This report investigates the impact of Customer Experience Management (CXM) on the performance and sustainability of small and medium-sized enterprises (SMEs), particularly licensed restaurants in Derby. In an increasingly competitive business environment, where customer experience has become a key differentiator, this study seeks to bridge the gap between theoretical frameworks and practical applications of CXM in the SME context. The research is guided by the aim to develop and validate a diagnostic tool specifically tailored for assessing the effectiveness of CXM systems in SMEs. To achieve this, the study was structured around two key objectives: analyzing existing CXM frameworks and investigating current practices in licensed restaurants. A comprehensive literature review established the theoretical foundations of CXM, drawing on seminal works such as Lemon and Verhoef's customer journey framework and Homburg et al.'s conceptualization of CXM as a higher-order resource. The review also highlighted the relevance of emerging technologies, such as AI and block chain, in enhancing CXM strategies. These insights informed the development of the diagnostic tool, which was designed to assess various dimensions of CXM, including customer satisfaction, feedback mechanisms, and the integration of technology. The empirical research involved in-depth interviews with owners of licensed restaurants in Derby, providing valuable insights into the current state of CXM practices. The thematic analysis revealed that while SMEs recognize the importance of CXM, there are significant challenges related to resource constraints, lack of formal feedback systems, and resistance to change. Despite these challenges, the study found that SMEs that invest in CXM— particularly through technology integration and customer feedback mechanisms—are better positioned to achieve customer loyalty and business growth