Will CEM Grow Up Big and Strong (Like Its Rich Cousin CRM)?


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In the last year, CEM has started to get more profile, but it is still just a good idea emerging into an area of marketing thought currently dominated by CRM. A quick check on Google elicits approximately 250 times more listings for CRM as it does for CEM. According to the paid search engine Overture (now owned by Yahoo!), for every one person searching on CEM almost 90 search on CRM.

Yes, CEM is currently a poor cousin to CRM. If it is to grow up and become a powerful business tool it must move out of marketing and directly link itself to business outcomes.

Having actively worked in CEM for the past three years, I believe that there are four constraints on CEM:

  1. Organizations view customer experiences and business value in isolation
  2. Organizations still measure the wrong outcomes.
  3. Organizations don’t know what drives behavior
  4. Organizations are waiting for perfection

Here’s how they hold CEM back from their full potential.

Organizations view customer experiences and business value in isolation

Bernd Schmitt’s often-quoted definition of CEM as “the process of strategically managing a customer’s entire experience with a product or a company” (Customer Experience Management, The Free Press, New York, 2001) is flawed to the extent that it doesn’t explicitly connect the experience to business outcomes.

Forget the motherhood statements. Let’s get practical. We are all trying to meet company goals, whether they be revenue, profit or market share. If we can’t demonstrate how our investment in customer experience improves those business outcomes, then we’re not going to be here very long.

As an example of this type of gap, we recently worked with a financial services organization that conducts tens of thousands of customer surveys a year, gathering a range of experience data. Yet, at no time did the company link the survey data with customer records and profitability patterns, even anonymously. As a result, company leaders could tell you volumes about the customer experience but nothing about the incremental business value of that experience.

In order to get traction, the customer experience, the cost to implement and the business benefit need to be directly linked and stated in cold hard terms.

Organizations still measure the wrong outcomes

Thankfully, some companies are starting to see that customer satisfaction scores are almost meaningless in predicting customer behavior. However, even with a range of research to support this view (see Fredrick Reichheld’s 2002 article in the
Harvard Business Review, The One Number You Need To Grow), many still swear by them. Customer satisfaction ratings will stay around for awhile, because they are integrated into so many KPIs and bonus plans. But satisfied customers are now just table stakes: You have to have them, but they don’t differentiate you.

So what should you measure? Start with something useful: demonstrated customer loyalty. In other words, how do individual customers actually behave in terms of re-purchase, customer lifetime and customer profitability? They are a basis for understanding the value of each customer and in turn the value of their experience with your company.

Remember, if you don’t measure the right outcomes, you will be forever chasing the wrong drivers.

Organizations don’t know what drives behavior

I’m still flabbergasted by the number of organizations that collect immense amounts of data (transactions, web stats, customer surveys) but fail to analyze it to understand which elements of the customer’s experience drive behavior. If you don’t know which customer experiences drive behaviour, how can you do any customer experience management?

One of our clients undertakes rolling six monthly customer surveys. A few surveys ago, we identified that “documentation” was a key driver of client discontent and gave them some concrete suggestions on changes to make. Over the course of six or eight months, the organization resolved the issues, and the score lifted. This resolved customer discontent and reduced help desk support requirements.

In another case, a credit card company was about to build a new call center to reduce customer hold times, because a survey indicted that it was a driver of customer satisfaction. Some additional focused research and analysis showed that, yes, customers did want the phone answered quickly and it wasa driver of customer satisfaction. But it was only a 1 percent driver of the key customer behavior, loyalty. There were many more important things to do first.

Understanding which customer experiences drive customer behavior allows you to focus your attention on the few important areas, not the unimportant many areas.

Waiting for perfection

If I had 10 cents for every customer who told me the organization’s data was no good or “We’re waiting until our new system (whether it be CRM or call center or data matching) is implemented,” I could retire.

The truth is that there is always something you can do with what you have now. Plus, if you get started immediately, you will have some runs on the board and be better prepared when the CRM or call center or data matching system finally arrives.

These are certainly not insurmountable barriers. If we can get CEM over them, it will be a significant driver of company profitability and value in the medium term. If we can’t, then it will become just another good idea that gathers dust.


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