Customer experience management is increasingly being adopted by executives and marketers in organizations of all industries and sizes because it helps to center a number of important factors: driving growth, increasing revenue, and fostering organizational change. It is both a process that runs through all the different stages of the funnel and a comprehensive tool by which it becomes easier and more effective to connect with the target audience, at every touch point.
Customer experience management: definition
The first to systematize thoughts on how to manage the consumer experience is Bernd H. Schmitt, who in 2003 introduced a new and visionary approach to managing the relationship between brand and customer in his book, “Customer Experience Management.” In this model, which he renamed Customer Experience Management (CEM or CXM) processes, methodologies, and tools are employed to positively transform the brand image. In every touchpoint of the customer journey, online and offline, Schmitt sees an extraordinary opportunity to maximize the customer experience and establish a lasting bond.
Twenty years have now passed since the publication of Schmitt’s book, and there are plenty of players who have interpreted the concept of customer experience management by applying it on their own corporate mission. Gartner, for example, a leading global consulting and research firm, defines it as “the discipline of understanding customers and deploying strategic plans that enable cross-functional efforts and customer-centric culture to improve satisfaction, loyalty, and advocacy. From this perspective, customer experience management is conceived as a process of strategically managing the entire customer experience of a product or company.
Before we go on to talk about the tools and challenges of CXM, let’s take a small step back.
Customer experience management was born to design, organize, and drive the customer experience. On the other hand, customer experience, now well established, represents one of the most important factors that a company—any company—must consider. Neglecting it or underestimating its impact is a very risky behavior that can hinder an organization’s growth or even harm it. But what do we mean by customer experience?
At the heart of customer experience management: what is the customer experience?
Customer experience is the result, never definitive, of the set of interactions a person has with a brand during the buying process (and also includes interactions that occur after the purchase).
Until the spread of the internet, a customer’s experience was determined solely by contacts that took place in the store or mediated by direct communications, by telephone for example. Today, the customer experience encompasses all customer interactions, off-line and online, from first contact to retention. The customer experience cannot be traced back to a single, immutable form or flow: customer experiences will continue to change in the future because shaping them is a set of factors that vary over time. Among these factors, technologies and interaction models play a prominent role. When exactly did the customer experience begin and how did it become what we know today?
To the origins of customer experience: from price to loyalty
The concept of customer experience can be traced back to early marketing and consumer theories developed between the 1960s and the 1990s. It was born in a context characterized by the increasing commodification of services, where the value of a product was no longer exhausted in its price or availability but generated through customer loyalty and depended increasingly on customers’ propensity to repeat purchases.
The theory of customer experience thinking came about in the mid-1990s. The first to coin the phrase “customer experience” and to develop a framework for engineering customer experience was probably Lewis “Lou” Carbone in his celebrated 1994 article, “Engineering Customer Experiences.”
Since that time, customer experience has increasingly become the differentiating factor behind consumer choices. From 2018, a much-quoted PwC report conducted on a sample of 15,000 people finds that 1 in 3 customers would abandon a brand they love after just one bad experience and that 92% would choose another company after just two or at most three negative interactions.
The digital customer experience: the customer experience in the age of digital transformation
Around the 1910s, internet penetration reshaped the ecosystem of commercial communications. Digital technologies enable new modes of contact with which the brand can intercept the target audience, and open online access channels that allow the construction of a much broader, articulated, and effectively polyphonic interaction space. At the same time, the status of the customer also changes from being a passive spectator to one who can finally participate in the dialog with the company, finding unexpected opportunities to be seen and recognized and to have his or her voice heard.
What we have named are the two main aspects of the digital customer experience, the customer experience in the age of digital transformation. The digital customer experience is thus the overall experience of customers during their online journeys and can take many forms: from researching the product to fully understand its features and make comparisons to generic forum browsing to get comments and reviews, from requesting information from self-service portals to using mobile apps for tips and assistance on product use, to conversions and transactions made directly online by clicking on interactive calls to action.
While the notion of customer experience management is still central to the debate among insiders, its operational meaning makes it incredibly relevant today. Technological evolution now makes available several tools through which to concretely apply customer experience management. Among these, CRM (customer relationship management) can be considered the system that paves the way for the development of CXM while CCM (customer communication management) is a further articulation of it. Let us try to elaborate.
From customer relationship management to customer experience management: a shift in perspective
CRM collects, organizes, and displays the information a company has about its customers to people working in different departments, marketing first and foremost. It involves specific software that constantly stores and analyzes customer data and keeps it in one place, open to different business functions.
CXM does something different. To some extent, it reverses the direction of the relationship: in this case, the company is presented to the customer, and not vice versa. This means that the consumer is permanently placed at the center of any business decision and that every action is aimed first and foremost at nurturing his or her loyalty to the brand and motivating conversions and purchases.
If a CRM has to be constantly updated in order to provide effective support, the degree of the CRM’s “vitality” is even higher and its initiatives are in constant flux. Beginning with the customer’s perception of the brand, customer experience management actions are developed by measuring the sentiment accrued during interaction with the company and they evolve both by identifying and correcting elements that were experienced negatively by the consumer and by amplifying those that generated positive feedback instead.
The CRM perspective, moreover, coincides entirely with the company’s programs: the focus remains on sales initiatives and obtaining more revenue. In general, it is a system that can also integrate with other functions such as customer service and technical support, but it requires significant digital transformation to support truly effective customer experience management overall. In any case, bringing value to the data within CRM systems is the essential initial step in any subsequent customer experience management and communication process.
Customer experience management and customer communication management: the leap forward
If we look at the advances in recent years, not only technological but also “cultural” (by culture we mean the system of corporate values and behaviors), the real leap forward of customer experience management is thanks to the adoption of customer communication management tools. The functionalities enabled by a CCM make it possible to overcome the broadcasting typical of traditional communication and to develop omnichannel, interactive, and personalized communication, achieving a degree of engagement previously unattainable, through the involvement of all the recipients of the message at the individual level.
A CCM, which can be conceived at the same time as a strategy and as a tool, integrates a series of interactive applications that allow the creation, storage, retrieval, and distribution of all the communications that take place between a company and its customers, its leads, its business partners and all in the same platform.
Today, the most innovative marketing strategies not only flank one-to-many communication with multiple bidirectional digital channels, they also tend toward the construction of a true conversation space, in the form of a dialog, in which the voice of users resonates distinctly and cannot be ignored (on the pain of discrediting the brand’s reputation). The benefits of using a CCM are varied: from increased sales to reduced costs, from increased customer loyalty to a better ability to identify customer pain points to rapid problem solving.
In today’s communications system, which is becoming more and more complex while simultaneously becoming more and more connected, CCM solutions are giving rise to a small revolution, inevitably impacting the customer experience. Therefore, in order to carefully, comprehensively, centrally manage communication, a fundamental component of the brand-consumer relationship, today a strategy to enhance the customer experience should be equipped with CCM tools.
Only through a sustained effort to keep communications with the target audience vital and engaging will companies be able to address the challenges that stand in the way of building satisfying customer experiences and stand out within increasingly crowded and competitive markets.
What challenges does customer experience management face today?
Customer experience can be positive, if it is responsive to customer needs, or negative, if not all the elements prepared by customer experience management are aligned, accurate, and properly functioning. Three obstacles stand in the way of a good customer experience today:
- Lack of an adequate data set. A company cannot accurately assess the customer experience if it does not have sufficient information about the customer’s behaviors, preferences, and problems. And it is not just quantitative data: a truly useful target analysis should also collect and interpret qualitative information. Free responses to surveys, for example, which can provide a much deeper understanding of customer problems, or comments posted on social networks, which provide a vivid and authentic cross-section of the audience, can spark new ideas for improving the overall experience.
- Insufficient omnichannel support. This second point relates to the previous one: if brands are unable to listen to customers on all channels where they are most likely to intercept them, they cannot gain reliable knowledge about their wants and needs. Moreover, customers who do not feel heard are more likely to switch to a competitor.
- Presence of information silos. The team involved in implementing customer experience management actions must convey the information collected and processed on the customer journey, making it understandable, to all departments involved, from sales to marketing to customer service to project managers. Only then, by identifying customer priorities and sharing them, will it be possible to create experiences that are perceived as relevant.
Why is customer experience management important?
The customer experience is, let’s repeat, the set of perceptions—or even better, the ultimate perception—that a customer experiences while interacting with the company. This perception can be determined by a variety of factors, from the tone of voice chosen by the brand for the text on its website to the ease found in completing a transaction, from the effectiveness of the conversation with a customer care operator to the resolution of a problem through chatbots, from the quality of the in-depth analysis of a multimedia content to the degree of personalization of a video. Generally speaking, the perceived value related to the individual interaction depends on the timeliness and completeness of the response given by the brand to a given question, even an unexpressed one from the user, the degree to which the user’s expectations are met, and the ability to keep the relationship viable through follow-up actions.
Customer experience management, by consistently managing all the actions that contribute to the construction of the customer experience, contributes greatly to the success of marketing actions and sales activities in general. The real competitive advantage lies in the voice of customers, which resonates in the data collected and provides a model on the basis of which more timely, useful, and meaningful initiatives can be designed.