An increasing number of companies are moving away from product differentiation, and are instead focusing on customer experience as their key differentiator. Research firm Gartner has conducted surveys that indicate as many as 89% of companies think they will have to compete primarily on the basis of the customer experience by 2017.

This shift in focus not only changes the priorities of marketing managers, it also affects the CIO role. Many IT directors haven't yet felt the change because most organisations start out with CEM projects that don't involve IT. But after going through the initial phases where they conduct customer satisfaction surveys and analysis, companies tend to move into a phase where they look to attain multichannel consistency and a single customer view. That's where the CIO must get involved.

The nature of the CEM trend

Nobody can ignore the importance of customer experience management (CEM). While the wave is hitting almost every industry, its amplitude varies from sector to sector. In general, wherever it's easy for the customer to switch, CEM has a large impact.

As we have already seen, where customers can easily change supplier, upstarts are disrupting well-established industries. Teleco is the perfect example of this phenomenon, with WhatsApp and Viber threating established companies like Telefónica. Retail is another good example, with startup e-businesses like Farfetch overtaking established brick and mortar stores.

In the midst of all the turmoil, one thing that's interesting to note is that while some companies are able to quickly attract and retain large customer bases, others are losing paying customers in droves. The difference lies in customer experience.

The crux of the matter is that shoppers make decisions differently than they did 10 years ago. Customers have access to price and a lot of other information. Customers can easily educate themselves on the differences between products and services. Vendors no longer hold the power they used to enjoy by simply hiding knowledge from customers.

Because customers now have power to get comparative information on products and services, the emphasis has switched to total customer experience. Vendors that treat their customers well tend to retain customers. Even though the customer knows that in some instances competitive products and services are less expensive or of superior quality, the customer develops a loyalty towards the vendor that provides the best overall experience.

The difference in customer experience can be felt in terms of revenue growth. According to Harley Manning who conducted a study with colleagues at Forrester Research, in industries where customers can easily change suppliers, companies with superior customer experience enjoy superior revenue growth as compared to direct competitors.

In industries with a higher switching cost, customers tend to stick with the same suppliers, but only because they have too. As soon as the switching barriers are lowered (as we've seen happen in the telecom sector of the last fifteen years), customers run away like a long-suffering spouse, bad-mouthing previous partners at every opportunity.

How IT gets involved

Differentiating oneself on total customer experience implies a coordinated multi-channel approach. The same messages need to come across each channel—and this includes the good old-fashioned face-to-face channel. Information needs to be collected from each interaction and stored in a common repository for use at other touch points.

That brings us to the discussion about the CIO. CEM projects can be as simple as collecting and analysing customer feedback, but the ones with the biggest impact are those aimed at improving consistency across channels. That's where the CIO needs to get involved.

Improving consistency means implementing (or improving) content repositories so that all users get the same view of the customer and the customer's most recent interactions. Improving consistency also means implementing (or improving) interfaces between enterprise application to consolidate data and to have more timely information on customers as they interact with different parts of your company.

Finally, improving consistency means thinking through how you use your different channels. One should pass consistent messages across the different channels, but one should certainly not refrain from using the unique features inherent to each channel. After all, video communication is inherently different from email communication, and one should benefit fully from the advantages of each.

The following is a list of technologies IT directors should think about before starting a CEM project:

  • Dedicated CEM platforms: Many vendors are offering CEM platforms, in the form of cloud-based or on-premises solutions to help manage customer interactions, similarly to CRM. If you already have CRM, you should first see if your CRM will do the trick.
  • Personalisation technologies: Personalisation technologies that help provide product recommendations can also be used to improve the customer experience. Automated product recommendations are not just appropriate for web interactions. They are also useful when provided on a mobile device to help the sales force come up with product recommendations while talking to customers.
  • Enterprise content management tools: Some of the enterprise content management (ECM) platforms provide tools that can be used to improve collaboration across channels. Such tools might improve collaboration internally, and they might help track customer feedback externally on social media platforms.
  • Customer service and contact center software: CEM may also involve changes to customer service and contact center solutions. If these platforms do not yet handle multiple channels, they'll need to start doing so.

Establish how you'll measure results before you start

As is the case with any IT project, the proactive CIO will sit down with business partners and agree on how they will measure benefits before implementing the change. There are a variety of metrics that indicate positive results of a CEM project – things like, customer satisfaction scores, competitive benchmarks, and brand value. But while it's always good to track changes in customer satisfaction, what you really want to achieve are changes in the following three metrics: customer lifetime value, repeat orders, and churn rates.