Experience Management

The term Experience Management – otherwise known as XM for short – refers to the collection and measurement of human, subjective experiences. The goal of Experience Management is to use the data that is collected in order to improve a product or a service or to experience a situation.

Fields of Experience Management

Common areas in which Experience Management is used can be described as follows.

  • Customer Experience, for example, poses the question of the customer’s experience in the context of a service
  • Employee Experience attempts to determine the experience of an employee within a team and within a company
  • Brand Experience examines this question in terms of the brand perception of a company
  • Product Experience addresses the experiences of customers with a specific product

Of course, these examples can be extended almost arbitrarily. However, the focus is always on the experience of a person in the context of a situation.

Experience Management – practical cases of use

The big question that now arises is how to manage experience. Once the empirical data has been collected, it should, of course, be possible to derive an advantage from it. What do you imagine Experience Management to be like in practice?

As Joseph Pine and James H. Gilmore stated in the 1998 article “Welcome to the Experience Economy”: “From now on, leading-edge companies – whether they sell to consumers or businesses – will find that the next competitive battleground lies in staging experiences.” The experience thus becomes the relevant unique selling point that is decisive for the success of a company.

Pine and Gilmore were right. Today’s most important companies are Experience Companies. Brands such as Apple, Amazon or Tesla have the highest revenues, strong customer loyalty and prevail in the War for Talents. They are at the heart of the major value-adding ecosystems.

With XO Data, for example, you can see that a certain type of a red T-shirt is increasingly being ordered. The O-Data initially provides you with process data (What?) and customer data (Who?). The survey for the X-Data is now generated on the basis of the O-Data, and enriches the values with experience-based ratings: Why did the customer order this T-shirt, and what was important to them when they bought it? The more answers you get, the easier it is to identify patterns. For example, you might find that customers who order the red shirt are all the same age and buy it because it is made from organic cotton. In this way, you can identify a trend towards organically grown cotton in a specific target group and adapt your business model accordingly in the interests of offering an even better Customer Experience.

Due to increasing competition for good junior staff, the Work Environment is becoming increasingly important and with it, the Employee Experience. In this case, Experience Management would enable you to ascertain whether and why certain employees want to leave the company and bind them to the company with corresponding improvements.

What is new, however, is the application of the Experience Economy to the Supply Chain Experience, i.e. to suppliers. This relationship is also based on reciprocity: The supplier expects a form of processing that is as uncomplicated as possible, and quick payment. On the other hand, the customer benefits from better availability and favorable delivery conditions. At the beginning of the year, a story in the german magazine “Stern” made the rounds, according to which a tiler from Bavaria wanted to exclude Siemens and Audi engineers as customers, because he was explicitly annoyed by this customer group as the invoices had been paid too late. This anecdote makes it clear: Communicating with suppliers on a par is worthwhile in itself, so that your procurement process continues to function smoothly. It can also help with securing even better conditions.

Common practical examples include, for instance, the measurement of customer satisfaction in the B2C sector. Everyone knows it to be true from personal experience: These days, the majority of transactions take place online, and regardless of what goods or services were purchased the transaction is followed by the question – as asked by the retailer to the customer – of the extent to which they were satisfied with the shopping experience in the online shop, with the shipping service, and ultimately with the product that they purchased. A rating scale is then presented to the customer for their evaluation. The customer can assign between one and five stars, for instance. The result then flows back into a collection container for all of the ratings, which is displayed in both the operator’s online shop and external marketplaces. Depending on the method used, an evaluation of a product or an evaluation of the online shop can be obtained in this way. If the latter is the case, the operator can also deduce the “brand experience” of his or her online shop from this data. At the same time, this helps potential customers to assess the trustworthiness, etc. of a service provider previously unknown to them. And so the Experience Management begins. The big US companies in particular, such as Amazon or Apple, see themselves as being Experience companies. Experience Management has been used in the USA for quite some time.

What is an experience?

The experience refers to the experience we have with a company, how it affects us, how we perceive it and how we feel when interacting with them. This applies to different groups:

  • Customer / Sales Experience
  • Employee Experience
  • Supply Chain Experience

According to a CEB study in Forbes Magazine, 71% of buyers who see added personal value are willing to buy a product and 68% are even willing to pay a higher price for it. Why do so many people buy an iPhone when there are significantly cheaper smartphones on the market that have the same features? It’s the buying experience Apple offers its customers.

The Employee Experience is the sum of all the experiences an employee has in a company. Important events in the Employee Journey shape this impression – for example, the application and onboarding process, promotions or leaving the company. A positive experience leads to more employee commitment in the long term, which has a direct influence on the success of a company. In addition, this strengthens the employer brand: employees speak positively about the company as an employer, which in turn facilitates recruiting and increases employee loyalty.
Experience determines the success of a company.

Basics for Experience Management

In order to implement Experience Management (XM) in a company, all important processes within the company must first be digitized. This includes, for example, the digital personnel file with contract documentation, salary increase letters, training certifications or other references.
It is only through the digitalization of such processes that user experiences can be collected in the form of feedback in real time and tailored to the target group. By collecting this data, trends can be recognized more quickly, and success can be easily measured. The collected feedback data is also called Experience Data (X-Data).

The trigger is typically a business transaction in a classic ERP system (such as SAP) or in processes such as Purchase2Pay. This business transaction is documented in the IT systems with the help of operational data (O-Data), such as a delivery note.

It is necessary to link this operational data with the experience data (X-Data) in order to receive feedback from users on their experience in the respective process step. Through Experience Management, companies can now obtain comprehensive and in-depth information on all transactions and business processes by being able to measure and interpret the user experience of customers, employees, suppliers and partners in relation to their business processes. Based on this experience, business processes and strategies can be agile and optimally aligned to the market.

The next step: Experience Management combines X/O-data

How was your most recent stay at our hotel? Would you recommend us to others? As customers, we are now used to hearing such questions; all service providers want to know how we experience their services or products so that they can adapt their offerings accordingly. According to a survey by SAP, 80 percent of customers would change a brand or service provider due to a poor customer experience. A positive customer experience is therefore hugely important in order to acquire and retain customers. That means: If products or services can no longer be distinguished from each other in terms of their quality and functions, further added value must be available in order to inspire customers. It’s all about building a relationship on an emotional level. A perfect example of this is the Apple brand, which, on the basis of a consistent brand strategy, has managed to tell a story and create an emotional sense of belonging to a group.

The way in which a product, brand or service is experienced is determined by many factors: Is the procurement process uncomplicated? Are the personal contacts friendly and courteous? Is the customer service department easy to access, etc.? Many companies use surveys to gather feedback. This usually happens afterwards – e.g. by email – and the questions or rating scales are not always sufficiently differentiated to allow conclusions to be drawn for the future: “Would you recommend us?” “Yes or no?” But WHO would make a recommendation and who wouldn’t? And WHY? Companies only answer these questions if they consistently manage their experiences.

The B2B sector is now going one step further. In this respect, Experience Data (X-data) is now being linked with operational data (O-data). The latter include, for instance, production costs, accounting and turnover data, etc. – and could be supplemented by any other operational data. The objective is to gain as complete a picture as possible of the customer journey and to find out what the customer thinks of the experience layered with company data. Formulated a little more clearly, perhaps: What does a company have, when, under what conditions and with which resources it produces (O-data), and how did this product reach the customers (X-data). These data are then put in context and one hopes to gain valuable insights. The goal is to become more agile in the market and to exploit competitive advantages in this way.