Customer Experience Defined

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

It goes 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 experiences that bolster the customer relationship.

The Customer Experience is the customers perception of the brand based on the totality of interactions. Customer Experience Management is the company's strategy to deliver relevant, personalized, contextual and predictive customer experiences.

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. Customer experience strategy and solutions focus more on the customer perspective, looking inward toward the company and seeking to leverage what the customer wants in order to develop a stronger relationship with the brand. CXM 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, CXC 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 advocates.

The Japanese are hailed as experts at CXM 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 CXM providers. These are the companies that implement CX 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 CX 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. CXM aims to take that personalized approach and codify it so it can be applied across all company locations and customer touch points.

The reason for more attention to this strategy is simple. Most companies don't do as well at managing the CX as they think. When Bain and Co. surveyed 362 companies they found that 80 percent of them thought they delivered a superior CX. 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 CXM pays off. Strativity Group surveyed over 800 corporate executives and found that the companies which have increased their investment in CXM report higher customer satisfaction, customer referral rates, repeat purchases and customer share. A similar survey of European companies by Chordiant found that performance in market share, customer retention, profitability and customer satisfaction was directly related to CXM performance.

As CXM evolves, a new generation of CX software tools has emerged to help companies manage their program. Initially, CX software was largely separate from CRM software. However, as the technology market matures CX is morphing with CRM.

A basic principle of CX 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, standardized 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 similar to the metrics used to evaluate CRM effectiveness, although they may have a 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 CXM systems.

Beyond that, CXM software applications devote considerable attention to measuring customer sentiment and figuring out how to improve interactions with the company from the customer's perspective. CXM systems aggregate interactions, transactions and industry metrics to understand how business process changes can predictably achieve increased customer satisfaction and loyalty.

In CXM software systems, the customer feedback provides much of the basis for data, analysis and actionable follow-through. CXM solutions look beyond the processes of serving customers and define processes to exceed the customers expectations and achieving memorable experiences.

CXM systems 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 CXM 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 CX software applications are strong on features that let you analyze the data and present the results immediately to the people who can act upon them, from executives, to sales people, to marketers, to customer service representatives (CSRs) and beyond. Most CXM software programs perform analysis in near real-time and display the results in dashboards, data warehouses, pop-up guided workflows and other business intelligence tools appropriate to the employee receiving the data and interacting with the customer.