Professor Wirawan Dony Dahana, Graduate School of Economics

"From customer value to customer experience: The next trend in marketing research"

The dynamics of marketing research

The focus of academic research in the marketing field has always changed along with the changes in the managerial priorities of marketing actors. During the 1980s, we witnessed the golden age of brand management learning, with hundreds of articles published in leading journals, all attempting to discover how firms can build a strong brand. Central to this field was the development of a favorable brand image to build strong brand loyalty, which has always offered both a critical competitive advantage and long-term profitability. In the late 1990s, firms in many industries encountered a dramatic change in the business environment, characterized by a decline in customer loyalty and progressing product commoditization. Marketers recognized that these obstacles would have been challenging to cope with if they had continued to rely solely on strong brand image. The emergence of these marketing problems encouraged academics to pursue a more holistic understanding of the underlying mechanism of these new phenomena to thereby find solutions. Consequently, research interest has shifted from brand-oriented to customer-centric marketing, with a new focus on how firms can maximize customer value by retaining and nurturing long-term customer relationships.

This relationship research stream has since contributed critical insights into how firms should treat their customers to gain as much value from them as possible. However, some scholars have recently highlighted several issues regarding the implementation of customer relationship management. One of the primary limitations is that marketers often focus too much on providing excellent products or services and tend to overlook the role of customers’ shopping experiences. This is a vital issue, as customer satisfaction results not only from the utilitarian value of a product, but also from the hedonic experience during their shopping journey. Similarly, there is a growing interest among practitioners and retailers on how to design contact points to thereby create exciting and pleasing customer experiences. This new trend calls for innovative research that can provide useful insights for effectively managing customer experience.

The knowns and the unknowns of customer experience

Although the research field of customer experience is still in its infancy, a few studies have attempted to delineate its antecedents and its outcomes. Prior research reveals a number of motives that may drive customers to engage in hedonic shopping; these include relieving stress, keeping up with trends, hunting for bargains, escaping from their daily routine, and pursuing social interaction. It has been reported that pleasing shopping experiences reinforce customer satisfaction, store loyalty, and intention to disseminate positive word-of-mouth.

Several other relevant issues are yet to be investigated. One of these is the behavioral impacts of hedonic shopping experiences. It is unclear exactly how such experiences would lead to long-term increases in purchase frequency or purchase amounts among customers. Investigating this topic using individual-level purchase history data may clarify—for marketers and retailers—whether it is worth investing in constructing an exciting shopping experience. Another relevant issue is the relative importance of utilitarian and hedonic experiences, according to customers’ evaluations. It is currently unclear how customers evaluate the utilitarian value of a shopping journey in relation to its hedonic value and how these two aspects interact to determine customers’ overall shopping satisfaction. Therefore, future studies may need to investigate the cognitive and affective aspects of the shopping process.

The role of customer experience in the “new normal” era

Another reason for focusing on customer experience in the next research agenda is its potential role during the turbulence caused by the COVID-19 pandemic. The outbreak has caused severe damage to the retail sector, evidenced by the increasing number of retailers forced to close down their stores. Some firms in the industry have attempted to alleviate the problem by adding an online channel to their current sales channels, as many customers have migrated from offline to online stores. Furthermore, some firms in the service industry have considered introducing robots and artificial intelligence (AI) to replace service personnel, which would reduce physical contact. For purely offline retailers, the damage was even more severe, as most of their customers were taken by their online competitors. It is therefore critical to understand how offline retailers can leverage customer experience to win back their customers. Considering multichannel retailers, finding ways to integrate channels and to thereby create consistent shopping experiences is critical. Lastly, the introduction of AI in the service retail sector should also be investigated to identify whether the introduction of AI would cause attitudinal and behavioral changes among customers.

Edit: Kim Mawer