I entered the CRM industry in 1998 after a career in the technology industry, mostly with IBM. CRM seemed like an exciting concept, because it brought together elements of business strategy, technology and customer relationships.
Without knowing it, I had been a student of CRM for a long-time at IBM, because the culture of the company was customer-oriented. After all, the three IBM Basic Beliefs (established in 1962) were respect for the individual, superlative customer service and the pursuit of excellence.
As time went on in the 2000-2005 time frame, the CRM industry headed in a more tech-centric direction. I felt something was missing. At CRM conferences (DCI was the big one, back in the day), vendors were mainly demonstrating SFA. This was fine for the sales manager, but missed the larger point — how does this help customer relationships? CRM really meant Customer Revenue Management.
Around 2005 I started reading about Customer Experience Management (CEM). At first, I wondered if it was just another buzzword invented by consultants. But after digging into the topic more deeply, and conducting my own research study in 2006, my conclusion was that CEM was fundamentally different.
In my 2006 article The Next Generation of Customer Management? Customer Experience Management, I concluded that:
CEM helps the enterprise see the customer with the “right brain”—concerned with perceptions, feelings and interactions that are harder to quantify but oh so valuable, nonetheless. Instead of just looking at how valuable the customer is to the enterprise, CEM requires an inspection of the enterprise’s value to the customer. Rather than recording transactional information like leads, opportunities and average handle times, as many CRM systems do, CEM maps the experience from the customer point of view.
CRM vs. CEM: Which is the Bigger Idea?
Since that study, there’s been an ongoing battle for buzzword domination. Those that go to market under the “CRM” brand (generally tech-focused consultants, analysts and vendors) tend to say that customer experience is just part of the CRM framework. After all, one of Gartner’s 8 building blocks includes customer experience, so what more is needed?
In the CEM world, the industry has been driven mainly by consultants the past few years. CEMers tend to say that CRM is just a system you need to support certain technology-enabled experiences (e.g. contact center, web sites). CEM is the bigger concept, CEM proponents argue, because it encompasses the entire end-to-end customer experience, including all interactions, touchpoints and people. In some cases, even products!
To be sure, both concepts have evolved. In recent years, CRM has become more “social”—which could mean using social media or being collaborative, depending on who is promoting Social CRM as the next big thing. Ironically, CEM has taken more of tech slant, which has caused some consternation with CEM consultants, who fear that vendors will hijack the term and turn it into a “solution.” Major vendors like Adobe, Oracle and SAP have been pushing CEM messaging and solutions, along with some vendors in the contact center, EFM and social analytics spaces. In 2011, Forrester coined the term CXM for digital experience solutions.
So which is the dominant concept? In a recent interview, I put that question to Ed Thompson, a noted Gartner analyst who helped develop the 8 CRM building blocks a decade ago. In recent years he’s been Gartner’s go-to analyst in CEM. Ed positioned CRM and CEM “like a Venn diagram… adjacent overlapping but different.” He went on to say:
The way I tend to associate is to say it’s about roles and goals. And I would argue that CRM is quite narrow in terms of the roles. And most people would agree that CRM has something to do with sales marketing, customer service roles in an organization. In other words, the finance guys aren’t doing CRM. You could debate that, but it’s largely about those three departments. But the goals are very long, and we typically collect every six months a list of about 40 to 50 what are your goals, your CRM initiative? So, it could be acquisition of customers and cross selling and up selling and learning customer service, the campaign response rate. There’s a whole long list of things that people try to achieve. Customer experience, I would argue that the goals are narrow, along with the sub set of CRM. The goals are advocacy, satisfaction, loyalty.”
At Forrest Research, Paul Hagen wrote in an April 2011 report Beyond CRM: Manage Customer Experiences:
Business process professionals characterize CRM as “the business processes for targeting, acquiring, retaining, understanding, and collaborating with customers.” Although CRM leaders and customer experience professionals share goals like extensive customer knowledge and increased service quality, the fundamental approaches of these two disciplines differ vastly. Typical CRM efforts take an inside-out approach that serves specific business needs but does little to improve or manage customer experience.
Speaking with Forrester’s lead CRM analyst Bill Band recently, he agreed with Paul that CRM was more of an “inside-out” technology/process approach, while CEM was “outside-in” by being more concerned about how the customer perceives and feels about all interactions with a company. He also says (and I agree) that CRM and CEM “are not mutually exclusive.”
Striking a Balance: Yin and Yang
I could go on, but the point here is clear. Both CRM and CEM are important concepts, but one is not subservient to the other.
You can use my left-brain/right-brain concept, or overlapping circles in a Venn diagram. But I think yin-yang is a better way of thinking about these two ideas, recently suggested by Maz Igbal in a comment on his post The customer loyalty paradox (Part II):
The yin-yang symbol that emphasizes the complementarity of the “male” and the “female”. This is needed for a system to be in harmony over the longer term, else it disintegrates – takes some time and it does disintegrate; and “the middle way” favoured by Buddhism – this is all about balance. Balancing the short term with the long term. Balancing hard (data, metrics, analytics, IT) with the soft (people, conversations, human touch, love, compassion..). Balance between creating value for customers and value for the stakeholders in the business. Balance between the needs/reward of shareholders and that of the people who create that value through their hard work – employees.
For those struggling to position CRM and CEM, maybe this yin-yang construct will help. And if you’re searching for yet another TLA to use, I suggest Customer-centric Business Management (CBM), a term I coined a couple of years ago. Take the best of CRM and CEM thinking, drive your actions with a customer-centric strategy, and you’ll deliver value for customers and the company. Isn’t that what a good business is all about?
* Yin and yang (Wikipedia)
* The Next Generation of Customer Management? Customer Experience Management (2006)
* Social CRM: Strategy, Technology or Passing Fad? (2009)
* “Social CRM” is Dead, Long Live the Social Customer Experience (2011)
* Is CRM Dead? (2011)
* The customer loyalty paradox (Part II)