I think having a good working knowledge of XD is extremely important if you want to become a successful CEM consultant. Remember – design comes before management!!. If you don’t understand the design, it’s highly likely that you’ll have trouble managing it.

Here’s the wikipedia definition of XD and CEM.

XD – “Experience design (XD) is the practice of designing products, processes, services, events, and environments with a focus placed on the quality of the user experience and culturally relevant solutions, with less emphasis placed on increasing and improving functionality of the design.^[1] An emerging discipline, experience design draws from many other disciplines including cognitive psychology and perceptual psychology, linguistics,cognitive science, architecture and environmental design, haptics, hazard analysis, product design, theatre, information design, information architecture, ethnography, brand strategy, interaction design, service design, storytelling, heuristics, and design thinking.”

CEM – “According to Bernd Schmitt, “the term ‘Customer Experience Management’ represents the discipline, methodology and/or process used to comprehensively manage a customer’s cross-channel exposure, interaction and transaction with a company, product, brand or service.” Customer experience solutions provide strategies, process models, and information technology to design, manage and optimize the end-to-end customer experience process.”

Key characteristics of the model:

• The model is based on a Customer Journey Map made of the five main phases the consumer goes through while purchasing on a B2c eCommerce website:
  • Landing
  • Product identification
  • Product presentation
  • Cart
  • Order completion and payment

• The phases have been analyzed in detail taking into account at least 15 drivers/features each. A set of parameters are selected to assess the features of each driver.
• One of the key output of the analysis accomplished with the model is a “experience curve” representative of the customer experience of a specific website made of five points (one point per phase), with values between 0 (low) and 1 (high level), that allows the reader to make comparisons between different eCommerce websites and identify their strengths and weaknesses.
• The model can be used very effectively to understand/identify the most critical phases and features of each online store which needs to be improved.

Experience Curve (Similar to Strategy Canvas of Blue Ocean Strategy):

The scores reported in the five stages of the Customer Journey for selected online stores are compared and visualized on a chart called the “experience curve”. This visualization enables a brief but very effective representation of the experience progression of the online store throughout the five stages. It’s very easy to see positive peaks and negatives downturns following the line from a step to another, supporting various business and design considerations. Moreover using this chart is easy to compare different websites altogether within a benchmark research, providing at a glance a picture about a specific market sector or revealing strengths and pain points of one retailer against the others.

Some of the conclusions from this research article are slightly counter-intuitive. We have all heard about the importance of creating stickiness in experience but the research done by the authors of this article reveals that functional (utilitarian) elements of online experience are far more important than the hedonic elements created to make the users stick around on the website for a long time. I believe this is not a one-size-fits-all kind of conclusion. It’d not only vary based on who your target users are but also on how long you have been in the business. If you are just starting out with a novel idea, you want to keep things simple, so that users can easily understand and use your features. However, as you evolve, you want to do something more sophisticated and maybe include hedonic features to prevent your old users from getting bored. It’s a difficult path to tread, on one hand you want to keep things simple for new users but at the same time you also want to have some fancy features to prevent your existing users from getting bored and moving to your competitors.

Anyways, following are the key concluding ideas from this research article:

• Online buying may be increased by providing website characteristics that serve utilitarian goals rather than offering hedonic value.
• Marketers who successfully engage consumers seeking hedonic value run the risk of ensnaring them in the negative consequences of pathological Internet use (PIU).
• Marketers often try to encourage website visitors to reach a state of flow, an enjoyable condition in which users may lose their sense of time and place, and which they assume will increase consumers’ tendencies to purchase from the site. However, being in a state of flow does not necessarily increase online purchasing – flow is a complex phenomenon, hedonic elements of which can strongly impact PIU symptoms – but only the more functional elements of flow appear to influence shopping behavior.
• This one is cool – The authors claim that their research findings are consistent with those of recent store environment research that indicate task-oriented shoppers prefer simple layout and merchandise presentation, but those who are browsing or exploring prefer a more exciting atmosphere.
• The authors recommend that marketers and website designers who work with them should focus on means of enhancing the utilitarian value of retail sites, such as:
  • providing ease of navigation
  • complete information availability
  • convenient ordering and
  • options for delivery
• Following this approach will prevent them from putting off  those shoppers who visit for primarily functional reasons.
• The authors advise against working to increase “stickiness” for its own sake, as the research results indicate that consumers exhibiting symptoms of PIU do not buy more than those who are online with utilitarian goals, including seeking information and placing orders. Facilitating functional goals is likely to pay for itself in the longer term, through increased satisfaction of those customers who come to the website seeking to make purchases.

Unlike most frameworks for managing customers, CEM includes both strategy and implementation in a uniform framework. Strategic considerations are at the core of the first two steps: analysing the experiential world of the customer and building the experiential platform. Next, three implementation steps focus on the brand experience, the customer interface, and continuous innovation. (Refer to 5 step CEM framework developed by Prof. Schmitt)

Moreover, in the CEM framework, strategy and implementation are tightly linked, as is each step to the next. An analysis of the experiential world of the customer usually results in experiential positioning options for the brand.

CEM’s focus is external and internal

The foremost concern of CEM is the external (customer) experience. However, CEM is also concerned with the “internal customer” (the employee experience). There is a simple reason for this concern: How employees feel and experience the company and its initiatives is critical for delivering the right brand experiences, enhancing the customer interface, and encouraging continuous innovation initiatives.

• A cosmetics company redesigning the customer experience for a leading brand whose sales had become stagnant.
• A pharmaceutical company adding interactivity with customers to its traditional R&D focus and making the experience (of both customers and employees) a key leadership initiative.
• A company in the information business reorganising entirely around the customer experience.
• A non-profit organisation in the music business repositioning its brand and expanding the customer experience.
• A company in the beauty business launching a new brand with contemporary experiential appeal.
• An advertising agency developing planning tools and metrics to provide experiential communications for their customers.
• A company in the electronics business launching an experiential product.

Application areas of CEM framework:

Opportunities to apply the CEM framework exist whenever you face a customer-focused issue (for example, changing customer perceptions because they are out of line with the reality of your offer, increasing customer loyalty and satisfaction, or getting customers to try your new product). But the framework is even more adaptable and useful than that. Often companies encounter problems that initially do not look like customer-experience issues, but on closer examination they may turn out to be just that. In these cases, a CEM project can add tremendous value.

Five such cases are:

1. Segmentation and targeting. For many firms, segmenting customers and selecting targets pose immense challenges. Part of the problem is that the issue is often viewed the wrong way. Many companies do not view segmentation in terms of the customer but from the perspective of the company and its products (by segmenting according to features, price, or distribution channel).

Similarly, companies often believe that targeting decisions are sound as long as their analysts have spent enough time and money mining the data for geographic and demographic data structures (in consumer markets) or information on firm size and profitability (in industrial and B2B markets). However, segmentation and targeting decisions without insight into the customer experience are useless and not even executable. The CEM framework approaches segmentation and targeting issues very differently; it starts with research tools that reveal meaningful data by analysing the experiential worlds offered to consumers as well as business customers.

2. Positioning. Another key issue for companies is how to position the corporation, its brands, and its products. Companies often commission perceptual maps (those two-dimensional displays with dots as products and dimensions as lines). But these maps are usually based solely on verbal input and are unrepresentative of customers’ daily experiences. The CEM framework produces a more meaningful experiential positioning and experiential value proposition, with a theme that can be used to implement packaging, advertising, the interface, and innovations.

3. Branding. Many companies have jumped on the branding bandwagon as the magic formula to enhance value. “Let’s turn our undifferentiated offer into a strong brand. Let’s value the brand and improve the brand image. Let’s change the brand’s personality.” Such initiatives usually lead nowhere. After a couple of years of brand consulting to determine the strengths of the brand; its value; its identity; what it would be like as a person . . . and changing the logo, stationery, and advertising, many brands still fail to connect with the customer and don’t sell. Management then realises that the logo, signage, and advertising were only insignificant parts of the problem.

Most branding issues are really brand experience issues or, more precisely, issues of the customer experience with the brand. To address this predicament effectively requires more than inward soul searching about the meaning of the company and its brands. The company needs, first, to understand the customer’s experiential world and, second, to create a differentiated strategy platform that it can implement in an innovative fashion. CEM accomplishes this by examining a brand in a much more comprehensive fashion than any prior branding framework and implementing the new brand experience in an integrative and creative fashion.

4. Service. In most so-called industrialised nations, service-based businesses make up about two-thirds of the economy. Not surprisingly, providing service quality is on everybody’s priority list. Most service management, however, is not customer-focused but is based instead on prior untested assumptions about customer preferences for service.

Companies may assume that customers will be happiest when they are treated in the most intimate and personalised manner (when in fact they may just seek efficiency) or, conversely, that customers prefer to serve themselves (when they really would appreciate a helping hand). As a result, most service systems are either people or technology-intensive; rarely do they bring people and technology together to deliver outstanding, memorable, and unique service experiences. This need not be so. The focus of the CEM approach is on understanding what customer interface is most appropriate for delivering the right service experience.

5. Innovation. Although companies face constant pressure to be innovative and to break boundaries, innovation is viewed narrowly, as if it resided only in the R&D department or referred only to technical innovation. Technical innovation in product features is part of the story, but it is not the whole story. Consumers often view innovation in terms of whether a new product, service, or communication helps them improve how they live. Similarly, business customers are focused on whether an innovation improves their way of doing business.

Customers value innovation, but not just technical innovation oriented toward features and benefits. From the customer’s perspective, small improvements in the customer interface are a major innovation if they simplify or speed up doing business with the company. An appealing line extension that changes the product from powder to liquid can be a breakthrough innovation if it makes the customer’s life easier. Even innovations in the look and feel of a product and in experiential communications are important if they make the customer feel better or happier.

Conclusion:

The five stages of the CEM framework may be seen as structurally equivalent to those of the classic marketing strategy: market analysis, segmentation, targeting, positioning, and implementation in the so-called Four Ps (product, price, promotion, and place). However, there are some key differences as well.

First, traditional marketing strategy is product-based, not customer-based. Many traditional marketing managers still believe in product superiority (”the better mousetrap”), where the task is simply to push the product through the channel to the right target. Most marketing departments are organised around product categories and focus on pushing as many units of the same product as possible to any kind of customer. Because repeated selling of desirable products to a specific customer segment is not a primary objective, traditional paradigms were largely analytical. On the other hand, ad agencies, corporate identity firms, and web designers provide creative services that are often entirely devoid of analytics. Creative minds and analytical thinkers alike tend to believe that the two worlds are separate and incompatible. However, a business can only develop to its fullest potential when it can merge analysis and creativity.

The CEM framework meshes the worlds of the analytical and the creative. It is rigorous, internally consistent, and well structured. The tools presented and the overall model and metrics that link experience to customer equity measures are analytical and possess quantitative components. At the same time, the framework is creative in its use of novel concepts, unique tools, and unusual research techniques for gaining customer insight.

Source – From articles published by Prof. Bernd Schmitt

The CEM framework has five basic steps.

Step one: Analysing the Experiential World of the Customer

The first step of the CEM framework provides original insight into the customer’s world. For consumer markets, it is necessary to analyse the socio-cultural context in which consumers operate including their experiential needs and wants, as well as their lifestyles. For B2B markets, we need to analyse the business context including requirements and solutions that might impact the experience of customers. Management must relate broad-based lifestyle and business trends to the usage situations and ultimately to the brand – a process that Prof. Schmitt refers to as “funneling.”

Step two: Building the Experiential Platform

The experiential platform is the key connection point between strategy and implementation. It is not a cut-and-dried positioning statement or a two-dimensional perceptual map with generic verbal labels. Instead, the experiential platform includes a dynamic, multisensory, multidimensional depiction of the desired experience (referred to as “experiential positioning”). It also specifies the value that the customer can expect from the product (the “experiential value promise” or EVP). The platform culminates in an overall implementation theme for coordinating subsequent marketing and communication efforts and future innovation.

Step three: Designing the Brand Experience

After management has decided on the experiential platform, it must be implemented in the brand experience. Whether you are in a consumer or market, the brand experience includes, first, experiential features and product aesthetics that can serve as a jumping-off point for the customer’s brand experience. Next, the brand experience includes an appealing “look and feel” in logos and signage, packaging, and retail spaces. Finally, appropriate experiential messages and imagery in advertising and collaterals, as well as online, complete the brand experience.

Step four: Structuring the Customer Interface

The experiential platform must also be implemented in the customer interface. Whereas the brand experience is largely static (once designed, it remains much the same for some time), the customer interface is dynamic and interactive. Step four includes all sorts of dynamic exchanges and contact points with the customer face-to-face in a store, during a sales visit in a client’s office, at an automatic teller machine at a bank, at the check in desk of a hotel, or as part of e-commerce on the internet. It is important to structure the content and style of this dynamic interaction to give the customer the desired information and service in the right interactive manner. Structuring the customer interface goes beyond CRM, which merely records the history and transaction content of such contacts and provides informational links. The interface design must incorporate intangible elements (for example, voice, attitude, and behavioural style) and address experiential consistency over time and coherence among various touch-points.

Step five: Engaging in Continuous Innovation

Finally, the company’s innovations must reflect the experiential platform – a process Prof. Schmitt calls “engaging in continuous innovation.” Innovations include anything that improves end customers’ personal lives and business customers’ work life, and can range from major inventions to small innovations in the product’s form. Marketing innovations might consist of creative launch events and campaigns.

Innovations demonstrate to customers that the company is a dynamic enterprise that can create new and relevant experiences on an ongoing basis. Innovations can attract new customers; most of the time, however, they build customer equity by helping a company sell more products to existing customers.

Innovations of all kinds need to be planned, managed, and marketed so that they improve the customer experience.

To summarise, the CEM framework consists of five steps. Step one (analysing the experiential world of the customer) is an analysis step. Step two (building the experiential platform) is a strategy step. Steps three through five (designing the brand experience, structuring the customer interface, and engaging in continuous innovation) are implementation steps.

Summary and key take-aways:

• Customer experience encompasses every aspect of a company’s offering—the quality of customer care, of course, but also advertising, packaging, product and service features, ease of use, and reliability. Yet few of the people responsible for those things have given sustained thought to how their separate decisions shape customer experience.

• The extent of the problem has been documented in Bain & Company’s recent survey of the customers of 362 companies. Only 8% of them described their experience as “superior,” yet 80% of the companies surveyed believe that the experience they have been providing is indeed superior.

• Although few companies have zeroed in on customer experience, many have been trying to measure customer satisfaction and have plenty of data as a result. The problem is that measuring customer satisfaction does not tell anyone how to achieve it. Customer satisfaction is essentially the culmination of a series of customer experiences or, one could say, the net result of the good ones minus the bad ones.

• The article describes a model to create closed-loop process in which every function worries about delivering a good experience, and senior management ensures that the offering keeps all those parochial conceptions in balance and thus linked to the bottom line.  The model is composed of three kinds of customer monitoring: past patterns, present patterns, and potential patterns. (These patterns can also be referred to by the frequency with which they are measured: persistent, periodic, and pulsed.) By understanding the different purposes and different owners of these three techniques—and how they work together (not contentiously)—a company can turn pipe dreams of customer focus into a real business system.

• 
• Whether it is a business or a consumer being studied, data about its experiences are collected at “touch points”. What constitutes a meaningful touch point changes over the course of a customer’s life.

• Not all touch points are of equivalent value. At each touch point, the gap between customer expectations and experience spells the difference between customer delight and something less.

• People’s expectations are set in part by their previous experiences with a company’s offerings. Customers instinctively compare each new experience, positive or otherwise, with their previous ones and judge it accordingly.

• CEOs may not actively deny the significance of customer experience or, for that matter, the tools used to collect, quantify, and analyze it, but many don’t adequately appreciate what those tools can reveal. Three forces in the main conspire to preserve this gap.
  • Too much money already lavished on CRM.
  • Lack of attunement to customers’ needs.
  • Fear of what the data may reveal.

• A well-designed survey is not simply one that elicits the desired information. It must itself avoid becoming an unfortunate aspect of the customer experience.

• Customer experience does not improve until it becomes a top priority and a company’s work processes, systems, and structure change to reflect that.

• Every business function has a role to play in managing customer experience:
  • Marketing has to capture the tastes and standards of every one of its targeted market segments, circulate that knowledge within the company, and then tailor all consumer communications accordingly.
  • Service operations must ensure that pro cesses, skills, and practices are attuned to every touch point.
  • Product development should do more than specify needed features. It should also design experiences after observing how customers use products and services, learning why they use offerings as they do, and figuring out how existing products might be frustrating them.
  • Information technology that can collect, analyze, and distribute CEM data, integrate the information with that generated by CRM, and monitor progress must be in place.
  • Human resources should put together a communications and training strategy that conveys the economic rationale for CEM and paints a picture of how it will alter work and decision-making processes.
  • Account teams must progress from annual surveys to detailed touch-point analysis, then translate present patterns of customer experience and issues gleaned from recent transactions into action plans that are shared with customers.

A brief summary of the article:

The importance to the global economy of commerce conducted over the Internet is no longer in doubt. Determining how to create commercial online environments that engage consumers so that important marketing objectives, such as extended visit durations, repeat visits, and online purchase objectives may be achieved, are critical marketing tasks. The degree to which the online experience is compelling can be defined, measured, and related well to important marketing variables. The model constructs presented in the paper relate in significant ways to key consumer behaviour variables, including online shopping and Web use applications such as the extent to which consumers search for product information and participate in chat rooms. As such, the model may be useful both theoretically and in practice as marketers strive to decipher the secrets of commercial success in interactive online environments.

Key predictions/take-aways from the model presented in the paper:

• The website design must provide for enough challenge to arouse the consumer, but not so much that she becomes frustrated navigating through the site and logs off.
• Unexpectedly, greater challenge corresponded to greater focused attention online. This means that engaging consumers online will arise in part from providing them with excitement.
• Conversely, if the site does not provide enough challenges for action, potential customers will quickly become bored and log off. Additionally, because the Web mixes experiential and goal-directed behaviors, the model constructs can be used as a first step in evaluating websites in terms of the extent to which they de- liver these two types of experience.
• The researchers found that the more important consumers considered the Web to be in general, the more likely they were to focus their attention on the interaction, and the more likely they were to be skilled at using the Web.
• Web waiting time negatively affects consumer evaluation of website content only when slow speeds are not well managed, for example, by failing to provide information on waiting times. Thus, this recent research lends support to one of results (presented in the paper) that interactive speed seems to affect challenge, but not attention.
• A compelling online customer experience is positively correlated with fun, recreational and experiential uses of the Web, expected use of the Web in the future, and the amount of time consumers spend on- line, but negatively associated with using the Web for work-related activities.
• These results suggest that online shopping and task-oriented activities involving product search do not yet offer the requisite levels of challenge and arousal, nor do they induce the sense of tele-presence and time distortion necessary to create a truly compelling online customer experience.
• Evidence is emerging that on-line environments offering full information improve the decision making process for consumers and offer greater benefits to online retailers than environments with less information. Though providing full information to consumers may increase the possibility of price competition, providing a compelling online experience may significantly mitigate price sensitivity in such environments.
• The model results presented in paper suggest that the “interactivity metrics” of duration time and browsing depth recently proposed to measure marketing effectiveness on advertising sponsored websites is highly positively correlated with a compelling online customer experience.

Items for future research:

• The role of situational involvement is unexplored in this research, as are distinctions between task- oriented and experiential navigation behavior and the role of consumer demographic variables.