Customer master data management: How to get it rolling

Most debates on the importance of master data management (MDM) belong to the mid-2000s. It was around that time that Roger Wolter and Kirk Haselden of Microsoft Corporation defined MDM as “the technology, tools, and processes required to create and maintain consistent and accurate lists of master data” that takes a complete alignment of business processes with a corporate MDM strategy.

By 2016, these theoretic rambles reduced to rather technical practicalities leaving the topic of a business impact behind. But with the coming of the new customer-centered paradigm, a viable strategy for customer master data management can mean feasible returns. For example, Informatica, a leader in Gartner 2015 Magic Quadrant for Master Data Management of Customer Data Solutions, reports that end-to-end master data management helps their clients to make marketing campaigns 30% more efficient, improve upsell and cross-sell rates by 60% and increase loyalty members’ spending by 20%.

In this article, we suggest reiterating the value of customer MDM with an eye on its possible home base, a customer relationship management (CRM) system. 

Addressing the challenges of customer master data management

The biggest challenges in managing customer master data come from a variety of disintegrated systems and sources, duplicated data and a lack of standards for data governance, hierarchy and maintenance at organizations. For larger companies, this may be a legacy from mergers and acquisitions; for others this discrepancy results from the lack of a data management vision whatsoever, where data repositories have grown into ‘swamps’ of stale facts that no one thinks they need.

In marketing and sales terms, this leads to having just a fragmented picture of customers’ past interactions, needs and expectations, which causes conversion, loyalty and satisfaction rates to decrease drastically. Above this, Oracle says, it can wreck the operational part of businesses, amounting to billions of dollars in losses each year.

A holistic master data management can address these challenges both reactively (fixing past data already in the systems) and proactively (preventing to create new records with incorrect, redundant, missing or duplicate details). Either way, the customer MDM means implementing an automated cycle of the following phases:

1. Mapping out the sources and consumers of customer master data
2. Defining data governance policy and assigning data stewards to maintain an impeccable data quality at all times
3. Cleansing data from duplicate and incorrect records
4. Completing missing details from either internal or external (business directories, registers, public records, etc.) sources
5. Synchronizing cleaned master data with relevant enterprise applications
6. Building up customer data hierarchies and dependencies (e.g. identifying subsidiary companies to the same parent corporation)
7. Providing a shared access to trusted, reliable and clean master data to both CRM users from multiple departments (sales, marketing, production, etc.) and users of other integrated applications (e.g. ERP)

The value of customer master data management

Once these 7 phases are in place, it will be possible to bring in the following benefits thanks to having a single, unified version of correct and complete customer master data. It’s necessary to mention that these benefits would extend across the organization via the network of integrated enterprise applications exchanging customer master data between them, that’s why we call it integrated customer master data management. 

Benefits of integrated customer data management

• more precise marketing automation (e.g. web content personalization) that results from correct customer data
• more efficient lead scoring (e.g. by correctly identifying the lead’s market share and sales potential) which enhances collaboration of marketing and sales teams
• ability to focus on high-value customer segments (e.g. customers with the highest lifetime value)
• targeted cross-selling and upselling activities aligned with the customer’s needs 
• transparency of the customer’s credibility, financial state and history of payments for the purposes of risk management
• error-free delivery and billing due to customers’ precise and detailed contact information
• facilitated decision-making and regulatory compliance through more accurate reporting
• better CRM adoption by end users thanks to clean, complete and correct data

Purpose-built master data hubs or in-CRM tools?

Today, master data management is more and more about cloud solutions versus traditional on-premises systems, and there is no lack in packaged MDM solutions out on the market. Gartner 2015 Magic Quadrant for Master Data Management of Customer Data Solutions features 11 companies with proprietary products, most of which are customer data hubs that aggregate customer data from heterogeneous applications, clean and distribute it back to master data consumers. This may serve as a nice departure point for every enterprise looking to implement and customize a high-level system with an eye to more ambitious MDM projects as the rolling hills and slopes of the enterprise IT landscape may offer unchartered territories for new undertakings.

With master data management, however, multiple sources emphasize it’s important to start off at a smaller scale to see if and how the pilot will work for one particular system at a time. With customer master data, CRM becomes the first choice. Therefore, the innate capabilities of CRM systems such as Salesforce Sales Cloud and Microsoft Dynamics CRM Online can serve as the alternative to purpose-built master data hubs. For example, Salesforce’s Data.com solution for managing and cleaning customer data comes as an extra to its license options, while Microsoft Dynamics CRM Online and soon Dynamics 365 have some in-built tools for data cleansing such as auditing, data import and duplicate detection. 

Starting off with CRM-specific MDM

CRM is always a part of a larger, cross-application picture, the one where all customer-related workforce comes together to deliver unified, manageable customer experience at all touchpoints, throughout a customer journey (as we describe this cycle in this step-by-step overview). This requires a stable access to a single version of truth pulled from all available sources, with no customer detail being incorrect, missing or duplicated.

The logic behind customer MDM is to make CRM a master data source covering every customer data dimension: relationships with the brand, interrelations with other customers, behavior, sentiment, satisfaction, locations and more. Integration of CRM with other relevant applications (consumers of master data) such as ERP, PLM, billing systems, etc. is another required step in order to reach the overarching goal of automating data quality validation and maintenance.

Such CRM-centered approach is beneficial in other ways too. Its modest scale means only a limited circle of stakeholders is involved, which makes for a faster-paced project management. Then, it allows for easier measuring of intermediate and short-term results, while adoptability gets more transparent with fewer end users. Also, once you succeed with a small pilot within a larger enterprise, it will help to boost other employees’ morale and win executives’ approval for further MDM initiatives (e.g. sourcing product master data from your product lifecycle management system). Phase by phase, organization-wide MDM will be rolled out, covering one system at a time to encompass the entire vastness of corporate data in one intertwined, interoperable ‘datascape’.   

It’s closer than you think

The scope of an MDM project may first seem frustrating, but it doesn’t have to be. It does take thorough planning and active involvement of senior decision makers, but the multitude of positive returns such as more effective marketing campaigns, higher conversion rates and enhanced customer experience should serve as pretty compelling motivators in their own right.

Whether you go for a customized CRM system or a purpose-built customer master data hub, look for CRM consultants with interdisciplinary competencies in customer relationship and experience management, as well as business intelligence, data analytics and reporting specific to your industry. All in all, there is already a number of success stories and hard facts proving it feasible, so you shouldn’t be discouraged.