Unlocking the Full Potential of Customer Data Integration Through Complete Product and Service Lifecycle Management
Information Management Special Reports, October 2007
In today's business environments, access to rich customer information can provide a significant competitive advantage and be the determining factor in revenue growth and margin expansion. Having detailed knowledge of the customer is not only paramount to extracting the maximum amount of revenue, but also to delivering the highest levels of service throughout the lifecycle of each customer relationship. The challenge is that customer data is often arranged in silos of access - relegated to individual systems based upon the purpose of the data/information and the nature of the transaction, rather than centralized around the customer.
Customer data integration (CDI) is emerging as a factor in overcoming these challenges, particularly in the supply chain where service contract management and product/service lifecycle management is concerned. CDI is the planned interaction of strategy, technology and process that is required to achieve and maintain a relevant, comprehensive and precise view of customer data records throughout multiple channels, business lines and enterprises. Consolidating and managing customer information from all available sources to achieve the highest quality of business intelligence is paramount to maximizing the value derived from a CDI initiative.
Historically, companies have focused their efforts on capturing and storing transactions in specific but isolated data environments. Examples of these isolated data environments include shipping, ordering, accounting, technical assistance, point-of-sale (POS), and incentive and rebate data systems. Loosely coupled to the customer, they are also strictly governed by the transaction, which they are commissioned to track. For example, looking at simple metrics such as product sales and service sales, these values are likely to be obtained from two different systems while falling under the responsibility of two different business units.
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Customer interactions are organized by transactions more often than not because of the distributed organizations that are charged with managing different segments of the overall business. The quality of the information contained in these transactions and, ultimately, the registration processes following their occurrence, must allow reconnection with the customer in order for future actionable renewal and sales opportunities to ensue. In the technology supply chain - made up of manufacturers, distributors and resellers - the likelihood of reconnection has traditionally been less than stellar. Although all of these entities are ultimately selling to the same end customer, the manufacturer and distributor often do not have the necessary information related to that end customer to facilitate future sales and service renewals. Again, these businesses are aligned according to the transaction, with each of them taking from the transaction the data elements that are critical to their respective businesses. Yet, in most cases, they are either neglecting or failing to adequately capture the intelligence that is necessary for future interaction with the end customer in order to maximize the lifecycle revenue opportunity.
Take, for instance, the lifecycle revenue opportunity of maintenance service contracts within the technology hardware and software industry, Figure 1 depicts an overview of the revenue lifecycle, starting with the initial hardware purchase, followed by the purchase of the original service contract associated with the hardware asset, and then the subsequent service renewals (year one, year two) and ultimately, the replacement of the original product (otherwise known as technology refresh).
Figure 1
Organizations can optimize the value of their customer data by ensuring that it evolves in parallel with the actions of customers over the lifecycle of the relationship, particularly at strategic points, such as at the initial point of sale, at product registration, in the post-sales phase when customer changes occur; when service and warranty contracts are up for renewal, and when technology refresh makes sense. It all begins with gathering, managing and assimilating important customer data at the time when a product is initially purchased. On average, however, only 60 percent of technology products sold with service get registered with the manufacturer. When proper registration does not take place, record of the service purchase is not appropriately entered into the manufacturer's entitlement system. This creates the possibility that no record of the contract actually exists, leading to major setbacks in the delivery of the service, much less in the tracking of expiration notifications. The result is lost service renewal opportunities as well as the risk of noncoverage for the customer on critical assets. Even worse, lack of registration can lead to loss of the customer due to dissatisfaction.
As illustrated in Figure 2, the primary reason for low service registration and service renewal rates is poor data quality as a result of disparate multi-party systems that track purchases. This poor data quality is the principal driving force behind new service contract management practices emerging today.
Figure 2
With CDI, data quality is achieved through normalization, correlation, and standard and advanced matching techniques designed to create a homogenous environment where detailed quality measures can also be applied. Matching in CDI is the process of comparing similar records, removing duplicates and uniting them into the best possible version of a record. Weighted quality scoring and specific automated scans can then be implemented to measure the quality and completeness of the resulting data pool. The CDI environment then must be connected to all business processes, customer touchpoints and other systems that interface with the customer in order to maintain a unified front of information. No matter which system or touch point may be in play, in an effective CDI initiative, the customer information is always derived from the same place.
This approach requires dynamic intelligence that develops with the customer relationship over time. It is based upon the premise that all data eventually becomes stale or inactionable. Most service contract management systems in play today lack the ability for secure customer interaction or they require manual customer interaction and do not embrace the channel partner. As a result, customers and channel partners cannot effectively update the information with critical moves, adds or changes (MACs), further compromising the value of their data as time passes and MACs occur. This ultimately results in lost opportunities for renewal. The most advanced CDI-based service contract management platforms, however, automate many of these functions by leveraging multiple "static" existing systems without disrupting or displacing current systems (i.e., POS systems) or processes, resulting in increased data integrity, and ultimately increased revenue. Further, through use of service-oriented architecture (SOA) technology, they can provide flexible, automated and dynamic multiparty interaction to allow the management of each product, service and registration as a transactional/dynamic property.
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