Publications

Book Chapter

In many consumer-intensive (B2C) services, delivering memorable customer experiences is often a source of competitive advantage. And yet, there exist few formal guidelines to design the structure of such experiences.

In this chapter, the authors introduce a utility-based model of customer satisfaction when customers are subject to acclimation, satiation, and memory decay. The authors then review and extend principles for optimizing the structure of an experience to maximize customer satisfaction; specifically, the authors characterize the optimal sequence of activities, the optimal activity selection, and the optimal information policy about an uncertain outcome.

The authors find that, in general, the optimal experience structure is non-monotone in service levels and makes use of breaks/intermissions to create contrasts and reset satiation levels. However, in many extreme cases, the authors show that a crescendo design is optimal.

The authors then discuss the implications of their framework for quality management in services, especially as it relates to a potential gap between ex-ante expectation and ex-post satisfaction, and for monetizing customers’ utilities derived while anticipating or recalling the event.