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Entrepreneurs can't afford to ignore customer experience

Kitchen staffers work at an Earls location in Calgary. Chris Bolin for the Globe and Mail

With 60 locations in Canada and the United States, Earls Restaurants didn't become a success on customer service alone. The North Vancouver-based chain pays close attention to customer experience, defined as everything that happens between it and its patrons.

Vice-president of operations Mo Jessa says Earls measures customer experience by employing mystery diners and monitoring feedback to its website. And last year, the company hired a social media specialist to join the online discussion about customer likes and dislikes. "There's someone on there who's constantly tweeting and looking on Facebook, having a conversation with our customers on any questions they have," Mr. Jessa says.

A family-owned private company with 6,000 employees, 28-year-old Earls also thinks like a small business. Mr. Jessa says it leaves much of the responsibility for decision-making and customer experience, or CX, to individual locations. "The customer experience manager is the general manager who runs each one of those restaurants."

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Customer experience is coming into its own as a crucial discipline, says management consultant Mark Healy, a partner at Toronto's Satov Consultants. No matter how strong their service, pricing and marketing, companies must work on CX. Customer experience can set a business apart – and give it a long-term competitive advantage by building loyalty, Mr. Healy says. At the same time, top-notch CX can lower the cost of serving those customers.

Small companies have an edge in CX, Mr. Healy argues.

"Generally, the customer experience lags the brand experience for larger organizations," he says. "In smaller businesses, it tends to be the other way because they were founded on service and values and sound principles."

For Vancouver-based retail consultant David Ian Gray, small retailers offer superior customer experience because the owner is often onsite. Comparing good retail to theatre, Mr. Gray says the goal is to deliver a memorable experience by connecting with new and repeat customers on an emotional level. But as a company grows, he warns, it's tough to stay true to the owner's vision. "What amazes me is when a big organization can keep that magic happening."

Three forces are driving companies both large and small to improve their customer experience, according to Mr. Healy.

First, every year it gets harder to stand out from the competition. "Just about any industry is so crowded now that even if you are differentiated, it can be tough to get your message through," he says.

Second, from the mid-1990s through the mid-2000s, theme parks and movie theatres trained people to expect an experience.

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Third, Mr. Healy says, there's far greater communication between consumers than ever before. With the rise of social media, peer-to-peer recommendations have a powerful influence on purchasing decisions.

"The brand is either a participant in the conversation, or in some cases is even on the sidelines," Mr. Healy says. "Smart managers understand that dynamic and are looking for ways to mitigate or, better yet, to enhance – to make sure those conversations are positive."

In his 2004 book Clued In: How to Keep Customers Coming Back Again and Again, Minneapolis-based management consultant Lou Carbone describes customer experience as a three-part cycle. It starts with the customer's perception of a company, moves to interaction and ends with recollection. Then the process begins again as the customer's recollection influences her – and other potential customers' – perceptions of the company.

Brand experience and customer experience are two sides of the same coin, Mr. Healy says. Brand experience refers to how customers perceive a company, while CX is how they feel when dealing with the business. For example, you could spend $150 at a high-end clothing retailer and leave with a positive impression of its brand. "And yet … in spite of having a great brand experience, you might have a very negative customer experience – if they make you feel like a peon because you haven't dropped five grand," Mr. Healy says.

Most businesses fail to recognize that service is just a small part of CX, he observes. Meanwhile, some have appointed a chief customer experience officer, or CXO, which Mr. Healy predicts will become a key position. But often, he says, the result is little more than a revamp of customer service. "In very big companies, I think customer experience equals the call centre, which is ridiculous."

Instead, Mr. Healy encourages companies to map, measure and maximize CX in four categories: pre-purchase, purchase, usage and post-purchase. Mapping such touch points can be as simple as enlisting a third party to poll the firm's departments, but Mr. Healy says a more detailed approach is to have people phone the call centre and go mystery shopping.

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Measuring touch points could mean giving each one a letter grade, or distributing customer surveys that rate experiences from 1 to 10.

Engaging in conversation – literally – is another way to measure CX. In Mr. Healy's opinion, Vancouver-based Lululemon Athletica Inc. excels at staying in touch with its customers. One way the company does so is by having each of its stores hold free weekly yoga classes. "They don't have to survey customers – they have a dialogue going with customers all day, every day," Mr. Healy says.

Lululemon is one of the most decentralized retailers for decision-making, says Mr. Gray, which gives store managers plenty of discretion. "With a lot of chains, the bigger they get, the more controlling they become," Mr. Gray says. "They keep everything consistent, but it doesn't always create that rich experience any more because it starts to get dumbed down for the sake of efficiencies."

If the retail customer experience is theatre, it's also about managing expectations – especially in an age when they are so high. When Mr. Gray visits Costco, he knows exactly what's coming: great deals, cool product, a long stroll and a quick checkout. On the other hand, he doesn't need to be swarmed by staff. "I don't expect I'm going to get served in Costco, but not in a bad way, because I know what my expectations should be around that," Mr. Gray says.

Having proper CX metrics allows a company to calculate return on experience, or ROX, Mr. Healy says. If you provide a better customer experience, your customers are happy and spend more money. In turn, they spread the word to others. They may also be so happy that they return goods less often and stop calling to complain, so your cost of service goes down. "You put those three things together and it's pretty simple math, but it's also airtight," Mr. Healy says.

Companies that are progressive enough to put someone in charge of the entire customer experience are rare. But Mr. Healy says this person should have the power to change operations, marketing and other decisions that hinder CX.

"That's where I believe the world should go. I think it will take a long time."

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