Don Peppers - Managing Customer Experience and Relationships

1 Cover

2 Title Page Managing Customer Experience and Relationships A Strategic Framework FOURTH EDITION Don PeppersMartha Rogers

3 Copyright Copyright © 2022 by Don Peppers and Martha Rogers, Ph.D. All rights reserved. Published by John Wiley & Sons, Inc., Hoboken, New Jersey. Published simultaneously in Canada. No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording, scanning, or otherwise, except as permitted under Section 107 or 108 of the 1976 United States Copyright Act, without either the prior written permission of the Publisher, or authorization through payment of the appropriate per-copy fee to the Copyright Clearance Center, Inc., 222 Rosewood Drive, Danvers, MA 01923, (978) 750-8400, fax (978) 750-4470, or on the web at www.copyright.com . Requests to the Publisher for permission should be addressed to the Permissions Department, John Wiley & Sons, Inc., 111 River Street, Hoboken, NJ 07030, (201) 748-6011, fax (201) 748-6008, or online at http://www.wiley.com/go/permission . Limit of Liability/Disclaimer of Warranty: While the publisher and author have used their best efforts in preparing this book, they make no representations or warranties with respect to the accuracy or completeness of the contents of this book and specifically disclaim any implied warranties of merchantability or fitness for a particular purpose. No warranty may be created or extended by sales representatives or written sales materials. The advice and strategies contained herein may not be suitable for your situation. You should consult with a professional where appropriate. Further, readers should be aware that websites listed in this work may have changed or disappeared between when this work was written and when it is read. Neither the publisher nor authors shall be liable for any loss of profit or any other commercial damages, including but not limited to special, incidental, consequential, or other damages. For general information on our other products and services or for technical support, please contact our Customer Care Department within the United States at (800) 762-2974, outside the United States at (317) 572-3993 or fax (317) 572-4002. Wiley also publishes its books in a variety of electronic formats. Some content that appears in print may not be available in electronic formats. For more information about Wiley products, visit our web site at www.wiley.com . Library of Congress Cataloging-in-Publication Data is Available: ISBN 9781119815334 (Hardback) ISBN 9781119815358 (ePDF) ISBN 9781119815341 (ePub) Cover Design: Wiley Cover Image: © Den Rise/Shutterstock

4 Foreword The View from Here NOTE

5 Preface NOTES

6 Acknowledgments

7 About the Authors

8 PART I: Technology's Rainbow CHAPTER 1: Evolution of Marketing and the Revolution of Customer Strategy ROOTS OF CUSTOMER RELATIONSHIPS AND EXPERIENCE INITIAL ASSESSMENT: WHERE IS A FIRM ON THE CUSTOMER STRATEGY MAP? COMPARING MARKET-SHARE AND SHARE-OF-CUSTOMER STRATEGIES WHAT IS A RELATIONSHIP? IS THAT DIFFERENT FROM CUSTOMER EXPERIENCE? LEARNING RELATIONSHIPS: THE CRUX OF BUILDING CUSTOMER VALUE NOTES CHAPTER 2: Treat Different Customers Differently: How Learning Relationships Lead to Better Experiences and Higher Profit FOCUS ON RELATIONSHIP EQUITY THE STRATEGY: TREAT DIFFERENT CUSTOMERS DIFFERENTLY (TDCD) THE TECHNOLOGY REVOLUTION AND THE CUSTOMER REVOLUTION WHAT CHARACTERIZES A RELATIONSHIP? CUSTOMER LOYALTY: IS IT EMOTIONAL? OR BEHAVIORAL? CUSTOMER RETENTION AND ENTERPRISE PROFITABILITY NOTES CHAPTER 3: Better Customer Experiences for Better Shareholder Return FRICTIONLESS: THE IDEAL CUSTOMER EXPERIENCE MAY BE NO EXPERIENCE AT ALL PRODUCT COMPETENCE CUSTOMER EXPERIENCE DUALITY CUSTOMER COMPETENCE UNDERSTANDING CUSTOMER EXPERIENCE THROUGH CUSTOMER JOURNEY MAPPING NOTES CHAPTER 4: IDIC and Trustability: Building Blocks of Customer Relationships IDIC: FOUR IMPLEMENTATION TASKS FOR CREATING AND MANAGING CUSTOMER EXPERIENCES AND RELATIONSHIPS HOW DOES TRUST CHARACTERIZE A LEARNING RELATIONSHIP? DO THINGS RIGHT, DO THE RIGHT THING, AND BE PROACTIVE RELATIONSHIPS REQUIRE INFORMATION, BUT INFORMATION COMES ONLY WITH TRUST BEHIND THEIR CUSTOMERS' BACKS HOW TRUSTABLE COMPANIES OPERATE RECOVERING LOST TRUST NOTES PART I: Food for Thought NOTE

9 PART II: Customer Experience and Relationships: Trust Is the Foundation and IDIC the Building Blocks CHAPTER 5: IDIC Step 1: Identify Individual Customers INDIVIDUAL INFORMATION REQUIRES CUSTOMER RECOGNITION THE REAL OBJECTIVE OF LOYALTY PROGRAMS WHAT DOES IDENTIFY MEAN? FOUR WAYS TO INTEGRATE THE ONLINE AND CONTACT-CENTER EXPERIENCE CUSTOMER DATA REVOLUTION COOKIES AND PRIVACY NOTES CHAPTER 6: IDIC Step 2: Differentiate Customers by Value CUSTOMER VALUE IS A FUTURE-ORIENTED VARIABLE CUSTOMER LIFETIME VALUE RECOGNIZING THE HIDDEN POTENTIAL VALUE IN CUSTOMERS DIFFERENT CUSTOMERS HAVE DIFFERENT VALUES CUSTOMER VALUE CATEGORIES CUSTOMER REFERRAL VALUE NOTES CHAPTER 7: IDIC Step 2: Differentiate Customers by Needs DIFFERENTIATING CUSTOMERS BY NEED: DEFINITIONS AND EXAMPLES UNDERSTANDING CUSTOMER BEHAVIORS AND NEEDS WHY DOESN'T EVERY COMPANY ALREADY DIFFERENTIATE ITS CUSTOMERS BY NEEDS? CATEGORIZING CUSTOMERS BY THEIR NEEDS COMMUNITY KNOWLEDGE USING NEEDS DIFFERENTIATION TO BUILD CUSTOMER VALUE NOTES CHAPTER 8: IDIC Step 3: Interact to Learn and Collaborate DIALOGUE REQUIREMENTS IMPLICIT AND EXPLICIT BARGAINS DO CONSUMERS REALLY WANT ONE-TO-ONE MARKETING? CUSTOMER DIALOGUE: A UNIQUE AND VALUABLE ASSET EFFICIENT AND EFFECTIVE CUSTOMER INTERACTION COMPLAINING CUSTOMERS: HIDDEN ASSETS? EMPOWERING CUSTOMERS TO DEFEND THE BRAND AGE OF TRANSPARENCY NOTES CHAPTER 9: IDIC Step 3: Interact/Privacy Considerations PROTECT PRIVACY AND EARN CUSTOMER TRUST TO ENCOURAGE INTERACTION GENERAL DATA PROTECTION REGULATION CUSTOMER LOYALTY: IS A CUSTOMER LOYAL TO A COMPANY, OR A COMPANY LOYAL TO A CUSTOMER? PRIVACY PLEDGES BUILD ENTERPRISE TRUST THE WEB THAT MIGHT HAVE BEEN NOTES CHAPTER 10: IDIC Step 4: Customize to Build Learning Relationships HOW MASS CUSTOMIZATION WORKS HOW CAN CUSTOMIZATION BE PROFITABLE? ANSWER: CONFIGURATION TECHNOLOGY ACCELERATES MASS CUSTOMIZATION CUSTOMIZATION OF STANDARDIZED PRODUCTS AND SERVICES VALUE STREAMS CUSTOMER SUCCESS MANAGEMENT CULTURE RULES TECHNOLOGY'S REAL RAINBOW: COLLABORATIVE LEARNING RELATIONSHIPS NOTES PART II: Food for Thought

10 PART III: Making It Happen CHAPTER 11: Measuring and Managing to Build Customer Value CUSTOMER EQUITY CUSTOMER LOYALTY AND CUSTOMER EQUITY RETURN ON CUSTOMER LEADING INDICATORS OF LTV CHANGE STATS AND THE SINGLE CUSTOMER NOTES CHAPTER 12: Customer Analytics, Martech, Critical Thinking, Data Science, and the Customer-Strategy Enterprise CUSTOMER-SPECIFIC DATA AND LONGITUDINAL INSIGHT BIG DATA LIKELIHOODS, PROBABILITIES, AND REALITY A/B TESTING: SOME GUIDELINES FOR NON-STATISTICIANS CONDITIONAL REASONING AND BAYESIAN ANALYSIS A SMALL SECTION ON A BIG TOPIC: USING MARTECH TO BUILD CUSTOMER VALUE AND FOR MARKETING TASKS AN ANALYTICAL FABLE NOTES CHAPTER 13: Organizing and Managing the Profitable Customer-Strategy Enterprise WHO OWNS THE CUSTOMER RELATIONSHIP? WHAT IS THE FINANCIAL CASE FOR INVESTING IN CUSTOMER EXPERIENCE? RELATIONSHIP GOVERNANCE MAKING IT HAPPEN HOW DOES RELATIONSHIP GOVERNANCE AFFECT CUSTOMER SERVICE MANAGEMENT? NOTES CHAPTER 14: Leading to Build Customer Value HOW MARKETERS WORK WITH THE FINANCE DEPARTMENT HUMAN RESOURCES: MANAGING EMPLOYEES IN THE CUSTOMER-STRATEGY ENTERPRISE KEEPING AND GROWING CUSTOMERS IS ALIGNED WITH KEEPING AND GROWING EMPLOYEES LEADERSHIP BEHAVIOR OF CUSTOMER RELATIONSHIP MANAGERS AND OTHERS LEADING THE CUSTOMER-CENTRIC ORGANIZATION FUTUREPROOFING THE CUSTOMER-CENTRIC ORGANIZATION NOTES PART III: Food for Thought