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Customer Service

Customer Data: Lifeblood of an Organization

  Article published in DM Direct Special Report
March 29, 2005 Issue
 
  By Kamal Shah

Who are your customers? Chances are you don't know the half of it.

After years of focus on customer relationships, this should be an easy question. But to answer it, the customer data that drives your organization has to be 100 percent accurate across the board. And 100 percent accuracy is extremely complicated to achieve.

The root of the problem lies in the fact that, over the years, the focus on customer relationships has been at a functional, line-of-business level. This, coupled with the numerous packaged, custom and legacy applications implemented during the past decade, has resulted in customer information that remains siloed and fragmented at divisional and departmental levels.

Does it really matter if a corporation coordinates its customer relationships and customer information enterprise-wide? The following example of John, a customer of ABC Bank, clearly demonstrates the value of coordination. Let's say when John goes into his local branch, tellers have access only to checking and savings data that tells them that John has a free checking account and typically carries a low balance. The information on the mortgage John holds through the institution's lending division, records of the insurance policies he and his wife have through yet another division, and their joint retirement fund in the bank's investment arm are not part of the teller system. When John visits his branch to have a "stop check payment" charge waived, the teller sees only John's meager checking account and does not provide the level of service that John's value to the institution warrants. This is not the way to keep John a satisfied customer.

Now imagine the teller has a single view of John's individual accounts as well as all business the members of his household conduct across all divisions. Not only would the teller recognize that John is a high-value customer and deliver the right level of service, but also the institution could leverage the combined information to offer him appropriate products and services that might lead to cross-sell and up-sell revenue from a decidedly loyal customer.

Why Integrate Customer Data? Why Now?

The analyst firm Gartner Inc. refers to the people, processes and technologies required to create and maintain a unique, complete and accurate customer profile and make it available to all operational systems as "customer data integration" (CDI). An effective CDI solution helps accomplish many business objectives shared by companies in a wide array of industries:

  • Revenue growth through cross-sell and up-sell opportunities - Without a complete picture of which products and services a customer already has, a company has no basis on which to intelligently engage the customer in cross-sell and up-sell activities.
  • Effective, differentiated customer service - Without a single view of the customer, employees cannot recognize premier clients. A customer has to call multiple call centers in order to change the address for each of his or her accounts, versus changing the address once and having it reflected everywhere.
  • Compliance with mounting legislation, regulations and privacy requirements - Consider the growing compliance burden--the Patriot Act, the Do-Not-Call registry, the eGovernment Act of 2002, Sarbanes-Oxley, the Gramm-Leach-Bliley Act. The collective effect of these laws is to raise the bar for improved customer knowledge and insight to comply with government mandates and avoid huge fines that would impact the bottom line.
  • Optimized operational cost structures - Organizations waste literally millions of dollars annually on redundant hardware, software, and infrastructure to improve the quality of their customer data across multiple applications. They also spend redundant administrative costs, have inconsistent data quality policies, and cannot track and audit those policies.

While these objectives might appear unrelated, all can be achieved more easily with a single view of the customer. An effective CDI solution goes way beyond the "simple" job of providing accurate contact information. An effective solution enables an organization to consolidate customer data, ensure its accuracy and completeness, and make it available when and where it is needed.

Components of an Effective CDI Solution

As Figure 1 illustrates, an effective CDI solution comprises four primary components:

  • Trusted customer information in the form of a comprehensive set of customer attributes, including demographic information and previous interactions, purchases and privacy preferences.
  • Closed-loop data quality capabilities to rationalize and enhance the customer data.
  • Proactive events and policies that prompt quick action in response to customer life cycle events.
  • Standard-based integration to unify and distribute customer insight to operational applications on demand.

Figure 1: Four Major Components of an Effective CDI Solution

Trusted Customer Information

Trusted customer information starts with knowing which aspects of a customer are relevant and important, then managing them appropriately. This may seem like a straightforward task. The dynamic nature of customer data, however, combined with the fact that it needs to be easily retrievable and accommodate any number of industry-specific requirements, makes this task increasingly complex.

What constitutes a comprehensive customer profile varies widely by industry. While an insurance company needs to track customer risk profiles and insurance policies, pharmaceutical companies need to monitor physician credentials and drug sample distribution, and telecommunications carriers are interested in service agreements, installed hardware and minute usage. An effective packaged CDI solution supports this need with industry-specific customer profiles out of the box.

In addition to capturing comprehensive customer profiles, an effective CDI solution should also support modeling complex roles and relationships among customers, individuals and corporate entities. Companies also need to model complex hierarchical relationships such as enterprise versus site, holding company versus subsidiary and retail chain versus individual store.

Since customer information must be distributed across the enterprise, the solution must support robust data synchronization and data federation capabilities. It must also have rich audit trail and history capabilities and record the complete history of each customer profile, including changes and updates at an attribute level.

Closed-Loop Data Quality

Since maintaining central, authoritative customer information is an ongoing task, an effective CDI solution orchestrates the end-to-end process of managing customer data throughout the customer life cycle. The steps involved in closed-loop data quality include cleansing and standardizing records, matching customer records against suspect duplicates in the existing database, merging or unmerging records, periodically enhancing records with new information and constantly monitoring the above processes against key performance indicators.

Successful CDI solutions also offer prebuilt capabilities to validate and enhance customer information with external data sources such as Dun & Bradstreet and Experian. With such a capability, ABC Bank could, for example, augment John's customer information with credit score information to improve decision-making related to the products and services offered to him and his household.

An effective CDI solution incorporates robust data profiling capabilities to track the effectiveness of data quality - that is, its accuracy, completeness and uniqueness across business units, channels and geographies. Such a solution provides dashboards that answer questions, such as how many duplicate records exist and how are they reducing over time? How many customer profiles have blank e-mail addresses or phone numbers and how is that tracking over time? What are the most frequent sources of duplicate profiles?

Proactive Events and Policies

To deliver superior customer service, comply with government mandates and make the most of up-sell and cross-sell opportunities, organizations must respond proactively to customer life cycle events, such as change of address, new account opening or substantial balance change. An effective CDI solution supports this need by providing triggers that prevent data decay and help maintain data integrity. Examples include rules that automatically verify data periodically or that provide real-time alerts when someone attempts to create a potential duplicate customer record.

An effective solution also provides rules management capabilities to facilitate legislative and regulatory compliance. The Sarbanes-Oxley Act, for instance, requires that companies record the complete history of each customer profile, including changes and updates at the attribute level. The Gramm-Leach-Bliley Act requires companies to issue privacy notices that explain their information-sharing practices and allow consumers to limit some, but not all, sharing of their information.

With these capabilities in place, organizations can do a better job of managing sensitive information, abiding by customer preferences, upholding corporate privacy rules, meeting government mandates for privacy and providing auditors with proof of compliance.

Unify and Distribute Customer Insight

A CDI solution is, by far, the most integration-heavy solution in IT infrastructure. According to analyst firm Forrester, companies that have implemented a single view customer solution have found that up to 80 percent of the project budget can be spent on integration issues. To reduce integration costs, an effective CDI solution provides interfaces that can be accessed easily by other applications. These interfaces must be defined as business services (that is, they must support a services-oriented architecture) and use industry standards such as XML and Web services.

Prepackaged integration with custom, packaged and legacy applications that reflect industry best practices is the optimal approach. Prepackaged processes eliminate custom development associated with traditional integration methods, resulting in reduced risk, lower total cost of ownership and faster time to implementation. Gartner states that packaged integration processes save time and money when used as a component of an integration project involving common business processes such as customer life cycle management, partner management or order management.

An effective CDI solution must also support all modes of integration: batch, near real time and real time as well as multiple integration technologies inside and outside the firewall. Through built-in integration capabilities, an effective CDI solution permits the organization to deliver the appropriate information to customer-facing employees at the right time. Had ABC Bank's branch teller been able to access John's entire customer record, the teller would have had full insight into John's value to the bank and would have immediately waived the stop check payment fee to retain a satisfied, repeat customer.

CDI in Action

The South African Revenue Service, or SARS, the tax collection agency for the South African government, knows firsthand just how effective a CDI solution can be. Until recently, the agency, whose 15,000 employees collect more than U.S.$30 billion in annual revenue, faced a major obstacle. Because the agency used a patchwork of eight legacy systems to manage personal and corporate tax accounts, it could take a SARS employee as long as three weeks to gather all the information required to resolve an inquiry by a major corporation. Without a universal view of its customers, SARS found it difficult not only to detect suspicious activity such as tax evasion, but also to even credit payments and refunds against taxes due.

To address these challenges, SARS mapped out a plan for a total view solution that would provide the agency's call center personnel, tax advisers, and case workers with easy and complete access to the full tax record of individuals and corporations. In just four weeks, the system was up, running and providing real-time integration of the agency's line-of-business systems.

Today, the agency's 200 tax advisers and case managers can access a unified record of tax profiles that includes history, payment records and outstanding tax inquiries. Additionally, SARS has:

  • Generated more than U.S.$90 million in incremental monthly tax revenue
  • Improved the quality of the service it provides its 20 million taxpayers
  • Increased employee productivity by cutting the average time needed to collect taxpayer information to less than a minute
  • Ensured accurate tax revenue collection by enabling immediate credits of payments to outstanding tax balances

Ask yourself a few questions: Who are your customers? Do your employees have an easy way of identifying a premium, high-value customer? Can they immediately find accurate and complete contact information for each customer? Can you quickly access a complete picture of all sales, marketing and service activities targeting your customers?

Chances are, the answers are no. But by investing in a customer data integration solution that provides a single view of the customer across the enterprise, you can improve your operations, revenue and customer satisfaction in one fell swoop.

...............................................................................

For more information on related topics visit the following related portals...
Business Intelligence (BI), Customer Data Integration and Data Profiling.

Kamal Shah is a senior director responsible for product management and product marketing of Customer Data Integration solutions at Siebel Systems. Shah has more than 10 years of experience defining and developing enterprise software solutions in the areas of data and business process integration, composite applications, e-business platforms and sell-side commerce suites.



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