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The Value of CEM

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The Value of CEM

An enterprise’s reputation — its brand — is no longer built solely via mass media. It is also built at customer touch points. Whenever customers come into contact with an enterprise, they experience what it is like to deal with that organization and form an opinion — good, bad or indifferent. The experience is the ultimate conveyor of value to the customer and a primary influence on future behavior; thus, it has potential value for the enterprise. A poor customer experience is a step on the path to defection, while a good one encourages loyalty. Customer experience is what ultimately creates the highly prized relationship and brand. It is important to manage the customer experience because enterprises cannot avoid providing one. Experience is the ultimate conveyor of value and is a major influence on future buying behavior. The impact of CEM on customer retention and loyalty is illustrated in the diagram above.


The dynamics of loyalty are not the same in all industries. Loyalty is far more likely where involvement with the product or service is strong (i.e., the purchase is personal or important to an enterprise, and the transaction is more complex than routine) and less likely when it is not. Moreover, it should be emphasized that Complaint Management is an integral part of a CEM system. Resolving complaints and improving the customer experience via feedback will have an immediate effect on business by reducing the level of defection and business at risk, as well as providing longer-term gains in loyalty and competitive differentiation.

In environments in which CEM solutions provide services of Compliance and Risk Management, ROI can be measured by the reduction of insurance costs and the cost of exposure to liability risk. In other environments, ROI can be measured by the reduction in agent training and retention costs, as well as staffing costs required to ensure quality. Additionally, it is a known fact that the cost of acquiring a new customer is six times that of retaining one. As such, it is clear that a CEM solution plays an invaluable role in reducing the costs of regaining and retaining customers. More specifically, the value of CEM to operations, risk management and sales and marketing is as follows:

  • Deflect customer inquiries with proactive problem resolution: Often, a service organization identifies an operational problem that is stimulating customer inquiries, such as a systemic miscalculation on credit card statements. Using CEM tools to identify and deliver these inquiries directly to the appropriate decision makers allows an enterprise to react quickly and fix the problem before more customers are affected.
  • Decrease inquiries by providing feedback to marketing: By capturing and analyzing customer inquiries about marketing campaigns on a timely basis, patterns can be identified and problems fixed early on in a promotion or even in the test phase. This will save marketing dollars and reduce customer complaints and attrition.
  • Increase sales closure rates for marketing campaigns: Listening to customer input and promptly applying it can improve the response rates to marketing or sales campaigns. Increasing the closure rate for a campaign by as little as 1 percent can represent significant revenue for an enterprise. Today, a typical marketing campaign yields a 2 percent to 3 percent response rate; this means that 97 to 98 percent of all sales and marketing dollars are wasted. Customers are not shy about sharing their thoughts about programs and often communicate ideas that could enhance marketing campaigns and increase response rates. CEM provides tools that automatically capture and deliver this input to the marketing organization so that it can act to increase customer satisfaction, revenue and loyalty.
  • Reduce customer attrition: ill-conceived marketing campaigns, poorly targeted and communicated sales promotions, or inaccurate billing statements anger and frustrate customers. Today, consumers view most products and services as virtually interchangeable. Service is sometimes the only differentiator; good service retains customers and bad service turns customers away. CEM tools reduce customer attrition by identifying areas of customer dissatisfaction and preventing enterprises from annoying and ultimately alienating customers.
  • Improvement of existing product/service lines and the creation of business opportunities – by utilizing the feedback gathered from customers through the CEM system, companies can make improvements to their existing products and services, and can even learn what types of new products their customers desire, thereby creating new business opportunities.
  • Another area that can realize quick and significant benefits from CEM is risk management. CEM tools, in conjunction with fraud prevention techniques and software, can be used to promptly identify and prevent losses.



A good customer experience encourages loyalty, while a poor customer experience can put relationships at risk resulting in reduced wallet share and defection.

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