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The Battle Between CRM and CEM 

The Battle Between CRM and CEM

The Battle Between CRM and CEM

8/1/2006
By Donna Fluss
Written for GreaterChinaCRM

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The buzz word battle continues and customer experience management (CEM) is in the center of the bulls eye. CEM is not a new term; it’s been around since 2000 when it was first introduced by one of the contact center quality management (QM)/recording vendors. (NICE Systems and Verint Systems both claim that they were the first to promote this term and it appears that both had a hand in its introduction.)

What is the Definition of CEM?

As often happens when a new term or buzz word is introduced, there has never been much consensus on the definition of CEM. But it is clear that this term has had staying power, as vendors and end users continue to use it.

Since CEM first appeared on the business landscape, different constituencies have had different understandings of this term. Back in 2000, QM/recording vendors viewed it as a set of tools/applications to improve contact center quality and customer satisfaction. Lisa Hager-Duncan of Gartner said that “CEM enables a multidimensional view of the customer and their interactions and experiences with an enterprise.” The Manager of Risk at Absa Bank in South Africa stated that CEM was a strategy where risk management “leverages contact center information to prevent criminal activity and losses.”

I argued back then, and still strongly believe, that CEM is not just a set of technologies – although it uses certain technology. Rather, it is an essential element of an enterprise’s customer relationship management (CRM) strategy. I provided the following definition in an article called Focusing Your Organization on Customer Satisfaction (November 1, 2002): “Customer experience management extends and leverages information gathered in the contact center to enterprise decision makers, senior management and sales and marketing organizations. This information can be used to increase revenue, improve customer satisfaction and loyalty, identify trends and customer concerns, and improve risk management.”

Should CEM Replace CRM?

Customer relationship management are another set of buzz words that saw their popularity hit peak awareness in the 1997 to 1999 time frame. I was at Gartner at the time and very involved in helping the market appreciate that CRM is an enterprise strategy intended to drive how enterprises interact with and realize benefits from customers. CRM was not and is still not an application or servicing suite, even though the term is often used this way.

CRM is an enterprise-wide business strategy impacting all customer facing departments and activities, including, sales, marketing and service. When CRM is properly implemented, it is a driving force behind all company decisions that impact customers. All decisions should face the CRM litmus test – if they help the company achieve their CRM goals, they should be prioritized. If they do not facilitate achievement of CRM goals or other important corporate objectives, they should be reviewed and enhanced to improve their value to the enterprise and its customers.

Managing the customer experience should be a critical element of corporate CRM strategy. The problem in many companies is that CRM has taken on a life of its own and has left the customer out of the equation. Too many decisions are made in the name of “achieving” CRM without considering the customer impact. For example, many companies implement a self-service application to reduce costs. They say it is being done as part of a CRM strategy, because self-service applications are intended for customers. Cost reduction is an essential financial goal, but should not be the driving force behind a CRM decision. On the other hand, providing customers with alternative and flexible channel choices, including self-service applications, is an important CRM objective for most companies. When these self-service systems are implemented properly, they are capable of significantly reducing operating expenses while improving the customer experience.

This difference may appear subtle, but it is substantial for customers. In the example where self-service is implemented to meet cost reduction goals, the enterprise is likely to automate activities they want customers to use and unlikely to present options that are helpful from the customers’ frame of reference. In the second situation, the enterprise identifies and analyzes customer needs and wants and then satisfies many of them through the self-service channel. What too many companies fail to realize, and what ultimately causes so many bad self-service applications, is that if you give customers what they want, they are more likely to use the application and the enterprise is more likely to achieve their desired cost reduction.

Should Enterprises Manage Customers?

Both CRM and CEM are subject to a fatal flaw. Both strategies assume that customers can and are willing to be managed. While there are exceptions to this rule, in general, customers do not want to be managed. Customers want to do business when they want, where they want, how they want and the way they want. This doesn’t mean that customers are never willing to be managed – they are, as long as the approach used by the company doesn’t conflict with customers’ needs and wants. When corporate goals and customer requirements are misaligned, which appears to be happening at an increasing rate (almost frighteningly so), enterprises lose customers and receive many complaints about poor quality.

CRM or CEM Strategy?

Enterprises that want to succeed need to implement a CRM strategy that incorporates CEM. Enterprises should concentrate on using CRM to provide an outstanding customer experience, instead of trying to manage customers. Managing customers is akin to trying to stop a hurricane – it’s simply not going to happen.

Providing an Outstanding Customer Experience

Enterprises of all sizes should strive to provide an outstanding customer experience. This should be one of the fundamental CRM goals of all “for profit” companies, if not for all enterprises, including government agencies. To achieve this goal, enterprises need to identify, analyze and understand customer needs, wants and insights. Enterprises should change their strategy from managing customers and trying to get them to do what the company wants, to anticipating customer needs so that they can profitably deliver desired products and services.

Concluding Thoughts

Few companies have the knowledge, analytical capabilities or applications to adequately understand customer needs, wants and insights and even fewer can anticipate their customers’ desires. Companies that want to provide an outstanding customer experience must understand their customers’ expectations, as customers are generally not willing to be “managed.” And, enterprises that want to “wow” their customers on a consistent basis must anticipate customer requirements.

Billions of dollars have been invested in data warehouses, data marts, business intelligence, reporting and other analytical initiatives to collect customer information. While there have been great improvements in the timeliness and usefulness of analytical data in many companies, a great deal of this information still arrives too late to be helpful.

Contact center vendors were onto something back in 2000 when they introduced the CEM term to the market. They knew that the contact center is the focal point of interactions in most companies and that customers openly share their needs, wants and desires with agents. What they didn’t know back in 2000 was that by 2006 there would be speech analytics applications available that could capture, structure and analyze phone conversations, enabling enterprises to take action in near-real time. Even better, within the next 12 to 24 months, these applications will be enhanced to address all types of unstructured data and respond in real time.

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