Customer Intelligence - Still a Long Way to Go

Business methods and products both need to change before we can realize the full promise of CRM

Optimizing customer interaction gets its momentum from the customer understanding you gain in the first step, and its goal is to influence customer behavior. Companies need, but unfortunately do not have, insight into all customer interactions and have not understood the transitions that occur between the organizational and process barriers found in marketing, sales, or service systems.

These transitions are the glue that binds together the steps of the customer experience model. (See Figure 2.) The lack of systems to support this need have left companies with little understanding of the customer experience. These transitions are critical to providing consistency across customer touchpoints to ensure continuity of customer interactions and ensure a high-quality customer experience.

After you model these transitions, you have to use behavior models to generate customer segments upon which you can base personalized interactions at any step of the customer experience. The critical aspect of this step is to use analytics (specifically, predictive models) on a common view of the customer to generate rules and resulting recommendations for specific customers.

A good example of this strategy is Broadbase acquisition ServiceSoft, which let Broadbase augment its customer analytic software to enhance collaborative interaction with customers through electronic touchpoints. Broadbase's vision is to have a way for the operational systems to query the analytic system and dynamically create targeted customer content during those electronic interactions.

We need, but don't have, software that can help analyze customer interactions at every touchpoint, not just the electronic touchpoints, and that can measure and monitor the transitions in the customer experience model. Most vendors have not expanded their products to meet this requirement; they still need to move beyond just measuring the performance of organizational unit activities such as sales, marketing, or service. To fully optimize interactions with customers at every touchpoint, you have to use analytics to drive interactions with customers. A good example of this is Blue Martini Software Inc. and its Customer Interaction System, which uses analytics to systematically drive customer interactions. Analytic techniques like this are essential to realizing the value of CRM systems.

Leveraging customers as assets means building profitable relationships that align revenue goals with correct levels of customer satisfaction and ensure sustainable relationships. This activity allows a company to be proactive instead of reactive in how it acquires and retains customers, by developing strategies that align organizational resources and business processes to specific customer objectives.

You need to do three things to leverage customers as assets, to realize customer profitability as the ultimate result of your CRM project:

First, define a strategy with goals that link together the operational CRM and supply chain business units. You can do this by using or applying the concepts of balanced scorecard applications, which provide the structure for defining and monitoring strategy execution.

Second, integrate customer information as earlier described in the first two steps with financial, employee, and supply chain information to provide a common set of performance and cost metrics.

Third, develop pricing and revenue analytics that will help you understand variables and actions required to achieve customer profitability. Dynamic pricing systems are controversial, though the airline and hotel industries have been using them for years. These industries set the precedent, and dynamic pricing has let them align pricing with profitability models. New offerings from vendors like Talus Solutions and Zilliant have begun addressing this need for more industries; they optimize pricing models based on customer behavior and segmentation.

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Opportunity for Excellence

To realize the bottom-line promise of customer intelligence, companies need to understand how to use analytics as the backbone for developing or improving CRM strategies and processes that operate, optimize, and automate business operations across all channels of customer interaction. To manage customer-centric processes, companies must develop processes that break cultural and business barriers to ensure that organizational resources are aligned properly to leverage investments made in CRM. To be successful, corporations must develop strategies and models to achieve customer profitability and focus organizational resources and processes to meet company goals. To start, a company must model existing performance of the entire customer experience and apply analytics at each step and transition point of customer interaction.

Mark Allen Smith (mark.smith@fullcirclestrategies.com) is principal and founder of Full Circle Strategies and an expert in the applied use of information and analytics in the areas of business intelligence, portals, and analytic applications.