How to build stronger customer relationships with BIby
Business intelligence can provide greater customer insights and generate sales in a more cost-efficient way. But how do you effectively collect and harness this information to deliver real business value? Chris Colvin offers five key steps.
Customers can make or break a business, especially in today’s tumultuous economic times. They provide the main source of revenue. So, customer relationship management becomes the key to lowered customer acquisition costs and improved retention. It also drives increased profitability as loyal customers increase their spending. As such, most enterprises go to great lengths to acquire and retain their customers.
Taking control of their customer data enables organisations to grow or sustain their business. Knowledge about customers is critical to these relationships. Gaining insight requires complete awareness of every interaction between a customer and the organisation, enabling those who engage to maximise the customer experience and fully meet their needs.
Information from all aspects of each interaction needs to be centralised, organised and presented to appropriate staff with customer contact. It needs to be done in a timely manner and in a format that allows them to act effectively on a customer strategy. A business intelligence (BI) platform can consolidate data into one place, provide greater insights and allow the company to harness that information to generate sales in a more cost-efficient manner.
The complete customer picture
As organisations grow, their IT systems evolve to support business critical processes. These systems could be from different vendors and implemented by different teams. And the customer concept may not always be implemented using the same logic. To effectively manage customer interactions, data from each system that supports customer ‘touch’ needs to be consolidated with a common reference. Creating a master customer index – one that maps the customer identifier from order entry, customer service and billing – needs to be common to relate the records from the disparate systems. This provides a complete picture for customer interactions.
However, most organisations today are unable to collect and harness the information they have to deliver real business value. Customer interactions are recorded and captured within disparate systems that span several departments and may not be integrated together. As a result, these solutions are limited in the benefits they offer to the organisation. It leaves companies with multiple records of the same customer and little insight into their purchasing patterns or preferences. Without a centralised repository of customer information, employees cannot interact with customers in a truly meaningful way.
For example, a customer could call one department about a shipment that has not been received and discuss the delay in payment. Meanwhile, the collections department is calling the customer looking for the payment. Throughout this process, frontline staff do not have access to customer history and treat the issue as a first incident. This upsets the customer and can escalate into a negative situation. Lack of communication between departments and systems can jeopardise the existing relationship. If the collections department had access to the history of all interactions with that particular customer, they could have offered a specialised treatment based on that history. This could curb a potentially negative experience that could lose a customer.
With an integrated approach, organisations can use BI tools to leverage customer data to improve relationships. It also can use alerting and scorecard measuring to track performance based on sales targets. This can give them the insight they need to make profitable decisions. In the previous example, the call centre would know the customer’s history and interact appropriately based upon their purchase history and loyalty. By investigating the delay of shipment and tagging the account, the call centre is proactively resolving the issue to expedite payment, which helps the organisation and the customer. Accounts receivable will not call because the integrated system indicates the deficient payment is being resolved.
With business intelligence, companies can also take advantage of effective functionalities, such as market basket analysis. This uses data to improve market awareness to gain better customer and market insight. For example, an online banking website can use data to create a specialised profile of a particular customer in order to determine interest in any additional services. Using a combination of business intelligence and customer relationship management, the data provides a clearer understanding of customers’ preferences and purchasing trends. The company can then use this data to predict future trends and gain market insight. The question is how do organisations get started? Below are a few steps that businesses should consider:
- 1. Identify the maturity level of the organisations
In order to create an effective strategy and achieve greater customer intimacy, the organisation needs to begin with basic data on customer demographics and sales history. The organisation needs foundational information about the customer such as age, occupation and geographical locations. This type of information enables a profile to be created to compare customers. Sales history can then provide trend information about a progression of purchases that can help predict purchases for like customers. As the organisation’s information about the customer deepens and expands, customer insight follows.
- 2. Compile historical data on all customer interactions
This information helps establish a history for each client for future referral. Organisations can evaluate customer attributes, their purchase history and how much it costs to serve them. This helps determine a customer’s profitability and shows who generates the most revenue. Since acquiring customers requires additional marketing efforts, it is more efficient to expand the services your current customers are using. This increases revenue while reducing the average cost to serve each customer - for example, providing banking customers with large balances. The ability to move extra money into higher interest bearing accounts automatically generates revenue for the bank and delivers a higher return on the customer’s balance while still providing cash liquidity.
- 3. Adopt the right technologies for your business
The technology behind a customer strategy is what enables the organisation to manage end-to-end customer interactions, provide information of all transactions to relevant organisation members and monitor strategy execution to ensure targets are met. Without these three components, the organisation is at risk of losing its competitive edge with customers.
- 4. Start small, but think big
While it’s necessary to have a long-term strategy for integration, there is no need to implement the new system all at once. Begin with setting an organisation’s goal for the next two years, and then try to structure the project in such a way to deliver the first phase of the plan in three months or less. Along the way, ensure that every activity, no matter how small, is focused on the long-term goals.
- 5. Evaluate the effectiveness
Once a strategy is in place, data from areas such as campaigns, purchasing, sales, shipping and accounts needs to be collected to evaluate the strategy’s effectiveness. The compiled data helps to lay out a holistic picture of all interactions with each customer. Using business intelligence, the data can then be compared to previously established key performance indicators (KPIs). These KPIs will help determine if a target is being met, what business processes are hindering strategy execution and/or behavioral changes in customers. Once an issue has been identified, key organisation members can dive into the previously collected data to determine the root cause and take corrective action.
By integrating disparate systems, organisations can reap valuable benefits, regardless of the economic climate. With business intelligence, organisations can improve and expand existing relationships and improve customer service using historical information on all previous customer interactions. Positive experiences lead to loyal customers – a key tenet for the success of any business.
Chris Colvin is business solutions architect at Avanade.