What Is Customer Experience Management? (And How It Works)

By Indeed Editorial Team

Published 12 October 2022

The Indeed Editorial Team comprises a diverse and talented team of writers, researchers and subject matter experts equipped with Indeed's data and insights to deliver useful tips to help guide your career journey.

Customer experience management, often abbreviated as CEM or CXM, is an approach to improving customer satisfaction. Business leaders use this practise to analyse and understand their customers' experiences so they can identify strengths and weaknesses in their customer service strategy. Learning about CEM can help business leaders improve their approach to customer service, which can lead to increased customer loyalty and brand advocacy. In this article, we define what customer experience management is, explain its importance, describe how it works and compare it to customer relationship management (CRM).

Related: 35 Customer Service Manager Interview Questions with Answers

What is customer experience management?

Customer experience management is the practise of putting the experiences of customers at the centre of the business model. It means focusing on the end-to-end experiences of customers who engage with a business. For example, an e-commerce company may look at how its sales page optimises the shopping experience for its customers. To do this, it may study how well website features meet the needs of its customers, identify opportunities for improvement and change the website to make the shopping experience better.

Managing the customer experience involves understanding the needs of core customers. Identifying what customers value in the experience of working with a business allows leaders to provide a high level of personalised customer service. When businesses meet the needs and expectations of their customers, it can improve customer loyalty, increase word-of-mouth advertising and benefit the company's bottom line. Customer experience managers use a combination of software, analytics, research and data management systems to perform their work. They typically break the process down into stages, including:

  • researching customer needs

  • developing a service vision

  • building relationships by forming emotional connections

  • implementing a customer feedback system

Related: What Does a Customer Experience Manager Do? With Salary

Importance of customer experience management

CEM is important because it improves customer satisfaction. Customers who have a positive experience with a business are more likely to buy from that business again. Additionally, they may recommend the business to others, which can help businesses grow their customer base. Often, it's less expensive for a company to invest in a loyal customer base than it is to get new customers. For example, marketing to persuade new customers to try a business is expensive. Loyal customers are likely to return to a business with less prompting from the marketing team, so they're less expensive to access.

When customers promote a business to their friends and family, it's called word-of-mouth advertising. Customers who have positive experiences with a business may be more likely to advocate for that business. This helps organisations gain positive public reputations. Effective CEM benefits both businesses and customers. For example, implementing a CEM strategy helps with:

  • applying automated marketing software to collect and analyse large volumes of customer data

  • improving the process of making customer-centred business decisions

  • reducing customer churn and lowering costs

  • increasing revenue from returning customers

  • generating sales from new customers through word-of-mouth advertising

  • improving company reputation through brand advocates

Related: What Is Good Customer Service? Definition and Guideline

6 CEM strategy stages

A typical CEM strategy works by following six stages. These stages represent the process of gathering information, creating goals and strategies, analysing the effectiveness of those strategies and making improvements based on additional data. Here are the six stages of CEM:

1. Assessing needs and segmenting customers

Understanding the needs of your customers is the first step to managing their experiences. To get an accurate assessment, it's important to conduct customer research and create customer segments. When you segment customers, you group them by characteristics like demographics and behaviours. For example, you may have a customer segment that includes women between the ages of 25 and 35 who make most of their purchases from the company website late at night.

Identifying this segment allows you to narrow your research focus. Learning more about customers in this specific group helps you understand the needs and expectations of these customers. The better you understand what these customers look for in a positive experience with a company, the more you can implement features that provide them with the experience they want.

Related: What Is Market Research? Definition, Types and Examples

2. Mapping the customer journey

Mapping the customer journey means identifying specific touchpoints for your customers at each stage of interaction with the business. A touchpoint refers to any point at which customers interact with a business. For example, the first touchpoint for many customers is seeing an advertisement. Identifying every touchpoint in the customer journey for each of your segments allows you to focus on optimising the customer experience at each of these points.

Related: What Is Business Strategy Development? (With Examples)

3. Identifying the ideal experience

Using your customer data and the touchpoints from the customer journey map, visualise what the ideal customer experience is at each point of contact. This stage allows you to identify specific goals to improve the customer experience at each touchpoint. The purpose of this stage is to identify what the ideal customer experience looks like before your team fully develops a realistic strategy.

Related: A Complete Guide to Developing a Strategic Planning List

4. Creating a brand experience strategy

Based on your vision for the ideal customer experience, create a strategy. At this phase of the cycle, detail what it takes to optimise the customer experience for the business. Make a realistic plan for how you can implement service features that improve the quality of the customer experience. For example, create a plan to update the company's website with new features that make shopping online easier.

Related: 7 Brand Strategy Examples: Types, Definition and Importance

5. Implementing the strategy

Put the strategy in place. Implement the plan to improve the customer experience at the business and have a strategy to monitor its success. At this stage of the process, customer experience managers make changes to key customer touchpoints that better align those points of contact with the ideal customer service experience. Examples of this may include changing how sales associates interact with customers, updating the company website or altering the social media strategy.

6. Reviewing and improving the strategy

It's important to analyse and measure the success of the customer experience management strategy. Measuring the plan may involve surveying customers to get feedback along with analysing changes in sales patterns. Gaining feedback from customers is important for gaining insight into their feelings regarding the changes. Additionally, monitoring the effect of the changes on your sales and budget can affirm that the new strategy is effective for the business.

Related: How to Measure Brand Value (Complete Guide And Definition)

Difference between CEM and CRM

CEM and CRM share some similarities but differ in their areas of focus. Both customer experience and customer relationship management put the customer at the centre of the business model. They both emphasise the importance of building meaningful relationships with customers. The difference is that CEM focuses on the feelings and experiences of customers. By comparison, CRM emphasises the organisational knowledge of customers. Here's what CEM and CRM entail:

CEM

Managing the customer experience means looking at how a company meets the service needs of its clients. It involves:

  • implementing technology to track customer experiences

  • resolving customer satisfaction problems

  • providing relevant and personalised marketing and services

  • focusing on improvements in business operations that increase profitability

  • integrating strategies across all business channels to improve customer service

CRM

CRM seeks to build and maintain positive relationships with customers. Managing customer relationships typically involves:

  • creating detailed and specific goals to improve the business' relationships with its customers

  • implementing customer service strategies to provide customers with consistent, positive experiences that promote loyalty

  • focusing on personalised customer experiences as the centre of its engagement strategy

  • applying technology like artificial intelligence to show the real-time impact of relationship-building strategies

Related: What Is a Customer Relations Manager? (With Average Salary)

How does CEM software help?

Effective CEM software programmes help businesses constantly manage and analyse large quantities of customer information. They also quickly turn these interactions into profitable actions like intelligent service, product recommendations and loyalty incentives. CEM software often incorporates CRM data, customer feedback, web content management systems, personalisation engines and web analytics.

Here's what to look for when choosing a CEM platform:

  • Multichannel data collection: The software can gather customer feedback through various methods, from web and text surveys to live chats and interactive voice response systems.

  • Centralised data storage: The platform stores all customer information in one place, with real-time updates that are easy to share with various teams.

  • Customisable dashboards: These helpful dashboards quickly show relevant metrics to people in different roles.

  • Analysis tools: Analytics capabilities to look for include statistical, text and key driver analysis.

  • Automated actions: Ticketing, alerts and other automated actions enable businesses to respond to customers directly from within the system.

  • Ability to integrate with the current ecosystem: Many CEM software programmes have application programming interfaces (APIs) that allow businesses to send and gather data to and from other systems.


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