August 10, 2011 | Updated: August 18, 2011

The Emergence Of Customer Experience Management Solutions

by Brian K. Walker for eBusiness & Channel Strategy Professionals

Making Leaders Successful Every Day

For eBusiness & Channel Strategy Professionals

The Emergence Of Customer Experience Management Solutions

by Brian K. Walker with Zia Daniell Wigder, Stephen Powers, and lily varon

August 10, 2011 | Updated: August 18, 2011

How CxM Will Help eBusiness leaders Drive interactions Across Touchpoints

ExECUT i v E S U M MA ry
A new type of solution is emerging on the commerce technology landscape that promises to help eBusiness leaders drive customer targeting, content relevancy, and personalization on their sites and across digitally enabled consumer touchpoints. Vendors from a diverse set of solution categories from eCommerce platforms to content management, site search, and personalization are expanding their capabilities to support the management and optimization of cross-touchpoint customer experiences. These customer experience management (CXM) solutions aim to support these personalized experiences across digital experiences such as websites and mobile sites, as well as mobile and tablet apps. The solutions will also support digitally enabled touchpoints such as contact centers and stores or branches or check-in desks. In the era of agile commerce, more eBusiness leaders will look to take advantage of CXM solutions to drive optimized experiences and increase sales. However, many of these solutions remain nascent and eBusiness leaders should proceed with a pragmatic view of the value of CXM solutions in the near term.

TABl E O F CO n TE nTS
2 Siloed, Disconnected Systems Result In Manually Intensive CXM Processes Customer Experience Management Solutions Defined CxM Solutions Emerge From Many Solution Categories
WHAT iT MEAnS

n OT E S & rE S O U rCE S
Forrester interviewed more than 30 vendor and user companies, including Adobe Systems, Avail Technologies, Elastic Path Software, Endeca Technologies, Gx creative online development, hybris, iBM, intershop Communications, Marketlive, Monetate, Oracle, richrelevance, Sapient, SDl, Thunderhead, and TouchCommerce.

8 CXM Solutions Will Evolve Rapidly, But It Is Still Very Early

Related Research Documents Welcome To The Era Of Agile Commerce March 11, 2011
What Every Exec needs To Know About The Future Of eCommerce Technology August 27, 2010 Scenario-Based eCommerce Technology Evaluation Process May 17, 2010

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The Emergence Of Customer Experience Management Solutions

For eBusiness & Channel Strategy Professionals

SIloED, DISCoNNECTED SYSTEMS RESulT IN MaNuallY INTENSIVE CXM PRoCESSES The evolution in how businesses interact with consumers across multiple touchpoints has quickened, and the complexity of the jobs of eBusiness and channel strategy leaders, marketers, merchants, and content managers has increased along with it (see Figure 1). Today, there is a mountain of data as well as a mountain of offers, products, and content. However, there is a valley of execution and technology challenges in between. Much is riding on the ability of eBusinesses to cross that valley and get the right content, offers, products, and options to the right customers at the right time.1 In the short-term, these businesses have opportunities to drive improved conversions, attach rates, and average order sizes while reducing service and customer acquisition costs. In the longer term, eBusinesses have the opportunity to drive profitable long-term customer relationships and loyalty. eBusinesses must figure out how to accomplish this in a personalized, efficient, consistent, and agile way while maintaining management and visibility into the customer experiences they deliver. Also critical will be the effective measurement and optimization of these dynamic customer experiences within channels and across customer touchpoints. eBusiness professionals currently face major roadblocks to creating and managing customer experiences on their websites and other digitally enabled touchpoints The ecosystem of solutions they use is siloed. For example, to create a campaign, they may have to go to one system for campaign tracking, another for content creation, another for commerce, another to test the campaign, and yet another to measure success and determine the next best action. And as experiences have become more complex and fragmented, it has become increasingly clear that businesses cant sustain the current manually intensive processes over the long haul. Time-to-market is too long, and the number of staff that will be required to support these experiences using current systems will be too high. This is the gap that customer experience management (CXM) solutions are stepping into.

August 10, 2011 | Updated: August 18, 2011

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The Emergence Of Customer Experience Management Solutions

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Figure 1 Delivering Cross-Touchpoint Customer Experiences Drives need For new Capability

Search Research Get help Discover Use Evangelize Personalize Compare Trust Friend Decide Purchase Web
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Share

Company website

Mobile

Branch/store

Call center

Social

Source: Forrester Research, Inc.

CuSToMER EXPERIENCE MaNagEMENT SoluTIoNS DEFINED CXM technologies should not be confused with the profession of understanding and leading customer experience design activities.2 Rather, CXM solutions are the technology solutions that allow businesses to manage and optimize the customer experience through content management, customer targeting, analytics, personalization, and optimization capabilities across customer touchpoints online, through mobile devices, through Internet-connected interfaces, and through digitally supported customer interactions such as contact centers and in-store or branch interfaces. For some eBusiness leaders, CXM will be another solution category to consider along with their eCommerce platform, content management solutions, and personalization tools, among others. For others, CXM will be a set of capabilities increasingly found within and embedded into their commerce and content solutions. Forrester defines customer experience management solutions as: A solution that enables the management and delivery of dynamic, targeted, consistent content, offers, products, and service interactions across digitally enabled consumer touchpoints.

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August 10, 2011 | Updated: August 18, 2011

The Emergence Of Customer Experience Management Solutions

For eBusiness & Channel Strategy Professionals

A diverse group of vendors has begun putting together CXM solutions intended to support:

The leveraging of cross-channel data to drive targeted offers to customers. In the era of

agile commerce, as digital consumer touchpoints proliferate and offline touchpoints become increasingly digitally enabled, businesses must deliver relevant content, offers, and product recommendations in a scalable, manageable manner.3 Many CXM solutions will use businessrule driven capabilities to enable the merchant, site manager, and marketer to drive targeted offers to customers across touchpoints, including in-store/branch and call center activities. These business rules will comprise a number of tiered rules such as offering a coupon to lowfrequency customers but in highest-margin products likely to convert.

Personalized experiences across consumer touchpoints. When matching relevant offers,

products, and content to consumers, the volume of potential results is too great to drive through standard business rules. Personalization engines show the power of in-session data to support product recommendations in many cases a much better predictor of customer intent than previous purchases. Businesses must deliver highly relevant and optimized experiences to touchpoints with ever-smaller real estate and to consumers with more distractions to compete with.4 CXM solutions will incorporate personalization tools and embedded real-time analytics to be leveraged by the merchant, site manager, and marketer to drive their business goals in a more automated fashion.

Highly dynamic sites built to drive unique experiences for customers. Some merchants,

site managers, and marketers have grown accustomed to thinking of their sites as made up of pages. CXM solutions will extend component-driven functionality originally championed by high-end web content management (WCM) and search vendors to deliver content, products, and offers from pools of content assets. These assets will be either manually or automatically associated with metadata including language, size, campaign, category, brand, use, customer segment target, and duration and dynamically serve that content (see Figure 2). Leveraging these asset stores and accessing the right content for each customer represents a significant paradigm shift and will present challenges for some businesses.

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The Emergence Of Customer Experience Management Solutions

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Figure 2 CxM-Driven Sites represent A very Different Site Management Paradigm

Page building paradigm

Asset le name

Asset le name

Manual assignment

Business tools

Asset le name

Dynamic site paradigm

Rules lter to populate site

Assets tagged and attributed

Context/query Business rules

Assets tagged and attributed

Assets tagged and attributed

Result/asset

Assets live in repository

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CXM Solutions Emerge From Many Solution Categories Solution providers from many solution categories are converging to create a category with many overlapping capabilities (see Figure 3). Together they are responding to their clients needs to drive improved response, conversion, attach-rate, average order size, and retention. To achieve this goal, they are adapting or extending their tools to drive more of the overall experience. Forrester sees vendors building CXM capabilities within solutions from many categories, such as:

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The Emergence Of Customer Experience Management Solutions

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Commerce platform solutions. Commerce platforms have a difficult task in supporting

their clients across a wide range of capabilities, including the management of products, promotions, and orders. They are also challenged to provide content management, search, and site management capabilities that can integrate tightly into their clients back-office systems environment. In order to meet next-generation client requirements to drive highly dynamic site experiences, commerce platforms are responding by adding CXM capabilities. IBM acquired campaign management solution Unica and a recommendations engine with Coremetrics, whereas ATG acquired and continues to leverage a personalization engine as it adds improved content and campaign tools (ATG was subsequently acquired by Oracle, which has now also added FatWire, a WCM solution, to the mix). Other commerce platform providers such as Demandware, hybris, Fry/Micros Retail, Intershop Communications/GSI Commerce, and MarketLive are focused on CXM capabilities to varying degrees with somewhat different strategies.

eCommerce search solutions. For years, eCommerce search vendors have talked about

targeting and personalization as a search problem matching the most relevant result to a very complex search query that incorporates customer segments, preferences, and collaborative filtering. However, these capabilities were largely ill-productized and difficult for clients to take advantage of. Endeca is an example of a solution that has begun to productize these capabilities through its page builder product, which was largely focused on landing page optimization, and is now building upon that with the relaunch of its InFront product. SDL/Fredhopper and Adobe (with the combination of Omniture, Mercado, and Day Software) are also extending their products to become CXM solutions.

eCommerce product recommendation engines. Point solution providers that initially

focused on providing personalized product recommendations based on collaborative filtering are now using complex algorithms that leverage more and more data to drive improved product, offer, and content recommendations. These algorithms are analyzing data such as customer cross- session and device browsing history, in-session navigation, in-bound URL, purchase data, marketing response, and product margins. Firms such as Avail Technologies, RichRelevance, and Baynote are leveraging personalization to serve both product and content recommendations to consumers. The greater breadth and depth of data being analyzed helps streamline and automate the work required to target customers with relevant offers, products, content, and search results.

Web content management. WCM solutions have evolved over the past few years from

supporting web publishing to enabling business users to create and manage content-driven multichannel experiences. WCM vendors such as SDL and Adobe have already added functionality such as content targeting, social, and mobile. But the best WCM vendors realize that their products will only support a portion of the customer experience, and have begun adding connectors allowing integration with complementary technologies such as analytics, testing and optimization, CRM, and third-party social networks.5

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The Emergence Of Customer Experience Management Solutions

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Web intelligence. Web analytics and site optimization applications such as Adobe Omniture,

Webtrends, and Maxymiser no longer have the luxury of focusing exclusively on websites. As customer interactions fan out across numerous inbound and outbound channels, analytics tools are increasingly called upon to provide visibility to a multichannel funnel spanning the entire customer life cycle. These tools are developing native data collection and third-party integrations to track interactions and report on all activities. Additionally, these solutions are moving past reporting on historical data to make data actionable by supporting targeting, A/B and multivariate testing, and feeds into marketing execution systems for campaigns and retargeting.

Marketing automation. Marketers are rapidly increasing their sophistication as interactions

become more intricate and involve more touchpoints. A variety of marketing automation solutions such as IBM Unica, Neolane, Responsys, and Oracle Siebel are expanding from discrete functions such as campaign management, messaging, and CRM to support advanced requirements for managing the processes, resources, and execution of activities. These solutions also provide consistency to aid multichannel coordination by centralizing business rules, campaign history, offer management, and customer preferences.

Customer service interaction management solutions. A company reinforces its brand

perception every time a user interacts via voice, email, chat, and web self-service, as well as social channels such as forums, Facebook, and Twitter. Its critical to standardize the problem resolution process and customer service experience. In addition, customers expect to be able to use multiple communication channels during the course of a multistep interaction and not to have to repeat prior interactions. As a consequence, customer service interaction management solution vendors like eGain Communications, Moxie Software, Parature, and RightNow Technologies have matured to offer a central interaction hub of customer data and history, agent and web selfservice, knowledge management capabilities, workflow, and customer feedback management capabilities.6 These key CXM components provide the foundation for providing consistent service across communication channels. eCommerce platform vendors are also increasingly adding these capabilities to support both customer self-service and contact center capability.

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The Emergence Of Customer Experience Management Solutions

For eBusiness & Channel Strategy Professionals

Figure 3 CxM Solutions Will Emerge From The Convergence Of Many Solution Categories

Web content management

On-site search

Personalization and marketing automation

Analytics, test, and optimization

Commerce platforms

Customer service interaction management

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Source: Forrester Research, Inc.

W H AT i T M E A n S

CXM SoluTIoNS WIll EVolVE RaPIDlY, BuT IT IS STIll VERY EaRlY

CxM solutions present groupings of existing and emerging technologies that will offer businesses a set of valuable tools to optimize their customer experiences over time. However, these solutions have only begun to emerge, and businesses interested in these solutions must:

understand the operational needs and support required with CXM. Many existing
campaign management, eCommerce, content management, and targeting solutions have been developed over the years that enabled early versions of CxM capabilities. However, many of these early solutions lacked effective business user-optimized management tools, integrations with other CxM technologies, and limits in areas such as the number of

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The Emergence Of Customer Experience Management Solutions

For eBusiness & Channel Strategy Professionals

customer segments and scenarios supported. Savvy eBusiness professionals must be careful not to repeat these missteps and understand how usable and scalable proposed CxM solutions truly are from an operational standpoint.

Be cognizant of how disparate solutions will integrate and work together. eBusinesses
will form customized CxM solutions from a variety of different technologies that must work together. The challenge will lie in developing an orchestra of marketing, merchandising, and site management solutions that business can keep in tune. An overarching technology strategy and architecture may be necessary to avoid these issues, while also avoiding a bigbang system implementation.

Select on vision but execute CXM rollouts tactically. The romance of CxM solutions lies in
their promise to deliver eBusinesses cross-customer-touchpoint targeting, personalization, and experience. However, these capabilities may represent more of what is possible than what is realistic given todays technology, integration complexity, and businesses operating models. As a result, the challenge in selecting solutions will be to understand the vendors long-term vision and opportunity in leveraging its portfolio of solutions, while also selecting based on the vendors ability to solve short-term, channel-specific needs. The selection of the right vendor will enable a short-term rOi as well as allow learnings and proof points to develop momentum within the organization.

use scenario-based technology selection approaches to ensure fit. Scenario-based

technology selection (STEP) enabled businesses understand how technologies will enable their business processes and goals. Use STEP to ensure clarity in how these tools will be used across customer touchpoints and be used in practice. Use scenarios aimed at delivering short-term return on investment as well as longer-term vision for supporting crosstouchpoint interactions.

ENDNoTES
1

When firms excel at customer experience, they have an advantage of more than 14% over customer experience laggards in three key areas of loyalty willingness to buy more, reluctance to switch, and likelihood to recommend. For more see the November 19, 2010, The Business Impact Of Customer Experience, 2010 report. Forrester has a significant body of research for the Customer Experience Professional. See the June 22, 2011, The Customer Experience Ecosystem, and see the July 13, 2011, How To Develop Your Digital Customer Experience Strategy. For more on the advent of cross-touchpoint commerce and the evolution of multichannel business, see the March 11, 2011, Welcome To The Era Of Agile Commerce report. For more on the advent of cross-touchpoint commerce and customer experience, see the March 11, 2011, Welcome To The Era Of Agile Commerce report.

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The Emergence Of Customer Experience Management Solutions

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For more on Web Content Management solutions, see the July 13, 2011, The Forrester Wave: Web Content Management For Online Customer Experience, Q3 2011 report. For more on customer service specialty solutions, see the December 10, 2010, Market Overview: Customer Service Specialty Solutions report.

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