As marketers, we like to talk about personalized marketing—"treating customers as individuals based on their unique needs" and delivering "customized treatment." Over the last decade and a half, the concepts of personalized marketing have been well documented. In a ground-breaking book on the subject, The One to One Future, authors Don Peppers and Martha Rogers described personalized marketing as a four-phase process: identifying potential customers; determining their needs and lifetime value; interacting with customers so as to learn about them; and customizing products, services and communications to individual customers.

Since 1993, much has been written about personalized marketing and an entire industry has emerged offering technology, training, and consulting to help companies reinvent their business models around their customers. First, customer relationship management (CRM) emerged and often focused on a single product or channel transaction —the short-term. As companies matured, customer experience management (CEM) was introduced to manage customer interactions across products and channels over the customer's lifecycle —the long-term.

But where are we on our journey towards CEM and personalized marketing? What capabilities do companies have today to manage the customer's experience across products and channels? Is anybody really doing it? How well are they doing it? How does your company compare? And, if you improve your company's capabilities, will it really matter?

The Customer Experience Maturity Monitor (CEMM), a qualitative and quantitative research study conducted by Peppers & Rogers Group, SAS Institute and Jubelirer Research, addresses these questions in its first report, "The State of Customer Experience Capabilities and Competencies." The research measured 58 variables in four categories: customer orientation; customer insight; customer interaction; and improvement. The premise is that a company must have more than the desire to manage the customer experience; they must have enterprise capabilities that leverage customer insight to better-manage customer interactions and continuously improve results. Importantly, for these capabilities to work, the company must have a customer orientation—a culture that focuses on the customer and builds trust.

Customizing Treatments

What was the big CEMM finding around customer interaction? Many companies are, in fact, differentiating customer treatment—60 percent of respondents agreed with the following statement: "My company treats customers differently, based on an understanding of the needs of each one individually." On the surface, 60 percent seems pretty impressive, and perhaps a bit high. To get the real story, you have to look a little deeper.

Customer Interaction: Managing Strategies + Engaging Customers + Customer Orientation

Differentiating the customer experience for competitive advantage is about designing an experience for each customer that is based upon knowledge of that customer, delivering it across products and channels, and measuring individual outcomes to improve future interactions. Done well, CEM will guide investment to higher-potential customers, provide a richer experience that engenders loyalty and turn customers into advocates. Here's the deeper CEMM learning.

• Managing Strategies: Many companies use loyalty programs to differentiate and manage the customer experience. In the CEMM research study, 37 percent of respondents rated their capabilities as good or excellent when asked if: "Rewards and loyalty programs are used to encourage loyalty among high-value customers." However, only 18 percent rate their capabilities as good or excellent when asked if: "Individual 'treatment tracks' are created to manage the customer experience across products and channels." Ahhh….the truth revealed!

  While some companies have mature loyalty programs, many have no capabilities of differentiating the customer experience and still rely on brand advertising to shape customer perceptions. One respondent summed it up well when he said, "Most companies don't really have a customer experience strategy, but this is changing. Usually companies rely more on brand perceptions, but they are realizing the customer experience is the No. 1 influencer of brand perception, so they're paying more attention to customer experience."

• Engaging Customers: In the CEMM study, only 28 percent rate their company's performance as good or excellent at orchestrating outbound customer contact across products and channels. While this problem is easily solved with today's campaign management and marketing automation technologies, enterprise contact management capabilities remain illusive for most companies.

  Only 1 in 4 companies (25 percent) rate their capabilities good or excellent in the use of mathematical optimization to maximize the profitability of marketing campaigns. With the endless combination of products, channels and offers, marketing optimization technologies represents a clear opportunity to direct investment to higher-potential customers and improve decision making.

  For inbound interactions, 34 percent of respondents rate good or excellent their ability to use customer insight to guide pricing, service and product suggestions. Fewer still, at 19%, rate good or excellent their ability to calculate real-time best outcomes during customer sessions.

  Perhaps the biggest opportunity for improvement, for both outbound and inbound engagement, is behavior triggers. Only 22 percent of respondents rate good or excellent their ability to create triggers for systematic response to significant changes in customer behavior. Engaging customers when they have changed not only produces significantly higher response rates, but it also demonstrates to the customer that their relationship matters to your company.

• Customer Orientation: While capabilities to manage the customer experience lag, a customer orientation is emerging. In the CEMM survey, 76 percent agree that their company motivates employees to treat customers fairly. And 69 percent agree that their company takes the customer's point-of-view when making business decisions. Also encouraging, 69 percent agree that their company considers the impact that business decisions have on the future value of its customers.

What is the current state of customer experience management? A respondent from a retail company summarized it best, "It is a work-in-process. We are now integrating the customer service CRM data with the POS data by adding interaction history to the master database. We also want to integrate CRM data with website data. This is a long journey ahead. We are just getting started."

Indeed, CEM is a journey!

Why is the CEM journey important to your company? Its simple, according to the CEMM study, companies with mature customer experience capabilities enjoy 2-3 fold competitive advantage. In addition, you can download the Customer Experience Maturity Monitor (CEMM) white paper (free registration required) for a deeper discussion of all findings.

Further reading: Customer Experience Success Starts with Insight: Transforming Data into Action