What is customer experience management (CXM)?

Customer experience management (CXM) is how companies track, analyze and improve how customers interact with their products and services, also known as customer experience (CX). Companies can use a combination of strategies, technologies and processes to help them with CX management. Innovations in artificial intelligence (AI) have allowed companies to improve all aspects of the customer experience, from enhancing customer interactions to sorting through customer data.

CXM is often incorrectly confused with customer relationship management (CRM). CRM is how companies manage relationships with existing and potential customers through metrics such as lead generation and sales. CRM helps companies identify challenges and potential ways to improve operations.

CXM, however, uses customer data to measure customer engagement and customer satisfaction with a company’s products and services. Great customer experiences can increase the lifetime value of a product and brand loyalty. Satisfied customers might also become future brand advocates.

Customer experience can shape their perceptions of a brand. It can be used to create an emotional bond with customers and differentiate one company’s offerings from its competitors. Positive experiences can also cement customer loyalty from existing customers, which can result in more word-of-mouth referrals of the business. Poor customer experiences might result in customer churn, which can hurt a company’s bottom line.

Companies should invest in providing a good customer experience because retention of loyal customers is less expensive than acquisition of new customers. Also, mining customer feedback provides actionable insights. These insights can be useful for companies to optimize facets of their customer-facing technologies and platforms such as their websites, social media, mobile apps, customer service chatbots and application programming interfaces (APIs).

For effective customer experience management, companies must first create a good customer experience.

One way to do this is to build a customer journey map, which requires starting with customer personas, or buyer personas. Buyer personas represent fictionalized versions of a company’s target audience. Also, it is made with data such as purchasing behaviors, web analytics, surveys, ratings and reviews, social media posts and interactions with customer service and customer support teams.

After personas (or average customer profiles) are created, companies need to gain a deeper understanding of the different touchpoints that this buyer can have throughout the customer lifecycle. This is predictive of how a new customer would move from learning about a company to purchasing a product to choosing whether or not to return to the company. Generative AI can help companies create interactive customer personas with data that they can then query or expand on.

Data from different sources of customer feedback can be used to build the voice of customer (VOC), which can then be used to analyze customer concerns and surface actionable information that can increase customer satisfaction.

Customer experience can also be quantified by using metrics such as net promoter scores (NPS) calculated from survey ratings.

Customer insights across the entire customer journey allows organizations to develop an appropriate CXM strategy that serves customers the right information at the right time.

CXM can help companies coordinate communication across organizational silos, offer automation solutions in customer service, improve employee experience, monitor omnichannel customer engagement and personalize customer experiences.

Successful customer experience management also means picking the right software or platform to use. Many tech companies such as Salesforce, Microsoft, Oracle, Adobe and IBM offer platforms for customer experience management. Organization can shop around for software depending on if they want end-to-end management or a customized management.

Most CXM software include four core components:

• A CRM hub that gathers customer data across different channels and customer touchpoints in the customer journey. Data analysis can be performed on this information to derive customer sentiment, which is whether customers feel positively or negatively about the brand.

• A marketing automation software that streamlines marketing workflows and tracks customers, leads and the real-time dashboards on engagement and performance of ongoing campaigns. This might include tools that analyze the responses to initiatives such as personalized customer-centric content such as emails and texts or customer loyalty programs.

• An e-commerce platform with a catalog of products and integrations to payment processing.

• A customer service platform that can either patch through to an external contact center or enable customers to provide self-service through AI-powered chatbots and product documentation.

Picking the right customer experience management software not only improves the brand experience. It also has the potential to enhance employee experience by cutting down on repetitive work and helping them prioritize urgent issues to improve overall efficiency, which increases profitability for the company.

Help ensure that customer data is private and secure. A key part of customer retention is trust. Every customer experience management strategy should include best practices for cybersecurity.

If they are using third-party CXMs, companies should make sure that their selected management platform is rich in security, up-to-date on the latest cybersecurity policies and can encrypt and protect customer data. Also, companies should continuously train employees on the latest cybersecurity protocols and how to avoid cyberthreats and attacks such as phishing.

As a backup, companies should have a plan ready for what happens in the event of a data breach. That means keeping a paper copy of important data so that they can continue operations even during a cyber shutdown.

CXM can be challenging for multiple reasons. Here are some tips on how organizations can stay ahead of common issues that crop up in CXM:

• Issue: Getting adequate customer data.    
  • Solution: Organizations must make sure that they get enough customer data to analyze by including qualitative data from comments, communications or other omnichannel support. Also, organizations should make sure they’re incorporating the most updated data because customer needs and customer expectations can change over time.

• Issue: Organization silos might fragment customer data. For example, sales, marketing, support and leadership teams might work with separate customer databases.
  • Solution: Having different internal teams pitch in when creating a complete customer journey map. This can break down silos inside the company and consolidate data. Different teams can contribute a different set of data on customer behavior that other teams might not have access to. Sharing and unifying data sources help solve this problem.

• Issue: Not using the right tools and technologies for the job. 
  • Solution: Pick customer experience management software and platforms that can easily integrate with other technologies that the company uses for operations and customer interactions.

• Issue: Securing an ROI on CXM technologies. Research by XM Institute¹ has shown that half of customers cut their spending after having a poor experience. ROI is calculated with a basic formula: (Benefit of initiative – Cost of initiative) / Cost of initiative. 
  • Solution: Companies need to invest in initiatives that can boost long-term success and can be used to either upsell or cross-sell products and services across different teams. Increasing operational efficiency by streamlining processes, facilitating internal communications and improving productivity by cutting down on redundancies across the company can both boost benefits and cut costs, resulting in a greater ROI.