Editor's note: Colin Shaw is Founder and CEO of Beyond Philosophy™, thought leaders on Customer Experience Management. He is author of three books on the subject including his latest, The DNA of Customer Experience: How Emotions Drive Value. He can be reached in London at (tel) 0207 917 1717 or at www.beyondphilosophy.com.

Many senior executives struggle with the commoditization of their markets, the loss of their differentiator and their inevitable impact on market share, profitability and shareholder value.

At the same time a new breed of enlightened, customer-focused executives see a simple solution. By focusing on the customer instead of the organization, they try to deliver an emotionally engaging experience, confident that higher revenues will follow. This new breed understands that the Customer Experience is the next competitive battleground, and that emotion accounts for over 50 percent of every customer experience.

Following 18 months of research with the London Business School in the UK and USA, my company, Beyond Philosophy™, identified four clusters of emotions that either drive or destroy value. We can now demonstrate an empirical link between customer emotion and company revenues. This is the subject of my third book on customer experience, The DNA of Customer Experience: How Emotions Drive Value.

The four emotional clusters (Fig. 1) include Destroying, Attention, Recommendation and Advocacy. These have been independently and statistically proven to impact customers’ short-term spend, and drive or destroy loyalty. For the first time we believe it is possible to prove to the accountants that improving your Customer Experience generates revenues.

Fig. 1

Let’s review and explain each of the clusters.

The Destroying Cluster

This is the first area an organization needs to focus on when it decides to improve its Customer Experience. The Destroying Cluster represents negative emotions that organizations may unwittingly provoke. For example, customers may feel frustrated if they have to wait to speak to a Customer Service agent. Other “destroying” emotions (Fig. 2) include feeling neglected, disappointed, stressed, irritated or unhappy.

Fig. 2

It’s impossible to eradicate destroying emotions entirely, but wise organizations take steps to mitigate them. It’s important to recognize that this cluster not only destroys value, but taxes resources and imposes other costs on an organization. Suppose, for example, delivery of a complex IT system is poorly coordinated and a few items are missing. In addition to feelings of frustration, this misstep wastes the valuable time of the personnel involved with installation.

The Attention Cluster

The Attention Cluster contains emotions used by organizations to attract customers (Fig. 3). Our research has shown that these emotions encourage customers to explore your offers and experience, and boost customers short-term spend.

Fig. 3

However, this cluster contains an inherent danger. Once you’ve attracted a customer, will you be able to retain them? We’ve discovered that what attracts a customer in the first place may not turn them into long-term customers. As a simple example, imagine a theme park. Your first visit is likely to be interesting, stimulating and energetic -- all characteristic of the attention cluster. But what happens after your tenth visit? The “exciting” emotions fade. The experience becomes bland. To retain customers you need to evoke the Recommendation Cluster.

The Recommendation Cluster

Here is where you really begin to build loyalty. The Recommendation Cluster (Fig. 4) includes basic human emotions like valued, cared for and trusted. It reflects a reactive, rather than pro-active, state. For example, if a colleague asks you to recommend a good car dealer, you’d offer your opinion. But if they hadn’t asked, you probably wouldn’t have brought it up.

Fig. 4

The Advocacy Cluster

The Advocacy cluster (Fig. 5) is at the top of the pyramid, and contains only two emotions, reflecting their statistical importance. Happiness is a primary goal for everyone. People want to be happy, thus we seek out experiences which please us. Obviously, organizations should strive to make their customers happy. Happy customers become advocates, proactively telling people about your organization without prompting, and are among the most loyal. Word of mouth, after all, is the best form of marketing.

Fig. 5

Your Company’s Emotional Signature™

My company’s recent research takes all this one step further. We have discovered that every organization has an Emotional Signature that measures its emotional engagement with customers.

Here is a case study taken from my new book, with names changed to preserve anonymity. An upscale High Street Retail (HSR) client wanted to compare its Emotional Signature to that of a competitor we’ll call Kool Klothes (KK). HSR was puzzled by contradictory data. Although their customer satisfaction scores showed they were ahead of KK, HSR was rapidly losing market share to them. This is a fairly typical situation, by the way. Most organizations measure only the physical aspects of the Customer Experience -- price, product availability, range and so on. They ignore the other 50 percent of an experience: the customer’s emotions.

Like a graphic equalizer, your company’s Emotional Signature can be altered to produce a better sound, i.e., experience. Because they are not consciously and deliberately thought-out in advance, most experiences are out of tune. All organizations unwittingly evoke unintentional emotions. For example, customers become frustrated when their actions trigger the wrong behaviors, and organizations should take action to reverse this. To persuade your customers to feel you “care for” them -- a powerful differentiator -- you may need to change your recruitment process and hire people who are naturally caring. It’s important to understand what your Emotional Signature is today, to enable you to take action to improve it.

HSR’s Emotional Signature (Fig. 6) compares favorably to the overall Retail Clothes Sector, with the exception of Disappointed and Neglect. The chart demonstrates why HSR’s data were contradictory. KK’s market share was increasing because customers felt they provided a more emotionally engaging experience. Because HSR’s customer satisfaction survey measured only the physical factors, not the emotional ones, the company did not realize this finding.

Fig. 6

The Emotional Signature of HSR and KK (Fig. 7) clearly shows KK ahead in the Attention cluster.

Fig. 7

After on-site visits and anonymous shopping trips to both stores, we identified several differences that accounted for KK’s higher scores. The client engaged Beyond Philosophy to improve their scores for the Valued, Disappointed and Neglect emotions, as well as the entire Attention cluster: Stimulated, Indulgent, Interested, Energetic and Exploratory.

To achieve these goals, we made a number of practical recommendations, including:

1. Recruit store associates with a high degree of emotional intelligence.
2. Implement a training program on how to emotionally engage with customers.
3. To evoke “Indulgent,” introduce a personal shopper.
4. To evoke “Exploratory,” increase the number of new styles offered.
5. To evoke “Stimulated,” redecorate to introduce a more sensory environment.
6. To reduce feelings of “Neglect,” greet all customers as they enter, and approach them offering assistance within two minutes.

While these are just a few of our recommendations, they give an idea of the practical steps that can be taken to engage customers’ emotions. New targets were set for improvements to HSR’s Emotional Signature. When building our model, we calculated that these improvements would generate an additional $37 million in sales revenue annually. Armed with this data, HSR was able to create a business case for change that demonstrated payback within the first year.

Every organization should understand that a Customer Experience involves both physical and emotional aspects. It’s critical to examine and measure both halves, and to uncover your company’s Emotional Signature. By improving the four emotional clusters surrounding every Customer Experience, you can drive more customers higher up the pyramid, and reap a significant financial return in the process.