Do you really know your customers?

Even if you think you do know your customers, what do you do with that intelligence? Stuart Lauchlan looks at creating a single view of 'the truth'.

Do you know your customers? Yes? Ok, what do you know about them? Their names? Probably. Their age? Most likely. Their address? Presumably. But what do you really know about them? Do you know what they spend money on? Do you know what they don't spend money on? Do you know how they go about spending their money? Are they purposeful shoppers or aimless browsers? Are they 'big ticket' spenders or dyed-in-the-wool recession-istas? Do you know all that? 

If you do, what do you do with that information? Do you put it in a great big bucket – that data warehouse your IT department has spent so much money on over the past few years! - and leave it there? (The problem with the term 'warehouse' is that a warehouse is after all a place where you put stuff for storage!) Or do you turn it to practical use and enable your sales and marketing people to base commercial decisions on data gathered about what is happening in the real world?

How would the commercial decisions change if they were based on solid data, if marketing campaigns were based on real world analysis of customer behaviour rather than the gut instinct of the marketing director? Yes, there's room for gut feel and experience in marketing, but there's a lot more room for building in hard facts and figures on which to base solid, rational decisions.  If you could see customer activity- interactions with customer service, accounts payable, sales and marketing etc – in near real-time - how would that change the way your organisation sold its products and services?

The holy grail of CRM 

But customer intelligence is an elusive goal. The holy grail of CRM for decades has been to achieve the fabled 360 degree view of the customer. Customer intelligence is another version of that quest and one that's complicated by the most seemingly simple of factors such as inconsistent naming conventions. For example, is it John Smith, J. Smith, J. A. Smith, John A. Smith, Smith, J etc, etc. If such customer information is entered into multiple, non-integrated systems, there can easily be multiple versions of the same individual throughout your organisation. Bang goes your single view of the customer!

What is needed is a single view of the truth, not multiple replicated versions. Customer intelligence optimises CRM by providing the creation of a single view of a customer or data consolidation, customer analytics, integration across customer-facing systems. That in turn leads to the transformation of customer information into revenues. An effective customer intelligence strategy will begin with basic reference data – name, rank, location, etc. Then throw into the mix transactional data such as commercial information, customer activity and so on. Then you might add subjective and qualitative factors, such as customer satisfaction levels. 

Customer intelligence needs also to reach further than traditional CRM. Organisations have spent millions on customer data capture, storage and analytics, but this is based on actions which took place. But what about the actions that didn't take place? What about the customer who wandered into a shop and didn't buy anything? Why did they leave? Has anyone asked them? Is there any data on file to monitor, track and spot a negative trend that can be addressed?

It's important to establish objectives for a customer intelligence strategy. What do you want to know about your customers? There are the high level metrics of course, such as age, income, lifestyle, number of products purchased, level of spending, what the spending was on and so on. This will help to identify who the most valuable customers are. Not everyone spends the same amount and you want to hang onto the most lucrative. So you need to calculate customer value and target the customers who are the most valuable (based upon whatever metric you choose) in order to ensure their retention.

Key technologies

On that same subject, do you know how loyal – or disloyal – your customers are? Can you predict who's susceptible to churn before it's too late or do you only realise that once they've already gone? How happy are your customers? Use customer surveys to understand key customer expectations and pre-empt any problems. Where there are problems, how quickly and effectively can you respond to address them?  

Holding on to your existing customers is crucial, especially during an economic downturn where there is less consumer money to be spent and as such customers are taking more care over where they want to spend it? But organisations also need to acquire new customers. That means ensuring that your organisation is operating at maximum efficiency. Can you measure the length of your sales cycle, forecast demand in advance so as to meet customer expectations and guarantee optimised resource deployment? If not, what are you going to do about it? 

So where do you get all this intelligence from? The good news is that there are plenty of technological options to help; the bad news is that you need to work out which ones are most appropriate to your organisation and how to integrate them into a unified whole! Key technologies include:
 

• CRM applications – the most obvious starting point.  Applications from vendors such as Oracle, SAP, Salesforce.com, Sage and so on are a critical tool in gathering and managing customer intelligence. But remember, CRM is an enabling technology, not an end in itself. You can't buy 'good CRM' off the shelf.
• Business intelligence (BI) – As the name suggests, BI technologies enable organisations to pull together and analyse operational data about your business. Applying these technologies to the customer-facing, customer-touching aspects of your organisation is a logical move. There are independent BI firms, such as SAS and QlikView, while most of the major CRM applications vendors have acquired and integrated BI functionality into their portfolios, such as SAP with Business Objects and Oracle with Hyperion.
• Web analytics – with more and more business being done online, it's increasingly vital to be able to track customer activity on your corporate web site. What is the customer journey through the web site? Where do customers look? Where do they take action to convert their browsing into transactional activities? Web analytics technologies such as those from the likes of Omniture enable organisations to track and analyse how customers interact with web sites and use this information to optimise marketing and sales campaigns accordingly.
• Data warehousing – one of the more established technology options. The danger with data warehousing is that the temptation is to let them grow and grow and grow until they are unmanageable in terms of delivering up any useful information. At their most bloated, data warehouses are great for putting data in, lousy for getting it out.
• Speech analytics – When you phone a call centre and get the warning that the call may be recorded for training purposes, there are more useful things to do with that information. For example, use speech or phonetic analysis to track keywords and phrases and identify trends.
• Loyalty cards -  Store loyalty cards are a source of vital customer intelligence that goes beyond simple demographics. Who has the potential to be a truly loyal customer? Where is this person? When are they most receptive? Why do they think what they think? All that information for a few points on a card that might one day enable them to get a free tube of toothpaste! 

Other articles in this supplement:

• Seeing customers as individuals via intelligence and data
• Customer intelligence: The centrepiece of BI
• Do loyalty cards really work?
• Customer intelligence in action