Will Customer Experience Management grow up big and strong like its cousin CRM?

In the last couple of years, Customer Experience Management (CEM) has started to get more profile but it’s still just a “good idea” emerging into an area of marketing that is currently dominated by CRM. A quick check on Google cites shows approximately 250 times more listings for CRM as it does for CEM.

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

Having actively worked in CEM for the past five years, I believe that there are four areas that are currently holding CEM back from its full potential:

Viewing customer experiences and business value in isolation

Bernd Schmitt’s often quoted definition of CEM,”the process of strategically managing a customer’s entire experience with a product or a company” is flawed to the extent that it does not explicitly connect the experience to business outcomes.

Forget the motherhood statements, let us 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 they link the survey data with customer records and profitability patterns, even anonymously. As a result, they 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.

Companies 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, 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, i.e. how do individual customers actually behave in terms of re-purchase, Net Promoter Score, customer lifetime value 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.

Companies 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) and fail to analyze it to understand which elements of the customer’s experience drive behavior. If you don’t know which customer experiences drive behavior, 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. We also gave them some concrete suggestions on changes to make. Over the course of six or eight months, they resolved the issues and their score went up. This resolved customer discontent and reduced help desk support requirements.

In another case, a credit card company was about to build a new call centre to reduce “customer hold times”. The plan came about as a survey result indicating that customer hold time was a driver of customer satisfaction. Some additional focused research and analysis showed that yes, the customers did want the phone answered quickly and that it was a driver of customer satisfaction. However, it was only a one 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 and not the unimportant many areas.

Waiting for perfection

If I had 10 cents for every customer that told me their data was no good or “we’re waiting until our new CRM/call centre/data matching/etc. system to be implemented,” I could retire.

The truth is, there is always something that 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/call centre/data matching/etc. 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.