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What is customer experience management, and why does it matter?

by Jackson Kushner | Apr 29, 2022

What is customer experience management (CXM)?

Customer experience management (CEM or CXM) is a system of strategies, technologies, and processes a company uses to track, oversee and organize every interaction between a customer and the organization to meet or exceed customer expectations and, thus, increase customer satisfaction, loyalty and advocacy.

Customer Experience Transformation and Digital Customer Experience Management

How digital transformation is shaping customer experience

Digital transformation and customer experience transformation go hand in hand. The integration of digital technologies into business processes has fundamentally transformed the customer experience. These new digital technologies have caused a shift in customer expectations, resulting in a new kind of modern buyer. More and more companies now understand the importance of optimizing end-to-end CX.

Examples of customer experience transformation include:

  • Ongoing training for employees and customer teams with the digital skill sets to build strong customer relationships; on every communication channel.

  • Utilizing business data, customer insights and feedback, and cross-team collaboration to iteratively improve and automate the customer journey.

  • Implementing customer contact systems and technology that enables a fluid omnichannel experience.

Digital transformation experience is crucial for businesses that want to grow, evolve and be more successful than their competitors. Successful businesses are finding ways to integrate new customer experience technologies and introducing creative ways to keep customers engaged at every digital touchpoint.

Why is Customer Experience Management important?

Customer experience has become a critical differentiator in today’s hyper-competitive, hyper-connected global marketplace. In the 2020 Achieving Customer Amazement survey, U.S. companies across a variety of industries fell short of customer expectations by 38 percent, and 96 percent of customers said they would leave a company because of a bad customer experience. There’s tangible business value in managing the customer experience effectively and optimizing the entire customer journey. Good customer experience management is important because it can:

  • Boost revenue

  • Improve customer loyalty and create brand advocates

  • Reducing customer churn

  • Boost client satisfaction rate

  • Improve customer retention

  • Improve customer lifetime value

  • Increase brand equity

  • Improve crisis management

  • Reduce costs of service and marketing

  • Improve customer engagement

  • Achieve a deeper understanding of customers

  • Maintain a competitive edge

What is the main goal of customer experience management?

The importance of CXM for commoditized markets

Commoditization occurs when the market perceives a product or service to be substitutable. As a result, prices drop as competition increases. Some of the most innovative products on the market have become commoditized over the past decades. According to Harvard Business School, Cloud storage apps are now widely available for next to nothing. One of the most popular cloud storage services, was launched in 2005 and had nearly 70,000 business users by the end of 2016. Today, it's competing against Google Drive, Microsoft OneDrive and other similar apps. The average consumer may not be able to differentiate between these products and will most likely go for the cheapest option.

 From technology and agriculture to automotive and fashion, no industry is immune to commoditization. Companies that want to remain competitive must prioritize innovation and embrace the latest technologies. Customer experience management is a major focus area for digital transformation by enterprises across all industries. Power has now shifted towards the customer; who has more choices and greater access to products and services from around the world. For companies that offer substitutable products, CX is where they must compete to win and retain customer loyalty. Good customer experience is not just just good for the bottom-line, it's crucial for most businesses to maintain a competitive edge.

What's the difference between CRM and CXM?

CXM is often confused with customer relationship management (CRM), but these concepts are not the same. CXM takes the next step in managing customer relationships. Where CRM mostly deals with optimizing the internal processes of a business, CXM offers an even more customer-centric approach with new technologies, processes, and strategies. 


With all the available data from a CRM, businesses are able to create a better experience for their customers. Creating experiences is where CXM comes in. Through the data businesses obtain from their CRM, they are able to make observations and come up with predictions to proactively anticipate their customers' needs.

Customer experience strategies for delivering on customer expectations

Customer experience is a totality of cognitive, affective, sensory, and behavioral consumer responses during all stages of the consumption process including pre-purchase, consumption, and post-purchase stages. In 2020 many businesses had to pivot their internal and external customer processes to provide convenience and safety. This switch to a more virtual world has sparked the need for updated customer experience strategies to ensure that all adjustments are as friction-free as possible. For businesses to be successful, they must rethink and reorganize their experience strategy to accommodate new customer needs and demands.

In order to address these evolving customer needs, successful businesses have begun prioritizing CX. A Gartner study revealed that 32% of CMOs rate customer experience as a top three priority. Businesses have implemented chatbots and virtual assistants to drive seamless and effortless customer experience. They are also investing in artificial intelligence (AI) technologies and analytics to help provide human insight and intelligence needed for CX. Businesses are even going as far as creating a new role within their company to drive CX initiatives. The Customer Experience Officer (CXO) is responsible for improving employee experience and drives the company's entire CX strategy. This involves mapping customer journeys, overseeing the customer success and customer service teams, and digging into customer data.

How To Effectively Manage Customer Experiences

CXM and business strategy

The most effective CX solutions align with the desired image of the business, are consistently delivered, and are frictionless for the customer. Identifying improved customer outcomes as a key goal for an organization establishes a clear link between business strategy and customer experience. Prioritizing and ensuring CX projects are included in future business plans requires buy-in and alignment. The customer experience is created by the entire company, which means businesses need buy-in and support from many different stakeholders to do it successfully. Typical key influencers in customer experience adoption include:

  • Chief Experience Officer (CXO)

  • Chief Marketing Officer (CMO)

  • VP of Sales

  • Chief Information Officer (CIO)

  • Chief Financial Officer (CFO)

  • Chief Executive Officer (CEO)

Customer experience management strategy

A customer experience strategy defines the actionable plans in place to deliver a positive, meaningful experience across all these interactions. CX strategies should be both forward-looking and have an actionable level of detail. A CX strategy must serve as a road map to actualize, deliver, and measure progress toward the customer-centric goals of the business.

Steps for successful customer experience management strategy

1. Create complete customer profiles and customer journey mapping

    Understanding how a customer feels about a product, brand, or service is a key asset to a successful customer experience. To deliver an amazing customer experience, businesses have to know their customer better than ever before.

    In order to properly market, sell to, and offer support to customers, businesses must get to know the customer. This means creating and maintaining complete customer profiles that help better understand and measure the customers' journeys at every touch point across multiple channels. The customer journey map outlines all the opportunities, pain points, and interactions which businesses use to guide CX improvements. Knowing the customer is key to serving them better. By documenting customer pain points, attributes, and characteristics, businesses can deliver a superior customer service experience before they ever request help. Plus, businesses can predict issues before they arise, provide effective self-help resources, and better align with customer needs if they reach out to the service team.

    2. Manage and measure CX

      Friction points can occur anywhere in the customer lifecycle —marketing, purchase process, shipping and logistics, product or service issues, returns and exchanges, billing, online user experience, and more. Managing CX means identifying and quantifying friction points in the customer journey, determining the root causes of those friction points, and resolving the problems at their origins. CX teams should also collect voice of the customer data throughout the entire journey to identify where to improve experiences. It's not enough to simply have that data; brands should understand customer emotions through customer sentiment analysis tools and techniques. Once businesses understand what touchpoints and interactions they want to measure and improve, creating a system to do this is the next step. This is where most companies turn to customer experience software. Customer experience software is the system of record and action for experience data. Customer experience platforms are tools for companies to measure, report, analyze and take action on the human feedback from customers.

      3. Optimize customer interactions

        Businesses are able to optimize the customer journey by really listening to their customers. Once a business has a deeper understanding of their customer, they are able to get an enhanced view of customer behaviors and preferences across all touchpoints. This allows for more detailed segments to provide highly relevant personalized experiences that customers demand. Cultivating deeper, lasting relationships with customers through intelligent customer service management drives loyalty, retention, and conversions.

        CXM Challenges

        Lack of omnichannel support

        In order to deliver a seamless omnichannel experience to customers, companies need to utilize multiple communication channels, like websites, social media, and brick-and-mortar stores, and ensure all platforms stay on the same page. The idea is that whichever channel the customer uses, he or she should get the same experience. When businesses can’t listen to or help customers in the channels they are interacting with, customers can't make their wants and needs known.

        Operations business silos

        Often businesses find that silos are not aligned because of the company-centric or channel-centric nature of many organizations and the lack of alignment to the impacts on the customer experience. A couple types of silos that cause challenges for CX are organizational silos and channel silos. For customer experience, organizational silos are missing information-sharing, empowerment and collaboration among departments to minimize delays and hassles. For customer experience, channel silos are missing integrated data, policies, and procedures, and experience continuity across sales channels, across service channels and between sales and service channels. Silos cause missed opportunities, this means precious business resources are wasted, potential growth is unrealized, avoidable churn of customers takes a toll on the whole business, and return on investment across a wide variety of business endeavors could be much higher.

        Understanding how to monitor and measure CX success properly

        Businesses struggle when it comes to measuring the success of their customer experience strategy. A survey done by Oracle states that, “57% of respondents report being unsure or not having enough knowledge of what to measure in order to indicate their customer experience strategy is getting better.” Progress is likely to be mirrored in a company’s bottom line, but that’s not the only indicator of an improved, more seamless customer experience. Customer loyalty, brand trust, positive brand association and word of mouth are further positive outcomes of CXM investment that can be difficult to track. It’s one thing to commit to making strides in improving how your company handles CX, but there’s no way to know if any changes are effective when you’re unable to measure those improvements.

        Over reliance on surveys

        With many companies striving to form a more complete picture of customer preferences and behaviors, they continue to rely on aging survey-based measurement systems that for decades have formed the backbone of customer experience efforts. Companies use these systems to track CX performance through brand and relationship surveys and even strategically plan business decisions by attempting to mine the feedback from their regular surveys over time. Surveys themselves are an important tool for conducting research, however, leaders are now recognizing that survey-based measurement systems often fail to meet their companies’ CX needs. A Mckinsey & Company survey of CX leaders from US-based companies, found that 93% of respondents reported using a survey-based metric (such as Customer Satisfaction Score or Customer Effort Score) as their primary means of measuring CX performance, but only 15% of leaders said they were fully satisfied with how their company was measuring CX—and only 6% expressed confidence that their measurement system enables both strategic and tactical decision making. Leaders pointed to low response rates, data lags, ambiguity about performance drivers, and the lack of a clear link to financial value as critical shortcomings.

        Getting CX buy-in

        Though leaders may understand the importance of developing customer experience strategies, they still have to convince the decision-makers of their companies to invest in CX strategies and to stay current with technological advancements. This CX buy-in is an essential factor in being able to obtain the resources necessary for a successful CX program. According to Oracle’s survey mentioned earlier, “The majority of respondents thought their companies were lagging, and only 13% of those surveyed believed their companies are keeping pace with emerging and changing technologies.”

        Overwhelmed with customer data

        An omnichannel customer journey consists of key interactions over multiple touch points between customer or prospect and a company during the point of sale and throughout the customer lifecycle. Many businesses have a large amount of data but no way to bring it together for accurate analysis. Privacy and security concerns also complicate attempts to consolidate data into a single customer profile. Qualitative data are narrative responses that tell businesses why customers do what they do. However, qualitative customer data such as social media engagement or phone conversations can be particularly challenging to take into account. Without understanding the complete customer journey and specific touch points, inaccurate or conflicting data can be missed.

        Benefits of Using Customer Experience Management Software and Platforms

        CX software is technology that helps businesses manage and measure their entire organization’s interactions with customers, both current and potential. This technology acts as a record of interactions across all your customer-facing touchpoints.

        CX tools should be able to:

        • Aggregate all sources of customer contact and feedback

        • Classify each customer interaction with a taxonomy unique to your business

        • Visualize data down to the individual interaction in one application

        • Democratize access to data and insights across the organization

        • Leverage cutting edge machine learning to continuously refine identification

        • Include data security and be GDPR, CCPA, and Australian Privacy Act 1988 compliant

        What industries are adopting customer experience management solutions?

        According to Fortune Business Insights: There is a rising adoption of customer experience solutions across Banking, financial services and insurance (BFSI) and Retail and Consumer Goods sectors. The BFSI is expected to hold a significant market share in the forthcoming years. Rising customer interactions with various touch points such as call centers, emails, online banking systems, and social media foster the adoption of consumer experience solutions across BFSI. To offer a convenient, secure, and digital customer experience to customers across the BFSI sector, organizations are adopting advanced solutions.

        Retail and consumer goods sectors are likely to hold a significant share of the market. The adoption of consumer experience solutions anticipates retail and consumer goods demand with optimized supply chains and engaging experiences that boost customer loyalty. Other industries, such as healthcare, government, automotive, IT and telecommunications, media and entertainment, are expected to showcase growth over 2022-2029.

        Key trends driving the adoption of data-driven CXM

        According to Catalyst Investors, a host of factors have come together to drive adoption and prove this is an exciting time for Data-Driven CXM:

        • Digitalization:
          • B2C companies continue to add customer-facing channels (chatbots, web messaging, voice channels etc.) requiring more management and interaction between channels

          • Consumer preferences in the digital era require greater relevancy of interactions

          • Consumer Tech:
            • Mobile

            • Premium Online Content

            • Social Media

            • Consumer IOT systems

            • Marketing

        Khoros CX Insights for World Class CX Management

        Khoros is the most comprehensive solution for a unified, actionable view of the customer to create world-class customer experiences. Khoros CX Insights sits on top of all your customer communication platforms to provide a single view of all customer conversations and comments, normalizing and classifying the data for comprehensive CX analysis.

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