Customer experience no longer qualifies as a "faith-based initiative."

So say the pith-helmeted researchers who dig into the minds of customers to unearth quantitative factors that make or break their perceptions of companies.

"We have codified our understanding of what it takes to design and run customer experience," says Jeneanne Rae, president and cofounder of Peer Insight.

The firm's ongoing research includes interviews with more than 1,000 practitioners. It seeks to identify how companies segment customers, map all of the touchpoints that comprise a customer experience, and rank individual touchpoints based on their impact to the overall customer experience.

The term "customer experience" is endlessly discussed in executive circles as an abstract idea that most agree should be taken seriously. But determining its value using analytics and other quantitative measures is only starting to gain traction. The calculations tie financial metrics to customer experience measures. "In an ideal situation we have [customer experience] survey data and analyze it against their spending and revenue data to generate precise [correlations]," says Rob Kaplan-Sherman, senior vice president and managing director, research, for LRA Worldwide.

The importance of customer experience management is growing because A) companies that have successfully embraced it outperform competitors; and B) practitioners and experts are getting better at linking customer experience management progress to bottom-line improvements. Additionally, many companies are delivering sub-par experiences to customer, says Bruce Temkin, Forrester Research's vice president and principal analyst, customer experience.

Customer experience drives differentiation, Peer Insight's Rae explains, and differentiation drives customer loyalty; greater loyalty in turn decreases pressure to spend money on traditional forms of marketing because word of mouth increases. The payoff of effective CEM practices, asserts Kaplan-Sherman, "can be empirically demonstrated -- there are different parts of the customer experience that can directly impact the business outcome, either positive or negatively."

For example, Rae notes that Starbucks employees "surprise and delight" customers by providing free samples of new menu items to the entire restaurant at certain times during the week. "That's one of the little secrets that make a big difference in the customer experience," she says. "There are many ways to measure customer experience, but you have to measure each touchpoint."

Emerging design practices
No universal return-on-investment (ROI) formula exists; the process of determining ROI varies by company, and the ease of these calculations depends on how organized, accurate, and detailed each company's information infrastructures are.

However, Rae, Kaplan-Sherman, and Temkin list some leading practices among "customer experience exemplars" -- companies such as Amazon, Apple, McDonalds, Starbucks, and Starwood Hotels, among others. Exemplars have the ability to examine and understand at a "granular level what goes on in a touchpoint and what are the moments of truth in a touchpoint -- where the experiences make or break somebody's overall impression of the company," says Rae. The following practices are also common:

Tone at the Top: "CEOs and their executive teams need to be fully engaged in the effort," Temkin says. This engagement consists of "clearly understanding and communicating what the experience should be, a very clear picture of success, and ways to measure success and the different elements of experience drive the desired outcomes," adds Kaplan-Sherman.

Brand Awareness: Rae and Temkin agree that CEM exemplars use every customer touchpoint as an opportunity to reinforce their brand. To do so, employees also need to understand and embrace the brand.

Customer Collaboration: CEM exemplars invite customers to assist with designing, or "prototyping," their own experiences. Rae points to McDonald's massive innovation center, where 40 full-time employees design and observe simulations in a "customer experience studio" and then apply their gleanings to enhance customer touchpoints.

Go with your gut
CEM exemplars also balance hardcore data analysis with gut feelings, say Rae and Temkin. To work well, employees need to be empowered to solve customer problems.

"Firms should augment data crunching with some old-fashioned techniques like talking to customers and observing their experience," Temkin suggests. "It's really about constructing a customer journey," adds Rae. "You look at a segmentation model and try to find customers in the target market. And then shadow them all day long and try to understand what their world is like."