Rebranding CRM as customer experience management: The road to ruin?

14th Nov 2011

While some firms are rebranding CRM operations as customer experience, there is also misappropriation of CEM by CRM software vendors. Colin Shaw believes it will only end in tears.

Many firms consider customer experience management (CEM) the successor of customer relationship management (CRM). One of the most dangerous pitfalls of this assumption is that senior leadership simply rebrands preexisting operational functions as paradigmatic of CEM. Because the 2011 Beyond Philosophy Global Customer Experience Management Survey uncovers that most 'CE' professionals lack any formal background in CEM, it’s time to clearly distinguish CEM from CRM, discuss some of the key drivers of CEM and offer suggestions.
In order to properly understand CEM, however, you must first truly understand the definition of what a customer experience is. In our last book, Customer Experience: Future Trends and Insights, we shared our definition:
"A customer experience is an interaction between an organisation and a customer as perceived through a customer’s conscious and subconscious mind. It is a blend of an organisation’s rational performance, the senses stimulated and emotions evoked and intuitively measured against customer expectations across all moments of contact."
As you can see, to manage a true customer experience management program is a cross-functional role that requires the following elements to be included and addressed:
  1. Implementation of organisational transformation.
  2. Engagement of corporate culture, especially at the senior levels.
  3. Fostering a customer-centric philosophy from the top-down.
The threat to customer experience management is obfuscation in the fields of CRM, customer service or marketing.
As our definition shows, CEM is an eclectic discipline: it draws upon work in consumer psychology, experience management, customer delight, brand association and even neuroscience. Specifically, we argue that CEM is a project-based framework to productively manage the holistic customer experience.
So while CEM draws upon techniques and methodologies from marketing, customer service and customer relationship management, it alone engages inter-functional integration between these disciplines. For this reason, it makes sense that the most commonly asked question in our survey of CE executives is “how should we implement customer experience?” One of our survey participants speaks to this point, when identifying the endemic nebulosity of CE:
“There is major confusion…so CE=CS. [There also is] confusion with user experience, so things about web, user interface, design and user experience. Techies think [CE is] user experience, and business professionals think [it is] customer service, meaning survey tools and workforce automation.”
As this expert’s quote shows, the understanding of exactly what customer experience is varies greatly according to department. The risk this incurs is a fragmented adoption of “CE” initiatives, lacking a cohesive, unified vision. Secondly, CEM means engagement of corporate culture.
Rendering CRM obsolete
The trend to rebrand service and marketing operations as CE occurs side-by-side with another issue: misappropriation of CEM by CRM software vendors. 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. Our survey results are in line with this point because the second most commonly asked question by CE executives is “how can we measure the financial return of CE?”
Returning to our original definition of CE, this question 'answers' itself. Customer experience appeals to the rational, emotional and subconscious elements of all moments of contact. It is possible to prove ROI against all these measures.
Customer experience, by definition, requires qualitative measurements. Experience itself is multi-dimensional and situation-specific. In fact, research shows that the 'numbers' alone don’t tell the full story of the customer experience. Meaningless differentiation in consumer products shows that frequently the trivial, non-utilitarian features of a product can and do determine real outcomes. Procter and Gamble, for example, sells Folgers’s Instant coffee by advertising 'flaked coffee crystals', implying that the flaked crystals improve taste. In reality, the shape of the coffee particle only matters for ground coffee and is irrelevant to instant coffee. As this example and many others show, the subjective aspects of experience carry a tremendous amount of weight and force in the decision-making process.
A CE expert in the US told us that:
“Most [members of the senior leadership] would not go to emotions. Most people come from an analytical service management route rather than a brand emotional viewpoint. No more than a handful use the language of emotion (e.g. by employing anthropologists to look at user experience).”
Facing a lack of CE training, more and more CE executives reach their positions unprepared to collect the relevant types of data required for a customer experience project.
A final consideration is that CE initiatives are successful when they develop as a customer-centric philosophy realised from the top-down and across the board. Since customer experience is an organisational strategy based on a holistic approach to the customer (where emotion is a key differentiator), successful CE means the organisation must become more customer-centric.
Customers interact with firms via more channels than ever before: on the phone, in person, by email, using instant messaging and even via social networking – and they even switch back and forth between these channels to address a single concern.
While leadership can see 'customer experience' as a component of CRM, contact centres, marketing or the customer service interface, customers see one thing: the organisation. As technology allows more companies to expand globally, customer experience is likely to fall through the cracks if it is not treated as a valuable constellation of strategy, integration of technology.
The greatest single threat to customer experience is the trend to rebrand it as 'customer service' or 'customer satisfaction'. In order to be successful, customer experience change initiatives need operational synergy created from the culture within a company.
From the customer’s point of view, a company’s mistakes measure its worth, so inconsistent CE policies mean failure, plain and simple. Since CE utilises a full, rich and holistic understanding of the customer, it is critical to have properly trained staff in the positions critical to CE transformation. A faulty definition of CE will create company-wide vulnerabilities with respect to customer experienced-based initiatives, engagement of the senior leadership team and establishing a customer-centric corporate culture.
CE is more important now than ever before. With the increasing commoditisation of products and services, even traditional B2B industry verticals are seeking ways to differentiate themselves from competitors. The stakes are high for the CE industry, but the opportunities are priceless. Developing a clear understanding of what CE is and what it isn’t is the first step to launching a successful initiative. Putting the right people in place to follow through on it will drive high quality standards for your program and will steer the CE ship away from the iceberg just as it’s beginning to set sail.

Colin Shaw is founder and CEO of Beyond Philosophy.

Replies (2)

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By mayomarriott
14th Nov 2011 13:56

CEM is a small sect within the broad church of CRM.  It jealously guards its 'mysteries' which most people see as common sense.

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By debeastman
06th Jan 2012 12:33


Isn't CEM the completion of the 360 degree view of the customer?  When CRM came on the sceen in early 2000, companies wanted an "enterprise view" of the customer.  However, they thought of this as aggregation of their data which captured the knowledge they had of THEIR relationship with the customer; products purchase, services delivered, support interactions, etc.  Organizations have spent billions implementing CRM to manage their interactions with the customer and capture all data related to those interactions whether sales, service, or support.  This is typically behavorial data, showing the actual behaviors of the customer.

CEM extends this view to give you a better understanding of the customer's relationship with you (the brand).  It compliments CRM by focusing on the customer's perception of their experience across your entire organization, from purchase, use, payment, etc.  By focusing on improving the customer experience (the cultural transformation you describe) you impact the customer's attitude which eventually impacts their behavior (purchase and recommendation). 

I believe CRM and CEM work together to deliver the desired 360 degree view of the customer, both from your prospective and theirs.  Organizations that get this right will win in today's high competitive environment, as customers expectations continue to rise and social media provides a megaphone for both good and bad experiences.  If CEM gets absorbed into CRM, without a clear understanding that the combination is a superset and requires cultural transformation, not just automation of interactions, those organizations are missing the point and will watch their competitors eat away at their market share.

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