Meet the new boss: Is customer experience management the new CRM?

Meet the new boss: Is customer experience management the new CRM?

A growing number of CRM vendors are refocusing towards customer experience management. Is it the dawning of a new age for CRM or a cynical rebranding? 

When SAP held its Influencer Summit in February, the vendor revealed it would be repositioning the focus of its CRM proposition from ‘relationship’ to ‘experience’.
 
This wasn’t altogether a huge surprise. Last year, SAP executives Reza Soudagar, Vinay Iyer, and Volker Hildebrand, published a book reflecting this flavour, entitled The Customer Experience Edge.
 
Indeed, Vinay Iyer told MyCustomer.com that customer experience was “beyond” CRM in a recent video interview by BPT Partners.
 
But with other CRM vendors also hailing the age of customer experience management, it does raise the question of whether we are witnessing a sea change in CRM.
 
"Customer relationship management is the corner stone of a customer-centric approach, but as the brand needs to be able to address the customer expectations during cross channel processes, we are seeing the evolution of CRM to customer experience management," said Oracle’s Steve Fearon, vice president, applications sales development, alliances & CRM On Demand EMEA, last year.
 
Fearon’s colleague Anthony Lye, SVP of Oracle CRM On Demand, echoed these sentiments recently when he told me: “CRM is now largely seen as a tool to automate internal functions; customer experience is the stuff that touches the customer”, explaining that “the transformation of CRM to customer experience” was a big opportunity for his company. And Oracle is of course putting its money where its mouth is, having sealed a billion-dollar acquisition of RightNow.
 
Elsewhere, Adobe too has announced its entrance into the customer experience management space in the last 18 months.
 
Someone who is somewhat unsurprised by the shift is Carter Lusher, chief analyst for the enterprise applications ecosystem at Ovum.
 
“Traditional CRM is about control,” he explains. “It’s about having managers wrap their hands around the throats of the salespeople – what’s your pipeline like, are you going to get your quota this year, if not why not? For customer service and contact centres, it’s about managers having their hands around service staff – you took 17 seconds on that last call, you should have taken 14. It is about marketing managers having control over marketing campaigns and marketers – why did the campaign cost 3% more than we budgeted for?
 
“So it is about control vs empowerment. This is along the lines of Zappos – we’re going to make you as happy as possible and if that take us five minutes instead of 14 seconds it doesn’t matter. It is about developing lifetime revenue from customers rather than making this quarter’s numbers. And so there is that sort of conflict going on - control vs empower. There is the front office vs back office. There is the select few vs everybody. There is efficiency vs effectiveness. And the Oracles and SAPs are seeing that sheer efficiency is no longer the way to cut it because customers or prospects have access to too much information, it is too easy to switch, and customers and prospects have a megaphone called social media. And if they’re pissed off, they are going to let the world know that they are dissatisfied.”
 
Parochial points of view
 
This really would represent a sea change for CRM, for while CRM has ostensibly been about the customer, in many cases it has actually been more to do with managing customer-facing teams and their targets. A shift towards the customer can only be a good thing, right?
 
But there’s a problem with this new shift towards customer experience management – while a growing number of vendors are embracing CEM, they are tending to use it in quite different contexts. Unanimity there is not. “The vendors are all looking at it from their own parochial point of view,” notes Lusher. He highlights the following divisions in this new world of customer experience management:
 
  • “SAP is looking at it from the point of view that they have got the front office and the back office, so customer experience is a pervasive and consistent information issue,” he says. SAP understands that a company cannot interact consistently with a customer unless the front office and back office are tied together so that every employee that interacts with a customer has access to a complete understanding of the customer and what the firm can do for the customer to better serve them, rather than just viewing only part of the information. Lusher adds: “The idea is that if a customer calls in and asks where is their order, through the traditional CRM system, data warehousing and logistics and supply chain information, anybody can see where the order is, rather than having to transfer the customer to the warehouse, who then transfers them to shipping and so on.”
  • While Oracle addresses “a little bit of that”, its approach is more tied to the acquisition of RightNow. “It is an opportunity to improve the experience of the customer through artificial intelligence – it could just be an efficiency point of view or it could be a really huge collaboration effort, with consistent collaboration internally and externally through RightNow technology. So even though Oracle could approach it from the front and back office, they are really coming at it from the pervasive and consistent collaboration and knowledge point of view.”
  • SugarCRM, meanwhile, takes the perspective that customer experience management requires persistent and consistent access to the customer system for all employees. “SugarCRM’s view is that you shouldn’t just give CRM licenses to 3% of the company (the people in sales and marketing), you should in essence make the customer interaction system available to everybody in the organisation, so that no matter who the customer talks to, they can at least know what’s what and do a better job and give the customer an answer or give them immediate access to the right person who can solve the problem.”
  • A further perspective regards persistent and consistent use of all media channels – phone, VoIP, email, social media, etc. – so that no matter which way the customer wants to interact with the company, they can have a consistent interaction, both multichannel and cross channel. This is a view taken by some of the contact centre technology vendors.
  • Another take on customer experience management, and one that Salesforce.com subscribes to, is “internal vs external” says Lusher, where there is “pervasive and consistent collaboration internally within the organisation, and externally with customers or partners”.
Stumbling towards CEM?
 
As such, it is clear there is no consistent definition or approach across the vendors. Lusher believes we are “stumbling” towards customer experience management.
 
And the parochial approach to CEM has opened up the vendors to criticism from some concerned that the shift in focus is little more than a rebranding exercise for CRM. Colin Shaw, CEO and founder of Beyond Philosophy is just one who is worried that CEM is being misappropriated by CRM vendors.
 
In a recent article on MyCustomer.com, he warned that rebranding CRM as CEM would end in disaster.
 
“Many firms consider customer experience management the successor of customer relationship management,” he wrote. “One of the most dangerous pitfalls of this assumption is that senior leadership simply rebrands pre-existing operational functions as paradigmatic of CEM.
 
“CRM creates a data deluge of discrete, statistical information about customers. However, when CEM is properly understood, it entails a qualitative, rather than a purely quantitative, approach to customer metrics. Without a strong holistic customer focus within an organisation, CRM and other operational initiatives are simply rebranded as CEM. This misunderstood effort, which proves uneven and ineffective, thus renders CEM obsolete.”
 
Lusher agrees that unless the shift to customer experience management really involved something of substance, the cynics will be correct in their assumptions that it is merely a rebranding exercise.
 
But at the same time, he recalls the emergence of another technology field that was similarly fragmented when it was first categorised and has since carved out a $14 billion market for itself.
 
“I used to be a Gartner research fellow back in the 90s and I was there when we started doing the original research that led to CRM – but we called it technology enabled relationship management (TERM). At the time it was just a lot of disparate applications: IT helpdesk applications that were being used for customer service like some call centre stuff and some salesforce automation stuff. Then vendors starting talking about eCRM or CRM and when we finally coalesced around the category of CRM people were equally as sceptical. They thought it was just a bunch of vendors trying to make their salesforce automation sound fancier, or their customer service applications sound bigger. At first it was more of a concept than it was having any substance behind it.
 
“So fast forward to the 21st century, the question is whether or not we’re seeing the true creation of a new market category, that has different capabilities, and different values both for the customers as well as the company. Is this really something that is evolving into something new? Or is it, like the sceptics say, just a new label on the same old stuff?”
And this is a question that has yet to be answered, concludes Lusher.
 
“It could be the next ‘big thing’. Or the next big ‘who cares’!’”

Comments

 I agree with many of the points made in this article. In particular Carter Lusher's view that we are seeing a shift from efficiency to effectiveness. However, I believe that at it's best CEM goes way beyond that.

We have created an assessment that measures the 'Evolution' of the contact centre by analysing purpose, process, people technology and metrics. 

We typically find that many organisations are at the 'Efficiency' stage where it is all about cost-reduction.  Technology is used primarily to minimise interactions and automate transactions in order to drive out costs. Many organisations at this stage choose to off-shore their customer operations for the same reason. The key metric is productivity. Many banks are at this stage.

The second stage is 'Effectiveness' where the focus is largely on driving revenues. The technology is focused on using analytics and customer data to equip the agents to more effectively cross-sell or up-sell. This stage lies at the heart of CRM in my view and when poorly implemented has led to much of the criticism of CRM as being a blunt instrument for 'hunting' customers rather than 'wooing' them. The key metric is creating value for the organisation. Many energy companies at this stage. 

In my view, CX or CEM lies at the third stage of evolution which is 'Experience'. This is where the focus is on building the brand and delivering an experience that drives customer loyalty. This is not about merely 'wooing' customers but 'wowing' them. The key metric is on creating value for the customer. Think Zappos, First Direct, Virgin.

I wrote an article titled 'We don't need the NBT' which argued that when implemented properly, CX or CEM provides a strategic context that is broad enough to meet organisational needs for a very long time to come. I think the role of technology providers like Oracle, Salesforce and others is to make the technology so seamless across channels that it enables the front-line to focus on the customer and create a wow experience. But that requires the providers to be having very different discussions with different executives in the 'C-suite'.

Shaun Smith

Re-naming "CRM" to "CEM" will just lead to more confusion in the marketplace.  To me it's just an indication that SAP (specifically) doesn't know what it wants to be.

Here's my take (and a disclaimer; I'm a software vendor in the CRM and CEM space)...

CRM has historically been a set of software tools. geared towards helping direct sales teams to use customer data for closing deals; faster, more predictably and with the best possible outcome (ie deal size) for the vendor.  Software like salesforce.com (which we use at HTK) does a good job of this.  But the out-of-the-box segmentation, marketing and customer service automation functions aren't that great.

CEM is wider than just software; it also needs to include people, processes and organisational culture.  And it's very much about long-term loyalty rather than short-term win rates. 

Forget deal size, think "customer lifetime value". 

For me, CEM is about using your CRM data to deliver more consistent, compelling, engaging customer experiences across all touchpoints of a business.  CEM doesn't replace CRM, it builds on it to deliver better customer-focused experiences that will increase loyalty and reduce churn.  To do this, you still need your CRM data in order to *know which customers are worth keeping* - but then you need to take this insight and get smart with it.

This is going to be a huge subject area through 2012, as all kinds of businesses shift towards a micro-payment or subscription payment business model and the spotlight shifts from acquisition to retention.

Justin BowserManaging Director, HTK Horizonwww.htkhorizon.com/intelligent-crm@jkbowser

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