Excerpt
Table of Content
Table of figures
List of abbreviations
1 Introduction
1.1 Relevance and Objectives
1.2 Definition of relevant Terminology
1.3 Structure of the work
2 Customer Journey Mapping
2.1 Customer Journey Mapping – Why to talk about?
2.2 Customer Journey Mapping – What is it all about?
2.3 Customer Journey Mapping – No right or wrong
3 Automobile Industry
3.1 Automobile Industry – Figures and Trends
3.2 Automobile Industry – Changing Customer Behavior
4 Utilization of Customer Journey Mapping in the Automobile Industry
5. Conclusion and Outlook
Appendix
Bibliography
Table of figures
Figure 1: Customer Funnel
Figure 2: Process of Customer Journey Mapping
Figure 3: Customer Journey Map
Figure 4: Automotive Customer Journey Map
List of abbreviations
illustration not visible in this excerpt
1 Introduction
Commoditized products and volatile market environments frame the setting that companies are facing today. Thereby, the importance of differentiation as key to company’s growth is more relevant than ever. It is widely assumed that differentiation often refers to products or market positions. However, more recently, the concept of Experience Based Differentiation (EBD) emerged as an idea for companies to build sustainable relations and loyalty by delivering a superior, differentiated experience to customers (Temkin, 2008).
1.1 Relevance and Objectives
Managers have become increasingly aware that customers are their most valuable assets. However, pure Customer Relationship Management (CRM) is not sufficient anymore. Thus, Customer Experience Management (CEM) takes CRM to the next level by integrating customer experience (CEx) and emotions during interactions into consideration (Fatma 2014). Tracing the considerably increasing number of customer touch points and derive so called customer journey maps, helps companies to understand the broader reasons of performance gaps and thus address root causes. A recent study by McKinsey & Company (2013) revealed that companies that are able to map and optimize relevant customer journeys reinforce superior CEx, reduce churn and increase revenue, and, as a result, built sustainable relationships. In addition, greater employee satisfaction and an increased effectiveness of cross-functional collaborations have been observed. However, most companies fail to strategically align and manage the CEx across all touch points and miss a great opportunity to differentiate. This gives relevance to a study on the potential of Customer Journey Mapping (CJM), as a way for the marketing management to understand CEx during all interactions.
1.2 Definition of relevant Terminology
In the process of the present work, the concepts of Customer Experience (CEx), Customer Experience Management (CEM), Customer Journeys (CJ), as well as Customer Journey Mapping (CJM) are important. Therefore, the basic idea of these concepts will be characterized and explained in this sub-chapter.
The terms CEx and CEM have been introduced to the marketing management several years ago and have its roots in the concepts of service quality and customer service, which evolved during the eighties and nineties {Formatting Citation}(Drotskiie, 2009, p. 363). Today, a common understanding of the frequently cited concept of CEx is “the user’s interpretation of his or her total interaction with the brand, product or company” (Ghose, 2007). Consequently, CEM moves beyond outcome-based measures, such as satisfaction or loyalty, and focuses, according to Schmitt(2010), on "the process of strategically managing a customer's entire experience with a product or company.” The concept aims to engage with the customer along the entire CJ and across all touch points. Since the current research misses a general definition of CJ, the concept is understood as representation of all customer actions and decisions on all touch points throughout the entire customer lifetime, consisting of five phases (Figure 1). In the course of these phases, CJM visualize the actions and decisions, by also integrating perceptions, needs, and experiences into consideration. According to Temkin(2010), CJM is defined as a “Document that visually illustrates customers’ processes, needs, and perceptions throughout their relationships with a company.”
1.3 Structure of the work
The first part of the paper at hand, elicits the concept of CJM and the current state of research. In addition, CJM as an marketing tool will be discussed. The second part analyzes the current state of the automotive industry with regards to current trends and developments. The third part discusses the utilization of CJM in the automotive industry under consideration of key journey phases and major pain points (PP). The last part discusses the findings and future directions.
2 Customer Journey Mapping
2.1 Customer Journey Mapping – Why to talk about?
In 2012, the Customer Experience Index by Forrester revealed that customer expectations are on the rise. Today’s consumers are accustomed to choose brands and products based on a variety of offers. In addition, the tool of social media gives them a greater control over suppliers and forces companies to re-invent themselves at an astonishing speed. Thereby, companies have to work hard to hold pace with industry leaders such as Amazon.com and Apple Inc., which also hold leading positions in the area of CEx (Forrester Research inc., 2012). The advantages of those leading CEx-positions are obvious – 86% of all consumers have an increased willingness to pay and the average spending rises by 30%, following improved retention rates and customer equity. However, 89% of consumers are losing ties after a poor CEx appeared (Bain & Company, 2011a; Oracle, 2011, 2012). Taking into consideration that only 1% of all consumers are always satisfied with its experiences, companies have to carry out a Customer Experience Strategy (CES) that makes the difference and closes this huge experience gap (Oracle, 2011). Recent studies on customer management (McKinsey & Company2013; A.T. Kearney2012; Bain & Company2011b; Edelman2010; Booz&Co2009) agree, that this claim requires more than just engaging customers into operations, as well as serving them efficiently. Rather it requires a deep understanding of experiences, emotions, and expectations along the entire CJ (Berry et. al.2002). Since the infusion of technology and multi-channels created a more sophisticated and complex service environment, executives are facing difficulties to identify and define CJs that matter. Therefore, an inventible element in developing such CES is CJM (Patricio, Fisk, & Falcao e Cunha, 2008; Rawson, Duncan, & Jones, 2013).
2.2 Customer Journey Mapping – What is it all about?
CJM, also known as Customer Experience Mapping (Oxford Strategic Marketing, 2012) and MomentMapping® (Colin Shaw & Ivens, 2002), has its roots in the similar concept of Service Blueprints (Kingman-Brundage, 1989; Shostack, 1983). As essential element of every CES, CJM has scarcely been considered as an independent construct in the marketing management and service management literature (Davis & Dunn, 2002; Colin Shaw & Ivens, 2002; Zomerdijk & Voss, 2010). Instead, researchers have mainly focused on the holistic concept of CEx and its implication on several determinants i.e. retention, loyalty, satisfaction (Shaw;Ivens2002; Smith;Wheeler2002; Shaw2004; Barnes et. al.2009; Schmitt2010; Walter et. al.2013).
Going one step beyond these measures, CJM asks “What is it really like to be your customer?” (Fatma, 2014). By walking in the customer’s shoes, this approach aims to elicit what customers really value during interactions, as well as to identify clues and correlated emotions throughout the entire journey, as a foundation for improvements in CEx. Of course, not all CJs are equally relevant to customers and the company – some journeys even indicate negative performance and should be abandoned from the company’s channel mix. However, it is difficult for companies to get this right. Therefore, commitment by the top-management is required to layout the foundation before executives dive into the mapping of CJs. Following Temkin(2010), this foundation consists of five phases, as seen in Figure 2. The initial step – Internal Insights – requires a detailed assessment of already available customer knowledge. It is important to identify key sources of data and generate initial insights to understand the experiences and ideas of every CJ. Due to the high amount of customer data, Hypotheses help companies to keep the focus by formulating assumptions that represent customer insights and findings. Often, hypotheses are created in collaboration with stakeholders. Traditionally, customer insights are formulated from the company’s point of view to identify relevant customer groups. However, being able to know, which customer groups care about what, is a pre-requisite of every CJM-process. For this purpose Processes, Needs, and Perceptions need to be formulated from the customer’s point of view, which requires a solid data-driven bottom-up approach. Best in class companies even use regression analyses to determine the impacts on businesses and customers (Duncan et. al.2013). Once, the most relevant CJs have been identified project leaders can apply CJM.
2.3 Customer Journey Mapping – No right or wrong
As already mentioned, CJM has scarcely been considered as an independent construct in academic literature. Consequently, current research misses an elementary definition of the basic elements and the general execution of CJM. In recent years, however, concepts like MomentMapping® (Colin Shaw & Ivens, 2002), Brand Touchpoint Wheel (Davis & Dunn, 2002), Performance and Improvement Maps, as well as Tactical Maps (Morgan, 2013) have been introduced and have been widely accepted by practitioners. Following extensive research, the authors understanding of the basic elements of CJM is the representation of customer actions, as well as Key Moments-of-Truth (MoT) and major PP. Key MoT are of significant importance for the CEx, as they represent the “make” or “break” of the customer relation. Major PP indicate where the CEx is likely to become difficult or negative to the customer (Morgan, 2013). A general rule of execution is not possible to formulate, due to the fact, that there is no single right of execution. Thus, CJM’s can fulfill different purposes. Some maps integrate all phases and touch points, highlight key MoT and PP, and formulate improvement levers (Oxford Strategic Marketing, 2012). Others, such as tactical maps, focus on the actions on single touch points, highlight major PP, and formulate improvement measures. Therefore, each company has to identify the CJM-concept that fits to its current situation, or even come up with an own, new CJM-concept.
Since CJM is applied to the automotive industry in chapter four, the underlying map type will be described in this chapter. However, as a consequence of the scarce research on CJM as an independent construct in marketing and service management, different types of maps often do not have particular names or descriptions. Therefore, the author refers to a journey map that has been introduced by Arthur D. Little(2013). This map – Figure 3 – measures the performance and process of each customer journey step in detail. It refers to every customer touchpoint and reveals opportunities and challenges for companies. This helps in identifying major PP and key MoT during the entire customer lifetime. As the Author added customer expectations and potential/opportuntites to the model, improvement measures and future diretions can be derived on this foundation.
illustration not visible in this excerpt
Figure 3: Customer Journey Map
Own Illustration, following Arthur D. Little(2013)
Of course, the depicted stages are not static and can be adjusted to the current situation. As previously stated, the proposed map by Arthur D. Little(2013) is just one opportunity to illustrate a customer journey. Currently, research is lacking a comprehensive exhaustive overview of CJM concepts. This is due to the fact, that this tool can uniquely be applied to current situation and is not static. However, an overview of different forms, identified by the author is presented in appendix 1 – 4.
3 Automobile Industry
3.1 Automobile Industry – Figures and Trends
In recent years, the global automobile industry has experienced substantial structural changes. Dynamics, such as shorter product-life cycles, increasing diversity of models, new technological advancements and cost pressure, have affected the industry inevitably (Oliver Wyman, 2013). Nevertheless, ever-growing sales figures in BRIC nations and a solid post-crisis recovery in the United States have enabled a prevalent optimism within the industry. Even though, Europe has not been able to fully recover yet, Original Equipment Manufacturers (OEMs), such as Audi or BMW, announced new sales records in 2013 (PwC, 2014). However, these records were mainly driven by massive sales improvements in emerging markets like China and India. While the BRIC states accounted for 30% of the global automotive profits in 2007, 60% of total sales are generated in those regions today. Consequently, global profit is expected to increase from €25 billion to €79 billion until 2020 (McKinsey & Company, 2013). Yet, China is not only an important region for retail and sales, but also for the vehicle assembly. This value creation process is also expected to grow at a Compound Annual Growth Rate (CAGR) of 53% to almost 30 million assembled units in 2030 (PwC, 2014). As one can observe, the automobile industry generated impressive figures and creates indispensable value for nations and regions around the world. Thereby, the entire industry is currently dominated by five megatrends that are leading future directions. According to a study by Hanna et. al. (2013) “hot topics”, such as the [1] demographic change, the ongoing [2] urbanization, as well as the worsening [3] climate change affect the development of the automobile industry already. In addition, [4] technological progresses, like the emerging concept of e-mobility, and new possibilities through digitalization, influence the way in which OEMs, retailers, as well as customers interact and communicate. The major force of [5] economical power impacts OEMs, dealer networks, and retailers as seen in the figures above and will direct future target markets. Facing such complex and sophisticated issues, managers have to determine appropriate strategies to cope with these challenges. Especially, OEMs and retailers need to critically scrutinize its concepts and invest into the further development of technology and skills in order to reveal sustainable future profit streams (McKinsey & Company, 2013).
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