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CX leaders desperate to overhaul outdated customer data strategies

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Current customer experience data programmes aren’t fit for purpose, with nearly three-quarters of brands looking to alter their CX data strategy due to changes in customer needs and inadequate infrastructure.

21st Nov 2022
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Customer experience leaders are desperate to improve their strategic use of customer data, with many CX data programmes not fit for purpose, according to new research. 

The survey conducted by Harvard Business Review, unearthed a huge disconnect between what companies consider important uses of customer data, and what they are actually capable of doing with that data.

Whilst the vast majority of those surveyed understood the importance and benefits of customer data, most agreed that their existing programmes were not up to scratch – with 71% of brands looking to alter their CX data strategies.

Virtually all (99%) of respondents admitted that to remain competitive in their industry, it is very important or extremely important that their organisation integrates customer data into their business processes. However, only 2% say they do this extremely successfully, and only 17% do this very successfully.

Graph showing disparity between goals and capabilties

Moreover, the vast majority (94%) of respondents say being able to quickly adapt the customer experience strategy based on up-to-date customer activity is important for organisations like theirs, but just 42% are able to do this today.

So how can CX departments better align their capabilities with their goals, and start making the most of their customer data?

Data, data everywhere

Organisations are currently operating in a data-rich environment, and are struggling to deal with the sheer volume of customer information that they are receiving.

As customers hop between channels, they expect companies to know them anywhere and provide what they want instantly. To meet the demands of this new era, companies understand their data must be agile and scalable, and see integrating customer data into business processes as vital in achieving this.

However, the existing infrastructure is not providing the capabilities that are necessary to compete and succeed.

The pandemic, and subsequent digitisation that organisations went through in order to operate in this new environment, was undoubtedly the major cause for this influx of data. And this is not the only concern for data-rich organisations – to paraphrase Spiderman’s uncle: with great data comes great responsibility.

Customers today are far more conscious and savvy about data privacy – expecting full transparency around data collection and sharing.

The combination of the pandemic and, more recently, the cost-of-living crisis has also resulted in heightened customer service/experience expectations. With people having to make do with considerably less disposable income, they are understandably looking for as much bang for their buck as possible.

What’s going wrong

In attempting to outline precisely what is preventing current CX customer data infrastructure and strategies from processing and utilising customer data effectively, the survey revealed two clear stumbling blocks: silos and a limited ability to collaborate.

The former of these issues is an all too familiar face. Silos are generally considered to be the biggest challenge standing in the way of generating business outcomes when it comes to data.

This suggestion is supported by the survey findings, which saw almost four in 10 respondents (39%) citing data silos within business functions or channels as being their largest obstacle to generating business outcomes from their customer data.

Silos and poor collaboration are the major stumbling blocks to utilising customer data.

Perhaps somewhat surprisingly, the inability to collaborate was only marginally below silos (38%), with those surveyed outlining limited alignment and collaboration across departments as extremely detrimental to their capacity to meet customer data goals and processes.

However, on closer inspection, this makes a great deal of sense. When dealing with masses of information, being able to accurately and efficiently designate who is responsible for disseminating specific aspects of the customer data is crucial.

Organisations with subpar data sharing and collaboration systems in place will never be able to fully capitalise on their customer data banks – a point that organisations, again, seem well aware of, with 67% of companies stating that they are changing the way they store/structure customer data to improve their CX capabilities.

Unleashing your data’s potential

The report is quite forthright in how it believes organisations can resolve these customer data issues, highlighting data amalgamation as one of the key elements of a successful strategy.

To achieve this, the report recommends the incorporation of centralised data models, which would allow information to be collected in one place so it can be easily shared and used by people throughout the organisation.

This ease of access is key, argues Ari Lightman, professor of digital media and marketing at Carnegie Mellon University in Pittsburgh: “A centralised data model is critical – it provides greater efficiencies, less risk, and greater levels of normalisation. Without a centralised data model, companies are unable to capture the demand and constant changes in customer needs.”

‘A centralised data model is critical – it provides greater efficiencies, less risk, and greater levels of normalisation.’

Whilst efficient and accessible data storage is obviously beneficial, it is important to remember that the key goal here is to transfer this data into improving customer experiences.

As Liz Miller, vice president and principal analyst at Constellation Research, puts it:“Having a standardised customer data model for storage is very different than having a unified data model in the service of engagement. We get into a really big world of hurt if we don’t have specificity around the language of where the data and the model is going to be applied.”

The virtues of centralising your organisation’s data are also supported by the respondents, with 37% stating that they are in the process of introducing a centralised data model, and 29% saying that they are planning to implement one.

Pie chart of organisations' intentions to introduce centralised data models

Of course, incorporating new technology systems is not cheap. Yet, in spite of the current financial uncertainty, all indicators are suggesting that CX will see increased spending next year, with one report claiming that 82% of CX leaders believe their budgets will rise in the next 12 months.

Moreover, the Harvard Business Review survey suggests that the customer data sector will see the lion’s share of that investment, with 60% believing that their organisations will increase spending in that sector in the next 12-18 months.

It is important to note, that this question was put to respondents prior to being asked any further questions relating to customer data, so as not to bias the replies. 

Conclusion

Customer expectations are going to continue to rise, and one of the key ways that organisations can satisfy these expectations is by leveraging the increased amount of data they are receiving in an agile, flexible and accessible manner.

With organisations finally beginning to pay more than lip service to the importance of CX, and actually starting to put their money where their mouth is, it is vital that customer experience departments utilise any budget increases wisely.

While the benefits of centralised data models are undeniable, it is essential that CX professionals do not become over-reliant on the technology and forget that its main purpose is to assist in providing more personalised experiences – the machine can’t do that job for you.  

 

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