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Rick Cook Customer Experience Management Explained

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By Rick Cook

Customer Experience Management (CEM) is the next logical step beyond Customer Relationship Management (CRM) in managing interactions and relationships with your customers. CEM takes the idea of CRM and either extends it or turns it completely inside-out, depending on how you look at it.

Customer Experience Management attempts to go beyond CRM strategy by understanding how the customer views the totality of interactions with the company and then how the company acts upon that understanding to further engage the customer and improve the customer experience.

CRM strategy places a high value on customer service and customer satisfaction, but it is still largely outward looking toward the customer and focused on the enterprise. CEM strategy focuses more on the customer perspective, looking inward toward the company and seeking to leverage what the customer wants along with the nature of the customer's interactions with the enterprise. CEM solutions make the customer the center of the universe and focus on meeting the customer's needs rather than just selling goods or services.

As the name implies, Customer Experience Management aims at co-managing the customer's total experience with your company. The goal is to provide not just an acceptable level of service for customers, but a consistent, personalized and rewarding experience that's so good it turns customers into committed loyalists.

The Japanese are hailed as experts at CEM strategy and implementation, especially in the retail industry. Much of Japanese business practice is aimed at making sure each customer's dealings with the company are as pleasant and fruitful as possible. This goes hand in hand with a Japanese goal of building long-term relationships with every customer and the emphasis placed on customer loyalty.

The United States also has its share of globally cited best in class CEM providers. These are the companies that implement CEM strategy from the top of the organization and empower staff to go the extra mile to give their customers the best service possible. For example, Nordstrom's department stores has built its reputation on providing personal service to its customers. Results from Nordstrom's CEM adoption include exceptionally high customer repeat purchases, the highest revenue per square foot in the retail industry and an outstanding customer centric reputation among retail shoppers. CEM aims to take that personalized approach and codify it so it can be applied across all company locations and all customer touch points.

The reason for more attention to this strategy is simple. Most companies don't do as well at managing the customer experience as they think they do. When Bain and Co. surveyed 362 companies they found that 80 percent of them thought they delivered a superior customer experience. When independent consultants surveyed the customers, they found that only 8 percent rated their experience as superior. This level of discrepancy is typical among many companies and industries.

The low customer rating is bad enough, but the disconnect between the companies' rating of themselves and the customers' rating of the companies reveals something worse. Most of these companies were seriously out of touch with their customers.

There's a growing body of evidence that Customer Experience Management pays off. In late 2009, Strativity Group surveyed over 800 corporate executives and found that the companies which have increased their investment in CEM between 2006 and 2009 report higher customer satisfaction, customer referral rates, repeat purchases and customer share. A similar survey of European companies by CEM software maker Chordiant found that performance in market share, customer retention, profitability and customer satisfaction was directly related to CEM performance.

As customer experience management has emerged as an integrated discipline, a new generation of CEM software tools has emerged to help companies manage their CEM effort. Although these new business software systems are similar to CRM software, the focus and extent of these offerings makes them significantly different. CEM software systems are a compliment to CRM systems, not a replacement.

One basic principle of CEM software is to centrally manage all the customer's contacts with the company, no matter what the channel. Information on everything from sales visits to email campaigns to call center interactions and customer feedback is centralized and readily available to anyone in the company who is dealing with that customer.

That information is used not only to serve the individual customer but to develop a series of metrics that apply to customers overall. Many of these are basically the same as the metrics used to evaluate CRM effectiveness, although they have different focus and implications. Other performance indicators such as the percentage of customers who say they are satisfied or highly satisfied less the percentage of customers who are dissatisfied are characteristic of CEM systems.

Beyond that, CEM software applications devote considerable attention to measuring the customer's response and figuring out how to improve interactions with the company from the customer's experience and perspective. CEM systems aggregate interactions, transactions and industry metrics in order to understand how business process changes can predict and achieve increased customer satisfaction and activity.

In Customer Experience Management software systems, the customer feedback provides much of the basis for data, analysis and actionable follow-through. CEM solutions look beyond the process of serving the customer to the customer's perception of the process, and the company behind it. CEM systems try to gather as much feedback as possible by employing surveys and other customer response tools at every touch point where the customer interacts with the company. Needless to say, complaints are taken very seriously in the CEM philosophy and every effort is made to learn from them and improve all aspects of the business.

Collecting the data is only the beginning as CEM software applications are strong on features that let you automatically analyze the data and present the results immediately to the people who can act upon it, from executives, to sales people, to marketers, to customer service representatives (CSRs) and beyond. Most CEM software programs attempt to perform the analysis immediately and display the results through dashboards, data warehouses, pop-up windows and other business intelligence tools appropriate to the employee receiving the data and interacting with the customer. End

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Comments (2) — Comments for this page are closed —

x Jim Earlsmay
  Too many companies fail to recognize that the customer experience stands heads and shoulders above company messaging, marketing and advertising. Customers have learned its less about what companies say about themselves and more about what their customers say about them. These same companies throw large investments at marketing, but try to run customer service on the cheap. It's shortsighted and contributes to customer dissatisfaction and churn. Instead they need to modify their investments and make marketing part of the customer experience solution. In multiple studies over, consumers rank word of mouth as more than twice as believable and important as marketing or advertising. More than 9 out of 10 customers state they are influenced in making a purchase decision based on an independent recommendation. With increased social networks and a willingness to share both positive and negative customer experiences with the world, that makes nearly every customer of every company a powerful marketing source capable of directly influencing top line revenues—for the positive or the negative—depending upon their customer experience.

Guest Mimi Sasen
  Products are at parity. When products do achieve differentiation, the advantage is temporary as competitors will copy the advantage in short order. A consistently rewarding customer experience remains the differentiator that buyers associate with at an emotional level.


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Research on customer experience management by Bain and Co. reveals that most companies don't do as well at managing the customer experience as they think they do. When Bain and Co. surveyed 362 companies they found that 80 percent of them thought they delivered a superior customer experience. When independent consultants surveyed the customers, they found that only 8 percent rated their experience as superior.


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Customer Experience Management

While CRM solutions focus on sales, marketing and support from the company perspective, CEM has emerged to focus on customer needs and desires. CEM software solutions integrate strategy, processes and technology to optimize each customer experience. The increased alignment delivers increased customer activity, loyalty, advocacy, referrals, revenue and customer share.


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