Defining Customer Experience Management (Part I)

A growing number of books and articles are actively promoting the concept of Customer Experience Management (CEM). Popular leaders include Bernd Schmitt, author of “Customer Experience Management” and "Experiential Marketing". Joseph Pine and James Gilmore, co-authors of the book, “The Experience Economy” have also gained a great deal of exposure. You may have read “Managing the Customer Experience” by Shaun Smith, or “Customers.com” by Patricia Seybold. You may also have seen articles about and Harvard Professor, Gerald Zaltman, author of the book How Customers Think. There are also a growing number of agencies and consultancies claiming expertise in CEM – all with varying degrees of involvement and expertise in the arena.

While there’s a clear reason to become a staunch supporter of CEM, there’s a great deal of confusion over what it really is. As more individuals get on board the CEM band wagon and build services in the arena, confusion seems to be increasing. It’s time to demystify the hype:

Defining CEM

While no individual really “owns” the term “Customer Experience Management,” it is often attributed to Bernd Schmitt who, in 2003, defined CEM as “the process of strategically managing a customer's entire experience with a product or company." Building further on Schmitt’s definition:


The term "Customer Experience Management" represents the discipline, methodology and/or process used to comprehensively manage a customer's cross-channel exposure, interaction and transaction with a company, product, brand or service.

Five Functional Areas of CEM


When we look at the nature of Customer Experience Management, there are essentially five key areas that CEM practitioners or “Experience Architects” examine. While these are broken down consultants in slightly different manners, based on individual methodologies, they can be described, at a high level, as follows:


1. The Customer. CEM analysis focuses on developing a multidimensional understanding of customers. This understanding includes cultural, sociological, behavioral and demographic analysis, and culimates in a detailed ability to articulate the needs, wants, desires, expectations, conditions, context and intentions of various customer groups. This understanding informs audience segmentation and guides the prioritization of key segments. Customer analysis is proactively benchmarked against a company’s capability to meet customer needs - both in a present and future state capacity. Customer understanding therefore serves as the primary driver in shaping the business approach, aligning strategy and investment.

2. The Environment. Examining the “landscape for brand discovery” is an essential tenant of CEM. This landscape is comprised largely of market conditions, competitive factors, channel use (and channel/cross-channel dynamics), the process for purchasing (steps to buying), the “real” purchasing environment (store, phone, web, etc.) and the service environment. Leveraging this knowledge against customer analysis, CEM strategists work with companies to create integrated plans, which “order the paths” customers commonly follow in the purchasing process. These multi-path strategies work to ensure customers have an intuitive, pleasing experience at every step in the journey to brand discovery. As a part of Environmental Analysis, strategists also focus on applying experience innovation to customer environments, which remove barriers that confuse, inhibit, discourage or de-motivate customers, and create a more engaging, efficient, pleasing, personable or memorable environment within which to interact.

3. The Brand. From a tactical perspective, this analysis involves the development of visual identity, assets, tag-lines, communications, logos and other brand assets that help shape perception and define the brand in the marketplace. From a strategic perspective, however, this analysis focuses on innovation and differentiation. This includes the consistent and iterative evaluation, planning and refinement of product or service features, functionality, pricing, options, attributes, benefits and positioning of the company, service or product.

4. The Platform. A company’s operational infrastructure is the platform on which customer experience is delivered. As a result, operational efficiency has a direct impact on customer experience. As companies move from an “inside out” focus (on internal operational constraints such as production, capacity, etc.) to an “outside in” focus (on customer-centric delivery), operational analysis is essential. This includes comprehensive evaluation and improvement of people, process, policies, technology and systems that facilitate, track and measure customer interaction and transaction. CEM Platform analysis may include technology implementation, workforce evaluation, fulfillment and logistics analysis, process improvement, systems analysis, policy reviews and a myriad of other tasks. The goals of platform analysis include streamlining operations, increasing time to market, removing barriers to customer satisfaction, lowering costs and improving the overall customer experience by creating operational excellence.

5. The Interface. This area of CEM analysis focuses on the interaction between consumers and the brand, from a human-to-technology; human-to-human; and human-to-environment perspective. Simply defined, this area focuses on refining and optimizing the customer interaction within any channel to produce desired and pleasing outcomes. At a tangible level, CEM Interface analysis may center on improving the usability of electronic applications or products (e.g. a web site, a TIVO interface; or the buttons and information flow on a cell phone). However, it also concentrates on optimizing the interfaces within other channels, such as brick-and-mortar outlets. CEM strategists focus on how customers interact within, and across channels, often examining the end-to-end shopping and service delivery process. This may include task-based analysis of various interactions and transactions, such as a customer's discovery, browse, shop, purchase and post-sale experience. CEM practitioners focus on improving the quality and efficacy of customer dialog. This may include conducting analysis of the call-center or voice-response systems, as well as optimizng the approaches of sales or other customer-facing staff.


It’s relatively easy to find individuals who can work within one or two of the areas above. What separates CEM practitioners from the pack an adamant dedication to examine all five functional areas with companies to develop truly cohesive strategies and plans that result in tangibly improved customer experiences and better business outcomes.

It's easy to confuse CEM with CRM, Usability and "Experiential Marketing" ... we'll talk more in future posts about how it all fits together.

Resources for this article include materials produced by Bernd Schmitt; Joseph Pine/James Gilmore and other authors referenced in the initial paragraphs of this book.

4 comments:

Sivaraman Swaminathan said...

Lovely post. I think CEM is more comprehensive than experiential marketing. Experiential is more "shallow" , a touch and feel act. That is really where experiential marketing fails. The subsequent interactions with the company may not be as good. Experiential marketing creates expectation, CEM sustains and delivers the expectations. I think CEM is more deeper, true and sustainable over long term.

Tim Whelan said...

Actually impresive. The one thing that really bothers me about the way CEM is being developed is that it deals only with the brand. Why? There are hundreds of contact points outside the brand influence that that have impacts on customers and their experience. Yes, CEM needs to be managed cross chanel, but the chanels are not company wide and are limited in number and scope. Sounds like the brand boys and girls are still up to their armpits in sludge (doing old things with new words). CEM needs to extend beyound just brand enfluence to have a real effect on customer satisfaction and loyalty.

Anonymous said...

This is a really excellent piece, and it does a nice job of highlighting the differences between CEM and CRM. I was disappointed when I read the "About" section of Leigh's website (livepath.net) where she described her self as "... Leigh provides strategic consulting in the areas of web strategy, customer experience CRM..." I thought she is trying to show a difference between CEM and CRM. So what is customer experience CRM???

LivePath said...

Thanks for the note about my bio. In addition to the typographical error, I cleaned up a little of my terminology... the joys of web site maintenance. ;-) Resources pages are next, someday, I hope!

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LEIGH DURST

LEIGH DURST
I’m Leigh Durst, a 20 year veteran in business, operations, customer strategy, ecommerce, digital & social media and marketing. Simply put, I’m a strategist that helps companies (start-up to blue chip) achieve business shift, create more compelling online and offline experiences. I also write, speak and teach about experience design and next-generation business. I’m a futurist, visionary, strategist, doer and connector with a passion for people and helping others. When I’m not on the road, you’ll find me in the San Francisco bay area, working, beaching it and hanging out with my family and dog.

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