You can either create great customer experiences and leverage the benefits thereof, or you can watch poor customer experiences erode your revenue, profits and ultimately your brand equity. I was recently asked the following question:

“What is the difference between CRM and CEM, or is there any difference between the two?”

In a previous post I addressed the practice of Customer Relationship Management (CRM) in fairly great detail. As most of you know I am a huge fan of well conceived CRM initiatives.

That said, I have rarely witnessed CRM implemented to its full potential. Most companies can claim an element of success in some aspect of CRM proficiency such as sales force automation, database marketing, development of a knowledge-base, etc., but the reality is that most companies absolutely miss the boat in harnessing the true power of CRM which is improving the customer experience. In today’s post I’ll address a key metric that all companies should be focused on – Customer Experience Management (CEM)…

Before I go any further let’s get the semantical arguments out of the way…Some will claim that a well conceived CRM initiative includes CEM as a subset. Others will claim that CEM is a stand alone practice differing measurably from CRM, and I actually believe that CEM should drive CRM functions such that CRM is actually a subset of CEM. I believe it is the experience (or promise thereof) that creates and sustains a relationship. The initial concept behind CRM was to integrate experience with management, which was a great idea, but in all practicality, rarely exists in most companies. Oddly enough, I have found that most business people use CRM and CEM inconsistently or worse yet interchangeably…a very big and very costly mistake.

Now that you’re totally confused, let me see if I can clear things up a bit…My belief is that experience has been unknowingly, but nonetheless systematically bled out of CRM over the years by operationally focused “bean counter” types who tend to focus on measuring incomplete and certainly less meaningful data points to begin with. The focus of these short-sighted bean counters incorrectly place cost savings ahead of the customer experience. In short, most CRM practitioners have traditionally assumed an internal (inside-out), operationally centric approach to customer management and strategy. CRM purists (those who really get it) or CEM practitioners differentiate themselves by assuming an external (outside-in) approach that focuses on customer centricity.

While many companies tout their CRM initiatives, and pride themselves as being customer centric, the reality is their efforts are woefully inadequate. This is because most CRM platforms measure customer interactions solely upon product purchase history and preferences. As should be obvious, this set of metrics is biased not only to product centric data, but also toward historical data, and does not take into account experience or forward looking trends & preferences. CEM focused platforms measure experience data not just product data and focus much of the efforting on forward looking analytics. Misguided CRM practitioners focus on selling more product while true customer centrists who display a bias toward CEM focus on closing the gap between a company’s brand promise and the delivered customer experience.

Just as a mountain climber can choose different routes to the summit, companies can likewise choose different approaches and focus points in how they manage the customer relationship and experience. However as the mountaineer’s choice can influence time, degree of difficulty and the eventual success or failure of the climb, so will a company’s choice between a historical product based platform (CRM) vs. a forward looking experience based platform influence their degree of success or failure.

Oh, and by the way…if you’re a CEO you better have a very clear understanding of what your customers are experiencing at every level of interaction across your enterprise. Great CEOs personally experience their business as a consistent consumer of its services. Richard Branson is a frequent passenger on Virgin flights. Howard Schultz is known to show-up at various Starbucks locations and stand in line to order a coffee to measure the quality of his experience.  Jeff Bezos spends great amounts of time on the website attempting to improve the customer experience, and the list could go on…

In closing, let me leave you with this final example; think of the best restaurant you’ve ever experienced…Chances are it was a restaurant where the owner was present and highly involved in every aspect of the dining experience. Every thing from the first impression when entering the establishment, to the quality of service, to the detail of the ambiance and atmosphere provided, and finally to the presentation and taste of the meal was excellent. This was no accident…it took hard work, careful planning, and extreme attention to detail with a focus on execution…This example is exactly how a great customer experience is created.