Jan. 23 2013 12:00 AM

Prescriptions for common customer intelligence maladies

Customer intelligence is one of those bandied about terms that benefits from general marketplace acceptance. Sure, it's an important capability for companies to cultivate, but few organizations truly excel at making it central to their business and a driver of competitive advantage. Why? Are they capturing the right data? Can they easily derive insight from their data? Are they struggling to turn that insight into action? From my experience, I see a number of companies that struggle with all of these questions. However, there are remedies for these customer insight maladies.

Remedy #1: Clear Definition and Alignment
Customer intelligence (CI) refers to the process of capturing and analyzing customer data to uncover opportunities for improving business results. It's important, however, that organizations approach CI through a lens that is consistent with their core competitive positioning. For instance, if the organization competes as a low-cost provider, the focus for CI should be how to further improve marketing, service or operational and product efficiencies to reduce costs. Any misalignment will impede adoption of CI within the organization and, ultimately, lead to failure. So, it's critical that all customer intelligence efforts, first and foremost, align to overall corporate strategies.

Remedy #2: Understanding the Value
Customer intelligence helps organizations answer the following key questions:

  • Who are my customers, and what value do they represent to my organization both now and in the future?
  • What common and distinct needs do they have?
  • How can we meet these needs through products, services and interactions?

By answering these questions, organizations can better prioritize their resources to maximize program ROI. I've seen consistent two times to three times lift in marketing performance when companies better segment and target customers with specific offers, products and services. How? You are more likely to elicit a desired response when targeting customers and prospects that are more prone to responding to the specific promotion. In addition, when applied right, customer intelligence can serve as the basis for building relationships with key customers at scale. The more you capture and leverage data for and about your customers, the easier it should be for them to do business with you.

Remedy #3: Capturing the Right Data
With the proliferation of interactive technology and a significant decrease in the costs of storage, many companies have become data hoarders. This does not mean, however, that they are capturing the right data; all too often, they are collecting more than they need. To streamline data collection while ensuring comprehensiveness, you need to evaluate your data against six key categories:

  1. Customer Identification Attributes (UniqueID, Name, Address, etc.)
  2. Customer Profile Attributes (Demographic/Firmographic, Preferences, etc.)
  3. Interaction Attributes (Type, Number, Response, etc.)
  4. Transaction Attributes (Number and Type, Revenue, RFM, Competitive Spend, etc.)
  5. Financial Attributes (Product Gross Margins, Marketing and Sales Costs, Service Costs, etc.)
  6. Value Attributes (Historical Value, Expected Future Value, Potential Value, etc.)

With these six categories, organizations can answer the key questions about their most valuable customers: what their needs are and how best to meet those needs through products, services and interactions. Additionally, best practices dictate that you should not capture customer data unless you have a definitive plan to use it, and make sure that the benefits of capturing customer data are clear to both your organization and your customers.

Remedy # 4: How to Avoid Analysis Paralysis
The good news is that customer intelligence professionals have more data than ever at their disposal. The bad news is that they have more data than ever at their disposal. Without a clear objective or focus on the root question that is to be answered, these professionals, all too often, find themselves trying to unearth the proverbial needle in their data haystack.

Rather than approaching key business problems and questions with an open-ended approach, it is best to borrow from science and to start with a hypothesis. The process begins with clearly defining the question or problem you are trying to solve. From there, a number of hypotheses can be generated to determine root cause and identify the data sets and associated analyses required to validate or refute the hypotheses. For validated hypotheses, the next step is to understand the implications of the findings and brainstorm solutions to address the problem.

If none of the hypotheses are validated, then it's back to brainstorming and a repeat of the cycle. This structured and cyclical approach ensures that you are focused on addressing the key business challenges and solutions are grounded in rigorous data analyses. This approach allows for the delivery of results much more quickly than an open-ended one, ensuring that you don't get stuck in the analysis paralysis cycle.

Remedy # 5: Turning Customer Intelligence into Programs
Too often, great customer insights fall by the wayside because they are not fully translated into business implications and impact. Without that translation, it's impossible to gain buy-in from the rest of the organization and act upon the insight to capture the underlying value. So, when new insights are derived, customer intelligence professionals need to ask the all-important question: So what? What does this mean to our business? What is the potential impact both internally and to my customers? To answer these questions, customer intelligence professionals often need to identify an internal business partner/champion who can assist with the translation. Without that partnership, the great insights are likely to languish without any action or application, eliminating their usefulness to the organization.

Remedy # 6: Darwinian Approach Instead of a Big Bang
After deriving insights and identifying the "so what," you are likely to be left with a number of potential programs with which to move forward. These program opportunities undoubtedly will have varying degrees of potential impact and levels of implementation complexity. Tackling them all at once is a recipe for failure. Rather, it's best to take a more measured and strategic approach. The potential opportunities should be prioritized based on customer and business impact as well as feasibility for implementation. You want to focus on program opportunities that will deliver the biggest bang for the buck and have the least path of resistance to getting implemented. Also, you want to identify quick wins that can demonstrate the value of customer intelligence in action without significant change or resource investment. Once you are able to prove the effectiveness of customer intelligence-informed programs, you are more likely to gain additional organizational buy-in, support and resources for additional investments.

Moving Forward
Building out a core competency in customer intelligence is not a simple and straightforward exercise. Even less straightforward is building in the process and capabilities to turn that insight into action. There are quite a few points along the way where organizations can get off track.

Oftentimes, customer intelligence professionals may open themselves up to questions about the value of their work. So, it's critical to maintain a focus on how customer intelligence can and does impact an organization's bottom line and to constantly communicate this up, down and throughout the organization. Additionally, it's important to take stock of where you are in the process (i.e., areas that might be struggling). If you are suffering from any of these common customer intelligence maladies, start implementing these remedies to get your organization back on track.


JOHN STRABLEY is the senior manager of strategy and analytics for Quaero. His consulting clients include ESPN, Verizon, Roche, USPS, Motorola, John Deere, Sotheby's, British Airways, SAP, AstraZeneca, Nielsen, Citrix, Wyeth and AARP. For more, email john.strabley@csgi.com.