Signature Experience: Art and Science of Customer Engagement for Fashion&Luxury Companies

by Stefania Saviolo (Editor)

Overview

This volume argues that fashion and luxury brands should craft the customer experience with the same attention as they do with products, injecting creativity in all relevant touch-points. In crafting the experience, not only physical and digital touch-points will be considered but also human touch-points. However crafting is not enough if the execution is not well engineered. This book explores how fashion and luxury organizations are usually divided into sylos (design, marketing, sales) and are more product-centric then consumer-centric. To become signature, the customer journey should be the result of a new organization design and company culture enabled by three factors: data and technology, people and organizational mechanisms, and processes design and execution.

Product Details

ISBN-13:	9788885486591
Publisher:	EGEA Spa - Bocconi University Press
Publication date:	10/01/2018
Edition description:	None
Pages:	144
Product dimensions:	6.00(w) x 9.25(h) x 0.30(d)

About the Author

Stefania Saviolo is a Professor of Management and Technology at Bocconi University and SDA Bocconi School of Management in Milan, Italy. Since 2013 she has been Head of the Luxury & Fashion Knowledge Center at SDA Bocconi School of Management where in 2001 she also was the founding Director for the International Master in Fashion, Experience & Design Management. In 2014 she launched the first ever MOOC (Massive Open Online Course) on fashion and luxury management on the American educational platform Coursera. She serves as board member in listed companies such as Stefanel, TXT, and Natuzzi. 

Read an Excerpt

CHAPTER 1

Defining Consumer Experience

by Stefania Saviolo

"It is beyond a doubt that all our knowledge begins with experience".

– Immanuel Kant

What is customer experience? Why is it important as well as difficult to manage? What is the definition of touch-point? What is an omni-channel customer journey?

1. Welcome to the customer-experience business

Whether it springs from product aesthetics or functionality, a delightful service in-store, personalised engagement in branded activities or in sharing feedbacks online, it's the experience that matters the most, making something memorable and meaningful. Consumers have always known that, rewarding their loyalty to companies and brands able to deliver experiences over products. What's certain is that it's the value of experiences over ownership in the consumer experience that has deeply changed the way companies do business in many industries. No matter the source – academic literature, high impact journals, consulting reports or CEOs talks – customer experience is considered today the battlefield of competition and the main source of competitive advantage as it leading to higher revenue growth via better customer satisfaction, loyalty and word-of-mouth (WOM). Recent psychological studies have shown that people are more satisfied when their money is spent on living rather than having; analysts expect that experiential goods will takeover products in the near future. Experiences are defining our social identities across social media so that a trip to an exotic destination or participating in an exclusive fashion show seems much more valuable than wearing a designer pair of shoes. The product itself is just the starting point of the value proposition that needs to be enriched by layers of experiences through the physical, digital and human interactions between the consumer and the brand. Consequently the process of value creation and value extraction is shifting from a product and firm-centric view to an experience and consumer centric view, where the breadth and depth of the relationship between the brand and the consumer is key.

Evidence shows that many businesses are still falling short of this paradigm shift. Although companies are investing large amounts of money in traditional loyalty programs, customer-relationship-management (CRM) technology, and in general service-quality improvements, most of these initiatives end in disappointment if not anger towards the brand. And angry customers can damage brand's reputation and do even more damage spreading the word via the internet. Social media is full of negative experiences due, for instance, to long delays for refunds to be processed, unhelpful staff and poor customer service such as the lack of response towards complaints. And it's not just about digital touch-points: at some fashion retailers the combination of a poor layout, limited changing rooms and lack of staff can often make the in-store experience frustrating. Disappointment may arise also from not being recognised by the sale staff or not being rewarded as a loyal customer. Even professional sales people in high traffic locations often demonstrate behaviors that indicate a belief that the product, due to its excellence, should sell itself.

Why did it happen? There are many reasons. In our research we found out that brand promise is designed and formulated in a way that it is difficult to execute in terms of experience. In Fast Moving Consumer Goods the brand promise comes from the marketing department while experience is related to the retail and customer service department often separated and managed by third parties. In the Fashion and Luxury sectors, the brand promise often originates from the designer vision, being related to an aesthetic statement that fails to be delivered in what the consumer actually experiences in the store or online. The way satisfaction is measured has more to do with product features and performance than with experiential drivers related to service, people, and emotional connections. Another reason behind poor experiences is that companies focus all their efforts on individual touch-points thus failing to consider the entire customer journey that is the real source of impression and brand's consideration. Originally, Fashion and Luxury companies created content just for opinion leaders (press, influencers, wholesale clients). The consumer was a priority of CRM, when available. In the recent years, companies have moved to selling products and stories to consumers and individual end users. Who owns the customer? Still CRM and frontline salespeople in their little black notebooks. It comes as no surprise that only a few of the executives surveyed in our research strongly agreed that business results anticipated from implementing CRM were met or exceeded.

Last but not least, designing customer journey requires customer data that is often old, incomplete and held by multiple organizational silos. The truth is that many firms do not know what experience means for their consumer or for their brand and organization. And in the luxury sector, many brands seem still too afraid to experiment, fearing the loss of control and compromise over their brand image. Customer experience is not just about assessing customer satisfaction and service quality but about understanding, planning and executing how the brand promise should resonate across selected and well-crafted points of contact between the company and the consumer.

In the process of understanding, defining the concept comes first. The purpose of the next chapter is to provide a workable definition of customer experience and a state of art of the evolution of academic contributions.

2. Customer Experience defined

As a much-researched phenomenon, customer experience (CX) presents a high level of heterogeneity in the scope and conceptualization as a construct. Academic literature has so far been quite fragmented offering different perspectives:

• CX as perceived by the consumer (focusing on understanding consumer behavior and explaining underlying psychological processes).

• CX as designed by the firm (focusing on the organizational perspective on ways to design CXs with a customer centric perspective).

• CX as the result of co-creation focusing on customer experience as the outcome of the customer's interaction with other actors in a broader eco-system.

Looking back, the etymology of the word "experience" comes from Latin and means knowledge through senses and actual observation. The debate about human experience has a long tradition in European philosophy centered around some of the most fundamental questions, such as how we experience time and space, the difference between imagining and seeing, whether beauty is subjective, how we can understand other people's emotions. The philosopher Immanuel Kant offered a thoughtful definition of experience as "knowledge by means of connected perceptions".

• Knowledge is the ultimate goal of any experience.

• Perception is how we sense external objects to build knowledge.

• Connection makes clear that the perceptions build knowledge in our mind as the result of several interactions in time and space, in addition to making reference to our prior knowledge and memories.

Academics started talking about experience in the context of the consumer economy in the 1950s observing that the individual as a consumer desire satisfactory experiences rather than buying just the product. However CX as a concept was introduced only at the beginning of the 1980s. Previously, consumption was seen mainly as a (rational) problem-solving process in the context of consumer behavior or in the context of customer satisfaction.

Scholars of the so-called "experiential view" observed that the act of consumption also included a flow of fantasies, feelings, and fun. Pine and Gilmore (1998) were the first to introduce to a wider audience of academics and practitioners the concept of the "experience economy". They observed that as product and services were becoming more commoditized, leading-edge companies were increasingly competing on experiences, defined as events engaging the individuals in a personal way. They also observed that setting experiences was about engaging customers on different levels such as entertainment, education, escape, and aesthetics. So there are different layers of experience and the richest experience includes them all. Schmitt et al. (2009)introduced the concept of brand experience as sensations, feelings, cognitions, and behavioral responses evoked by brand-related stimuli that are part of a brand's design and identity, packaging, communications, and environments. They also proposed a multidimensional brand experience scale that includes four dimensions: sensory (sense), affective (feel), cognitive (think), physical (act).

Since then, the definition of CX has evolved further to become a broad holistic concept encompassing and accounting for a diverse set of phenomena that are social and physical, ordinary and extraordinary and not always fully in the control of firms. Particularly interesting in this debate is the research about flow and/or peak experiences. The concept of peak experience as moments of peak happiness and fulfillment was first introduced by Maslow in 1964. Later, researchers underlined the difference between flow experiences that are ordinary and mundane versus peak experiences that stand out from everyday events and are moments of pure joy and excitement. Customer experience is therefore the result of the ever-shifting interaction and overlap between ordinary and extraordinary, flow and peak that are not mutually exclusive.

In this book we will adopt a definition of customer experience defined as a sum of individual interactions between the firm and the customer, adding value through customer participation and connection, at distinct points in the experience where the interactions are named touch-points.

3. From touch-points to the omni-channel customer journey

Touch-points have become the center of any consumer-led perspective. They are the point of interaction between the brand and its world of products, consumers, partners and environments. The term touch-point itself is quite fluid having been widely used as a substitute for contact point, place of interaction (physical, digital, human) or moment of truth. The "moment of truth" perspective in particular supports the notion that touch-points are places of static interactions but what matters is the impression they make on the consumer. This impression is defined as the "moment of truth": touch-points create impressions that can be positive or negative, cognitive, emotional or behavioural at any given moment of truth resulting in the overall customer experience. It's now clear that touch-points are important in understanding how customers interact with parts of the business and its offerings across media, channels and geography.

There are different kinds of touch-points according to the type of control the company has: brand-owned, partner-owned, customer-owned, and social/external/independent.

• Brand-owned touch-points are designed and managed by the firm and are under its control. They include brand-owned media (e.g. advertising and PR, websites, loyalty programs) and brand-controlled elements of the marketing mix (product attributes, packaging, service, store communication).

• Partner-owned touch-points are jointly designed, managed or controlled by the firm and one or more partners such as marketing agencies (sponsorships initiatives), multichannel distribution partners (retailers advertising or catalogues), communication channel partners (editorials) or multivendor loyalty program partners.

• Customer-owned touch-points are customer actions that are part of the customer experience but that cannot be controlled by the firm or its partners (e.g. customer's choice of payment, unpackaging at home).

• Social/external touch-points are represented by social media and external elements (other customers, peer influences, independent information sources or environments that influence the whole process).

If customers expect the brand promise to be consistent across all its touch-points, brands today have a big challenge in deciding where to allocate budget and time across the wide range of touch-points. As well as companies, researchers are still trying to understand what could be an optimal design, assuming that one really exists. They are also struggling to discover potential models to enable firms to deliver a seamless customer experience that is integrated across all the touch-points; this means recognizing the effects that the use of multiple devices across the customer journey have on the overall experience and defining tools or processes that help firms to exert more control over non-owned touch-points.

A profound change of mindset has to happen. Considering all kinds of touch-points, internal and external, leads to the awareness that CX takes place within a broader network of firms and service providers, defined in the literature as value constellation or service eco-system that all together create value for the customer. The customer experience should be seen as a culmination of a customer's interaction with other actors in a broader ecosystem, while recognizing the customer's role in the co-construction of the experience and as each consumer might have a different journey, the brand promise should consistently resonate across every one of them. Instead of focusing on just one part of the experience or a specific touch-point, companies should look at the complete customer experience. Here comes the importance of moving from the individual touch-point to the view of the entire customer journey beginning to end.

In the past, the vision of the journey was quite simple. Touch-points were traditionally grouped into three main stages, according to the different steps people had to take to become a customer: pre-purchase (awareness and consideration), purchase (preference and action) and post-purchase (loyalty and advocacy). This path was defined as a funnel as it went from the broadest to the narrowest set of choices:

• the consumers identify a need and start considering a number of potential brands based on a rational and emotional basis;

• the consumer may form an intention to buy the preferred brand in a choice set and act in order to purchase the good or service;

• the post-purchase stage is the one during which the customer uses or consumes the good and further engages with the brand. This stage is crucial since it can increase loyalty towards the brand and determine what the opinion of the brand will be when considering subsequent purchases.

The concept of the funnel has been criticized according to two perspectives:

1. the process is not simple and linear but consumers are going back and forth and therefore the funnel is better defined as a journey;

2. the view of the process has to be considered not in terms of individual or groups of touch-points but rather as an eco-system beginning-to-end.

Consumers nowadays connect with many brands through an ever-increasing range of touch-points to gather information before making a purchase or to engage with a brand before and after the purchase. They also increase their expectations when brands or retailers use multiple channels and engage with brands on social channels to seek peer reviews or ratings. So in terms of process consumers are often expanding the pool of brands before narrowing it down and they remain engaged even after the purchase within what has been defined as a loyalty loop. The process that consumers follow when making a purchase is much more complex and less predictable and rational then the systematic reduction of the choices available to them prescribed by the funnel approach. In Fashion and Luxury, for instance, consumer value is not solely created at the time of purchase but rather through the process of usage. Feedback from peers and interactions with customer service all represent contextual factors influencing the perception of value and overall satisfaction. Touch-points have to be thought of as an eco-system rather than as unconnected as they influence each other. In addition we intend to interpret touch-points according to their nature as physical, digital and human.

(Continues…)

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Table of Contents

Preface D. D'Angelo ix

Foreword xi

Part 1 Contextualising 1

1 Defining Consumer Experience S. Saviolo 3

1 Welcome to the customer-experience business 3

2 Customer Experience defined 5

3 From touch-points to the omni-channel customer journey 7

Notes 13

2 The Evolving Fashion and Luxury Eco-System S. Saviolo 15

1 Defining the context 15

2 The pattern of evolution 17

Notes 30

3 Fashion "Augmented Creativity" (and Its Dark Side) S. Saviolo 31

1 Managing creativity in the era of engagement 31

2 The dark side of augmented creativity 34

Notes 36

Part 2 Crafting 37

4 The Signature Experience Framework P. Pedersoli S. Saviolo 39

1 The signature experience framework 39

2 From Guessing to Knowing 46

Note 47

5 Signature Touch-Points: Best Cases L. Paladino 49

1 Engagement and consideration phase 49

2 Purchase phase 51

3 Service and feedback phase 53

Note 54

6 Crafting the Signature Experience Within the Fashion Communication Eco-System E. Corbellini L. Paladino 55

1 Brand communication strategy in a context of touch-points' multiplication 55

2 Transmedia storytelling: before buying products, people buy stories 57

3 The power of communities 60

4 Influencers: when people trust people 62

5 Orchestrating the content creation eco-system 66

Notes 70

Part 3 Engineering 71

7 The Organizational Framework P. Pedersoli 73

1 The difficult journey to customer-centric organizations 73

2 The Marketing driven approach 76

3 The Retail driven approach 77

4 Who leads the change? 79

5 Who manages the change? 82

Notes 85

8 The Operations and Processes at the Heart of the Signature Experience Execution P. Pedersoli 87

1 Why retail standards and people management matter 87

2 Codify the selling ceremony and other retail processes 89

3 Disseminate retail standards and getting people onboard 91

4 Manage hard and soft incentives 92

5 Continuously monitor and control 93

Note 96

9 Marketing Technology in the Era of the Experience-First Brands A. Maggio 97

1 Implications of technology on the signature experience 97

2 How to facilitate the marketing technology building process 105

Notes 106

10 Signature Experiences DOs and DON'Ts G. Gallone 107

Part 4 Envisioning 113

11 The Future Ahead M. Alberti M. Di Dio Roccazzella 115

Note 120

Afterword G. Presca 121

Postface G. Pecori Giraldi 123

Bibliography 125

About authors 129