OK, so I did a wee look into the subject and could not find a logical or at least convincing definition. That is why I am writing this post. I hope this help you clarify the difference as it does for me.
Here are acronyms used in this post:
- CX = Customer Experience
- CXD = Customer Experience Design
- CXM = Customer Experience Marketing
Who and why am I writing this post?
Given 9 years of my design background (trained and practiced) and 8 years of experience in SaaS industry as a customer success manger, I thought I would give a crack.
Table of contents
CXD has longer history
Raise of CXM
Goal and value of CXM
- CXM is the super-set of CXD.
- CXM utilizes principles of CXD, combines other aspects such as pricing and support, and translates them into business value so you can calculate your return on investment (ROI).
CXD has longer history
Designers have always known the importance of CX
The focus of Design have always been about the customer experience. The medium have changed from mostly paper then to TV and Web and finally all things digital, but it has always been a study of how to optimize the user experience for given information / service / etc.
The business value of CX was not understood
However, it was up to individual designer to persuade the value of CX to the client. Often the dedication and care for detail and usability was not given enough priority or investment, especially when the budget was tight. It was never ignored, but since no one have figured how to tie a value to good CX, it was at least difficult to justify the investment.
Raise of CXM
The value of CX have become known in the marketing domain
From the of 2014 to the beginning of 2015, the importance of Customer Experience in marketing context had began to be reported.
Customer experience is now the fifth marketing P that needs to be managed as purposely and carefully as the product, and the price, and the promotion, the traditional Ps of the marketing mix.
Macpherson, Lisa. Hallmark Customer Experience Marketing: What is it?
And while yes, “the future of marketing” is something we should all be thinking about, there are many marketing practices “from the past” that are still vital to delivering exceptional customer service – and the overall customer experience is one of them. Why is that? Even though we may concentrate on big data, mobile, social, or content being the future of marketing, if you really think about it, all of these elements are only important in how they help us to enhance customers’ experiences with our brands.
Newman, Daniel. Customer Experience Is The Future Of Marketing
CX have become indispensable for SaaS business model
While the value of CX have become widely recognized, it was the success of SaaS business model that made CX indispensable for business.
Unlike previous business model where ROI was made at the point of purchase, SaaS business model relied on LTV (life time value) of customer, where ROI was made from continued usage of service (Recurring Revenue or RR) and up/cross sell.
Therefore, it was crucial for SaaS enterprise to provide great CX to retain the customers once they were acquired.
Companies like Salesforce and Adobe (Omniture) have always known this and invested in Customer Success as an enterprise.
The churn rate at Salesforce was 8 percent. That doesn’t sound so bad until you add these two words—per month! Do the math if you wish, but it will come out like this: almost every customer was exiting the business every year.
Dempsey’s presentation awakened Benioff and set the wheels in motion around a company-wide initiative to focus on, measure, and reduce churn.
Mehta, Nick. Customer Success: How Innovative Companies Are Reducing Churn and Growing Recurring Revenue (churn rate figure as of 2005)
UX was no longer a philosophy but a business investment (with return).
Goal and value of CXM
CXM includes CXD and combines other aspects like price & marketing.
Experience are result of iterative contact with everything that relate to the service. This could include hardware, software, documentation, in-person contact, store, event, brand impression etc.
Some factors mentioned above are dealt with marketing or business, but most of them reside in the domain of design.
Value of CXM have been proven many ways
Stats and findings about value of CXM can be found from Clientheartbeat.com. I have quoted some below.
It takes 12 positive experiences to make up for one unresolved negative experience
Newell-Legner, Ruby. Understanding customers
A 5% reduction In the customer defection rate can increase profits by 5-95%
Bain & Company
You can read more stats here
CXM is an on-going process and need organizational effort.
While the value of CXM has been commonly known, it is a different story when it comes to implementation.
According to Four ways to shape customer-experience measurement for impact, a report by McKinsey & Company article, companies who invested in CXM are struggling to yield value from their effort.
The report states the issue often comes from a company having multiple KPIs that do not correlate, or the company can’t connect their finding to an action.
Its recommendation is to focus on 3 areas; 1) Evaluate entire CX, not just touch point, 2) Make sure KPIs are reported at real-time to be actionable and neutral, 3) Work on CXM at company wide initiative.
Of the 3 areas mentioned, I believe #3 is the most crucial area to work on. As a Customer success manager I have seen some companies who invest in service but do not have leadership and/or strategy and taken much longer to success.
I hope my findings help you improve your service to win the heart (and that precious Recurring Revenue) of your customers.
I am planning to add CXM tools & methods to this website as I sort them.