Most companies have a focus on customer-centricity as part of their mission statement and corporate values. Social and mobile communications have changed the way companies engage with customers, blurring the lines between marketing, sales and service. The following post by Nadine Leber explores the difference between two predominant concepts for building strong relationships with customers – customer relationship management (CRM) and customer experience management (CEM). She explored the strengths and weaknesses of both concepts as part of her Bachelor thesis in International Business for the European University of Hamburg.
CRM vs. CEM: What strategy should companies choose for building better customer relationships
By Nadine Leber
A loyal customer base is a key element to determine a company’s value. The world’s most successful companies pride themselves of having deep relationships with their customers. While there are a number of best practices, the approaches to build strong relationships with customers are evolving as they take social and economic market changes into account. As such the question remains: How can companies best develop strong relations with their customers built on trust for the long-term?
Two of the predominant concepts are Customer Relationship Management (CRM) and Customer Experience Management (CEM). Both approaches offer a variety of solutions for building customer loyalty. But how can a company select the approach that is best suits for its business?
They can start by looking at the strengths and weaknesses of each approach.
Let’s start with CRM.
According to my research based on a comprehensive literature review and expert interviews, CRM aligns the view from the company to the customer. The bundling of customer data expands the existing knowledge about customer needs. By pinpointing specific areas that need attention, such as faster response times for customer service, and automating processes, CRM supports the sales, marketing, and service teams. However, CRM often fails due to the lack of an integrating the CRM strategy into the overall corporate strategy. It is often used as a technical tool to identify and consolidate customer data, as opposed to using it as an overall strategy that is implemented across the organization, going beyond marketing, sales and service.
Now, let’s look at CEM.
The customer is at the center of all business decisions. CEM pursues to build an emotional bond with the customer and identifies customers’ expectations. It systematically creates positive customer experiences on all possible touch points across the organization, from sales to finance and service. By creating a unique customer experience, companies can shun out competition. It is easier to replicate a business model than to replicate a unique experience.
However, this does not mean that CEM is a better concept than CRM. The implementation of a CEM strategy works best by using CRM data to build and maintain relationships with customers. Both concepts can be complementary.
In fact, expanding the traditional CRM approach across the organization and combining it with the customer experience goal can set the foundation to achieve the best possible customer loyalty. Only a combination of CRM and CEM elements offers companies the opportunity to look at their customer base holistically.