CRM Thought Leader Denis Pombriant In His Own Words

Denis Pombriant CRM Thought Leader

The Integral Relationship of CRM and CXM

CRM Thought Leader Denis Pombriant of Beagle Research discusses the integral relationship between Customer Relationship Management and Customer Experience Management, and shares some practical advice and industry examples for those planning to implement a CX program—including psychological factors such as the prevalence of buyers who make business decisions for emotional reasons.

"To improve the customer experience, you must build new products and your whole business around the customer. Just like Quality Control initiatives of 30 years ago, Quality is something that has to be built in, it isn't something you can add as the last step in the process."

— Denis Pombriant

Key take away points in the discussion with CRM Thought Leader Denis Pombriant:

  • Customer Relationship Management (CRM) is a relatively mature business strategy, and as such is seeking new innovation at a category level to deliver incremental value. Customer Experience Management (CXM) is extending CRM for practitioners and CRM software vendors in order to deliver additional value and provide differentiation in a crowded marketplace.
  • Customer Experience Management is a business response to provide differentiation, especially in commoditized markets.
  • CXM planning should begin with an internal evaluation to identify either business opportunities to improve upon or business problems to eliminate.
  • Daniel Kahneman, a Nobel laureate, provided a foundation for behavioral economics and described four combinations in which a vendor and customer interact—rational to rational, emotional to emotional, rational to emotional or emotional to rational. Both the vendor and customer may approach their interaction in either a rational or emotional state of mind. For vendors to recognize their customer mentality is key to advancing a successful customer experience, but beyond that, Kahneman identified that about two-thirds of the time, customers approach the interaction on an emotional plane, which further amplifies the opportunity and impact of a customer experience program. Perhaps this lends to the old sales management saying that "People make business decisions for emotional reasons."
  • A research study by Denis a few years ago suggests that even B2B buyers make high capital expenditure decisions based on emotional reasons. In that study, Denis surveyed Siebel Systems CRM customers to determine if they performed a needs analysis prior to their purchase. Somewhat surprisingly, only 51% did perform such an analysis. The remaining half made made their decision on an emotional level—for example, because their competition was buying Siebel, because they were making a brand purchase or because of other emotional criterion. Not so surprisingly, the Siebel CRM buyers who did not perform an up front needs analysis also rated the CRM software system as less effective than those buyers who did perform due diligence.
  • Many companies implementing CX programs limit their participation to front office staff, such as the sales team and the contact center. However, Apple is a classic example of where the customer experience is much more pervasive throughout the company. In order for Apple to make what Steve Jobs called "insanely great products", the Apple customer experience went beyond customer interaction at the retail stores, website and customer support functions and into the company's research and development, design, engineering and promotion. Customer input to the ideation, design and manufacturing processes provided the basis to give customers exactly what they wanted.
  • Customer experience success or failure has a lot to do with when and how a CX program is planned and implemented. Companies that begin their CX program as a corporate strategy and precursor to customer facing business processes—and with clear starting objectives such as building insanely great products, achieving customer loyalty, earning customer appreciation or other measurable customer experience success metrics. tend to be successful. Companies that inject CX as a trailing process, believing they can insert quality or customer happiness at the end, tend to not be successful.
  • Depending upon your customer experience objectives, you may be able to implement a CX program with software tools you already have, such as your existing Customer Relationship Management system. Or you may find that particular CX objectives may be best managed and automated with CX specific tools.
  • Forrester has described Customer Experience Management as "a class of software solutions emerging to enable the management and delivery of dynamic, targeted, consistent content, offers, products, and interactions across digitally enabled consumer touch points". Certainly while there is a need for software automation, we must be cautious not to replicate a resurgence from the CRM era where adopters put technology in front of strategy and supporting processes, and which ultimately delivered disappointing results – and even criticism toward the strategy in general. Fortunately, the CRM lessons have been learned and well publicized. Further, implementing a CX program is generally a lesser project than implementing an enterprise-wide CRM strategy. The smaller scale and improved understanding should contribute to a better result as compared to CRM efforts of the past.

The next podcast discussion is with CRM Thought leader Laurence Buchanan.