Table Of Content

Managing Customer Experience and Relationships Managing Customer Experience and Relationships A Strategic Framework Third Edition Don PEPPErs MarTha rogErs Cover image: © Danil Melekhin/iStockphoto Cover design: Wiley Copyright © 2017 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) 646-8600, or on the Web at www.copyright.com. 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Title: Managing customer experience and relationships : a strategic framework / Don Peppers, Martha Rogers. Description: 3rd edition. | Hoboken, New Jersey : John Wiley & Sons, Inc., [2017] | Series: Wiley corporate F&A series | Includes index. Identifiers: LCCN 2016023735 (print) | LCCN 2016036342 (ebook) | ISBN 978-1-119-23625-2 (cloth) | ISBN 978-1-119-23982-6 (pdf) | ISBN 978-1-119-23981-9 (epub) | 978-1-119-23983-3 (obook) Subjects: LCSH: Customer relations—Management. | Consumers’ preferences. | Relationship marketing. | Information storage and retrieval systems—Marketing. Classification: LCC HF5415.5 .P458 2017 (print) | LCC HF5415.5 (ebook) | DDC 658.8/12—dc23 LC record available at https://lccn.loc.gov/2016023735 Printed in the United States of America 10 9 8 7 6 5 4 3 2 1 Contents Foreword by Phil Kotler xiii Preface xvii Acknowledgments xxi About the Authors xxiii Part I PrinciPles of Managing custoMer exPerience and relationshiPs 1 ChaPter 1 evolution of relationships with customers and strategic customer experiences 3 roots of customer relationships and experience 5 Traditional Marketing Redux 11 What is a relationship? is that different from customer experience? 20 Who Is the Customer? 21 How to Think about Customer Experience 22 Return on Customer: Measuring the Efficiency with Which Customers Create Value 25 the technology revolution and the customer revolution 28 Royal Bank of Canada’s 16 Million Loyal Customers 30 The ROI of Building Customer Relationships in Financial Services 34 summary 38 food for thought 39 glossary 39 ChaPter 2 the thinking behind customer relationships that leads to good experiences 43 Why do companies Work at Being “customer-centric”? 44 What characterizes a relationship? 46 Continuing Roles for Mass Media and Branding 46 v vi Contents Characteristics of a Genuine Business Relationship 47 Building Genuine Customer Connections: A Framework for Understanding Customer Relationships (James G. Barnes) 50 customer loyalty: is it an attitude? or a Behavior? 61 Loyalty Programs 63 summary 66 food for thought 67 glossary 67 Part II idic iMPleMentation Process: a Model for Managing custoMer relationshiPs and iMProving custoMer exPeriences 71 ChaPter 3 customer relationships: Basic Building Blocks of idic and trust 73 trust and relationships happen in unison 74 idic: four implementation tasks for creating and Managing customer experiences and relationships 79 how does trust characterize a learning relationship? 82 The Speed of Trust (Stephen M. R. Covey) 82 The Trust Equation: Generating Customer Trust (Charles H. Green) 85 Becoming More and More trustable to customers 92 The Age of Transparency (Dov Seidman) 96 Basic Principles of Twenty-First-Century Trustability 101 do things right and do the right thing 102 Be Proactive 103 The Man with the Folding Chair 106 relationships require information, but information comes only with trust 108 Scenario: Governments Develop Learning Relationships with “Citizen-Customers” 111 summary 116 food for thought 116 glossary 117 ChaPter 4 identifying customers 119 individual information requires customer recognition 120 The Real Objective of Loyalty Programs and Frequency Marketing Plans 124 What does Identify Mean? 129 Contents vii customer data revolution 133 The Role of the “Internet of Things” and Smart Products in Managing Relationships with Customers 138 summary 139 food for thought 139 glossary 140 ChaPter 5 differentiating customers: some customers are Worth More than others 143 customer value is a future-oriented variable 145 Assessing a Customer’s Potential Value 158 different customers have different values 159 Pareto Principle and Power-Law Distributions 160 Customer Referral Value 165 Is It Fair to “Fire” Unprofitable Customers? 170 Dealing with Tough Customers 171 Canada Post Customer Value Management Program: Using Value to Differentiate Customer Relationships (Janet LeBlanc) 179 summary 182 food for thought 183 glossary 184 ChaPter 6 differentiating customers by their needs 187 definitions 188 Demographics Do Not Reveal Needs 191 differentiating customers by need: an illustration 192 Scenario: Financial Services 193 understanding customer Behaviors and needs 194 Needs May Not Be Rational, but Everybody Has Them 196 Why doesn’t every company already differentiate its customers by needs? 197 categorizing customers by their needs 198 understanding needs 200 community Knowledge 202 using needs differentiation to Build customer value 206 Scenario: Universities Differentiate Students’ Needs 208 summary 212 food for thought 213 glossary 213 viii Contents ChaPter 7 interacting with customers: customer collaboration strategy 217 dialogue requirements 219 implicit and explicit Bargains 220 do consumers really Want one-to-one Marketing? 222 Two-Way, Addressable Media: A Sampling 223 technology of interaction requires integrating across the entire enterprise 226 Managing Customer Experiences by Taking the Customer’s Perspective (Mounir Ariss) 229 customer dialogue: a unique and valuable asset 234 Customizing Online Communication (Tom Spitale) 236 not all interactions Qualify as “dialogue” 239 When the Best Contact Is No Contact (Bill Price and David Jaffe) 240 Contact Centers Take a New Approach to Customer Interactions (Elizabeth Glagowski) 243 cost efficiency and effectiveness of customer interaction 244 complaining customers: hidden assets? 245 summary 248 food for thought 248 glossary 249 ChaPter 8 customer insight, dialogue, and social Media 253 The Dollars and Sense of Social Media 254 listening to customers 260 The Importance of Listening and Social Media (Becky Carroll) 261 Crowd Service: Customers Helping Other Customers (Dr. Natalie L. Petouhoff) 267 age of transparency 277 as interactions Multiply, trust Becomes More important 277 Influencing the Influencers 283 summary 286 food for thought 286 glossary 287 ChaPter 9 Privacy and customer feedback 289 The Trust Advantage of Robust Data Stewardship (John Rose) 294 Individual Privacy and Data Protection (Larry A. Ponemon, Ph.D.) 303 Privacy in europe is a different World 306 European Organization for Economic Cooperation and Development Privacy Guidelines 307 Privacy Pledges Build enterprise trust 310