Why CXM Is the Next Step in Customer Interaction

Experts explain the difference between customer relationship management (CRM) and customer experience management (CXM) and describe how--and why--you need to create a positive customer experience.

As if we didn't have enough abbreviations and acronyms, along comes CXM (or customer experience management). But what exactly is CXM and what makes it different from CRM? Why should organizations be embracing CXM? And what type of organization benefits most?

CIO.com asked customer experience experts and executives to explain and provide suggestions on how companies can get the most out of CXM.

"When CRM came of age in the late 1980s and early 1990s, the focus was on improving internal processes to better support customers, reducing cost and increasing satisfaction—with a heavy emphasis on reducing cost," says Marchai Bruchey, chief marketing officer at Thunderhead, a provider of customer communications management services. "It was an inside-out view of how to manage a relationship with customers."

CXM, on the other hand, takes an "outside-in" approach.

"CXM is proactive, even anticipatory," notes Peter Flynn, vice president of worldwide customer service with Stratus Technologies, an uptime service provider. "CXM proactively initiates contact, delivers content, preemptively solves problems and understands customer preferences, often before the customer requests it or knows they need it."

In addition, "CXM seeks to address the experience customers have with companies over time, with the aim of making each interaction a positive one, so that there is a cumulative effect on satisfaction and on loyalty," says Richard Vermillion, CEO of Fulcrum, a company specializing in marketing technology and analytics.

Why should organizations be embracing CXM and what types of organizations benefit most?

"Any organization that cares about delivering value to its customers should care about CXM," says Kurt Carlson, associate professor of marketing at Georgetown University's McDonough School of Business. "Organizations that will benefit most are those that operate in spaces where consumers have a lot of choice and where switching costs are low."

Similarly, "enterprises that thrive on strong customer relationships and want to empower their business users to make the most of every customer touch point throughout each state of the customer life cycle will benefit by embracing CXM," according to Neal Gottsacker, vice president of product marketing and R&D at HP Exstream. "Considering it costs six to seven times more to gain a new customer than to keep an existing one ... enterprises that deliver context-aware customer experiences in the preferred delivery channel—such as the Web, SMS, mobile apps and email—will find increased customer satisfaction and retention, improved response rates and higher revenues."

How to Improve Your Company's CXM

Define success. "Make it clear how a successful CXM will be measured," says Christine M. Ricci, chief communications officer and chief marketing officer, at B. E. Smith, a health-care leadership solutions firm. "This will help move the organization away from emotional decisions and more toward rational [ones]."

Start small and focus on specific goals. "If there is one thing CRM taught us [it's that] huge initiatives with vague aims are highly likely to fail," says Fulcrum's Vermillion. "Focus on delivering bite-sized projects that deliver real customer benefits frequently, both to build improved experience and to maintain corporate attention."

Some experts advise that firms should hire a customer experience management expert. In addition to having CIOs and chief marketing officers, more organizations are hiring chief customer officers (CCO) to help oversee the entire customer experience. And while this does not have to be a C-level hire, organizations interested in providing or improving and monitoring customer experience should hire someone experienced in CXM.

Make sure your CXM and IT are in synch. "Whoever is accountable for the CXM and the results that it delivers needs to work hand-in-hand with the CIO. That way you deliver a solid front-end and back-end experience," Ricci recommends.

Continually strive to understand your customers from their perspective. "Often companies make the mistake of looking to automate what's painful for the company instead of looking at what is painful for the customers," says Mariann McDonagh, chief marketing officer with cloud software provider inContact. Instead, firms should "learn what customers really care about and remember that they demand the same experience regardless of what channel—call center, social media, chat, etc.—they use."

Julie Ann Lyssy, executive strategist, Kaleidoscope Minds, a consulting company, agrees. "Ask customers what they think ... for suggestions on how to make their experience better," she said. "This can be done in many ways, but too often companies use models to figure out what their customers like and neglect to use their best resource—actual customers—to create and implement new programs they believe customers will like." Many times improving the customer experience just requires a minor tweak or change to an existing system or program, not a big new expensive initiative, she adds.

Learn what customer touchpoints (i.e., interactions) matter the most and harmonize them. "Have someone own responsibility for the success or failure of each channel and work together as a team with other channel owners to create a seamless experience," says McDonagh.

Make CXM an enterprise, not just a departmental, goal. "Customer experience should be a total enterprise goal, not just the purview of the customer service team," she adds. "Sales, finance, product development and other teams should all have a role in collecting customer feedback and closing the loop with customers."

Be flexible. "Don't build a customer experience strategy that is rigid and inflexible, but instead approach it as a process that is organic and responsive to changing customer needs and expectations," McDonagh says.

Measure results. "Every use case should be developed and tested based on an improved customer experience," Vermillion argues. "Did the merchandise return take one minute instead of five? Were search results more relevant? Did the customer actually get their problem resolved?"

Actively engage in customer experience measurement. "Visit the call center and listen to calls. Attend focus groups. Build feedback loops into your interactive technology and act on the feedback you get," Vermillion counseled.

Don't forget the data. "More than ever, the many interaction touchpoints demand that data be both reliably accurate and available," he adds. "Focus on developing data hubs that are authoritative and that can be accessed by customer-facing applications."

The Bottom Line on Customer Experience

"Customers not only have more choices than ever before in who they do business with, they also have a direct voice through social media and other channels," says Scott Kolman, senior vice president of marketing at SpeechCycle, a provider of enterprise customer experience management solutions. "If the customer does not receive the level of service they expect from a business," Kolman said, "not only will they potentially take their business elsewhere, but they will tell others."

How Does This Affect CIOs?

"Because we're dealing in knowledge economies and information, the CIO is becoming more of the business transformation expert within organizations," says Doug Morse, vice president of customer experience at Cubic Transportation Systems. "Since transformations require a systems-type of approach as well as supporting technology, CIOs are often best positioned to lead the change to CXM in most organizations today."

Jennifer Lonoff Schiff is a contributor to CIO.com and runs a marketing communications firm focused on helping organizations better interact with their customers, employees, and partners.Follow everything from CIO.com on Twitter @CIOonline, on Facebook, and on Google +.

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