NTT DATA Business Solutions

Experience Management – The Complete Guide to XM

Great companies don’t sell products, they provide experiences. This is where experience management (XM) comes in. We explain everything you need to know about XM and its capabilities, benefits and application fields.

colleagues talking about experience management (xm)
team talking about what experience management is

What Is Experience Management?

Experience management (XM) is first about monitoring and analyzing every interaction people have with a company, so that businesses find ways for improvement. Those people can be internal and external stakeholder such as customers, employees, clients and suppliers.

Experience itself is the perception and feelings associated with a brand based on the touchpoints and interactions someone had with it. As experiences are seen as a competitive advantage, the goal of XM is to improve people’s perception with a business, as much as it’s about improving the actual product or the service.

Experience Management is not about collecting data. It’s about making people happier.

Why Is Experience Management a Thing?

Of course, we all want to make our customers and colleagues happy, it’s Business 101. So why has experience management become its own thing? Whether we’re in the boardroom, the shop floor, or the office, our thoughts are led by the data we have in front of us. We look at our electricity and water consumption to figure out where and when it’s at its highest because it’s the only way to minimize our bills. We know that the satisfaction of our customers and employees is crucial to the bottom line too. Yet often we simply remind ourselves to do a good job, without bothering to measure anything and discover if it actually worked.

Without benchmarks to compare against, our performance is left to chance, and our decisions are driven by bias. 89% of employers in a recent study said that they believed pay was the top reason for employee attrition. However, less than 30% of employees cite pay as their reason for departing. We invest in the wrong areas not because of a lack of effort, but because of a lack of data – because what we don’t measure, we can’t improve.

Why XM Became that Important for Businesses?

It’s clear that we can’t improve the experiences we provide without data. However, this isn’t the only reason why we should measure and try to improve them. Experience management is vital, even for businesses who are already leading in their markets, because of a fundamental truth – people buy experiences, not things.

When a customer or client is unsatisfied, we tend to think it’s because the product or service didn’t do what it was designed for. We look for failures in manufacturing and quality control, or we check our KPIs and see if we met the targets we promised. However, most customers switch brands not because the product itself was poor. They switch because they had a poor experience with it. As an example: A flawlessly manufactured washing machine can’t satisfy a customer who doesn’t understand the symbols on the display.

Experience also adds value. Tiffany & Co. and Apple invest in iconic packaging, not because they have the luxury of high margins, but because unboxing is the easiest time to make a customer fall in love with the product inside. By creating warm feelings at the start of the purchase process, the brand ensures customers are less likely to be frustrated if the product fails in the future. Great experiences also turn satisfied customers into brand advocates. A well-designed good or service satisfies a one-time need, but a well-designed experience creates ongoing loyalty.

People Buy Experiences, Not Things

66% customers switch brands not because the product itself was poor, but because they had a poor experience with it.

What Is the Difference between CRM, CXM, UX and EEM?

Customer Relationship Management, Customer Experience Management & User Experience

  • Customer Relationship Management (CRM) is about managing customer information from the perspective of the company. Think about tracking the number of phone calls and support tickets, for example.
  • Customer Experience Management (CXM or CEM) is about managing information from the perspective of the customer. Instead of merely tracking the number of calls, Customer Experience Management attempts to understand why someone called support in the first place.

For both, the ultimate objective is to please the customer, however, they address the challenge from opposing perspectives.

  • User Experience (UX, User Experience Design or User Experience Research) is another common substitute. This is a subset of Experience Management focused on the design of digital products and digital customer experiences.

Employee Experience Management

  • Employee Experience Management (EEM) is indeed a fundamental role of every HR team. However, the terminology has evolved because we no longer think of employees as resources to be exploited. Therefore, HR was redefined as ‘Human Capital Management’. Employees were capital to be invested in, by providing them with continuous training and education. This model was replaced again with ‘Employee Experience’ to recognize the fact that more training doesn’t always lead to more productivity.

That is also why we’re talking today about ’Human Experience Management’ as we know now that it’s more productive to manage people’s feelings by ensuring that their work is satisfying, rather than forcing employees into roles they’re not comfortable with.

Gain Deeper Insights into Customer Experience Management

How to Set Up an XM Program?

Have a look at the three fundamental steps for setting up an successful experience management program:

Step 1: Measure & Baseline

Often people have a hunch about what needs to be improved and want to implement change straight away, but without baseline experience data (X-data) it’s impossible to measure results and determine whether the effort was worthwhile. The first step is to put together a list of every conceivable touchpoint that the customers, employees, or other stakeholders have. For product marketers, this might include your physical stores, 3rd-party retailers, your website, and social profiles. Whereas for HR teams managing employee experience, it could be branches, internal departments, suppliers, affiliates, as well as virtual spaces such as intranets, and company software.

After the list is prepared stakeholders are then surveyed to chart metrics such as NPS (customer experience), employee satisfaction (employee experience), or brand awareness (brand experience).

Step 2: Prioritize & Predict

With baseline data in place, the second step is to analyze results to find out the most important stakeholder needs and desires, and which factors are the biggest drivers of satisfaction. These are then ordered by priority.

To plot all the opportunities to influence your target audience, it’s important to create a ’journey map’ of the corresponding target group. What we are doing here is creating a list, or an experience map, of every possible touchpoint each of your stakeholders might go have, both before and after the main conversion goal. Two examples, which touchpoints an HR Manager might list for the hiring process:

  • Candidate discovers company; Touchpoints can be LinkedIn post, industry media, word of mouth.
  • New employee starts onboarding; Touchpoints can be contracts, online training, tours and introductions.

Just as we’d find leaks in a sales funnel, journey mapping allows us to find stages that are vulnerable to bad experiences and how they might affect the next stage. For example, an airline might discover that travelers are frustrated during the ticket purchase stage due to additional fees for baggage, seating, insurance upgrades, and so on. A better time to promote luggage upgrades might be 2 days before the flight when customers realize how much they have to pack and the ticket price has been forgotten.

Step 3: Act & Optimize

Changes are implemented iteratively, with continual tracking of results. For example, contacting customers who identified issues with packaging and inviting them to test prototypes. In a brand experience or customer experience strategy, this might involve taking the values that customers or clients identified and creating ad campaigns to promote them or ensuring that your most-favoured employee benefits are mentioned in your hiring interviews. Optimization is a continual process, so the next step is to return to the measurement stage again and continually implement new initiatives. 

Which Data Do You Need for an Successful XM Program?

To run a successful experience management program businesses must combine two types of data: Operational data (O-data) and experience data (X-data). The combination of these two types of data, allows us to:

  1. Identify areas with the most opportunity to improve
  2. Prioritize experiences that drive long-term revenue
  3. Calculate the ROI of XM

Experience management software platforms allow organizations to collect X-data and combine it with O-data. This makes it easier to understand what influences the personal experiences of customers and others, as well as to create strategies to improve them.

What is O-data?

O-data, or operational data, are the metrics company leaders traditionally focus on. For example: What is our monthly revenue? How many new employees did we hire? What share of the market do we have? O-Data can tell us everything that’s happening inside a business. But it doesn’t tell us why – that’s where X-data comes in.

What is X-data?

X-data, or experience data, is about the human experience, it tells us what people feel. This includes both qualitative and quantitative data, such as: product ratings and reviews, employee feedback surveys, phone conversations with support or the likelihood of recommending a product or company to a friend.

The Measurement of X-Data

Experience data is by no means a limited area, but understanding three popular types of metrics gives us a foundation for new ideas. The crucial thing to remember about X-data is that it’s not an end unto itself. Your customer satisfaction might be going through the roof, but that could be because all your unsatisfied customers are leaving. Of course, this could conversely be a good thing if it frees up resources to develop better products for your core customers. The important thing, however, is to understand why.

learn how to measure x-data

What Are the Business Areas of Application?

XM isn’t restricted to the marketing or customer service departments of large corporations. Regardless of your department, or industry, the benefits of XM can be applied to your work.

Sales & Marketing

Sales & marketing can create great benefits by using XM. Customer experience management (CX, CXM) research allows marketing teams to understand their customer base more closely, so they can create precise segments and target their campaigns more cost-effectively. Sales teams can use CXM to optimize the sales experience by knowing which products best match a customer’s needs, as well as learning why prospects fail to convert. Here are some examples:

  • Product naming
  • Market segmentation
  • Competitor research
  • Feedback on events, website
  • Digital experience monitoring

Customer Service

Customer Service teams use experience management research to discover the reasons behind common issues and reduce support volume by going straight to the source. With knowledge of the most popular issues, customer service staff can optimize the customer service experience by creating self-service portals and AI-powered tools, such as chatbots, to solve issues automatically. This frees up staff to work on more challenging customer issues, and focus on building customer relationships so they can not only support but also sell.

HXM

Within human experience management (HXM), teams use employee experience management to improve their recruiting strategy, plan learnings, develop programs, and structure benefit packages that employees genuinely value. Improving the employee and candidate experience enables HXM teams to reduce attrition, improve productivity, as well as identify and develop top performers. Using tools to improve employee experience is particularly important if they’re working remotely from home and have less in-person contact with managers. Here are some examples:

  • Diversity & inclusion studies
  • Exit interviews
  • Employee engagement surveys,
  • Benefit packages

IT

Software rollouts happen faster, and with fewer issues, when IT teams understand the needs of their users. By improving the IT experience, it’s easier to determine which upgrades are necessary, which employees require the most training, as well as to quickly spot and solve bugs.

Spend Management

Spend management and procurement teams use XM to research employee requirements and get a more accurate picture of what actually needs to be purchased, as well as how the delivery and implementation process can run as smoothly as possible. With purchases often acquired internationally, understanding the motivations of suppliers who come from different cultural backgrounds can be vital.

Financial Management

With XM insights from marketing, financial management teams can make more accurate forecasts of future revenue. Working closely with HXM teams, financial controllers are also able to forecast employee costs with greater confidence.

Supply Chain Management

XM research allows teams to more easily understand the requirements of every member of the supply chain. Warehouses can be managed more efficiently and supply chain complexity can be reduced with a more accurate understanding of delivery and storage needs and pain points.

Manufacturing

With experience management data, manufacturers can learn which product features are necessary or desired, and design new or improved products to match. XM data is also used for safety management, and to discover where employees need additional training or new responsibilities to make the most of their skills and competencies.

How Other Businesses Benefit from Experience Management?

Experience management can improve revenue and profitability over the long-term. However, XM initiatives often yield unexpected benefits, such as new product ideas, and even changes to business models and company structures. Read through a few examples:

Allianz

Allianz discovered in their research that clients were worried about the risk of cybersecurity breaches, which could potentially cause damage in the billions of dollars for large organizations. However, Allianz didn’t offer any product to insure against this emerging risk. X-data allowed them to discover how much demand existed for a new type of insurance, so they were able to develop products to match.

Procter & Gamble (P&G)

Test participants weren’t completing surveys until sometimes days after they used the product. Testers were delaying this step as the survey software was cumbersome and inconvenient. By the time they submitted their feedback, they’d forgotten much of the experience, so the data was inaccurate. By upgrading its XM software to a modern platform, P&G was able to gather more accurate data and to complete their research projects in one-tenth of the time.

JetBlue

JetBlue used XM software to combine data on flight frequency and pricing. They found that a majority of their customers (82%) cared primarily about the overall ticket price, and were less concerned about baggage fees. With this insight, they created different rate structures and pricing options, which ultimately generated $100 million in additional annual revenue.

How Can the Experiences Gained Be Managed?

There are many software platforms available to easily survey customers and analyze data, but to properly integrate XM into a business, what’s required is a professional XM platform. XM platforms provide multiple tools that allow you to:

  • Run qualitative and quantitative surveys of stakeholders
  • Identify trends in responses
  • Predict which factors are responsible for driving good/bad experiences
  • Determine which improvements will improve revenue the most
  • Analyze data to predict people’s feelings and behavior

75% of the Fortune 100 Companies Use Qualtrics

Qualtrics is the leading platform for experience management, which is why they’re used by 75% of the Fortune 100 Companies and why they’re also now part of SAP.

How Experience Management with Qualtrics Works?

The leading platform for the management of experience, by a significant margin, is Qualtrics. Qualtrics in fact created the entire category of experience management and uses predictive analytics, machine learning, and AI to perform all of these essential tasks, across five integrated tools.

Five Integrated Tools by Qualtrics

  1. Text iQ: Analyze text responses to discover insights.
  2. Driver iQ: Identify which factors drive satisfaction for each of your target audiences.
  3. Stats iQ: Analyze quantitative data and identify trends.
  4. Predict iQ: Analyze historical data to predict what customers/employees will do next.
  5. Voice iQ: Analyze phone support calls in real-time to identify trending issues and sentiments.

How We Can Help You with Experience Management

Software Integration

We’re proud to be a partner of Qualtrics and SAP. This means that we’re able to integrate Qualtrics products into any organization, connecting them with the systems that are already in place, such as CRMs and ERP software. We chose to partner with Qualtrics because their software is designed with an agile architecture. This means that software implementations can be easily scaled to suit the size and timeframe requirements of our clients.

Qualtrics is also the only software suite that can be applied to all areas of experience management: customer, employee, product and brand. For customer service teams for example, Qualtrics enables teams to solve tickets faster, whether they’re communicating with the customer via social media, web, phone or a self-service portal. While from a sales perspective, insights from Qualtrics have allowed businesses to improve their conversion rates, increase customer retention, and raise employee satisfaction.

XM Strategy

Intelligent software requires an equally intelligent XM strategy, this is where our teams provide the greatest value. Our consultants design strategies for implementing XM across the entire organization. This takes place in a four-step process:

  1. Executive Alignment: Executive-level proposals with identified business scenarios.
  2. XM Discovery: Workshops with employees, customers, clients and primary research to identify XM problems and opportunities.
  3. Roadmap Building: Identifying IT architecture and processes required to achieve the vision.
  4. Project Delivery: Implement software & governance models, and train users. Measure results and design iterations.

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