The Four Stages of Customer Interaction

(c) 2006 Customer Engagement Strategies, Inc.

Table of Contents
I. Introduction
II. Four Stages of Customer Interaction Overview
III. Ask the Following Questions
IV. The Four Stages of Customer Interaction
a. Initiation
b. Integration
c. Intelligence
d. Value Creation

(c) 2006 Customer Engagement Strategies, Inc.

Introduction
Customer Engagement Strategies analyzes, assesses, designs and builds strategic customer
experience and relationship programs and processes. Its Four Stages of Customer Interaction
methodology is used to align Customer Experiences with Brand Promises through appropriate
Business Processes. This results in customer interaction practices that are essential for longlasting, profitable customer relationships.

Customer Engagement is the state of alignment of Brand Promises, Business Processes and
Customer Experiences. Disconnects between Brand Promises and Customer Experiences are
caused by misaligned Business Processes. These misalignments create hot-spots that are
moments of truth when the customer experience falls short of the Brand Promise. The Four
Stages of Customer Interaction help vendors develop the vision and processes to ensure their
Brand Promises are realized as Customer Experiences throughout the customer life-cycle.
Each of the Four Stages of Customer Interaction defines what customers should be feeling,
thinking and doing in each stage, as well as a desired end state. The Four Stages of Customer
Interaction are:
1.
2.
3.
4.

Initiation
Integration
Intelligence
Value creation

The Four Stages result in a new model for ensuring Brand Promises, Business Processes and
Customer Experiences are 100% aligned. The Four Stages also pinpoint directional change
necessary to generate the customer knowledge needed to create new value for the customer and
vendor alike. The roadmap also clarifies which customers warrant long-term investment and
which ones do not.

(c) 2006 Customer Engagement Strategies, Inc.

The Four Stages of Customer Interaction

In order to develop relationships with customers that result in repeat business, referrals, profitable
relationships and high life-time value, the following statements must be core to customer facing
activities and processes:

Every interaction with customers (or lack of interaction) tells customers how much they
are truly valued

These interactions are moments of truth are when a customer learns if promises made
to them (the brand) will be honored or not

In order to create great experiences for customers, companies must know what they
want customers to feel, think and do at every stage of the relationship

The most unsatisfied customers can be a companys greatest resource for innovation.
Customer engagement failures must be pursued aggressively to find out how to create
great experiences and value WITH not for customers

Business Processes must enable Brand Promises to be realized as Customer

Experiences

Every action a company takes from answering the phone at the front desk to the most complex
product installation makes a statement about how that company values customers. These
moments in time are when a brand comes to life, when promises made are either kept or broken.
Jan Carlzon, former President of Scandinavian Airline Services called these instances moments
of truth. He defined them as any time a customer comes into contact with any aspect of your
business, however remote, the customer has an opportunity to form an impression.
Moments of truth, when repeatedly resulting in positive outcomes and experiences, lead to
customer loyalty. But what is customer loyalty? Is it repeat purchases by a customer? Is it a
customer who gives a vendor a second chance if the vendor falls short on delivering the
appropriate experience? Is it a customer who refers others to a vendor?
Loyalty is all of that and more. Customer loyalty is a state of being that is defined by behaviors
and experiences on BOTH sides of the relationship vendor and customer that lead to a state of
value creation for both parties. Loyalty cant be measured by repeat business alone. A customer
may not have a viable alternative to a vendor currently, but the moment they do, theyre gone.
Frederick F. Reichheld has found through his research that for most industries the best measure
of loyalty is whether or not customers are willing to refer a company to a colleague or peer. If
they are not willing to do so, they are at best passive detractors even if they are still purchasing
goods or services.

(c) 2006 Customer Engagement Strategies, Inc.

The Four Stages of Customer Interaction

Reichheld found that customer loyalty results in higher profitability by as much as 95% by
reducing customer defections by as little as 5% depending on the industry (The Loyalty Effect:
The Hidden Force Behind Growth, Profits and Lasting Value, 1996, Harvard Business School
Press.)
Regardless of how you define customer loyalty and how you measure it, the question really is
how does a company ensure its Brand Promises are realized as Customer Experiences? The link
between Brand Promises and Customer Experiences is, of course, Business Processes. The Four
Stages of Customer Interaction are designed to enable companies to ensure their Business
Processes create the Customer Experiences their Brand Promises promise.
The Four Stages of Customer Interaction are:
1.

Initiation the active management of welcoming (on boarding) a new customer

and beginning the relationship (starting the work for which a company has been
hired, implementing a product or service, etc.)

2.

Integration the active management and assessment of the product or service

after the initiation stage has been completed, i.e., development/building/creating is
complete and production usage has begun. The ultimate goal of the Integration
stage is achieving operational excellence

3.

Intelligence the active management of accumulating all previous learnings

from the Initiation and Integration stages, conducting additional fact-finding and
research, assessing performance of the customer and the vendor, the vendor
deciding what level of further relationship investment is warranted from a
financial return standpoint, and developing a deep and keen understanding of the
customers long-term strategic goals

4.

Value Creation the active management of developing a partnership with the

customer to become an inextricable part of the customers performance, find
opportunities to drive innovation, create new value, and gain recommendations
from the customer for new business

The Four Stages of Customer Interaction help companies establish internal and external
experience expectations that are easy to communicate and understand, measure, and manage, and
will have a direct impact on their financial performance. The Four Stages also provide a
framework for developing and implementing all customer facing processes and solutions.
The attributes and processes of each stage of customer transformation result in a specific
customer experience. Each stage results in an experience designed to lead to the next stage,
ultimately resulting in achieving value creation for both parties. The experience in each stage is
comprised of three action states and an end state:

Emotional what the customer should be feeling

Intellectual what the customer should be thinking
Behavioral what the customer should be doing (including customer behaviors the
vendor wishes to change)
Culminating Status the state of the customer at the end of a specific stage which
enables the transition to the next stage

(c) 2006 Customer Engagement Strategies, Inc.

The Four Stages of Customer Interaction

Reality, of course, is not as neat and tidy as management theory. There is much overlap between
stages that will be different for each customer and likely different for different projects with the
same customer.

The process of implementing the Four Stages of Customer Interaction begins with
several questions, including:
1.

Has a company clearly defined the Emotional, Intellectual and Behavioral objectives
for all customer facing processes and programs?

2.

What are the most important moments of truth where a company fails to live up to
expectations?

3.

Are Customer Experiences truly the realization of Brand Promises?

4.

What processes are in place to ensure customers are having loyalty building
experiences throughout the customer life cycle?

5.

How easy is it for customers to provide meaningful feedback?

6.

What customer needs are not being met?

7.

What is the financial impact of existing customer-facing processes?

Profitable, long-term customer relationships require the development and implementation of, and
adherence to, customer interactions that welcome customers into the fold in an organized,
considerate way; ensure operational excellence is achieved; provide opportunities to learn about
customers strategic goals; and, ultimately enable customer and vendor to achieve a state of
mutual value creation.

(c) 2006 Customer Engagement Strategies, Inc.

The Four Stages of Customer Engagement

Stage 1 - Initiation
Initiation is the active management of welcoming (on boarding) a new customer and
beginning the relationship, i.e., starting the work for which a company has been hired or
delivering the product that has been purchased.
Attributes

Welcoming information and

materials provided and
explained to customer

Robust project processes and

communications protocols
established

Delivering the right information

to the right people at the right
time

Customer Experience

(c) 2006 Customer Engagement Strategies, Inc.

Emotional:
o

Satisfied with vendor selection

Confident about the likelihood of

success

Anxiety-free start-up with no sense

of being overwhelmed

Intellectual:
o

Understand process and timeline

Focused on how to maximize

success

Behavioral:
o

Actively engaged with vendor and

participating in process

Communicating clearly about issues

Customer is meeting deadlines and

managing their end of project
successfully

Culminating Status:
o

Preliminary project phase done

All signs are go for operational

deployment or release or
announcement, etc.

Client and vendor implementation

teams working well together

No surprises

The Four Stages of Customer Engagement

Stage 2 Integration
Integration is the active management and assessment of the product/service after the Initiation
process has been completed, i.e., development/building/creation is complete and production
usage has begun. The ultimate goal of the Integration stage is achieving operational excellence.

Attributes

Project is completed from

implementation standpoint

All components are operational

Delivering the right information to

the right people at the right time

Customer Experience

(c) 2006 Customer Engagement Strategies, Inc.

Emotional
o

Satisfied with process and progress

Anxiety-free transition to operational

stage

Intellectual
o

Educated and knowledgeable of all

impacts of project; no surprises

Understand next phase and/or steps

Behavioral
o

Customer is communicative

Customer continues to meet any

deadlines and provide appropriate
performance updates

Customer understands and follows

proper support channels

Culminating Status
o

Project results are acceptable to

customer (at a minimum)

Customer receiving benefits of

project being operational

Customers customers receiving

benefits of project (if applicable)

No surprises

Willing to consider and/or offer

referrals

The Four Stages of Customer Engagement

Stage 3 Intelligence
Intelligence is the active management of accumulating all previous learnings from the Initiation
and Integration stages, conducting additional fact-finding and research, assessing performance of
the customer and the vendor, and developing a deep and keen understanding of the customers
long-term strategic goals. The ultimate goal of the Intelligence stage is knowledge creation.

Attributes

Customer and vendor are

sharing information in an effort
to glean as much information
about operational excellence
experience as possible
including how customers
customers are being impacted
by experience

Customer Experience

Vendor learning customers

strategic goals

Vendor learning what needs are

not being met for customer (i.e.,
new opportunities to provide
solutions)

Delivering the right information

to the right people at the right
time

(c) 2006 Customer Engagement Strategies, Inc.

Emotional
o

Satisfied

Trusting

Willing to share more and more

information

Intellectual
o

Considering other ways vendor can

help

Analyzing learnings to understand

opportunities for innovation

Behavioral
o

Sharing information

Considering and/or referring vendor

to colleagues and peers

Culminating Status
o

Have gathered information necessary

to consider value creation through
innovation and/or considering other
products or services form vendor

The Four Stages of Customer Engagement

Stage 4 Value Creation

Value Creation is the active management of developing a partnership with the customer to
become an inextricable part of the customers performance, find opportunities to drive
innovation, create new value, and gain recommendations from the customer for new business.
[Note that some customers will be perfectly happy and loyal without driving innovation and
creating new value. Those customers should still be sources of referrals.]

Attributes

Customer Experience

Applying learning to drive

innovation

Creating new products,

services, relationships,
revenue, cost savings

(c) 2006 Customer Engagement Strategies, Inc.

Fully trusting

Intellectual
o

Creating new or optimize

standard operating
procedures and
communication channels
Delivering the right
information to the right
people at the right time

Emotional

Actively focused on innovation

Behavioral
o

Partnering for innovation

Staff are working in conjunction with

vendor on innovation projects

Culminating Status
o

New processes, services, products

developed with vendor

Clear intellectual property understanding

Actively referring colleagues and peers to

vendor

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Solutions
Customer Engagement Strategies offers the following program solutions. In addition, custom projects are
developed to suit specific needs not met by these solutions.
1.

Customer Hot Spot Audits - Audits identify "hot spots" in customer experience, i. e.,
relationship areas where a problematic gap exists between brand promise and customer experience.
Results are achieved through in-depth interviews, surveys, focus groups and face-to-face meetings
with customers, both current and lapsed. Audits involve the assessment and modification of
existing or develop new customer-facing Business Processes to ensure those processes support
Brand Promises being realized as Customer Experiences. Projects range from specific hot spot
remediation to full-scale Customer Engagement Strategy development and deployment

2.

C-Suite Engagement Programs Custom developed educational programs are used to attract
customer CEOs, CIOs, and other CxOs. By stimulating the emotional and intellectual and creating
unique experiences in the appropriate venues, vendors are able to build relationships at the highest
possible levels inside customer organizations. C-Suite Engagement Programs can also be used to
invite prospective customers to demonstrate the value of building a relationship with a particular
vendor.

3.

Customer Experience Audits Audits identify "hot spots" in customer experience, i. e.,
relationship areas where a problematic gap exists between brand promise and customer experience.
Results are achieved through in-depth interviews, surveys, focus groups and face-to-face meetings
with customers, both current and lapsed.

4.

Strategic Customer Advisory Boards Vendors must have clear and powerful
communications channels designed to solicit, elicit, and take action on customer feedback. A
Customer Advisory Board enables the most strategic customers to share insights and
recommendations with each other and with the senior management from the vendor organization.

5.

Customer Referral Programs The true test of loyalty is whether or not customers are
willing to refer a vendor to peers, colleagues, and friends. Developing a formal customer referral
channel will make it easy and worth while for customers to make referrals, allow vendors to gain
the benefit of referrals, and will also serve as a clear measure of true customer loyalty.

6.

Leadership Summits Custom developed educational programs designed to develop and

enhance leadership skills and breadth of knowledge of new and existing leaders. Audience types
may include employees, customers, community leaders, and other company stakeholders. Business
practitioners, academics, consultants, national and international government leaders and other
world-class thought leaders are recruited to present content

7.

Green Business Driver Summits Custom developed educational programs designed to

explore climate change and its impact as a business driver. New market opportunities, new ways to
serve customers, new ways to produce existing products, and new ways to provide existing
services may all be explored. Audience types may include employees, customers and other
company stakeholders. World-class climate change thought leaders are recruited to present content.

(c) 2006 Customer Engagement Strategies, Inc.

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Contact Customer Engagement Strategies

To learn more about The Four Stages of Customer Interaction and Customer
Engagement Strategies, Inc., please visit http://www.customerengagement.com/,
email info@customerengagement.com or call 781-559-8202.

(c) 2006 Customer Engagement Strategies, Inc.

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