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  • Writer's pictureStephen Plimmer

Beyond stated intent: the 4Es driving customer-experience

Marketers, product managers and researchers know very well that customers will say they intend to buy one thing and often behave differently. Therefore, to pre-empt trends in customer behaviour and experience, we need to look beyond the attitude and stated-preference surveys to recognise more erstwhile trends in buying behaviour, brand preference, and decision-making. We suggest four dimensions driving customer service innovation, rooted in psychology, economics, and technology trends and which have demonstrated consistent evolution for decades. The art and science of service managers it to drive forward with the dimensions that are most important given their market and organisational characteristics.



Drivers of technology in customer service.

Offering excellent Customer Experience has long been known as a source of competitive advantage, if not a necessary means of survival. Some recent research by McKinsey (2023) re-emphasised the fact:


"Successful experience-led growth strategies—those that increase customer satisfaction by at least 20 percent—can deliver a range of significant financial benefits. In particular, they can increase cross-sell rates by 15 to 25 percent, boost companies’ share of wallet by 5 to 10 percent, increase cross-sell rates, and improve customer satisfaction and engagement by 20 to 30 percent."


However, this doesn't answer "how?" (to achieve these benefits). Change, innovation, global competition and technological complexity associated with today's uncertain market environment make it harder to predict the right investments to create excellent experiences today, and that sustain into the future. While listening to customer feedback is important, cases of customers stating that they find certain products and services appealing or not, but then acting differently, are the stuff of legend in product innovation, marketing and research:


In its early days around 2006, Twitter faced criticism for its 140-character limit and was often dismissed as as being a forum when ]] people to share the most trivial details of everyday events.


When Apple first introduced the iPhone in 2007, there was skepticism and criticism about its lack of physical keyboard and high price.  


By contrast, in 2001, a great deal of hype and excitement surrounded the Segway Personal Transporter, with many believing it would revolutionise personal urban transport. The reality was that it died under the combined weight of high prices, limited usability and new regulation.


New Coke was the result of market research that suggested people wanted a sweeter taste. The market backlash was severe and the product short-lived.


People are simply not great at predicting their future behaviour...


In the area of lifestyle choices, peoples' intentions predict only 30%-40% of changes to healthier behaviour (e.g. Rhodes and de Bruijn, 2013).


Most new years resolutions fail (e.g. Time, 2023)


So what indicators can service managers and their organisations trust as they seek to prepare for the future?


To understand the drivers of customer behaviour, thus identify reliable trends in customer experience and service, we need to look beyond attitudinal and sentiment surveys. Clues and evidence lie in consistent trends relating to buying processes, choices, and responses to new innovations.


Crunching data and case studies, we arrived at "The 4Es of Customer Experience Innovation".


  • Effort

  • Experience

  • Ethics

  • Economics.


Below, we run through each of these four dimensions in turn, before proposing how businesses can use them to consider their customer experience strategies.


Effort


The idea that humans engage in "effort minimisation" is well accepted across a number of fields, encapsulated in the so-called Principle of Least Effort. In the field of customer service, the concept of "Customer Effort" emerged from research by the US Customer Executive Board (CEB) in 2008, and was popularised in a Harvard article that urged businesses "Stop trying to delight your customers" (Dixon et al, 2010). Attempts to "delight" customers, through surprises and exceptional forms of service, were found to have a minimal impact on customer behaviour. A more substantial impact on customer behaviour and commercial performance was found from removing the sources of hassle, effort, dissatisfaction etc. that plagued customers and encouraged them to shop elsewhere.


Unsurprisingly, as customer effort reduces then customer satisfaction increases, as demonstrated in a large study of over 300k customer interactions with 96 brands (Ardelet, 2017).


That said, the idea that measurements of "Customer Effort", through surveys, are the best predictors of customer behaviour is a controversial one. Haan et al (2015) found that top-box customer satisfaction scores outperformed both NPS and Customer Effort in predicting customer behaviour in an extensive study of 93 brands across 18 industries. Seemingly conflicting research finds for the superior predictive power of Customer Effort over traditional Customer Satisfaction.


BT found that customers who reported low levels of effort were 40% less likely to churn. A 2013 book by Dixon et al from the CEB ("The Effortless Experience"), demonstrating methodologies for diagnosing customer effort and improving customer loyalty, accumulated further evidence for the power of Customer Effort centric approaches to service management. In 2019, Gartner also cited that Customer Effort is 40% more accurate than Customer Satisfaction at predicting customer churn.


Customer Effort was. dissected by by Clark and Bryan (2013) of Henley Business School in collaboration with British Telecom ("Customer Effort: Hype or Help?"), where the authors proposed that effort came in four forms: 1) physical (making someone move), 2) time (making someone wait), 3) emotional (incurring unwanted emotions like anxiety) and 4) cognitive (making someone think). This clarification about "what effort is" provided a practical and tangible framework for organisations to audit then improve their service processes.


However, the exact predictive power of different measurements is arguably moot, as they measure different concepts or clusters of consumers' attitudes in different contexts. Customer Satisfaction is an ambiguous measure without understanding what contributes to it by way of expectations and experiences. In one setting, satisfaction could be dominated by price-perceptions, but in another, be driven by personalised service, or indeed, by emotional effort. Switching barriers and the availability of alternatives might additionally moderate the satisfaction-loyalty relationship.


The more reliable and obvious indicator that "effort" is an important driver of customer experience trends comes from the basic observation of human progress, Countless product and service innovations are testament to the power of reducing effort.


Taking the four sources of effort proposed by Clark and Bryan, we can see a wide range of products and services are borne with the raison d'etre of reducing human effort. shown in Table 1 below. We additionally provide examples of innovations that specifically appear increasingly within our homes, and reducing the effort we expend in life there, showing how services are moving closer to "meet consumers where they are". Many of these innovations reduce two or more sources of effort.


Table 1: Examples of product and service innovations to reduce effort

Type

Products & services

Examples in the home

Physical (movement)

Car, remote control, robot vacuum cleaners, social-media, online shopping, electric toothbrushes, delivery drones.

Smart heating, lighting, and smart locks can be controlled remotely through mobile apps, reducing manual effort.

Emotional (feeling)

Security alarms, insurance. mental health apps, banking apps.

Being able to monitor your home via your phone reduces anxiety when out of the home.

Cognitive (thinking)

Product bundles, sat-nav, autonomous vehicles, virtual reality therapy, recommendation engines.

Most home utility services involve subscriptions with auto-renewal.

Time

Washing machines, contactless payments, ready meals, self-service checkouts, chatbots, telemedicine, virtual assistants.

Appliances like smart ovens, refrigerators, and washing machines can be programmed to save time setting them each manually.


Experience

So while one school of thought, supported by wider psychological theory, suggests that consumers are driven to reduce effort, driving innovation in customer experience, another identifies how consumers seek experiences that are memorable and exceptional.


Pine and Gilmore (1998) were amongst those to popularise the concept of the "Experience Economy" which advocated that businesses can create value by staging memorable and engaging experiences for consumers, aligning with the human inclination for experience-seeking. Later, a study by PwC ("Experience Is Everything: Here’s How to Get It Right," 2018), showed consumers are willing to pay more for a better experience. Positive interactions and emotional engagement contribute significantly to brand loyalty.


Consumers are wired to meet a hierarchy of needs, as per Maslow's famous model: While the basic needs for survival and security are a given for organisations to consider, consumers also need love and belonging, self-esteem (confidence, self-affirmation, recognition) and self-actualisation (i.e. the experience of fulfilling of one's talents and potential).


Human psychology is complex and riddled with contradictions: One part of our brain seeks safety. Another exhibits a drive towards both experience-seeking and variety-seeking behaviors, met by novelty, stimulation, and a sense of fulfillment. According to the "Peak-End Rule," described by Kahneman et al. (1993), individuals tend to judge experiences based on their most intense moments and the way they conclude, rather than considering the entire duration. This can explain why people are drawn to unique and memorable experiences and want to repeat them.


The "Optimal Stimulation Level" theory (e.g. Landschultze, 2009) suggests that individuals seek an optimal level of stimulation, and when that level is not met, there is a propensity to seek variety or change. This suggests that an absence of cognitive and emotional effort is not necessarily optimal.


Using the higher needs in Maslow's famous pyramid, we can see many examples of product and service innovations can be considered as meeting higher level needs for love/belonging, self-esteem and self-actualisation. As with "Effort" we see examples of these increasingly appearing in the home, amongst other settings.


Table 2: Examples of products and services meeting higher level experiential needs.

Type

Product & service innovations

Examples in the home

Love & belonging

Social media, dating apps, community clubs.

Virtual family games, personalised home decor, open plan living spaces.

Self-esteem

Gyms, fitness apps, classes and courses, fashion brands and products, personal care/ cosmetics

Art, home fitness equipment, luxury home artefacts, smart mirrors, grooming tools and products.

Self-actualisation

Personal development programmes, career counselling, life coaching, experience-holidays,

Creative digital software, home interior design services, personal growth apps.

McGuire (1977) had previously proposed a different perspective on consumer motivations, having noted16 classes in 4 groups across the consumer research literature, describing why consumers buy a product or service.


Its a matter of personal taste on whether this additional granularity adds insight or confusion to Maslow's simpler framework. Suffice to say that consumers have long been observed making buying choices through deeply psychological needs to attain a range of emotional experiences. While over four decades has past since this study, it is testament to the erstwhile nature of those psychological needs that we can still recognise them as important drivers within innovations and business growth stories today.


For instance, McGuire noted the consumer motivation for "Consistency", which we see in the ways high-tech brands like Apple create a unified language, design and set of experiences across their devices. He recognised the consumer motivation for "Reinforcement" (of their values and beliefs), which have seen brands spend billions on the art and science of marketing products in ways that appeal to a deeper sense of self. Brands might create communities of users to generate social proof, which McGuire had noted in the form of the motive for "Affiliation" with different groups through purchasing.


Ethics

We could stop there, and conclude two dimensions to our framework: Effort and Experience. Consumers are driven to minimise their effort in life and maximise the emotional rewards they get from their experiences. Job done!


However, this perspective would paint consumers as solely self-serving. Consumers, surely, also think outside of narrow confines of themselves and towards the needs-of and implications-for others? Ethical factors (usually a combination of empathy for people who may suffer some hardship as a result of different products, and concerns for the natural environment, with impacts on everyone), also play into decisions.


The counter-argument would be that these factors are already considered within Effort and Experience. People are only "ethical" to reduce the emotional effort they'd otherwise experience by feeling that they were causing some sort of harm, or potential future harm, and fear the personal consequences by buying a particular product. By taking a moral stance, consumers are reducing emotional effort and seeking self-esteem or even self-actualisation, as they align their purchases with their values, which are nothing more than rules for survival and prosperity. Smizgin and Carrigan (2006) even noted that ethical purchases generate hedonistic pleasure.


The position we take here is that, whether human acts that help others are borne of selfishness, altruism or even hedonism, doesn't greatly matter. It is simply useful to recognise that people are motivated to achieve outcomes for both themselves and others in their purchase behaviour. Furthermore they can be motivated to achieve such outcomes for people they know (e.g. gifts), people they don't (e.g. fairtrade), or people not yet alive today (e.g. sustainable investments). Moreover, they can broadly seek to enable the same classes of Effort and Experience outcomes they seek for themselves, described above.


Ethical consumer behaviour also transcends buying decisions: Consumer behaviours included a wide range of actions, from boycotting products, to promoting them. Consumers retaliate against moral violations (Komarova Loureiro et al, 2018). Different motives have been ascribed to different ethical stances, ranging from expressions of love, appreciation of aesthetics (e.g. Smizgin and Carrigan, 2006), to expressions of concern for personal well-being (e.g. Vermeir and Verbeke, 2006) and expressions of guilt (Bray et al, 2011).


Three broad classes of ethical behaviour have also been noted, originating from different motivations Delistavrou et al (2017) described observing them at play in the Greek consumer market: a) Positive Ethical Consumption is typically where better educated and well-off (mainly female) consumers exercise their consumer power to exert political influence. b) Negative Ethical Consumption is where consumers boycott or avoid products or brands, and is exercised by more powerful, highly-educated consumers. c) Discursive Ethical Consumption is endorsed by younger, less materialistic and well educated consumers "who ... aim to share information about business practices against their moral values" which can evolve into "radical consumer activities, such as protests, marches."


"Purpose brands" have responded by developing products that directly address the source of the consumer concern e.g. renewable energy companies that are motivated to directly address climate change. A number of such brands have been successful e.g.:


Good Energy: Offers electricity with a 100% renewable mix, provided by 2,000 local independent regional generators.


Brewdog is an "anti-establishment" zero carbon brewer.


Coral Eyewear make glasses frames from the nylon of recycled fishing nets and fabric scraps from landfill.


TOMS is a US a shoe retailer who donate one pair of shoes to disadvantaged groups for every one bought.


Tesla, the famous electric-car manufacturer, has a mission to "accelerate sustainable transport."


More broadly, most organisations have faced growing but diverse sorts of pressure from a spectrum of consumers, employing different influences, as well as the sorts of disruptive competition created by purpose brands. Again, one might see debates on whether such brands are self-serving or altruistic, given that research has shown 78% of consumers are more likely to remember a brand with a strong purpose, and 72% said they would be loyal to such a company (Porter Novelli, 2021). However, the ends is to drive changes in both consumer behaviour and experience.


In terms of changes to the customer experience, over recent years, there has been rapid momentum in practices of reporting progress towards sustainability and EDI goals, within the broader banner of Environmental and Social Governance (ESG). In the US, 90% of the Russell 1000 companies were reporting ESG goals by mid 2023 with large cap companies approaching 100% (G&A, 2023). In turn, 57% of investors have adjusted their investment strategies in response to ESG (Natixis Investment Managers, 2023). Consumers are building in the evaluation of such credentials into their purchasing behaviour.



Economics

The three dimensions - Effort, Experience and Ethics - concern the consumer and their internal decision-making. The final dimension that is driving Customer Experience concerns the wider pressures on the service organisations delivering them.


To survive and succeed in the marketplace, organisations are needing to meet evolving consumer needs for (minimal) effort, (memorable, stimulating) experience and ethical contributions to a greater-good, to a level that equals or betters competition on at least one source of differentiation.


Organisations also need to make a profit in doing so, which brings in the question of economics, and the 'efficiency' with which needs can be met.


Consumers remain price sensitive. Most demand elasticities are negative for consumer foods and drinks (da Silvioni Marioni et al, 2022), transport (Wardman, 2022), energy (Bobbio et al, 2021) and non-durables (e.g. Salotti, 2015), which all means that consumers will buy less when prices rise. In the UK, particularly post-Pandemic with the subsequent economic downturn, budget supermarket chains Aldi and Lidl were growing their market share at the expense of traditional retailers (Statista, 2023) when prices increased.


Following decades of optimising processes using techniques like Lean and Six Sigma, and in light of rising energy and commodity prices, the promise of efficiency and productivity improvements is now provided by digital technologies. Competitive advantage is gained by applying technologies to both meet customer needs and reduce the costs per service interaction (e.g. Hoyer et al, 2020).


Reconciliation and application

While reducing effort and enhancing the emotional aspects of experiences and/or being ethical might seem contradictory or conflicting trends, these factors are not necessarily mutually exclusive. A series of McKinsey reports around 2018-20 (e.g. "Personalizing the customer experience: Driving differentiation in retail"), highlighted the importance of balancing simplicity with personalisation to meet the evolving expectations of consumers, addressing both the Effort and Experience-related needs. Effort and Experience both have their place within a wider consumer proposition.


Consumer preferences vary across different product-markets. In sectors like e-commerce and banking, consumers often prioritise efficiency and ease of use. Taking their attention to deliver emotionally engaging interactions would delay them from the rest of life, which offer a richer source of such experiences. In the hospitality and luxury sectors, however, the experience is a critical differentiator. In sectors where the impact of purchases has a far reaching effort, notably energy, then the ethical considerations come more into play, and the experience to some consumers of being made to feel part of the mission might be worth the effort of, say. receiving environmental information about the product. Moreover, different consumer segments make decisions that vary with socio-economic status, age and factors like personality traits and personal values.


A simple way of looking at it would be that consumers are seeking more experiences, including the experience of doing good. If and where organisations are not in the business of delivering these outcomes, generally because their wares are essentials, then the least they can do is provide an effortless interaction that costs consumers minimal time and energy. Furthermore, if it costs too much money, they'll switch.


Organisations - who are pressed by finite resources of time, money and energy - may wish to consider their own position. A suggested list of 16 dimensions, with 4 factors for each of the 4Es, is proposed in Table 3. For each factor, organisations could consider: a) what do our customers' expect today, b) what will the expectation be in 2-3 years from now, c) what are our competitors doing today that meet these expectations better than we do, d) and where are the biggest 1-2 opportunities to differentiate?


Table 3: Factors to evaluate opportunities and risks in customer behaviour trends under the 4Es framework.

Effort

Experience

Ethics

Economics

  1. Physical effort

  2. Time

  3. Emotional effort

  4. Cognitive effort.

  1. Cognitive preservation

  2. Cognitive growth

  3. Emotional preservation

  4. Emotional growth

  1. Concern for hardship

  2. Concern for unfairness

  3. Concern for future generations

  4. Concern for nature and environment.

  1. Initial cost

  2. Recurring costs

  3. Hidden costs

  4. Opportunity costs


Conclusion

We have noted that there are countless trends associated with customer- service, -experience and -behaviour.


To simplify, we noted that there are two particular erstwhile trends in human development that cut through the noise: the minimisation of effort and the satisfaction of emotions via experience. Moreover, buying motivations are directed at not only personal satisfaction, but the (ethical) consideration of others.


As they are based on decades of customer service evolution, organisations can plan ahead with some degree of confidence that all of these high-level trends will continue, while monitoring current sentiments, technology developments and competitor responses to understand how the needs are being met.


As ever, businesses will be hard-pressed to excel at everything, which suggests that as time elapses, it is continually worth monitoring the evolving minimal expectations of key consumer groups, while finding points of difference to excel with priority consumer targets.


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