We’re Moving to the New Customer Innovations Website

We are very happy to announce that Customer Innovations is moving to a new and updated home on the web.

You can find us at:  www.customerinnovations.com

The ideas and insights we’ve been sharing on this blog site have already been relocated to this new location.

Onwards and upwards,

Frank Capek,  CEO, Customer Innovations, Inc.

Outcomes-Based Experience Design


Chris O'Leary

Bridging the Gap Between Customer Experience and Business Outcomes

by Chris O’Leary, COO, Customer Innovations, Inc.

In the 25 years we’ve been helping companies design customer experiences, one of the consistent challenges has been to estimate the business impact of specific experiential improvements.  The fact is that many customer experience (CE) programs simply fail to make a compelling argument about the business value that will be generated by specific CE innovations. In the absence of a compelling business justification, executive support and sponsorship may be weak or even absent, orphaning the CE program and robbing it of the executive leadership it needs.

In their efforts to generate a business justification, Customer Experience (CE) managers frequently try two approaches.  Neither approach has been consistently effective in earning senior management support and sponsorship.

First, they may choose to rely on generally held beliefs about the value of customer satisfaction, engagement or Net Promoter Scores (NPS).  Often, this reliance highlights a correlation between these indices and some business outcome (e.g., revenue growth or market share), but treats it as though it was a causal relationship. (see: Keiningham et al., “A Longitudinal Examination of Net Promoter and Firm Revenue Growth,” J. Marketing, Vol. 71  July, 2007, pp. 39-51)

In addition to the confusion of correlation and causation, we’ve also seen many cases in which high satisfaction or NPS scores actually co-exist with declining revenues, market share, and profitability.  These measures reflect how customers feel about the company and not how the company may make customers feel about themselves.  As a result, they are poor predictors of how customers will actually behave.

The second approach, of course, focuses on generating cost savings and efficiencies, most often at the service touch points.  Unfortunately, service efficiency is almost always more important to the company than to the customer, and efforts to streamline or automate the touch points typically end up working against the quality of the overall customer experience.  (See:  The Customers’ Experience Does Not Happen at Your Touchpoints).

What is needed is a fundamentally new approach to focusing and justifying investments in customer experience innovation, one which directly addresses the core challenge of connecting specific experiential innovations with measurable business objectives.

For some time, we have been using a new approach to CE business justification called Outcomes-Based Experience Design, which represents a 180-degree change from common practices:

  • Rather than trying to justify potential CE innovations by predicting or projecting hoped-for business outcomes, this approach starts by clearly defining the desired measurable business outcomes and working backward to identify the innovations required to generate those outcomes.
  • Rather than relying on self-reported satisfaction, loyalty and NPS scores, this approach targets concrete business and customer behavior outcomes, both of which are measurable at the individual and the aggregate level.  Satisfaction, loyalty and NPS are interesting, but should NEVER be used to justify investment in experience innovation!

Rather than competing for attention, funding and time with other business initiatives, this approach anchors CE to the existing strategic priorities, which is where CE should have been all along.

Figure 1: Outcomes-Based Experience Design

As illustrated in Figure 1, the Outcomes-Based Experience Design approach introduces a new measurable outcome, Behavioral Outcomes that connects Experiential Outcomes and Business Outcomes.  Linking Experiential Outcomes and Business Outcomes in this manner enables CE program leaders to define and measure the specific business value that is being created, and this provide a rigorous business justification.

The model works in two directions.  The first direction, going right to left, illustrates the design relationship. When designing the experience innovation, one starts with the business outcome of interest, then determines the specific customer behavior that needs to be influenced, and then designs the specific experiential interventions that are required.

Second, the model illustrates the causal relationship going left to right.  The only way that CE innovation can create a business benefit is by influencing a specific change in customer behavior and choice-making.  The difficulty in business justification discussed earlier arises from the fact that it is so difficult to predict how customers in general will respond to different CE innovations, and even more so for specific groups of customers,

Outcomes-based Experience Design generates a host of critical benefits.  First and foremost, it positions CE innovation as a tool for achieving the priorities of executives and senior managers, NOT competing with those requirements.  Second, it provides metrics and measurability at each stage of the causal relationship.

Third, it allows companies to invest only in those innovations that will influence the target customer behavior, and stop investing in potentially expensive initiatives which may not matter to customers or for which they are not willing to pay.  Identifying (and terminating) uneconomic CE investments will often fund new investments that are far more impactful and that generate meaningful business benefits.

One final note:  This model is effective only if we understand how and why customers behave as they do.  Without the ability to link individual characteristics to the decisions and choices a customer makes, there is no way to design experiential interventions that will be effective in influencing the target behavior.  More important, there is no way to assure that  an experiential intervention targeting undesired customer behavior (e.g., attrition), will not adversely affect desirable customer behavior (e.g., retention, growth).

The necessary foundation of Outcomes-Based Innovation, therefore, is the ability to understand how and why customers make the choices that they do, and to use that information to influence those choices.  The scientific and methodological basis for this understanding has been previously discussed here (Getting Beneath the Voice of the Customer) and here (Customer Experience:  Beyond Better Sameness); practical challenges and applications will be discussed in the future.

Getting Beneath the Voice of the Customer

Doesn’t it make sense that:

  • If you want to know what customers want, just ask them.
  • If you want to see if they’re satisfied with the experience, just ask them.
  • If you want to know if they’re come back or will refer you, just ask them.
  • If you want to understand what you can do to improve, just ask them.

Listening to customers is critical for gaining insight into their lives, their goals, their needs, as well as, their frustrations, feelings, and behaviors.  Unfortunately, we’ve found that most structured “voice of the customer” research is not only ineffective for designing influential customer experiences, but it can seriously undermine innovation by directing investment at the wrong things.

It’s common for companies to conduct customer interviews, surveys, and focus groups trying to understand what customers want.   The reality is that what customers say they want is not often well-correlated with the subconscious factors that influence their behavior.  In many cases, what customers say they want is actually quite inconsistent with what ultimately drives their behavior.  The key is to able to engage customers in fundamentally different kinds of conversations and get beneath the surface of what they say to understand the deeper experiences they’re having.

I first encountered this disconnect about 25 years ago.  At the time, I was working with Dick Larson at MIT.  Dr. Larson is an expert in the psychology of waiting.   The situation involved commercial real estate managers responsible for several high-rise office buildings in New York.  These managers were trying to figure out how to address customers’ dissatisfaction with the amount of time spent waiting for elevators during peak periods.  Not surprisingly, if you ask customers what they want, they’ll tell you that they want an increase in service levels:  faster elevators and less waiting.  Obviously, the complexity and cost of actually improving service levels are quite high; it would involve installing faster elevators, dedicating more interior space to elevator banks, improving the optimization of elevator queuing, etc…   It turned out that the most effective improvement was to install mirrors in the elevator lobbies.  This allowed people to entertain themselves by fixing their hair, straightening their tie, and checking each other out in a much more socially acceptable way.  The perceived experience improvement was greater with the relatively low cost mirrors than with the relatively high cost technology required to improve actual service levels.  Note:  Waiting is an important aspect of many experiences, for more information about designing better waiting experiences see: Helping Customers Lose Wait.

Elevators

In general, the design of influential experiences involves a trade-off between two strategies:  1) improve the reality of the events, service levels, etc… and/or 2) influence the way customers experience and act on those realities.   When you ask customers what they want or what they liked or didn’t like about their experience, what do they tell you?  In most cases, they only talk about the relatively obvious service levels associated with the first strategy.

Another example of this disconnect involves customers’ surface-level desires for more choice… compared with their subconscious distaste for actually having to make choices.  When conducting traditional voice of the customer research, customers often ask for a set of choices that allow them to find the alternative they prefer.  However, when presented with the range of choices uncovered in the research, the same customers find that actually making the choice exceeds both their level of motivation and capacity for processing information at the point of purchase.  In essence, giving customers the choices they request often leads to a “choice overload” that gets in the way of profitable customer behavior… in many cases, influencing them to postpone making a decision.

Jam

In one illustrative experiment, conducted by Iyengar and Lepper, consumers shopping at an upscale grocery store were presented with a tasting booth that displayed either a limited selection (6) or an extensive (24) selection of different flavors of jam.  The experimenters measured both customers’ initial attraction to the tasting booth and their subsequent purchase behavior.  While the extensive choice booth attracted more customer attention, customers presented with the limited set of choices were 10 times more likely to make a purchase.  Customers that sampled from the limited choice booth made a purchase 30% of the time versus only 3% of the time from the extensive choice booth. Leading companies are really starting to internalize this finding.  P&G, for example, reduced the number of versions of Head and Shoulders shampoo from 26 to 15, and, in turn, experienced a 10% increase in sales.

Voice of the customer research makes the underlying assumption that people have a relatively stable, conscious, explainable, and at least somewhat consistent set of preferences.  It also makes the assumption that when ask customers about their preferences they can tell you or, in some cases, when you present them with a set of forced choice trade-offs (e.g., would you prefer to buy A or B), how they choose will reflect what they do in real life.  Unfortunately, this is far from true.  People typically don’t know what they want until they see it; they construct their preferences and work through decisions as they perceive their alternatives in the actual purchase environment.  Subtle differences in the design of that purchase environment can have a significant impact on the decisions customers make.  In fact, research in the areas of cognitive psychology and behavioral economics has shown that…

…small and seemingly insignificant contextual details have a major impact on people’s behavior.

One of my favorite recent examples comes from MIT Professor Dan Ariely.  (See Dan’s great book:  Predictably Irrational)  Dan came across the following advertisement for The Economist:

The Economist Subscription Options

The Economist Subscription Options

The ad offered three subscription options:

  • Electronic Only: $59
  • Print Only: $125
  • Electronic and Print: $125

Which of these options do you think people would choose?  Why would anyone choose the “Print Only” option rather than opting for the additional “FREE!” electronic subscription?  It seems very unlikely!  In fact, Ariely conducted a test with 100 Sloan School students and only 16 chose “Electronic Only” while 84 chose the “Electronic and Print” option.  No one chose the “Print Only” option! On the surface, this option seems totally irrelevant.  Why would you even offer it?   It turns out that something very interesting happens when this seemingly irrelevant option is eliminated.  When another 100 students were offered only two choices: “Electronic Only” and “Electronic and Print”, 68 chose “Electronic Only” while only 32 chose “Electronic and Print.”

The presence of an irrelevant option influenced a more than 250% increase in customers choosing the more expensive alternative!!!

Ariely observed the following, “Thinking is difficult and sometimes unpleasant.” Cues that allow us to establish the relative value of various offerings, then, reduce the cognitive load or effort required to think about your options.  What the Economist offered was a no-brainer; while we can’t be certain that the print subscription is worth more than twice the electronic version, the combination of the two was clearly worth more that the print version alone.

In another illustrative example of how subtle environmental details influence customer behavior, Cornell University researchers Sybil S. Yang, Sheryl E. Kimes, and Mauro M. Sessarego found that by dropping the “$”symbol on a restaurant menu can have a significantly positive impact on the total ticket value.  The researchers did a side by side comparison of three ways of presenting menu prices: with a preceding dollar sign (e.g., $14.95), without a dollar sign (e.g., 14.95), and as written out prices (fourteen dollars and 95 cents).  Aside from the subtle differences in price presentation, all other aspects of the actual pricing and customer experience were held constant.  They found that the average total ticket increased by $3.70 when prices were presented without the dollar sign.  They also found that the average ticket decreased by $1.85 when prices were written out.

All of these examples illustrate a level of insight into the way people have experiences and act on their experiences that cannot be accessed by most  traditional, structured voice of the customer research.

The Vast Majority of Human Experience is Subconscious

Every waking second of the day, each of us processes just over 4,000,000 bits of sensory information.  At the same time, we get to pay conscious attention to only 7+/- higher level and relatively abstract notions about what’s happening to us, what we’re doing or planning to do, and how we’re feeling about all of this.  Luckily our brain does an outstanding job of filtering, predicting, and prioritizing all if this information in a way that makes it possible for us to be reasonably effective in the world.  The challenge is every normally functioning human being on the planet lives in a state of “naïve realism.”  This naïve realism, gives us the sense that we’re experiencing our surroundings as they actually are, rather than just as a high level abstraction of what we believe them to be.

If we are asked by a researcher to describe an experience, particularly an experience we had at some point of time in the past, the best we can do is relate what we think we remember, about how we believe we felt, along with the alibis we construct for the choices we made, in an experience that was almost entirely subconscious.  However, due to the state of naïve realism we live in, we’re convinced that our explanations have merit… despite the fact that we are just reconstructing a plausible sounding story for what we think happened.  This is the way it works for all of us.  It’s also the fatal flaw for most structured, traditional voice of the customer research.

Understanding how to design highly meaningful, differentiated, influential, and profitable experiences involves engaging people in fundamentally different sorts of conversations and listening in ways that get beneath the surface of what they say to understand the deeper, subconscious aspects of how  people actually have experiences.

VOC Iceburg

While there’s value to listening to customers’ recollections of the experiences they’ve had and their suggestions for improving that experience, what you really need to look for and understand are:

  1. Goals and Desired States
    • What set of desired states and goals are people really trying to accomplish?
    • What kinds of experiences are people attracted to and comfortable engaging with?
  2. Beliefs and Expectations
    • How do people make sense of and remember the experiences they have?
    • How do people construct situation-specific expectations and preferences?
  3. Emotional States and Triggers
    • What conscious and subconscious emotional states influence peoples’ actions?
    • How do specific events trigger emotional reactions that influence behavior?
  4. Natural Behavioral and Decision Pathways
    • What behavioral pathways do they naturally follow to accomplish their goals?
    • How do people make choices in light of these expectations and preferences?

We’ve developed an innovative toolset for answering these questions. Experience MinerTM provides a rigorous way of capturing and analyzing the most critical aspects of the way people think, feel, and act  on their experiences.  It involves a fundamentally different way of listening to what people say and watching what they do in order to identify what’s going on beneath the surface.  Built on 25 years of research into the cognitive, affective, and behavioral basis of experience, it provides the specific insight required to focus design and delivery efforts on the areas of greatest influence and financial return.   Experience MinerTM is used to identify the most influential experience elements for each target customer personae.  This insight is used to 

…design evocative experiences from the mental model of the experiencer.

The Experience MinerTM toolset consists of the following seven elements, each designed to fill in a critical piece of insight required to design experiences that influence behavior.

Experience Miner Toolset

  • Goal Space MappingTM Describes the desired states and situation-specific goals that motivate and direct the experience for each key persona
  • Experiential TemperamentTM – Profiles how temperamental differences influence the way people are drawn to and engage with novelty seeking, harm avoidance, social orientation, and persistence
  • Framing Metaphors – Surfaces the underlying physical metaphors people use to interpret, evaluate and act on their experiences in the relevant domain(s).
  • Experiential ConstructsTM – Identifies the most common, learned distinctions that enable people to recognize, categorize, differentiate, and form expectations.
  • Emotional States and TriggersTM –  Surfaces the emotional states and specific triggers across the lifecycle of the experience highlighting areas of uncertainty, stress, frustration, etc…
  • Experiential PathwaysTM – Maps the end-to-end set of activities and choice points that people follow in pursuit of their goals… including the unwritten rules and automatic behavioral scripts people apply along this pathway.
  • Experiential Choice DynamicsTM – Describes the situation-specific choice processes that people follow, as well as, how they construct preferences and make decisions that influence their behavior.

If you’re interested, I’ve covered various topics related to the elements of Experience Miner in a wide range of other posts, including:

Experience Miner: Creating Profitable, Evocative Experiences

Most of the time and money organizations invest on customer experience is wasted…

… because they focus on how the organization “delivers the experience”…

… rather than on how customers actually “HAVE the experience”…

… and how those experiences influence behavior!

Most customer experience efforts are based on touch-point oriented approaches that define the experience in terms of a customers’ interactions with the company.  These approaches are inherently company-centric and, at best, lead to improvements that create “better sameness.”  The fact is:

Customers’ experiences do not just happen at your organizations’ touch-points.


Evocative Experiences… The Experiences that Matter

An experience is evocative when it positively and profitably influences:

  • What people think (cognitive outcomes)
    • What they remember about their experience
    • The story they tell themselves and others about their experience
    • The distinctions they draw that differentiate what you did for them
  • How people feel (affective outcomes)
    • How doing business with you makes them feel about themselves
    • How the way they feel about themselves drives how they feel about you
    • What specific emotional states and triggers motivate behavior
  • What people do (behavioral outcomes)
    • Making additional purchases
    • Diversifying what they buy from you
    • Telling stories about their experience with you
    • Recommending you to others
    • Behaving more cost effectively
    • Adopting new product, service, or process offerings

Four Characteristics of an Evocative Experience

  1. Are immediately simple to understand and easy to navigate. The vast majority of peoples’ experiences are accomplished using a combination of “gist processing” and “automatic behavioral scripts.” Well-designed experiences fit easily with the mindsets and natural behaviors people have for the problem they’re trying to solve. Note: As a result of being designed around automatic behavioral scripts, evocative experiences can have a surprising subconscious influence on behavior.
  2. Offer innovative solutions to peoples’ latent problems. Well-designed experiences start with a deep understanding of what people are trying to accomplish and provide solutions to problems, accomplish goals, and address needs that people may not even realize they have or be able to easily describe. These innovative solutions almost never occur at the existing company touch-points.
  3. Tell a compelling and memorable story. People perceive, interpret, and recall their experiences using stories. Well-designed experiences tell a story that has a clear and distinctive message that resolves conflict using a small number of high-contrast, signature experience elements. These signature experience elements get people’s attention and are perceived as a meaningful differences in kind… rather than incremental differences in degree.
  4. Trigger specific emotional states that influence behavior. The most influential experiences are designed to influence how people feel… not about the company… but about themselves. The specific emotional state(s) associated with the experience are chosen as the precursors to the behavior the experience is intended to generate.

Creating Evocative Experiences

In order to create evocative experiences you must start with an “experiencer-centric” rather than “company-centric” definition of experience.   We define an experience to be:

Experience:  A person’s cognitive, affective, and behavioral reactions… across the end-to-end process they follow… in order to realize a desired state, satisfy needs, and accomplish goals that are important to them.

This is fundamentally different than the typical company-centric definition:  Customer experience is the sum or all interactions a customer has with a supplier of goods or services, over the duration of their relationship with that supplier.

Experience MinerTM and the Design of Evocative Experiences

The objective of any product, service, or experience design is to profitably and powerfully influence how people think… how people feel… and, most importantly, how people act.   Most organizations’ efforts fail to achieve this objective because they focus on how their organization “delivers” an experience rather than how people actually HAVE experiences.  As a result, organizations routinely over-invest in incremental improvements that deliver “better sameness” at the existing touch-points.  In the course of doing so, these organizations miss the fact that customers’ experiences don’t just happen at their touch-points.   Although these investments may have a marginal impact on reported satisfaction, they often don’t lead to any measurable change in behavior in the face of changing customer needs, priorities, expectations, and alternatives.  In order to positively influence customer behavior, experiences must be designed and delivered with a deep understanding of how people actually HAVE experiences.  For more information on this, see:  Getting Beneath the Voice of the Customer

Experience MinerTM provides a rigorous way of capturing and analyzing the most critical aspects of the way people think, feel, and act  on their experiences.  Built on 25 years of research into the cognitive, affective, and behavioral basis of experience, it provides the specific insight required to focus design and delivery efforts on the areas of greatest influence and financial return.   Experience MinerTM is used to describe the key elements for each target customer personae.  This insight is used to 

…design evocative experiences from the mental model of the experiencer.

Experience Miner Toolset

The Experience MinerTM toolset consists of the following seven elements, each designed to fill in a critical piece of insight required to design experiences that influence behavior.

Goal Space MappingTM Describes the desired states and situation-specific goals that motivate and direct the experience for each key persona

Experiential TemperamentTM – Profiles how temperamental differences influence the way people are drawn to and engage with novelty seeking, harm avoidance, social orientation, and persistence

Framing Metaphors – Surfaces the underlying physical metaphors people use to interpret, evaluate and act on their experiences in the relevant domain(s).

Experiential ConstructsTM – Identifies the most common, learned distinctions that enable people to recognize, categorize, differentiate, and form expectations.

Emotional States and TriggersTM –  Surfaces the emotional states and specific triggers across the lifecycle of the experience highlighting areas of uncertainty, stress, frustration, etc…

Experiential PathwaysTM – Maps the end-to-end set of activities and choice points that people follow in pursuit of their goals… including the unwritten rules and automatic behavioral scripts people apply along this pathway.

Experiential Choice DynamicsTM – Describes the situation-specific choice processes that people follow, as well as, how they construct preferences and make decisions that influence their behavior.

Most of the time and money organizations invest on customer experience is wasted…

… because they focus on how the organization “delivers experiences”…

rather than on how customers actually “HAVE experiences” and how those experiences influence their behavior!

Customer Innovations: Creating Experiences that Drive Measurable Business Results

Are you losing too many customers or sales opportunities?    Are you experiencing too much negative word of mouth?    Are customers’ expectations changing faster than your company’s ability to stay ahead of the competition?    Do you have trouble aligning the efforts of intermediaries in order to deliver for the customer?    Are customers behaving in a way that constrains or undermines your efficiency and profitability?    Are all your efforts just leading to “better sameness”?

Over the past couple of years, I’ve covered an extensive array of topics focused on how companies can address these issues.  In this post, I’d like to take the liberty of  describing the type of work we do and the unique tools we use in the process.

My colleagues and I at Customer Innovations have a 25 year track record helping leading organizations create experiences that improve the acquisition, retention, and profitability of customers.  In the course of our work, we’ve demonstrated bottom line results of 10-25% in the form of increased retention, incremental sales, reduced acquisition costs, positive word of mouth, higher price realization, and improved productivity of customer-facing operations.   Most of our work has been with organizations that create experiences across complex networks of “customers” including consumers, agents, brokers, retailers, and other influencers.

Our work generally takes the form of these types of efforts:

  • Rapid Revenue Retention. We quickly identify specific elements of the current experience that are leading to attrition, lost sales, negative word of mouth, and unproductive customer behavior.   Intensive 10-12 week efforts often lead to $10 – $100 million in benefits.
  • Accelerating Sales From the “Outside In”. Rather than starting with the internal structure, processes, tools, and training, we start with a deep understanding of how and why your customers buy and then focus improvements on shifting buying behavior.
  • Creative Customer Insight. Without breakthrough customer insight, design efforts can only produce “better sameness.”  We have a unique approach to surfacing customers’ latent motives, beliefs, needs, and priorities in a way that informs the creation of highly evocative and profitable products, services, and experiences.
  • Signature Experience Design. We design, deliver, and engage customers in experiences that capture their attention and influence the actions they take.  These evocative experiences are structured to tell a meaningful and influence customer behavior using a set of differentiated “signature experience” elements.
  • Aligning Effective Employee and Intermediary Experiences. We help create the specific employee and intermediary experiences required to ensure that those who work directly or indirectly with your customers reinforce the intended evocative experience.

We Have a Unique Technology for Creating Experiences that Influence Customer Behavior

Traditional touch-point oriented approaches rarely deliver more than “better sameness” because they focus on how the organization delivers an experience rather than on deeply understanding how people actually have experiences and how those experiences influence behavior.   Customer Innovations has a unique approach and toolset for designing evocative experiences that positively and profitably influence behavior. 

  • Experience MinerTM – Traditional “voice of the customer” approaches are insufficient for understanding the largely subconscious processes that influence customers’ desires, preferences, emotional states, choices, and behavior. Based on 25 years of cognitive and behavioral research, the Experience MinerTM toolset helps surface, analyze, and measure the ways customers think about, feel about, and act on their experiences.
  • Experience DesignerTM – The output from Experience MinerTM feeds our structured Experience DesignerTM toolset that guides every step of the experience ideation, concept development, specification, and blueprinting processes.  Experience DesignerTM also incorporates an integrated experience-chain framework that helps specify and design the specific employee and intermediary experience interventions required to generate the intended customer experience.
  • Experience EconomicsTM – It’s exceptionally easy to deliver an uneconomic experience.  Most organizations simultaneously over-invest in elements of the experience that don’t matter to customers and under-invest in elements that have significant influence on customer behavior.  The Experience EconomicsTM toolset helps companies find the optimal investment point based on the influence that individual and collective experience design elements and service levels have on the financial performance of the business.

I’ll continue to expand on these tools in upcoming posts.   In the meantime, you might want to check out the following links:

If you’d like any more information, just post a reply or send me a note at fcapek (at) customerinnovations (dot) com.   Cheers, Frank

Behavioral Engineering and the Design of Influential Experiences: Example – Influencing Sustainable Behavior

Let me start this important topic with a few points that should be intuitively obvious:

  • The benefits associated with delivering an outstanding customer experience accrue from influencing customer behavior
  • Customers either deliberately or incidentally change what they do when they experience something that makes them feel or think differently
  • In most competitive markets, there are straightforward financial benefits associated with changing customer behavior. These positive changes in customer behavior lead to increased retention, wallet share, referral rates, etc…
  • The levers for changing customer behavior generally involve finding ways to understand and influence customers’ perceptions of the value they receive

Moving beyond these obvious points, things get much more interesting when the objective is design experiences that influence behavior towards more altruistic ends.  For example, many regulated utilities are launching energy conservation and demand response programs.  The objective of these programs is to shift customer behavior related to energy consumption and conservation.  While there might be marginal direct benefits (e.g., reduced rates, etc…) experienced by the customer as a result of changing their behavior, there are also environmental and social benefits the customer may not easily perceive. 

As we’ve been engaged with clients working on this problem, it’s become clear that there’s a lot that any company can learn from this more challenging experience design problem.  For example, the airlines have done a good job of influencing customer behavior regarding online check-in and the use of kiosks rather than agents, despite initial customer tentativeness and resistance.

What Comes First:  Attitudes or Behavior?

While it seems natural to assume that customers’ beliefs and attitudes are precursors to their behavior, practical experience supported by numerous academic studies have demonstrated that the linkage is highly complex.  For example, many people have attitudes and beliefs consistent with environmental conservation yet do not exhibit any significant conservative behavior.  A person’s expressed beliefs and attitudes about environmental issues are not a strong indicator of how that person will act relative to those issues.  In fact, you can’t even assume that a person who identifies themselves as an environmentalist will necessarily have either a solid understanding of the issues or be any more willing to modify their behavior to make it more environmentally friendly.  

As discussed in Doug McKenzie-Mohr’s and William Smith’s book, “Fostering Sustainable Behavior,” a few illustrative examples include:

  • “Participants in an intensive 3 hour energy conservation workshop indicated greater awareness of energy issues, more appreciation for what could be done in their homes to reduce energy use, and a willingness to implement changes. However, based on follow up visits, actual behavior did not change. The only difference in behavior between participants and non-participants is that eight of the forty participants had installed the low-flow shower head they were given for free at the workshop.” Geller, E.S. “Evaluating Energy Conservation Programs: Is Verbal Report Enough?” Journal of Consumer Research, 8, 331-335
  • “Individuals who hold attitudes that are strongly supportive of energy conservation were found to be no more likely to conserve energy.” Archer, D., Pettigrew, T., Constanzo, M., Iritani, B., Walker, I. & White, L. “Energy Conservation and Public Policy: The Mediation of Individual Behavior” Energy Efficiency: Perspectives on Individual Behavior, 69-92.
  • “500 people were interviewed and asked about personal responsibility for picking up litter, 94% indicated that individuals have a responsibility for picking up litter. However, when leaving the interview, only 2% actually picked up the litter that had been “planted” by the researcher.” Bickman, L “Environmental Attitudes and Actions” Journal of Social Pscyhology, 87, 323-324.
  • “An investigation of the differences between recyclers and non-recyclers found that they did not differ in their attitudes towards recycling.” DeYoung, R. “Exploring the Difference Between Recyclers and Non-Recyclers: The Role of Information” Journal of Environmental Systems, 18, 341-351.

There are several factors that contribute to a disconnect between a person’s attitudes and their behavior.  Each of the following reasons influence whether or not a person engages in any new behavior, despite their attitudes towards that behavior:

  1. Lack of Knowledge.  Inconsistency between a person’s expressed attitudes and their behavior might be partially attributable to a lack of understanding of what to do or a lack of understand the implications of their actions.  While numerous studies show that information or education alone has little or no effect on behavior, it is still a critical enabler.
  1. Perceived Barriers.  External barriers and constraints set limits on what can be accomplished by just changing a person’s attitudes.  The higher the barriers, including expense, inconvenience, and technical difficulties, the less the effect attitudes will have on a person’s behavior.
  1. Perceived Benefits.  A person may have to incur immediate and well-defined inconvenience, uncertainty, and monetary costs in exchange for longer term benefits experienced by the broader population rather than the individual themselves.  This is related to Hardin’s metaphor of the Tragedy of the Commons.

In general, behavior competes with behavior.  People consciously or automatically make choices between alternative behaviors.  When they do, people naturally gravitate to behaviors that have high perceived benefits and few perceived barriers or costs.  In general, people also naturally pay the most attention to short-term benefits and costs.  While perceived benefits and barriers / costs vary dramatically by individual, there are usually common elements shared by customers within a given customer “personae.”

As a result, a behavioral engineering approach is often most effective.  It is generally more cost effective to try to change behavior directly than to do so via a change in attitudes across a large population.  We have found that attitudes are just as likely to be a consequence of behavior than the cause of behavior.  Or, as we like to say, you often “act your way into a new way of thinking, rather than thinking your way into a new way of acting.” 

As McKenzie-Mohr and Smith summarize, much of the practice involves influencing behavior in specific ways by:

  • Increasing the customers’ perceived benefits of the desired behavior
  • Decreasing the customers’ perceived barriers to the desired behavior
  • Decreasing the customers’ perceived benefits of the current or competing behavior(s)
  • Increasing the customers’ perceived barriers of the current or competing behaviors(s)

The high level steps include:

  1. Identifying Specific Perceived Barriers and Benefits.  This requires field-based observation and elicitation research (See:  Observation and Elicitation: We Like to Watch!) focused on surfacing:  What makes the desired behavior difficult/easy?  What are the perceived positives and negatives?  Who wants you to do it and who doesn’t care?  This qualitative research is used to clearly identify the ways that  customers experience the barriers and benefits.
  2. Clustering Perceived Barriers and Benefits by Personae.  The initial observation and elicitation research is generally followed by a more quantitative study that clusters and prioritizes barriers and benefits for different customer personae.  (See:  Personae-Driven Customer Experience Design)
  3. Designing Behavior Change Programs by Personae.  In general, program design starts by targeting the most “influencable” personae first.  Characteristics of effective program design typically include the following elements (See:  Influential Experiences and the Psychology of Escalating Commitment):
    • “Easy to get started” initiating actions and reinforcement
    • Gaining visible commitment (e.g. written commitments)
    • Creating meaningful incentives and penalties
    • Emphasizing personal contact
    • Encouraging development social norms and leveraging social pressure
    • Designing prompts / reminders for new behaviors.  Helping people remember – making it difficult for them to forget.
    • Measuring and reporting progress against individual and community goals.
  4. Piloting and Refining Behavior Change Programs.  It is very important that any programs be tested and refined in the field.  This can be done with a sample or segment of customers.  The purpose of this pilot is not just to evaluate the design but to improve it with observation and feedback gained from the participating customers.
  5. Rollout and Evaluate Results.

Here are a few situation-specific lessons learned:

  • Efforts to encourage people to conserve energy must provide information that can help them understand what the effects of specific changes in behavior will be. For example, the information on a typical electric bill is not detailed enough. These bills typically summarize overall usages. This doesn’t give consumers any clue as to the relative effect of various resource-conserving actions. As a result, misconceptions about the impact of various actions persist despite educational efforts to change them (e.g., the impact of turning off lights vs. making less frequent use of the clothes dryer).
  • Providing incentives can be effective. However, if incentives are significant, many people come to believe they are acting only for the incentives. They may begin to require larger incentives to do things that they might previously have done only with small incentives. In these situations, the behaviors often stop as soon as the incentives are removed. In general, people tend to sustain changes in behavior when they have chosen those behaviors without the influence of significant incentives or penalties.
  • Attitudes about specific threats are more predictive of behavior related to those threats than general concerns about the environment are predictive of general environmentally friendly behavior. For example, attitudes towards recycling are more predictive of recycling behavior than are general concern about the environment.
  • Stronger commitments yield more persistent behavior. A commitment accompanied by an agreement to promote target behavior among neighbors has more behavioral influence than just the expression of commitment by itself. Encouraging customers to commit to a more specific goal is more effective than more general goals to conserve energy.
  • Aligning consequences to behavior is critical. For example, having customers pay for trash pickup based on the amount of trash they produce is more effective than impassioned pleas to reduce trash.
  • While publishing typical customer behaviors can generate peer pressure, it is a double edged sword. It can encourage people who are already doing both better and worse than average regress to the norm. Publishing exemplary behavior is an alternative to publishing average behavior.

This is a topic we’ll continue to explore as we progress in our work with utilities on the design of more influential programs and experiences.

Helping Customers Lose Wait

I’m so tired… tired of waiting… tired of waiting for you…   Oh… sorry…  I’m just sitting here singing to myself as I wait on hold for the reservation agent to pick up.  I might as well do something productive… like write a post about waiting.

I know, we all have to wait.  Every day we wait for the next available agent; we wait in traffic; we wait at the airport; we wait for meetings; we wait at the bank, the hospital, the checkout lane, the lunch counter, the post office, the doctor,  etc… etc… etc…   It’s not unreasonable to estimate that the average person spends between 30 to 60 minutes of every day waiting.  If that estimate is true for you, over the course of your life, you will spend more than 2 full years waiting.   As one of the earliest FedEx ads said, “Waiting is frustrating, demoralizing, agonizing, aggravating, annoying, time consuming, and incredibly expensive.”

It’s hard to overestimate the impact of waiting on your customers’ experience.  Across the research we’ve conducted, some of the most dramatic customer defections occur because of bad waiting experiences.  I’m sure you can all remember the times you’ve had those experiences.  Years ago, I arranged a special dinner with family members who had traveled in from out of town.  I’d made a reservation at one of the upscale restaurants that I’d been going to pretty regularly.  Unfortunately, when our party of six arrived, we were told we would have to wait a bit for our table to be ready.   As it turned out, we were kept waiting for more than an hour.  Each time we checked with the hostess, we were told that our table would be ready soon.  When we were finally seated, everyone in the party was upset and frustrated.  However, no one from the restaurant provided any sort of explanation or apology.  In fact, they avoided us because they knew we were upset.  The outcome: I’ve not been back to that restaurant and I’ve told plenty of others about my frustrating service experience.  The good news is that the restaurant, in essence, fixed their customers’ waiting problem; they’re just not busy any more.

As the pace of the people’s lives has increased, people are more and more aware of the costs of waiting and are less tolerant of providers that make them wait.  As a busy professional, time is my most limited resource.  I’ve become keenly aware of the costs I incur when providers keep me waiting.  For example, in 2007, I spent $51,740.87 on 47 Delta tickets.  Based on my back of the envelope calculation, I also lost approximately $29,000 in personal productivity due to delayed or cancelled flights over the same time period.  Part of my sensitivity to this amount results from the contrast compared to other situations in my life.  For example, if the guy who cuts my lawn for $40 keeps me waiting for a few minutes, he’s all over me with apologies.  However, when I spend $1,500 on a round trip ticket and the company keeps you waiting for a couple of extra hours there’s not even the slightest hint of an authentic apology.

Okay… sorry… I’ll stop belly-aching!  You can help customers “lose wait” two ways: 1) reduce the actual waiting time and 2) design a better waiting experience; one that is more pleasurable or at least less frustrating.

1)  Reducing the Actual Waiting Time. Waiting generally occurs at times when customer demand exceeds resource supply.  Queueing theory is the mathematical study of waiting lines.  Queueing theory can be used to reduce wait time by optimizing the scheduling of service resources and/or changing the queueing discipline.

Another way to reduce actual wait time is Demand Management.  Demand management including things like: finding ways to shift demand to less peak times or reducing demand without reducing profitability.  Companies frequently “inventory” demand by scheduling appointments or taking reservations.  A company might also reduce the price of service at off-peak times and/or increase prices at peak times.  More creatively, companies can provide information on anticipated wait times in a way that influences the customers’ decision to get in line.  For example, a service organization (e.g., department of motor vehicles, auto service center, call center, etc…) can provide information about wait times or queue length at their facility, on their voice response system, or on their website.  A service organization might also find ways to alert customers to the fact that there is currently little or no wait.  This is the kind of thing quick lube businesses do; they’ll put someone out on the street with a flag calling attention to the fact that there is currently “no line no waiting.”

2)  Designing a Better Waiting Experience. Beyond reducing actual wait time, there are a wide range of things that can be done to improve the customers’ waiting experience.  In fact, in most situations customers’ perceptions of waiting time are not strongly connected with the actual wait time.   David Maister (See: The Psychology of Waiting Lines“) has made several very interesting observations regarding customers’ perceptions of waiting.  These are discussed below along with several ideas for how to address these perceptions:

  • Unoccupied time feels longer than occupied time. William James observed, “Boredom results from being attentive to the passage of time itself.”   Customers perceive waits to be shorter if they are given something to do.  Ideally that something should be beneficial and relevant to the service encounter.  For example, this might be giving customers that are waiting for a table a menu to peruse and a light appetizer or soft drink.  This can also include providing news or entertainment to customers while waiting.
  • Pre-process waits feel much longer then in-process waits. In general, people want to get started.  For example, 10 minutes waiting to board a plane generally seems longer than 10 minutes waiting to take off after you’re seated.  Outstanding experience designs replace pre-process waiting with in-process waiting.  For example, at Disney World, the wait experience is designed to not only occupy the customers’ attention but it is actually part of the attraction.  Also, in a hospital or medical clinic, having patients greeted and triaged immediately generally leads to a shorter perceived wait time.
  • Anxiety makes waits feel longer. Customers are anxious when they don’t know whether they’ve been forgotten, whether they’ve chosen the right line (note Erma Bombeck’s Law:  The other line always moves faster”), and whether they’ll be done in time for your next appointment.  Customers boarding an airplane often worry about finding space for their luggage dramatically reducing the quality of the overall experience.  Also, customers in a long line for a movie may not be sure they’re waiting in the right line or be able to judge to what extent the number of people in front of them will fill up the available seats.  As a result, customers experience anxiety about whether they’ll be able to sit with rest of their party or whether they’ll be stuck sitting in the first row.  Effective experience designs find ways to proactively remove what customers are worried about.   This can include reassurance that they’re in the right line, that they’ll get in, have room for their bags… whatever it is.
  • Uncertain waits are longer than known, finite waits. A lot of anxiety is derived from not knowing how long the wait will be.  Customers generally perceive waits to be shorter if they are given an accurate estimate of the length of the wait.  Again Disney does a good job of estimating the length of the wait.  Generally, it works best to overestimate rather than underestimate the wait.  Restaurants have learned that, if you tell customers it’ll be 30 minutes and it works out to be 20, they’ll be pleasantly surprised and start their dining experience in a more positive frame of mind than if it actually turns out to be 40 minutes.  For some reason, airlines haven’t learned this yet.  As you probably know, airlines repeated announce incrementally longer delays… reinforcing customers’ beliefs that they are not being dealt with honestly.
  • Unexplained waits are longer than explained waits. Customers have more patience if they understand the causes for the delay.  This explanation might not let the provider off the hook, but it’s better than no explanation at all.  If customers don’t know about the cause for a delay, it adds to their anxiety about the length of the wait.  Waiting in ignorance makes customers feel like they have no control.  Another element of unexplained waiting involves long lines of customers who observe service representatives on break or doing other work rather than serving customers.  This happens all the time; one or more agents will be helping customers while others will be just typing away on their terminals.  Customers waiting in line find this subconsciously difficult to deal with.  Most fast food restaurants have figured this out enough to have policies about not doing non-customer work or taking breaks in front of customers.  On the other hand, most banks and airlines haven’t figured this out yet.
  • Unfair waits are longer than equitable waits. One of the most stressful and irritating aspects of waiting is feeling that somebody has gotten ahead of you in line.  MIT Professor, Dick Larson, makes a strong case that customers’ perceptions of their wait are highly influenced by perceptions of social injustice (See “Perspectives on Queues:  Social Justice and the Psychology of Queueing.”)  Effective experiences are carefully designed to ensure that the waiting experience is perceived as fair.   In general, first come first served is perceived to be the most socially just.  As a result, the Wendy’s style single queue is perceived by customers to be faster than the McDonald’s style parallel queue structure.  When there are long lines of customers at checkouts and a new register is opened, do the people at the front of the line or the end of the line get served first?  At the Whole Foods store near my home, a new cashier will generally approach a customer already in line at another register, ask “Can I help you over here?” and then lead the customer to the newly opened register.  Another example of social injustice occurs when service reps answer the phone while serving customers who are waiting in line.  Customers in line naturally feel that a caller has just cut in front of them and that they have been assigned a lower priority than the random caller.
  • The more valuable a service, the longer the time people are willing to wait. Customers are generally more tolerant of waiting for high-demand or high-value products and services (e.g., concert tickets, popular restaurants, limited supply products, etc…).  Traditionally, it’s been assumed that shoppers with a large basket of groceries are more tolerant of waiting than customers with a few items.  However, as customers have become accustomed to being “valued” based on the dollar amount of their purchases, we’ve noticed that customers with high total dollar purchases are starting to expect to be served with a higher priority.
  • Solo waits feel longer than group waits. The ability to commiserate with others in line tends to shorten the perception of wait time.  Often a natural, ad hoc sense of community develops amongst people waiting in line together.  Effective waiting experiences create opportunities for customers in line to interact with each other.  For example, when I was recently waiting to enter a popular concert club with my son, the front door attendants were asking customers trivia questions that required you to talk with your neighbors in line.  My son and I met an interesting couple ahead of us in line and the wait didn’t seem so long.

While the cost of reducing the actual wait can be significant, it’s often just a matter of creative, customer-centric thinking to find ways to improve the customers wait experience.  We’ve observed that, when the waiting experience is very negative, it tends to strongly and negatively effect the customer’s perceptions of the overall experience.  This post has just scratched the surface on a topic that has not gotten anywhere near the attention it needs.