I entered the CRM industry in 1998 after a career in the technology industry, mostly with IBM. CRM seemed like an exciting concept, because it brought together elements of business strategy, technology and customer relationships.
Without knowing it, I had been a student of CRM for a long-time at IBM, because the culture of the company was customer-oriented. After all, the three IBM Basic Beliefs (established in 1962) were respect for the individual, superlative customer service and the pursuit of excellence.
As time went on in the 2000-2005 time frame, the CRM industry headed in a more tech-centric direction. I felt something was missing. At CRM conferences (DCI was the big one, back in the day), vendors were mainly demonstrating SFA. This was fine for the sales manager, but missed the larger point — how does this help customer relationships? CRM really meant Customer Revenue Management.
Around 2005 I started reading about Customer Experience Management (CEM). At first, I wondered if it was just another buzzword invented by consultants. But after digging into the topic more deeply, and conducting my own research study in 2006, my conclusion was that CEM was fundamentally different.
In my 2006 article The Next Generation of Customer Management? Customer Experience Management, I concluded that:
CEM helps the enterprise see the customer with the “right brain”—concerned with perceptions, feelings and interactions that are harder to quantify but oh so valuable, nonetheless. Instead of just looking at how valuable the customer is to the enterprise, CEM requires an inspection of the enterprise’s value to the customer. Rather than recording transactional information like leads, opportunities and average handle times, as many CRM systems do, CEM maps the experience from the customer point of view.
CRM vs. CEM: Which is the Bigger Idea?
Since that study, there’s been an ongoing battle for buzzword domination. Those that go to market under the “CRM” brand (generally tech-focused consultants, analysts and vendors) tend to say that customer experience is just part of the CRM framework. After all, one of Gartner’s 8 building blocks includes customer experience, so what more is needed?
In the CEM world, the industry has been driven mainly by consultants the past few years. CEMers tend to say that CRM is just a system you need to support certain technology-enabled experiences (e.g. contact center, web sites). CEM is the bigger concept, CEM proponents argue, because it encompasses the entire end-to-end customer experience, including all interactions, touchpoints and people. In some cases, even products!
To be sure, both concepts have evolved. In recent years, CRM has become more “social”—which could mean using social media or being collaborative, depending on who is promoting Social CRM as the next big thing. Ironically, CEM has taken more of tech slant, which has caused some consternation with CEM consultants, who fear that vendors will hijack the term and turn it into a “solution.” Major vendors like Adobe, Oracle and SAP have been pushing CEM messaging and solutions, along with some vendors in the contact center, EFM and social analytics spaces. In 2011, Forrester coined the term CXM for digital experience solutions.
So which is the dominant concept? In a recent interview, I put that question to Ed Thompson, a noted Gartner analyst who helped develop the 8 CRM building blocks a decade ago. In recent years he’s been Gartner’s go-to analyst in CEM. Ed positioned CRM and CEM “like a Venn diagram… adjacent overlapping but different.” He went on to say:
The way I tend to associate is to say it’s about roles and goals. And I would argue that CRM is quite narrow in terms of the roles. And most people would agree that CRM has something to do with sales marketing, customer service roles in an organization. In other words, the finance guys aren’t doing CRM. You could debate that, but it’s largely about those three departments. But the goals are very long, and we typically collect every six months a list of about 40 to 50 what are your goals, your CRM initiative? So, it could be acquisition of customers and cross selling and up selling and learning customer service, the campaign response rate. There’s a whole long list of things that people try to achieve. Customer experience, I would argue that the goals are narrow, along with the sub set of CRM. The goals are advocacy, satisfaction, loyalty.”
At Forrest Research, Paul Hagen wrote in an April 2011 report Beyond CRM: Manage Customer Experiences:
Business process professionals characterize CRM as “the business processes for targeting, acquiring, retaining, understanding, and collaborating with customers.” Although CRM leaders and customer experience professionals share goals like extensive customer knowledge and increased service quality, the fundamental approaches of these two disciplines differ vastly. Typical CRM efforts take an inside-out approach that serves specific business needs but does little to improve or manage customer experience.
Speaking with Forrester’s lead CRM analyst Bill Band recently, he agreed with Paul that CRM was more of an “inside-out” technology/process approach, while CEM was “outside-in” by being more concerned about how the customer perceives and feels about all interactions with a company. He also says (and I agree) that CRM and CEM “are not mutually exclusive.”
Striking a Balance: Yin and Yang
I could go on, but the point here is clear. Both CRM and CEM are important concepts, but one is not subservient to the other.
You can use my left-brain/right-brain concept, or overlapping circles in a Venn diagram. But I think yin-yang is a better way of thinking about these two ideas, recently suggested by Maz Igbal in a comment on his post The customer loyalty paradox (Part II):
The yin-yang symbol that emphasizes the complementarity of the “male” and the “female”. This is needed for a system to be in harmony over the longer term, else it disintegrates – takes some time and it does disintegrate; and “the middle way” favoured by Buddhism – this is all about balance. Balancing the short term with the long term. Balancing hard (data, metrics, analytics, IT) with the soft (people, conversations, human touch, love, compassion..). Balance between creating value for customers and value for the stakeholders in the business. Balance between the needs/reward of shareholders and that of the people who create that value through their hard work – employees.
For those struggling to position CRM and CEM, maybe this yin-yang construct will help. And if you’re searching for yet another TLA to use, I suggest Customer-centric Business Management (CBM), a term I coined a couple of years ago. Take the best of CRM and CEM thinking, drive your actions with a customer-centric strategy, and you’ll deliver value for customers and the company. Isn’t that what a good business is all about?
Further Reading:
* Yin and yang (Wikipedia)
* The Next Generation of Customer Management? Customer Experience Management (2006)
* Social CRM: Strategy, Technology or Passing Fad? (2009)
* “Social CRM” is Dead, Long Live the Social Customer Experience (2011)
* Is CRM Dead? (2011)
* The customer loyalty paradox (Part II)
Hello Bob
I love the way that you have put the picture together and I thank you for including me in your thinking and in your post.
I got value out of your post and I hope that many other peope will as well. Maybe, just maybe, we can stop arguing over who is right and who is wrong; whether CRM comes first or CEM comes first. They are just concepts. We create value when we use these concepts intelligently. These concepts have no life outside of us – how we speak (of them) and how we use them.
Maz
As always, very useful insights and thoughts to consider. This is a valuable presentation of the balancing-act struggle – between gathering, deploying, managing and acting on customer data (functional) and table-setting and continuity/consistency to provide optimal transactions and other experiences (emotional) – organizations are increasingly facing in reaching customer-centric, sales, and profit goals.
Maz’s comment states the real objective for all: creating and sustaining customer value. At the end of the day, blending CEM and CRM may be closest to what Plato described in his play, Gorgias: it is like cooking, a knack, i.e. neither art nor science, but the best of both. I tried to lay this out in my “inside-out advocacy” CustomerThink article from a few months ago: http://www.customerthink.com/article/inside_out_advocacy_creating_and_sustaining_customer_centricity_and_loyalty
Bob: Part of the challenge exists in the fact that people seem wired to think of many things in terms of versus rather than in more harmonic ways. I’m not sure why, because we often construct false trade offs. “Would you rather have (this)? . . . or (that)?” Why not both?
At the risk of oversimplification, when we purchase cars, we wouldn’t think of trading off buying critical systems such as braking and fuel injection, even though one performs deceleration and the other is critical for acceleration. Our choices are limited to the quality and performance of the components. We can’t operate a vehicle without both (although when I was 21, I would have argued about the brakes).
Similarly, as you describe CRM and CEM, tremendous friction results when companies give primacy to inside-out thinking versus outside-in–or vice-versa. Clearly, in order to sell a product, any organization’s processes must mesh with those of multitude of organizations outside of its boundaries, and that can’t be done effectively today without harmony between CRM and CEM.
Of course, that’s much, much easier said than done, so in the meantime, the discord keeps legions of consultants, and others, gainfully employed.
Hello Andrew
Being a student of various systems of thought and cultures I have noticed that the Western mind automatically goes for the either or which is a natural consequence of logic. Something is either black or white.
Life, complex systems, does not work like that. The access to workability, performance and harmony is integrative thinking. IN fact wisdom, I argue is the capacity to get, live with and prosper on paradox: the damn things is white, is black, is white and black, is neither white and black. White becomes black when the absence of light. That tells you that colour is function of light not a property inherent in the object.
Take a blind man and white, black have no meaning, no significance. Dive into this and you see that the human visual system creates colur in the presence of light.
Take a longer term perspective and you see that white given long enough becomes not white – grey, and so forth.
All systems survive and prosper on harmony. Harmony within the parts and amongst the parts (the subsystems) leading to harmony in the system. Harmony with the environment. Yet in the West we do not see the harmony. We are used to foregrounding and backgrounding – we do not see the gestalt, the whole. Then we fall into the trap of inside/outside and so forth.
Thanks for the comments!
Andy mentioned that “CRM and CEM are components of a larger engine.” I couldn’t agree more. The larger “customer-centric” engine still includes products/services — you know the stuff you buy to actually do something.
CRM is about managing customer info, which CEM is about customer interactions. But the value a customer receives is still highly influenced by whether they like the product or service they bought. So I see product/service quality and innovation as part of greater whole in delivering customer value. Not every company is like Disney where the experience is the solution.
I also think Maz is right that there is too much of the either/or mentality in the Western world. To use a car analogy, would you rather have a good transmission, reliable engine, or comfortable seating? All of the elements of car design must work together to create a pleasing product. You can’t just pick one component and upgrade without considering the rest.
Unfortunately in the CRM/CEM world, there is a fair amount of one-upmanship going on. I rarely see CRMers and CEMers interacting and learning from each other. Instead, it’s like a competition to sell their ideas as the “best” to clients/prospects. What a shame.
I absolutely agree that you need both CRM and CEM and its not a question of which is first. That probably depends on the company and their current challenges.
I tend to lean strongly into the CEM camp because it has been less co-opted by vendors pushing a particular message (seems like all great business strategies get repositioned as pure technology solutions-CRM, BPM, Content Management, etc.). Unfortunately, that less is growing all the time to the point where CEM is at high risk of being solely associated with either feedback systems or Web Content Management systems that personalize. (I’m guilty of some of this in various marketing roles I have had).
When I switch my perspective to the ideas, I see where they both fit and one really needs to other to deliver ongoing value.
Hank