1. World’s Largest Emotion Database: Part 1 Steven Walden Senior Head of Research and Consulting Beyond Philosophy

2. 1. Viewer Window 2. Control Panel GoToWebinar Example Interface Webinar Interface Review Beyond Philosophy © All rights reserved. 2001-2011 2

3. 3 Beyond Philosophy © All rights reserved. 2001-2011 The Beyond Philosophy Perspective Customer Experience is all we do! Thought leadership is our differentiator New Fourth book Is now available Offices in London, Atlanta with Partners in Europe & Asia Links with Academia Focus on the emotional side of Customer Experience

4. 4 We are Proud to Have Helped Some Great Organizations… Beyond Philosophy © All rights reserved. 2001-2011

5. Experience Value is Emotional Value Customer Satisfaction Emotional Signature Beyond Philosophy © All rights reserved. 2001-2011 5

7. The "principle of hedonic dominance“: after a required level of functionality is met, hedonic aspects drive consumer choice.

8. a consumer shopping for a cell phone with at least an eight-hour battery life will choose an option that offers this level of battery life over ones that do not, even if this option is much worse looking than the alternatives. However, after the required level of functionality is met, consumers shift focus almost entirely to the hedonic aspects. Thus, if all available cell phones exceeded the eight-hour battery limit, the phone that looks best will be chosen, regardless of the differences among the options in terms of battery life. Source: Form versus Function: how the intensities of specific emotions evoked in functional versus hedonic trade-offs mediate product preferences

9. The Evidence from Neuroscience 7 Beyond Philosophy © All rights reserved. 2001-2011 When making decisions in the future, physiological signals (or ‘somatic markers’) and evoked emotions are consciously or unconsciously associated with their past outcomes and bias decision-making towards certain behaviors. When a somatic marker associated with a positive outcome is perceived, the person may feel happy and motivate the individual to pursue that behavior. When a somatic marker associated with the negative outcome is perceived, the person may feel sad and act as an internal alarm to warn the individual to avoid a course of action. These situation-specific somatic states based on, and reinforced by, past experiences help to guide behavior in favor of more advantageous choices and therefore are adaptive In contrast to economic theory, the somatic marker hypothesis proposes that emotions play a critical role in our ability to make fast, rational decisions in complex and uncertain situations. Patients with damage to certain regions of the frontal lobe suffer from an inability to appreciate negative outcomes. Though they can reason logically, their decision-making ability is flawed. They have lost emotional reactivity at a high level; they can no longer sense, for instance, embarrassment or guilt or pride or shame. They have lost their ability to feel emotion relative to the future consequences of their actions and thus are no longer able to qualify their choices as "potentially good" or "potentially bad." Professor Antonio Damasio Decision-making is devoid of emotions and involves logical reasoning based on costs-benefit calculations Assumes that individuals have unlimited time, knowledge and information processing power and can therefore make perfect decisions.

10. ‘Somatic Marker’ Marketing Firms tend to see their experience as a detailed painting Customer tend to see their experience as an impression 8 Beyond Philosophy © All rights reserved. 2001-2011

11. The Urgency of Measurement 9 Beyond Philosophy © All rights reserved. 2001-2011

12. Four Clusters of Emotions Drive or Destroy Value The 2 years of baseline research produced the framework against which we will compare your experience. The baseline model identified 20 emotions clustered into 4 hidden factors and that drive/ destroy value for business. 10 www.beyondphilosophy.com Beyond Philosophy © All rights reserved. 2001-2011

13. 11 Endorsement from the Market Research Industry The DNA of customer experience: how emotions drive value “The case for focusing on emotion as a philosophy for building a better experience for customers as presented in the book is a compelling one. The methodology for undertaking the necessary emotional analysis is practical, simple, potentially very effective, and enables organizations to benchmark themselves by sector and 'best practice'. International Journal of Market Research Vol. 53 Issue 1, Peter Mouncey, Editor Endorsement from Research Industry Magazine http://www.research-live.com/magazine/why-we-must-measure-emotion/4003434.article Independent, Peer Reviewed Endorsement from the leading Journal for Market Research Beyond Philosophy © All rights reserved. 2001-2011 Scale development with Professor Voss of London Business School, Professor Raymond (Chair of Experimental Consumer Psychology at University of Wales) and Dr Miles (ex- York University) now Quantitative Psychologist and RAND corporation

14. 12 Beyond Philosophy © All rights reserved. 2001-2011 The Worlds Largest Database of EmotionsEmotional Signature® Database (N=25,000) The 2 years of baseline research and subsequent 3+ years of client work has resulted in the world’s largest fit-for-business emotional database Benchmarking The Emotional Signature® system has been independently corroborated and validated It looks not just at the Past But perspectives on the future

15. The Findings Emotion database 13 Beyond Philosophy © All rights reserved. 2001-2011

16. Emotion Exercise 14 Beyond Philosophy © All rights reserved. 2001-2011 How would your typical customer feel towards your organization

17. The Emotional Database 15 Beyond Philosophy © All rights reserved. 2001-2011 N= 25,000 New Overall Business Index

18. Advocacy: Happy, Pleased Reduce 16 Beyond Philosophy © All rights reserved. 2001-2011 2005 to 2011 Reduction in Advocacy N= 25,000 New Overall Business Index

19. Recommendation: Safe, Focused Reduce 17 Beyond Philosophy © All rights reserved. 2001-2011 2005 to 2011 Some reduction in Recommendation N= 25,000 New Overall Business Index

20. Attention: No Change Except Pampered Reduces 18 Beyond Philosophy © All rights reserved. 2001-2011 2005 to 2011 Same levels of Attention N= 25,000 New Overall Business Index

21. Negatives: Significant Reductions 19 Beyond Philosophy © All rights reserved. 2001-2011 2005 to 2011 Reduction in Negatives N= 25,000 New Overall Business Index

22. The Failure of Perspective 20 Beyond Philosophy © All rights reserved. 2001-2011

23. Internal Bias Towards Controlling Losses 21 Beyond Philosophy © All rights reserved. 2001-2011

24. Avoid The Cost of a Negative Experience 22 Beyond Philosophy © All rights reserved. 2001-2011 Case Study: Enterprise with 2 million customers Revenue = $200,000,000 per year Average Revenue per customer = $100 per year Sources: Cherry Tree Research, Bain & Co., McKinsey, Harvard Business Review and Gartner 2,992 customers $299,200 At risk — 34%Issue not resolved 2,464 customers $246,400 Complain2% Defect — 28% 8,800 customers Poor experience22% Resolved — 38% 440,000 customers Do notcomplain98% At risk — 55%Decline in wallet share 237,160 customers $23,716,000 Positiveexperience 78% 431,200 customers 194,040 customers $19,404,000 Defect — 45%

25. But Leave the Blight of the Bland From the American Customer Satisfaction Index Looks good except when you look at the scale! 23 BeyondPhilosophy © Allrightsreserved. 2001-2011

26. Experience Psychology Frederickson (1998) suggests that positive emotions ‘broaden the cognitive and behavioral repertoire, signifying new possibilities’, while negative emotions are more action specific e.g., fear leads to flight, anger to fight. Needless to say for the business manager the positive emotion set represents the best point of competitive differentiation in a marketplace focused on controlling the negative emotions: in particular, happy and pleased which relates to the concept of achieving advocacy or total satisfaction with an experience encounter 24 Beyond Philosophy © All rights reserved. 2001-2011

27. Rational 4Ps Trade-Offs No Longer Work 25 Beyond Philosophy © All rights reserved. 2001-2011 I see the experience Price I feel wowed by the experience Product Promotion Place That feeling embeds in my memory As expected, little different from your competitors = Rational Satisfaction and declining ROI I want to return Loyalty Emotions = CLV

28. LoveMark your Experience 26 Brands are running out of juice". Love is what is needed to rescue brands. Roberts asks, "What builds Loyalty that goes Beyond Reason? What makes a truly great love stand out?” Kevin Roberts, CEO Saatchi and Saatchi Beyond Philosophy © All rights reserved. 2001-2011

29. 27 Beyond Philosophy © All rights reserved. 2001-2011 TV ad: http://www.youtube.com/watch?v=M0mXUC0cUPg

31. The increasing use of Six Sigma, Lean and other BPR initiatives has led to an increased focus of control on the negative emotional experience. This has been to the detriment of value-adding positive emotional experiences.

32. The recession has led to a cut-back in initiatives that focused on positive emotional experiences.

33. The meaning of a positive emotional experience has changed under conditions of hyper-competition. That is to say that to score highly on a word like happy requires an increased effort over and above what has happened before to match changed expectations. For this to have been the effect, firms efforts would have been minimal over the last few years to evoke a positive emotional reaction from clients and consumers.28 Beyond Philosophy © All rights reserved. 2001-2011

35. Thank You Questions or ideas?Contact Steven Walden Senior Head of Research and Consulting Email: steven.walden@beyondphilosophy.com Tel USA: +1 678-638-3050 Tel UK: +44 158-263-5007