CEM should stand for “Customer Expectation Management”. There is no such thing as “Customer Experience Management” without first defining its location on the company’s strategic map. There is no value proposition in the open space without the gravity of an expectation baseline.
This is why I think that Ryanair, Spirit and all those customer-bashing barebones LCCs are the best airlines in the world: you know what to expect before buying the ticket. They do understand what Expectation Management means: promise deliberately 0 and give 1 creates more value and loyalty than promising 10 and delivering 9 – and is much cheaper to achieve. They are so profitable because the manage actively customer expectations!
The formula is simple:
(and look out for a free bonus CEM workshop session after the break…)
You only have to get yourself regularly into the press with news about onboard toilet usage charges, stand-up “seats” or baggage charges that apply both to checked and carry-on bags. Everybody will get the message that your are working around the clock to make life for passengers worse because you are determined to continue being the cheapest game in town. That’s the deal, it’s easy to understand and the core customer experience of the cost and price leaders is the thrill of a great fare. CEM at its best. Highly profitable. What can we learn?
No Value Proposition without Expectation Management!
If your company is not the absolute cost leader in the market, you need to make a difference to justify the higher price. No Harvard degree required to understand this.
“Making a difference” only make sense if the customer understands and values it. This value perception is not of absolute nature. It will emerge as the result of a comparison with some kind of reference and have a positive (“above expectations”) or a negative (“below expectations”) value.
Without an expectation baseline intentionally defined to help our customers to understand what to expect, they will compare their experience to whatever is in their collective imaginary of what they consider “normal” for a company like ours. I can assure you that 99% of the customers will expect more than you want to give away for the price they pay! The outcome: a negative value perception for the customer or an economic loss for the airline.
How to develop customer expectations
Let’s explain the four pillars of expectation management with a very simple example:
1) Define the desired generic expectation level in line with the company’s strategy. “Example Airlines” (ExAir) defines itself strategically as a value based, hybrid carrier serving two segments: lowest-fare VFR/leisure travelers and cost and value sensitive professionals. Originally founded as a pure LCC, the cut-throat price competition has recently forced it to differentiate its offering. Management decided to raise carefully specific expectations levels, but making clear that this refers only to certain product features, not marking a “generic upgrade”.
2) Translate this into business rules and processes.
ExAir decides to redefine some of its lowest-cost product features and includes “free seat selection, second tier boarding”, but for passengers using web check-in. Free airport check-in is also introduced with “free seating, third tier” plastic boarding passes that take no time to issue while offering the pax to buy a “pro service pack” that includes seating in the first 10, 32” pitch rows and priority boarding. ExAir considers this a better value proposition than the “stampede-boarding” process of ExAir’s competitor, while also facilitating up-sells.
This is the easiest, yet often overlooked part of the process. ExAir starts communicating powerfully the “free assigned seating” offering, while making absolutely sure that everyone knows that this does not apply to checking in at the airport. Service feature tables, highlighted messages during the booking process and clear advertising messages help the customer to know what to expect.
4) Exceed expectations by design.
Setting expectations with precision allows ExAir to design processes to consistently exceeding them when desired, creating highly valued “memorable experiences”. This needs careful planning; it cannot be left to chance or employee intuition.
In this case, ExAir decides to allow check-in agents to assign families (hardly cannibalizing “Pro” pack sales) contiguous seats (if available) and second-tier boarding at no cost. Of course, the staff must be trained to celebrate the unexpected privilege to make the customer really appreciate it and to insist on being an exception.
How to integrate Expectation Management in the organization
Expectations Management is still struggling to find its place in the strategic management toolboxes. CEOs delegate it down, but Marketing has a brand to defend, Sales has a genetic tendency to overpromise and Operations, legitimately, wants processes and KPIs to comply with, not define them.
This leaves us with the CFO? This is not as far-fetched as it seems at a first glance. Once the CFO understands the ROI of CEM and its basic concepts of value generation and customer equity growth, he or she typically becomes its strongest supporter.
But let’s be practical: according to our experience, “Experience Management” can be assumed well by the Marketing Director as long as he/she did not participate in the launch of the current branding. When CMOs are emotionally too close to “their” brand, they tend to be apologetic and sometimes even live in a “reality distortion field” about implicit brand promises.
Naturally, if the company has a Chief Customer Officer, managing expectations is his/her job. This function can become a true, “de-siloing” corporate boundary spanner, unify the conscious and unconscious messages sent out to the customer, make the value proposition manageable and create a positive value perception.