Studies show that companies that commit to their customer experience (CX) can grow their revenues as much as 8% above their market.
Yet, according to CustomerGauge research, 62% of companies aren’t calculating the ROI of their customer experience. What’s more, only 20% understand how CX supports their overall strategy.
This matters because when the experience of your customers isn’t tethered to your bottom line, you’re more likely to lose valuable customers to churn, neglect crucial revenue streams, and ultimately put a handbrake on your growth.
In this guide, we aim to demonstrate the importance of customer experience management (CXM) while giving you practical advice to build an effective CXM program yourself.
At CustomerGauge, we work closely with 1,000s of B2B companies to develop and improve their customer experience. Over the years we've learned a thing or two about how global corporations can gain market share with Net Promoter and similar CX tools.
Let's dive in together.
Why Customer Experience Needs Your Focus Now
Over the years, customer experience (or CX) has grown from a niche idea into a key concern for many businesses. Why? Because people have recognized that a customer-centered approach delivers benefits across your business and cuts the costs of customer acquisition.
Before we introduce you to the idea of customer experience management—the strategies and tools you can use to improve your CX—let’s consider why understanding your customers is so important:
- You’ll boost retention and reduce business costs. Studies suggest a 5% increase in customer retention can result in a 25% increase in profit. That comes from both lower acquisition costs and the fact that happy customers tend to require less attention and therefore cost less to serve. Satisfied customers also tend to spend more—140% more—and stay for longer.
- Improve customer interactions and bolster positive word of mouth. One study found that 82% of customers do business with a company based on past experience or word of mouth. By transforming detractors into brand promoters, you’ll be outsourcing some of your marketing efforts to your fans.
- Improve business processes and products overall. Improving CX isn’t just helpful for your marketing and sales departments. Understanding what your customer likes, needs, and would like to see in the future can help you refine your products so you can stay competitive and build loyalty into the future of your company.
Yet to many businesses, the real value of their CX remains invisible. Our research shows that 70% of companies don’t link CX data to financial data. That means your understanding of your customers is limited—and you’re flying blind.
Only customer experience management integrated with revenue outcomes can help.
What is Customer Experience Management (CXM)?
Customer experience refers to the sentiments of customers when they interact with your service, product, or staff. Customer experience management (CXM) is the name for the methods and tools you use to maintain and enhance these interactions.
But it’s more than that. CXM is the way for you to become strategic about your customers’ experience—and tie it to your wider business goals. This way, insight into CX doesn’t stay siloed in different departments. Instead, it helps your entire business gain visibility at every stage in the customer journey.
CX has conventionally been just a B2C thing. But it’s no longer that way. B2B businesses can use the Account Experience methodology and CXM & NPS tools like CustomerGauge to keep track of their relationships with customer accounts of all sizes. While that’s a more complex job than tracking a single account touchpoint, it unlocks incredibly valuable business opportunities.
Customer Experience Management Definition
Customer experience management is the tools, tactics, and strategies businesses use to understand, maintain, and improve customer interactions. It gives you deeper insight into who your customers are, what they like about your company, and what more they want. And it empowers you to use that knowledge to drive revenue growth.
We’ve seen what customer experience management can do for you. It’s time to start reaping its benefits.
What is the Main Goal of Customer Experience Management?
So, what does CXM actually help you achieve? In short, the main goal of customer experience management is revenue growth. CXM can help you to:
- Link your CX to revenue. CX means nothing if it’s not linked to your bottom line. A CXM program makes this possible (more about this later).
- Reduce churn. While many companies have churn rates around 1-5%, some B2B brands can suffer from as high as 15% churn. The goal of CX management is to keep this to a minimum, while showing you who is churning and how much they are worth to your company.
- Identify your brand promoters. Your brand promoters will be most useful for customer referrals. This is a way to win new customers fast.
- Find your most lucrative clients. Gartner states that 80% of your business profits come from 20% of your customers. Finding those customers to which you can dedicate extra resources will be one of the main goals of your CXM.
The main goal of CXM is to make customer experience work for your bottom line. But it’s not the only reason why it matters:
Why is Customer Experience Management So Important?
In the everyday running of your business, you probably don’t want yet another metric to track, tweak, and optimize. But CX management is really worth it. You will power your revenue, while getting a deeper understanding of what makes your customers tick.
And the benefits of customer experience management don’t end there:
- Get deeper insights into your customers and their journey. Understanding your B2B accounts involves knowing when different people interact with your business and when. Effective CXM tools make this easy.
- Better understand customer feedback. By making feedback measurable, CXM helps make it actionable.
- Create a business-wide CX strategy. CX can get siloed, with marketing, customer service, and sales each with their own view of the customer. CXM makes customer experience visible to everyone.
- Improve your business processes. Gain full visibility on the parts of your business that are positively or negatively impacting satisfaction, and build plans to improve those areas.
- Promote transparency and accountability. Customer experience management is cross-functional. That means every department needs to get behind your CXM goals and be responsible for your CX success.
- Drive business growth. It’s worth repeating. Simply, customer experience management can boost your bottom line.
How INAP Reduced Customer Churn by 50% Using CustomerGauge
INAP is a data center company that had a massive churn problem. Thanks to CustomerGauge’s Account Experience program, they managed to cut their customer churn in half in just two years.
Watch the video: How INAP Reduced Churn with Account Experience
What’s the Difference Between CRM and CXM?
You may already have heard of CRM, customer relationship management. That’s the name for the strategy and processes that typically guide your relations with customers.
But how is CXM different?
- CXM gives a much deeper viewer of the customer. CRM compiles data on customers across different channels—search, company websites, email, and social media. In contrast, CXM gives you a 360-degree picture of every individual customer—from the chief experience officer to the tech officer to the marketing assistant—across all of your accounts.
- CXM offers opportunities to the whole business. CRM is typically most useful for customer-facing staff and those in customer services. Alternatively, CXM demands buy-in from all levels of your organization. In return, it delivers value to every department, by giving you a clearer picture of who your customers are.
- CXM links customer experience to revenue. Unlike CRM, CXM makes revenue the key aspect of customer experience. As a result, it’s an indispensable tool for business growth.
How SmartBear Brought in $6 Million in Referrals Thanks to Account Experience
Before they started working with CustomerGauge, SmartBear didn’t have a customer success team. But in a matter of six months, the software brand was able to create $2.2 million of new business thanks to the Account Experience program. A year later, that number reached $6 million.
Find out how we made it happen: How SmartBear Brought in $6M in Referrals Using AX
Two Customer Experience Management Program Concepts You Must Know
CXM is not a simple task you check off and move on.
To be a truly customer-centric organization, CXM should be something that informs all of your business decisions. It should be built into your brand’s very DNA.
But before you get started with designing, implementing, and optimizing your CXM strategy, there are two concepts it is essential to know:
1. Monetized NPS
Net Promoter Score is the widely-used metric that sits at the core of most customer experience strategies. But for your CXM program, you’ll need to take this to another level.
Enter Monetized Net Promoter. Monetized NPS takes the CX metric and ties it to growth. With this figure, you’ll be able to understand how your customers’ experience is having an impact on your revenues.
The original NPS question that you will ask customers remains at the heart of monetized NPS:
“On a scale from 0 to 10, how likely is it that you would recommend our company/product/service to a friend or colleague?”
Customer responses are then placed into three groups, depending on the score they give:
- 0-6. Detractors: The customers that are least likely to recommend your brand. These are your least satisfied customers. They may not purchase your product again, and they may spread negative word of mouth. With monetized NPS, you can understand how much of your revenue may be at risk.
- 7-8. Passives: Satisfied but not yet a loyal customer. They won’t spread negative word of mouth, but they could easily move to a competitor. Improving their CX can turn them into:
- 9-10. Promoters: Most likely to recommend. Loyal and enthusiastic customers, they can become your brand advocates and have the biggest impact on your profits.
If there’s one fundamental concept to understand CXM, it’s this. But it’s not enough just to understand your customer feedback. By linking NPS to revenues you’ll better understand the value of retention, referrals, and other customer behavior. More on this below.
2. The Customer Journey
Armed with their NPS, many companies fall into the trap of believing their customer experience work is over. Spoiler alert: it isn’t.
Customers are multiple, they are fluid, and they respond differently to your product, service, or survey at different touchpoints with your brand. And when you have different individual customers in different B2B accounts, keeping track of them all can be tough.
Mapping out the customer journey of each account can help give you a sense of when your customers interact with your brand.
For example, for a fairly simple B2C company, a standard customer journey could look a little like this:
Similarly, a customer may interact with a car brand in the following way:
Awareness—test drive—purchase—return for service—review—referral
But B2B contexts are usually a lot more complex. Consider the following:
In B2B scenarios, each of the stages in the customer journey might be performed by a different person—who has a different impression of your product.
Getting a true sense of your Net Promoter Score with a B2B customer means tracking their satisfaction and experience across every single touchpoint. And that will have an impact on revenue, too.
The Fundamentals of CX Management Strategy
At CustomerGauge, our CX management strategy hinges on four fundamental stages: measure, act, monetize, and grow. With these, you’ll link your customer experience directly to your business revenue and put steps in place to drive growth.
Strategy starts with measurement—and when it comes to CXM, that’s all about NPS. But you’ll need to consider when to ask the NPS question during the customer journey and to whom. Two different surveys are essential:
- Relationship surveys. These are short and frequent customer surveys that are usually conducted quarterly. Our research shows that companies see a 5.2% increase in retention if customers are surveyed every quarter.
- Transactional surveys. Triggered after a purchase, upgrade, delivery, or other specific interaction, these are short questionnaires directly tied to different touchpoints in the customer journey.
But the NPS question alone is not enough. To understand why your customers have given their score, you need to ask an additional question or two. We call this driver analysis, as it gives you visibility on which part of the customer journey is driving their response. And this can provide clarity on what needs improvement.
Note. While email surveys are the preferred method of conducting surveys for 71% of companies, it’s not actually the best. Our research found that phone interviews have a 42% response rate, compared to 30% over email.
Now you’ve understood your customer sentiment, the next stage in your CXM strategy is to act. There are two stages in this part of your CXM strategy:
- Closing the loop. Start by addressing the issues that are affecting your customer experience—and reach out to customers to let them know what you’ve done. Different levels across your organization will have different roles to play in this:
- Frontline staff determine the root cause of the NPS score, fix open issues, and encourage referrals
- Management identifies the best performance and best practices
- Executives work to understand structural issues, investment needs, or strategic problems.
- Optimizing. Optimizing your CXM program means measuring performance and setting targets. Our research showed that businesses that set NPS targets to grow twice as fast as those that don’t. Yet 21% of companies still aren’t setting targets for the CX.
Ultimately, your customer experience program should have long-term growth as its goal. In the third stage of your CXM strategy, you’ll reinforce your above action by linking CX to your revenue.
Monetizing your NPS happens in three stages:
- Measuring your retention rate. On a monthly basis, you should be measuring your retention and analyzing who is churning, when, and why.
- Measuring and analyzing referrals. Just because promoters are passionate about your brand, it doesn’t mean they have actually referred it to someone else. But you can influence them to do so, if you understand what makes them tick.
- Correlating revenue with NPS. For many B2B brands with vast numbers of customers, tying revenue gains to NPS can be tricky. But you can aggregate the values for detractors, promoters, and passives to show how an increase in NPS can increase your revenue. What you want to understand is how much the change of one NPS point is worth.
Find more on this in our ebook: NPS 101: Retention Management to Combat Churn
Now time for the fun bit. This is where you put all your efforts into growth—growing retention, referrals, and repurchases. But you won’t stop measuring and closing the loop at the same time.
To best drive growth, you need to segment your customers into three groups: those at risk, those in the gray zone, and those who are safe. This will help you understand where to focus target optimizations for growth:
- Focus on promoters, to drive up-sales and cross-sales. Remember: 80% of your profits come from 20% of your revenue
- Understand why some customers are at risk of churning and reach out to them to encourage them to stay
- When closing the loop, ask promoters for online reviews or referrals.
How Alphabet Increased Their NPS Score by 22 Points with CustomerGauge
As a mobility provider with a long list of partners, the Netherlands-based Alphabet wanted to make customer experience a priority. In 2013, it introduced CustomerGauge’s Account Experience program.
Three years later, Alphabet had boosted their NPS by 22 points and were named Best Leasing Company in the Netherlands 2015/2016.
Alternative Customer Experience Management Frameworks
CustomerGauge’s customer experience management framework is not the only one out there. For example:
- Deloitte’s CX Operating Model. The CXM framework from Deloitte identifies four strategic areas to improve customer experience in your business: structures and functions, people and talent, governance and power, and data and systems.
This CMX framework demands a radical restructuring of the way your organization operates. In contrast, with CustomerGauge, you can start improving CX immediately.
- CX Value Driver Framework. CX Pilots alternatively suggests some questions you need to ask to identify your ideal CX framework. These focus on your unique point of view, value sources, value drivers, segments, accountability, and capabilities.
What this framework doesn’t do, though, is account for the tools and tasks you need to implement to make CX drive your revenue. And that’s the most important thing.
That’s why we prefer Measure, Act, Monetize, Grow as a CX management framework. It gives you the tools to link measurable, actionable CX insights to your revenue while recognizing the particularities of different industries and actors across your business.
Find out more: Customer Experience Management Frameworks
When you have CustomerGauge’s framework in place, it’s time to implement some key tasks to improve your CX. Here goes:
8 Customer Experience Management Best Practices
So, what are some of the best things you can do to stay on top of CX? To make the most of your CXM strategy, here are some customer experience management best practices you can’t afford to overlook:
- Use NPS surveys regularly to take the temperature of customer relationships—at least every quarter. NPS isn’t a market research tool. It’s an operational management tool.
- Combine relationship surveys with transactional surveys. Our research shows that using both can increase customer retention by more than 4.9>.
- Use your customer journey to inform drivers. The different touchpoints in your customer journey—awareness, purchase, or support—are the drivers to which your NPS surveys should respond.
- Close the loop within two weeks, maximum. The faster you solve customer issues, the more retention grows. Two weeks is a top limit, but you can get it done much faster.
- Be transparent. Companies that have successful NPS programs are three times as likely to share their results.
- Get everyone on board. From your frontline staff to your executives, getting buy-in from everyone will enhance customer experience while improving your employer's Net Promoter Score too. Without satisfied employees, you can’t expect satisfied customers.
- Tie your NPS to revenue. If there’s one CXM best practice you cannot afford to ignore, it’s this. You should be able to attribute a portion of revenue increase to every individual NPS point.
- Automate as much of the CX process as possible. By automating as much of your program as you can, you’ll save time, effort, and cost, while swerving some key CXM challenges.
How Alchemista Achieved 100% Retention Using CustomerGauge
In 2019, the catering brand Alchemista lost its biggest client without warning. Without a customer experience program in place, they just didn’t see it coming.
But by implementing CustomerGauge, they’ve been able to completely turn this around—and now boast a 100% retention rate.
“Onboarding CustomerGauge has had the highest ROI of anything I've ever done at my company," says Christine Marcus, Alchemista’s CEO.
Find out how we had such an impact: How Alchemista Went From Losing Their Biggest Customer to 100% Retention
Overcoming Challenges in CXM
We’ve painted a rosy picture of CXM so far. But it’s not always an easy thing to get a handle on. The unfortunate truth is that most CXM programs don’t work as they should.
Indeed, our research shows that only 20% of companies are sure their entire organization understands how their CX supports their strategy. Meanwhile, a study by Accenture showed that only 28% of B2B leaders believe they have an influence over the direction of CX.
Something is going wrong in many B2B CX programs. But that doesn’t mean it has to go wrong for you, too. Here are some of the most common challenges facing CXM—and some tips on how to overcome them:
- Problems with company culture. Resistance to change is common, particularly when that change can threaten departmental control. Solid, inspirational leadership can help cut through these stubborn elements and convince everyone of the importance of CXM.
- Neglecting employee experience. Without trusting, engaged, and satisfied employees, it’s unlikely that you’ll have good CX. Improving employee motivation—and addressing concerns they have with the company is crucial.
- A lack of CX goals. When your CXM program is untied from any business goals, you won’t see the results you want. Remember, CX should always be linked to your revenue and growth.
- Inadequate technical support. In B2C contexts, keeping up with individual customers can be fairly straightforward. But when you’re a B2B brand, managing the CX of individual contacts in a given account is tough—at least without the right technology.
B2B CXM technology exists, and it can help you better understand your different touchpoints, contacts, and their experiences. And it can help you identify opportunities for growth too
New Trends in Customer Experience Management
Over the last decade and a half, the world of CX has changed rapidly. While we’ve outlined the basics above, new trends are emerging all the time. And keeping ahead of your competitors means keeping your finger on the pulse of these changes.
We want to end this guide by briefly exploring three of these major transformations: the rise of the chief customer officer, CXM adoption in different industries, and CXM software.
1. The Rise of the Chief Customer Officer (Who Is in Charge of CX Anyway?)
One of the major shifts in the way companies are approaching CX comes in the form of the Chief Customer Officer, the CCO. Between 2014 and 2017, the number of CCOs in the UK grew by 600%, from 14 to 90—and will have grown further since.
But what does a CCO actually do? And do you need one?
The CCO’s role centers around two main functions: building a customer-centric culture and creating revenue growth opportunities with existing customers.
While these tasks were once spread across different executives, bringing them together under a single leader gives them better recognition and focus:
- CCOs make CX a central tenet of your business. Naming a CCO shows you take CX seriously. But remember: it’s the work they do—not the title they hold— that really matters.
- They make the case for the importance of CXM to leaders. It’s the CCO’s job to prove the value of the CX focus and ensure it’s getting the resources it needs.
- They work across functions to keep the whole company focused on CX. CX shouldn’t become a function itself. Instead, your CCO will cultivate a customer-centric culture across your organization.
- They fine-tune your CXM strategy. Every business has different CX needs. It’s the CCO’s job to make sure you have the right priorities and focus.
2. CXM Adoption is Growing Across Industries
The principles of good CXM are the same for everyone. But the strategic and tactical reality can vary widely. No two businesses are the same—and no two customers in different industries are the same either.
These distinctions have become increasingly important as more and more industries—from healthcare to telecoms—are making CX a business priority. But there remain three main factors that will affect your approach to CXM depending on the industry you are in:
- The customer journey. Different industries have different customer touchpoints. CXM in SaaS, for example, tends to have a higher number of customer interactions than other B2B contexts.
- Client value. Similarly, a B2B SaaS company may have a smaller number of customers overall, but they are likely to be much higher-value clients than a B2C tech brand. In these cases, customer acquisition costs can be high, and the risks of churn are even higher.
- Data penetration. According to an Adobe study of financial services companies, 99% of executives believe that “improving data analysis capabilities” is a key element to improving CXM in banking. Other industries may be better equipped already.
3. The Growth of CEM Software and Technology
For B2B brands, the days are long gone when you could manage your NPS scores from different clients in a single spreadsheet.
Nowadays, technologies are available that empower you to link CX directly to your revenue, to drive growth, and identify new business opportunities:
- Visualize customers at 360 degrees, at every touchpoint in the customer journey
- Get total clarity on your detractors and promoters and how much they are worth
- Survey multiple stakeholders in each account, to ensure frontline staff, managers, and senior executives are all engaged
- See data on driver value, enabling you to fix the most valuable CX issues first
- Link up CX performance with your revenue
- Receive real-time insights into how to improve CX for all customers.
Find out more here: Top 5 CEM Software
Conclusion: Customer Experience Management is Here to Stay
Today, customer experience management demands a choice: either link your customers’ sentiments to your bottom line or fail to fully understand your customers. It’s a no-brainer.
At CustomerGauge, we can make this easy. As CX becomes a mantra for brands across the globe, we can help you transform their sentiments into concrete data with which to drive growth.