What Exactly Is Customer Experience Management?

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A few months back I penned a short blog post entitled ‘What Exactly Is CRM?’. It was based upon the wrong-headed definition of CRM on Wikipedia. I offered my own simple CRM framework – the C4EB Model – as a way to look at CRM in a joined up way. The post gathered a lot of interest from CustomerThink’s readers. Apparently, many of you are as confused about the many definitions of CRM as I am.

Right now, I am getting that deja vu feeling all over again. Not about CRM this time, but about Customer Experience Management (CEM). Just for once, the reference for CEM on Wikipedia is an empty category leading off in 23 different directions! One of the directions leads to the same old CRM definition, which now says, “To comply with Wikipedia’s quality standards, this article may need to be rewritten!” Not exactly progress.

So what exactly is CEM. And how does it differ from CRM?

CRM, But Much More Than Just CRM

Although many seem desperate to dissociate themselves from CRM, this is pointless, especially in the case of CEM. CEM is clearly built on top of CRM. Just as CRM is based upon a deep understanding of what customers want and building the capabilities that deliver those wants profitably, so at a different level is CEM. The difference is in how CEM does this.

There are four core differences between CRM and CEM. The first one is how CEM takes a much broader end-to-end customer lifecycle view than CRM. The second one is how it looks at value delivery throughout the customer lifecycle. The third one is how it takes a much deeper customer touchpoint view. And the final one is how it brings the whole experience together in service of customers.

Stitching Touchpoints Together into an End-to-End Experience

CEM is much more than just CRM. Whereas CRM is usually focussed on individual marketing, sales or service transactions, CEM integrates all these touchpoints into an end-to-end experience that delivers value for customers as well as for the organisation. Creating mutual value throughout the customer experience is the key. The founding father of CEM, Lou Carbone of Experience Engineering, describes in his book ‘CluedIn’, how looking at the customer experience from an end-to-end perspective has enabled many organisations to radically improve the experience customers have doing business with them. And the value they receive. It is this value accumulated at many touchpoints over a period of time that leads to increased customer satisfaction, loyalty and profitability.

Delivering Value Over the Entire Customer Experience

Looking at the entire customer experience introduces the second difference. Whereas CRM focusses on delivering value at the point of sale (and minimising the organisation’s costs after the sale), CEM recognises that the sale is just the start of value delivery for the customer. Most value for the customer is created using the product in the weeks, months or years after the sale. Just think of the summer holiday experience which can last months from planning to enjoying. Or the automobile ownership experience which can last for many years. Organisations must be prepared to support customers during the entire ownership experience, not just upto the point where the customer has paid. After all, customers think they already bought post-sale support if they need it. They just hope they won’t. Vargo & Lusch describe this as the ‘Service Dominant Logic of Marketing’ in a recent seminal article in the Journal of Marketing. It is an idea that is revolutionising marketing.

Looking at Touchpoints Through the Heart & Mind of the Customer

The differences don’t stop with the end-to-end customer experience either, CEM also looks at each touchpoint differently too. Whereas CRM is usually focussed on the end result of a transaction, CEM brings together all the factors that drive a successful transaction from the customer’s perspective. As Berndt Schmitt describes in his definitive book on CEM, ‘Customer Experience Management’, CEM looks at how customers sense, feel, think, act and relate to the individual touchpoints in the customer experience. To groups of touchpoints that are experienced together in the experience. And to the experience as a whole. Just think of the feelings the smell of freshly roasting coffee generates in Starbucks. Or the feelings associated with your first ride on a Ducati motorbike. Sampson Lee’s Experienced Emotion Maps are a great way to look at this.

Creating an Experiential Brand Fit for Customers

There is one last big difference. Whereas CRM often focuses on customer equity at the expense of brand equity, CEM is uniquely placed to grow them both at the same time. This is often mistakenly done using the marketer’s view of the brand as the starting point. The goal of these ‘experience the brand’ programmes is for the customer to experience what the marketer thinks the brand should be. But the brand usually isn’t what marketers think it should be, instead, as Tom Asacker descibes in his book, ‘A Clear Eye for Branding’, the customer’s view of the brand is often very different to the marketer’s. Often in a negative way. And that is a problem that often leads to failure in CEM. A more honest approach to CEM is to start with customers and their wants and then to build a branded customer experience that delivers them reliably at a profit, and, and this is a big and, creates an experiential brand fit for customers.

What do you think? Is CEM more than just CRM? Or is it something entirely different?

Post a comment and get the conversation going.

Graham Hill
Independent CRM Conisultant
Interim CRM Manager

Further reading:

What Exactly is CRM?
http://www.customerthink.com/blog/what_exactly_crm

The C4EB Model of Customer Business
http://www.customerthink.com/blog/what_drives_successful_customer_business

Lou Carbone of Experience Engineering
http://expeng.com/who.htm

Vargo & Lusch on the Service Dominant Logic of Marketing
http://www.sdlogic.net/

Sampsopn Lee on Emotions Experienced at Dell & IBM
http://www.customerthink.com/article/dell_not_alone_efficiency_driven

Berndt Schmitt of the ExGroup
http://www.exgroup.com/index.php

Tom Asacker on A Clear Eye for Branding
http://www.acleareye.com/

8 COMMENTS

  1. Andrew

    Thanks for your comment.

    You raise an interesting question. In answering it it helps to go back to one of the first books on what was to become CEM, namely Jan Carlzon’s book ‘Moments of Truth’. In it, he describes a ‘moment of truth’ as a point where an organisation influences the perceptions of the customer, positively or negatively. They are key touchpoints in today’s CEM language.

    If the mess that McDonalds’ customers leaves in your local park makes you think bad of McDonalds, then it is part of the McDonalds experience. Whether it is McDonalds responsibility or not. Whether McDonalds likes it or not.

    The customer experience extends along the entire end-to-end customer lifecycle: From seeing McDonalds communications, through visiting a McDonalds, to disposing of your rubbish afterwards and leaving. If others leave their rubbish strewn all over the park, that is part of both the end of their McDonalds customer experience and the beginning of yours. Sounds unfair on McDonalds? Not really. It isn’t as though McDonalds can’t do something about it. I have seen customer education programmes about not littering in some McDonalds. And McDonalds sponsored rubbish bins outside other McDonalds. Even rubbish patrols in parks sponsored by local McDonalds. There are many ways to influence touchpoints with customers for the better.

    As Tom Asacker pointed out some time ago in his book, ‘A Clear Eye for Branding’, brands are what customers think they are, not what marketers think they are. Brands are customer-made. And the end-to-end customer experience is the brand nine times out of ten. As Charlene Li & Josh Bernoff confirm in their excellent new book (Yes, that’s a solid recommendation) ‘The Groundswell’, the same customer-made, co-creation thinking applies to much of the customer experience too. Particularly as other customers are now the biggest single influencers of customer buying behaviour in today’s networked world.

    Time for a McDonald’s rubbish patrol I think. After all, more than just the customer experience is at stake. The brand is on the line now too.

    Graham Hill
    Independent CRM Consultant
    Interim CRM Manager

    Further Reading:

    Tom Asacker on A Clear Eye for Branding
    http://www.acleareye.com/

    Charlene Li & Josh Bernoff on The Groundswell
    http://www.forrester.com/Groundswell/book.html

  2. I view Customer Relationship Management as the formulation and deployment of tactical resources (people, processes, and technology) to transfer value that a vendor produces to entities that consume that value.

    Customer Experience Management connotes a company’s effort to affect how its image is perceived across a broad spectrum of interactions and situations, and with people who buy its products and with people who don’t. My struggle is appending the word “Management” to this gargantuan and fuzzy discipline. Beyond sales training, logo design, corporate philanthropy and sponsorships, public relations outreach, there is much, much more in what a customer experiences that is simply outside of any organization’s control.

    As with any umbrella term, it’s necessary to draw boundaries, and I think those are difficult to create for CEM:

    For example, even if I’m not a McDonald’s customer, if the detritus from their meals constantly sullies my local park, my McDonalds experience is negative. If CEM can actually be defined, shouldn’t that issue fit within its aegis?

  3. Yesterday I held a business meeting with two colleagues at my local Starbucks. At one point, a Starbucks employee began sweeping the floor around our table area. For at least five minutes, the noise she created with her all-steel dustpan was so loud that it wasn’t possible for us to hear each other across our small table. I don’t think the employee was aware of the disturbance she created–or, if she was, she clearly didn’t care.

    While the noise from the dustbin surrounded us, I considered the multitude of decisions that Starbucks had to make to get that outlet operational: location selection, lighting and seating configuration, staffing, plant and beverage-making equipment, product pricing, drink recipes, inbound logistics for products, waste disposal, etc. It’s ironic to think that an important overhead task facilitated by low-cost dustbin, could render these other major decisions almost immaterial in terms of the customer experience. If cleanup at that Starbucks is so consistently noisy, I’ll select another place to meet with clients.

    And I won’t mind if the store doesn’t sit on prime real estate or have a fancy latte machine.

  4. Andrew

    What you describe happens all the time. Lots of money is spent on setting up a expensive, glossy ‘servicescape’, but it is all spoilt because thoughtless staff just operate it as though customers don’t matter.

    As you point out, they should have used quieter cleaning tools. Or they should have waited until you had gone. Or maybe they should have made it into a bit of service theatre. Or, or, or. The options are endless.

    This is but one little example of why I believe top-down, customer-driven experience design is superior to bottom-up, brand-driven design.

    Graham Hill
    Independent CRM Consultant
    Interim CRM Manager

  5. I really liked the candid explanation of CRM Vis a Vis CEM . However, its a sense of Deja vu again as i hear my initial travails in CRM space 10 years agao about being a integrated approach, customer lifecycle management etc.,

    what to me is really changing is the advent of new genration and thereby their buying preferences which are supported by tools like social web on one side and also mass commiditization on the other ..

    Brands have moved beyond product fulfillment to services fulfillment in whatever form and the point about Mutual value creation is the key in the entire CEM space ..

    To be honest this is one of the most candid and clear articulation of CRM and CEM differences

  6. Graham, you’ve often said that a brand exists only in the customer’s mind. Not in the marketer’s message.

    Well, on this forum we are all marketers for new ideas. So, it’s helpful to remember that, while we can have some influence on what people think, they are bombarded by a host of other influences that shape their point of view.

    All those influences over a period of 10 years or more resulted in “CRM” being shaped into a disappointing shadow of what it could have been. Instead of being a truly customer-centric way of doing business, CRM is generally viewed as a technology-centric, inside-out, tactical project. Something to be installed.

    But, as you noted, Customer Experience Management has arisen to fill the gap in the past three years or so. Although not a new idea (having been popularized by Jan Carlzon 20 years ago in his book “Moments of Truth”), 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.

    This quote is from my article, The Next Generation of Customer Management? Customer Experience Management written in 2006.

    I think CEM is a critical development in what I’m now calling customer-centric business management — CBM for those who love acronyms. But, CEM is not the end game any more that CRM was. Leading companies are now developing strategies for “customer collaboration” — including use of the social media and co-creating products and services with customers.

    Bob Thompson, CustomerThink Corp.
    Blog: Unconventional Wisdom

  7. Gooty, Bob

    How right you both area. CEM is the next big TLA after CRM. It is a stepping stone in an evolutionary process (in a Darwinian rather than a Lamarckian sense) towards something more effective for business. Maybe even something more effective for customers too. As Gooty suggests, the current best-bet for the post-CEM era is Customer Co-Creation (CCC), where customers are closely involved in business innovation, marketing, sales and self service.

    Evolution is relentless and the post-CCC era is already starting to take shape, in the form of Peer-to-Peer Production (PPP). The reduced transaction costs brought about by cheap, distributed, multi-sided market enabling technologies like the Internet and in particular, the mobile Internet, enable customers to transact with their peers without the direct involvement of companies. The companies just provide indirect platforms for the transactions to take place (multi-sided markets), just like credit card companies enable card-based borrowing, mobile phone companies enable conversations, and eBay and Amazon enable commerce.

    I wonder what evolution has in store for customers after CEM, CCC and PPP. Any ideas? Alternatively, we can always wait and see. I have a feeling we won’t have long to wait.

    Graham Hill
    Independent CRM Consultant
    Interim CRM Manager

    Further Reading:

    The Three Ages of Customer Business
    http://72.32.209.80/blog/the_three_ages_of_customer_business
    (Posted just over a year ago!)

    Chris Lawer on Customer Co-creation
    http://chrislawer.blogs.com/
    (Chris is doing a PhD in Co-Creation at Cranfield University and is easily one of the best thinkers and doers on the subject)

    Yochi Benckler on Peer-to-Peer Production
    http://www.benkler.org/wealth_of_networks/index.php/Main_Page

  8. CEM is about managing customer experience, and CRM customer relationship. The only difference between the two is the alphabet in the middle. Luckily, customer is still the focus, but both acronyms suggest that the firm should manage its customers.

    What is the relationship between experience and relationship?

    Relationship is made up of touchpoints. Touchpoint is every point of interaction, internal and external, seen and unseen. It is a point (what/who) that is touched via any channel (where/how) for a purpose (why). With touchpoint comes experience. Experience happens at touchpoints. As David Armano writes in his blog, “touchpoints are experience-driven with the quality of the experience determining the effectiveness of a touchpoint.”

    How is relationship built?

    It is mainly built on value, trust and mutual respect. Since it is made up of touchpoints, it is usually subjective and emotional-driven.

    Should customer be the focus?

    If service profit chain is right, then should firm focus on internal customer instead?

    Do customers want to be managed, or do they want to be in charge and manage the relationship?

    What’s next?

    Daryl Choy
    Make Little Things Count
    wisdomboom.blogspot.com

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