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Customer Experience Management vs. Customer Relationship Management
by Leigh Duncan January 31, 2006 I was a bit reticent to take on this topic as the fourth part of this series on Customer Experience Management (CEM), because in my view it deals largely with perception, and the complexities thereof. But here goes. Many individuals equate CEM with Customer Relationship Management (CRM). I understand why this is the case—and do believe the original intention of CRM was to focus strategically on five components of customer experience: Customer Environment Article continues below
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Brand Platform (systems) Interface While many CRM initiatives attempt to address those components, many assume a highly operational, quantitative or technical bias. To illustrate this point, ask any executive to describe the tasks associated with CRM. You'll likely receive answers that align CRM with activities such as these: Establishing/managing a customer management platform Installing/configuring hardware, software, systems Enabling use of customer management and response tools Assessing, consolidating, and organizing (customer/sales) data Operationally connecting and synchronizing channels Attempting to align internal business process and policies Translating programs and campaigns into new toolsets Enabling centralized metrics and analytics capabilities Perceptions about CRM have been partially created by systems integrators, who have served as active leaders in the development of CRM capabilities. Such firms place a strong emphasis on technology, data management, quantitative analytics, and operational alignment. These activities are necessary to lay the groundwork for technology-enabled customer management and have often overshadowed strategic branding, marketing, program development, interaction design, and other tasks. The (operational, quantitative, and technical) perceptions of CRM are also shaped significantly by historical
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focus. Over the past several years, CRM efforts have centered on establishing and refining the infrastructures necessary to enable solid customer management. The work has been highly operational in nature and involves the resolution of complex technology, process, and people issues. In the context of establishing these infrastructures, CRM practitioners have fought many important battles. A large number continue to rage today and focus on removing internal barriers (human, technology, policy, data, process) that can compromise customer experience. Unfortunately, resolving these challenges forces so much attention on getting the corporate "internal house" in order, that they often compromise corporate efforts to develop, execute, and measure broad, crosschannel, cross-program, customer-centric strategies and plans. While many practitioners and CRM consultancies specialize in customer management and marketing strategy, much of this work is too narrow in scope and execution. Detailed customer analysis; designing and improving marketing strategies, programs, and campaigns; developing analytic models and reporting; supporting tactical execution; and other important tasks often occur as an adjunct to larger, more technical implementations. The engagements are often too quick or too narrow (e.g., within a single or few departments) to impact largescale customer experience or customer centricity within companies. At times, this work can even be done in a manner that is disengaged from the larger CRM initiative (e.g., disparate strategies created by different parties), creating disconnects that can hamper progress on a number of fronts. Unfortunately, within many CRM initiatives, comprehensive strategic planning activities are simply incomplete, insufficient, delayed or non-existent. These are some key activities: Designing the broad picture for customer experience (CE) Designing integrated programs to support CE Aligning programs and campaigns with each other and CE Developing customer-centric touch management strategy Defining companywide, customer-centric, cascading metrics Failure to engage in comprehensive strategic planning can compromise CRM results and negatively impact return on investment. It can also create gaps that negatively impact customers and reinforce a fragmented view of customers. Insufficient strategic planning and alignment can help explain why it is common to find CRM implementations that drive benefits within individual programs or departments while larger benefits remain unrealized. This occurs because of narrow execution results in the absence of a broad, seamless, measurable customer experience strategy. This is somewhat common today, and why some critics believe CRM initiatives miss the mark. Our progress to date may be a natural outcome of CRM (and corporate) evolution. Even so, the mounting dissatisfaction with strategic outcomes is a key driver in the growth of the CEM movement. Books and articles on the topic have proliferated. Customer experience has become a hot topic in industry publications and on weblogs. Gartner's Q4 2005 report states that four of the top 10 CRM topics are building and managing customer loyalty; creating a single view of the customer; creating a customer centric enterprise; and managing/improving customer experience.* CEM practitioners distinguish themselves by assuming an "outside-in," or highly customer-centric, approach. This is a direct contrast to the "inside out," or highly operations-centric, approach found in traditional CRM work. Article continues below

CEM strategy focuses heavily on conducting detailed customer (demographic, behavioral, ethnographic, profitability, etc.) and environmental (market, channels, competition) exploration and analysis. This analysis is used to design broad, detailed, integrated experience strategies that answer customer needs and market opportunity. These strategies are accompanied by detailed plans composed of multiple, integrated programs and campaigns. CEM strategies and plans are used as the drivers that shape product and service offerings, refine and align customer interfaces, and conform the operational platform (people, process, technology) for experience delivery, management and measurement—across channels, and over time. The terms CRM and CEM are used in a complimentary and, at times, somewhat interchangeable fashion.

Forrester seems to separate CEM as a unique discipline that is distinct from, but closely related to, CRM. Gartner seems to leverage CEM as a skill set or practice within CRM. Regardless of the interpretation, analysts do seem to be defining CEM in a consistent manner (that fortunately aligns with this article). No matter how you cut it, CEM requires knowledge and skill that is lacking in many organizations. This is especially true with regard to marketing organizations. **Recent studies reveal that, while CEOs view the CMO and marketing organizations as critical to bottom-line growth, many CMOs believe that their organizations are underperforming and lack the organizational credibility necessary to influence strategic transformation. Gartner also reports that one of the top, C-level enterprisewide concerns today is that "skill gaps will impede growth."* To build new CEM core competencies, create more customer-centric strategies, and transform businesses, it's necessary to teach business owners how to manage customers and market differently. The scope of work goes well beyond the marketing enterprise, and must begin with the development of high-level strategy that can drive a coordinated, cohesive organizational approach to managing customers. While it is very common to see this level of strategic and tactical support unaccounted for in many companies, an increased demand for strategic support in the areas of customer strategy, planning, and execution is mounting. Gartner predicts that in 2006 the number of organizations with "single view of the customer" projects will actually double.* Analysts seem to agree that outsourcing will play a critical role in augmenting missing strategic skill sets, and helping companies develop more comprehensive plans that drive marketing, customer management, and customer-centricity to the next level.* As a result, everyone seems to be jumping on the CEM bandwagon. This includes the systems integrators, who are developing solution sets (and entire practices) dedicated solely to CEM. A growing number of agencies and consulting firms are claiming expertise in CEM. Try a keyword search on Google to see what you get... In short, CEM practitioners address emerging market needs directly, while attempting to circumvent current perceptual biases of CRM. Proponents of CEM assert that their approaches can help remedy many of the issues created by operationally focused CRM implementations. CEM practitioners argue that their methodologies enable business stakeholders effectively conceive, own, and manage next-generation customer experiences, executing them across channels effectively with CRM tools. CEM evangelists promote the work as having a transformative impact on companies, asserting that the customer-centric alignment and planning will naturally help focus business effort and drive operational alignment. Some CRM practitioners dismiss CEM claims as a glossy repositioning of traditional CRM methodologies. Others argue CEM methodologies differ greatly from CRM. Individuals with a philosophical bent may argue that CEM is a "next generation" term that symbolizes a focus shift in CRM. Individual positions will vary, shaped by personal perspective, approach, scope of knowledge, area of experience, and objectives. In my opinion, it doesn't really matter what term you choose. I'm a supporter of CRM and a proponent of CEM. Using CEM as an umbrella term to circumvent undesirable perceptions of CRM can be a smart move, depending on your audience. However, when I can help it, I really try not to get caught up in the overuse of buzzwords and industry acronyms. Looking back, many of us "old timers" have been trying to get executives to support a robust customer experience strategy within CRM engagements for years. Sadly, we've suffered from narrowed scope and limited resources, and we've watched as the lion's share of corporate investment has been allocated to costly technology implementations and operational work. Whether you agree or disagree with the perceptions of CRM or the assertions about CEM, there's good news: Support for broad strategy and integrated customer experience planning is growing. Operational environments are maturing. Organizations are becoming more open to customer-centric transformation. Now matter how you spin the work, helping businesses transform, and comprehensively align to manage, measure and improve customer experience is the right thing to do. We may indeed be better positioned to do this today than ever before. If we do our work right, drive corporate success and make life better for customers. Cool. Sources: *"Gartner 2006 State of CRM Presentation," 2005. ** B2B Magazine Study: "Marketing execs still lack boardroom clout," November 2005. Forrester Research (various articles and article summaries); Wikipedia; About.com; CRM Magazine. Thanks to Amelia Fox and Ann Duncan for listening and "brain hockey"!

Leigh Duncan (leigh at livepath dot net) is a 15-year veteran of marketing, ecommerce and business and is the founder of Live Path (www.livepath.net). You can meet Leigh and hear her speak at "Finders, Keepers: Finding Prospects, Keeping Customers," MarketingProfs' executive retreat, April 20-21, 2006.

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