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Continued: He clues firms in to manage customer experience

  • Article by: TODD NELSON , Special to the Star Tribune
  • Last update: March 14, 2011 - 1:21 PM

As an ad executive in the 1970s, Lewis Carbone had an insider's view of Howard Johnson's cost-cutting decline and Disney's growth through lavish attention to detail.

The diverging fortunes of those two companies led Carbone to a simple but powerful conclusion: Experiences that companies deliver have as much value to consumers as the products and services they offer. Orchestrating sensory and emotional clues to maximize customer experience builds loyalty and ultimately can improve bottom-line performance.

Carbone's insight propelled him to launch a new management theory -- customer experience management -- and a successful customer experience design and management consulting firm, Bloomington-based Experience Engineering, of which he is founder and CEO.

Widely recognized as the godfather of experience management, Carbone -- who goes by Lou -- has achieved global reach after more than two decades of spreading the customer experience gospel through frequent speeches, articles in academic, trade and business publications and his 2004 bestselling book "Clued In: How to Keep Customers Coming Back Again and Again."

Using design and management tools based on neuroscience and psychology, Experience Engineering company works with Fortune 500 and other companies in retail, hospitality, health care, financial services education, manufacturing, transportation and technology, among other industries.

"What we've been about is almost a movement more than a company," Carbone said. "We've taken an art form and tried to create more of a science around it, and a rigor and a system. I think we're the only firm in this space of customer experience that contributes equally to the academic literature and to the practitioners."

In October, a Forrester Research study recognized Experience Engineering as the longest-established experience consulting firm and the only boutique consultancy with end-to-end solutions for organizations seeking to improve customer and employee experiences.

Clients include Time Warner Cable, United Airlines, Capital One, La Quinta Inns, Pizza Hut UK and Avis. The company has a licensee in Japan that is doing well, Carbone said, and Asia appears to be a strong growth area for experience management.

Aligning clues

The recession put a premium on customer experience, Carbone said, as companies sought new ways to attract and retain customers. Experience Engineering, which has 12 employees, saw revenue grow 50 percent last year to $7 million. 

"Customers cannot not have an experience," Carbone said. "It's a question of whether it's managed or haphazard. People think experience management means adding cost, but it really doesn't. Aligning clues to create an experience can be much more efficient than a whole bunch of haphazard stuff."

Carbone said he expects "pretty phenomenal" growth over the next five years. He has resisted offers to sell Experience Engineering. Most business comes from repeat customers and referrals.

"We've done very little marketing and sales," said Carbone, who is president of the American Management Association's Sales and Marketing Council. "So have we optimized what the company could be? Probably not in terms of the business. But I'm having a lot of fun."

Carbone wrote probably the first article published on customer experience management in 1994 with longtime collaborator Stephan Haeckel, past chairman of the Marketing Science Institute, retired director of strategic studies at IBM and now president of Adaptive Business Designs, an executive education and coaching firm.

Carbone is to experience management what Edwards Deming was to quality management, Haeckel said: "He's as close to a genius at what he does as anybody I ever expect to meet."

Leonard Berry, distinguished marketing professor at Texas A&M University and a longtime collaborator of Carbone's, said simply: "I consider Lou Carbone to be the leading expert on customer experience management probably in the world today."

"It's not just a business for him," Berry said. "It is a quest, a personal quest. When done right, customer experience management is a market share builder for companies."

Among Experience Engineering's clients, Penske Truck Leasing saw positive results soon after redesigning its central reservations system with Carbone's input, said Jim Feenstra, senior vice president of marketing. Changes included doing away with a rigid script that required employees to press on with insurance-related questions even after increasingly irritated customers had declined coverage.

"Within the first 30 days, we saw a 40 percent uptick in close ratio," Feenstra said. "Some of their methodologies for getting down to what the consumer was thinking were eye-opening for us. It's some of the best research we've ever seen ... that you could actually do something with."

The expert says: Jack Militello, a management professor at the University of St. Thomas' Opus College of Business, said Carbone's writing about what he is practicing is a savvy business model.  

"Combining intellectual capital with operations is a great model for a consulting business," Militello said. "People want an idea they can reuse, they want a framework to work from. His articles and book give you the framework, then he guides you through the application of it."

Carbone may not need to worry about marketing because his frequent public speaking appearances probably are his best sales tool, said Militello, noting that Carbone has gotten high marks as a guest speaker in St. Thomas' executive MBA program. 

Todd Nelson is a freelance writer in Woodbury. His e-mail address is todd_nelson@mac.com.

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