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  • June 01 2004, 1:00am EDT
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How to Help your Company Capture Elusive Customer Information

This column is part of an ongoing series that discusses how customer intelligence supports the strategic development and operational execution to ensure customer relationship management (CRM) projects meet expectations.

One concern that looms large for most organizations today is determining the critical information that best supports customer intelligence without missing anything relevant. For organizations trying to assess customer value, predict customer behavior or enhance the customer experience, there's a simple framework that can be applied that will help identify key information assets. This framework describes seven key dimensions that can drive customer research, customer analysis, sales and marketing performance analysis, customer service analytics and predictive modeling. Not all business models will need all of the dimensions, and, based on a company's business model and goals, some dimensions may be more important than others. Following are the critical dimensions for customer intelligence (CI):

  • Purchase Patterns: What and how often do customers buy?
  • Decision Process: How does the customer decide to buy?
  • Attitudinal Purchase Intent: Why does the customer buy?
  • Purchasing Process: How does the customer buy? How did the transaction occur?
  • Customer Life Cycle: What are the customer's personal circumstances?
  • External Factors: What is happening outside of the organization that impacts buying behavior?
  • Usage and Service Process: What are the customer's expectations post-sale?

Purchase Patterns

Purchase patterns consist of the key transactional information regarding customers' orders. Examples of this information include:

  • What products or services have been purchased?
  • What features, accessories and options were purchased?
  • How often do customers purchase?

Purchase patterns represent the key ingredients for behavioral segmentation. For business models rich in customer information that can identify and match each customer with each interaction, this synthesis of information will be one of the key ingredients to customer insight. However, many business-to-business organizations may not have the luxury of identifying the end consumer. Though consumer packaged goods companies are flocking to house and analyze point-of-sale information, they may or may not be able to link separate orders to the same customer. Even very consumer-oriented organizations may have difficulty creating an accurate purchase history picture. Catalogers and e-tailers that have rampant duplicate names in their customer and registration databases find themselves at a disadvantage when analyzing purchasing patterns.
One aspect that is extremely elusive for most organizations is share-of-wallet or the purchases made through other organizations or competitors. Some regulatory industries, such as pharmaceuticals, may be able to understand where their customers' money goes when it does not go directly to them. Manufacturers either cement relationships with their retailers to get full category information or purchase third-party information such as IRI to understand how their products perform against the competition.

Decision Process

Understanding how a customer makes a purchasing decision can be invaluable. Key information associated with this category includes:

  • What is the customer's decision-making process?
  • Who influences the customer's decision?
  • What information does the customer use to make the decision?
  • What interactions with your organizations occur during the buying process?
  • What are the timelines and deadlines for a decision?

An example of an industry trying to insert itself into the purchasing process is the automobile industry. Forming relationships, advertising or leveraging information with organizations such as, or Edmunds allows auto dealerships and manufacturers to send differentiated messages and information to consumers during the auto buying process. Similarly, music labels try to influence consumers' album buying decisions by working with iTunes and Napster, setting up listening stations at Borders or getting Rolling Stone to review their CDs.
Business-to-business organizations have been known to highly customize and leverage their extranets in order to entrench themselves in the customer's buying process. Manufacturers who make it easy for retailers to replenish goods have a competitive advantage by circumventing the decision process, in essence becoming a sole source provider.

Attitudinal Purchase Intent

Trying to get into the mind of a customer really does not show up in transactional information coming through on an order. Attitudinal demographics (psychographics) are purchased frequently by organizations to gain information on consumers such as car fanatics, sports junkies or music fans. However, this information is often suspect. Key information that all organizations strive for includes:

  • Why did we win the deal?
  • Why did we lose the deal?
  • What were the customer's decision criteria, and how did we rate?
  • Were there any politics involved?

Typically, this information comes through market research. Surveys, focus groups and interviews help organizations understand customer thought processes. The trick becomes how organizations can keep this information current in a cost-effective way and how to operationalize or extrapolate this information on customers who did not respond to the survey or participate in the focus group.

Purchasing Process

Capturing the information surrounding the actual order or purchase itself helps give insight into retention and acquisition issues. As mentioned in the decision process section, organizations that literally support or outsource their customers' purchasing process through extranets or other electronic mediums can create a competitive advantage by embedding themselves in their customers' purchasing process. Key information that is captured includes:

  • What channel was used?
  • What payment method was used?
  • What, which and how many interactions were needed to complete the transaction?
  • What type of delivery or service options were available at the time of purchase?
  • Was there an opportunity to make the purchase larger?

Most people have chosen certain experiences that they consider valuable during the purchase process. For airline reservations, it may be services such as proactive alerts for delays. Or, better yet, frequent travelers have become very accustomed to electronic check-in kiosks that accelerate the process. Many people have learned which airlines do not have kiosks at specific airports, and they avoid those airlines. For retail, it may be the purchasing options that entice customers to buy, such as Amazon's convenient one-click purchase. Alternatively, some people may avoid gas stations that are not equipped with a credit card swipe at the pump.

Customer Life Cycle

Understanding a customer's life cycle and their specific life events might trigger tailored messaging, cross-selling opportunities or retention activities. Key information includes:

  • What is the customer's financial situation?
  • What are the key events in the customer's life?
  • What volume of products and services have they purchased over their lifetime?
  • Has the mix, frequency or volume of purchases changed?

It is easy to see how life events impact insurance companies. Buying new cars, homes, getting married and having children are all insurance opportunities, and not being there at the right instant could allow a competitor to capitalize on the event.

External Factors

Similar to psychographics and attitudinal information, marketers are eager to capture and quantify market and competitive conditions that impact their sales. Key information would include:

  • What was my customer's pricing strategy?
  • What was the economic climate?
  • What is the overall demand for my product and service?
  • Are there regulatory issues impacting my business?
  • Are there any sociopolitical issues impacting my brand positioning?

Organizations such as mortgage companies and airlines are starting to invest in true competitive information systems that help collect, assimilate and explain their competitors' offers, pricing and current promotional activity. This information comes from competitor Web sites, external sales forces or customers themselves. For example, newspapers track the weather because rain usually means that single copy sales for the corner vendor are going to decrease.

Usage and Service Process

Understanding the amount, type, channel and frequency with which the customer needs assistance with a product or service is a key component for retention and lifetime customer profitability. Most organizations (software and hardware being notable exceptions) offer free post-sales support. Consequently, provision of this support can be a huge expense item. Key information includes:

  • What channels does the customer use for support?
  • How often does the customer call?
  • What is my return rate?
  • How often do repairs occur?
  • Can I link service with retention numbers?

Organizations are flocking to integrate their contact center information into customer value models. Successful companies understand how they can avoid service calls through education and messaging. When the calls do come through, parlaying that experience into a selling opportunity is something that very few companies have been able to operationalize. Even fewer companies have a continuous improvement process that evaluates their service information, designs new customer experiences and evaluates the profitability impact of those programs.
Like CRM, customer intelligence has a different meaning for every organization. This meaning usually translates to drastically different information requirements within the same industry and even within the same company. However, utilizing the key dimensions outlined in this column can help organizations create a road map for customer intelligence, round out their analysis portfolios and even modify their operational systems in order to capture elusive information.

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