The idea at the center of CRM can be stated in the following way: Every time a company and a customer interact, the company learns something about the customer. By capturing, sharing, analyzing and acting upon this information, companies can better manage individual customer profitability. CEM’s premise is almost the mirror-image. It says that every time a company and a customer interact, the customer learns something about the company. Depending upon what is learned from each experience; customers may alter their behavior in ways that affect their individual profitability. Thus, by managing these experiences, companies can orchestrate more profitable relationships with their customers.
CRM uses profiling, micro-segmentation and predictive analyses to identify each customer’s figurative genetic structure. CRM thus uncovers the preferences and propensities of customers so that they can be nudged towards optimal profitability. CEM, on the other hand, looks at the environment. It gathers and analyzes information about the dynamics of interactions between companies and customers. This information is fed back to the company in a self-calibrating system that (in theory) makes optimal use of every opportunity to influence customer behavior. CEM’s strengths lie in precisely the areas where CRM is weak. By focusing on the experiences of customers and how those experiences affect behavior, CEM examines both the quality of the company’s execution and the efficacy of the result. It aligns customer needs with the company’s ability to fulfill those needs, leading to business relationships that are mutually beneficial and that both parties – company and customer – are motivated to improve.