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«Decision Sciences Volume 35 Number 3 Summer 2004 Printed in the U.S.A. Ability of Experience Design Elements to Elicit Emotions and Loyalty Behaviors ...»

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Decision Sciences

Volume 35 Number 3

Summer 2004

Printed in the U.S.A.

Ability of Experience Design Elements

to Elicit Emotions and Loyalty Behaviors

Madeleine E. Pullman†

School of Hotel Administration, 338 Statler Hall, Cornell University, Ithaca, NY,

e-mail: mep58@cornell.edu

Michael A. Gross

Department of Management, Colorado State University, Fort Collins, CO 80523-1275,

e-mail: michael.gross@mail.biz.colostate.edu

ABSTRACT

Experience design, an approach to create emotional connection with guests or customers through careful planning of tangible and intangible service elements, has gained popularity in many hospitality and retail businesses. With ever-increasing competition, service providers seek to develop loyalty by aggressively designing, continuously innovating, and managing their customer experiences. This article explores the relationship between different service elements designed to create enhanced experience and customer loyalty.

In addition, it looks at emotional responses as mediating factors between the physical and relational elements and loyalty behaviors. A model is proposed and tested with a VIP hospitality tent for an internationally renowned touring circus. Results of the study indicate that while a few design elements directly affect loyalty behavior, the relationship between most design elements and loyalty behavior is strongly mediated by eliciting certain types of emotional behavior. This connection has implications for the focus of service managers’ efforts in different environments.

Subject Areas: Emotion and Loyalty Modeling, Experience, and Service Design.

INTRODUCTION

Recently, there has been increasing interest in creating “experiences” for customers, particularly for those in the service sector. Along these lines, a number of authors argue that the service economy has been transformed into an attention economy (Davenport & Beck, 2002), entertainment economy (Wolf, 1999), a dream society (Jensen, 1999), emotion economy (Gob´ & Zyman, 2001), or an experience econe omy (Pine & Gilmore, 1998, 1999; Schmitt, 1999). The authors indicate that as commoditization of many service offerings continues, companies must find new ways to achieve a competitive advantage particularly by focusing on design and management of customers’ experiences. Typical examples of new service experience concepts are the following: boutique hotels, such as Starwood’s W hotels or † Corresponding author.

552 Ability of Experience Design Elements to Elicit Emotions and Loyalty Behaviors Ian Schrager’s unique properties; “Try and Buy” retail concepts, such as American Girl Stores, Xscape (U.K.), or Case Tomahawk Customer Experience Center;

theme park retail, such as Toys R US, New York City flagship store, and full experience portfolios, such as those provided by Lego International through their theme parks, Web sites and user groups, and extensive products.

While experience design authors argue that well-designed experiences build loyalty (Davenport & Beck, 2002; Gob´ & Zyman, 2001; Pine & Gilmore, 1998, e 1999; Reichheld, 1996; Schmitt, 1999), the relationship between different service design elements and loyalty behavior warrants further examination. Experiences are inherently emotional and personal; many factors are beyond the control of management such as personal interpretation of a situation based on cultural background, prior experience, mood, sensation seeking personality traits, and many other factors (Belk, 1975; Gardner, 1985; Hirschman & Holbrook, 1982; Zuckerman, 1971). Nevertheless, within management’s domain, the service designer can design for experience and operations manager can facilitate an environment for experience by manipulating key elements. A considerable amount of marketing research has examined how brands create experiences (Gob´ & Zyman, 2001; Schmitt, 1999;

e Wolf, 1999; Zaltman, 2003). Limited research focuses on the influences of experience design and management in services. In addition, minimal research exists concerning the mediating role of emotions between experience design elements and customer loyalty behaviors in the evaluation of services (Cook et al., 2002). Our study’s major contribution is to develop further understanding of this relationship and provide a useful framework for experience service design and management.

The purpose of this article is to improve management understanding of experience

design by addressing the following questions:

r How do services create an experience that can influence loyalty behaviors?

r What role do customer’s emotions play?

r What specific service design elements influence desired emotions and loyalty behaviors?

r What are the implications for service managers?

r Can we learn lessons in one sector and translate this knowledge to other service sectors?

To address these questions, we first look at definitions of experience and the current literature on designing and managing experiences. Next, we develop an exploratory framework to integrate the vital pieces of experience design with customer loyalty behavior. We test the proposed framework with a VIP hospitality treatment for an internationally renowned touring circus company. We then analyze and discuss the managerial and research implications of the model and experimental results. In addition, we offer suggestions for future research.





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“experience,” we first look at definitions of experience. Early research by Dewey (1963) focused on the event qualities of an experience. According to this work, engaging in an experience involves progression over time, anticipation, emotional involvement, a uniqueness that makes it stand out from the ordinary, and it reaches some sort of completion. Gupta and Vajic (1999) state that an experience occurs when a customer has any sensation or knowledge acquisition resulting from some level of interaction with different elements of a context created by a service provider.

Successful experiences are those that the customer finds unique, memorable and sustainable over time, would want to repeat and build upon, and enthusiastically promotes via word of mouth (Pine & Gilmore, 1998, 1999).

Several researchers have focused on extraordinary or optimal experiences.

Csikszentmihalyi (1991, 1997) refers to optimal experiences as “flow.” Flow experiences offer absorption, personal control, joy, values, spontaneity, and a newness of perception and process. The activity or goal object completely absorbs one’s attention and the experience has a level of skill and challenge. Arnould and Price (1993) define extraordinary experiences as those characterized by high levels of emotional intensity (usually triggered by an unusual event) and disclosure over time. The customer is never sure what the exact outcome will be due to the context, behavior of other customers, and unclear expectations. According to McLellan (2000), the goal of experience design is to orchestrate experiences that are functional, purposeful, engaging, compelling, and memorable. Similarly, Pine and Gilmore’s (1998) richest experiences have a “sweet spot” or elements of active and passive customer participation and immersive and absorptive connection in the context. The context should be mutable so each customer can choose the extent of participation and connection with people, physical objects, or technology.

They stress that all context elements should have a consistent theme and engage all senses. Similarly, Berry, Carbone, and Haeckel (2002) discuss the importance of clues of quality in experience design. These clues emanate from people and tangibles and communicate important themes or mission of an organization. For example, the clues for a medical facility such as the Mayo Clinic should signal competence, caring, and integrity (Berry & Bendapudi, 2003). Within a manager’s control, there are several common ideas relating to the design and management of customer experiences. Properly executed experiences will encourage loyalty not only through a functional design but also by creating emotional connection through engaging, compelling, and consistent context.

Context Context is the primary concern for experience design and management. Previous researchers have alternative definitions for context. Carbone and Haeckel (1994) differentiate context from a service’s performance by design clues or elements emitted by the service and the environment. Similarly, Gupta and Vajic (1999) define context as the physical and relational setting where the customer consumes the service and everything that the customer interacts with in that setting. According to Bitner (1990, 1992, 2000), context is the “servicescape” and dictates what the organization should consider in terms of environmental dimensions, participant mediating responses (cognitive, emotional, and physiological), and employee and 554 Ability of Experience Design Elements to Elicit Emotions and Loyalty Behaviors customer behaviors including staying longer, expressing commitment and loyalty, spending money, and carrying out the purpose of the organization. Here, the social environment is an important dimension of the servicescape because people within a physically built environment can shape and influence the physical space and its impact (see Baker, Grewal, & Parasuraman, 1994; Baker, Levy, & Grewall, 1992).

Particularly, memorable context allows for different levels of customer participation and connection with the event or performance both through relational and physical elements (Pine & Gilmore, 1998). Context design allows the guest to choose between passive participation (not affecting the performance outcome) and active participation (helping to create the experience). Similarly, context designers affect the level of guest connection by allowing guests to stand on the sidelines and absorb activities or immerse them in the center of activities with all the accompanying sensory stimuli (Pine & Gilmore, 1998). Our model contributes to the experiential design framework by further explicating how the service provider “creates” a loyal relationship with the customer by manipulating the social and physical environment.

Similar to previous research addressing elements of experiential design, we propose two primary components to context: physical and relational. Carbone and Haeckel (1994) refer to physical context as “mechanics clues” for sights, smells, sounds, and textures generated by things. They refer to relational context as “humanics clues” for those behaviors emanated from people. From this perspective, managing customer experience means orchestrating all the “clues” that people detect so that they collectively meet or exceed people’s emotional needs and expectations in addition to functional expectations (Berry et al., 2002). From a service operations design perspective, service design factors such as location, facility layout, product design, scheduling, worker skills, quality control and measures, time standards, demand and capacity planning, industrialization level, standardization of service offering, customer contact level, front line personnel discretion, sales opportunity, and customer participation affect both context elements (Metters, King-Metters, & Pullman, 2003).

The particular context of this study is a VIP hospitality tent for an internationally renowned touring circus. Traditionally, hospitality tents or venues are luxury environments for socializing, eating, and drinking before, during, and/or after an event. Golf tournaments, ski competitions, theatre performances, pro sports, or fashion shows typically use these venues. Today, VIP experiences are key revenue generators for many performance arts and sports venues due to limited perishable capacity, competition from alternative entertainment options, and ticket price sensitivity (Barnes, 2000; Boraks, 2002; Buzalka, 2000). Because of premium pricing associated with these venues, increasingly sponsors or owners examine different context elements to see where they will get “bang for the buck.” Hence, VIP venues have increasingly become the focus of experience design with the goal of creating memorable guest experiences. Because the venues are often temporary (set up specifically for an event, moved, or changed for other functions) or take up significant space relative to regular seating, the design and management of context elements can dramatically affect the operation’s management and cost.

Pullman and Gross 555 The industry used for the study, a touring circus company, recently introduced a new VIP tent concept with many experiential context elements. Although VIP guests pay a premium of $100 for the tent experience, the increased cost and complexity of the new service delivery reduced profit margins considerably. For example, large special effects and lounge seating required additional trucks and setup time; special interactive entertainers created additional cost through costumes, salaries, and yearly living/touring expenses; and carefully designed food and beverages created increased management costs for selection, materials, labor, quality control, and training costs of touring city caterers. The company was considering an international rollout of the new tent concept but needed to determine what to modify for both improved margins and loyalty behavior.

As seen in the previous review of experience design literature, the key context design elements are (1) opportunities for customer interaction with other people and (2) design or atmosphere that conveys certain messages or themes. In the next sections, we will explore these conceptual definitions and their relevance to the specific VIP tent context.



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