Master Thesis 3 – CRM versus CEM

CRM versus CEM
The difference and the interaction between CRM and CEM are not truly understood
by firm owners and professional managers. However, before mentioning the differences in
detail we must state the interaction between CRM and CEM. Kiska, is the one who
explains this interaction between CRM and CEM by stating that “CEM is a critical
addition to CRM”(Kiska, 2002). What he means by “addition” is that CEM is a part of
CRM and what he means by “critical”, I believe Lee defined above. Lee expresses that
“the brand is the missing piece of CRM” and adds that ”"If the experience is not branded
than it wouldn’t differentiate” (Lee, 2006).

Seven main differences of CEM and CRM are mentioned in the literature:
1. Who is the learner, what is the material to learn
2. The thing that they examine in the customer
3. The concept they focus on,
4. The time period that they gather and use the data
5. How they gather and use data
6. How they are monitored
7. How they help the company to profit

The first difference between CRM and CEM is that; “CRM captures and distributes
what a company know about the customer while CEM captures and distributes what a
customer thinks about a company” (Meyer & Schwager, 2007). Gurney also frames the
difference from this point of view. He says that “CRM promises: “every time a company
and a customer interact, the company learns something about the customer”. CEM
promises: “every time a company and a customer interact, the customer learns something
about the company”(Gurney, 2002). Here what one should understand is that in CRM the
learner is the company and it learns about the customer, but in CEM the learner is the
customer and he learns about the company.

What CRM and CEM try to explain in customer is another difference mentioned in
the literature. Chisholm represents the difference as “CRM deals with customer behavior,
and tells what customer did while CEM deals with customer attitudes, and tell why he did
what he did”(Chisholm, 2006).

The third difference, the concept they focus on; is mentioned by Thompson and
Young. According to Thompson “CRM is about maximizing the revenue and value to the
company, while CEM is about “managing the value proposition as the customer perceives
it”(Thompson B., 2006). From Young’s perspective, in CRM the focus was on the
"management," rather than on the customer, while in CEM, the focus is on the customer.
(Hill & Greenberg) in(Young, 2006).

The time period that they focus on while they are gathering and using the data is
another aspect that CEM and CRM are different and this is mentioned in three different
articles. Chisholm states that CRM focuses on the past and present but CEM focuses on
present and the future (Chisholm, 2006). Kiska agrees with that statement: “Although, the
information gathered by CRM is useful, it only captures the historical view of customer
transactions. However, to help build and sustain customer relationships the integrated
approach that CEM provides is essential”(Kiska, 2002). The last article mentioning the
difference of the time period focused is “Customer Experience Creation: Determinants,
Dynamics and Management Strategies” authored by Verhoef et all. Their perspective is
also same with Kiska’s perspective and they state: “Customer experience management
differs from customer relationship management by focusing on the current experience of
the customer, rather than the recorded history of the customer”(Verhoef, Lemon,
Parasuraman, Roggeveen, Tsiros, & Schlesinger, 2009).

The method of gathering the data is also different in CRM and in CEM. Gurney is
one of the few mentioning this difference. In his article he explains the difference as
follows: “CRM uses profiling, micro segmentation and a predictive analyses to identify
each figurative genetic structure in order to gather data, while CEM gathers information
about the dynamics of interactions between companies and customers by looking at the
environment”(Gurney, 2002). Beside the variation in their methods of gathering the data,
CRM and CEM also vary in using the data they gathered: In CRM the information
gathered is used by groups that are facing the customer such as sales, marketing, field
service, customer service while in CEM the information is used by business or functional
leaders to create better experiences (Meyer & Schwager, 2007). To explain it another way
“CRM would be useful after the information is gathered while CEM can be applied at
points of customer interaction: “touch points””(Meyer & Schwager, 2007).
Meyer and Schwager have determined two more differences. How CRM and CEM
are monitored and how they help the company profit. They say that, “CRM can be
monitored by point-of-sales data, market research, web site click-through, automated
tracking of sales while CEM can be monitored by surveys, targeted studies, observational
studies, “voice of customer” research. CRM helps the company to profit via cross selling
opportunities, while CEM helps the company to add offerings in the gaps between
expectations and experience.”(Meyer & Schwager, 2007).

References:

Chisholm, J. (2006, June). What is Customer Experience Management. CEM White Paper ,
pp. 36-27.

Hill, G., & Greenberg, P.

Gurney, P. (2002, February). CRM, meet CEM. Retrieved March 10, 2010, from
CRM2day: http://www.crm2day.com/

Kiska, J. (2002, October). Customer Experience Management. CMA Management , 28-30.

Lee, S. (2006, June). Defining CEM. CEM White Paper , pp. 6-8.

Meyer, C., & Schwager, A. (2007, February). Understading Customer Experience. Harvard Business Review , pp. 116-126.

Thompson, B. (2006, May). Customer Think. Retrieved from CRM guru:
http://www.customerthink.com/

Verhoef, P. C., Lemon, K. N., Parasuraman, A., Roggeveen, A., Tsiros, M., & Schlesinger,
L. A. (2009). Customer Experience Creation: Determinants, Dynamics and Management
Strategies. Journal of Retailing, 85, 31-41.

Young, G. (2006, June 26). What's the Difference Between CRM and CEM? A Heck of a
Lot, Some Say. Retrieved March 14, 2010, from Customer Think:
http://www.customerthink.com/article/difference_between_crm_and_cem_a_lot

Master Thesis 2 – CEM (Customer Experience Management)

Master tezimin ikinci bölümü olan Müşteri Tecrübesi Yönetimi Başlığı altında Müşteri Tecrübesi Yönetiminin Tanımı, yine tüm referansları ile...

Definition of CEM

In order to define customer experience management, we should first understand what customer experience means. There are multiple definitions in literature. Some prominent definitions will be discussed in this chapter. In order to be able to define “customer experience ”we should understand what the word “experience” means from a marketing perspective. Thompson and Kolsky define the term experience as the “sum of conscious events”(Thompson & Kolsky, 2004). Even though, Thompson and Kolsky mention only the “conscious” events, we will see that some experience may contain unconscious events.
Now that we have described what experience is, we can define what customer experience is. According to Ghoose it is “the user’s interpretation of his or her total interaction with the brand”(Ghoose, 2007). Here, the use of the word “interpretation” stands out. With the inclusion of interpretation, the definition evolves from conscious events to the perception of any event. The customer experience is defined as the reality that the customer perceives rather than the reality presented by the company.
Now that we know what customer experience means as it is defined in the literature we should look into its origins to have a deeper understanding. Italian management experts state that, in order to be defined as experience, an interaction should en up with a reaction. “The customer experience originates from a set of interactions between a customer and a product, a company, or part of its organization, which provoke a reaction. This experience is strictly personal and implies the customer’s involvement at different levels (rational, emotional, sensorial, physical, and spiritual)”(Gentile, Spiller, & Noci, 2007). Meyer and Schwager enrich the definition by introducing the concepts of indirect and direct contact. They define customer experience as “the internal and subjective response customers have to any direct or indirect contact with a company”(Meyer & Schwager, 2007). A similar definition is also constructed from the anonymous responses to the CRMguru survey: “The feeling and thoughts resulting from all impressions, tangible and intangible, from anyone or anything representing, directly or indirectly an organization, brand or product.”
The customer experience is not limited by the interactions that brand owners can control. It has a holistic nature and involves the customer’s cognitive, affective, emotional, social and physical responses to the retailer. “An experience can be created not only by those factors that the retailer can control (e.g., service interface, retail atmosphere, assortment, price), but also by factors outside of the retailer’s control (e.g., influence of others, purpose of shopping)”(Verhoef, Lemon, Parasuraman, Roggeveen, Tsiros, & Schlesinger, 2009). Verhoef et al. mention the holistic nature and the existence of other factors than the brand and Ward completes the definition by including the experience of the customer with the competitors and define customer experience as “the provisional disposition a person has about the company based on all the information in his or her environment, and their interactions with the company and its competitors, plus their reflection of what this means to them”(Ward, 2006). Ward here includes the experience of the customer with the competitors to the definition since the customer’s perception and relationship with the competitors is also a part of the relationship of the customer with the brand.

With customer experience defined above, now customer experience management can be defined. The recipe of Rodriguez and King on how to manage customer’s experience makes customer experience management look easy. Those two experts define CEM in a very similar way to each other, i.e. setting the customer’s expectations, delivering it – and a little bit more (Rodriguez, 2006)&(King, 2006). Although it looks so easy, it requires the understanding and the management of a very complex topic: the customers’ perception. Lee incorporates perception to the definition of Customer Experience Management and also defines perception. “CEM is about perception, process and the brand. Perception is important because since “feeling good” is a perception. Process is important because the issue here is “how” we experience, not “what” we experience”(Lee, 2006).
What is rarely discussed in literature is the point where the experience / perception starts Ng-Chee states. This point is: “consumer experiences the brand/product etc even before he becomes the customer of that specific brand with the perception and expectations that is build up from the other marketing activities”(Ng-Chee, 2006). Ng-Chee’s comments help a customer experience manager understand at what point CEM should start, thus at what point managers should start.

By synthesizing definitions above now we are able to define CEM as; to create desirable and memorable interactions with the customer in the existence of many noises from outside world as well as the competitors, so that it would create value for customer while creating profit for the company.
Let’s break down and understand the definition
• Create: A customer experience manager should design the possible journeys of customers.
• Desirable and memorable interaction: The interactions have to be positive and have to be remembered in order to be differentiated from competitors.
• In the existence of noises: The experience is not limited with what a brand says to the customer, it is also affected by competitors’ statements.
• Create value for customer: In order to be differentiated in a positive way and to guarantee that there will be a relationship, the company should offer value to its customer.
• Create profit for company: Corporations are founded to make profit, so any activity should end up directly o indirectly with a profit margin.


References:
Gentile, C., Spiller, N., & Noci, G. (2007). How to Sustain the Customer Experience: An Overview of Experinece Components That Creates Value with the Customer. European Management Journal, 25, 395-410.

Ghoose, K. (2007). The strength of the brand value chain is the strength of the brand anchor. Thought Leaders International Conference on Brand Management.April. Birmingham: Birmingham Business School.

King, R. (2006, June). From CRM to CEM. CEM White Paper , pp. 20-22.

Lee, S. (2006, June). Defining CEM. CEM White Paper , pp. 6-8.

Meyer, C., & Schwager, A. (2007, February). Understading Customer Experience. Harvard Business Review , pp. 116-126.

Ng-Chee, C. (2006, June). Managing Touch Points for CEM Success. CEM White Paper , pp. 23-25.

Rodriguez, R. (2006, June). What is CEM? Back to basics! CEM White Paper , pp. 18-19.

Thompson, E., & Kolsky, E. (2004, December 27). How to Approach Customer Experience Management. Retrieved May 13, 2008, from Gartner: http://www.gartner.com/it/products/research/asset_129491_2395.jsp.

Verhoef, P. C., Lemon, K. N., Parasuraman, A., Roggeveen, A., Tsiros, M., & Schlesinger, L. A. (2009). Customer Experience Creation: Determinants, Dynamics and Management Strategies. Journal of Retailing, 85, 31-41.

Ward, P. K. (2006, June). What is Customer Experience? CEM White Paper , pp. 15-17.