As more and more companies invest in customer relationship management (CRM) initiatives, it's becoming apparent that customer insight is a key component of any CRM strategy. Regardless of where a company began its CRM efforts, the following capabilities are critical for achieving successful deployment of any customer strategy:

  • Customer Insight: Ongoing research into the traits and behavior that create customer segments, ensure stability and track customer migrations.
  • Strategic Insight: Continual executive monitoring of ROI to ensure the key metrics are trending in the right direction and the strategy is performing successfully.
  • Organizational Insight: Line manager monitoring of CRM process details to ensure that the train is on the right track, the organization is adopting new processes and technologies, and that the strategy is being well supported.
  • Experience Insight: Monitoring different customer interactions or behavior to react to changes in the environment as quickly as possible.
  • Decision Insight: The review and ongoing updating of a best practices knowledge base, enabling companies to make well-informed decisions and better react to internal process issues, changes in customer behavior or other key metrics that aren't trending in the right direction.

Collectively, these capabilities are defined as customer intelligence (CI), the core analytical requirements for a sophisticated CRM strategy.
To begin a customer intelligence strategy, companies should first use a CI road map for their organization that identifies how they're approaching implementing core CI capabilities. By becoming familiar with the common stages in a customer intelligence program, organizations can improve their existing CI capabilities, identify where new opportunities exist and enact a strategy for implementing these solutions.

Four Stages of the CI Road Map

Though not required to be implemented in order, a CI road map (see Figure 1) increases in the effectiveness of the visual interface to the different types of insight (customer, strategic, organizational, decision), as well as the automation of the decision process itself.


Figure 1: CI Road Map

Stage 1:
CI Infrastructure Readiness

In the mid to late 1990s, organizations started creating enterprise and divisional data warehouses to provide easy access to information. Implementations usually entailed accumulating vast amounts of company-wide information to provide a 360- degree view of the customer and leveraging query and reporting tools (i.e., BusinessObjects, Cognos, etc.) to allow business analysts to slice and dice the information as easily as possible.

Many companies reaching the infrastructure ready stage have:

  • A nearly complete view of the customer including demographics, behavior/purchase history, promotion history and contact history;
  • Numerous (hundreds or thousands in some cases) standard reports to choose from on a daily, weekly and monthly basis;
  • Empowered business analysts with self-service reporting tools from which they can supply rich information to their supervisors and executives;
  • The ability to create new data marts for specific point functions (retention reporting, sales velocity analysis, etc.) in a matter of weeks; and
  • The ability to execute sophisticated research projects such as segmentation and customer value analysis.

Stage 2:
Business Performance Management

Organizations that have begun investing in their CI infrastructures realize that data warehouses solve many problems but can cause others. Common complaints include:

  • I now get so many reports that I'm confused as to which ones are important, and I cannot digest the information.
  • I know the exact information I want to see, but I don't see it anywhere.
  • I want to know what strategies are working and which ones aren't. Are we getting better or worse?
  • Am I seeing a return on my CRM initiatives?
  • I want to know everything about my top 100 customers or about a single customer. Where's the one place I can go for all of that information?

These types of statements are usually a result of information overload or the inability to interpret massive amounts of reports easily.
For this reason, organizations are now reverting to the creation of executive cockpits, dashboards and scorecards using portal and database technologies or new packaged applications that look similar to the old executive information systems. The purpose of these applications is to focus information delivery on key metrics and specific information a manager needs in order to evaluate the state of the business at a glance, rather than cobbling together information from several different reports and sources.

Business performance management allows individuals from all levels of the organization to review key performance drivers, evaluate specific strategies and review key processes at a glance. It answers the basic question, "Are things working or not?"

Stage 3:
Decision Enablement

The next level of sophistication is the automation of the actual decision process. While many of the current CI technologies provide information and reports regarding the events and activities in their business, there's little support for helping to make the decision or evaluating that decision once it's been made. For example, "The last time customer churn increased by one percent in just two months, what did we do about it?" Or, "Customer satisfaction in our high-value customer segment is down ­– why did it happen last time and what did we do about it?" In both cases, the most important follow up question is, "Whatever we did, did it work?"

Though it may sound simple, most organizations have not spent much effort actually capturing and evaluating decisions and the knowledge around those decisions as they are made. This can be a huge cultural hurdle for some organizations. Systems that are decision-enabled can act as the organizational memory, helping employees solve problems after resignations, layoffs or transfers of subject matter experts.

Stage 4:
Business Activity Monitoring (BAM)

Business activity monitoring (BAM) refers to the decision enablement paradigm when implemented in a real-time environment. Instead of monitoring and checking dashboards, proactive alerts notify the right people when certain thresholds are reached. As customers, suppliers and partners push organizations to react and move even quicker, the need to be notified of specific events as soon as they occur and react immediately is becoming a reality.

Examples of companies using BAM include:

  • Sophisticated customer service organizations that can balance staff allocation to react to peaks and valleys in inbound customer inquiries.
  • Supply chains that monitor parts en route and can adjust production and shipping schedules based on late and early arrival of components.
  • Homeland security systems using BAM concepts to react to incoming reports, traffic patterns and monitoring of suspects.
  • Financial institutions and healthcare companies monitoring transactions in order to avoid fraudulent claims or exchanges.

Customer intelligence plays an important role in helping companies gain the full value from their CRM initiatives. It identifies cost and revenue opportunities, provides a vehicle for a closed-loop, continuous improvement environment and continues to monitor the initiatives and detailed processes that constitute your CRM program.
Regardless of where companies find themselves on the CI road map, implementing elements of all four stages is a critical piece of a comprehensive customer intelligence strategy.

My next few columns will discuss tactics and technologies that can make your customer intelligence vision a reality. Check back next month for details behind the first stage of the road map, the CI Infrastructure Readiness stage.

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