient support from the top management team. In this
case, the organization did not establish performance outcome measurements and we
observe a link between a well-articulated set of objectives and senior support for CE
initiatives. Research, customer satisfaction and marketing communications activities are
both a catalyst of CE management and a means of providing a voice of the customer.

For some, keeping experience management within the confines of marketing is


problematic. Irrespective of its origins, research retains an essential role as the voice of
the customer and benchmark of progress.
The whole experience design [team] is the voice of the users [and] we are in
constant battle [with] the business.
CE challenges
Our data and analysis show that organizations have often contrary views on the
definitions, the scope, the governance, management, and policy development of CE
strategy and practice. They are rather united, though, in pointing out the challenges they
encounter in designing and implementing a successful CE strategy and management.
The vast majority of organizations defined the three main challenges as: managing the
holistic, and often vague nature of CE; linking CE to specific financial outcomes; and
the need to view CE strategy as a long-term commitment. In the following we discuss
these three main challenges in more detail, starting with the holistic nature of CE
management. The result of our data analysis posits that organizations are struggling
with their understanding of what actually constitutes the CE, describing it as a sum of all
interactions between the client and the company. Some of the organizations have a
more sophisticated view of the stages the overall experience and its influence on the
overall experience, evident by statements such as:
I think it is a holistic question as you said before. You can involve all the actions in the
process, not only the airline, but also the airport, security measures, the airport access,
the access to the downtown. It is a holistic process. We have to understand the reason
of the trip and the way you can add value in the process.
Even managers from organizations committed to their CE programs report the difficulty
implementing strategies as across function:
different business functions seldom speak to each other, so you end up with this
functionality[split] between human resources, marketing and operations, each targeted
on the performance on their own individual results rather than the context of the whole.
Others, then again, are seemingly overwhelmed with this notion asserting they
were not able to analyze or to find a way to weight all these inputs and suggestions and
complaints sometimes and put them into an operational roadmap of how to tackle, what
to tackle first and how?
There is not a coherent view about which measure is sufficient enough to reflect the
nature of CE. Furthermore, CE strategy, in most cases, fails to deliver hard evidence
between financial the CE program and financial outcomes. Respondents often referred
to either a causal chain between CE and outcomes, such as better customer
experiences will lead to better satisfaction and to an increase in loyalty, or simply
believe that CE management will deliver positive financial outcomes for the
organization. We, as researchers, could find no clear evidence for this presumed link,
leading us to the question if we are returning to the first challenge of CE strategy, or, as
one respondent affirms
But, the thing is if I cant clearly define it, how can I can know if its going to improve
(our performance).

Even where organizations overcome this challenge, they are still challenged to create
awareness that CE strategy and management will not reward them immediately. The
consensus is that the organization, in order to succeed in this has to commit to CE longterm, because
unfortunately it only will be central to business success if they can take a reasonably
long term view because the short term drive for custom calls.
And building it (the CE program) conflicts with short term, of shareholders and so on.
Clearly, these challenges, according to our research, are strongly interdependent and
interrelated, and cannot be seen in isolation. The principle hurdles organizations have to
overcome in order to develop a coherent CE strategy are: defining what is, or what
constitutes CE; demonstrating the impact of the CE program (linking it to performance);
receiving funding; and developing a coherent CE strategy. Further examining the data,
and the definition of the challenges in the final stage, we found substantial evidence that
the principle challenges in developing and implementing a CE strategy are based on the
lack of a clear definition of what constitutes CE and how to measure it. CE became a
key strategic objective for the organizations interviewed despite a lack of clarity of its
definition and evidence of its efficacy.
Typology
Based on the findings of our qualitative stage we develop a typology of CE strategy and
management practice using our peer-reviewed conceptualization of CE management
practice (see Table 1). In a subsequent stage, the primary research team scrutinized
each interview according to the 47 generated items in order to develop a typology of CE
strategy and management practice. Each item was ranked on a scale from 0 (no
evidence to support statement) to 10 (explicit evidence to support associated
statement). Based on the review of the literature and extensive exchange between the
researchers the primary research team agreed that values between 5.0 refer to low
evidence, values between 5.0 and 6.0 to average, and above 6.0 to a more than
average evidence for the individual item of CE management practice. The resulting
scores were analyzed according to overall and average score per item, and for each
individual organization (see Appendix B), resulting in a three-cluster typology of CE
management practice. The resulting typology of CE management practice submits three
distinctive practices, namely preservers, transformers and vanguards. Next we discuss
the characteristics of these practice types in detail.
Preservers
Preservers define CE management as an extension, or development of existing service
delivery practices and assess its effectiveness using traditional customer outcome
measurements of service quality or customer satisfaction. While acknowledging its
importance, Preservers are incapable of making a strong business case for CE
management. Preservers execute CE in a tactical rather than strategic fashion, lacking
central control, corresponding processes or an overarching vision. The inability to
connect CE practice to identifiable aims and outcomes inhibits the development of a
compelling business case and elevation of CE to a strategic level. While Preservers

acknowledge the importance of accountability, they struggle to develop appropriate


measures for its effectiveness. The focus of CE management is upon organizational
results. Outcomes for employees, customers and core business processes are not
developed. Preservers provide limited training for customer-facing employees
responsible for delivering good CE. In summary, Preservers, while acknowledging the
importance of CE management for their organization, have yet to develop
commensurate practices.
Transformers
Transformers differ from Preservers in all five dimensions of CE practice. Transformers
submit that CE is positively linked to financial performance, but acknowledge CEs
holistic nature and the resulting challenges in scoping and defining its management.
This indicates a clear internal discourse about CE strategy and its corresponding
management practice. Unlike Preservers, they see customer-facing personnel as a key
component for shaping their CE programmes given the customer-centric nature of
experience. Following this logic, Transformers are convinced that CE influences
customer satisfaction, loyalty, recommendation and brand perception. In contrast to
Preservers, who manage CE as an extension to their existing practices, Transformers
believe CE is strategically important and highlight the necessity to design and execute a
CE strategy based on the organizational definition of CE. Transformers connect CE
practice to organizational aims, and link practice to existing measurements of customer
outcomes. Transformers articulate a detailed history of their CE programmes which
where most often initiated by a top-level executive. Transformers state the impact of
customer-facing personnel on delivering the CE and customer behaviour, and develop
training programs for these personnel. Transformers also voice their struggles with
developing a CE business model and the corresponding business processes. While they
often concentrate on improving existing processes, they labour to see the overall
picture of the CE strategy. In comparison to Preservers focus on incremental
improvements, Transformers strive to become a CE focused organization, acknowledge
the broadly-based nature of CE and the implications for managing CE throughout the
organization. And while Transformers struggle linking CE to financial outcomes, they are
convinced of the positive influence of CE on customer behaviour and organizational
aims.
Vanguards
Vanguards CE practices display the closest proximity to that which research suggests is
a CE focused organization. Vanguards have a clear strategic model of CE management
which is visible throughout the organization and in commensurate business processes
and practices. While transformers only acknowledge the broad-based challenges of CE
management, Vanguards achieve the integration of functions and customer touch-points
to implement best CE practice throughout their organization and partner businesses.
Vanguards noticeably connect CE practice, outcomes and aims, as defined and
controlled by a central CE function/division, the latter integrating multiple organizational
functions. Vanguards recognise the crucial role of accountability, and develop constantly
new and better ways to measure the effectiveness and efficiency of CE practice. CE
practice is founded on the conviction that satisfying expected outcomes for customers
are the drivers of organizational performance. Rewards are developed in order to

ensure favourable CEs from the customers point-of-view. In Vanguards organizations


CE management receives clear and visual support from top-executives. Vanguard CE
practice centres around the constant development and refinement of their CE business
model. This model is based on, and implemented by internal research and functions
throughout the entire organization. These organizations are certain of, and develop
evidence to make the business case for, CE strategy based on existing measurements
of loyalty and customer satisfaction. Conclusively, Vanguards are at the forefront of CE
practice, and their constant aim for improvement will most likely keep them in a leading
position in what marketing scholars consider delivering perfect CEs.
Our typology develops three distinctive types of CE practitioners, namely Preservers,
Transformers, and Vanguards. These types display differences across all five
dimensions of CE practice: CE definitions, scope, and objectives; governance of CE;
management of CE; CE policy development; and CE challenges. Preservers practices
display, despite the verbal pledge, little evidence that CE is a strategic focus or more
than an extension of existing processes. Transformers elevate CE on a strategic level,
moving towards a CE practice, manifested by defining CE programs and prioritising
investments accordingly. For vanguards CE is the key source to compete and gain a
sustainable competitive advantage. Their well-developed and executed CE practice is
designed around creating value for their customers and proven market gains.
Discussion
The overall aim of the article has been to develop a typology to better describe and
understand CE in practice. The typology is grounded in both relevant literature and in an
empirical study. We are not surprised to find a variety of CE management practice.
Whilst scholars have been developing elements of CE for some time, it has only recently
been popularized in companies. Indeed scholarly literature has yet to coalesce around a
common definition of CE, and we believe it fair to assess practice as emergent rather
than established. This is an early descriptive contribution. We here discuss our empirical
contributions and the theoretical implications.
Scholars are responding to the great interest in CE by tackling the difficult issues in
defining the concept and its measure. Starting from the perspective of service quality,
researchers identify in what ways CE is broader and deeper. Experience is generated
from both cognitive appraisal and affective response and, whilst we can represent these
in a sequential change, research has not yet determined which sequences are most
important both in the customers overall appraisal and in their resulting behaviour.
Therefore, the literature exhorts managers to accept a vast increase in responsibility for
customer outcomes at the risk of CE becoming a theory and practice of everything.
Our proposed typology can help firms scope their ambition and establish a realistic
development path for their investments in new experience-creating capabilities. Despite
the encouragement of scholars and consultants for radical transformation of experience
management, we believe that organizations first must establish the extent of their
ambition and how it relates to their overall strategy. For some, a limited commitment to

experience may be sufficient to retain their customers and achieve their marketing
objectives, while others will wish to compete on the basis of superior experience and the
need to develop their program from emergent to competitive. This realization, and
sorting by type, allows managers to benchmark their own efforts and set achievable
goals that can be shared across the firm. The second axis of typology identifies the
current dimensions of practice that help generate identifiable practices and programs for
each overall cluster or type. We expect that most firms practices reflect a mixture of the
types echoing the empirical findings of Coviello et al. (2002). A typology therefore
provides an illustration of a firms current state of CE practices and therefore serves as
the as is state upon which a CE program can be grafted. Whilst sometimes
inconsistent, managerial perceptions as to the definition and scope of CE reflect
academic literature, accepting that emerging scholarly definitions are very broad. The
dominant themes emerging from our managerial interviews are that CE management
enacts the firms brand values, and provides engaging customer emotional and
functional benefits consistently across customer touch-points and channels through
motivated employees. The notion of a sequence of encounters with customers,
designed by the firm, leading to emotional attachment to the brand is a central theme in
the academic literature (e.g. Hume, 2006). The centrality of people in CE is equally well
documented (e.g. Heskett et al., 1994; Smith, 2002).
If the what of CE management is broadly aligned with research, the how seems to
diverge. Researchers advice on implementing CE coalesces around deploying process
management tools around the sequence of customer encounters, albeit process tools
extended to allow design elements that provoke emotional responses. Accepting that
traditional quality management focuses overly upon the repeatability of service actions
within a tight variance of output, CE scholars create tools that focus on functional and
emotional outcomes including Servicescape (Bitner, 1992), multi-level service design
(Patricio et al., 2011) and learning from drama (Goodwin, 1996). However, we found
evidence for the use of a process-based tool in only one interview. The dominant
management activities associated with CE, in our research, are channel (touch-point)
integration and attendant back-front office integration. This supports the work of Neslin
and Shankar (2009) highlighting the strategic importance of multichannel management
and integration. The often implicit assumption of the managers interviewed is that if the
firm can provide a consistent delivery of its brand values, it will improve CE. This
approach tends to confound consistency with effectiveness. Linking this consistent
delivery of brand values to customer value created and or business outcomes is indirect.
Eschewing calls in the literature for measurement specific to the construct of CE
(Verhoef et al., 2009; Klaus & Maklan, 2012), managers interviewed use customer
satisfaction, more specifically its Net Promoter Score (NPS) derivation, to monitor
customers overall assessment of their encounters with the firm. Whilst consistent with
the broader definition of CE, overall satisfaction might not generate the forensic data
that targets investment towards those areas of the experience that impact satisfaction
most. Equally, such measures limit their universe to existing customers and fail to
identify the experiences of lapsed and competitive users normally the majority of the
market. In analyzing what managers actually do, our research suggests that CE
management is a development of both Quality and Relationship Marketing theories /
practices. Managers articulate clearly the origins of their CE programs from extant

activities in one or both areas. Typically, a service firm identifies poor quality and or
inconsistent service delivery as an inhibitor to the development of their most profitable
customers and conceives of a CE program to address the issue. Scholars seeking to
establish that experience is conceptually new and important may at times
overemphasize its unique contribution to theory, whereas managers take a more
pragmatic perspective, and position CE as an extension to well-understood existing
activities. We therefore posit that CE will generate incremental performance and
customer value improvements rather than a dramatic step-change with the past.
Limitations and directions for future research
As does any research, our investigation has certain limitations that must be
acknowledged. Although the expert respondents are reasonable representatives of the
phenomenon of interest, they could be considered convenience samples. Further
research could explore CE management practices in even more detail based on specific
industry contexts and country of origin. We believe that extending our study to other
areas, subsequently allowing comparative studies if CE practice according to cultural
differences and across industries could be fruitful.

References
Abbott, L. (1955). Quality and competition: An essay in economic theory. New York, NY:
Columbia University Press.
Berry, L.L., Carbone, L.P., & Haeckel, S.H. (2002). Managing the total customer
experience. MIT Sloan Management Review, 43(3), 8589.
Berry, L.L., Wall, E.A., & Carbone, L.P. (2006). Service clues and customer assessment
of the service experience: Lessons from marketing. Academy of Management
Perspectives, 20(2), 4357.
Bitner, M. J., Ostrom, A. L.,, & Morgan, F. N. (2008). Service blueprinting: A practical
technique for service innovation. California Management Review, 50(3, Spring), 6694.
Boulding, W., Staelin, R., Ehret, M., & Johnston, W. (2005). A customer relationship
management roadmap: What is known, potential pitfalls, and where to go. Journal of
Marketing, 69(October), 155166.
Coviello, N., Brodie, R., Danaher, P., & Johnston, W. (2002). How firms relate to their
markets: An empirical examination of contemporary marketing practices. Journal of
Marketing, 66(3), 3346.
Di Gregorio, S. (2000). Using Nvivo for your literature review. Paper presented at the
meeting of the strategies in qualitative research: Issues and results from the analysis
using QSR Nvivo and NUD*IST, London, September. Retrieved August 3, 2011, from
http://www.sdgassociates.com/downloads/literature_review.pdf.
Edvardsson, B., Enquist, B., & Johnston, R. (2005). Cocreating customer value through
hyperreality in the prepurchase service experience. Journal of Service Research, 8(2),
149161.
Edvardsson, B., Enquist, B., & Johnston, R. (2010). Design dimensions of experience
rooms for service test drives: Case studies in several service contexts. Managing
Service Quality, 20(4), 312327.
Forgas, J.P. (Ed.). (2000). Feeling and thinking: Affective influences on social cognition.
New York: Cambridge University Press.
Gentile, C., Spiller, N., & Noci, C. (2007). How to sustain the customer experience: An
overview of experience components that co-create value with the customer. European
Management Journal, 25(5), 395410.
Glaser, B., & Strauss, A. (1967). The discovery of grounded theory: Strategies for
qualitative research. Chicago: Aldine Publishing Company.
Goffman, E. (1959). The presentation of self in everyday life. Garden City, NY: Double
Day & Co.
Goodwin, C., Grove, S.J., & Fisk, R.P. (1996). Collaring the Cheshire cat: Studying
customers' service experience through metaphor. The Service Industries Journal, 16(4),
421442.
Grewal, D., Levy, M., & Kumar, V. (2009). Customer experience management in
retailing: An organizing framework. Journal of Retailing, 85(1), 114.

Grove, S.J., & Fisk, R.P. (1992). The service experience as theater. Advances in
Consumer Research, 19, 455461.
Grove, S.J., & Fisk, R.P. (1997). The impact of other customers on service experiences:
A critical incident examination of getting along. Journal of Retailing, 73(1): 6385.
Grove, S.J., Fisk, R.P., & Bitner, M.J. (1992). Dramatizing the service experience: A
managerial approach. Advances in Services Marketing and Management, 1, 91121.
Grove, S.J., Fisk, R.P., & Dorsch, M.J. (1998). Assessing the theatrical components of
the service encounter: A cluster analysis examination. The Service Industries Journal,
18(3), 116134.
Gupta, S., & Vajic, M. (2000). The contextual and dialectical nature of experiences. In
J.A. Fitzsimmons & M.J. Fitzsimmons (Eds.), New service development: Creating
memorable experiences (pp. 3351). Thousand Oaks, CA: SAGE..
Haas, J.E., Hall, R.H., & Johnson, N.H. (1966). Toward an empirically derived taxonomy
of organizations. In R.V. Bowers (Ed.). Studies on behavior in organizations (pp. 157
180). Athens, GA: University of Georgia Press.
Haeckel, S.H., Carbone, L.P., & Berry, L.L. (2003). How to lead the customer
experience. Marketing Management, 12(1), 1823.
Hambrick, D. (1984). Taxonomic approaches to studying strategy: Some conceptual and
methodological issues. Journal of Management, 10(1), 2741.
Harris, K., & Baron, S. (2004). Consumer-to-consumer conversations in service settings.
Journal of Service Research, 6(3), 287303.
Heskett, J. et al., 1994. Putting the service-profit chain to work. Harvard Business
Review, 72(2), 164175.
Hillebrand, B., Nijholt, J.J., & Nijssen, E.J. (2011). Exploring CRM effectiveness: An
institutional theory perspective. Journal of the Acadamy of Marketing Science, 39(4),
592608.
Holbrook, M.B. (2006). Reply to Bradshaw, McDonagh, and Marshall: Turn off the
bubble machine. Journal of Macromarketing, 26(1), 8488.
Holbrook, M.B., & Hirschman, E.C. (1982). The experiential aspects of consumption:
Consumer fantasies, feelings, and fun. Journal of Consumer Research, 9(2), 132140.
Hume, M., Sullivan Mort, G., Liesch, P.W., & Winzar, H. (2006). Understanding service
experience in non-profit performing arts: Implications for operations and service
management, Journal of Operations Management, 24(4), 304324.
Johnston, R., & Clark, G. (2008). Service operations management: Improving service
delivery, 3rd edn. Harlow: FT/Prentice Hall.
Klaus, Ph. (2011). Quo vadis, customer experience? In C. Rusconi (Ed.), Beyond CRM:
Customer experience in the digital era. Strategies, best practices and future scenarios in
luxury and fashion. Milano: Franco Angeli.
Klaus, Ph., & Maklan, S. (2012). EXQ: A multiple-scale for assessing service
experience. Journal of Service Management, 23(1).

Klaus, Ph., & Maklan, S. (2011). Bridging the gap for destination extreme sports: A
model of sports tourism customer experience. Journal of Marketing Management,
27(1314), 13411365.
Krasnikov, A., Jayachandran, S. & Kumar, V. (2009). The Impact of Customer
Relationship Management Implementation on Cost and Profit Efficiencies: Evidence
from the U.S. Commercial Banking Industry. Journal of Marketing, 73, 61-76.
Maklan, S., & Klaus, Ph. (2011). Customer experience: Are we measuring the right
things. International Journal of Market Research, 53(6), 771792.
Maklan, S., Knox, S., & Peppard, J. (2011). Why CRM fails - and how to fix it. MIT Sloan
Management Review, 52(4), 7785.
Mascarenhas, O.A, Kesavan, R., & Bernacchi, M. (2006) Lasting customer loyalty: A
total customer experience approach. Journal of Consumer Marketing, 23(7), 397405.
Mattila, A.S., & Enz, C.A. (2002). The role of emotions in service encounters. Journal of
Service Research, 4(4), 268277.
Meyer, C., & Schwager, A. (2007). Understanding customer experience. Harvard
Business Review, 85(2), 116126.
Nambisan, P., & Watt, J.H. (2011) Managing customer experiences in online product
communities. Journal of Business Research, 64(3), 889895.
Neslin, S. & Shankar, V. (2009) Key Issues in Multi-channel management: current
knowledge and future directions. Journal of Interactive Marketing, 23, 70-81.
Normann, R. (2001). Reframing Business. When the Map Changes the Landscape. New
York: John Wiley & Sons.
Normann, R., & Ramrez, R. (1993). From value chain to value constellation: Designing
interactive strategy. Harvard Business Review, 71, 6577.
Padgett, D., & Allen, D. (1997). Communicating experiences: A narrative approach to
creating service brand image. Journal of Advertising, 26(4), 52.
Palmer, A. (2010). Customer experience management: A critical review of an emerging
idea. Journal of Services Marketing, 24(3), 196208.
Patrcio, L., Fisk, R.P., Cunha, J.F., & Constantine, R. (2011). Multilevel service design:
From customer value constellation to service experience blueprinting. Journal of Service
Research, 14(2), 180200.
Pine, J.B., & Gilmore, J.H. (1998). Welcome to the experience economy. Harvard
Business Review, 76 (4, JulyAugust), 97105.
Pine, J.B. and Gilmore, J.H. (1999). The experience economy. Work is theatre & every
business a stage. Boston, MA: Harvard Business School Press.
Prahalad, C.K., & Ramaswamy, V. (2003). The new frontier of experience innovation.
MIT Sloan Management Review, 44(4), 1219.
Prahalad, C.K., & Ramaswamy, V. (2004). The future of competition Co-creating
unique value with customers. Harvard Business School Press, Boston.
Pullman, M.E., & Gross, M.A. (2004). Ability of experience design elements to elicit
emotions and loyalty behaviors, Decision Sciences, 35 (3), 551578.

Reichheld, F. (2006). The microeconomics of customer relationships. MIT Sloan


Management Review, 47(2), 7378.
Ryan, G., & Bernard, H. (2003). Techniques to identify themes. Field Methods, 15(1),
85109.
Strauss, A., & Corbin, J. (1990). Basics of qualitative research: Grounded theory
procedures and techniques. Newbury Park, CA: SAGE.
Vargo, S.L., & Lusch, R.F. (2004). Evolving to a new dominant logic for marketing.
Journal of Marketing, 68(1), 117.
Vargo, S.L., & Lusch, R.F. (2008). From goods to service(s): Divergences and
convergences of logics. Industrial Marketing Management, 37(3), 254259.
Verhoef, P.C., Antonides, G., & De Hoog, A.N. (2004). Service encounters as a
sequence of events. The importance of peak experiences. Journal of Service Research,
7(1), 5364.
Verhoef, P., Lemon, K., Parasuraman, A., Roggeveen, A., Schlesinger, L., & Tsiros, M.
(2009). Customer experience: Determinants, dynamics and management strategies.
Journal of Retailing, 85(1), 3141.
Voss, C., Roth, A.V., & Chase, R.B. (2008). Experience, service operations strategy,
and services as destinations: Foundations and exploratory investigation. Production and
Operations Management.

Appendices
Appendix A Coding structure and corresponding item and dimension descriptions
CE definitions, scope, and objectives
1
KSO CE as key strategy/objectives
OOS Origins of CE strategy based on importance of CE for businesses/origins
2
3
MCI CE strategy as tool for multichannel integration
4
LCL Linking CE to customer loyalty
5
LCS Linking CE to customer satisfaction
6
LCR Linking CE to customer recommendations
7
ESQ CE as enhanced service quality
8
DFO CE as a differentiator for organizations
9
IDO CE as innovation driver for organizations
10 HEC Historical evolution of CE throughout the entire organization
11 BEN CE as brand reinforcement
12 ITP CE strategy as integrator of all touch-points
13 DOP CE definition from organizational POV
14 EPN Example(s) positive/negative CE
15 IOE Importance of emotions in CE
16 INV Invisible CE
17 EXT Extraordinary experiences
18 CPO CE from customers POV
19 ITO Who/what introduced CE to the organization?
20 PAC People and culture related
Governance of customer experience
21 PSM Purposeful systematic CE management versus outcomes and aims
22 RMD Responsible management for definition and control of CE
23 IOM Importance of measurements for delivering CE
24 CEB Customer experience as brand enhancer
25 RVP Reactive versus proactive measurements of CE
26 SAM Sophisticated approaches to measure CE
27 DIF Diffusion
Management of customer experience
28 CFP Connection to customer facing people's service delivery
29 TAI Training and instruction customer facing employees
30 PRD CE as people recruitment and development tool human capital management
31 ICMR Individuals' contributions to CE are measured and rewarded
32 BOI Back office integration in CE delivery
33 EOE Expected outcomes for employees
34 EOO Expected outcomes for organization and shareholders
35 ICFT Integration of cross-functional teams for CE delivery and management
36 DMA CE delivery manual
37 EOC Expected outcomes for customers
CE policy development
38 BMBP CE business model/business plan
39 HOF How were CE objectives formulated?
40 BPRO CE business processes
41 ICLE Importance C-level executive support/sponsoring for the success of the CE initiative
CE challenges
42 SUCH CE supply chain
43 LCEFO Linking CE to financial outcomes
44 HOLN Holistic nature of CE
45 CSPN Context-specific nature of CE
46 CELTC CE as long-term commitment
47 IETPD Integration of all touch-points for CE delivery

Appendix B
Items
KSO
OOS
LCL
LCS
LCR
ESQ
DFO
CEB
IDO
MCI
HEC
BEN
ITP
DOP
EPN
IOE
INV
EXT
CPO
ITO
PAC
PSM
RMD
IOM
RVP
SAM
DIF
CFP
TAI
DMA
PRD
ICMR
BOI
EOC
EOE
EOO
ICFT
BMBP
HOF
BPRO
ICLE
SUCH
LCEFO
HOLN
CSPN
CELTC
IETPD
Average per
organization1
Total Score per
organization2

1
2

Org. A
7
6
6
8
7
8
4
8
9
7
9
9
8
7
5
8
10
3
6
7
5
4
7
9
6
6
9
3
4
3
3
3
7
5
3
6
7
4
4
4
4
2
4
5
3
3
8

B
3
7
6
5
5
10
8
7
10
4
7
8
1
5
10
10
10
10
8
7
7
8
5
3
8
8
5
3
5
5
5
7
5
8
7
9
10
10
8
7
7
5
7
10
8
8
8

C
5
5
6
7
7
2
5
7
5
5
5
7
7
4
5
10
4
10
8
4
8
7
4
4
4
4
4
4
8
4
4
3
10
5
5
7
5
4
5
5
5
5
7
8
10
10
5

D
5.5
7
6
6
9
6
10
8
3
3
2
8
4
5
7
9
7
9
3
8
10
4
9
8
5.5
2
9
8
5
4
8
2
5
4
4
6
5
3
4
5
6
7
6
3
7
7
7

E
10
9
6
10
10
10
10
9
6
8
9
9
10
10
9
9
0
7
9
9
10
10
10
10
9
8
10
10
10
9
10
10
10
9
8
9
9
10
9
8
9
10
9
9
7
7
9

F
2
3
6
5
2
4
6
3
7
6
5
3
3
3
3
5
1
7
8
9
8
5
4
5
4
5
4
4
0
4
2
2
7
3
8
10
2
3
3
10
3
6
9
8
10
3
3

G
5
7
6
5
2
7
5
2
5
7
4
3
3
3
6
3
9
5
5
5
8
5
4
5
7
8
3
8
8
7
8
8
8
5
7
5
7
2
3
3
5
3
6
7
8
8
3

H
7
7
6
7
8
7
5
2
4
5
6
2
4
7
2
3
7
4
5
7
4
7
3
7
5
2
3
8
8
5
5
5
5
5
5
5
5
3
2
3
6
3
6
5
2
9
3

5.8

7.0

5.8

5.9

8.9

4.8

5.4

5.0

278.8

334.0

277.8

284.9

425.9

230.8

261.4

239.0

Average score of CE Strategy and Management activities of each organization


Vanguard CE practice representing an average score of 6.0 and above is marked with BOLD NUMBERS; preservers practice with Italic

Numbers.