Concept and general conceptual features of customer experience

Authors: Tarja Keski-Mattinen, Mirja Kälviäinen and Markus Ahola

This article explores the concept of customer experience, its evolution, and the relevant characteristics that define it. With the integration of digital and real-world operations in businesses, customer touchpoints are spread out across multiple platforms. Therefore, it is essential to understand how customer experience is built, and which features are crucial in creating a positive customer experience.

Clarifying terms is not only vital for researchers but also advantageous for business developers. Joint understanding of customer experience goals is required in the world, where algorithms and AI can be made to subtly influence customer experience, often without the customers’ awareness. This trend is increasingly prevalent in AI-driven businesses, transforming the way marketing, communication, and other operations should play together.

The objective of this article is to pinpoint the key aspects of customer experience that have evolved and remain pertinent today. The literature review scrutinizes the primary themes in customer experience research and amalgamates characteristics of customer experience from diverse disciplines, providing a comprehensive (more holistic) understanding of the concept.

The analysis presented is part of the ASKO project, undertaken at LAB UAS. ASKO project is dedicated to assisting small and medium-sized enterprises (SMEs) in gaining a profound understanding of their customers’ needs. It aims to achieve this by investigating the potential of integrating data analytics and qualitative customer research, enabling SMEs to generate actionable insights for enhancing their customers’ experience.

Accounting the steadily growing interest of customer experience

One of the first theorists of economics who focused on customer expectations was Lawrence Abbott (1955). He claimed that customers’ basic and derived needs vary from one individual to another, affecting competition with price and quality. Later, it’s been proven to be so.
Starting in the late 1950s, studies about customer understanding were focused on theoretical and academically rigorous research. The field expanded from economics to incorporating theories and methodologies from psychology, sociology, anthropology, and statistics. This led further to focus on understanding individual consumers’ thoughts, desires, and experiences. (Malter & al. 2020).

The concept of the 4Ps was introduced by E. Jerome McCarthy, a marketing professor, in 1960. The four Ps stand for product, price, place, and promotion. It means the product should meet the needs and wants of the customer and should be placed where it is easily accessible. The value of the product should justify its price, and customers should be familiar with it. (Anderson & Taylor, 1995).

In 1964, Professor Neil Borden introduced the marketing mix concept, an extension of model 4Ps. Borden indicated eight areas of marketing activities affecting business results in manufacturing industries: Branding, Channels of Distribution, Advertising, Packaging, Display, Servicing, Fact Finding, Physical Handling, and Analysis. (Borden 1964, Berry 1990).

As understanding of the factors that affect CX increased, researchers also discerned environmental factors influencing business and CX. In 1967, Francis J. Aguilar, an American scholar and professor at Harvard Business School, published a study introducing the concept of ETPS (economic, technical, political, and social influences), which is the precursor to PESTEL (or PESTLE). The PESTEL stands for political, economic, socio-cultural, technological, environmental, and legal factors. The analysis is commonly used for designing business strategies but can also be applied to understand customer behaviour and consumption and the drivers influencing them. Key drivers vary by business and sector, so analysis results can’t be generalized. (Johnson et al. 2009).

Philip Kotler (1971) focused on consumer movements in 1900-century and explained the factors behind the term consumerism, and how to meet consumers’ desires for both satisfaction in the short term and benefits in the long term. One main discovery was trust. Companies should avoid misleading marketing, and product covers should provide correct information. Understanding sellers’ and buyers’ rights is the foundation for building trust between parties.

In the 1980s, Holbrook and Hirschman (1982) distinguished two primary perspectives on consumption research: environmental and consumer-related themes. They suggested that researchers adopt an experiential perspective that considers the aesthetics of products, the enjoyment of consumption, and emotions. They believed researchers could clearly understand consumer behaviour by focusing on consumers’ fantasies, feelings and fun. These thoughts and a rising understanding of consumer aspects led to a growing interest in ethnographic methods in consumption research.

Around the same time the computer science field started gain consciousness about the value of including human perspective into the development process. In the 1980s and 1990s, the Internet transitioned from being used mainly for academic and industrial purposes to being utilized by the public and private sectors. The real breakthrough happened in the 1990s, thanks to the graphical interface technology. It made personal computer usage more accessible. In the early 1990s, human-computer interaction research focused on user interfaces. Nielsen and Molich (1990) conducted a study on user interfaces using heuristic evaluation, which led to the development of widely appreciated UI heuristics. In 1994, Nielsen introduced ten heuristic rules for designing better user interfaces.

In the 1990s, the focus of technology shifted towards human aspects. Angeli et al. (2002) argued that usability alone is not a sufficient metric for social artifacts, which are intended to create and maintain meaningful relationships within user. They suggested that involvement is a more appropriate concept that reflects the strength and quality of the interaction.

The concept of user experience (UX) was acknowledged by cognitive scientist Donald Norman in 1993. It originated from the field of human science and ergonomics, with the interaction between humans and machines within different contextual environments. Previously, in computer science, design work that considered users’ needs was referred to as human-centred (HCD) or user-centred design (UCD) before the term user experience was coined. (Nielsen 2017). The factors affecting UX are significantly broader and more diverse (e.g., interpretation and meaning) than those traditionally within the scope of HCD (e.g., performance and smooth interaction) (Roto et al. 2011).

In addition, Norman contributed the theoretical base of cognitive psychology in consumer experience. He was conscious of social and attitudinal challenges in human-computer interaction (HCI) and understood psychology’s role in interaction design. (Preece 1994, 59-73). As a result of difficulties for people understanding how to use computers, interaction research expanded into a new discipline. It was done by computer scientists, psychologists, social scientists, and designers. (Norman 2010, 143) Expanding interaction research into a multidisciplinary field highlights the complexity and importance of making technology more accessible and user-friendly. Norman’s work has profoundly influenced how we think about and approach design, making technology more intuitive and accessible for everyone.

The term UX is often used as a synonym for many related concepts (i.e., usability, user interface, interaction design, and customer experience) or as an umbrella term incorporating all or many of these concepts. Although, UX affects to customer experience and vice versa, UX differs from the broader concept by referring explicitly to the experience(s) derived from encountering systems. (Roto et al. 2011)

Pine and Gilmore (1998) predicted that experience design would become as crucial to businesses as product and process design were in previous decades. In the concept of the Experience Economy, they identified four dimensions: educational, escapist, aesthetic, and entertainment. These four realms of experience further our understanding of the experience market. Pine and Gilmore (1998) presented the change of experience economy over time. Table 1 illustrates the evolution of businesses from being trading-focused to emphasizing goods and service features and ultimately prioritizing customer experience.

			Economic Distinctions
	Economic Offering	Commodities		Goods	Services		Experiences		Transformations
	Economy	Agrarian		Industrial	Service		Experience		Transformation
	Economic Function	Extract		Make	Deliver		Stage		Guide
	Nature of Offering	Fungible		Tangible	Intangible		Memorable		Effectual
	Key Attribute	Natural		Standardizes	Customized		Personal		Individual
	Method of Supply	Stored in bulk		Inventoried after production	Delivered on demand		Revealed over a duration		Sustained through time
	Seller	Trader		Manufacturer	Provider		Stager		Elicitor
	Buyer	Market		User	Client		Guest		Aspirant
	Factors of Demand	Characteristics		Features	Benefits		Sensations		Traits

Table 1. Economic Distinctions (Pine & Gilmore 1998, 170)

Overbeeke & al. (2002) represents a paradigm shift in the field of product design. They emphasize the importance of “pleasure-based” human factors, moving beyond the traditional focus on product usability. This approach highlights the holistic nature of the person-product interaction, suggesting that the experience of using a product should be not only efficient and functional but also pleasurable through emotional experiences. This approach considers various aspects such as aesthetics, emotional responses, cultural factors, and individual preferences.

In 2002, Kälviäinen (2002) discussed the concept of consumer taste from three different perspectives. The first one was about how consumers see and understand a product’s fit to their own objective and contextual frames. The second perspective was about the identity meaning-making or aspirational purposes that a product may have. The third perspective was about the consumer’s preferences for objects in the social meaning sense that those objects hold. Kälviäinen explored the boundaries and possibilities of consumers’ use situations by focusing on their subjective and meaningful aspirations and social placements.
Around the early 2000s, research began to emerge linking customer experience to value for both customers and companies. These studies examined consumption as a holistic phenomenon involving a person with a company or its offerings at various levels. (Arnould & Thompson 2005).

The roots of digital transformation (DT) date back to the late 20th century when businesses started investing more in digital technology. By 2010, DT had become a significant focus in management across various business sectors, emphasizing digital and customer experience-focused business models. This shift involved creating entirely new business models and adapting existing ones. According to Hanelt et al. (2021), this change involves a shift towards adaptable organizational designs and digital business ecosystems.

The use of digital technology in business has revolutionized the way companies interact with customers

As per the research conducted by Calderon-Monge & Ribeiro-Soriano (2023), digital technologies have been playing a central role in creating and reinforcing disruptions in business since around the Millennium. The digitization of businesses has transformed the way information is collected, stored, and transferred within firms and their environment. Business environments have expanded beyond the physical world to include digital environments that are accessed solely through screens.

Digital consumption, often referred to as digital consumer behaviour, is a field of study that focuses on how consumers interact with digital technology and how this interaction influences their consumption behaviours. Digitalization has led to significant changes in consumer behaviour and altered consumer’s decision journey. For instance, online shoppers are keen to find the best price, choose healthier options, and be more eco-friendly by shopping locally where possible. (Nadkarni & Prügl 2021).

Digitalization has also made changes in how we can get more information about the CX. The advancement of big data, the Internet of Things, and web design have transformed the way consumers research and purchase products and services. Companies can now easily customize their offerings through detailed consumer profiling made possible by digitalization. The other side of the coin – Digitally savvy consumers, exposed to best-in-class offerings globally, may not settle for less. (Nadkarni & Prügl 2021).

With AI, cutting-edge companies have forwarded to a new level of customer experience. Edelman & Abraham (2022) use the term “intelligent experience engines”. These advanced systems can assemble high-quality AI-powered customer experiences by using digital customer data.

The current business world is experiencing digitally changing times and disruption. This has led to a growing gap between traditional companies and forerunners, the ones that are embracing new technologies beneficially. Digitally savvy companies have competitive advances with data usage. As a result, followers who are not on the same level of development are trying to collect information from various channels and environments through different methods. However, gathering data from multiple sources can be challenging, and many companies are inconclusive about how to use results.

In many businesses, especially after covid-19, digital transformation has increased rapidly. Online and traditional way to take care of customers differs a lot. Online customer experience (Ahmad 2022) can be seen generated by four-dimension typical in traditional commerce, product, shopping environment, staff service experience, and shopping procedure. Suitability of product is defined by such issues as price, value, aesthetics, and usability. The influence on customer experience depends on engagement context, product and industry type and cultural context (Barari et al. 2021). There are two possible pathways on engagement, online and traditional, and the context of online or offline varies widely. The industry type like service or manufacturing has their own features. According to Barari et al. (ibid.), the product type can be hedonic or utilitarian. A utilitarian product is practical, necessary, and functional, whereas a hedonic product refers to experiential, fun, and enjoyable products. Finally, the cultural context includes the power of distance beliefs (PDB), which means inequality among people. In societies with high power distance, individuals are more likely to engage in status consumption, purchasing luxury or high-priced items to signal their social status. Conversely, power is more evenly distributed in low power distance societies, and the need to show hierarchical status in consumption is lower.

Becker and Jaakkola (2020) discussed the fragmented field of customer experience studies and formed four fundamental premises of customer experience perspective.

1. Customer experience encompasses customers’ automatic, spontaneous reactions to stimuli encountered throughout their customer journey. This range of reactions can vary from ordinary to exceptional, depending on the intensity of the stimulus.
2. Stimuli affect customer experience at various levels such as small cues, touchpoints, service moments, customer journey, and consumer journey.
3. Responses to offerings are subjective, dependent on customer, situational, and sociocultural factors.
4. Firms can’t create customer experience but can manage stimuli that affect it.

These premises aim to reconcile the confusion in the current literature and provide a comprehensive understanding of customer experience across different contexts and literature fields.

Characteristics of CX

There are various factors that can affect the overall customer experience in both physical and digital environments. These factors can be categorized into three groups:

The first category includes characteristics that are within the company’s control, such as the quality of its product, the level of service it provides, and the environment it creates for its customers.

The second category is made up of customer-dependent factors, such as emotions, desires, preferences, and other activities and effort requiring demands the customer has going on.

Finally, the third category comprises factors that are independent of both the customer and the company, including competing firms and products, as well as political and social activities. These factors are more challenging for companies to influence, but they can still significantly impact the way customers perceive their brand and overall customer experience.

Examples of CX concept characteristics in three dimensions
	Service & product characteristics and the environment managed by the company	Customer-based characteristics	External environment-based characteristics
Kotler 1971	Sellers rights, marketing practices, societal marketing, prices, current, enduring, beneficial, profitable, ethical, and pure.	Buyers’ rights, consumer values, intuitive, societal and consumer interests.	Consumer movements, business scene, economic system, and societal needs.
Holbrook & Hirschman 1982	Objective and subjective features, tangible and symbolic benefits, stimulus properties (verbal and non-verbal), communication content (semantic and syntactic), hedonic aspects and affective qualities.	Personal values, cognitive functions, affective impact, response to stimuli (buy/use), recourses (money/time), task (features/response), act readiness, criteria, learning and output/results goals.	Demographics, socioeconomics, and lifestyle.
Borden 1964	Product features, quality, design, branding, and packaging, distribution channels, the locations to sell, inventory management, transportation logistics, prizing including discounts, allowances, payment period terms and promotional activities.	Needs, wants, demands and expectations.	Competitors, suppliers, and distributors within industry, government forces: laws, regulations, and policies.
Nielsen & Molich 1990	Visibility of system status, consistency and standards, user control and freedom, error prevention, match between system and the real world, recognition rather than recall, help & documentation offering, flexibility and efficiency, aesthetic and minimalist design and recover from errors.
Anderson & Taylor 1995	Features, advantages, benefits, promotion, appropriate price, nature of the product, usability, unique features, differs versus competitors, brand trust, existing competitors, and the perceived value, where it is seen, made, sold, or distributed.	Enjoyment and perceived value.	Existing competitors and brand trust.
Pine & Gilmore 1998	Entertainment, educational, escapist, aesthetic, constant change, or activity, innovative, integrated, demand, pricing, engage all senses, mix in memorabilia, progressive, transformative, empowering, forward-looking, mutually joined, or related, resilient, sustainable, effectively communicative, harmonize impressions and customer participation.		New technologies
Kälviäinen 2002	Symbolic and communicative object features, similarity and continuity, patterns of meaning and value.	Aesthetic experience, identity building, social display, value-based capacity, product taste, idea of experience, consuming wants, passions and pleasure, consumer perceived values, practical knowledge, individuals’ cultural capital, product-related beliefs, and stimulus chaining.	Societal trends, technological advancements, shifting lifestyle, cultural habits, patterns of meaning, values, perspectives, and worldviews.
De Angeli & al. 2002	Relationship technology usage, functional-, aesthetic- and social quality, interface design, usability, informal, individual, practical, communicative, supportive, “sense” of personality and attitude, learning time, task-performance time, error rate, effectiveness, efficiency, user-friendliness, flexibility, accessibility, and personality.	Emotions, affect, attitudes and social intelligence, enjoyment, pleasure and humour, perception, problem solving, reasoning, rational rules, satisfaction, feelings, and initial mental model.
Becker & Jaakkola 2020	Firm controlled stimuli, dynamic interplay between stimuli, nature of the offering, holistic experiences, multilevel journeys, dynamic interactions, and contexts.	Non-deliberate and spontaneous responses and reactions, personal and internal response to stimuli.	Situational and sociocultural contingencies.
Malter & al. 2020	Strategic decisions	Thoughts, desires, experiences, goals, self-control, time, psychological ownership, search for meaning and happiness, social belonging, creativity, status, hedonic aspects, economic rationality, identity, beliefs/lay theories, regulatory focus, self-construal, goal systems and personal relationships.	Influence of technological advancements, shared experience, varying degrees of veracity, divided attention, never-ending streams of media and news, increased prevalence of confirmation biases, markets of consumer satisfaction ratings and social inequality.

Table 2. Examples of CX concept characteristics in three dimensions

Many companies are currently undergoing digital transformation, which involves the integration of both digital and physical aspects of their business. As a result, customers are now experiencing digital and physical interactions with these companies. This has created a need for companies to gain a better understanding of their customers through various means. For this understanding, getting the information on all three aspects presented in the previous table is very important to obtain the actionable insights required for developing and creating suitable, even inspirational, customer experiences.

While companies often concentrate on digital transformation, it’s vital to understand that success requires a broader perspective. To thrive, we need to embrace a comprehensive approach and consider the larger context.

As such, digital transformation is not the problem but managing the omnichannel interaction it creates is challenging because the customer’s voice is spread to multiple channels. Controlling all these channels is problematic. In a digitalised business, customers move through multiple possible service paths. Usually, partly digital paths have numerous spots that trigger emotions and other reactions, affecting the customer experience. To find and choose the best experience analytics, we must first understand customer experience characteristics.

The ASKO project focuses on and illuminates this challenge, with the aim of exploring how SME enterprises can develop better methods for hearing customers’ voices and gaining actionable insight.

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Authors

Tarja Keski-Mattinen is a senior lecturer in business information technology at LAB University of Applied Sciences and an expert at the LAB customer experience development platform focusing on data analytics.

Mirja Kälviäinen (PhD) is a principal lecturer of design and media and a Docent of user-centred product design and design thinking. She is an expert at LAB customer experience development platform.

Markus Ahola (PhD) is a leading specialist in LAB’s customer experiences platform. His research areas include e.g. user-centred design, human-centred design, and experience design.

Illustration: https://pxhere.com/en/photo/914018 (CC0)

Reference to this article

Keski-Mattinen, T., Kälviäinen, M. & Ahola, M. 2024. Concept and general conceptual features of customer experience. LAB RDI Journal. Cited and the date of citation. Available at https://www.labopen.fi/lab-rdi-journal/concept-and-general-conceptual-features-of-customer-experience/