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Which Way Do You Jump? Part 1

By
  • Claudia Imhoff, Jeff Gentry
Published
  • November 01 1999, 1:00am EST
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Claudia would like to thank Jeff Gentry for his assistance in writing this month's column.

If your organization has a customer relationship management (CRM) project under way, you're not alone. If you're also examining information architectures to support your CRM needs, you should consider the Corporate Information Factory (CIF). See Figure 1.

Its data warehouse/mart component (DW) is excellent for strategic analyses such as trending, pattern recognition, exception analysis and segmentation. Its operational data store (ODS) component is ideal for a tactical view of current information such as integrated customer information, current inventory levels and status of mass customized products in manufacturing.

Each component is built using different methodologies, technologies and skill sets. Each encompasses different data, source systems and business communities. Together, they represent a powerful synergistic combination for implementing CRM solutions. Unfortunately, you usually cannot build both simultaneously.

So, which one do you build first? You may have guessed that there isn't a best answer. It depends on the characteristics of your organization. Your organization's marketing savvy, customer database size, technological sophistication, IT politics and state of operational systems (integration and age) all make a big difference and will impact your decision.

This column examines the business factors that can influence when and where you use the DW and ODS constructs to optimize your CRM plan. A second column, next month, will examine the influential technological factors.

Organizations that consider a CRM implementation usually come from one of two camps. Some companies have multiple operational system environments and place a higher priority on coordinating "customer touch" processes. These are often companies with a need to integrate multiple marketing channels, such as a call center and e-commerce. Others are more interested in marketing analyses and strategic directions suggested from these analyses. Determining which is the more important to your company will determine which you build first – the ODS or the data warehouse.


Figure 1: The Corporate Information Factory

Some organizations have complex operational systems or have gone through a number of mergers and acquisitions resulting in the company completely losing sight of their customers. For these companies to support implementing CRM, they usually concentrate on consolidating all the current customer information from their fractured operational systems so that they can interact with their customers and craft an enterprise-wide view of customer information. They must focus their attention on the customer touch processes to support customer interactions, resulting in a consistent customer experience. A customer touch is any form of contact with the customer, such as a bill, an invoice, a Web visit, a complaint call or a marketing flyer. Organizations that are focused on interacting with their customers and that lack integrated, high-quality, current, accessible data about their customers should consider an operational data store first. An ODS will help them interact with their customers and treat them with preference and familiarity.

Here's an example to help clarify which camp you represent. Aircraft Parts, Inc. (API), a fictitious aircraft parts retailer, is expanding via acquisitions of smaller, specialized aircraft part manufacturers. As API's product lines are expanding, a large aircraft parts customer asks API for a long-term parts bid. The customer stipulates that API must support one-stop shopping, whereby the customer can place one order for all of the parts that they need each month and receive one invoice. Since API hasn't yet integrated the purchasing or billing functions of its satellite divisions, it can't support the requirement and ends up losing the business.

In addition to their operational difficulties, API management needs consolidated, strategic information by customer. This information helps them identify distinct customers and differentiate them for individualized treatment. But, they muddle through by creating small reporting databases and using rudimentary tools.

For API, the operational and tactical needs outweigh the strategic ones. Without building the foundation of integrated customer data across the divisions first, the business is at risk. The strategic information requirements can wait until the tactical requirements are met.

Other companies have the customer touch side tackled and are more interested in strategic marketing analyses. They are more concerned about the strategic moves they should be making to attract and retain customers. The first step is to identify individual customers and differentiate them from each other based on their needs and desires as well as the way they interact with the enterprise. Determining customer buying habits, analyzing customer profitability and performing demographic profiling are some of the high-priority activities. These companies choose to focus on strategic information first for a variety of reasons. Some have well integrated operational systems that already support integrated customer, inventory and supply chain data. Others do not interact with any given customer across multiple marketing channels in near real time, reducing the complexity of the operational needs. With their operational data under control, these organizations are free to focus on their strategic decision support environments to determine who their best customers are, which ones have the potential of becoming better customers and which ones are not worth the effort. By proceeding with a DW, they can begin to reach their strategic goals, like treating different customers differently, based on how they are interacting with the company.

Here is an example of a company that needs strategic capabilities first. Mighty Financial Bank (MFB) has just implemented a large ERP application. They are able to view their customers easily and can create reports on their current status. They are able to generate mailing lists, trigger call center activities and support other sales and marketing events. They know what products the customers have and can find their contact information easily.

Unfortunately, they have been using the "spray and pray" approach to marketing their products. They send out mass mailings describing their products to all customers and then wait to see who takes them up on their offer. Not only is the return rate low (one percent out of most mailings), but it costs a fortune and their customers are getting very irritated with the constant bombardment of products they don't want or need.

MFB needs business intelligence about their customers. They must build the warehouse and marts quickly to stop the irrational and inefficient manner of reaching their customers. They need the ability to determine who is likely to want or need their products, determine the best way to reach them and leave the others alone. Not only will they improve their overall marketing response rate, but they will also stop annoying their customers with unwanted solicitations.

The Corporate Information Factory is a perfect architecture for supporting CRM. However, no one can build the entire architecture at once. By assessing your organization's situation and needs, you can select the right starting point, build a stable CRM architecture and optimize the returns on your CIF investment.

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