What is Customer Experience Management (CXM)?
The CXM meaning goes way beyond providing a great product or service —it's about delivering a seamless and enjoyable customer experience from start to finish.
Learning how to manage and provide the best customer experience has become one of the main selling points for brands, sometimes considered as important as the service they provide or the products they sell. At this point, you might be wondering "What is the CXM meaning?". Well, let's explore it.
Customer Experience Management (CXM) is the collection of processes brands use to manage the customer experience by overseeing and organizing every interaction to maximize satisfaction and promote customer loyalty. Or, put more technically:
"Customer experience management (CXM) is the discipline of understanding customers and deploying strategic plans that enable cross-functional efforts and customer-centric culture to improve satisfaction, loyalty, and advocacy." - Gartner
In short, it's the practices brands use to keep their customers happy and coming back for more. But while it's relatively easy to explain, its origins go a bit deeper than it seems and tie into this new age of personalizing and customizing customer experience.
According to CX Today, "79% of consumers will stop doing business with a brand after just one bad customer experience". This might (partly) explain why 89% of tech executives plan to increase their digital CX spending for a more effective CXM strategy.
Let's talk about where customer experience management comes from, its importance, and the fundamentals every brand must apply to develop a good CXM strategy.
CX management in the era of digital transformations.
Over the past decade, customer experience has become one of the top priorities for brands across many industries, because businesses began understanding that a positive customer experience is an important part of business growth. It promotes loyalty, improves customer retention, and encourages brand advocacy. Simply put, it can generate more revenue both in the short and long term.
As the adoption of digital technologies grows in every industry, this provides new channels for customers to express their needs and preferences: they make purchases based on more than your storefront or ads. They consider what you represent as a company, how you treat your employees and the kind of experience they had when they interacted with your brand in the past.
How customers feel during their journey and whether their expectations are met have become differentiating factors in their decision-making process.
CX pillars - What are the pillars of Customer Experience?
When implemented throughout the organization, a CXM strategy has a few fundamental components that help brands take control of their customers' experiences. Adobe has identified 4 best practices to help you improve your customer experience management. Let's take a look:
- 1. Adopt a data-driven mindset: Data is everything for CXM. Setting up a unified database for customer information is the key to delivering insights for all team members in every department.
- 2. Adapt to first-party data solutions: Third-party cookies used to be a “cheat code” for gathering customer data from multiple sources, but in late 2023 Chrome will stop supporting them, marking their effective end-of-life. That is to say that developing first-party solutions will be the best way forward. Customer Experience Management (CXM) allows you to that easily.
- 3. Increase content velocity: Customers value digital initiatives delivered quickly, but internal data silos slow down the process. Brands need to adapt to expectations by resigning content workflows to turn content into insights faster.
- 4. Involve your leaders: A CXM strategy needs to be embedded into your brand’s fundamental processes to work as intended. Having a single department manage CX management without support from higher leadership will lead nowhere. Leaders need to enforce a customer-centric strategy to all stakeholders in sales, marketing, customer support, IT, and senior leadership.
By applying these CX pillars, brands will be able to:
- Better understand customer needs and expectations.
- Streamline internal processes for responding to these needs and expectations.
- Measure performance against key metrics.
- Be more competitive in the market.
- Improve overall business outcomes such as customer loyalty, revenue growth, cost savings, and even employee productivity.
What is a CXM strategy —and why is it so important?
Over time, models and strategies were created to perfect the management of customer experience, CXM has emerged as one of the most important currents. But, why has it become such a fixture of the culture surrounding so many industries?
Here are 4 reasons why customer experience management (CXM) is important and why every brand should have a consistent CXM strategy:
1. Retaining customers costs less than acquiring new ones and can be more profitable.
Every brand needs to balance acquisition and retention:
- Acquisition expands the customer base and provides new opportunities for retention... but costs more.
- Retention, on the other hand, costs less and provides a constant income stream... but doesn’t grow the customer base at the same rate.
However (and this is a big “however”), retention provides a potential for revenue growth that customer acquisition cannot match. Here’s a rather powerful quote that perfectly encapsulates this way of doing business:
“In industry after industry, the high cost of acquiring customers renders many customer relationships unprofitable during their early years. Only in later years, when the cost of serving loyal customers falls and the volume of their purchases rises, do relationships generate big returns. The bottom line: increasing customer retention rates by 5% increases profits by 25% to 95%”. The Economics of E-Loyalty
So, if you play your cards right, fostering good, long relationships with your customers and increasing your retention rate by only 5% can net you as much as a 95% increase in revenue.
Nevertheless, it needs to be said that customer retention is very much a long game. It will not produce explosive revenue right from the start because you will need to overcome the costs of bringing in that customer and the costs related to retaining them before their purchases drive your revenue into the green. But when it hits, your brand will feel it.
2. Loyal customers bring in new customers.
It turns out that loyal customers are the most profitable kind and bring in other customers by spreading the good word about your services. They can do this via word of mouth or you can promote this feeling of loyalty by including marketing material such as testimonials, case studies, and social proof on your website and social media.
Here are some of the most important benefits of testimonials and customer endorsements:
- They foster trust in your brand.
- Asking customers for their opinion and getting their permission to publish it makes them feel valued and heard.
- They provide context and educate your potential customers.
- Their critical, constructive feedback will help you improve your services.
- Your brand gains reputation and notoriety.
- Positive opinions help convert new customers.
- They help develop your storytelling and emotional connections.
The potential connection (and trust) customers will feel when they have heard good things about you from their peers can be stronger than even the best marketing campaign.
3. It gives you the information you need to grow.
This goes back to feedback, but deserves a point of its own.
Customer Experience Management (CXM) implementations allow you to be aware of your customers’ opinions. This will help you identify specific pain points they are experiencing and come up with a solution for them. Additionally, customer sentiments often give you information about your competitors.
When customers compare brands, they point out what part of each of their services works for them and what part does not. This invaluable information will help you dive into their preferences and position yourself favorably against rivals through a CXM strategy.
In short, a combination of feedback, ratings and surveys will give you the information you need about your customers and rivals to make decisions. However, processing that information and converting it into actionable insights that inform those decisions can be a challenge.
One alternative for this can be the growing use of machine learning. Machine learning systems can identify keywords or phrases in individual reviews and larger feedback sets. Then a “sentiment analysis” follows: given the context, it will analyze the text to determine whether the opinions are positive or negative.
On a larger scale, machine learning analysis can identify the frequency and context in which certain opinions are given about specific products or services, helping brands steer their attention towards the most productive paths forward.
Regardless of the specific method used, CXM implementations provide a platform that helps you solve problems based on the information you collect from your customers.
4. Omnichannel vision.
Omnichannel customer experience is a cross-channel customer-centric approach that enriches the experiences your customers share with your brand. This means that you don’t focus on one specific channel (website, mobile app, email, etc.) but rather create an ongoing CXM strategy that customers can feel when interacting with each of those channels. Some of the most important benefits of omnichannel experiences include:
- Convenience and accessibility, which in turn improve retention rates and customer lifetime value.
- Having a variety of channels keeps the inventory moving.
- Expanding to more channels helps you reach previously untapped customer segments.
- Increase operational efficiency.
- Collect more and higher-quality customer data.
Since price and product availability is no longer the main driver of sales, a CXM implementation that pushes omnichannel experiences will help meet and exceed customer expectations by optimizing every interaction across the customer journey. It doesn’t matter what platform your customers use —CXM lets you see their whole journey and customize it to their preferences.
What industries are spending the most on CXM?
CX management implementation is growing, but not at the same rate across industries. Certain industries have always been more customer-centric than others, and some have specific reasons to increase their CXM spending. Moreover, data from Grand View Research shows exactly how the global customer experience management market in 2021 was spread across industries:
As the graphic shows, retail, IT & Telecom, BFSI (banking, financial services and insurance), and healthcare make up most of the global market, with the rest spread across various industries.
The healthcare industry, in particular, is expected to grow its market share. Pharmaceuticals and health insurers have not typically been considered customer-centric, so this is an opportunity to reap the benefits of centering around the customer experience by developing a good CXM strategy.
For IT and telecom companies, the CX management spend is understandable: they both depend on retention to grow, so it makes sense for them to find ways to optimize the experience and increase retention, one of the benefits of implementing a CXM strategy.
With customer experience becoming such a significant element in business, it is only natural that brands would want to come up with the best possible strategy to improve upon these experiences.
A CXM strategy identifies all of the customer touchpoints and helps you develop the best ways to make those interactions more gratifying for your customers, making them want to constantly come back for more.
Needless to say, the specific practices that your brand will need to dive into depends on your industry and your customers' needs. But one thing is for sure: you must incorporate methods to manage your customers' CX. Otherwise, you would not have the data or the tools necessary to provide the best possible experience at all times.
This was a relatively short introduction to the world of customer experience management (CXM). Be aware that there is a wealth of deeper knowledge out there. To succeed in a market where customer expectations always rise, brands need to know the principles while understanding how to better apply them for maximum benefit.
At the end of the day, the best way to learn how to please your customers is to listen to their needs and use your tools and CXM knowledge to provide them. If your brand is ready to invest in the most effective CXM tools out there, reach out to our team of experts. At Conexio, helping companies boost and optimize their customer experiences is our bread and butter.