CRM:
Providing A Unified View Of Your Customers
By Bipin
K Paracha and Anupama Bulusu, Integrhythm Inc.
The Problem
Consider a very common case that customer service centers in companies
often confront. A customer purchases an item from a company as a result of
a telephone marketing campaign and the item is shipped. The customer,
however, feels dissatisfied with the product and would like a replacement.
The marketing department sees this customer as someone to whom they
successfully sold a product. The order processing and shipping department
sees this customer as someone who should be satisfied because the order
was filled, shipped and delivered on time. The customer service department
sees a dissatisfied customer asking for a replacement, and a customer
service request that has not yet been resolved. If the three departments
have disparate systems with discrete data points, each department is
unaware of the other department's "snapshot" of the customer. In
such as case, a week after the first time it made the sale to this
customer, the marketing department may do some profiling, and find out
that in the past, customers who bought this product are also likely to buy
a service that the company offers. They call the customer with a new
promotion or offer, but the customer is unhappy with the company for
calling him with other offers when his complaint with the product he has
already purchased is pending. The company projects an image of chaos and
disorganization, and the customer does not receive satisfaction in his or
her dealings with the company. The company may potentially lose a customer
who could have proved to have a valuable lifetime value because of a lack
of judgment. Had the marketing department known that the customer had a
pending customer service request, they may have waited until it was
resolved satisfactorily and then tried to pitch the service to him or her,
thereby increasing the possibility of a successful reception to their
sales efforts. In this case, the fact that the marketing department did
not have data from the customer service department caused the sales effort
to fail, when better communication between the departments could have
prevented this.
The Solution
How can a company solve such problems? Frequently, departments within a
company need to "trade" data about customers, and not having the
capability to easily do so can seriously limit them in performing
efficiently. A unified view of customer relationships allows the company
to provide each customer with a consistent approach to his or her
problems, and the ability to offer solutions no matter which department in
the company is contacted by the customer and through which medium. This
increases cross-sell and upsell opportunities for the company and
increases organizational efficiency. It also helps the company with better
business intelligence possibilities, in terms of segmenting clients more
competently and recognizing trends and profiles more efficiently. Not only
does this allow the company to have a unified view of the customer, but it
also helps the customer perceive the company as a single entity as opposed
to an assortment of several departments. This increases the customer's
satisfaction with the company and the probability of a future
relationship.
Strategies
Companies have long realized that this organization-wide view of customer
relationships is necessary and lacking, and there are several industry
giants trying to solve this problem. Several strategies have been
proposed, but few have gained prominence or garnered respect as
authoritative solutions. What are leaders in the CRM industry doing about
this?
One solution may be to use a single system for all the applications. A
single application for all the systems in the office is not feasible, as
no single application can manage everything from human resources to
customer service management. Additionally, this solution does not leverage
investments in existing systems and applications. It is impractical to
throw away all the existing systems and launch a mammoth project to
replace all of them with a single system.
Logically, integrating the data in all these applications without
replacing the systems (or at least the ones that contain data essential to
provide a unified view of the customers) has emerged as a practical
solution to this problem.
So where can all the integrated data be stored? Can one application be
chosen as the "master" application and all other data merged
into it? Maybe'but this approach can lead to performance, scalability
and security issues and can cause huge maintenance problems. Is it a
better approach to create a common data repository where all data are
integrated? This would create a central storage area for the integrated
data in the entire enterprise, and performance and security issues can be
managed with more ease. Scalability would depend on how well the data
model for the repository is planned, designed and constructed.
Shortcomings
Some common questions that come up in discussions of a unified view of the
customer are:
- Can the data be integrated real time?
- Does there have to be a lag time?
- If there is a lag time, what is the freshness of data and how can
accuracy be ensured?
- What is the time needed for incremental loads?
- If data is integrated in real time, what happens to errant data?
In the last question, certain records may be rejected by the system due
to missing information or certain unsatisfied rules. In such cases, there
has to be a robust error-handling mechanism and a way to temporarily store
these rejected records so they can be rectified at a later stage. It is
also important to ask in a real-time system how the updates and inserts to
the system are handled and what the response times are to such requests.
The response times need to be in the order of microseconds. It may be
counter-productive if the end users must spend a lot of time waiting for
the records to be updated while entering data. What kind of middleware
solution is used by the system to perform the real-time integration
becomes important when answering this question.
In both cases, whether the data integration happens real-time or during
incremental loads at off-peak times, an important issue to be addressed
is: how are the records from various systems correlated and how is data
duplication avoided? Each system may have its own method of identifying a
customer, and correlating the records belonging to that particular
customer across all the applications may be a difficult and daunting task.
All the integrated data exists as discrete data in the individual
applications, so data are already duplicated. But if there are several
different versions of data regarding the same customer, then unifying the
data has produced negative results and compounded the problem instead of
resolving it! Therefore, within the integrated data, duplication needs to
be avoided.
How reliable will the software used to integrate the data be, not just
in terms of the expected or unexpected "down time," but also in
terms of the accuracy of data? How are scalability and security issues
addressed? If the solution is indeed long-term, it needs to be able to
handle increasing volumes of data per year and also needs to be able to
handle demands on functionality and efficiency. An internal study
conducted by the company to project reasonable data volume surges and its
relation to enterprise growth might be useful in making this decision. For
example, the software may boast 90 percent reliability, but if your
company deals with 10 million customer records a year, this translates to
one million inaccurate records. If the company projects that every year
its growth will cause the data volume to increase by one million records a
year, the problem is compounded.
Most companies wish to provide customer service for 12 hours or more
per day, and usually also provide service on the weekends. This raises an
important question: what will the hardware requirements be for a system
that is needed for 24/7 operations and what is the cost of implementation?
Most decisions are made with the bottom line in view. If it costs a lot to
implement the solution and then maintain and use it, and the reliability
is less than ideal, does it make sense for the company to still implement
it? Would it be better for the company to perform without a unified view
of the customer and hope to maintain profitability by dealing with
customers as best as they can? Time cost and scope accounting is very
valuable in the implementation of huge projects, and whether there is a
return on investment on such a capital outlay should be weighed when
making the decision.
There is very little doubt that a truly unified view of the customer
can have a lot of advantages to a company, and make contacts more
satisfactory for its customers. But achieving a truly unified view is a
complex and protracted problem. For the unified view to be accurate and
reliable, several things have to be in place. The data in the individual
applications need to be reliable. Business needs and strategies must be
clearly defined and mandated. Also, it is very important to find the
strategy/product that solves the company's individual requirements and
issues instead of tailoring the needs and issues as an excuse to buy the
leading product. Company executives need to have a realistic understanding
of the expenses and issues involved. End users need to be trained and
trained often.
The ultimate reward is that the company that achieves a completely
unified view of the customer can be a market leader in terms of quality of
service and organizational efficiency.
Bipin Paracha and Anupama Bulusu are senior
consultants at Integrhythm Inc.
Integrhythm provides consulting services for CRM implementation and
integration.
A Unified View:
The Holy Grail
By Andrew Shepard, Getronics
Capturing a 360-degree view of the customer is considered the Holy
Grail in banking. Today's financial institutions understand that future
business will come from nurturing and maximizing existing relationships.
Yet, while financial institutions have a huge amount of customer data,
this information is often segmented and stored within various divisions
that don't communicate. A host of software has been developed to capture a
unified customer view, yet institutions should spend more time determining
what they're looking for before the IT department gets involved in the
crusade.
Financial institutions lag behind many other industries in
understanding their customers. Ironically, they have more information at
their fingertips than any other industry -- they just don't maximize it.
When a customer applies for a mortgage, think about all of the valuable
data the bank captures: assets, debts, net worth, credit history. The bank
knows the make, model and age of the customer's car, the lien holder and
the monthly payment amount. It knows the customer's investments, and even
more important, potential investment-worthy assets. In short, the bank
knows almost everything about the customer from a financial perspective.
Why aren't financial institutions using these data to boost customer
satisfaction levels and anticipate customer needs to sell their full
portfolio of services, from insurance to brokerage and investment services
in addition to traditional banking services? The reasons are common: it's
expensive and time-consuming to figure out how to share information among
autonomous business units, and the financial world's culture can be
resistant to change. However, if managed properly, most financial
institutions are sitting on a treasure trove of underused data. Getting
answers to the right questions can help financial firms to achieve the
holy grail of a unified customer view.
1. Who is the customer, anyway?
The first step in maximizing customer data is to understand not only
who the customer is, but also whose customer it is. In the financial
arena, the customer might be the account holder, the head of the
household, the business executive or any number of stakeholders.
Determining whose customer it is gets more complex: If a customer has a
brokerage account with one bank division and a mortgage with another, who
owns that customer? It's an easy question to answer when the units operate
autonomously -- both divisions own the customer. But when data are shared
among the institution's different silos, political issues and competing
interests can get in the way. Imagine a loan officer advising a customer
to use money from his brokerage account as a down payment for his desired
car or yacht -- and imagine the brokerage manager's reaction when he finds
the account, and subsequent commissions, are reduced. Competing interests
are driven by the highly evolved realities of bottom-line commission.
That is the risk of having a unified view of the customer. Financial
institutions must avoid shortsighted gains to achieve long-term
profitability. In order to avoid tripping over each other, it's important
to insure that one person has accountability for the customer and can
manage the relationship to the benefit of both.
2. What do we want to know?
In the banking world, there is a big discrepancy on how much
information is needed to develop a customer profile - a 360-degree view
means different things to different people. It is all too easy to
overwhelm too many people with too much data. Before the IS team can
capture data, each department must determine exactly what it wants to know
about the customer.
For example, tellers achieve high levels of customer satisfaction by
making sure their lines move fast. They don't want to wade through
multiple screens of data about customers before they can find the
information they need to conduct a transaction. Some banks that tout a
higher level of customer service may want to provide tellers with
information that enables them to personalize the customer experience, such
as total loans, total deposits, attrition risk, market segmentation and
history with the institution.
Yet, capturing a full 360-degree view of the customer means going
beyond these basics. Data needed for a full customer profile includes
demographic information on income, family members and related business
accounts, contact history, competitive products the customer is using at
alternate institutions and information on debt and investment-worthy
assets.
The key to managing the varying levels of information is data
integration. Most financial institutions' data is separated into silos:
traditional banking areas like lending and cash management don't share
information with extended service areas like brokerage and insurance.
In addition to determining who has access to data, banks must decide
how often they will refresh it. Real-time information is ideal, but very
costly. Firms must balance the need for data quality and validity with the
cost of delivering it.
3) Can we share what we gather?
There are a lot of unsettled dynamics in terms of privacy of financial
data. The Financial Modernization Act of 1999 broke down the rules of
banking and enabled financial institutions to offer integrated banking,
insurance, brokerage and other financial services. The Act also required
all financial service providers to allow customers to opt-out of enabling
them to share data with external firms. However, pending legislation,
including the renewal of the Fair Crediting Reporting Act, has the
potential to change the rules.
Today, the rules are fairly flexible, as long as the customer hasn't
specifically informed the financial institution otherwise, it may share
customer data among its own divisions and with external firms. However,
it's wise to document and segment customer data so that if the rules
change, the institution is prepared. Capture data by division ' mortgage,
brokerage, banking, etc. -- and document where each piece originated. It's
acceptable to combine the pieces into one integrated database to share
among divisions, but make sure that should the rules change, you can pull
the pieces back out.
More to the point, it's a good time to start marketing the value of
integrated data-sharing to customers. Most countries use the opt-in
system, in which consumers must agree before financial institutions share
their data. The United States most likely won't move to an opt-in system
anytime soon, but it makes sense to start communicating the upside
benefits: the ability to develop and offer customized financial services
and help customers become more financially savvy.
4. How will we use the information?
Capturing customer data and making the information available to the
right people at the right time is just the first step. The driving force
behind capturing a unified view of the customer is to increase customers'
satisfaction with the financial institution and, therefore, increase their
profitability to the bank. In other words, if the customer has a good
relationship with the bank, it should make sure it understands and acts on
the value of that.
The goal is to use the captured data so the appropriate people within
the institution know the customer well enough to offer a logical and
tailored package of financial services that meet the customer's particular
needs. The bank must use the data to maintain customer satisfaction levels
and anticipate their needs. This will drive customer loyalty and,
therefore, continue to deliver ongoing revenue to the bank.
After all, those are the true benefits behind the promise of the
unified customer Holy Grail: customized, actionable services for clients,
and continued profitable relationships for the financial institution. It's
time to start the crusade!
Andrew Shepard is a consultant with Getronics Business Solutions &
Consulting. With an emphasis in financial services, he assists
Getronics' clients with addressing business issues through critical
analysis and practical recommendations. His areas of expertise within the
financial services arena include business process reengineering, strategic
planning and customer relationship management. Shepard has 12 years of
experience in the financial services industry.
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