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Customer Intelligence:
Driving Toward Action

  Column published in DM Review Magazine
December 2004 Issue
  By Larry Goldman

One of the crucial aspects of customer intelligence (CI) or using business intelligence (BI) to support your customer relationship management (CRM) business strategy is what I call the "outlet for action." Within the decision support process, it must be clear to analysts, knowledge-workers or other decision-makers how they can take information and make an impact. For some employees, their role may be increasing efficiency or reducing costs. Other employees may be responsible for driving revenue through cross-selling programs.

The general approach consists of the following stages: information, insight, strategy and action.

Information. Raw data is rarely useful to most organizations. The aggregation, transformation, integration and scrubbing allow an organization to truly derive understanding of what is happening in their organization. For CI, these activities typically focus on the following outcomes:

  • Aggregating information to various levels of the customer hierarchy. We need to see information at the account level, the consumer or individual level or the household level. In business-to-business organizations, hierarchies can be exponentially more complicated when selling into national or even global organizations. Understanding information at the contact, location, region, country and global levels can be a daunting task.
  • Integrating disparate sources. From a CI perspective, integrating customer behavior and profiles from multiple channels, matching customer expenses with revenue, or matching customer responses to messages or offers are all examples of how integrated information creates an exponential amount of insight over the disparate data.
  • Cleansing customer information. Standardizing name, address, product and business name in order to household or enterprise (in a business-to-business situation) allows us to view customers at their various levels of hierarchy.

Insight. The user interface to support decision making has become as complex as the information it is built upon. We realize that different tools, different levels of aggregation and different metaphors appeal to different user groups. This epiphany causes CI implementers to ask the following questions:

  • What is the right tool to understand corporate performance? Do management reporting applications map strategies to revenue, budgets and profitability metrics?
  • What is the best way to monitor and evaluate specific business processes such as marketing effectiveness or customer service issue resolution? Are dashboards or business performance management (BPM) applications the best way to quickly evaluate tactical performance?
  • How can exploratory and ad hoc analysis be performed and visualized most effectively? Is there a tradeoff between speed of analysis and visualization?

Strategy. Of course, few analytic technologies can provide as much insight as predictive modeling applications, which is exactly why I have grouped those applications with the development of business strategy. Advanced analytics allow organizations to:

  • Understand the most effective value propositions, offers, prices, discounts and product bundling.
  • Match channels, products and offers with customer preferences, needs and segments.
  • Predict the value of different prospects, customers and segments.
  • Predict the return on investment of various marketing, sales or service investments.

Figure 1: General Approach to Customer Intelligence

This type of insight can create or refine our perspective regarding which customers and programs merit increased or decreased investment. These decisions become the basis, and many times the catalyst, for an organization's strategic road map.

Action. Though turning information to action -- and eventually actionable initiatives - has a technical component, attention to business process and organizational considerations is required for ultimate success. Technology, such as marketing automation, multichannel coordination or personalization, cannot be successful without:

  • Clarity regarding process alignment, hand-offs, roles and responsibilities.
  • Communicating the benefits, costs and impacts of a proposed technology implementation in order to gain buy-in.
  • Incentive structures that both reinforce positive behavior and punish negative behavior.


Wal-Mart is famous for distilling point of sales information in record time. Understanding the demand for specific products and product lines ensures that stores have hot items in stock and ride specific customer demand trends - even if those trends only last a few days.

C.W. Napkin, on the corner of Sheridan and Agatite in Chicago, sells pizza, ribs, pasta and a triple-layer chocolate cake on a delivery basis and only takes cash. What keeps customers coming back are the coupons you receive after an order. C.W. knows which customers are likely to repeatedly buy and makes sure they have an immediate incentive - after every purchase.


Video stores continue to squander the goldmine of information they are sitting on. Let's face it, most of us are not very adventuresome when it comes to movies. You are the romantic kind, the action kind, the horror kind, the comedy kind or the indie kind. Yet video stores continue to offer mundane services that rarely get customers excited. The onslaught of Netflix and video on demand will test the mettle of these organizations.

Over the next months, we will describe the winners and the losers, the best practices and the pitfalls of each stage of customer intelligence. Through examples, I'll describe your line of sight to turn data into action.


For more information on related topics visit the following related portals...
Business Rules and CRM.

Larry Goldman is president of AmberLeaf, a customer intelligence consultancy. He has more than 13 years of experience in database marketing, business intelligence and customer analytics, as well as customer and marketing strategy, customer experience optimization, sales force automation and call centers. He can be reached at larry@amberleaf.net.

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