Customers 1st: The Difference Between CRM and CX is in the Customer

Customers are the most important people for any organization. They are the resource upon which the success of the business depends as customer satisfaction is at the heart of the selling process. The relationship between the customer and the organization is, therefore, an important one.

We have entered the age of the customer – an age where every company can tap into global factories and global supply chains. Brand, manufacturing, distribution, and IT are all table stakes. With online reviews, social networks, and mobile web access, it's easy for your customers to know as much about your products, services, competitors, and pricing as you do.

In this age, the only source of competitive advantage is the one that can survive technology-fueled disruption: an obsession with customer experience. As of late, customer experience has become an extremely hot topic. But, customer experience (CX) is very similar to customer relationship management (CRM). So, what exactly is the difference between the two?

CRM is a model for managing a company’s interactions with current and future customers. Although it had been around in many forms for a long time, the term CRM became popular in 1993 when Siebel entered the market. It was later coined by Gartner in 1995 as a way to describe ‘front office applications.’ Meanwhile, CX has also been around a very long time as well. CX is known as the sum of all experiences a customer has with a supplier over the duration of the customer-supplier relationship.

Both terms talk about managing customer interactions and experiences over time, but the difference comes down to perspective. Business2Community recently shared a good example of the difference between CX and CRM. Say someone is refinancing a home with a large national bank. It is a possibility that it may be easier to handle the monthly payments with a checking account with the same bank, so the customer opens up a new account. Then, say the agent asks the customer to fill out an account application and the customer wants the agent to reference his or her personal information based on the load number, but the agent doesn’t have access to that information.

From a CRM perspective, this is a successful transaction because the mortgage fulfillment team knows your information, and after opening a checking account, the branch knew your information. However, the mortgage team and the deposit team didn’t know about each other, so they relied on the customer to bridge that gap.

Customer experience, on the other hand, would have taken a different approach – one based soley on the customer. The reasoning would including: where are you in your life journey now, what do you need now, what are you going to need along with that, and what can we do to serve all of this at the right times?

So, the difference between CRM and CX is that one looks at the world from the inside-out (CRM), the other from the outside-in (CX).