One of the golden rules of marketing has always been "know your customer." Historically, this required deep knowledge about a market segment. You know the drill. It included understanding the unmet needs and wants of a particular target market including: demographics; attitudes; consumption patterns; media habits; lifestyle; and other dimensions that enabled you to define a homogenous group. And then you tailored the 4-P's of marketing (product, price, place and promotion) based on your knowledge about this market segment.

This approach to "target marketing" worked pretty well for decades. It enabled marketers to develop products, value propositions, advertising creative, and media buys that were well targeted to a particular market. But, in today's world of Customer Experience Management (CEM), how does this approach stack up?

CEM: Beyond the 4-P's and CRM

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.

The marketing buzz over the past several years has been all about managing the customer experience. Intuitively we all understand that successfully managing the customer's experience is the key to building a durable and profitable customer franchise. And, as more and more products and services become commodities, it's only logical that companies focus on differentiating the customer's experience as a primary source for competitive advantage.

What is customer experience management (CEM) and how is it different from customer relationship management (CRM)? CRM often focuses on a single product or channel transaction—the short-term. Conversely, CEM focuses on holistically managing customer interactions across products and channels over the customer's lifecycle—the long-term. The goal of CEM is to move a customer up the affinity scale from satisfaction to loyalty to advocacy. And today, where a customer can influence millions with the click of a mouse, advocacy is becoming more critical.