• by Karlene Lukovitz  @KLmarketdaily, September 20, 2011

Customer experience management (CEM) is in danger of being "misunderstood into extinction," maintains Steven Walden, senior head of research and consulting for Beyond Philosophy.

Walden bases his conclusion on a just-completed global survey conducted by the CEM consulting and research firm. The research, done between June and September, included 53 in-depth interviews with CE executives/industry experts and analysis of 8,000 CE executives (including 500 in the U.S.) from 2,106 "CE-active" companies across 239 countries. Companies and executives were limited to those with a CE presence on an in-country Google site and/or a presence of executives with a CE title on LinkedIn.

The study found that 78% of executives now in CE have been redeployed from areas such as marketing and customer service, with no background in CE. "We're seeing a large number of companies simply handing out new titles to operations staff without truly committing to customer experience management," says Walden. "The lack of effort behind the change ensures the failure of customer experience management in the eyes of corporate leadership."

The study also found that in many cases, transaction-based CRM initiatives/software or simple product/services competence are being mistakenly "rebranded" as CEM. CEM, says Walden, is a broader concept that is properly defined as an ongoing, organization-wide focus on emotionally engaging customers in ways that enhance loyalty.

"Emotions account for more than half the typical customer experience; thus, proper CEM must consider emotions in order to deliver any significant value," he stresses. "CEM is all the 'wow factor' or giving customers those 'moments of delight.'" Nor can CEM be implemented effectively on a piecemeal basis, he adds.

The U.S., Canada and the U.K. allocate the most resources to CE, and four vertical industries -- telecoms, banking, retail and IT -- account for 63% of the global customer experience market.

Individual companies making the greatest investments in CE include HP, HSBC, Vodafone, Gap, American Express, Dell, Citibank, Best Buy, Sprint Nextel and AT&T.

However, spending does not guarantee results. In fact, outside of exceptions such as American Express and Vodafone, "the companies we see allocating the greatest amount of resources are widely recognized for providing disappointing customer experiences," Walden says.

"Companies like HP, which mostly define CEM in terms of the 'simple ease' or usability of their products, are missing the emotional connection point," he adds. "Functionality is part of the hygienic stuff that companies should be doing in any case."

The companies that are admired by peers as being excellent at CRM are not necessarily spending huge sums on it, but instead have a clear vision and are "wrapping their organizations around it," Walden says.

The companies most frequently cited as having the best customer experiences by the CE executives interviewed are Apple, Amazon.com, Zappos.com, Starbucks, Disney, Tesco, Virgin Atlantic, Vodafone, Nordstrom and First Direct.

Each in its own way delivers delight that deepens customer loyalty, which in turn drives long-term growth and profitability, Walden says.

"Apple delivers entertainment in its retail stores," he notes. "Amazon is of course known for personalization and recommendations as well as great customer service. Virgin Atlantic delivers comfort and pampering. Disney has thought through every aspect and moment of the customers' experience at its parks and ensures that every employee from top to bottom follows through on that vision. First Direct delivers personal service and an extremely pleasant tone in its call-center environment."