Customers and companies talk about ‘experience’ a lot these days, and for good reason. Think of a product you want to buy or a service you want to use and – save for some rare instances – there will always be at least two competing providers to choose from. Tesco and Sainsbury’s both offer the same sorts of products at a similar price. You can get working, reliable phone, broadband and TV services from either Virgin Media or Sky. The list goes on: competing providers, all price matching, all offering comparable products and services. So where do you choose to spend your money?

A lot of the time, the decision comes down to which company provides the best customer experience. What a ‘great experience’ looks like is largely in the eye of the beholder. It could be a website that’s easy to navigate, an e-commerce site that remembers your shopping basket across devices, or call centre staff who can solve a query on the first call. But regardless of the form it takes, the end result is the same: great customer experience makes customers happy and keeps them coming back for more.

For many people, Amazon is the standard bearer for great customer experience. The online retailer regularly tops rankings for the quality of its service and the satisfaction of its customers. “Our energy at Amazon comes from the desire to impress customers, rather than the zeal to best competitors,” wrote CEO Jeff Bezos earlier this year in his annual letter to shareholders.

Bezos has been writing these letters since 1997. Returning to his first letter today, you see how he realised early on that the web was the “world wide wait” – at least it was in the days before e-books and digital delivery. Back then it lacked the gratifying immediacy customers could get by walking into a bookshop, browsing and making their purchase. “Therefore, we set out to offer customers something they simply could not get any other way,” wrote Bezos. A broader selection of titles, round-the-clock shopping, reviews, recommendations, lower prices. Amazon offered an all- encompassing experience that customers couldn’t easily find in the physical world.

The origins of customer experience
Customer experience, as a concept, is not new. It would be absurd to think that there was ever a period in time where organisations didn’t think about their customers and the experiences they created for them. What’s different now is that customer experience is becoming a recognised professional discipline with an associated set of processes and practices.

Business historians might trace the roots of the customer experience discipline back to the 1980s; the decade that gave birth to customer relationship management. CRM was an early attempt at customer- centricity, says Ed Thompson, an analyst with the Gartner research firm. “But somewhere along the way it got screwed up. It lost its original meaning. It became about selling to customers and marketing to customers, and generally doing things to customers. There was no thought of the customer really being put first.” This triggered a backlash in the early 2000s, says Thompson, and customer experience was born.

Leading the charge were Joseph Pine and James Gilmore, authors of The Experience Economy, a business text published in 1999 that proved influential in the early formative years of the customer experience movement. “Experiences are a fourth economic offering, as distinct from services as services are from goods,” they wrote. “When a person buys a service, he purchases a set of intangible activities carried out on his behalf. But when he buys an experience, he pays to spend time enjoying a series of memorable events that a company stages – as in a theatrical play – to engage him in an inherently personal way.”

The key words there are “personal” and “memorable”, says Stephen Walden, vice president of consulting and thought leadership at Beyond Philosophy, a customer experience consultancy. Thus, customer experience management – as a business discipline – is about “looking at and noting the emotional connections people have through the customer journey,” says Walden. “It’s about finding and extracting value in the customer journey, in a way that differentiates you from the competition.”

Pine and Gilmore updated their book in 2011. They lamented the fact that, 12 years on: “Relying on the manufacturing of goods and the delivery of services remains the mindset of too many executives, prohibiting the shift to more vibrant enterprises offering experiences.”

That’s undoubtedly true, but it would be wrong to say that interest in customer experience isn’t growing. Company by company, senior executives acknowledge that they need to offer more than just easily-commoditisable goods and services. They are hiring people to develop customer experience strategies, putting teams in place to design those experiences and training staff to deliver them.

A common currency
For many companies today, customer experience is thought about and managed as the sum of all the interactions a customer has with a company: whether its an ad they’ve seen, a product on a store shelf, a phone call to customer services, an exchange of tweets, or a recommendation from a friend. Marketers call them “touchpoints” – and there are a lot of them.

“In digital, you’ve got social and video, core website and mobile. Then you have the traditional offline channels – TV, radio, print etc,” says Brian Walmsley, chief marketing officer of Bounty, a parenting club owned by the Treehouse Group. “When I started in marketing 20 years ago, it was just TV and print. Now there are so many different touchpoints that it makes sense to have a common currency.”

That currency is customer experience. Using Net Promoter Score or some other metric, CMOs like Walmsley are able to measure satisfaction with each of these different touchpoints to figure out which ones are performing well and which ones are letting the side down when it comes to driving sales.

That’s right: ‘sales’. While the quality of an experience might best be measured by assessing the consumer’s emotional response to it (see The psychology of customer experience, and how to measure it, p23, those businesses that have adopted customer experience programmes tend to use hard financial metrics to grade performance – and work by Harley Manning and colleagues at Forrester Research supports this decision.

“Customer experience is a tremendous path to profitability,” says Manning, research director in Forrester’s customer experience practice and co-author of Outside In: The Power of Putting Your Customers at the Centre of Your Business.

“Each year, when we compile our customer experience index, we ask loyalty questions and we run correlations, and what I can tell you – based on six years of data from thousands of US consumers – is that nothing drives purchase intent more than positive customer experience.”

For executives like Walmsley, the strength of customer experience as a discipline, and as a way of thinking, is that it brings the whole organisation together. “It tells us all – brand, marketing and sales – that we need to be putting the customer at the heart of the business and focusing on ways of improving the experience and monetising it,” he says. “A marketer who only talks about customer experience without asking, ‘How do we monetise it?’ is only having half a conversation. That’s equally the case if you’re a sales person and you’re only talking about revenue. Customer experience brings people within the business together and gets them talking, using a common language.”

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