Customer Relationship Management (CRM) vs Customer Experience Management (CEM)
Customers are the essential ingredient for any business. As we know, their experiences and perceptions can make or break a product, service or brand, so it makes sense to focus on the relationship we have with them, and the experience we’re delivering. However, customer relationship management (CRM) and customer experience management (CEM) are commonly confused — although both are crucial to customer satisfaction and retention, their functionalities and objectives are not the same.
CRM vs CEM: What’s the Difference?
It’s all in the name. Building upon ‘relationships’ and building upon ‘experience’ are two separate concepts, which require two separate approaches.
So let’s break it down.
You can think of customer relationship management as a ‘lead machine’ or ‘lead database’. CRM helps you manage customers, whether they’ve only just been introduced to your brand or if they’ve been a lifelong customer. CRM software profiles customers so you can understand how they became a customer, how frequently they buy from you, what their average order size is and how they interact with your brand. The goal of a good customer relationship management system is to nurture customers from prospects to raving fans.
On the other hand, customer experience management is a strategy that tracks, analyzes, controls, and (ideally) improves interactions with your customers at every touch point. CEM analyzes the overall customer experience by collecting nitty gritty behavioral and experiential data as well as direct feedback. The data represents the perceptions that customers have across all interactions with an organization.
While CRM and CEM work together to increase repeat business and referrals, there are some key differences:
CRM VS CEM
- A CRM tracks the company’s view of a customer, while a CEM tracks a customer’s view of the company.
- A CRM focuses on the sales funnel while CEM focuses on touchpoints. Customer touchpoints are your brand’s points of customer contact, from start to finish. Examples include your point of sale, bill payments, and customer support agents.
- Whilst CRM data is centered more on customer transactions, CEM data is centered more on more granular behavior and overall customer satisfaction.
In a nutshell, a CRM manages the customer and a CEM enables them!
Understanding Customer Relationship Management
So now that you have a basic understanding of the differences between CRM and CEM, let’s dive deeper.
CRM crash course incoming.
By definition, customer relationship management is a system or software that is used for managing all your company’s relationships and interactions with customers and potential customers. A CRM system helps companies understand their customers, nurture leads, automate processes and increase profitability.
The objectives of CRM are:
- Maximise marketing efforts.
The more you know about your customers, the better. A CRM system helps marketing teams identify and target leads from a central organised location and offers campaign management, tracking response and detailed analytics all under one roof.
- Close more sales.
With greater access to customer information and a centralized place for tracking leads, a CRM system automates administrative workflows traditionally carried out by sales representatives, allowing teams to close deals faster with more efficiency.
- Improved customer support.
By centralising customer data and sharing knowledge, organisations are able to act upon customer requests with a high level of personalization which results in a greater connection between the customer and organisation.
What about the key functions?
- Mining and analysing data
If you’re known to geek out a little on graphs, data and spreadsheets, you’ll very much get a kick out of the data capabilities that CRM tools offer. Every ounce of information you’ve ever collected about a customer is stored on a CRM software, so you can track and analyse to your heart’s content.
- Reporting & analytics
Reporting and analytics is required across all major business functions. CRM analytics, also known as customer analytics, refers to the process of interpreting the data within your CRM software to uncover all those golden insights that will impact business decisions, marketing campaigns, coaching methodologies and more.
- Lead management
A customer that’s just heard of your business has different needs to a customer that’s been with you for years. A CRM helps you generate, manage, qualify and nurture leads, so you can manage the relationship effectively and in a timely manner.
- Document management
Collect, upload, store, and share documents in a centralized location. You’d think this would be a given in 2022 but ‘you don’t have access to this document’ is an all too familiar message. Easy access to important documentation ensures teams are in the know and promotes a smooth, consistent experience for your customers.
What are CRM systems?
Salesforce, the world’s #1 leading CRM software defines their product as “technology for managing all company’s relationships and interactions with customers and potential customers.”
The goal of a CRM is simple: improve business relationships to grow your business.
A CRM system helps businesses keep customer contact details up to date, track every customer interaction, and manage customer accounts.
“CRM is the largest and fastest-growing enterprise application software category, and worldwide spending on CRM is expected to reach USD $114.4 billion by the year 2027.”
Companies are now realizing the importance of adopting a CRM early to succeed in delivering five star customer experiences. CRM companies dominating the market include:
- Microsoft Dynamics
How does a CRM benefit a business?
While the true benefits of implementing a CRM will vary by industry, the general benefits include:
- Increase sales
Research from Salesforce indicates that CRM software can increase sales by as much as 29% while improving sales forecasting accuracy by up to 32% and improving sales productivity by 39%.
- Improve efficiency
CRM boosts productivity because the software is designed to overcome common operational obstacles. Ah, the beauty of automation.
- Streamline sales processes
Access to data insights is fast becoming a key differentiator for top sales teams. Research conducted by Aberdeen Group shows 24% more sales reps will achieve their annual sales quota thanks to CRM access.
- Maintain clear customer profiles
Salesforce states 81% of sales reps believe it is important to have a connected view of data across the entire customer journey. This means connected processes such as seamless handoffs between departments and organization-wide knowledge of a customer’s sales and service history are crucial.
Understanding Customer Experience Management
CRM knowledge, check. Let’s move on to CEM.
Customer experience management (CEM) is the processes a company uses to track, oversee and organize every interaction between a customer and the organization throughout the customer lifecycle and journey.
Customers no longer base their loyalty on price or product. Instead, they stay loyal with companies due to the experience they receive. In fact, 86% of buyers are willing to pay more for a great customer experience.
The objectives of CEM are to:
- Optimize the customer’s experience with the company as an entity
CEM uses experiential data to deliver on the things that matter most to customers. When customer’s expectations are met, or better yet exceeded by a company, the experience is optimized.
- Foster customer conversion and retention
Customer experience → Loyalty → Growth. CEM helps you build a loyal customer base who spend more with your business, and refer their friends and family.
- Improve brand image
When you improve customer experience for a single customer, their perception of your brand increases. When you improve customer experience for your entire customer base, you become known as the best in the business.
What about the key functions?
- Oversee customer interactions at every touchpoint
CEM tracks, analyzes, controls, and improves interactions with your customers at every touch point. Examples of touchpoints where a customer interacts with your brand are your point of sale, bill payments, and customer support agents.
- Gather experiential data to understand customer perception
CEM analyzes the overall customer experience by collecting nitty gritty behavioral data and direct feedback. The data represents the perceptions that customers have across all interactions with an organization.
- Create a customer-centric brand culture
CEM works to create a customer centric brand culture. When you’re constantly fine-tuning your experiences to meet the needs of your customers, you subsequently create a culture that is customer obsessed.
What is CEM software?
Customer experience management software is an invaluable tool used to measure customer loyalty, understand how to best respond to their needs and ultimately take the necessary actions to improve customer experience, and therefore customer retention.
- Helps improve customer experience through combining behavioral analytics with automated engagement and satisfaction surveys.
- Integrates with CRM software for a detailed understanding of your customers and how to reach them.
- Stores data in a way that is secure and easily navigated by your team.
Essentially, it automates, streamlines and keeps everything in one place.
How does a CEM benefit a business?
Here are just some of the benefits of CEM:
- Strengthen Brand Preference: Customers have more options than ever, and they know it. When you focus on customer experience management, and exceed customer expectations, you become the preference over competitors.
- Boost Revenue: An awesome customer experience means your customers will spend more. In fact, 86% of buyers are willing to pay more for a great customer experience.
- Reduce Costs: Focussing on CEM is a more efficient way to grow. The cost of acquiring a customer is 5 times more expensive than retaining one.
- Personalize Engagement: When you understand exactly what your customers want, you can tailor your experience to meet their needs.
- Improve Customer Loyalty: Customers no longer base their loyalty on price or product. Instead, they stay loyal with companies due to the experience they receive.
How CRM & CEM Work Together?
Now we understand the objectives and purpose of CRM & CEM individually, let’s explore how to create harmonious connections between them both to get the most out of your customer data, and win on customer experience.
To recap, the shared objectives of CRM and CEM are to:
- Deliver a better understanding of behavior through detailed data
- Improve and build upon customer relationships
- Foster customer retention in order to drive sales and growth
In essence, both aim to make the interaction between the customer and the vendor as smooth and enjoyable as possible. A CRM system focuses on managing the process from the employee’s perspective and a CEM manages the customer’s side. The combination are both necessary for delivering awesome experiences.
Integrating the brand view of customers (CRM) with customer view of brand (CEM) creates a more holistic understanding of a company’s strengths and performance.
The multifaceted nature of customer experience requires a multifaceted approach to management. There are many moving cogs, but with the right tools in place managing your customers and their experience can be a streamlined, methodical process.
Remember, building upon ‘relationships’ and building upon ‘experience’ are two separate concepts, which require their own unique approaches. Both approaches rely on smart strategy as much as it does on smart software solutions. Both are necessary if you're going to effectively manage customer experience and ensure nothing slips through the cracks.
Building upon and improving customer experience starts with investing in the right solutions. Join thousands of companies who use AskNicely to win on customer experience. Book a Demo today.