Customer Experience Management (CXM) – Development of a

Conceptual Model for the Digital Organization

Eileen Doherty, Marian Carcary, Gerard Conway and Catherine Crowley
Innovation Value Institute, Maynooth University, Ireland
Eileen.doherty@ivi.nuim.ie
Marian.carcary@ivi.nuim.ie
Gerard.conway@ivi.nuim.ie
Catherine.crowley@ivi.nuim.ie

Abstract: In the age of the digital organization, and at a time when customers are connected and empowered like never
before, there is growing consensus about the importance of a focus on customer experience (CX) in achieving competitive
advantage (Hartlen, 2017, Mc Kinsey Quarterly, 2016, Müller et al, 2016, Banfi et al, 2014). This focus on the customer
requires that the organization continuously considers “What do my customers want?” (Mc Kinsey Quarterly, 2016).
Leveraging digital technologies to address and deliver customer needs can have a positive impact on customer satisfaction
ratings whilst at the same time, reducing organizational costs (Banfi et al, 2014). However, to be successful, this
transformation means rethinking the entire way that organizations work with their customers (Banfi et al, 2014).
Organizations require guidance on where and how to improve the customer experience journey in a digital context.
Consequently, this research seeks to outline the key facets of a Customer Experience Management (CX) capability in the
form of a conceptual model to guide them through this process. The approach adopted in this research was a multi-phase
approach. The first phase is grounded in the relevant literature through undertaking a systematic literature review (SLR)
and developing a concept matrix on key customer experience themes and how they have evolved with the emergence of
digitization. The second phase is concerned with the development of a conceptual model for managing customer
experience in the digital context. This customer experience conceptual model may form a key component of the IT
Capability Maturity Framework (IT-CMF™) as a critical capability (CC). This research is of particular importance to
organizations and practitioners interested in understanding the value of, and guidelines for, developing a CX capability as
part of their digital transformation. It is also relevant to academics who are interested in the area of organizational digital
transformation.

Keywords: Digital, digital organization, digital transformation, customer experience, CX, customer experience
management, CXM.

1. Introduction
Customer experience is emerging as the new-age differentiator. There has been a paradigm shift of
focus from developing product brands to building customer relationships to creating and delivering
engaging and compelling customer experiences. (Bhandari, 2016, p.76)

Digital technology and the process of digitization has seen such industries as music and printed media
completely transformed over the last decade or so, necessitating a complete rethink of traditional business
models (Westerman et al, 2011). Organizations across all sectors, on a global basis, are now recognizing the
need to consider digital transformation in the context of their own business. Whether this transformation
focuses on the way in which individuals work and collaborate, the way business processes are executed within
and across organizational boundaries, or the way in which the company understands and services customers,
digital technology provides a wealth of opportunities to those willing to change their businesses to take
advantage of it (Westerman et al, 2011).

Historically, a company with the ‘next big thing’ could maintain their competitive advantage for some time
until their competitors caught up. Unfortunately, this is no longer always the case. Fast-track product
development, innovative software techniques, and easy access to digital channels have made products much
easier to replicate. Such changes are a key reason the battle for competitive differentiation has increasingly
shifted to the quality of the customer experience. Customers in this digital context, now expect the same
immediacy, personalization, and convenience offered by such digital-marketing pioneers as Amazon and
Google, from all other organizations (Müller et al, 2016). The most forward thinking executives are
continuously asking the question “what do our customers want?” Successful companies now recognize that
they are in the customer-experience business, and they realise that how an organization delivers for customers
is beginning to be as important as what it delivers (Mc Kinsey Quarterly, 2016). Using advanced analytics,

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customer-experience leaders can gain rapid insights to build customer loyalty, make employees happier,
achieve revenue gains of 5 to 10 percent, and reduce costs by 15 to 25 percent within two to three years.
However, this doesn’t happen overnight. It requires strong leadership and patience to train an organization to
see the world through the eyes of their customer and to redesign functions to create value in a customer-
centric way (Mc Kinsey Quarterly, 2016).

The paper is presented as follows; section 2.0 provides an overview of customer experience as a key
component of digitization and outlines the key research aims of the paper. Section 3.0 presents the
methodological approach adopted through this research and introduces IT Capability Maturity Framework (IT-
CMF™) which supports the digitization journey of the organization. Section 4.0 discusses the key findings and
section 5.0 presents the overall conclusions and future direction of the research.

2. Customer experience as a key component of digitization

There is increasing recognition that having a mature customer experience capability reaps significant benefits
for the organization. This is evident from a recent McKinsey survey of senior executives where 90 percent of
respondents indicated that CX was one of the CEO’s top three priorities. (Dias et al., 2016). A mature customer
experience has been found to result in reduced costs (Banfi et al, 2014, Van Bommel et al, 2014), higher
customer satisfaction, richer differentiation, higher brand advocacy (Banfi et al, 2014) and faster iteration and
delivery of service (Van Bommel et al, 2014). Customer experience has been purported to transcend all related
facets of customer satisfaction, service quality, customer relationships etc. It is also a much more profound
phenomenon and has a more lasting endurance. (Bhandari, 2016). Specifically, in terms of financial returns,
previous research indicates that for every 10-percentage-point increase in customer satisfaction, an
organization can increase revenues by 2 to 3 percent (Dias et al., 2016).

Previous studies have proposed approaches for managing customer experience such as ‘discovery’ or analysis
of data, ‘design’ of products or services and effective ‘delivery’ of ‘good fit’ solutions tailored to the needs of
each individual customer (Muller et al, 2016, Peppars and Rogers, 2016, Van Bommel et al, 2014, Baumgarten,
2014). Having the right people, tools and processes in place (Van Bommel et al, 2014) as well as effective
cross-functional governance (Mc Kinsey Quarterly, 2016) are also put forward as key facets of an effective
customer experience capability.

At a management level the priority is to start with the customer—not the organization—as the focal point. An
organization’s success in developing effective customer experience journeys requires agile capabilities that
excel at rapid iteration and testing and learning. It means reacting to live feedback from real customers. This is
often the difference between a good and a great customer experience (Dias et al., 2006). However, once these
organizations succeed, they will have a competitive differentiator that is compelling and that other
organizations will find hard to match (Müller et al, 2016, Mc Kinsey Quarterly, 2016).

Whilst some research has already been conducted in this area, a significant number of studies have focused on
the customer’s perspective (Nambisan and Watt, 2011, Mascarenhas et al, 2006, Gilmore and Pine, 2002) and
not on that of the organization in the development of a customer experience capability. There have also been
calls for additional empirical research across various industries to help better understand customer experience
and the applicability of this construct in the real world. (Bhandari, 2016).

However, there exists a dearth of studies which have synthesised these different customer experience
approaches to help guide the organization in a digital context. Additionally, organizations are unsure of where
to start on their customer experience journey. Therefore, the development of the key components or building
blocks of a customer experience capability is an attractive proposition for leading edge companies as a source
of building a sustainable competitive advantage. (Bhandari, 2016).

As such, this paper has the following research aims:

x To determine the key capability building blocks (CBBs) that constitute a Customer Experience
Management (CXM) capability.
x To develop a Customer Experience Management (CXM) conceptual model that forms a key component
of the organizational digital transformation process.

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Consequently, this research seeks to provide guidance to organizations on how to manage customer
experience in a digital context through use of a capability roadmap. This capability for Customer Experience
Management (CXM) is planned as a key component for the next release of IT Capability Maturity Framework
(IT-CMF™) and will be validated and refined in phase 2 of this research through empirical testing with
organisations with an interest in this area. The IT-CMF™ was selected for this research as it acts as a roadmap
or guidance for the organization through provision of meaningful maturity goals and metrics and helps mature
TM TM
their organizational capabilities. IT Capability Maturity Framework (IT-CMF ) already comprises 36 critical
capabilities (CC’s) (see figure 2) which are key to the successful management of IT.

3. Methodology
This paper adopts a multi-phase approach with respect to the aforementioned research aim.
Hence:

x Phase 1: Through adoption of a systematic literature review (SLR) approach (Okoli, 2015), this phase
reviews both the academic and practitioner literature to identify key characteristics/themes of a CXM
capability in the context of the digital organization. Analysis of these themes was undertaken through
use of a concept matrix (Webster and Watson, 2002).
x Phase 2: During the second phase, synthesis of these themes with the IT-Capability maturity
Framework (IT-CMF™) foundational capability approach is undertaken. The IT-CMF™ enables
management of IT capabilities to deliver agility, innovation and value for the organization (Curley et al,
2015). This phase concludes with the development of a conceptual model for CXM in the digital
context.

3.1 Phase 1: Systematic Literature Review (SLR) and Concept Matrix: the approach
In order to better understand the customer experience phenomenon, this study adopted a concept-centric
examination of approaches adopted to manage customer experience in the digital context. The unit of analysis
was the organization. These key concepts/themes were identified through adopting a systematic literature
review (SLR) approach (Okoli, 2015), and were analysed using a concept definition matrix (Webster and
Webster, 2002). The SLR adhered to the 8 steps proposed by Okoli (2015). These included:

x Purpose of the literature review: In terms of this study, the authors sought to identify and analyze the
key relevant themes in the stream of research centered on the key components of customer
experience in the digital context.
x Protocol and training: In this step, the procedures to be followed were detailed. A focused, systematic
literature search was undertaken to identify key components/characeristics of a customer experience
capability within the digital context. Analysis of the identified literature was supported through the
development of a concept matrix (Webster and Webster, 2002), which provided a simple, visual
overview of the key themes identified and their frequency.
x Searching for the literature: The requirement for an article to be considered for analysis was the
presence of the following terms within the title, abstract or keywords of the paper: ‘CX’, ‘Customer
experience’, AND capability OR framework OR management OR model OR maturity AND ‘customer
journey’. The literature collection sources were focused on the Association of Information Systems
“Basket of 8”, and sought to identify scholarly peer reviewed articles published between 2010 and
2017 inclusive. In total the authors identified 27 papers. In addition, a search of practitioner
publications such as Mc Kinsey, Forrester, Gartner, Ernst and Young and Cap Gemini, Accenture and
Spencer Stuart was also undertaken. This returned 46 results.
x Practical screen: Resulting from this step was a list of the literature to be considered for review. An
initial screen of the title, abstract, and keywords of the 73 identified papers resulted in the exclusion of
a set of papers due, for example, to language or a focus on issues that were debated by the authors as
not specifically relevant. Such exclusion criterion were such things as a focus on development of a
model based on the users perspective, factors determining a positive customer experience etc.
Inclusion criterion included a focus on the organization and development or key concepts put forward
for a customer experience capability or model. All remaining papers were read to verify their
relevance. Consequently, 13 papers in total were considered to address the research questions.

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x Quality appraisal: A more detailed examination of the 13 eligible papers was undertaken to evaluate
their quality. Given the specific search focus for scholarly peer reviewed articles and high quality
practitioner publications, no quality-related issues were encountered with the shortlisted selection.
x Data extraction: This step provided a list of all relevant concepts to be used to synthesize the study.
Within each of the shortlisted papers the relevant material to answer each research question was
isolated, and all characteristics/themes of a customer experience capability or customer experience
management approach were extracted.
x Synthesis of studies: A content analysis of the material extracted from the literature was undertaken by
converting the themes identified into a concept centric format in order to establish the most common
concepts. The authors created a high-level categorization of the major concepts or themes that
emerged, with each category encapsulating a number of related, lower-order concepts (Figure 1). The
authors followed the concept matrix method (Webster and Webster, 2002) which reflects a
diagrammatic representation of key themes. The matrix rows provide the paper references from which
the concepts were extracted. The frequency of occurrence of a particular theme is indicated from the
number of ‘X’s’ in the table columns.
x Writing the review: The final step involved a write up of the review. In the next section, the key themes
are described in 4 categories, with 11 sub-categories identified.

Figure 1: Concept matrix of key themes arising from SLR in area of customer experience management

3.2 Phase 2: Framework to support digitization

One of the primary obstacles to organizational digital transformation is the lack of clarity about the true value
gained from IT investments. At the outset, organizations need to be clear that the return on investment in new
TM
technologies is tangible (Fitzgerald et al, 2013). IT Capability Maturity Framework acts as a roadmap to the
organization on this journey and through provision of meaningful maturity goals and metrics helps the
organization to mature their organizational capabilities. One of the fundamental challenges in achieving
effective digital transformation is understanding what organizational critical capabilities are appropriate. IT
TM TM
Capability Maturity Framework (IT-CMF ) reflects a compilation of 36 critical capabilities (CC’s) (see figure
2) which are key for the successful management of IT. Each CC is made up of high-level categories and
Capability Building Blocks (CBBs) (see Figure 3).
TM
IT-CMF is designed to systematically lead an organization towards developing the CC’s necessary to support
a digital transformation appropriate to its context (Doherty et al, 2015). It does this through systematically and
continually improving the performance of the IT function in an organization, and through measuring progress
and value delivered. (Curley et al, 2015). For each capability, the framework outlines 5 levels of maturity,
where level 1 indicates a low level of maturity and level 5 indicates an example of best practice (Curley et al,
2015).

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TM
Figure 1: IT-CMF

4. Findings and discussion

This section is divided into three sections. Section 4.1 discusses the findings/themes that have emerged from
the systematic literature review and concept matrix. Section 4.2 presents the foundational building blocks that
are inherent in each critical capability of the IT-CMF™. Finally, section 4.3 uses the findings from the SLR,
concept matrix and foundational CBBs (see section 4.2) to develop a conceptual model for CXM.

4.1 Themes identified from systematic literature review and concept matrix
Four high-level concepts emerged from the systematic literature review. Within some of the high-level
concepts, further sub or related concepts also emerged. These are discussed below:

4.1.1 Analyse
The dominant theme that arose in all of the reviewed customer experience literature was ‘Analyse’. ‘Analyse’
is otherwise termed ‘discover’ (Van Bommel et al, 2014), ‘observe’ (Mc Kinsey Quarterly, 2016) and ‘identify’
(Peppers and Rogers, 2016) used in conjunction with customer data. Essentially, for an effective customer
experience capability to be in place, it is crucial that the organization analyses its customer data and
intelligence to reimagine the richest, most efficient and engaging way of satisfying customer needs and
expectations (Mc Kinsey, 2016). Even in this climate of ‘big data’ and widespread digitization of customer
information, a significant number of organizations are still not seeing the full picture when it comes to their
customers. Organizations typically focus on such things as the performance of direct sales activities such as
product pitches and encourage downloads using “last-action attribution” analyses, which assess campaigns in
silos rather than looking at the complete cross-channel consumer decision journey. To get this 360 degree
view, organizations need centralised data that combines all the contacts a customer has with a brand: basic
consumer data plus information about transactions, browsing history, and customer-service interactions (Van
Bommel et al, 2014).

4.1.2 Design
Another key theme that arose from the literature was that of ‘design’, (Van Bommel et al, 2014) or ‘shape (Mc
Kinsey Quarterly, 2016). Careful consideration needs to be given to the ‘design’ of the customer experience. It
is important that the experience is ‘frictionless’ and recent research suggests that companies need to do a
better job of integrating their online and off-line experiences. (Van Bommel et al, 2014). However, this is not a
task that should be underestimated. Designing the customer experience necessitates rethinking interactions
into different sequences and, though the effort may not seem a big task at the outset, it soon involves
digitizing processes, reorienting company cultures, and deftly re-orienting new approaches in the field (Mc
Kinsey Quarterly, 2016).

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Focus on customer touch points

Whilst designing the customer experience, it is imperative that the organization is cognizant and takes into
consideration customer touch points along this journey. This means paying attention to the complete, end-to-
end experience customers have with a company from their perspective. Too many companies focus on
individual interaction touchpoints such as those devoted to billing, onboarding, service calls. However, a
customer journey spans a series of touchpoints with a clearly defined start and end (Mc Kinsey Quarterly,
2016). Many firms are now offering customer apps to enhance customer touch points. These tools allow the
customer to save time, while saving the company money. Classic mobile apps allow bank customers to access
account information or media customers to have electronic rather than paper subscriptions (Westerman et al,
2011). These touchpoints together, add up to the complete customer experience (Mc Kinsey Quarterly, 2016)

4.1.3 Deliver
Another key theme that arose from the literature was that of ‘deliver’ (Van Bommel et al, 2014) or ‘perform’
(McKinsey Quarterly, 2016) which means delivering an effective customer experience. This may be through
customising the experience to suit the needs and wants of individual customers (Peppers and Rogers, 2016).
However, one thing that is consistently indicated in the literature is how this experience is delivered and that is
through adopting an agile way of working. This is discussed in the next section.

Adopt an agile approach

The organization needs to envision a superior journey from the customer point of view and toss aside
traditional notions of working and use customer data and intelligence (Mc Kinsey Quarterly, 2016). To do this
properly requires adoption of an agile strategy that means incorporating the latest technology as it is released
and adopting a test and learn approach (Ernst and Young, 2011). Organizations must have the confidence to
launch ‘good enough’ campaigns, ones that are continuously refined by the customers’ purchase behaviours
and stated preferences. Organizations must be willing to conduct many small-scale experiments with cloud or
proxy website services to pilot new designs and validate their value for investment (Van Bommel et al, 2014).
Basic prototypes are piloted with the customer, where concepts are tested, refined, and rereleased in
continual cycles until they meet agreed-upon performance thresholds. Before the final design is released the
team review and minimize business-investment risk and confirm that digital initiatives result in maximum
value for the customer (Müller et al, 2016).

Develop Skills
However, it is not enough to just adopt an ‘agile’ approach. These types of agile, data-driven activities
necessitates the organization to have the right people, tools, and processes in place (Van Bommel et al, 2014).
Leading customer-experience organizations have motivated employees who personify the customer and brand
promise in their interactions with consumers, and have the autonomy to do the right thing (McKinsey
Quarterly, 2016). Many organizations will have some of the talent or skills that are required, but not all, and
executives will inevitably face resistance when it comes to introducing lean tools and techniques into their
sales, marketing, and IT processes. The most successful have established centres of excellence in both analytics
and digital marketing, and they practice end-to-end management of micro-campaigns. Further, roles and
responsibilities are clearly defined at the outset so that everyone is clear what their role is and what they have
responsibility for. This is significant move away from a rigid hierarchical structure to a model which gives
individuals the autonomy to iterate quickly (Van Bommel et al, 2014).

Track performance
The key to creating an effective customer experience capability is not just to track performance or measure
what happens but also to use this data to drive action throughout the organization (Mc Kinsey Quarterly,
2016). Organizations need to adopt a continuous improvement strategy, launching new digital channels early
and refining based on customer feedback (Ernst and Young, 2011). The type of measurement in place is less
important than the way it is applied. The most effective customer-experience measurement system puts
journeys central to other critical elements such as business outcomes and operational improvements.
Forward-thinking executives start at the top, with a metric to measure the customer experience, and then
cascade downward into key customer journeys and performance indicators, whilst at the same time using
employee feedback to identify opportunities to improve (Mc Kinsey Quarterly, 2016).

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4.1.4 Culture
Another key theme that rose from the literature review was key aspects of culture. As the organization
reorients itself to deliver a good customer experience, this has an impact on the culture. The traditional ways
of doing business will be radically transformed and key aspects of the organizational culture will be impacted.
These aspects are explored further in the sections below:

Establish Governance
As the importance of the customer experience gains momentum and becomes a bigger focus of corporate
strategy, senior management will need to decide on whether to commit their organizations to a broad
customer-experience transformation. The challenge of which will be how to restructure the organization as
well as determining where and how to get started. Implementing sophisticated metrics to determine what
customers are saying, empowering frontline employees to deliver against customer vision, and a customer-
centric governance structure form the foundation (Mc Kinsey Quarterly, 2016). The governance model will be
in the form of a top down approach and have a strong executive-level understanding of the importance of
standardization and coordination. With a good balance of IT and business making up the governance structure,
business executives may propose an array of digital investments whereas IT executives may propose others
such as the firm’s new analytics initiative. (Westerman et al, 2011). Successful organizations have governance
structures that are made up of a sponsor—a chief customer officer—and an executive champion for each of
their primary cross-functional customer journeys. They also have dedicated teams dealing with operational
issues (Mc Kinsey Quarterly, 2016).

Innovate
Innovation in itself is key to success in the digital world. It necessitates embracing innovation and identifying
new engagement and business models. It means harnessing new opportunities that exist outside of traditional
markets and seeking out the tools that will differentiate between the mere suppliers and the ‘lifestyle
partners’ of the digital age (Ersnt and Young, 2011).

Secure leadership buy-in/support

Leadership is key. Organizations with leading edge customer experience capabilities have effective leadership
in the form of C-suite sponsorship. They have the authority and organizational influence to provide a clear
customer mandate and the ability to shift thinking away from incremental process improvement and toward
bolder experimentation (Müller et al (2016). Leaders at customer-centric companies involve employees at
every organizational level, working directly with them at the coalface, taking calls, and getting their own hands
dirty. Amazon for example, famously held “all hands on deck” sessions during the year-end holidays, a
tradition that still lives on in the employee-on boarding experience (Mc Kinsey Quarterly, 2016).

4.2 Foundational capability building blocks

The focus of this research is on the conceptualisation of a model for CXM that may be added to IT-CMF™ body
of knowledge. As such, a review of key foundational capability building blocks (CBBs)/components from IT-
CMF™, is necessary. These are outlined in figure 2 below.

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Figure 2: Foundational CBB’s for each Critical Capability (CC).

Each of the CBBs presented in figure 2, is foundational to all capabilities within the organization based on the
IT-CMF™ approach. Interestingly, there is a strong correlation between these building blocks (Governance,
Resourcing, Roles, Responsibilities and Accountabilities, Skills and Competence Development, Culture,
Stakeholder Management and Communication) and the key customer experience themes identified in the
literature.

4.3 Development of Conceptual Model

Synthesis of the themes derived from the SLR and concept matrix and the foundational CBBs are now
presented (Figure 3) in the form of a CXM conceptual model.

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Figure 3: Customer Experience Management (CXM) Critical Capability (CC)

The CXM capability is made up of three key categories; People, Process and Culture. The ‘People’ category
consists of 6 capability building blocks (CBBs) , namely - Governance; Resourcing, Roles, Responsibility and
Accountabilities; Leadership; Skills and Competence Development and Stakeholder Management. The
‘Process’ category consists of 5 capability building blocks, namely - Analyse; Design; Deliver; Track Performance
and Communication. The ‘Culture’ category consists of 2 capability building blocks, namely - Adopt agile
approach and innovate. Each of the proposed capability building blocks have either been discussed earlier or a
description is given above in figure 3.

5. Conclusion and future research

Through identification of key themes/concepts arising from a review of the extant academic and practitioner
literature, this paper has synthesised these findings in the form of a customer experience management critical
capability or conceptual model. Key high-level themes such as Analyse, Design, Deliver and Culture were found
to be key components of any CXM capability that is developed for use within the digital context. Additional
building blocks of organizational capabilities such as Governance, Resourcing, Communication etc. are also key
building blocks in this CXM model. CXM is planned as a key component of the IT-CMF™ following empirical
testing in the field. CXM will act as a roadmap or guide for organizations in the development and management
of this capability which is central to effective organizational digitization.

This research acts as a starting point and the basis for a more in-depth development and expansion of the
Customer Experience Management (CXM) capability. As such, practitioners and academics interested in the
area are asked to validate this critical capability to help determine its relevancy in a real-life industry setting.

5.1 Limitations and Future Research

This paper was limited due to word-count. Further detailed discussion on the conceptual model is planned in
future publications.

This research was also restricted in that only secondary sources of data (academic journal articles, practitioner
reports etc.) were used in the development of the model due to time-constraints. However, further empirical
testing is planned for the future with firms who are interested in CXM in a digital context. As such, refinements
to the model are expected. The organizations used will not be specific to any particular sector or location.
However, it is envisaged that this model will be more applicable/of interest to the larger firm.

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