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Customer Relationship Management

Notes How CEM Relates to CRM?

Customer Relationship Management (CRM) is a business strategy to acquire, grow and retain
profitable customer relationships. 80 percent of business managers seem to understand that
CRM is a customer-centric way of doing business, not just technology to automate front-office
processes.
Managing customer experiences is an integral part of what CRM should be—a win-win value
exchange between a company and its customers. Loyal customer relationships are built on what
the customer perceives and feels about the product/service purchased and interactions with the
organization. At a fair price, of course. Says CRM industry veteran and CSO Insights’ partner
Barry Trailer, “CRM and CEM are really synonymous, if you look at CRM as a business strategy,
rather than just technology.” Yet, the reality is that some people do equate CRM with technology
used for tactical automation projects, and many of those consider it technology that hasn’t
always made a business successful. (CRMGuru’s research has found that about two-thirds of
IT-focused CRM projects are successful.) So in some minds, the term Customer Relationship
Management has become tainted and must be avoided, while Customer Experience Management
is another name for a customer-centric strategy without any stigma attached.

“At its highest level, CRM defines what the company wants from the customer relationship and
gathers the information and insight that is analyzed against products and service to find optimum
opportunities to sell,” according to David Rance, managing director of Round (U.K.) Limited.
“CEM is the mechanism by which the customer is engaged to optimize the potential customer
loyalty and long-term value that is defined by CRM. The customer experience is the emotional
part of any transaction.” Lior Arussy, customer strategy expert and president of Strativity Group
and author of Passionate & Profitable (Wiley, 2005), agrees that CEM is about “managing the
value proposition as the customer perceives it,” while CRM is concerned with “maximizing the
revenue and value to the company.”
Of course, loyalty research tells us that there is a linkage between the customer’s perceived
value and loyalty and the company’s revenue and profits. But in practice, too many companies
focus more attention on the ends (revenue and profit) and ignore the means (the customer’s
value proposition). “Organizations think CRM will create the customer experience for them,
but it’s just a tool,” author Shaun Smith, director of the London-based shaunsmith co, told us.

Customer Process Improvement

Many find CEM to be an organizational strategy for managing customer interactions. HP, for
instance has placed customer experience high on its organizational chart, with a department
dedicated to Total Customer Experience. Its research director, Katherine Armstrong, calls CEM
a “designed and structured approach to planning and managing the customer experience end to
end.” In such cases, the business takes an active role in managing customer interactions, including
setting expectations to protect the brand value.

Emotions and Experiential Products

Is there any real difference between CRM and CEM? Yes, in two areas. CRM is usually more
clearly focused on customers’ value to the enterprise. There’s nothing wrong with that—
businesses exist to make money, and customers are valuable assets that require varying levels
of attention and investment. But CEM brings in the new dimensions of customer emotions and
“experiential” products (a type of product innovation), both of which are value that customers
receive from the enterprise. Classic CRM projects rarely consider such things.

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