What's the Difference Between CRM and CEM? A Heck of a Lot, Some Say

When Starbucks creates a home away from home for people to meet, drink, be seen and compute, is it customer relationship management? When video game companies invite users to modify the games and then sell those modified games, are they practicing customer relationship management?

A lot of people are starting to answer "no" to those questions. Setting aside the fact that many people use the term CRM synonymously with systems and technology, CRM and CEM are really different beasts, these same business leaders and management consultants say.

"Do I have a relationship with 17 million people?" asked Jim VonDerheide, vice president, CRM Strategies, for Hilton Hotels in a conversation I had with him for a white paper on customer experience management. "I don't think I do," VonDerheide said, answering his own question. "Do I interact with 17 million people? You bet."

When you're sitting at a Starbucks typing out your business report with a college student IMing who knows who at a table next to you, Starbucks is not practicing CRM, VonDerheide says. He believes there's no real relationship with you. The Starbucks people know nothing about you. But they have created an experience.

Management consultants and gurus Graham Hill and Paul Greenberg argue that today's business landscape lends itself to something different than customer relationship management. They say that, despite some commonality, CRM is not customer experience management.

The focus of customer relationship management is the optimization of transactions and business processes, they say. Sure, the idea was to manage a relationship with the customer, but the focus was on the "management," rather than on the customer. With CEM, you focus on the customer. What is the customer's reaction to your brand, from advertising and marketing to purchasing to support to the actual service or product? And what is the customer feeling about your brand the whole way?

Byproduct
"Relationships with customers were a much talked about, but rarely delivered, byproduct," said Hill, a principal at the London-based consultancy Soffron Partners. "Customers just didn't want relationships with companies more interested in themselves than in their customers."

With customer experience management, customers are the focal point. What is the effect on the customer of your brand? How does the customer feel when interacting with your company? "In CEM," Hill says, "the focus is on all the contacts during the end-to-end experience, not just on transactions. In airlines, the end-to-end experience might be 24 hours. In automotive, it might be five years, or more. This automatically provides an increased focus on the missing relationship part of CRM."

Hill sees CEM as the next logical step after you've practiced solid CRM. "This doesn't mean that the contacts companies re-engineered in the name of CRM should be tossed aside. It is critical that the contacts are integrated into the end-to-end experience at the appropriate points," He said. "After all, these are the only points where real value is created for the company and customers."

CEM, Hill says, is "broader" than CEM. It incorporates "branded communications before CRM really gets going and the product in use long after it has stopped."

Greenberg thinks the world of commerce has evolved past both CRM and, even CEM. He believes that there's a new ecosystem, one in which customers have enormous power and control. "What I used to think was that CEM was a subset of CRM," said Greenberg, who is president of The 56 Group, LLC. "Now I think that both of them have to be subsumed to something I don't even have a name for. My biggest problem is this: You can't manage the customer's experience. You have to come up with the tools to help them manage their own experience."

He goes on to call CRM and CEM "broken old business logic that says the company is still pre-eminent." In Greenberg's mind, the customer must be preeminent.

"A lot of these companies have millions of customers. There's no way they're going to individually interact," said Greenberg. "It's almost impossible."

But you can react to the customer and put in place techniques to figure out what the customer wants.

One of Greenberg's favorite examples is the video game world, where game makers have opened up source code to users (known as members of the "mod" community for the "modifications" they make in the games) and have embraced the altered games to great success.

Even in the traditional CRM technology world, you see what he means, with SAP's Developer Network of enterprise collaboration. "You've got this massive network of minds that can collaborate on solving problems and creating innovation," Greenberg said.

Samsung, too, engages customers in designing its products, according to Greenberg. And Procter & Gamble has a network of 600,000 "moms" called Vocalpoint, where P&G taps into what the moms think and feel about products. In exchange for easy access to products and samples "before your friends," women give feedback on entertainment, fashion, music, food and beauty.

"In CRM, the focus was on the company, its products and transactions. It was an inside-out view. It was the communicated brand," Hill said. "As far as experiences went, they were designed around the communicated brand. As often as not, customer communications didn't reflect what customers actually experienced at the point of purchase or when using the product."

Hill cites research that he says showed 80 percent of customers surveyed didn't believe that they would actually receive what is so expensively promised. "And 80 percent of them will still be disappointed," he said. In CEM, however, the focus is on customers' experiences with the real brand—"the one that exists in their head as a result of peer recommendations and their own accumulated experience," Hill said.