Introduction

Customer experience has long been proposed as a route to differentiation in maturing markets. Consumers seek not only high-quality products and services but also experiences that are “engaging, robust, compelling and memorable” (Gilmore & Pine, 2002, p. 10). Business customers, it is argued, are equally demanding (Witell et al., 2020). Enhancing the customer experience has become a major managerial endeavor across consumer and business markets, as well as public sector and non-profit organizations. From new job roles and departments to a profusion of conferences, books, courses, articles, and trade associations, customer experience management displays many characteristics of a management discipline.

Accordingly, a burgeoning research stream is studying what constitutes customer experience, how customers assess it, and how it influences behaviors such as purchasing (Becker & Jaakkola, 2020). A converging conceptualization of customer experience is summarized in Lemon and Verhoef’s (2016, p. 71) definition: “a multidimensional construct focusing on a customer’s cognitive, emotional, behavioral, sensorial, and social responses to a firm’s offerings during the customer’s entire purchase journey.” We adopt this as a working definition.

However, research into managers’ understandings and behaviors around customer experience is sparse (Kranzbühler et al., 2018). Save for a few exceptions (upon which we build), most writings are lightly evidenced prescriptions in the practitioner literature (Meyer & Schwager, 2007; Rawson et al., 2013). Scholars and practitioners alike have called for further research into customer experience management (or experience management for short) from the firm’s perspective. The Marketing Science Institute (2022) designated as a research priority the identification of general principles for improving customer experience, while Lemon and Verhoef (2016, p. 89) added that “Marketing scholars should investigate how firms organize to successfully manage the customer experience.” The issues requiring exploration include: (1) what the practice of experience management looks like, (2) drivers of experience management adoption, (3) how experience management varies across sectors, geographies, and time, and (4) consequences of experience management adoption (Lemon & Verhoef, 2016; Witell et al., 2020). In this article, we focus primarily on (1), while also providing an initial framework for (4). Understanding what constitutes experience management is important to practitioners who wish to adopt it, and foundational for scholars who wish to explore its antecedents and consequences.

We take a strategic orientation perspective on this research challenge. Strategic orientations are “principles that direct and influence the activities of a firm and generate the behaviors intended to ensure its viability and performance” (Hakala, 2011, p.199). They can be viewed as a set of values and behavioral norms (Narver & Slater, 1990; Anderson et al., 2015). Viewing experience management through this perspective allows us to examine both what managers do and why they do it. Hence our research question is: what values and behavioral norms underpin managers’ customer experience efforts, and how do managers theorize their impact on firm performance? Using a theories-in-use approach, we explore this question through a multiple-case study of nine organizations that are endeavoring to adopt experience management.

Our analysis elicits six values and related behavioral norms within what we term ‘customer experience orientation’ (CXO). We find that this set of values can be understood through an organizational learning lens. Three values—journey motivation, experience empowerment, and continual experience optimization—shape experience-based organizational learning through the collection, dissemination and actioning of insight into the customer experience. A further three values—journey organization, experience mandating, and purpose alignment—institutionalize this learning within the firm. We therefore define CXO as a strategic orientation that prioritizes and institutionalizes organizational learning about customers’ experience appraisal as a route to superior firm performance.

We inform understanding of how the impact of CXO varies by firm context by proposing four moderators of the relationship between CXO and customers’ experience appraisal: experience visibility, journey heterogeneity, experience turbulence, and journey controllability. We also propose two moderators of the relationship between experience appraisal and firm performance, namely product differentiation and price sensitivity, and we explore the potentially countervailing effect of CXO on firm costs.

This study hence delineates experience management as the focus of a coherent strategic orientation that synthesizes ideas from not just marketing but also from service, human resource (HR) management, and agile design. The orientation is characterized by an agile, empathic organizational-learning process that is deeply embedded or institutionalized within the firm, a notable field-based insight. CXO is distinctive in defining experience, especially customer journeys, as the firm’s unit of value creation; accordingly, we identify value-in-journey as a key part of customers’ experience appraisal, deriving a revised definition of a customer journey: the customer’s multidimensional response to a sequence of direct and/or indirect touchpoints motivated by one or more customer goals. The resulting practice-based model for how CXO impacts performance provides a rich platform for future research.

We first summarize prior work before describing our method and findings. We then outline contributions, draw managerial implications, and suggest research directions.

Background

Managing the customer experience

Often identified as a precursor to experience management (Lemon & Verhoef, 2016), customer relationship management (CRM) emphasizes the value of a customer to the firm over time (Kumar & Reinartz, 2016). A criticism of the CRM approach is that it under-represents value to the customer (Ou et al., 2017). The discourse on customer experience management redresses the balance, advocating a focus on the customer’s perspective as a route to long-term success (Berry et al., 2002; Meyer & Schwager, 2007). In a notable evolution from service quality literature, this perspective is gained not just through cognitive appraisals of quality but equally includes emotional, sensorial and spiritual dimensions; as such, it is ‘multidimensional’ (Lemon & Verhoef, 2016). Furthermore, managers are urged to optimize customer experience not only at moments of purchase or service delivery but at any “touchpoint” (i.e., encounter with the firm or its brand). These can be “indirect” brand encounters as diverse as seeing the brand on litter, hearing it in song lyrics, or seeing another individual consuming it, or firm-controlled and therefore “direct” touchpoints (Kranzbühler et al., 2018). A common metaphor is that the customer engages in “journeys” with the brand comprising multiple touchpoints (Rawson et al., 2013).

Scholars have typically responded to the customer experience movement by researching the customer perspective. A longstanding focus on touchpoints includes touchpoint typologies (Lemke et al., 2011) and touchpoints’ relative impacts (Baxendale et al., 2015). Themes in the growing customer journey literature include variations in journeys across categories, segments, platforms, and social settings (Fang et al., 2023; Hamilton et al., 2021; Herhausen et al., 2019; Li et al., 2020; Siebert et al., 2020; Trujillo-Torres et al., 2024); journey co-creation between customers and employees (Beverland et al., 2024); how customers evaluate journeys (Gahler et al., 2023; Kuehnl et al., 2019); and generalizing from customer journeys to stakeholder journeys (Hollebeek et al., 2023). See Table 1 for illustrative empirical studies on customer experience from both customer and supplier perspectives. Conceptual syntheses have also demonstrated how much consumer research contributes to understanding customer experience, even when it does not use that terminology (Lemon & Verhoef, 2016; Puccinelli et al., 2009).

Table 1 Illustrative literature on customer experience
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However, reflections on how managers might respond to experience challenges are largely speculative, provoking the comment by Becker and Jaakkola (2020, p. 640) that, “what experience management entails … remains insufficiently understood despite its practical relevance.” Some exceptions lie within the service design tradition, usefully suggesting that service experience design requires empathic insight (Zomerdijk & Voss, 2011); that customer journeys—and not just service encounters—can be designed using approaches such as blueprinting (Patrício et al., 2011); and that the physical or virtual context for the journey is vital to its design (Edvardsson et al., 2005). However, organizational values are outside the scope of these service design studies. Homburg et al. (2017) begin to fill that gap, reporting three ‘cultural mindsets,’ managerial beliefs akin to values in the strategic orientation literature. First, an experiential response mindset represents the belief that it is important to elicit cognitive, affective, and other customer responses to touchpoints. Second, a touchpoint journey mindset states that journeys comprising multiple touchpoints should be the object of market-facing decision making, with corresponding capabilities to design and monitor journeys. Third, the mindset of alliance orientation encourages inter-organizational partnerships to align touchpoints within customer journeys, such as an airline collaborating with taxi firms to provide door-to-door travel.

This evidence of mindsets that are characteristic of experience management hints at the existence of a customer experience orientation. However, Homburg et al. (2017) did not aim to develop a full orientation, and their use of single interviewees in each firm prompted them to call for research studying each organization in more depth. A multiple-case approach, with each case having diverse participants, is useful for exploring orientations which are inherently cross-functional in that they promote the effectiveness of the complete organization. Given also that mindsets formed only part of Homburg et al.’s (2017) broader scope, the possibility remains that their set of identified values is incomplete; indeed, in this work, we identify a range of further values and related behavioral norms.

Uncovering an experience orientation is important due to another sparsely researched topic: whether experience management does indeed, as has long been claimed, lead to superior performance (Gilmore & Pine, 2002; Grewal et al., 2009; Rawson et al., 2013; Witell et al., 2020). While recent work (Homburg & Tischer, 2023; Klink et al., 2021; Gao et al., 2023) provides initial evidence of a positive overall effect, the literature theorizing its mechanisms, boundary conditions, and contingencies is nascent. Strategic orientations can contribute to such theorizing, as their role is to link values, behaviors, and firm effectiveness (Anderson et al., 2015; Deutscher et al., 2016) in a practice-based “theory-in-use” (Zeithaml et al., 2020).

Accordingly, in this work we use a multiple-case study, asking the research question: what are the values and related behavioral norms underpinning managers’ customer experience efforts, and how do managers theorize their impact on firm performance? This echoes Moorman and Day’s (2016, p.24) call to explore: “what additional cultural values, behaviors and artefacts play important roles in marketing strategies?” We will later observe that the resulting theory-in-use coheres around an organizational learning process focused on customer experience. We therefore briefly review organizational learning before turning to our study.

Organizational learning

Garvin (1993, p. 80) provides an early definition of the “learning organization” as “an organization skilled at creating, acquiring, and transferring knowledge, and at modifying its behavior to reflect new knowledge and insights.” This suggests a process of obtaining, disseminating, and applying knowledge that underpins much subsequent thinking (Argote et al., 2021). The potential topics of such knowledge are broad. A mature strand of organizational learning research concerns internally generated knowledge to improve operations (Aranda et al., 2017). By contrast, Crossan et al. (1999, p. 522) consider organizational learning for strategic renewal: “For renewal to be strategic it should encompass the entire enterprise … and it should recognize that the organization operates in an open system, rather than having a solely internal focus.” Hence, these authors argue, the relevant knowledge concerns outside entities: customers, competitors, or other stakeholders. This perspective is of particular interest, as it aligns with the concept of a strategic orientation in its enterprise-wide and strategic scope, and also concerns externally focused knowledge. Mena and Chabowski (2015, p.433) provide a definition of organizational learning relevant to stakeholders outside the organization: “the development of new stakeholder-related knowledge that facilitates changes in behaviors toward stakeholders.” A first step is to identify the relevant stakeholder and phenomenon of interest (Mena & Chabowski, 2015); in our research, the stakeholder is the customer, and the phenomenon of interest is their customer experience.

While the remaining steps of the organizational learning process vary somewhat in the literature (Argote et al., 2021; Sinkula et al., 1997), Aranda et al.’s, (2017) delineation of knowledge acquisition, distribution, interpretation, and organizational memory is typical. Other studies add the application or actioning of learning (Lawrence et al., 2005; Mena & Chabowski, 2015). This process may occur rapidly or over longer time periods (Argote et al., 2021). Both “fast” and “slow” learning may be required, not least due to depreciation in knowledge with the passage of time (Berends & Antonacopoulou, 2014).

Learning may occur at the level of individuals, groups, or the whole organization (Crossan et al., 1999; Lawrence 2005). Barriers to organizational-level learning include inappropriate structures, measurement systems, and resource allocation (Schilling & Kluge, 2009). Conversely, a culture that motivates collaboration (Schilling & Kluge, 2009) and shapes individual identity around learning goals (Lawrence 2005) is an enabler. Collectively, such barriers and enablers demonstrate the need to “institutionalize” learning (Crossan et al., 1999, p. 522).

We will later view our findings through the lens of this organizational-learning literature. Next, though, we describe our research method and summarize our findings.

Method

We address the research question with a multiple-case study of organizations endeavoring to adopt customer experience management. Through multiple interviews in each organization, document gathering, and observation of business premises and team meetings, we sought an “insider’s perspective of reality” (Cha & Edmondson, 2006, p.60). We applied a theories-in-use approach in tandem with the case study method, keeping close to the managers leading experience management, whom Zeithaml et al. (2020, p. 34) would call the “theory holders,” by interviewing them and checking emerging findings with them over the study period.

Case selection

Nine cases were selected as examples of the phenomenon of interest (Yin, 2018) as they exhibited an explicit focus on experience management (Table 2). Evidence for this included explicit articulation of customer experience in the firm’s mission statement, the presence of an explicitly named experience management team, and in some cases their nomination for a peer-evaluated customer experience award (though there was no assumption that such a nomination made them particularly good at experience management). A spread of sectors was sought, including goods and service firms. The majority of cases were in consumer markets, one was a business-to-business bank, and two catered to both business clients and consumers.

Table 2 Sample
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Data collection

Following a theories-in-use approach, we sought “elicitation of theories held by individuals with proximity to the problem,” with the aim of uncovering the “mental models of the world that guide their deliberate behavior” (Zeithaml et al., 2020, p. 34). Specifically, we sought to identify the values and behavioral norms guiding managers. We conducted 44 interviews across the nine organizations with 39 leaders, managers, and other organization members, interviewing some key participants more than once (see Table 2). Interviews were face-to-face at firm premises, averaged 45–60 minutes, and were recorded, generating 694 pages of transcriptions.

A semi-structured interview protocol included a one-page visualization of the study’s aims, displayed to the participant in order to co-create the discussion (Zeithaml et al., 2020). In the center was a “grand tour” (Spradley, 2016) question: “What does customer experience management mean to you?”; this was spoken aloud. Around this were four quadrants, each containing a prompt for further exploration: “(a) in terms of day-to-day activities? (b) in terms of collaborating with other teams? (c) in terms of goals your team may have? (d) in terms of considering competition/benchmarks?” Prompt (a) aimed to ensure coverage of behavioral norms within a team. Prompt (b) explored norms outside the team. Laddering questions helped relate these behaviors to values. Prompt (c) explored values, and how they related to organizational success measures in the participants’ tacit theory-in-use. Prompt (d) ensured coverage of metrics, a strong theme in our review of previous orientations.

In addition, artifacts were collected during site visits, by correspondence, and through online search. Examples include organizational charts, statements of vision and values, training tools such as posters, and collateral for employee engagement (e.g., postcards). See Web Appendix A for details. We also observed a variety of events, such as staff meetings, employee training workshops, and call-center activity including listening into customer calls, as well as observing the workplace more generally; again, see Web Appendix A. Observational notes were made during interview visits. Across the nine organizations, 25 site visits were made.

Data coding, analysis and validity

Data analysis initially coded for values and behavioral norms. Coding used a constant comparative method (Lutgen-Sandvik, 2008); within- and cross-case coding occurred simultaneously through an iterative process whereby codes were created by analyzing a case sequentially, then checking back and forth between cases to find support or refutation.

Following Deshpandé and Webster’s (1989, p. 4) description of organizational values as those that “help individuals understand organizational functioning and thus provide them with norms for behavior in the organization,” the coding of values began by interrogating the data with the following: “what are managers saying about why experience management is important?” and “what are they saying about what experience management means?” Coding was aided by participants’ tendency to compare experience management with “how things used to be done” before it became an important organizational focus.

To identify behavioral norms in the data we asked: “how does what participants say about experience management translate into daily activity?” and “what do participants say they are doing in experience management?” Following Homburg and Pflesser’s (2000) definition of behavioral norms as expectations about behavior, this analysis identified participants’ prescriptive beliefs—what is regarded as appropriate and inappropriate behavior (Cha & Edmondson, 2006). This was aided by participants’ tendency to declare how they believed experience management should be done. We identified the value most closely corresponding to each norm by examining participants’ justification for norms.

The resulting values and behavioral norms are listed in Table 3. Web Appendix B indicates norms evidenced in each case, in keeping with the “mosaic filling” process of the theories-in-use approach (Zeithaml et al., 2020). Saturation was reached after cases 1 to 3 were coded with no further values or norms being identified (as indicated in Web Appendix B); however, other cases added richness to the understanding of these constructs, and helped the researchers to conduct a second phase of analysis in which moderators of the emerging theory were sought (Zeithaml et al., 2020).

Table 3 Customer experience orientation (CXO)—values and behavioral norms
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To stay close to the theory holders (Zeithaml et al., 2020), and as a rigor check of credibility, five face-to-face discussions of preliminary findings were held with seven participants from five case organizations. Participants agreed with the findings and added further examples of some codes. These discussions were transcribed but their analysis revealed no new codes. As a rigor check of transferability (Zeithaml et al., 2020), the researchers also discussed findings with 43 customer experience practitioners from organizations outside of the multiple case study over the course of three round-table events. Again, this step did not prompt substantial revisions.

An inter-coder reliability assessment provided a rigor check of confirmability (Zeithaml et al., 2020). The allocation of a sample of 152 quotations to values by two researchers was compared with those of two independent scholars, resulting in a proportional reduction in loss (PRL) of 0.96, well above Rust and Cooil’s (1994) recommended minimum of 0.7Footnote 1.

The theories-in-use method allowed for multiple theories to emerge from participants’ mental models. However, cross-case comparison found a high level of agreement in the values evident in participants’ beliefs and behaviors. These are summarized in Fig. 1, which represents the emergent consensus map (Zeithaml et al., 2020). The six values were evident in all nine cases, indicating existence of a common customer experience orientation.

Fig. 1
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A conceptual model of customer experience orientation and its outcomes

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We then interrogated the data for cross-case variation to outline the theory boundaries, following Macdonald et al. (2016), whose theories-in-use study identified moderators of the link between resource integration and value-in-use. We similarly sought moderators of a relationship in the emergent chain from CXO to firm performance via improved experience appraisal, identifying six. Furthermore, we identified complementary and potentially counteractive effects on firm performance via firm costs. We next describe these findings.

Customer experience orientation

From our data, we observe six organizational values and associated behavioral norms underpinning firms’ customer experience efforts (Table 3). The values are united by the endeavor to improve firm performance by enhancing the customer experience. Recall that strategic orientations are principles that direct activities to ensure firm performance (Hakala, 2011). Collectively, these values and norms paint a picture of a distinct strategic orientation, albeit one that integrates ideas from service, agile design, and HR management as well as marketing.

Figure 1 summarizes how this theory-in-use relates CXO to outcomes. Customers appraise their experience by assessing its touchpoint quality, journey integration, and value-in-journey. CXO focuses on improving this experience appraisal (Proposition P1) which in turn improves firm performance (P6). These effects of CXO on performance are contingent on six moderators (P2-P5, P7-P8). In addition, CXO may increase or decrease firm costs (P9a and P9b).

We begin by describing the six values of CXO. The relationship between them can be understood through an organizational learning lens (Aranda et al., 2017). Three—journey motivation, continual experience optimization, and experience empowerment—concern the firm’s learning about customers’ experience, dissemination of that insight, and its actioning, in an empathic, agile manner. The other three values—journey organization, experience mandating, and experience-purpose alignment—embed this organizational learning structurally and culturally; in the terminology of Crossan et al. (1999), organizations institutionalize the learning.

Journey motivation

Our data suggest a predominant managerial focus on viewing the customer experience through the metaphor of a journey. We define journey motivation as the extent to which organization members primarily focus on customer journeys. The journey notion offers a temporal and spatial perspective on customer experience over time and across diverse touchpoints (Verhoef et al., 2009; Siebert et al., 2020). At luxury retailer Felicity, for example, the global experience-management team drove a focus on customer journeys through insight and training: “There are all sorts of ways to experience [our brand]: recommendations from friends, personal experiences in stand-alone stores or in concessions; all of those we take into consideration in terms of the expectation when someone comes in. Then after they’ve had those interactions, if they’ve purchased, it’s the after-sales piece and keeping in touch with them” (LUX4; see Table 2 for participant codes; some company names are pseudonyms). While the notion of integrating channels through time is well developed (Neslin, 2022), the inclusion in this quotation of indirect touchpoints (e.g., peer-to-peer encounters) is a notable focus in CXO.

Four behavioral norms associated with journey motivation (Table 3) correlate approximately to the organizational-learning sub-processes articulated by Aranda et al. (2017): knowledge acquisition, information distribution, information interpretation, and organizational memory. The first norm, corresponding to the knowledge acquisition process, we term empathic listening: gathering insight into the multidimensional, contextual customer experience. (See Table 3 for full definitions of these norms.) Market research methods such as surveys and focus groups, some participants argued, can struggle to capture the full range of brand-owned, third-party, and social touchpoints, how they feel in the moment, how they join up over time, and how the physical, technological, and social context affects the experience (De Keyser et al., 2020). Complementary insight methods were greatly in evidence. For example at Kite Tours, a European vacation-package firm, 30 families used an online diary to make real-time reports on their vacation, using texts, photos, and videos. This in-depth listening provided insight into customer responses to touchpoints through time, assisting with what Lemon and Verhoef (2016, p.82) identified as the “complex and difficult endeavor [of identifying] critical touchpoints (‘moments of truth’) throughout the customer journey that have the most significant influence on key customer outcomes.” For example, “what was important for small kids can be the free ice cream from the machine at the hotel … The highlight of the whole holiday” (TOUR1).

The second norm is journey representing, expressing the experience of a touchpoint sequence in concise form. This predominantly occurred via graphics and stories. Finch Financial was typical in developing graphical representations of each journey according to different customer goals. A mortgage, for example, might be taken out to buy a first home, to provide cash for house renovation, or to help fund a grandchild’s education. Grocery retailer Mansion Food disseminated stories of individual customers’ journeys, what went right and wrong, and how they affected the customer’s life. Thus, journey representing relates not only to the interpretation process in organizational learning; its summarization and documentation of that interpretation also relates to organizational memory.

These representations feed into journey immersing, through which organization members absorb journey insight empathically. For example, Mansion Food’s frontline staff are trained through reviewing stories, chosen to illustrate critical journeys. In one, a parent “had to wait [at home] for this delivery that was late, and the kid is upset because mummy or daddy isn’t at the [school] play … We wanted to promote creative solutions to get them [employees] to realize you don’t just keep following a process” (service operations manager, GROC3).

The fourth norm is journey ritualizing: creating regular cross-functional opportunities to discuss journeys. In one such ritual at Finch Financial, the head of customer insight met with the executive team every month: “for an hour of that [meeting] the focus is just on customer. And we go through journeys … and they will use that to frame their discussion for the rest of the month. Before that, we’d have a quarterly fifteen-minute update with the board if you were lucky” (FIN1). Both journey immersing and journey ritualizing concern information distribution. They differ in that journey immersing focuses on individual learning, while journey ritualizing informs group learning (the executive team in the example above), corresponding to what Crossan et al. (1999) term “intuiting” and “integrating.”

Scholars advocate journeys as a customer experience building-block (Hollebeek et al., 2023; Tueanrat et al., 2021). A journey emphasis is also present among practitioners (Homburg et al., 2017). Our findings support that emphasis, and add the norms of journey immersing and journey ritualizing. Research on market-based organizational learning (Mena & Chabowski, 2015) mandates the collection and dissemination of market insight. In the case of customer experience, this collection requires empathic techniques (Zomerdijk & Voss, 2011). Our data add that the richness of empathic insight into journeys requires not just dissemination of knowledge but employee immersion in these data as well as ritualizing its use.

Continual experience optimization

Once knowledge has been acquired, interpreted, and disseminated, organizational action is required. Mena and Chabowski (2015) delineate three categories of this: innovation, responsiveness, and imitation. The first is addressed by continual experience optimization, which we define as the extent to which organization members focus constant innovation efforts on improving the customer experience. Its continuous nature begins with the constant identification of improvement opportunities. For instance, employees in B2B bank Cygnet are encouraged to use a continuous-improvement board immediately after a call with a customer: “Just run and scribble [ideas] on the board. Then we’ll go through that [later] and work out [what to change]. Then we allocate them as actions … It’s that cycle of trying to keep improving” (BANK4).

The first related norm is continual touchpoint optimizing—constantly enhancing individual customer encounters. According to this, work is needed to creatively improve all touchpoints, even the indirect ones. For example, by encouraging staff to act on free-text survey comments, Mansion Food’s experience team came across touchpoints it had not previously considered, such as the not-uncommon moment when a small child becomes bored or distressed in the store. Solutions that worked well, such as having a small stock of toys and comics to offer, were then suggested widely across stores.

This is complemented by continual journey optimizing, constantly enhancing a complete sequence of touchpoints to meet customer goals. This commonly starts with the journey maps discussed earlier, and proceeds with cyclical improvements. At Finch Financial, “we’ve created a fully-governed process about how we approach our customer journey mapping … so you’d map it out, you’d look at your actions, then you’d customer-test it, then it would go live, then you’d re-map it again” (FIN4).

A third norm is journey co-designing—inviting customers to join experience design efforts. For example, the insight work at Kite Tours described earlier was followed by an online collaborative exercise in which customers could contribute ideas for journey improvements. This resulted in very different journeys for customers with different journey goals, such as relaxing, fitness, or local cultural immersion. Innovating to better meet customers’ journey goals requires attention to touchpoints outside the firm’s direct control, such as social, usage, and partner encounters (Becker & Jaakkola, 2020). This helps explain why CXO has adopted cocreation ideas in the norm of journey co-designing: customers provide insights and design ideas that are not readily available to the firm.

Literature evidences the importance of journeys in experience design (Kuehnl et al., 2019), proposes journey-centric methods such as experience blueprinting (Patrício et al., 2011), and documents journey-design endeavors in practice (Homburg et al., 2017). Our most striking related observation is the continuous nature of experience optimization, with a common emphasis on rapid innovation loops: “we’re always in beta” (TELE2). This echoes the agile design movement’s emphasis on intense prototyping (Carlgren et al., 2016).

Experience empowerment

Coordinated design efforts are not the only use for experience insight. Experience empowerment encourages staff to “do what feels right, not what the process tells me is right” (experience operations manager, GROC3). Drawing on empowerment literature (Fernandez & Moldogaziev, 2013), we define this value as the extent to which organization members possess power to act autonomously to optimize customer experience.

Some participants justified this value by the need to tailor the experience: “What we’re saying is: do what comes from the heart in a really authentic and personalized way for your customer” (GROC1). This motivates the norm of purpose-trumps-process training, coaching organization members to vary standard procedures when appropriate to achieve organizational purpose. For example, Mansion Food’s learning program “License to Delight” aimed “to develop a personalized culture at our Service Centre where partners have permission to delight our customers” (GROC, CX awards entry). The team now talk “about being empowered, rather than delivering a process” (GROC4). This training contributes to self-appointing, encouraging organization members to take initiative to enhance customer experience. Finch’s head of customer insight observed employees bridging organizational silos to meet non-standard customer requirements: “Despite the fact that that’s not a channel that we support, if our customer needs anything from us we’ll break down the barriers and get to them—which we couldn’t have said two years ago” (FIN1). Self-appointing is reinforced by celebrating: praising individuals’ and teams’ experience endeavors. In some firms, for example, charts are placed in staff spaces like common areas and intranets to share and promote positive stories. London leisure venue Vibrant gave £50 ($60) vouchers to staff for particularly creative experience-related actions.

Customer experience is inherently idiosyncratic (Lemon & Verhoef, 2016). An implication of the value of experience empowerment is that standardized processes alone cannot successfully manage experiences. This is consistent with findings that employee empowerment is important in contexts with high task complexity and uncertainty (Fernandez & Moldogaziev, 2013). Experience management has both these characteristics: for example, the management of partner-controlled and customer-controlled touchpoints introduces complexity (Lemon & Verhoef, 2016) as well as uncertainty (Tax et al., 2013). The delegated, distributed response to that uncertainty inherent in the value of experience empowerment contrasts with the literature’s dominant emphasis on planned design processes (Patrício et al., 2011). But the approach makes sense in the light of organizational learning literature, which documents that the actioning of learning includes not just an “innovation” component but also a “responsiveness” component (Mena & Chabowski, 2015), with both relying on empowered actions by individuals as well as groups and corporate institutions (Lawrence et al., 2005). However, the benefits of experience empowerment may trade off against its costs, as we will consider later.

The three values of journey motivation, continual experience optimization, and experience empowerment motivate behaviors through which experience insight is generated, shared, and acted upon. These organizational-learning processes do not exist in a vacuum; they require institutionalizing: “the process of ensuring that routinized actions occur” (Crossan et al., 1999, p. 525). We next consider three values that address this through structure, resources, and culture.

Journey organization

Journey organization is the extent to which organization members structure and measure themselves around customer journeys. Cross-functional capabilities are critical for marketing (Morgan, 2012). Shah et al. (2006), among others, propose adding a strong customer dimension to the organizational matrix. Journey organization extends this thinking by advocating structures around customer journeys, thus responding to the challenge of different departments being responsible for the different parts of a journey. As observed at Kite Tours: “People think about customer journey, and they realize how ‘my work’ affects the other teams. We have been spending quite some time to break the silos, to make the cooperation work” (TOUR2).

The core norm, therefore, is journey governing: defining firm structure and control procedures to facilitate journey management. Telecoms firm ZTel’s head of experience explained: “One weakness of our operating model is it’s like a baton pass, and what I’m supposed to do is hand over to my colleague who then runs away. What’s coming is more of a customer hub where sales, service and marketing all sit together. And there isn’t handover: my team deliver all the way through” (TELE1). The “baton pass” echoes the idea of the market-oriented firm as a chain of internal customers sharing market data (Kennedy et al., 2003). In several cases, firms preferred to define teams for each journey: “it’s really important that we get everybody in the room who is part of the journey: customer proposition, customer operations, UX designers, communications” (FIN4).

The second norm, experience metric privileging, is the prioritization of customer experience measures. This involves not just defining metrics but also giving them prominence and influence. Several firms used a net-promoter score (NPS) for individual journeys, in part responding to board influence: “Whilst it [NPS] was rational, it had an emotional element as well. So, you wouldn’t feel like you were open to recommending our brand unless you had some kind of emotional attachment to it. Plus, obviously NPS was well-known in the industry… Everybody bought into it at senior management level” (TELE3).

Not all journey-focused structures are permanent. Agile resource assembling, flexibly creating working groups that address journeys, encourages the use of temporary groups to improve imperfect journeys: “To achieve the scale of change our customer journeys required, we had to change how we worked. Teams from proposition, digital marketing, and risk co-located and formed agile ‘squads’ focused on delivering customer-led solutions … before returning to their everyday work” (FIN, CX awards entry). This was “a much more agile way of working; we just made lots of incremental changes sitting in the one team, just continually making the website better for our customers” (FIN7). A benefit was improved collaboration after the team’s dissolution: “You had the marketing people and IT people all working together. And [they] continued to work together” (FIN5).

Extending this collaboration beyond the organization, journey partnering involves collaboration with external organizations that influence touchpoints. For example, Vibrant, which runs leisure facilities on the site of London’s 2012 Olympics, partners with local authorities to improve access routes to venues. In a similar vein, Finch Financial involves regulators and financial advisors in journey design and management teams.

Structuring around journeys differs from structuring around customers. Journey-related structures may be temporary—again, borrowing ideas from agile design (Knapp et al., 2016). Also, as journeys cross organizational boundaries, the structures may need to incorporate partners, supporting Homburg et al.’s (2017) concept of an alliance orientation. This provides the organizational counterpoint to studies that show the importance to customers of journey integration across firm-provided and outsourced touchpoints (Kuehnl et al., 2019).

Schilling and Kluge (2009, p.355) identify a structural barrier to effective organizational learning, specifically “a diffusion of responsibility [across teams and individuals] for the implementation [of actions from learning],” as well as a measurement-related barrier: “a lack of clear and measurable goals.” Structuring around journeys addresses these issues and institutionalizes one significant item of learning: the very definition of those journeys.

Experience mandating

Experience improvement requires resources (Keiningham et al., 2020), the lack of which is a barrier to organizational learning (Schilling & Kluge, 2009). Experience mandating concerns the resource of finance. We define this value as the extent to which investment in experience improvement is encouraged prior to clear evidence on financial outcomes. This perhaps counter-intuitive value is justified by a belief in the payoff from experience improvements, provided they are based on experience insight. For example, Finch Financial’s head of insight explained that her board was demanding the “need to see tangible results. Maybe not in terms of ‘here’s a fiver back,’ but in terms of how is the insight driving decision-making? … Explain to me how the customer experience is going to change, in order that we can get sign-off” (FIN1).

The first related norm—delegated approving—encourages organization members to make simpler experience improvements with minimal approval levels. Finch Financial’s CRM manager related: “Regardless of department, there’s a push for agile methodologies, where you get the opportunity to try [experience improvement] even if it doesn’t work. Before there might have been: the business plan’s going to the Executive [team], then you can do it” (FIN6). The head of marketing transformation at ZTel similarly reflected: “Before, we’d probably boil the ocean to make sure the business case is right, and R&Ring [revising and resubmitting]. Now it’s, let’s get it out there. Launch stuff, fail fast and move on” (TELE2).

Where additional resource is required, experience investment seeding provides organization members with rapid access to modest experience-related funding, as exemplified by the bank’s chief customer officer: “The business case that I took in January to the board asked for the appointment of two people [in an experience team], and I said: I am not saying if you give me this money for these two people, I will give you this return on investment. It’s a sunk cost; you need to spend this money to keep the business going. They bought that” (BANK1).

These flexible approaches to resourcing are balanced by efforts to build an evidence base in the norm of experience-profit evidence gathering—collating evidence on the return on customer experience investments. The telecoms firm tackled this in two steps. First, a “driver tree” (regression model) was developed from survey data to link touchpoint and journey feedback to a customer’s overall NPS score. This was useful in itself: “I’ve created this what-if simulator, so if we move these levers by x%, what would the resulting NPS be. So, we are able to say what initiatives we prioritize for next year” (TELE3). A second, time-consuming step was to link NPS to customer-level outcomes: “We did find, for detractors, their churn rate was significantly higher, so you could start to put a financial value on that. We haven’t gone down the route of putting that into business cases yet. Actually, there was a fair amount of push-back at that point because they [colleagues] said: You’ve won over hearts for that, we don’t think you need to win over minds” (TELE3).

This quotation suggests an intriguing tension between the perceived competitive benefits of acting fast, and the advantages of waiting for better evidence—a tension common in organizational learning (Berends & Antonacopoulou, 2014). The value and norms of experience mandating assume that experience improvements tend to contribute to profit, but concede that the return on these investments can be hard to estimate (Keiningham et al., 2020). Agile cycles of action and evidence gathering are therefore mandated as a way of countering the paralysis caused by a lack of robust evidence. Budgeting processes to support experimentation are studied in the literature on innovation (Becheikh et al., 2006) and are also advocated in the CRM context (Maklan et al., 2017). Here, they represent a shift toward an emergent (Vargo et al., 2022) conception of experience management. Later, we return to contexts in which this logic may pay off.

Experience-purpose alignment

The final CXO value is experience-purpose alignment: the extent to which organization members are guided by a purpose and values that encapsulate customers’ experience goals. Firms increasingly produce purpose and value statements to steer employee behavior (Mayer, 2021). We adopt Henderson and Van den Steen’s (2015, p. 2) definition of purpose as “a concrete goal or objective for the firm that reaches beyond profit maximization.” Such statements vary in terms of the stakeholders they focus upon, from the firm or its employees to society or the environment (Mayer, 2021). Experience-purpose alignment encourages purpose statements that focus on the customer experience, as exemplified by the CEO of Kite Tours: “We created a new vision for Kite: ‘to offer a unique Nordic experience.’ That goes hand-in-hand with everything we do: how we treat people at the airport, during the flight, at the destination” (TOUR1). Experience-purpose alignment likewise motivates corporate values relating to customers’ experience goals. For example, the corporate values of department store Home James—‘do right,’ ‘all or nothing,’ ‘give more than you take,’ ‘be yourself,’ and ‘we not me’ (DEPT, website)—match important aspects of Lemke et al.’s (2011) analysis of customer experience quality.

The core norm is thus defining experience-based purpose and values: collaboratively defining a purpose and values that align with customer goals. The collaborative approach was regarded as beneficial, in that staff begin “living” (BANK3) the resultant purpose and values: “If we are telling the world that we are a certain brand, the expectation is that it’s everything, front and back of house, after-sales … that there shouldn’t be peaks and troughs around how we’re perceived and what we are actually” (LUX4).

Alignment of purpose and value statements with behaviors is the subject of the other three norms. Purpose-aligned recruiting uses the purpose and values to drive how organization members are selected and inducted. For example, the bank’s chief customer officer conducted values training with every new recruit (BANK4). Purpose-aligned appraising involves the assessment of organization members on their degree of alignment with the purpose and values. In the bank’s annual review process, everybody including the CEO “has had an objective added that demonstrates delivery of the brand values” (BANK4). The telecoms firm adopted a similar approach, “from CEO all the way down to store advisor” (TELE1). Ongoing reminders of purpose and values occur via a value reinforcing norm. The bank had annual workshops to reinforce links between purpose, values, and behaviors, while the telecoms firm reinforced values via a story-sharing campaign with employees, categorizing stories by values.

Articulation of brand values that encapsulate benefits to the customer is an established feature of marketing practice. What is striking from our data is the emphasis on employees embodying these values, not just marketers communicating them. This echoes findings on the importance of shared values in service encounters (Maxham & Netemeyer, 2003), while employee engagement research shows that alignment with organizational values is critical (Tyler & Blader, 2005). CXO adds that those values should align with customers’ experience goals.

Experience-purpose alignment joins journey organization and experience mandating to form a third CXO value that acts to institutionalize organizational learning (Crossan et al., 1999). Specifically, it institutionalizes knowledge of customers’ experience goals, distilling that knowledge into a statement of organizational purpose and values. Any organizational learning process requires collaboration between members to apply insights (Crossan et al., 1999). Culture plays a key role in guiding such collaboration (Schilling & Kluge, 2009), encouraging staff to valorize organizational learning as part of their identity (Lawrence et al., 2005). Experience-purpose alignment provides guidance through purpose and value statements that valorize organizational learning about customer experience. This alignment’s prominence in CXO is enhanced by the orientation’s emphasis on delegated (as opposed to mere corporate) action. The importance of creativity at the frontline is observed in the experience design literature (Zomerdijk & Voss, 2011); this value shows a mechanism by which such employee behaviors can be shaped.

The impact of CXO on experience appraisal

We have seen that CXO draws on a range of discipline-specific ideas, from marketing and service to agile design and HR. Such a collision of worldviews can result in paradox: “the interesting tensions, oppositions, and contradictions between theories which create conceptual difficulties” (Poole & Van de Ven, 1989, p.564). Notably, we observe an overarching tension between the anticipated financial benefits from experience improvements and their costs, with it not being self-evident if the benefits outweigh the costs.

Research is therefore needed to explore to what extent and under what conditions CXO improves firm performance, as has occurred with other orientations (Deutscher et al., 2016; Hakala, 2011). To aid in this, we propose a mediator and six moderators of CXO’s positive effects, drawn from analysis within and between cases. We also examine the cost implications of CXO, identifying from our data arguments for both potential cost increases and potential cost reductions. See Fig. 1. We begin by discussing the mediator: experience appraisal.

Experience appraisal

The six CXO values discussed above are united by an endeavor to improve customers’ appraisal of their experience in the belief that this will improve firm performance. According to managers’ theory-in-use, this experience appraisal has three notable components: touchpoint quality, journey integration, and value-in-journey.

Customers’ cognitive and affective assessment of touchpoint quality is noted in the empathic listening norm. This affects both insight and design. For example, a manager at Felicity detailed the relaunch of a sub-brand: “this time it was customer-focused, kind of feeling-focused. If we want the customer to feel educated, valued, inspired and engaged, what sorts of things are we doing at each of these [touch]points to ensure that?” (LUX4). Although sensorial, social, and behavioral dimensions of touchpoint assessment (De Keyser et al., 2020; Bolton et al., 2022) were also present in our data, they were less prominent than cognitive and affective aspects. Adapting Lemke et al. (2011), we define touchpoint quality as the customers’ multidimensional assessment of the excellence or superiority of brand touchpoints.

Customers also assess journey integration, so managers seek to ensure that customers view journeys as frictionless and consistent. For example, Felicity’s customer operations manager studied customers’ purchase journeys to identify times when the customer was, say, bored (e.g., when waiting for staff to wrap clothes) and worked to design out such moments. Cygnet Bank’s head of customer experience looked for tonal consistency as well as navigational ease in banking journeys that crossed departments. Journey integration is documented in the experience literature (Homburg et al., 2017; Tueanrat et al., 2021) albeit under different names, such as Kuehnl et al.’s (2019) “customer journey design.” We draw on Kuehnl et al. and our own data to define journey integration as the extent to which customers perceive journeys as thematically consistent and frictionless. Our data emphasize in particular that journey integration extends beyond brand-owned touchpoints; managers equally mandate taking responsibility for third-party touchpoints through co-designing and journey partnering—the latter resonating with Patrício et al.’s (2011) multilevel service design approach.

Finally, managers seek to elicit customers’ goals for each journey so they can optimize achievement of these goals (via norms such as journey representing, continual journey optimization, and experience-purpose alignment). We term this value-in-journey. We adapt Macdonald et al.’s (2016) goal-based definition of value-in-use to define value-in-journey as the extent to which a customer journey facilitates achievement of the customer’s goals. We have further observed that managers define journeys not around their own offerings but around customer goals. Kite Tours, for example, regards a day’s excursion from the holidaymakers’ hotel as a customer journey even if the firm itself is not involved. Hence, our definition of a customer journey (the customer’s multidimensional response to a sequence of direct and/or indirect touchpoints that is motivated by one or more customer goals) contrasts with definitions that center on the purchase cycle (e.g., Voorhees et al., 2017). It is, however, consistent with Tax et al.’s (2013, p. 456) definition of it as “all of the touchpoints … from the customer’s perspective … required to help them achieve their goals.” To such conceptual work, we add that this goal-based view of journeys is prominent in the practitioner view of experience management.

In managers’ theory-in-use, then, customers judge their experience by three components: touchpoint quality, journey integration, and value-in-journey. The central concern of the values comprising CXO is to improve this experience appraisal, as is apparent from Table 3. Hence:

P1

CXO positively impacts customers’ experience appraisal, which has three components: touchpoint quality, journey integration, and value-in-journey.

Our data suggest four moderators of this relationship, which we consider next.

Experience visibility

Experience visibility relates to a challenge in the customer’s utility function: information asymmetry between the firm and customers about the customer experience. While some of the potential financial benefits of superior experience arise from current customers’ future behavior, such as repeat purchase (Kuehnl et al., 2019), others occur through differentiating the offer to prospective customers (Baehre et al., 2022). Both types were present in participants’ talk. However, these effects depend on prospective customers being aware of the superior customer experience. We define experience visibility as the extent to which customers’ experience appraisal is available to other customers and prospective customers.

Visibility may be enabled or constrained by indirect touchpoints within the customer’s brand journey. This was a challenge for Finch, as price-comparison websites for financial products tend to provide little customer experience information. Conversely, Vibrant was intermittently aided by television broadcasts of events from its venues: “We do struggle in terms of people knowing that they’re allowed to come in for free and visit. But when we do a big event with 6,000 [attendees] and it’s on Sky Sports, then they’re thinking, ‘Wow, I’m in the middle of this!’ That’s when they remember, ‘Yeah, I’m really lucky to be here’” (PARK6). Some firms proactively provide evidence about their customer experience through owned channels. Cygnet Bank, for example, posted its high NPS metrics on its website. These owned and earned touchpoints provide vicarious experiences that can influence not only the brand consideration of prospects (Baxendale et al., 2015) but also the satisfaction of existing customers (Colicev et al., 2018).

Information asymmetry research suggests that if such information is less available to prospects, the market will work less well, as providers with a superior offer will not be rewarded for it (Tong & Crosno, 2016). Information sharing is particularly rewarded in B2C as opposed to B2B markets (Tong & Crosno, 2016); for example, the impact of service quality on hotel profitability is enhanced by service data visibility (Melo et al., 2017). We therefore propose:

P2

Experience visibility positively moderates the impact of CXO on experience appraisal, such that high experience visibility strengthens the relationship between CXO and experience appraisal.

Journey heterogeneity

Another argument for CXO’s positive impact on experience appraisal relates to journey heterogeneity: the extent to which customers vary in the customer journeys they seek and go through. An example of high journey heterogeneity was Kite Tours, where insight revealed that the same product (i.e., a flight and hotel) arose from diverse customer goals, such as stress relief on a yoga retreat or the stimulation of immersion in an unfamiliar culture. The chief executive claimed that tailoring the design of vacation journeys to each set of goals resulted in improved satisfaction and hence a 30% uplift in bookings in a year: “Probably the biggest learning is that we were able to get much better ratings of how satisfied they are with their holiday as a whole. In one year we were able to turn around financially. And we’ve been able to fill the gaps in the segment we want, the families” (TOUR1, company presentation).

Finch Financial managers similarly regarded their experience-design efforts as being particularly fruitful in handling journey heterogeneity among their customers. Different customers might have very different motivations for buying the same financial product, and journey heterogeneity could also arise from different channel preferences. Journey-specific personas were used to develop journey maps for each. These tailored journey maps were “really making a richer, more compelling journey for that customer because it’s a completely relevant conversation” (FIN6). A cited benefit was enhanced promotional effectiveness: “If we wrote to 250,000 customers about consolidation [a financial product offer], 95–99% are not thinking about that now. So, a) it’s not an effective use of our marketing spend, and b) it’s not really a good experience for the customer” (FIN6).

Such benefits of CXO activities may not be available in contexts where journey heterogeneity is lower. We therefore propose:

P3

Journey heterogeneity positively moderates the effect of CXO on experience appraisal, such that the higher the journey heterogeneity, the stronger the relationship between CXO and experience appraisal.

This proposition builds on Gill and Kim (2021)’s finding that retail franchisees with greater expertise in managing heterogenous customers (“heterogeneity of distant experience”) had greater customer satisfaction and sales growth.

Experience turbulence

Some managers justified CXO by citing turbulence in the journeys desired by customers. In Finch Financial, for example, “The experiences customers expect from us have radically changed over the last decade”; in response, “we now constantly revisit journeys looking for enhancements” (FIN, CX awards entry). One reason for turbulence in this case was a rapidly changing regulatory environment emphasizing competition: “We faced challenges from the Financial Conduct Authority over what they required pension companies to offer customers up to and including the week of release. We wouldn’t have made as much progress in two years had the industry not been changing around us” (FIN1). A related driver was the increasing customer demand for digital channels, even for complex decisions: “We realigned our business around what customers needed, through insight, through delivery. We’re the only pension provider to have successfully launched an end-to-end digital customer experience when it comes to the new retirement pension freedoms” (FIN1). Market turbulence is defined as “the changes in the composition of customer preferences, needs and desires about products and services over time” (Frank et al., 2022, p. 3). We accordingly define experience turbulence as the extent to which the market exhibits change in customer preferences for customer journeys over time.

Experience turbulence was especially used to justify CXO behavioral norms involving rapid experience-improvement loops. In Finch Financial, as well as behaviors associated with continuous journey optimization, these behaviors included self-appointing (empowering employees to act in real time on negative feedback with the customer concerned), and delegated approving (“Now it’s like: I’ve got an idea, I’ve got the data, let’s try it, and that’s a big mindset change”; FIN6).

Similarly, department-store managers perceived high experience turbulence due to digital competitors such as Amazon enabling very different customer journeys. Accordingly, the self-appointing norm was advocated. So, for delivery drivers, “we encourage the sort of environment where drivers can make decisions. We had a delivery of an outdoor furniture set and we were missing some items. Ordinarily there’s a process whereby the items would be put on a delivery at another time. But the crew said we can’t have this, and they found the items and went back out to the customer, going over their shift. But that’s going the extra mile, rather than have a customer who’s disgruntled” (DEPT2).

Participants implicitly suggest, then, that responsiveness (Mena & Chabowski, 2015) in organizational learning about customer experience is particularly important in contexts with high experience turbulence. It is arguable that these behaviors may be less crucial to customers’ experience appraisal in contexts with lower experience turbulence. We therefore propose:

P4

Experience turbulence positively moderates the impact of CXO on experience appraisal, such that high experience turbulence strengthens the relationship between CXO and experience appraisal.

This proposition is consistent with work on agility, itself a response to market unpredictability, whereby rapid iteration aligns solutions with evolving market needs (Kalaignanam et al., 2021). While agile design is positively related to performance across sectors, the relationship is stronger in contexts that are technologically turbulent (Peña Häufler et al., 2021).

Journey controllability

The notion of experience management is paradoxical in that customer experience is not within the firm’s control. A journey can be shaped by the firm through endeavors to steer the customer’s process (Patrício et al., 2011), but it cannot be fully controlled. Journeys involve many touchpoints where the firm is nowhere in sight, from peer-to-peer encounters to the customer’s use process (Becker & Jaakkola, 2020; Lemke et al., 2011). CXO holds tension in that the firm takes responsibility for something it cannot control.

This tension was more apparent in some cases than in others. Some managers expressed frustration that crucial parts of customer journeys were difficult to influence. For Finch Financial, for example, the sales journey for products such as pensions is dominated by independent financial advisors (IFAs): “The advisors should be there to enhance your experience, not reduce it down to the minimum. If your IFA doesn’t tell you that we’ve got a mobile app, then you’re not going to know about it, but actually you might be sitting there thinking: my one-to-one with my IFA every quarter is fine, but it would be great if I had an app on my phone that I could use” (FIN1). Regulators, too, shaped many touchpoints, such as the wording of communications and the handling of sales meetings. For the leisure site operator, the literal journey to venues can be problematic: “When someone is approaching, there is no signage in the local area. Our local planning officers basically said they don’t want any banners around in the whole of the county area” (PARK5). Similarly, luxury firm Felicity struggled to influence sales journeys when its products were sold by other retailers.

Such frustrations were not evident in cases where fewer organizations were involved in the main customer journeys. Specialist bank Cygnet contrasts with Finch Financial, for example, in having no agents, distributors, or outsourced service providers. We define journey controllability as the extent to which touchpoints within customer journeys are under the supervision of the firm. We might expect that when journey controllability is lower, a focal firm’s customer experience orientation may be less effective in improving the customer experience, as that experience also depends on the actions of other organizations.

This problem may be mitigated by the CXO behavioral norm of journey partnering, which looks to resolve the paradox by increasing touchpoint visibility as well as the collective influence of the co-designers: “Three or four years ago, we just would never have thought of touching whole parts of our customer base, because [we worried] the independent financial adviser won’t like it, the regulator won’t like it, we might get it wrong. Whereas now we’re saying: how do we work with those groups to make sure the customer’s getting what they need in the end?” (FIN1). This norm is consistent with Gahler et al.’s (2023) proposals for identifying and collaboratively improving partner-managed touchpoints that create pain points in the customer journey. Nonetheless, these mitigation attempts may be imperfect. Hence we propose:

P5

Journey controllability positively moderates the impact of CXO on experience appraisal, such that high journey controllability strengthens the relationship between CXO and experience appraisal.

The impact of experience appraisal on firm performance

A managerial assumption underpinning CXO is that enhanced experience appraisal will in general improve the firm’s financial performance (although we will shortly discuss two moderators of that relationship). The assumption is particularly evident in the value of experience mandating and its associated norms. Participants claimed a number of outcomes of enhanced experience appraisal, including improved customer awareness (PARK6), satisfaction (TOUR1), loyalty (COFF1), retention (TELE2), lifetime value (FIN2) and NPV (BANK3), as well as higher firm revenue (TOUR1), margins (FIN1), and profits (TOUR1). The link from experience appraisal to aggregate firm performance was predominantly conceived via customer-level outcomes, while firm performance was described in terms of revenue and profitability, with little explicit mention of other financial outcomes such as return on assets or market value.

The customer experience literature (see Table 1) provides some support for these outcomes for each of the three dimensions of experience appraisal, though inevitably with gaps. For example, while much work on touchpoint quality establishes customer-level outcomes (Baxendale et al., 2015), far fewer studies examine journey integration (Kuehnl et al., 2019), and fewer still take a value perspective on customer journeys (Homburg & Tischer, 2023). Also, many studies stop short of firm-level outcomes such as profits or market value. We will return to the opportunities for further research later, including extensions into sustainability-related outcomes. Meanwhile, adapting previous work (Bamberger et al., 2021; Faramarzi et al., 2023; Homburg & Tischer, 2023), we adopt a broad financial definition of firm performance as financial customer-level and firm-level outcomes over time, and propose the following:

P6

Experience appraisal positively impacts firm performance.

Two moderators of this relationship emerged from our data, as we consider next.

Product differentiation

A commonly mentioned rationale for focusing on customer experience was the need to find a source of distinctiveness in mature markets where product differentiation is hard to find. Financial products, participants argued, exemplify this: “There’s an acceptance that experience is now the differentiator. Products, products, price, price – there’s no margins” (FIN1). This echoes longstanding arguments for experience management in both scholarly and practitioner discourse (Gilmore & Pine, 2002; Kranzbühler et al., 2018; Verhoef et al., 2009).

This raises the question of whether CXO is less effective at improving firm performance in contexts where a core good or service product is differentiated. Vibrant offered a comparison between venues with a relatively standardized product, such as horse-riding and ice-skating, and former Olympics venues such as an Olympics-specification velodrome (cycling track), which is a unique product in the UK. Velodrome managers seemed less enthused by experience initiatives, as we observed during a Collective Change workshop. The chief executive began by evangelizing about customer experience: “It’s not about customers spending money and leaving, it’s about them having an experience—exceptional not good. This is the future of Vibrant.” In a subsequent informal discussion with a member of the research team, three velodrome managers indicated that they disagree with this view, as they believed their world-class offer was inherently differentiated and that further experience-improvement efforts would be superfluous [PARK, field notes].

The talk of some participants, then, was consistent with the conjecture that experience differentiation is particularly important when product differentiation is low. Although evidence from our data was limited, the notion is plausible, especially in light of Gebauer et al.’s (2011) findings that the financial payoff from innovativeness is higher when it is focused on service differentiation or goods differentiation than if it is spread across both. The authors concluded that firms should avoid being “stuck between product and service differentiation.” We therefore offer the following proposition as a basis for further research.

P7

The impact of CXO on firm performance is negatively moderated by the firm’s product differentiation, such that a low product differentiation strengthens the relationship between experience appraisal and firm performance.

Price sensitivity

Kumar et al. (2014) found that past service is less influential in shaping future airline purchase when the economy is performing poorly, and particularly so for lower-income customers. A potential explanation is that in contexts that contribute to price sensitivity, the price is more highly weighted, relative to service and other touchpoints, in the customer’s repurchase decision. Price sensitivity might thus reduce the impact of CXO efforts on customers’ lifetime value and hence firm performance.

Consistent with this reasoning, participants’ views on the benefits of CXO appeared to vary across cases according to customers’ perceived price sensitivity. For B2B lender Cygnet’s experience director, some customers were willing to pay more for a superior experience: “Everybody knows exactly what they’re paying. It’s all really clear. We are expensive. You get what you pay for. But you get a great experience, and therefore if you want that quality of life, versus the pain of going through it with a bad lender, that’s what we do” (BANK1). Conversely, supermarket Mansion Food found itself under pressure from price-discounting competitors despite its high-social-class positioning. Customer experience efforts were still advocated, but with the proviso that efficiency was also vital: “You’ve got to do what feels right, but throwing £100 at every customer is unsustainable” (GROC3). In a similar vein, ZTel’s journey design work targeting price-sensitive mobile phone customer segments was explicitly directed to deliver cost benefits as well as experience improvements, as noted by the head of marketing transformation: “It’s making sure that the IT program is beautiful because there’s a much better experience for our customers. In the new system, [the customer service team has] got one system so massively reduced the time to serve. Fewer systems also cost less to run. So not only does it deliver phenomenal results for our customers, it is better for our commercials” (TELE2).

Some participants in price-sensitive contexts implicitly theorize, then, that while CXO is worthwhile, efforts may need to be moderated and complemented with efficiency goals. In Mansion Food, this was reflected in an addendum to its declared purpose of “working in partnership for a happier world”: “We aim to make sufficient profit to pursue our purpose.” Its experience operations manager elaborated: “That’s where my focus is at the moment, trying to raise commercial awareness in the team to continue to thrill [customers] but also to do what’s right for the business” (GROC3). We summarize this discussion in the following proposition:

P8

Price sensitivity negatively moderates the impact of experience appraisal on firm performance, such that high price sensitivity weakens the positive relationship between experience appraisal and firm performance.

This proposition, if confirmed empirically, raises the question of whether firms are right to pursue CXO when customers are highly price sensitive. An answer might lie in Umashankar et al.’s (2017) finding that improved service experiences can reduce price sensitivity, implying that the dynamic relationship between the two needs further investigation.

The impact of CXO costs

We have reviewed the potential benefits of CXO via the mediator of experience appraisal, and some moderators of these benefits. However, some participants observed that some of the behaviors associated with CXO can incur additional costs. Three CXO values attracted particular comment.

First, continual experience optimization could result in journeys that, while preferred by customers, had higher unit costs per customer journey. For example, department store Home James’s delivery journey for larger items had been redesigned at the expense of efficiency: “The driver might be the only staff member you actually meet if you bought online. That customer is really excited today, whether it be for her children or a present for her husband. We can never, ever recover that excitement, so we’ve got to make sure every delivery is on time and is a success. In the past we’d do 30 deliveries a day; now that’s dropped to 14, 15” (DEPT1).

The second CXO value mentioned by participants, experience empowerment, may also increase unit costs due to the experience-focused actions of individual employees. The desire to control incremental costs was clearly salient when Mansion Food’s operations manager discussed the successful service stories that employees were encouraged to share (the norm of celebrating): “A lot of the service stories are about sourcing stuff for customers and giving it to them for free. We want to move away from that. So my current challenge is to get the team more aware of our financial challenges, without them taking away a corrupted message which is: spend less money, satisfy customers less. It’s not that at all. It’s how personal and meaningful that interaction was” (GROC3). This manager seemed concerned to moderate the costs associated with experience empowerment without diluting its benefits.

Third, experience mandating behaviors that ease experience-improvement investment may incur investment costs. The head of marketing transformation at the telecommunications firm reflected on the danger of ineffective spending that could result from lowering the evidence threshold for experience-related investment, such as IT investments that aim to improve customer experience: “The new CMO and the new Director of Propositions are much more in the space of, you don’t need a business case for this, just do it because it’s the right thing to do. That is definitely saying the right things and I hope it will pay dividends. The challenge of being in an organization for a while is whether that’s going to bear true over time” (TELE2). The normative language of “it’s the right thing to do,” and the acknowledgement that this is “definitely saying the right things,” reflect the overarching assumption of experience mandating that investing in experience improvements tends to pay off. Nevertheless, the manager acknowledges the risk that expenditures may not “pay dividends.” Such experience investments can be seen as organizational learning costs associated with seeking solutions that improve organizational routines (Argote et al., 2021; Catalini, 2018), an inevitably effortful process.

In sum, managers identify several ways in which CXO behaviors can increase costs. This is consistent with Homburg and Tischer’s (2023) finding that customer journey management capability in B2B firms is associated with higher customer coordination costs, defined as “a supplier’s internal coordination, communication, collaboration, decision-making, and information processing efforts required for customer interactions at touchpoints in the B2B CJ [customer journey].” Hence, we propose:

P9a

CXO increases the overall costs associated with managing the customer experience.

The Mansion Food example above is illustrative of managers’ attempts to limit such additional costs. However, some participants looked beyond mitigation to journey designs that were both experience enhancing and lower cost than the previous design. For instance, coffee chain BaristaBros wished to “have the best experience on the high street bar none” (COFF1), while competing with mass-market chains on price. To emulate the personalization achieved by boutique coffee houses while limiting service time, the firm developed an app to handle the basics of an order so that employees could focus on optimizing personalization: “Asking you ‘what’s your name?’ and ‘how do you spell that?,’ ‘what type of coffee do you want?,’ a transaction may be anywhere between 30 and 45 seconds. Checking in with the app it becomes 10 seconds max. Now it’s a lot more enjoyable: versus ‘you’ve come here every single day and I still don’t remember your name,’ it’s ‘welcome back! Hey, how’s your project going?’” (COFF1).

A tendency to higher journey costs through CXO echoes longstanding findings of a trade-off between customer satisfaction and productivity (Wirtz & Zeithaml, 2018). The above coffee-shop example demonstrates one of the strategies identified by Wirtz and Zeithaml (2018) to mitigate or indeed reverse this trade-off, namely an operations management approach, which standardizes processes via technology in order to control costs. Similarly, telecoms firm ZTel mandated cost control and, where possible, cost reduction as a complementary goal in journey redesign efforts. Their approach is consistent with Maklan et al.’s (2017) study of a bank under cost pressure, which adopted experience-design approaches with tight objectives for journey costs, resulting in both experience improvement and cost reduction in the bank over a five-year period. This echoes Neslin’s (2022) finding that innovative multichannel journeys can sometimes deliver both cost reductions and experience improvements, as well as Wirtz and Zeithaml’s (2018) identification of a “dual culture strategy” aiming at both high-quality service and low cost. We therefore add the following rival proposition to Proposition 9a:

P9b

CXO reduces the overall costs associated with managing the customer experience.

Further exploration of the CXO-costs relationship, which builds on these findings as well as on the work of Homburg and Tischer (2023), is a clear research direction.

Conclusions

Customer experience literature has developed a degree of consistency, notably around core concepts such as touchpoints and customer journeys, but whether practitioners have a similarly consistent conception of experience management has received only modest attention. This study has therefore explored experience management from a managerial perspective. A set of values and norms underpinning experience management is shown in Table 3. Practitioners’ theory-in-use as to how these impact on firm performance is summarized in Fig. 1. These findings synthesize and extend prior work, making two main contributions to literature.

The first contribution is the identification and delineation of CXO as a distinct strategic orientation. Experience management is revealed as not simply a subset or evolution of marketing (Homburg et al., 2017) or service (Zomerdijk & Voss, 2011), although it has roots in both, as well as in agile design and HR management. Rather, it forms its own internally coherent philosophy for organizational effectiveness. That philosophy is distinctive in its unit of value creation: the customer experience and, in particular, the customer journeys into which such experience is divided. Diverging from the common academic view, we find that these journeys are defined not around the purchase process (Voorhees et al., 2017) but around diverse goals in customers’ lives. As such, the customer appraisal of journeys incorporates their goals (the value-in-journey component) as well as the touchpoint quality and journey integration concepts (Kuehnl et al., 2019) that dominate academic literature.

We reveal how the values and behaviors of CXO cohere around an organizational-learning process focused on this experience appraisal. Prior work has primarily addressed the knowledge acquisition and design aspects of this process, with Zomerdijk and Voss (2011) emphasizing the need for empathic approaches to customer research and design. We support that finding, and add the need for empathic dissemination of experience insight via the norms of journey immersing and journey ritualizing. Another learning-based finding relates to Mena and Chabowski’s (2015) observation that learning is actioned not just collectively in innovation processes, but also individually in customer responsiveness. We identify the value of experience empowerment as an enabler of this responsiveness in an experience context.Footnote 2

Three further novel values in CXO can also be understood from a learning perspective because they address the need for organizational learning to be institutionalized (Crossan et al., 1999). In values that add to prior work (Homburg et al., 2017; Zomerdijk & Voss, 2011), we find that the insight-into-action process requires buttressing structurally (i.e., journey organization), financially (i.e., experience mandating), and culturally (i.e., experience-purpose alignment). Consistent with suggestions that experience management is both uncertain (Tax et al., 2013) and complex (Lemon & Verhoef, 2016; Patrício et al., 2011), these values have a strongly agile flavor. Structures need dynamic reconfiguration (see the norm of agile resource assembling), while rapid learning cycles need delegation (through the delegated approving norm) and rapid funding (the norm of experience investment seeding). The need for flexibility and iteration in experience design has been widely proposed (De Keyser et al., 2020; Lemon & Verhoef, 2016); we add that this agility requires adaptations in the firm’s operating model.

Our second contribution is to provide a framework for the impact of CXO on experience appraisal and hence firm performance. This provides a basis for further critical evaluation of the practitioner evangelism about the efficacy of experience management (Klink et al., 2021). The framework (Fig. 1) incorporates a trade-off of CXO’s benefits against potentially increased costs, through case evidence congruent with Homburg and Tischer’s (2023) articulation of this pitfall of experience management. However, we also identify the potential for reduced costs through some CXO behaviors.

The framework further proposes six contextual moderators of the benefits of CXO via experience appraisal. First, a lack of product differentiation is central in long-standing arguments for an experience focus (Gilmore & Pine, 2002). While this is theoretically plausible (Gebauer et al., 2011), its moderating impact is untested. Second, customers in price-sensitive contexts may be less swayed by non-price aspects of their experience, thereby reducing the financial benefits of CXO. Third, experience visibility addresses the varying efficiency of word-of-mouth effects (Baehre et al., 2022) in providing a return on experience investments. Fourth, journey heterogeneity questions the efficacy of some CXO behaviors in contexts with relatively homogeneous customer journey expectations. Fifth, experience turbulence notes greater benefits from some agile features of CXO when the firm’s environment necessitates frequent modifications to customer journeys. Sixth, journey controllability observes that the more the customer experience depends on other organizations, the less effective a focal firm’s CXO may be. These moderators provide the basis for contingency-based insights into the relative importance of an experience focus across contexts, as has occurred with some other strategic orientations (Anderson et al., 2015; Kumar et al., 2011).

Implications for practice

As we have seen, experience management is not simply a department or a program. It is a philosophy for what will make the organization effective: in short, it is an orientation. Embedding it is a far-reaching endeavor. Table 3 provides a prescription for the values and behaviors that need to be instilled. We highlight here seven themes around this prescription that some organizations miss in their experience management.Footnote 3

Organize around goal-based journeys

Many firms begin their experience-management efforts with a central experience team, which tends to start by collecting better experience insight. However, such teams can become isolated (as we saw initially in Finch Financial). Cross-functional journey teams that champion the improvement of key customer journeys are important to ensure that experience insight is turned into action. A common mistake is to define teams around the firm’s own processes and products, leading to frustrating inconsistencies in journeys from the customers’ perspective. By defining both journey and team around customer goals, more innovative journey designs can ensue, as we saw in Cygnet Bank and Kite Tours.

Disseminate insight empathically

A related challenge is to ensure that experience insight reaches beyond the pages of research reports to all staff with a role in experience design. A plan is needed to immerse journey teams and the relevant functional and general managers in experience insight. Like the structural challenge identified above, this challenge benefits from executive sponsorship, as it requires resources as well as attention. A noteworthy approach is to involve executives in the insight generation itself.

Treat journeys as always in beta

Journey design is a journey, not a destination. Firms with relatively stable product sets and traditional stage-gate product development processes may be tempted to approach experience design in the same manner. But in markets facing disruption, experience design tends to require rapid innovation loops, which in turn need skills in empathic and agile design. One way to acquire these skills is through partnering with agencies, as we saw with Kite Tours. Another way is to borrow skills from other functions, such as software development.

Enabling such rapid innovation requires attention to funding. Journey teams benefit from having authority and seed-corn finance to conduct low-cost innovation loops simply. But to check that these are heading in an effective direction, long-term modelling of the financial impact of experience appraisal is helpful (as we saw with BaristaBros and Finch Financial).

Empower guided improvisation

Another challenge for some firms’ cultures is to give agency to employees at all levels so that standardized processes can be adapted to idiosyncratic customers. Managers may fear that the resulting benefit of flexibility will come at the cost of brand inconsistency. The field insight that squares this circle is to guide employees’ improvisation at the customer interface through a customer-focused purpose statement and accompanying brand values that align with customers’ experience goals, as was seen at Cygnet Bank. With such guidance in place, overall improvements in customer experience appear to be higher than they are for firms (e.g., ZTel) that lack this ‘purpose-trumps-process’ principle of constrained delegation.

Weave cost control into experience improvement

A common debate within organizations is the extent to which experience improvements can be afforded, on the implicit assumption that superior experience is costly. While some experience enhancements undeniably add to costs, a striking feature of mature experience management is that cost control is tautly woven into experience-management practices. We have noted three actionable examples. First, cost can be incorporated in experience-design exercises as a constraint. Simplifying journey steps, for example, can be more efficient for the firm as well as helpful to the customer. Second, empowerment of front-line staff can be constrained financially. Third, an experience-centric purpose statement can be complemented by a cost-oriented value such as efficiency. Managers may wish to adopt one or more of these ideas.

Extol and model journey-focused behaviors

The role of leaders in embedding CXO is not restricted to the institution of formal structures and processes. Leaders also play a part in inculcating experienced-focused purpose and value statements through explicit exhortations of their importance. We saw this in senior management events hosted by the CEOs of Vibrant and Kite Tours. The efficacy of this is plausible in the light of research on the cultural impact of purpose and value statements in steering employee motivations and behavior (Beer et al., 2021). In addition, leaders can model behavioral norms, particularly those involving fluid working across internal and external organizational boundaries (e.g., journey immersing, self-appointing, and celebrating). These norms prioritize the customer’s journey even when it requires cross-organizational action. Importantly, our case data contain successful examples of these leadership behaviors not just from the board level but also from middle management, such as Finch Financial’s insight manager and Cygnet Bank’s experience manager.

Assess and develop the maturity of customer experience orientation

Finally, our findings create a managerial opportunity to assess a firm’s current approach to experience management. The value typology in Table 3 can be presented to managers, from which they can assess the extent to which each value and behavioral norm is present. This may be useful in identifying directions for enhancement in experience management practice.

We caution, however, that this guidance assumes that the managerial theory-in-use of CXO is broadly correct. While we have documented its consistency with the case evidence, as well as with prior conceptual and empirical research, theory-testing research is required on the outcomes of CXO. We turn to this issue in the suggestions for research directions that follow.

Research directions

The discovery of a customer experience orientation provides a wealth of research directions; see Table 4. An immediate opportunity is to quantify the relationships between CXO, experience appraisal, and firm performance. Figure 1 suggests a range of hypotheses to test. Relevant performance measures include firm-level outcomes such as revenue growth, profitability, return on assets, and market value, in addition to customer-level outcomes such as retention, share of wallet, and customer lifetime value. As well as examining direct relationships, Propositions P1 and P6 suggest a mediation test for the role of experience appraisal, while P2–P5 and P6–P7 propose six potential moderators of the direct relationships to test.

Table 4 Research directions
Full size table

The relationship between CXO and costs requires particular attention. Potential moderators of this relationship include some of the contextual variables identified in P2–P5 and P7–P8, in addition to the three identified by Homburg and Tischer (2023) concerning the effect of customer journey management capability on performance in a B2B context: external dynamism, internal dynamism, and firm type (product vs. service).

Another opportunity is to explore the drivers of CXO adoption. On the basis of managers’ rationale for CXO (see the journey motivation value), we might expect these to include low product differentiation, market maturity, and competitive intensity. The transitional process of adopting CXO is also worthy of study, following similar work on market orientation (Gebhardt et al., 2006). For example, how can the cultural transformation inherent in CXO be achieved, particularly as many organizations move to higher levels of working from home?

A further research direction is to explore heterogeneity in the nature of CXO, which is a feature of more mature strategic orientation research (Hakala, 2011). There are two previously identified variables that create heterogeneity in experience management practice: the relationality of the context (Homburg et al., 2017; Lemke et al., 2011) and firm size (Homburg et al., 2017). While CXO remains a generally consistent philosophy across our cases (Web Appendix B), our data contained hints of other respects in which CXO may vary by context. For example, firms with lower experience turbulence (such as BaristaBros) do not pay as much attention to agile behaviors like experience empowerment and experience mandating, while firms that enjoy less control over the customer journey (such as Finch Financial) tend to adopt more journey partnering with other organizations.

Emerging technologies may lead to further variations in CXO practice. For example, technologies at the customer interface (e.g., AI, robotics, and augmented reality) may modify employee agency in tailoring touchpoints. Technology within firm processes may provide better tools for journey optimization, such as through data-driven journey integration. Technological developments like real-time experience tracking may also modify how customer insight is gathered, disseminated, and actioned. How these opportunities affect the values and behaviors of CXO requires exploration.

Another research direction is CXO’s relationship with other strategic orientations that play their own roles in driving performance, and the relevance of the firm’s context to that relationship. There may be dependencies between orientations: interactions have been observed between market orientation, innovation orientation, entrepreneurial orientation, and learning orientation (Deutscher et al., 2016). Similarly, we might expect CXO to interact positively with market orientation, service orientation (Homburg et al., 2002), and innovation orientation (Siguaw et al., 2006), given their commonalities.

Sustainability orientation (Khizar et al., 2022) and the closely related purpose orientation (Blocker et al., 2024) are gaining prominence in practice and scholarship and deserve particular attention. While we have focused on financial outcomes, a triple-bottom-line perspective implies an equal focus on social and environmental outcomes. How CXO helps or harms these remains to be explored. For example, how does CXO’s emphasis on an experience-based purpose interact with an organization’s sustainability-based purpose when these differ? Does CXO’s focus on customer goals correlate with beneficial social outcomes for customers? Is this in tension with outcomes for other stakeholders, such as employees and supply chain workers? And in what ways can CXO’s emphasis on the customer journey help organizations manage complete cycles of product, purchase, use, and disposal in a circular economy?