CRM vs CXM
Several of the major CRM software publishers are changing their CRM messaging to either append or replace what we've been calling Customer Relationship Management since about 1992. The new term that's in vogue is Customer Experience Management—and neither the term nor its acronym (CEM, CXM or just CX) have a shared understanding or consensus definition; but such is the case with innovation and new business strategies.
To begin with some perspective, and a starting point to compare and contrast, lets revisit what I consider generally shared definitions of both CRM and CXM.
Customer Relationship Management is a business strategy directed to understand, anticipate and respond to the needs of an enterprise's current and potential customers in order to grow the relationship value (again, I say generally accepted understanding as after more than two decades of using the term the industry still has variations).
Customer Experience Management includes both the individual experience in a single transaction as well as the sum of all experiences across all touch points and channels between a customer and a supplier over the duration of their relationship.
So Why The New Nomenclature?
Two factors are contributing to the drive for CXM: The shift in control from seller to buyer and the need to achieve a sustainable competitive advantage. Both of these factors seek to apply superior customer service in new ways and therefore require new thinking (along with strategy, process and technology) to achieve what has thus far been an elusive objective.
Now that there's no denying that the social communication revolution has shifted the balance of power from suppliers to customers, business strategies and information systems implemented with "control" in mind are no longer effective.
Lets face it, CRM has a troubled history. In my podcast discussion last week with Forrester analyst Kate Leggett, she noted the issues quite succinctly—technology without accompanying strategy, silo'd software use, troubling implementation failure rates, the list goes on.
The reality is that for far too many CRM adopters, CRM has been the tool used to exercise governance, or oftentimes outright control, over customer facing staff with little regard to engaging, collaborating or satisfying customers—or designing processes and outcomes from the customers' perspective (i.e., from the outside-in instead of the inside-out).
Instead, CRM software has been the application to give line of business managers visibility into staff performance—to see how many sales activities were performed yesterday, how many pipeline accounts haven't been called this week and why the forecast fell short again. In the contact center, CRM systems go so far as to employ prescriptive call scripts and decision trees so agents don't have to think or exercise judgment (and that's believed to be a good thing).
In fairness, leveraging CRM systems to measure performance and link system automation with organizational objectives is a much needed capability, but off the mark when the overarching objective of a customer-centric business strategy is nowhere to be found, and insufficient to deliver consistently superior customer service with every customer interaction.
So What Does CXM Bring to the Party?
CRM software has been successful as the customer system of record—in capturing, storing, processing and sharing data for staff management, process efficiency and business analysis. But of course these goals provide little direct benefit for customers.
CXM moves the focus from using software tools to control customers and the staff that serve them, to applying technology to support a holistic customer-centric strategy and deliver relevant, personal and superior customer service to achieve competitive advantage.
CXM technology moves the focus from data management to applying customer information at exactly the time and place it can be leveraged to better deliver consistent CXs that delight customers. CXM is more qualitative than quantitative with an underlying capability that can also make CRM information more actionable and deliver better customer outcomes.
Where CRM systems have struggled to make customer data actionable at the point and time where it can applied to benefit a customer interaction, CXM completes the information journey for a positive CX and measurable benefit.
In several ways, CXM is intended to deliver the last mile of CRM—the intersection of customer knowledge with customer fulfillment—and the capability to deliver that customer information across channels and devices at the exact time and location where it can be leveraged to positively affect a customer experience.
Why CX Now?
While the benefits of CX programs include repeat business, increased share of wallet, customer loyalty, customer advocacy and other measurable paybacks, the reality is that implementing CX strategies is not just a function of profit motives, but a matter of survival in increasingly competitive markets. To survive, companies must center the customer in front of all else and design products, services, fulfillment and support from the customer perspective.
CXM has made its way to the top of the CEO agenda. An IBM Global CEO Study cited "getting closer to customers" as the #1 priority for CEOs over the next 5 years. A Bloomberg Businessweek survey discovered that "delivering a great customer experience" has become the new imperative—with 80 percent of the companies polled rating CX as a top strategic objective. While the concept of CXM is over a decade old, the dual impact of the global economic slowdown and the rise of social customers have collectively accelerated the strategic need for CX from the top of the organization.
Companies have also recognized business process efficiencies only get you so far. Further, mediocre, inconsistent and undifferentiated customer service is an invitation for your customers to shop their purchases with your competitors.
Customer expectations are rising and it is increasingly easier for customers to switch suppliers. CX objectives and programs address the business problem of commoditization by delivering a consistent and differentiated customer experience which may be the last sustainable competitive advantage.
What About My CRM Investment?
The core functions performed by CRM software systems aren't going away.
Customer management systems—whether called CRM or by another name—are essential as the customer system of record. These applications are needed to collect data from every source, segment that data into manageable data sets, make sense of the data (discover correlations, patterns, insight and opportunities) and make it available for delivery to the resource that can consume it or use it to benefit a customer interaction or other organizational goal.
The maturation cycle of advancing from customer data to customer interaction is getting more complex. Tracking customer demographics and transactional history is the starting point. Recording customer preferences, adding unstructured and social data, supporting mobile and other channels, and linking all this data so that it is injected to the right business process at just the right time to benefit customer interactions dramatically increases the complexity.
In the battle for customers and the public skewing for poor customer service, CRM systems are even more essential to bring data management, process automation and business intelligence together in a way that manages this complexity and aids the customer data to customer interaction cycle.
CRM software will continue to be the workhorse that captures, churns and delivers what is needed to support CX initiatives—and further integrate or compliment purpose-built CX applications which focus on collaboration, communication, personalization and specific customer interaction outcomes.
CXM is less about a new software category to replace CRM and more about solving a decades old CRM software limitation of delivering the right data at the right place and completing the last mile of the customer interaction.
Lastly, CRM and CXM applications are not necessarily separate and over time you should expect the two to morph.
What's Next for CX?
CXM is still in early evolution. There will be variations that cause many business leaders to wonder if the whole concept is hyperbole or a potential game changer.
Make no mistake, the rewards are clear, measurable and sustainable. In a Forrester study titled The Customer Experience Quality Framework, survey respondents shared that the quality of the customer experience impacts loyalty (81%), advocacy (81%) and increased spending (73%).
Companies that succeed in delivering consistently positive CXs will enjoy increased referrals, loyalty, advocacy, customer share, repeat business, top line revenue and vocal advocates promoting the brand in online and offline channels. Companies that sit the sidelines will become the source for their forward looking competitors to secure net new market share.