What is Customer Experience Management? Your guide to customer satisfaction and loyalty

How to create a positive customer experience

The customer is king! You have probably heard this slogan many times before. And perhaps even made it the credo of your own company. Well, then you understand the central aspect of customer experience management: putting the customer at the heart of the business.

In recent years, “customer experience” and “customer experience management” became real buzzwords. Today, the experience that customers associate with a product or service is playing an increasingly important role when making a purchasing decision. Especially in a highly competitive market where products and services are often exchangeable, a positive customer experience becomes the competitive advantage. It helps you to increase customer satisfaction, drive loyalty and grow your business.

But what is Customer Experience Management exactly? And why is it so important for the success of companies?

Table of contents
What does Customer Experience mean?

What is Customer Experience Management?

Why is Customer Experience Management so important?

What are the components of Customer Experience Management?

How do I measure the Customer Experience?

How can a Customer Experience Management solution help your business?

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What does Customer Experience mean?

Before we dive into the concept of customer experience management, let’s pause to understand the basis behind it: customer experience. Customer experience, also referred to as CX, is the sum of all the experiences a customer has had with your company, your products or services along the customer journey.

From seeing an ad on television to navigating the website to actually buying a product and talking to the customer service—the customer experience is the result of the interaction a consumer has with your brand. Let’s take a look at typical touchpoints along the customer journey:

What is Customer Experience Management? Touch points along the customer journey
These are typical touchpoints along the customer journey

So providing a positive, memorable experience across every touchpoint is the key to making your consumers happy. And a satisfied customer is likely to become loyal and to recommend your product or service to others. The best marketing money can buy!

What is Customer Experience Management?

Customer Experience Management, also known as CEM or CXM, is a strategy set to positively influence your customers´experience along the entire customer journey. It enables you not only to meet their expectations but to exceed them at each touchpoint. The overall goal is to increase customer satisfaction and drive loyalty towards your brand, product or service.

Therefore, ask yourself “When and how do I interact with my customers?” and “What needs do they have?”. It is crucial that you are aware of each encounter you might have with consumers and what their expectations and wishes are.

Why is Customer Experience Management so important?

A positive customer experience — whether while shopping in a store or talking to customer service — helps to increase customer satisfaction. And the better the customer experience at all touchpoints, the easier it is to retain customers and win new ones.

According to a study by the consulting firm PwC, the customer experience plays a decisive role in the purchasing decision for three out of four respondents. And is therefore, the most important criterion behind price and quality (1).

Good customer experience management helps you to:

  • Create positive, valued and memorable interactions differentiating you from the competition
  • Generate more revenue as loyal customers are more willing to spend more and return to your business more frequently
  • Win new customers via word-of-mouth
  • Increase customer satisfaction and loyalty
  • Reduce churn rates and lower your costs

In today’s competitive environment, the customer experience often turns out to be the unique selling point. In fact, a study by Gartner reveals that two-thirds of the companies surveyed state that they compete with other companies mainly on the basis of the customer experience – compared to 31% in 2010 (2).

At the same time, the number of touchpoints has increased significantly in recent years due to the digital transformation of our communication habits. Websites, newsletters, emails and social media are just a few examples of communication channels between customers and companies.

Therefore, a well-thought-out CEM strategy is indispensable to monitor and enhance the customer experience at all touchpoints and to stay competitive.

What are the components of Customer Experience Management?

In general, customer experience management is made up of these six factors:

What is Customer Experience Management? Components of CEM
These are the components of Customer Experience Management

Customer experience describes the experiences that your customers associate with your company. So ask yourself what your customers want. After all, if you know their expectations, you can use a CEM strategy to enhance their experience, increase customer satisfaction and drive loyalty.

The customer journey is the set of experiences that a consumer goes through from the moment they start interacting with your brand to the purchase of a product or service. It can involve many different stages and does not always have to be linear. In fact, the steps between awareness and purchase are disrupted, varied and even loop back on each other. The journey is no longer that easy: seeing an ad, coming to the store and buying a product. Instead, consumers constantly search for information and move back and forth between the stages. Therefore, it is important to provide the customer with the right information at the right time throughout the entire customer journey.

Customer touchpoints describe the interactions (including contact points with no physical interaction) that alter the way that your customer feels about your brand, product or service. Make sure to be aware of these touchpoints to meet or even better exceed your customers’ expectations.

Customer personas (also known as buyer personas) help you get a full understanding of what makes your best customers tick. Personas are based on the analysis and research of your consumers. This allows you to create a detailed picture of your target group(s), including preferences in communication or personal motivations.

The customer lifecycle describes the various stages a consumer goes through before, during and after a purchase.

Customer centricity is at the heart of CEM. It’s a business strategy that fosters a positive experience at every stage of the customer journey in order to increase customer satisfaction and loyalty.

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How do I measure the Customer Experience?

There are different strategies that help you to measure the customer experience.

1. Distribute customer feedback forms

Feedback forms (or satisfaction surveys) are ideal to collect valuable insights into your customers’ experience with your brand, product or service. Do not limit yourself to collecting reviews after a purchase, but distribute feedback forms after meaningful interactions along the customer journey.

2. Analyse the feedback

Once you’ve collected the feedback, it’s all about analysing it to truly understand what your customers are saying. A very helpful tool in this context is the Net Promoter Score (NPS). It’s a key metric measuring how likely your customers are to recommend your product or service to their friends, family, and colleagues based on a scale of 1-10.

3. Take a closer look at support tickets and complaints

Support tickets and complaint emails provide valuable insights on issues and problems. Are there any recurring problems? Make sure to understand what is happening and how you could prevent certain problems from happening again.

4. Identify reasons for customer churn

Without doubt, churn is part of any business. But you should make sure to understand why and when it happens. This allows you to do better in the future and to retain your customers.

How can a Customer Experience Management solution help your business?

No question, a successful CEM strategy requires suitable software. There are numerous providers of Customer Experience Management solutions on the market. In general, it should support you in the following areas:

  • Communicate with customers throughout the customer journey using automated messages and feedback questionnaires
  • Centralise and collect customer reviews on external review portals
  • Distribute customer reviews to leading rating portals
  • Analyse evaluations to really understand feedback and gain valuable insights into customer expectations and wishes
Customer Alliance dashboard - analysing customer feedback
A software solution helps you to analyse feedback and to truly understand what your customers are saying

In Conclusion

Today, customer experience is a determining factor when making a purchase decision. And it’s predicted to increase in importance. To pull off a successful customer experience management strategy, you have to know all touchpoints along the customer journey and your customers´ wishes and expectations. Delivering a personalised, memorable experience means knowing your customers inside out and providing the right information at the right time.

Are you ready to offer your guests a personalised experience? Or would you like to learn more about customer experience management and how it can contribute to your business growth and success? Our experts are happy to help—so simply schedule your free, personal consultation.

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  1. PwC Study „Experience is everything: Here’s how to get it right“ (2019)
  2. Gartner Study “Key Findings From the Gartner Customer Experience Survey” (2018)