Customer value in
Commercial Experiences
‐Expecting the unexpected
Maria Eriksson
Main supervisor: Professor Håkan Wiklund
Co‐supervisors: Associate professor Ingela Bäckström Dr Pernilla Ingelsson
Faculty of Science, Technology and Media
Thesis for Doctoral degree in Sports and Quality Technology Mid Sweden University
Östersund, 2017-03-30
Akademisk avhandling som med tillstånd av Mittuniversitetet i Östersund framläggs till offentlig granskning för avläggande av teknologie
doktorsexamen fredagen, 12 maj, klockan 10.00, i sal Q221, Mittuniversitetet Campus Östersund. Seminariet kommer att hållas på engelska.
Customer Value in
Commercial Experiences
‐Expecting the unexpected
© Maria Eriksson, 2017-03-30
Printed by Mid Sweden University, Sundsvall ISSN: 1652-893X
ISBN: 978-91-88025-60-9
Faculty of Science, Technology and Media Mid Sweden University, SE-831 25 Östersund Phone: +46 (0)10 142 80 00
Mid Sweden University Doctoral 262
A person is the sum of their memorable
experiences
(inspired by Ronald Laing, 1967)
Stort Tack!
Det finns många som bidragit till mitt arbete, utan dem hade det inte blivit lika givande, lustfyllt och ett lika bra resultat. Det ekonomiska stödet från Mittuniversitetet och Europeiska Unionen har möjliggjort min forskning. Tack till den framlidne Leon Dahlén som möjliggjorde mina studier till maskiningenjör i Östersund och senare antagen som doktorand i ett forskningsprojekt. Förbättringar av det skriftliga engelska språket är utförda av Gary Watson med kollegor. Till den statistiska datainsamlingen har jag fått ovärderlig rådgivning av Ulla Romild, tack! Tack till alla de reviewer’s och granskare som läst, kommenterat och gett förslag till förbättringar av mina artiklar. Det har ökat min kunskap om forskning och vetenskapligt skrivande.
Mest uppskattning vill jag ge mina kollegor vid Mittuniversitetet, i hus Q där vi har en bra stämning, framförallt i närmsta arbetsgruppen, Kvalitetsteknik.
Varje dag på jobbet ger glädje och utveckling! Tack till mina handledare till licentiat: docent Pia Sandvik, professor Lena Mossberg och professor Bengt Klefsjö. Vidare till doktor docent Ingela Bäckström och doktor Pernilla Ingelsson som fick mig att både förstå vad jag åstadkommit och att det fanns möjlighet att slutföra min avhandling, utan er hade boken inte funnits! Tack till min outtröttlige huvudhandledare professor Håkan Wiklund som stått ut med mig hela vägen. Det har blivit många givande diskussioner med er alla under åren.
Stort tack till Andreas, min klippa att hålla i handen när det stormar på fjället, ”you are my person”. Tack till min son Nilo som ger mig skrattet och lekfullheten i vardagen. Tack till mina föräldrar Karl‐Johan o Gunborg både för att ni gett mig en trygg och bra grund att stå på i livet men framförallt tron på att allt är möjligt. Det har varit en lång, lärorik, fantastisk och ibland jättejobbig forskningsresa, både intellektuellt utmanande och mentalt inspirerande, fylld av många minnesvärda upplevelser! Ett sista tack till alla fantastiska kvinnor både inom forskning och andra områden som varit och är förebilder som gett inspiration till att våga ta sig an stora och svåra utmaningar!
Maria Eriksson
Östersund, 2017‐03‐20
TABLE OF CONTENTS
ABSTRACT ... vii
SAMMANFATTNING ... x
LIST OF APPENDED PAPERS ... xiii
1. INTRODUCTION ... 1
1.1. BACKGROUND ... 1
1.2. PURPOSE AND RESEARCH QUESTIONS ... 4
1.3. DELIMITATIONS ... 4
1.4. RESEARCH OVERVIEW ... 5
2. THEORETICAL FRAME OF REFERENCE ... 6
2.1. THE COMMERCIAL EXPERIENCE ... 6
2.1.1 Separating experiences from other offerings ... 13
2.1.2 Reasons to buy experiences ... 16
2.1.3 Critique towards the experience economy ... 17
2.2 QUALITY DEVELOPMENT ... 18
2.2.1. Customer Value ... 20
2.2.2. Measuring customer value ... 26
2.2.3. The theory of Attractive Quality ... 28
2.3 QUALITY MANAGEMENT ... 30
2.3.1. Organizational culture and corporate values ... 35
3. RESEARCH METHODOLOGY ... 38
3.1 RESEARCH PURPOSE ... 38
3.2 RESEARCH APPROACH ... 39
3.3 RESEARCH STRATEGY ... 41
3.4 METHODS OF DATA COLLECTION ... 43
3.4.1 Interviews ... 44
3.4.2 Documentation, direct and participant observation ... 45
3.4.3 Questionnaire ... 45
3.5 CONDUCTED RESEARCH STUDIES ... 46
3.5.1 Literature studies ... 46
3.5.2 The methodology of the research studies (case 1‐3) ... 47
3.5.3 Study 1‐ Case study at the Walt Disney Company ... 47
3.5.4 Validity, reliability and generalization ... 49
3.5.5 Study 2‐ Case study‐Eight Interviews ... 50
3.5.6 Validity, reliability and generalization ... 53
3.5.7 Study 3 A validation study‐ Questionnaire development ... 53
3.5.8 Study 3 ‐ Case Study at Camp Åre ... 56
3.5.9 Validation, reliability and generalization in Study 3 ... 58
4. SUMMARY OF APPENDED PAPERS ... 60
4.1. SUMMARY OF PAPER A ... 60
4.2. SUMMARY OF PAPER B ... 62
4.3. SUMMARY OF PAPER C ... 63
4.4. SUMMARY OF PAPER D ... 64
4.5. SUMMARY OF PAPER E ... 65
4.6. SUMMARY OF PAPER F ... 68
4.7. ADDITIONAL FINDINGS FROM STUDY 1 ... 70
5. MAIN FINDINGS ... 75
5.1 RESEARCH QUESTION 1 ... 75
5.2 RESEARCH QUESTION 2 ... 80
5.3 RESEARCH QUESTION 3 ... 82
6. CONCLUSIONS, DISCUSSION and FUTURE RESEARCH ... 85
6.1 CONCLUSIONS ... 85
6.2 DISCUSSION ... 88
6.3 METHODOLOGICAL DISCUSSION ... 90
6.4 FUTURE RESEARCH ... 91
REFERENCES ... 92
ABSTRACT
To an ever greater extent, customers desire experiences that are highly emotional, personally designed and memorable. Today’s customer has an increasing need to be entertained and often searches for pleasurable offerings of hedonic value. Many academics also argue that commercial experiences deliver a higher customer value than goods and services. More research regarding the character of the commercial experience is needed to understand the needs of the customer and what creates value to the customer. However the existing tools and methods for measuring customer value and customer satisfaction seldom contain the elements pointed out as important to customers in a commercial experience. Is it enough to focus on values, methods and tools developed within for instance Total Quality Management (TQM) or is there a need for further development to include the offering of a commercial experience?
The overall purpose of this thesis has been to explore the field of commercial experiences and establish new knowledge on how customer value is created when delivering commercial experiences. Within the overall purpose the research also intended to contribute to the area of quality development. In order to fulfill the overall purpose three research questions were asked and three case studies and one validation study were conducted. In the first case study, focus was on exploring the commercial experience sector and searching for best practices as regards how to create value to the customer.
One organization was studied and empirical data was collected by site visit, direct observation, participant observation, open seminars, follow‐up interview questions and documentation. In the second case study the aim was on how organizations were working to create customer value in commercial experiences. Empirical data was collected at eight organizations where top managers were interviewed. In the third study the aim was to develop a method or tool to measure customer value in a commercial experience. A validation study and a case study were conducted. In the validation study a questionnaire was developed as a measuring tool for commercial experiences and later tested on customers in the third and last case study.
The findings in the three case studies presented in this thesis contribute to expanding earlier research concerning commercial experiences and how customer value is created when delivering them. From the findings of research the commercial experience is defined as “a memorable event that the customer is willing to pay for” and identified as a unique business offering providing hedonic customer value. Further the findings describe the commercial experience by three vital factors: strong engagement, highly emotional and being memorable. To additionally describe the characterizing elements of the commercial experience, the research identified these factors as important to customers: having fun, novelty, surprise, learning, a challenge, co‐creation, the unexpected, storytelling, being in control, the venue for the experience (or the room of the experience), personal contact with staff and emotions creating strong engagement. Using the theory of attractive quality by Kano is suggested as one way to recognize elements of high customer value and to identify and deliver the unexpected, novelty and surprise the customers.
Further findings of the research revealed that existing tools and methods developed for measuring customer value and satisfaction do not sufficiently consider or measure the effect of customer emotions or the characterizing elements of the commercial experience. As a consequence, a questionnaire was developed and tested to identify and measure elements of value to customers in a commercial experience. From the results, a new instrument for measuring variables of value in a commercial experience is proposed. One of the conclusions is that a specific tool for measuring customer value in commercial experiences is both required and needed. It was also concluded that there is a shortage of well‐known and applied methods for measuring customer value in commercial experiences and that further research of this area is needed.
The research presented in this thesis also proves that successful
organizations delivering commercial experiences have a strong
organizational culture built on core values. The conclusion was that working
according to the core values of TQM is also a successful approach for these
organizations, even though this does not seem to be enough. The
characterizing element “co‐creating” the experience between the customer
and the provider was identified as a vital factor of business success. Giving
the customer the power to affect the outcome within certain limitations and
an opportunity to enhance the customer value meant that the experience
becomes more personal and delivers a higher customer value than other
offerings. Further identified ways of working to enhance customer value in the offering were: to recruit and select co‐workers not only on competence and skills but also based on the core values; to stimulate creative thinking among co‐workers and to further enhance the offering with storytelling and theming. These ways of working were categorized as specific and more unique or necessary in the experience industry and can therefore be vital in the competition between different organizations to deliver superior customer value.
Keywords: commercial experience; customer value; hedonic value; quality;
experiential quality; TQM; Kano model, attractive quality, co‐creation, storytelling and strong engagement.
SAMMANFATTNING
I en allt större utsträckning letar kunder efter att konsumera upplevelser som berör på ett emotionellt plan, är personligt utformade och minnesvärda.
Dagens kunder har ett växande behov av att underhållas och letar allt oftare efter erbjudanden enbart för nöjes skull. Flera forskare är överens om att kommersiella upplevelser handlar om att leverera ett högre kundvärde än för varor och tjänster. Det behövs mer forskning kring vad en kommersiell upplevelse innehåller för viktiga egenskaper som skapar värde för kunden samt att öka förståelsen kring kundens behov. De befintliga metoder och verktyg för att mäta kundvärde och kundnöjdhet innehåller få av de egenskaper som utpekas som vitala för en kommersiell upplevelse. Räcker det att arbeta med de värderingar, metoder och verktyg som utvecklats inom till exempel offensiv kvalitetsutveckling (TQM) eller behövs det ytterligare utveckling för att även inkludera den kommersiella upplevelsen?
Det övergripande syftet med den här avhandlingen har varit att utforska området av kommersiella upplevelser och öka kunskapen kring hur kundvärde skapas när en kommersiell upplevelse levereras. Inom ramen för det övergripande syftet fanns även ett fokus att forskningen skulle bidra till ämnesområdet kvalitetsutveckling. För att uppfylla det övergripande syftet har tre forskningsfrågor ställts och tre fallstudier och en valideringsstudie genomförts. I den första fallstudien var syftet att utforska området av kommersiella upplevelser, inhämta kunskap och leta efter goda exempel för att skapa förståelse för hur kundvärde skapas inom kommersiella upplevelser.
En utvald organisation studerades och besöktes. Empirisk data insamlades genom flera olika datakällor såsom direkt observation, deltagande observation, insamling av dokument, öppna seminarier och uppföljande intervjufrågor. I den andra fallstudien var syftet att studera hur organisationer arbetar med att skapa kundvärde i en kommersiell upplevelse.
Den empiriska datainsamlingen insamlades via intervjuer med högsta ledningen i åtta olika organisationer. I den tredje och sista studien var syftet att utveckla ett sätt att mäta kundvärdet i en kommersiell upplevelse.
Studien delades in i två delar, en valideringsstudie för att utveckla ett sätt att mäta och en fallstudie där mätverktyget testades bland kunder i en kommersiell upplevelse.
Resultatet av de tre fallstudierna som presenteras i avhandlingen bidrar till en vidareutveckling av tidigare forskning om kommersiella upplevelser och hur kundvärde skapas när en kommersiell upplevelse levereras. Som ett resultat av forskningen definieras en kommersiell upplevelse som “en minnesvärd händelse som kunden är beredd att betala för” och identifieras som ett unikt erbjudande som innehåller ett hedoniskt kundvärde. Vidare visar forskningsresultaten på att den kommersiella upplevelsen utgörs av tre viktiga faktorer för kunden såsom att vara djupt engagerande, starkt känslomässigt berörande och minnesvärd. För att ytterligare beskriva upplevelsens karaktärsdrag har ett flertal egenskaper identifierats som ett resultat av fallstudie tre. En användning av Kanos teorier om attraktiv kvalitet föreslås som ett sätt att fortsätta arbetet med att identifiera egenskaper som dels kan skapa ett högre kundvärde men också för att kunna överraska, leverera något nytt och ge kunden det oväntade som ofta efterfrågas.
Forskningsresultaten påvisar en brist bland befintliga mätverktyg och metoder för kundvärde och kundnöjdhet att mäta effekten av ett känslomässigt värde och de övriga egenskaper som utpekas viktiga för kommersiella upplevelser. Som en följd av det utvecklas en enkät för att identifiera och mäta viktiga egenskaper av värde för kunden i en kommersiell upplevelse. Från resultaten föreslås ett nytt mätinstrument för att mäta värdefulla egenskaper i en kommersiell upplevelse. En av slutsatserna är att mätverktyg specifikt utvecklade för att mäta kundvärdet i kommersiella upplevelser behövs. Erkända och tillämpade metoder för att mäta kundvärdet i en kommersiell upplevelse identifieras som en brist och mer forskning behövs inom området.
Forskningen i avhandlingen visar att framgångsrika organisationer som levererar kommersiella upplevelser har en stark organisationskultur som bygger på värderingar. En av slutsatserna var att arbeta enligt kärnvärderingarna inom offensiv kvalitetsutveckling är en framgångsrik metod, även för organisationer som erbjuder kommersiella upplevelser. Men det verkar inte vara tillräckligt. En annan viktig framgångsfaktor som identifieras är att samskapa (co‐create) upplevelsen mellan kund och leverantör. Det ger kunden möjligheten att påverka resultatet av upplevelsen inom vissa begränsningar och därmed en chans att förstärka kundvärdet, bli mer personlig och leverera ett högre kundvärde än andra erbjudanden.
Vidare identifierade arbetssätt för att öka kundvärdet i erbjudandet var:
rekrytera och välj medarbetare baserat på kompetens, färdigheter och
värderingar; stimulera kreativt tänkande bland medarbetare; samt förstärk
erbjudandet genom användningen av storytelling och tematisering. Dessa arbetssätt kategoriseras som specifika och mer unika eller nödvändiga inom upplevelseindustrin och kan vara avgörande i konkurrensen mellan olika organisationer för att leverera ett högre kundvärde.
Nyckelord: kommersiell upplevelse, kundvärde, njutnings‐/upplevelse‐
inriktat värde, kvalitet, upplevelsekvalitet, TQM, Kano‐modellen, attraktiv kvalitet, samskapa, storytelling och starkt engagemang.
LIST OF APPENDED PAPERS
The thesis is based on the six following papers, herein referred to by their letters:
Paper A Lilja, J., Eriksson, M. and Ingelsson, P. (2010).
Commercial Experiences from a Customer Perspective – Elaborated, defined and distinguished.
The TQM Journal, Vol. 22, No 3, pp. 285‐292.
Paper B Ingelsson, P., Eriksson, M. and Lilja, J. (2012).
Can selecting the right values help TQM implementation?
‐ A case study about organisational homogeneity at the Walt Disney Company
Total Quality Management. & Business Excellence, Vol. 23, No 1, pp. 1‐11.
Paper C Eriksson, M. and Wiklund, H. (2010) Towards Attractive Experiences
Presented and published in the proceedings of the 13th QMOD International conference, 2010, in Cottbus, Germany.
Paper D Lilja, J., and Eriksson, M. (2010)
From Problem to Attraction Detection Study (ADS):
‐Towards a new methodology for quality practice
Presented and published in the proceedings of the 13th QMOD International conference, 2010, in Cottbus, Germany.
Paper E Eriksson, M. and Ingelsson, P. (2016)
Building an organizational culture when delivering Commercial Experiences‐ the leaders’ perspective International Journal of Quality and Service Sciences, Vol.8, Issue 2, pp. 229–244.
Paper F Eriksson, M, Bäckström, I., Ingelsson, P and Åslund, A. (2016) Measuring customer value in commercial experiences Forthcoming in Total Quality Management & Business Excellence. Accepted and published on‐line 2016.
1. INTRODUCTION
In this chapter the background, purpose and research questions are presented along with delimitations and the structure of the thesis, giving the reader an introduction to the field and the motives for research.
1.1. BACKGROUND
For the past 25 years, experiences have been considered a key concept in understanding today’s consumer behavior (Tynan & McKechnie, 2009). Yet the opinion gap between academics and practitioners on this topic is as wide as ever (ibid). The commercial experience is something out of the ordinary (Carù & Cova, 2007), often challenging the customer, consisting of vague and unclear customer expectations (Mossberg, 2015). This is the case since the customer often expects the unexpected, to be surprised and experience something new and novel, all leading to a situation with expectations of little or no prior knowledge (Poulsson & Kale, 2004). The growing experience economy is described as a new era, not driven by necessity, where customers look for active and pleasurable experiences containing fantasy, feeling and fun (Holbrook & Hirschman, 1982). Results from previous studies of delivering or more accurately co‐creating experiences with customers have been identified as an important drive to achieve competitive advantage (Gentile et al., 2007). The deep involvement of customers as co‐creators in a new service innovation is often suggested as a successful strategy to improve the business success rate (Sjödin & Kristensson, 2012). It is found that customer involvement has a positive effect on both productivity and customer satisfaction (Dadfar et al., 2013) but practical implications of co‐
creation are rare in existing theory.
Both literature in quality and marketing stress the importance of focusing on customer value through customer focus (Band, 1991, Christopher et al., 1991, Gale & Wood, 1994, Webster, 1994, De Chernatony et al. and 2000, La &
Kandampully, 2004). This is a key when developing excellent business models.
Experiential consumption delivers value to customers by arousing emotional,
sensorial and cognitive consumer responses, taking place inside a person’s
mind (Poulsson, 2014). In our time when global economic growth is
increasing, more and more people can afford personalized offerings to fulfill
their needs of self‐actualization (Mossberg & Johansen, 2006 and Gelter,
2006). From the customer’s point of view, creating new memories, reaching
a higher level of personal growth and learning something new, all together
create your personal identity (Sundbo & Sörensen, 2013). Today you are defined by your experiences. Customers have a need for being entertained, stimulated and deeply emotionally affected (Schmitt, 1999). People are spending more and more time on travel and leisure and it is easier to consume new and unique experiences than ever before (O'Dell & Billing, 2005).
But why do we search for new experiences? Recent research endorses the belief that experiences result in happiness to a larger extent than material possessions (Bhattacharjee & Mogilner, 2013), which also was suggested by Danziger in 2005. The expression “experience economy” has enlarged, constituting a significant financial importance for both Swedish and global industry (Gustafsson, 2008). In developed countries two thirds of the economy constitutes intangible offerings where experiences are the prime contributor (Poulsson, 2014). In 2013, 135 000 people were employed within the creative and culture industry in Sweden (Sternö & Nielsén, 2013) this is where a lot of commercial experiences are developed. 90 000 were within the Stockholm area which had an impressive turn‐over of 180 billion SEK, (Swedish kronor) on a yearly basis (ibid). In addition there are 160 000 working within tourism, which had 256 billion SEK in turn‐over, that same year (statistics from www.tillvaxtverket.se) and also constitutes an important part of the experience industry. The experience industry is claimed to create 5% of Swedish BNP. By 2020 the experiential consumption is estimated to reach 50% of the global economy (Danziger, 2004). The trend is that consumers spend more and more on luxurious experiential consumption in the search for experiential values to fulfill their personal identity (Poulsson, 2014).
In a period of weak economy, the experience sector is the first to shrink, making the business sensitive to market instabilities. In Sweden we have several examples of well‐established organizations who have suffered in this way, such as the music festival in Hultsfred who had more than 20 years of experience yet unexpectedly went bankrupt in 2010 due to economic crisis.
How can these organizations become strong and robust enough to survive
sudden economical instabilities? Today most companies have realized that
customers wants to be enthused, entertained, educated and challenged by
the offering they purchase (Schmitt & Zarantonello, 2013) but they are not
always clear on how to deliver and fulfill the customer expectations. A
successful commercial experience has personal relevance for the customer
and should contain elements like novelty, surprise and learning and engage
the customer by deeply affecting their feelings (Poulsson & Kale, 2004).
Experiences are released by stimuli affecting all five senses and happen in people’s minds (Sundbo & Sörensen, 2013). When deeply affecting human emotions, the experience is more likely to be remembered (Kensinger, 2004).
The level of memorability increases by the amount of emotional involvement (Hung et al., 2014) ensuring that a strong emotional experience is more likely to result in a long lasting memory.
Delivering intangible offerings of high contact, where the customer acts as a co‐producer requires a close relation involving the customers. The greater the attention paid to and participation made by the target customers, the greater the customer satisfaction, retention and customer delight (Keiningham et al., 1999 and Fournier & Mick, 1999). Deeply affecting the customer’s emotions, delivering something unexpected and memorable (Poulsson & Kale, 2004 and Mossberg, 2003) with experiential values such as fun, flow and magic moments are presented as important ingredients of the commercial experience (Poulsson, 2014). Looking for feelings of arousal and pleasure (Hightower et al., 2002) elements not included in existing measurements of quality, customer value and satisfaction. Vague and even contradictory definitions of the commercial experience, a large portion of unclear customer expectations and diverse theoretical knowledge encourages further research to develop generally accepted theories and methods supporting providers (Koll, 2016 and Bille, 2010). Many agree that the most central issue is creating and delivering a higher level of customer value than for services and goods, indicating that something special is required (Chen & Chen, 2010).
Focusing on customer value as the most essential source of competitive
organizational advantage is shared within numerous fields of research such
as marketing, business administration, management, organizational
development, quality and psychology (Woodruff, 1997, Cronin et al., 2000,
Zeithaml et al., 2001, Oliver, 1999 and Lemon et al., 2001). Managers acting
within the experience economy must consider new concepts to create
customer value and most of all, adapt to new approaches within the
organization to capitalize on the new opportunities offered in this
experiential market (Schmitt, 1999). Since current tools of measuring
customer value and customer satisfaction lack the elements of importance
in a commercial experience along with the fact that the provider co‐creates
the experience with the consumer requires new methods of customer value
creation to be developed. The experiential perspective is seen as an
alternative approach to understanding customer behavior with fragmented theoretical literature. Most theories are academic and the perspective of the practitioner needs to be expanded (Tynan & McKechnie, 2009). More knowledge on what is needed to provide customers with fascinating experiences and create an extra high level of customer value is required.
1.2. PURPOSE AND RESEARCH QUESTIONS
With this background the purpose of the research was “to explore the field and build new knowledge on how customer value is created when delivering commercial experiences”. Within the overall purpose the research intended to contribute to the area of quality development. This to support the academia as well as practitioners supporting the provider’s approach to creating the offering, a commercial experience. To fulfill the overall purpose, three research questions (RQ) were originated and developed one by one.
RQ1: How can commercial experiences be defined and what are their distinctive characteristics?
RQ2: How can organizations work to create customer value in commercial experiences?
RQ3: How can customer value in commercial experiences be measured?
1.3. DELIMITATIONS
Throughout the thesis the research has been delimited to focus on the offering, experiences that are commercial and of hedonic customer value.
The research has not considered the profitability of the experience sector, instead focusing on organizations offering commercial experiences and the customer reaction to the actual experience.
1.4. RESEARCH OVERVIEW
During the research the field of commercial experiences was studied. The overall purpose with focus on customer value was followed by three research questions, developed one by one, see Figure 1.1, reflecting on the connection between the three conducted research studies and the six written papers of the thesis.