Introduction

One of the main challenges in implementing CRM projects is managing customer data. It is generally understood that to manage relationships with customers better, a business must start with a complete, accurate and appropriate view of the customer to establish and maintain a productive, relevant dialogue and relationship. Therefore, effectively managing and integrating the broad range of customer data for use in CRM is fundamental to project success. Yet, according to recent research detailing why CRM projects fail, the main reason is that the customer data is ignored. ^[1] To realize the potential of CRM fully, companies have implemented database marketing programmes over the past five years using data-trained graduate-level students. The leadership for CRM investment and installation seems to come from the IT function in corporations, despite marketing's early calls for databases with relevant customer behaviour data. Marketing managers now occupy the uncomfortable position of being most visible when the CRM systems are most likely to fail.

There are other issues that demonstrate the importance of how an organization develops and manages its customer information assets. The US Securities and Exchange Commission (SEC), for example, now asks organizations to report on 'intangibles', such as acquisition and retention rates, or the overall value of a customer base. Such reporting is impossible without a thorough understanding of an organization's customer information. The practice of reporting on customer data assets is at an early stage, but one leading organization has already done so. When the financial analyst community begins to demand such reporting in a regular and consistent manner, the chief financial officer and the chief executive officer will be demanding the relevant outputs from the customer data warehouse.

In addition to the SEC reporting changes, there are also compliance requirements with federal and state privacy legislation. Issues of security, privacy and trust are growing in importance, particularly with the prevalence of Internet usage. 'Companies that will succeed over the next decade will be those capable not only of understanding their best customers, but nurturing those relationships and providing those customers with the comfort that their data will be used with integrity. This can only be achieved by taking a holistic approach to the processes and procedures for good data management.' ^[2]

One other critical customer data management issue emerging as significant revolves around an organization's ability to recognize its customers accurately so as to leverage the appropriate customer view for both analytical and operational purposes. The ability to recognize best customers and segment customer households to optimize retention and growth strategies requires an organization to start with accurate recognition of each individual. Then the organization must understand how those individuals make up each household across each product line in the organization.

The ability to recognize customers accurately enables companies to avoid the data fragmentation problem and accurately understand behaviour, profile and risk views of each customer household. This accurate view leads to analytics that are based on full information. This enables the most relevant and timely offers for cross-sell, up-sell, retention and touch-point management to occur, and each customer interaction to be tailored for maximum effectiveness. Business measurements are more accurate and robust based on this foundation, and broad-based decision making across many areas of the organization is improved through better, more meaningful information.

According to the Gartner Group, customer recognition is defined as:

the ability to accurately recognize customers based on identifying information, and to synchronize all internal customer keys and pointers on a continuous basis. Customer recognition includes data models, real-time recognition components, high-volume batch processing components and associated interfaces. Its benefits include: first, providing a pre-built infrastructure for continuous synchronization of internal customer keys and pointers and second, enabling instant customer recognition and consolidation of disparate customer information. ^[3]

The challenge facing many organizations today is the inability to recognize the customer. Inaccurate recognition of customers, because of poor data quality, completeness and accessibility, causes a ripple effect across an organization that degrades business performance and, if used for customer contact, undermines customer confidence in the value of the relationship with the corporation (see Figure 13.1). Given the increasing volumes of data across multiple systems, lines of business and channels, even small levels of data fragmentation can create significant downstream customer management performance problems. QCi CMAT assessments show that the reasons the management and use of customer information seem fraught with difficulty include:

• Limited control over too many legacy systems and an inability to pull together a single view of the customer.

• An inability to justify the ROI from data quality assessment and improvement projects, since payback is not easily quantifiable, particularly in its impact on revenue and profitability.

• The failure to deliver CRM improvements to specification during the previous year.

• A lack of agreement among the marketing, sales and customer service teams on a common approach to CRM, so improvement is tactical rather than strategic.

• A lack of access to the internal skill sets needed to improve CRM implementation.

Figure 13.1: The Ripple Effect of Poor Customer Recognition

Given the benefits of best practice customer management, the push by the SEC to report on intangible assets - including customer-related information, increasing federal and state legislation concerning privacy, and the costs associated with poor management of customer data - an enterprise customer information plan has now become a strategic imperative for US corporations.