When it comes to customer experience management, some stay in the shallow end while others go deep. But one of the keys to customer loyalty is managing the customer experience.
Before we go any further, let's define CEM. Laura Bassett, director of marketing for Customer Experience Management and Emerging Technologies groups at Avaya, defines CEM this way:
"The discipline of managing and treating customer relationships as assets, with the goal of moving satisfied customers to loyal customers, and loyal customers to advocates of your brand. In doing so, CEM is ultimately about improving the lifetime value of a single customer or segment of customers, and increasing the duration of the customer relationship as it affects a customer's lifetime value."
The CLV Model
In a blog post called "Digging Deeper Into Customer Experience Management," Bassett discusses why organizations should invest in CEM. Her answer is simple: to improve profitability and duration of relationship. Both can be measured and ultimately drive top line impact as these dimensions increase. Then she introduced a model to manage CEM economics that she calls the customer lifetime value (CLV) framework, using key performance indicators (KPIs).
"This model links technical KPIs (percent application availability as an example), operational KPIs (average hold time, first call resolution, transfers, as examples) and strategic KPIs (net promoter score, retention rate as examples) to CLV. The model illustrates how making subtle improvements in technical, operational and strategic KPIs affect customer profitability," Bassett said.
"It also provides a means for linking CEM investment to CLV improvement. The model is valuable for many reasons. Probably the most understated value is that it provides people in the organization an understanding of how what they do every day, the things they are measured on, affect customer profitability and growth. It brings everyone along on the CEM journey."
Voice of the Customer
We asked Nancy Porte, vice president of Customer Experience at Verint Systems, a company focused on providing actionable intelligence to help companies improve the customer experience, for her take on Bassett's model. She told us she supports the idea of linking technical and operational KPIs, but it is important that an organization take the time to have a formal voice-of-the-customer program in place to listen to the customers actively, by using Enterprise Feedback Management and text and speech analytics to better understand which metrics truly drive customer loyalty.
"Focusing on three to five loyalty drivers enables organizations to better understand which KPIs to link together rather than relying on from all of the operational metrics," Porte said. "With the right tools in place, the contact center can play a strategic role in the collection of customer experience data because of its functional operations that can optimize both the effectiveness and efficiency of the customer relationship, protecting it as a corporate asset."