Why customer experience management will replace CRMs

More products and services are becoming commoditised. Price differentiation is less of a sustainable advantage. Smarter buyers demand a faster response and expect greater value. 

In this kind of market it’s no longer good enough to simply satisfy customers. Successful organisations are those that delight their customers. That means that companies are going to migrate from merely managing relationships to understanding their customers’ entire experience with the organisation. 

In December 2012, we published the 12 Sales Trends Report for 2013 and released a brief summary of each trend. This month we are focusing on the sales trend “Customer Experience Management (CX) will replace CRMs”.

Customer Relationship Management (CRM) systems are going to be replaced with more effective and agile Customer Experience Management (CX) systems that provide a deeper insight into the customer’s total experience with the enterprise. At the same time less constricting sales automation, with in-built mobility and easy integration of social networking websites and apps will take a step up and become the heart of these intelligent CX systems. 

A combination of the proliferation of social networks (at last count there were more than 200 such sites with collectively well over 4 billion members) and the increased mobility of the sales force means that communications will have to be instant to be effective; they will need to be broader, deeper and more accurate to be useful to sales; and will have to be current to have any real value for customers.

CRMs, with their traditional focus on the management of the organisation’s financial interface with its customers and production activities (some with the “bolted on” input from sales), just don’t cut it anymore. CRM may have got the “management” part right but it totally missed the boat on relationships. Customer Experience Management systems on the other hand, do it all and close the gap. They give companies an interactive 360 degree view of their customers’ total interaction with the company – financial, production, marketing, sales and service. And advances in technology make the CX interface between buyer and seller in real time.

This change will see salespeople being unshackled from databases that take up too much time and do little more than police their activities. Because CX is likely to be more sales friendly, more responsive and more all embracing, salespeople will be more prone to use the systems, cutting out costs in the sales process, increasing their productivity and their responsiveness to customer requests. In the end CX will do what CRM failed to achieve – i.e. help salespeople become both more effective (i.e. work smarter) and more efficient (i.e. deliver more sales).

A recent study (Strativity Group, 2009) of over 860 executives revealed that companies that have increased their investment in customer experience management reported higher customer referral and satisfaction rates than their CRM using counterparts achieved. The finding was corroborated by research completed by software company Chordiant (Europe). Their study showed that over 75% of the organisations with CX systems achieved improved performance in four key business areas – market share, customer retention, profitability and customer satisfaction.

So, the question is: “What Constitutes Customer Experience?”

Customer experience refers to a customer’s interactions with all of the channels of the organisation – marketing, sales, production, administration, etc – which makes the buyer feel happy, satisfied, enjoying a sense of being respected, served and cared for, according to his/her individual expectations, from first contact through the whole relationship.

A few decades ago Jan Carlzon of Scandinavian Air Services (SAS) introduced what became known as “moments of truth” as a service ethic that helped his small, regional airline become a global player. At that time, Carlzon defined “moments of truth” as any experience that a customer or potential customer had with the organisation, whether that experience was direct or merely a passing message observed in an advertisement.

At the time that exposure did not include the now pervasive internet and social networks that have increased the opportunities for these moments of truth and have opened a forum for customers to express their feelings – positive or negative.

Today’s Customer Experience Management systems can’t just rely on tapping sales, finance or production data. They have to extend to include the internet and social networks. Forrester research says that experience-based information from these social networks, when integrated with both internal and other external sources enable organisations to create end-to-end customer experiences views. This vast array of data allows management to evaluate their business models and customer interaction protocols as well as their support and operational systems from the customer’s point of view. This way they can achieve higher level of customer-centricity resulting in more sustainable customer loyalty, less churn and eventually greater revenue and profits.

In the mostly undifferentiated current market conditions, the ability to deliver an experience that sets one organisation apart in the eyes of its customers encourages an increase in spend with the company and, optimally, inspires loyalty to its brand. 

What do you need to do?

To create a superior customer experience requires understanding the customer’s point of view: 

“What’s it really like to be your customer? What is the day-in, day-out ‘customer experience’ your company is delivering? How does it feel to wait on hold on the phone? To open a package and not be certain how to follow the instructions? To stand in line, be charged a fee, wait for a service call that was promised, come back to an online shopping cart that’s no longer there an hour later? Or what’s it like to be remembered? To receive helpful suggestions? To get everything exactly as it was promised? To be confident that the answers you get are the best ones for you?” 

CX focuses the operations and processes of a business around the needs of the individual customer. Successful companies are those that focus on making sure that the customers’ experience is a positive one. In our view, the term ‘Customer Experience Management’ represents the discipline, methodology and processes used to comprehensively manage a customer’s cross-channel exposure, interaction and transaction with a company, product, brand or service that cares.

Remember, everybody lives by selling something.

Sue Barrett is a sales expert, business speaker, adviser, sales facilitator and entrepreneur and founded Barrett Consulting to provide expert sales consulting, sales training, sales coaching and assessments.