Prescriptions for common customer intelligence maladies
Customer intelligence is one of those bandied about terms that
benefits from general marketplace acceptance. Sure, it's an important
capability for companies to cultivate, but few organizations truly excel at
making it central to their business and a driver of competitive advantage. Why?
Are they capturing the right data? Can they easily derive insight from their
data? Are they struggling to turn that insight into action? From my experience,
I see a number of companies that struggle with all of these questions. However,
there are remedies for these customer insight maladies.
Remedy #1: Clear Definition and
Alignment
Customer intelligence
(CI) refers to the process of capturing and analyzing customer data to uncover
opportunities for improving business results. It's important, however, that
organizations approach CI through a lens that is consistent with their core competitive
positioning. For instance, if the organization competes as a low-cost provider,
the focus for CI should be how to further improve marketing, service or
operational and product efficiencies to reduce costs. Any misalignment will
impede adoption of CI within the organization and, ultimately, lead to failure.
So, it's critical that all customer intelligence efforts, first and foremost, align
to overall corporate strategies.
Remedy #2: Understanding the Value
Customer intelligence helps
organizations answer the following key questions:
- Who are my
customers, and what value do they represent to my organization both now and in
the future?
- What common
and distinct needs do they have?
- How can we
meet these needs through products, services and interactions?
By answering
these questions, organizations can better prioritize their resources to
maximize program ROI. I've seen consistent two times to three
times lift in marketing performance when companies better
segment and target customers with specific offers, products and services. How? You
are more likely to elicit a desired response when targeting customers and
prospects that are more prone to responding to the specific promotion. In
addition, when applied right, customer intelligence can serve as the basis for
building relationships with key customers at scale. The more you capture and
leverage data for and about your customers, the easier it should be for them to
do business with you.
Remedy #3: Capturing the Right Data
With the proliferation
of interactive technology and a significant decrease in the costs of storage,
many companies have become data hoarders. This does not mean, however, that
they are capturing the right data; all too often, they are collecting more than
they need. To streamline data collection while ensuring comprehensiveness, you
need to evaluate your data against six key categories:
- Customer Identification
Attributes (UniqueID, Name, Address, etc.)
- Customer Profile Attributes
(Demographic/Firmographic, Preferences, etc.)
- Interaction Attributes
(Type, Number, Response, etc.)
- Transaction Attributes
(Number and Type, Revenue, RFM, Competitive Spend, etc.)
- Financial Attributes
(Product Gross Margins, Marketing and Sales Costs, Service Costs, etc.)
- Value Attributes
(Historical Value, Expected Future Value, Potential Value, etc.)
With these
six categories, organizations can answer the key questions about their most valuable
customers: what their needs are and how best to meet those needs through
products, services and interactions. Additionally, best practices dictate that
you should not capture customer data unless you have a definitive plan to use
it, and make sure that the benefits of capturing customer data are clear to
both your organization and your customers.
Remedy # 4: How to Avoid Analysis
Paralysis
The good news is that customer
intelligence professionals have more data than ever at their disposal. The bad
news is that they have more data than ever at their disposal. Without a clear
objective or focus on the root question that is to be answered, these
professionals, all too often, find themselves trying to unearth the proverbial
needle in their data haystack.
Rather than
approaching key business problems and questions with an open-ended approach, it
is best to borrow from science and to start with a hypothesis.
The process begins with clearly defining the question or problem you are trying
to solve. From there, a number of hypotheses can be generated to determine root
cause and identify the data sets and associated analyses required to validate
or refute the hypotheses. For validated hypotheses, the next step is to understand
the implications of the findings and brainstorm solutions to address the
problem.
If none of
the hypotheses are validated, then it's back to brainstorming and a repeat of
the cycle. This structured and cyclical approach ensures that you are focused
on addressing the key business challenges and solutions are grounded in
rigorous data analyses. This approach allows for the delivery of results much
more quickly than an open-ended one, ensuring that you don't get stuck in the
analysis paralysis cycle.
Remedy # 5: Turning Customer Intelligence
into Programs
Too often, great
customer insights fall by the wayside because they are not fully translated
into business implications and impact. Without that translation, it's
impossible to gain buy-in from the rest of the organization and act upon the
insight to capture the underlying value. So, when new insights are derived, customer
intelligence professionals need to ask the all-important question: So what? What
does this mean to our business? What is
the potential impact both internally and to my customers? To answer these
questions, customer intelligence professionals often need to identify an internal
business partner/champion who can assist with the translation. Without that
partnership, the great insights are likely to languish without any action or
application, eliminating their usefulness to the organization.
Remedy # 6: Darwinian Approach Instead
of a Big Bang
After deriving insights
and identifying the "so what," you are likely to be left with a number of
potential programs with which to move forward. These program opportunities
undoubtedly will have varying degrees of potential impact and levels of
implementation complexity. Tackling them all at once is a recipe for failure. Rather,
it's best to take a more measured and strategic approach. The potential
opportunities should be prioritized based on customer and business impact as well
as feasibility for implementation. You want to focus on program opportunities
that will deliver the biggest bang for the buck and have the least path of
resistance to getting implemented. Also, you want to identify quick wins that
can demonstrate the value of customer intelligence in action without significant
change or resource investment. Once you are able to prove the effectiveness of customer
intelligence-informed programs, you are more likely to gain additional
organizational buy-in, support and resources for additional investments.
Moving Forward
Building out a core
competency in customer intelligence is not a simple and straightforward
exercise. Even less straightforward is building in the process and capabilities
to turn that insight into action. There are quite a few points along the way
where organizations can get off track.
Oftentimes, customer
intelligence professionals may open themselves up to questions about the value
of their work. So, it's critical to maintain a focus on how customer intelligence
can and does impact an organization's bottom line and to constantly communicate
this up, down and throughout the organization. Additionally, it's important to take
stock of where you are in the process (i.e., areas that might be struggling). If
you are suffering from any of these common customer intelligence maladies,
start implementing these remedies to get your organization back on track.
JOHN STRABLEY is the senior manager of strategy and
analytics for Quaero. His consulting clients include ESPN, Verizon, Roche,
USPS, Motorola, John Deere, Sotheby's, British Airways, SAP, AstraZeneca, Nielsen,
Citrix, Wyeth and AARP. For more,
email john.strabley@csgi.com.
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