Tuesday, April 19, 2011

How was Your Consumer Experience?

imageMeasuring customer satisfaction has been a core strategy for retailers trying to improve it and they do it in all possible ways. Most depend on asking consumers questions about their latest interaction with the retailer and how well it went.

Temkin Ratings now brings us a new term: Consumer Experience, more accurately reflecting what the retailers have been trying to measure. Temkin defines consumer experience along the three dimensions of functional, accessible, and emotional parts of the interaction. 

  • Functional Component: Thinking of your most recent interactions with each of these companies, to what degree were you able to accomplish what you wanted to do?
  • Accessible Component: Thinking of your most recent interactions with each of these companies, how easy was it to interact with the company?
  • Emotional Component: Thinking of your most recent interactions with each of these companies, how did you feel about those interactions?
Temkin’s survey consisted of 6,000 consumers covering 143 companies from 12 industries. The winner: Amazon, a company that really does not interact with consumers in the traditional sense of it. Retailers did the best with all the major wholesale clubs, Costco, Sam’s Club and BJ’s in the top 10. Other highlights:
  • Retailers did the best followed by Hotels though the Retailers beat the Hotels by a wide margin (average score of 74% for Retailers to 66% for Hotels).
  • Health plans and TV service providers brought up  the rear as these industries scored an average of 50%.
  • Insurance Firms and Airlines made up the middle with average scores of high 59 and 60%. Banks did marginally better at 61%.
  • The lowest score among all? Emotional experience component at 37% for the famed “TV Service Providers” – Comcast customer would agree!
You can access the complete Temkin ratings here. Temkin concludes by saying that, “Companies can improve isolated customer interactions, but they can’t gain competitive advantage until customer experience is embedded in their operating fabric.” I agree – any company trying to systemically create a competitive advantage through a functional capability needs to explicitly design and build that capability: as Temkin puts it, to “embed it in their operating fabric”. Only a well-designed and deployed capability can become pervasive enough to become part of everyday “business as usual” and provide a systemic advantage.
But does having the best supply chain affect the the consumer experience? I cross-checked Temkin’s list with AMR’s Top 25 Retail Supply Chains.  At first glance, the evidence is mixed: Only four of the Temkin's top 15 retailers also appear in AMR list as supply chain leaders, these being Amazon, Wal-Mart, CVS, and Walgreens. On the other hand, only the first component of Temkin ratings is directly impacted by supply chain capabilities of a retailer – ensuring that the merchandise that the consumer wanted is actually available when they want it. In this context, given that supply chain capabilities affect only a third of the criteria for consumer experience ratings, having 4 retailers out of 15 in both the lists is not a bad correlation. 
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© Vivek Sehgal, 2011, All Rights Reserved.

Want to know more about supply chain processes? How they work and what they afford? Check out my books on Supply Chain Management at Amazon.

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