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CRM, CEM and the ROI of Customer Relationships

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Posted May 16, 2012 By Ann All     Feedback

Customer experience management (CEM) involves a more cohesive approach to customer acquisition and retention than traditional CRM or social CRM. To get the most from CEM, companies should combine it with CRM.

Executives like to see a clear return on investment from enterprise software. However, it can be a tricky proposition with any kind of social applications, including social CRM.

Surveys administered late last year by Jive Software and the Association for Information and Image Management (AIIM), among others, find organizations seem  willing to invest in social technologies based on the general idea they can help solve business problems rather than subjecting them to strict ROI analyses.

Returns on Customer Relationships?

That doesn’t mean organizations won’t keep trying to find measurable ROI. A more recent Gartner survey found that many organizations fail to tie their social CRM initiatives to clear business objectives, and that just half of Fortune 1000 companies will attain a worthwhile ROI from their social CRM initiatives by the end of 2012. Yet Gartner expects three-quarters of new social CRM initiatives that receive funding by the end of this year will be based upon a business case incorporating measurable ROI.

A recent Temkin Group report titled The ROI of Customer Experience makes a connection between customer experience management and financial benefits. The report found that customers of U.S. companies proficient in customer experience management (CEM) are about 20 percent more likely to recommend products and services to others than customers of less proficient companies and also about 19 percent less likely to take their business elsewhere. This enhanced loyalty can result in a financial gain of up to $382 million over a three-year period, according to the report.

While the definitions of both social CRM and CEM remain fuzzy, experts seem to agree that both involve communicating with customers via social channels like Facebook and Twitter. Bruce Temkin, managing partner of the Temkin Group, said social media has helped raise the profile of CEM by making companies more aware that what customers say about them impacts their business.

Temkin said one of the goals of his research is to take customer experience from being a soft, squishy kind of thing to an explicit discipline that has a real connection to real business results.”


Customer experience management takes a more cohesive approach to attracting and retaining customers than either traditional CRM or social CRM, Temkin said. It’s more challenging than either kind of CRM because it requires companies to “master a bunch of competencies,” including areas such as human resources that are not usually linked to CRM efforts.

For many companies, “the biggest blind spot is viewing customer experience in the lens of specific interactions they have with their customers,” Temkin said. “At the end of day, the feedback companies get from customers around interactions is often a symptom but not the problem.”

Key CEM Competencies

Temkin said CEM leaders have mastered four key competencies:

  • Purposeful Leadership, which Temkin defines as the ability of leadership to consistently and compellingly communicate about where a company is heading.
  • Brand Values, a strong set of values that help employees define what is right and wrong in terms of delivering on their promises to customers.
  • Employee Engagement, which involves ensuring employees are tightly aligned with the direction of the company.
  • Customer Connectedness, which means using insights about customers to drive decisions across a company.

“If you don’t have all four, you’re not going to be good at CEM,” Temkin said, noting that the Temkin Group’s just-published State of CX Management 2012 report found that companies experience the most difficulty with employee engagement and brand values, with only about a third of companies scoring highly in those areas.

Combining CRM, CEM

CEM initiatives should incorporate CRM, Temkin said.

“I define CRM as information about customers, with processes and activities layered on top of that data,” he said. “That has to be integrated into the customer experience effort. If your voice of the customer program sits in CEM, which it often does, and isn’t linked to CRM, which it often isn’t, that’s a silo you don’t want to have.”

Linking the two areas becomes even more crucial if analytics are involved, Temkin added.  “If and when I get customer feedback, I want to know if I’ve interacted with that customer before and if, historically, he or she is a good customer. And If I want to predict and understand his or her future behavior, then I want to link both of those data sets.”

Integrating CRM data and analyzing social media conversations are the top CEM challenges, according to the State of CX Management report.

Ann All is the editor of Enterprise Apps Today. Follow Enterprise Apps Today on Twitter @EntApps2Day.

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