Origins of the C/DXE Concept

Author: Dr. Katharina Gawrisch

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For the past decade, customer experience has enjoyed significant attention in marketing theory and practice, although the concept can actually be traced back as far as to the economist Lawrence Abbott in the mid twentieth century (Abbott 1955; Becker and Jaakkola 2020). Both scholars and practitioners agree that nowadays - in the digital age of information and the service economy - successfully managing the (digital) customer experience is a leading firm objective and also a major challenge. In order to truly understand the concept of customer/digital experience and make sense of its implementation, one needs to first explore its history.

The Evolution of the Customer Experience Concept Over Time

Over the past 70 years, the domain of marketing has witnessed several paradigm shifts. It has moved from a production orientation (1950s - 1960s), to a sales orientation (1970s), and, finally, to a market and customer orientation (Achrol and Kotler 2012; Vargo and Lusch 2004). In the meantime, also the concept of customer experience has been continuously evolving along with such other core concepts as customer satisfaction, service quality, relationship marketing, customer relationship management, and customer engagement (Lemon and Verhoef 2016).

An important building block to our overall understanding of customer experience and its measurement is that of customer satisfaction. The conceptualization of customer satisfaction began in the 1970s together with the recognition that assessing and evaluating customer reactions to firms’ offerings is a critical marketing task and capability. Customer satisfaction has been understood as resulting from the comparison between consumers’ expectations and the actual delivered performance. Both researchers and practitioners have come to agree that satisfaction has substantial implications for consumer behavior and firm performance, and, for that reason, customer satisfaction measurement is still a standard practice within marketing (Lemon and Verhoef 2016; v. Wangenheim and Bayón 2007).

In the 1980s firms began recognizing that marketing services was different from marketing physical goods. Consequently, service marketing has developed into a separate discipline  with service quality and customer journey mapping being its core concepts (Lemon and Verhoef 2016). A breakthrough in the measurement methods used for service quality research was the SERVQUAL model introduced by Parasuraman and colleagues in the mid-eighties. SERVQUAL is an instrument that measures service quality by capturing respondents’ expectations and perceptions along the following five dimensions:

1. reliability (ability to perform the service accurately);

2. assurance (courtesy and trustworthiness of employees);

3. tangibles (appearance of physical facilities, equipment, and personnel);

4. empathy (caring, individualized attention)

5. responsiveness (willingness to help customers; Parasuraman et al. 1988)

This model is one that has had a major influence in marketing practice (Roberts et al. 2014)

The 1990s then witnessed increasing attention on developing strong relationships with customers. Major constructs or topics that have been considered in the relationship marketing research include, for example, trust, commitment, relationship quality, and the emotional aspects of customer relationships (Morgan and Hunt 1994). While the focus of relationship marketing was mainly on building long-term relationships, customer relationship management (CRM), which emerged in the 2000s, focused more on the optimization of customer profitability and customer equity. Accordingly, attention shifted towards optimizing customer acquisition and retention as well as CLV (Blattberg et al. 2008; Lemon and Verhoef 2016;).

In a parallel development, the notion of customer centricity has been proposed - a valuable marketing approach that focuses on understanding the needs and wants of individual customers and delivering tailored offerings. Especially the ubiquitous availability of individual-level customer data has greatly facilitated the shift toward customer-centric marketing. It can be said that customer-centricity has set the stage for the current focus on customer experience. In the past decade, researchers and practitioners have additionally begun to increasingly emphasize the role of customer engagement. The digital and social media revolution has empowered customers to engage more with firms and become active coproducers (or destroyers) of value for firms. In other words, customer engagement is related to behaviors that go beyond purchase, e.g., word-of-mouth and customer referrals (Lemon and Verhoef 2016).

The developments in research and practice discussed above infuse our understanding of customer experience. For example, customer satisfaction can be considered as one of the components of customer experience, since satisfaction relates to the cognitive evaluation of an experience. Service quality could be one of the major antecedents of customer experience, whereas constructs in relationship marketing, such as trust and commitment, would typically be a consequence of customer experience. Experience is also related to customer engagement, which can be viewed as a component of experience emerging through specific touch points, such as social communities.

Hence, customer experience is a complex, multidimensional construct comprising “[...] customer’s cognitive, emotional, behavioral, sensorial, and social responses to a firm’s offerings during the customer’s entire purchase journey” (Lemon and Verhoef 2016, p. 71). Thereby, customer experience management (CEM) can be defined as “[...] the process of strategically managing a customer’s entire experience with a product or a company… It is a process-oriented satisfaction idea (not an outcome-oriented one)” (Schmitt 2003, p. 17–18).

Literature

Abbott, L. (1955). Quality and competition. New York: Columbia Univ. Press.

Achrol, R. S., & Kotler, P. (2012), “Frontiers of the marketing paradigm in the third millennium,” Journal of the Academy of Marketing Science, 40, 35-52.

Blattberg, R. C., Kim, B.-D., & Neslin, S. A. (2008), Database Marketing: Analyzing and Managing Customers. New York: Springer.

Lemon, K. N., & Verhoef, P. C. (2016), “Understanding customer experience throughout the customer journey,” Journal of Marketing, 80, 69-96.

Morgan, R. M., & Hunt, S. D. (1994), “The commitment-trust theory of relationship marketing,” Journal of Marketing, 58(3), 20-38.

Roberts, J. H., Kayand´e, U., & Stremersch, S. (2014), “From Academic Research to Marketing Practice: Exploring the Marketing Science Value Chain,” International Journal of Research in Marketing, 31 (2), 127–40.

Schmitt, B. H. (2003). Customer Experience Management: A Revolutionary Approach to Connecting with Your Customers. New York: The Free Press.

Vargo, S. L., & Lusch, R. F. (2004), “Evolving to a new dominant logic for marketing,” Journal of Marketing, 68, 1-17.

v. Wangenheim, F., & Bayón, T. (2007), “The chain from customer satisfaction via word-of-mouth referrals to new customer acquisition,” Journal of the Academy of Marketing Science, 35, 233-249.