Improving customer intelligence management practices empowers organizations to profitably define, identify and respond to high value customers and has become the top motivator for 74 percent of "best in class" in creating a corporate culture of customer-centricity. According to the report, companies that exemplify "best in class" practices attained greater than 20 percent annual improvement in gross revenues, customer acquisition and retention rates. Moreover, leaders have proactively begun to address their need to improve the management, analysis and application of customer intelligence in several critical areas:
- Best-in-class companies utilize both operational BI and predictive analytics to better understand and respond to high value customers;
- Leaders are more likely to use customer data integration and data quality solutions to incorporate data captured from multiple sources prior to analysis.
- Leaders plan to extend or integrate their CRM systems with other customer intelligence tools for increased visibility and better data analysis capabilities;
- 50 percent of best in class selectively out-source to third-party service providers to augment internal capabilities and processes.
The study reveals that leaders share similar approaches and processes:
- Establishment of cross-functional teams and ownership processes to align IT with line of business users.
- Take a long-term approach to growth in defining customer value by lifetime value models.
- Centralize management of customer intelligence at the corporate level.
Organizations have spent millions capturing, analyzing and applying customer intelligence with the goal of growing revenues by increasing focus on customer-centric strategies and tactics. However, many companies are challenged in that customer intelligence is spread throughout an organization. Whether sourced externally from Web-based or third-party suppliers of information or captured through an organization's own activities, customer intelligence is often stored within numerous data marts across the corporation. In practice, this intelligence is accessed by different role-based functions for specific activities or in-line decision-making. Each source maintains a separate data structure resulting in corporate-wide informational silos - each retaining critical pieces of customer intelligence.
According to Aberdeen research, companies that exemplify best-in-class customer intelligence management practices reported greater than 25 percent year over year improvement in each of these key performance metrics: annual revenues, customer acquisition and customer retention rates. Moreover, these leaders are more likely to: centralize management of customer intelligence at the corporate level, utilize both operational and strategic analytics to better understand and respond to high value customers and take a long-term approach to growth by defining customer value according to lifetime value models.
Surprisingly, the research also uncovered that effective management, analysis and application of customer intelligence is still at its earliest stages at organizations of all sizes. Most organizations cited a lack of effective customer data analysis processes and an inability to establish meaningful performance metrics as barriers to improving customer intelligence initiatives.
Key Business Value Findings
Despite these challenges, best in class are more likely to use customer data integration solutions to extract, normalize, verify and integrate data captured from multiple sources (both internal and third-party sources) prior to analysis. Additionally, leaders are more likely to establish cross-functional ownership processes to address challenges, such as establishing customer data analysis processes and defining performance metrics - 90 percent of best in class measure customer intelligence success according to customer retention rates.
Implications and Analysis
Effective customer intelligence management is about transforming customer information into revenues - customer data converted to profits. Organizations have already invested heavily in customer data capture, storage and analysis, but need to further establish customer data integration and analysis processes, define performance metrics, and develop capabilities that allow customer intelligence to be applied at the line of business level. Leaders are responding by increasing their investment in building a culture of customer-centricity. For 74 percent of best in class respondents, the decision to improve customer intelligence management was the direct result of increased corporate focus on customer-centricity and a desire to provide a 360° view of the customer to all customer-facing functions. The ability to identify and respond to high value customers is a top motivator for improving customer intelligence management throughout the organization.
AberdeenGroup asserts forward-thinking organizations will continue to invest in select technology enablers, process development, performance measurement capabilities, and services that empower them to apply customer intelligence towards better decision-making in support of profitable growth.
Recommendations for Action
In converting customer intelligence into profits, best-in-class organizations are more likely to apply a comprehensive approach comprised of select capabilities, services, processes, and technology enablers. Without a holistic approach, enterprises risk making customer-centric decisions on garbage in, garbage everywhere.
- Democratize access to customer intelligence so that those in customer-facing roles may apply this knowledge "in-line" and foster a customer-centric culture.
- Measure performance for customer intelligence management based on composite metrics: annual revenues, customer retention and acquisition rates initially.
- Establish and refine performance metrics, processes and standards to create linkage between customer intelligence initiatives and corporate goals that include increased productivity, cost reductions, and the ability to make real-time decisions based upon a 360° view of the customer.
- Consider vendors who offer tools to facilitate data extraction, normalization, verification, quality and integration from multiple sources - both internal and third party.
- Move from manual processes to partial or fully automated processes so that internal stakeholders may focus on analyzing and applying customer intelligence rather than managing bits and bytes.
- Build cross-functional buy-in and collaboration processes to align IT with line-of-business users.
Leslie Ament is an experienced consultant, researcher and presenter. She advises clients on business issues relating to precision marketing, customer data management and customer relationship management strategies. She may be reached at lament-ruder@att.net.
