A lowdown on CEM – part 1

As multinational companies expand daily, and adding business across the globe is now as easy as moving to the next city once was, it’s no wonder the business philosophy of customer relationship management (CRM) is growing in mammoth leaps and bounds.

It should also come as no surprise that within the CRM paradigm other schools of thought come to life, burgeoning with the opportunities already made possible by CRM systems. “Customer experience management” (or, of course, CEM) is a relatively new kid on the customer service block, but practitioners and proponents are finding it a vital key to successful business practices that traditional CRM just doesn’t cover.

CEM defined

In the short history of CEM, Bernd Schmitt is usually recognized as the leading luminary. Schmitt is currently a professor of international business at Columbia Business School, but came to notoriety for his book entitled nothing other than Customer Experience Management. In this book, Schmitt provided the first definition for the eponymous concept: customer experience management is “the process of strategically managing a customer’s entire experience with a product or a company.”

CEM is the group of psychological principles that underlie compelling customer experiences and the business strategies to put these principles into action. CEM practitioners typically place heavy emphasis on the “essential first step” of making the selling environment more appealing.

CEM sees the selling environment as the answer to the ultimate problem marketing must overcome: the fact that 70 to 80 percent of all competing products are seen as relatively equal by consumers. In his “How Customers Think: Essential Insights into the Mind of the Market.” Harvard Business School professor Jerry Zaltman explaining that the failure of 80 percent of new products despite marketing blitzes should be obvious because “a great mismatch exists between the way consumers experience and think about their world and the methods marketers use to collect this information." (For a good story about an encounter with Zaltman and a nice everyday simile for CEM, check out the FastCompany.com piece, “This is My Brain on Coffee.”

In the end, rather than high-level advertising campaigns and heavy promotion, CEM focuses on the generally cheaper but more obscure method of feedback and improvement.

CEM is often confused with CRM, or the relationship between the two isn’t exactly clear. Indeed, industry online publication TMCNet.com recently stated that, “contentwise there isn’t any appreciable difference between CEM and what we’ve been doing in CRM for years.” The main difference comes in the interest on returns: CRM is essentially based in software systems designed to maximize transactions via quantitative data, and ultimately is most effective in the short term. The CEM philosophy seeks to investigate and exploit the relationship between the consumer and his/her “experience” with the product or service; in this way can a long-term relationship and true customer loyalty result.

As the CEM espouser sees it, every time a customer interacts with a company, via telephone, store visit, website visit or even seeing an advertisement, a customer experience results. Alongside “interaction,” “touch point” is a key expression in CEM: “Touch points” are those moments of meeting with customer service agents, direct mail, advertising, website, or online chat, which represent an opportunity essentially to close the deal. In any everyday sense, you know why blogs are proliferating right now? The blog is becoming known as an easy, friendly touch point.

In CEM, touch points must be two-way. Customer feedback is seen as crucial to the CEM system, and companies must react to feedback in order to maximize the number of positive experiences in future.

Pros and cons of CEM

The number one argument for getting a CEM system is time. The truth is, if you’re looking into CEM at all, it’s no doubt because you’ve already got CRM implemented. As it well known, CRM is a fantastic number cruncher, providing lots of data on all aspects of the larger picture of customer-company interaction, i.e. sales. The problem with CRM comes when minute-to-minute changes, if made, can produce tangible positive results in sales. Those pondering implementing CEM must consider exactly how important real-time data regarding sales is to the company.

Proper management and IT infrastructure must be in place as well, as CEM solutions work best with total executive commitment and high emphasis placed on success of the program. The CEM solution, to be successful, must collect data and distribute quickly to maximize opportunities. The CEM solutions must also be plugged in to every touch point in customer experience, typically requiring a decent CRM system already in place. Some industries seem to positively require a CEM system, as CRM literally cannot meet the need.

Upon unveiling a new CEM manager specifically for international airlines from Sabre Airline Solutions and ResponseTek Networks Corp. Gartner analyst Ed Thompson was cited as stating that "Airlines have historically had some of the lowest customer satisfaction scores across all industries.” (And thus an easy sell for CEM systems.)

Truly, CEM and CRM should not be seen as warring factions at all. CEM solutions provider Interwoven, like many CEM suppliers, see Customer Experience Management as simply more holistic than that of simple CRM. And, according to Interwoven’s director of CEM Eben Miller, “Customer experience management is not a new concept or a new issue in Asia,” plus “CEM is especially relevant in Asia.”

The truth is, by the time the pros and cons of implementing CEM are being considered, the decision has already been made for you. If time is of the essence, the purchase of a CEM system is as well. Those new to the CRM game probably do not yet need CEM specialization yet, while those fighting for every one percent of business should begin getting that executive support now.

Has CEM’s time finally come?

Generally speaking, CEM is still seen as a bit of an embryonic concept, although it has been employed in hundreds of businesses already. WebProNews.com recently stated that “CEM has started to get more profile but it is still just a good idea emerging into an area of marketing thought currently dominated by Customer Relationship Management (CRM).” Writer Arthur Ramshaw goes on to list four areas in which CEM is suffering: viewing customer experiences and business value in isolation; measurement of wrong interaction outcome by businesses; companies still don’t know what truly drives consumer behavior; and the tendency for companies to wait for a perfect system before using what they have at present.

In CEM’s favor is the milieu in which in thrives: This one, the internet. Customer experience is often the only way to measure data regarding site visitors aside from the already age-old “visitors” and “new visitors” statistics.

For example, consider the seemingly necessary question in order to do e-commerce: “What do searchers do after they perform a search?” Over at the online publication Search Engine Journal , editor Loren Baker tells of execs from Performics and Keynote Systems who since 2004 have carried out search engine analyses and ranked them according to positive consumer experiences.

Surely, it is no surprise that Google is ranked no. 1 here, but periphery data is such a study can be highly valuable when fighting for every online visitor to come your way. Both Performics and Keynote use CEM techniques in essentially all their studies.

Some players in CEM

Satmetrix Systems, Inc., headquartered in Foster City, Calif., was founded in 2000, but has recently rededicated itself to specializing in customer experience management. The Satmetrix philosophy centers on the three P’s: People, Programs and Processes. Among Satmetrix clientele are FileNet, BT Infonet, Sodex Ho healthcare services.

Amae Software was founded in 2001 and focuses primarly on contact center operations with its Amae CI Suite package. Amae encapsulates the CEM principle even in name: “Amae Software is inspired by the Japanese concept of ‘psychological interdependence’ … Amae is the underlying principle and the basis for customer loyalty and satisfaction. Amae is the basis for all customer relationships.”

Interwoven was founded in 1995 in California, but today the CEM specialist has put offices in 15 countries and has perhaps the strongest CEM presence in the Oceania market. Customers include nine of the world’s ten top companies and 64 of America’s top 100 law firms.

ResponseTek Networks Corp. is a CEM provider specializing in Global 2000 firms based in Vancouver, Canada. Clients include Aon, HSBC, NTL, T-Mobile, WestJet and Xerox.

Books and Blogs

Most of the key players in and crafters of the CEM philosophy are still producing work on the subject, some on a daily basis. Below are some books and blogs you might want to look into, should you be interested in the CEM world. The one that started it all – “Customer Experience Management” is still in print and author Bernd Schmitt keeps a blog over at http://meetschmitt.typepad.com/. Alongside his business-related activities most recently having him judge the new Experiential Marketing Awards in Indonesia, Schmitt also waxes philosophical about NFL football and hair.

Patty Seybold is the CEO of Boston-based consulting firm Patricia Seybold Group. Since 1998, she’s been authoring/co-authoring books, including “Customers.com”, “The Customer Revolution”, and “Brandchild: Remarkable Insights into the Minds of Today’s Global Kids & Their Relationships with Brands.” Her new book is entitled “Outside Innovation: How Your Customers Will Co-Design Your Company’s Future” and is central to her current philosophical focus. Seybold’s work begins in her concept of “outside innovation.” “Outside innovation” is defined by Seybold as “when customers lead the design of your business processes, products, services, and business models. … when customers attract other customers to build a vital customer-centric ecosystem around your products and services.” In CEM terms, Seybold is demonstrating the necessity of exploiting customer feedback and offers radical solutions on how to do so. Naturally, Seybold’s blog is located at http://outsideinnovation.blogs.com/.

In the advisory arena, business consultants at Gartner are always worth listening to. Their blog dedicated to CRM is also worth tuning into, as Gartner does explore the Customer Experience Management niche as well.