Bridging the Gap between CRM and CEM
Despite more than a decade of efforts implementing customer relationship management (CRM) systems, Executives are realising the sober reality: CRM in its present guise has not enabled major leaps forward in customer focus, says Martin Green VP, EMEA, Satmetrix, the Net Promoter Company. Some fundamental questions remain unanswered:
• How do I focus my entire company on what matters most to customers?
• What are the indicators of growth and how do I measure, monitor and affect these indicators?
• How do I give employees the information they need to positively impact the customer experience?
CRM is an important step for improving operations across customer touch points, but it focuses on your perception of the relationship with your customer. Customer Experience Management (CEM), by contrast, is focused on how the customer perceives their relationship with you. Together you can gain a true 360-degree view of the customer.
CRM systems track essential facts such as a customer’s name, address, phone number, what they bought, when they called, why they called, and so forth. Sales and service personnel record every instance of customer activity, and marketing/research personnel use this information to predict future buying patterns.
This falls short of producing customer insights on how the customer perceived these interactions and how they are likely to behave in the future. To obtain additional value from CRM investments, companies need to understand the attitudes, preferences, expectations and actual experiences of customers. In the case of business-to-business relationships, this insight applies to partners, distributors and OEMs as well.
This is where the ‘discipline’ of Net Promoter comes in. Many people are familiar with the CRM concept of attaining a 360-degree view of the customer. Net Promoter helps you “turn the camera inward” to complete the 360-degree view by understanding how customers perceive your company, through each and every touch point. When you tune in to the voice of the customer, you are able to tailor your product, sales, marketing, web and service campaigns according to what customers really want and need.
Each and every one of your customers has valuable information to share. Tapping into this insight allows you to invest in the right initiatives that grow your business. CRM does not give you this information, nor does it have the capability to help make timely decisions. CRM is the result of information entered by a company’s sales staff, whereas Customer Experience data collects information directly from customers – the data tends therefore to be more representative of customer intentions.
CRM records your view of your customer. CEM reveals your customers’ view of you.
Complementary approaches to customer management
There are some key differences between customer relationship management and customer experience management, which show how the two types of information can complement each other.
Firstly, CRM is a lagging indicator. It generates historical data about customer relationships, and includes tools for analysing the data. Conversely, Customer Experience data is a leading indicator. Customers reveal their experiences and describe how those experiences will impact your business – in particular, whether they want to continue to provide the same level of business to you and recommend your products and services to others. By continually monitoring the experience your customers have with your organisation, CEM helps you measure the overall quality of the customer experience all the time, so you can comprehensively address issues and identify areas that need improvement.
What versus Why
CRM systems do not provide any direct insight from a customer’s perspective, they can only record what a customer did – they cannot reveal why the customer acted a certain way. Customer Experience Management programmes reveal the “why” behind customer behaviour, such as the key drivers behind purchase decisions. It allows you to optimise the customer experience by making operational changes. That’s why we believe that a customer experience programme should be viewed not as market research, but as an operational management tool. The key question is not about customer satisfaction or loyalty, per se. Rather, it’s about a customer’s willingness to recommend your product or service to someone else.
Push versus Pull
At its core, Net Promoter is about motivating customer-facing employees to act quickly and knowledgably to customer feedback, while it still matters. It drives action across the organisation, from individual service personnel to executives, enabling them to respond appropriately for each customer. Reducing the time to act is the fundamental idea that underlies CEM solutions. As a result, the company knows their customers better than the competition. And decision makers know what can be done to optimise the customer experience in ways that drives loyalty.
In our experience, CRM and CEM need to be viewed as two halves of a whole. Net Promoter, as an approach to customer experience management, is complementary to CRM. While CEM does not need CRM to provide a clear customer view of the company, together, they provide a complete perspective that helps you increase both loyalty and revenue. Combining behavioural CRM data with attitudinal CEM data allows you to gain a comprehensive view of the factors that motivate customers to buy more and recommend you to others.
By directly asking your customers about their experiences and what they think about your products and services, Net Promoter establishes a dialogue between you and your customers. It enables you to quickly identify when customers have received unsatisfactory service so that you can immediately initiate recovery efforts. This can be especially important at critical junctures in a customer relationship, such as when a contract is up for renewal, a project phase is completed or an installation is performed.
Net Promoter allows you to build a trusting relationship based on listening, taking action and closing the loop. By optimising the customer experience you build loyalty and enhance the customer relationship, which results in increased retention, repurchase and referrals.
By gaining valuable and timely insights into your customers’ views and level of loyalty, you can gauge how willing they may be to respond to cross-sell or up-sell efforts. If you match this feedback with segmentation data, you will be able to introduce special sales initiatives for these priority customers that can be planned and implemented using CRM.
In a book entitled “Answering the Ultimate Question”, Dr Laura Brooks and Richard Owen of Satmetrix write about organisations which have had success with a Net Promoter programme to maximise growth. Through profiling and segmentation, they find NetWorked Promoters who can influence others by spreading positive word of mouth more quickly and broadly than average customers. Some business-to-consumer (B2C) organisations have created online communities through the product and service registration process by collecting customer interests, size of social network, and likelihood to influence others. The book says: “By combining inputs from other technology sources such as CRM systems with demographic information, website log-in frequency, past feedback provided, buying and spending habits, and referrals, organisations can triangulate which customers have been the most engaged and then rate these customers based on their level of influence.”
Conclusion: Using Customer Insight to Get Ahead – and Stay There!
Net Promoter completes the process started by CRM by directly channelling customer feedback to impact all business units. It not only reveals why a customer did something, but also what they are most likely to do next. Only by gaining insight from what customers think, rather than merely collecting historical data, can you identify behavioural patterns that impact future revenue and discern how customer loyalty pertains to financial results. Companies that master both perspectives can see the entire picture of their customer relationships and grow their businesses faster and better than their competition.
While CRM remains an important strategy for increasing operational efficiency and effectiveness across all customer touch points, its focus is on what you want customers to do. Customer Experience Management as defined by Net Promoter, by contrast, is focused on what drives customers to do business with you. Companies that master both can see the entire picture of their customer relationships and grow their businesses faster and better than their competition.
Today, doing things right is necessary just to stay in the game. Doing the right things is what sets your company apart.
The One Number You Need to Grow
For companies of all sizes, there is a strong correlation between company growth rate and the percentage of promoters, which refers to customers that are likely to recommend a company to friends and colleagues. By subtracting the percentage of customers who say they are unlikely to make a recommendation from the percentage of those who say they are extremely likely to do so, we arrive at a calculation called the Net Promoter® Score or NPS®. While companies measure customer experience using a variety of criteria, research shows that this loyalty metric most strongly links to long-term revenue growth. Satmetrix uses its Net Promoter methodology to match responses from individual customers with their actual behaviour, such as repeat purchases and referral patterns over time. A high Net Promoter Score means that your organisation has more promoters (open advocacy of a product, service or organisation) than detractors (negative word of mouth). Using the Net Promoter methodology, customer input can be translated into profitable growth.