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Customer Intelligence Priorities

  Article published in DM Direct Special Report
February 14, 2006 Issue
  By Jim Ericson

"Customer-centricity" is not a new term, but as stated by new research from Aberdeen Group, it is catching on. According to "Customer Intelligence: Converting Data to Profits," improving customer intelligence management practices to define, identify and respond to high-value customers has become the top motivator among 74 percent of best-in-class companies studied. Those with best-in-class practices achieved greater than 20 percent annual improvements in revenues and acquisition and retention rates.

Best-in-class companies tend to share common traits, according to Leslie Ament, director of customer intelligence at Aberdeen Group. They utilize both operational and predictive analytics; they are more likely to use customer data integration and data quality solutions; they plan to integrate CRM systems with other customer intelligence tools; and about half utilize third-party service providers to boost performance.

That said, Ament tells us that this isn't simply a technology exercise. "Even though organizations have spent millions capturing, analyzing and applying customer intelligence - knowledge management, asset management, content management, BI, CRM, analytical CRM - it's somewhat surprising that they are not further along." That is true because customer intelligence strategy requires the establishment of end-to-end processes and meaningful performance metrics. More importantly, she says, because customer intelligence is an end-to-end ecosystem, it's about building consensus and getting cross-functional teams to work together. "It's still early adopter in that some companies are doing pieces of it very well but pulling it all together and having actionable insight for strategic decision-making is still a work in progress."

A high-level takeaway is that companies have reduced costs, created efficiencies and increased productivity to the point where they're not going to reap new incremental profitability from their back end. "In my opinion, the way companies will find growth in the future is through M&A, enhancement of product and service offering and understanding and responding to their best customers so they can selectively invest in their most valuable customers. That means they need to pay attention to their customer intelligence ecosystem."

An enterprise-wide approach naturally leads to a discussion of ownership. Part of this will be determined by whether the CEO has come up from product management, product marketing, IT or sales. In practice, compartmentalized structure is reflected in customer information management (CIM) strategies. "It's very easy to see that certain job functions take ownership of each of those pieces."

This can lead to some confusion back on the product front. "People say to me, 'should we get sales force automation or marketing automation?' I tell them there is a minimum of 30 percent overlap across all those systems. Whether you decide to buy CRM or SFA is really determined by who has the budget and is making the decisions."

Best-in-class organizations ameliorate this problem with cross-functional teams working and taking ownership. Other traits of industry leaders include a long-term approach to growth by establishing customer lifetime value models and centralized management at the corporate level. Among the latter, CIM is often established at the corporate level, followed by pilots at the business unit level to determine how well it works before it rolls out to the entire organization. Whether this should be a CxO responsibility is an interesting proposition to Ament. "Having a customer intelligence czar would not be a bad thing, at least to facilitate the discussion across the cross-functional teams."

For more information on related topics visit the following related portals...
Analytics, Business Intelligence (BI) and CRM.

Jim Ericson is editor in chief of Business Intelligence Review (www.bireview.com) and editorial director of DM Review, SourceMedia publications. You can reach him at James.Ericson@sourcemedia.com.

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