How to Create a Culture of Customer Centricity

Transcription

1 Solutions for Enabling Lifetime Customer Relationships Forging a Culture of Customer Centricity Using an Alternative Approach to Master Data Management W HITE PAPER: MASTER DATA MANAGEMENT

2 WHITE PAPER: MASTER DATA MANAGEMENT Forging a Culture of Customer Centricity Using an Alternative Approach to Master Data Management 2 ABSTRACT THE BUSINESS VALUE OF CUSTOMER CENTRICITY OVER THE PAST TWENTY YEARS, KEY BUSINESS STAKEHOLDERS HAVE BEEN CONDITIONED TO BELIEVE THAT TECHNICAL CUSTOMER DATA MANAGEMENT SOLUTIONS ARE EQUATED WITH THE CREATION OF VALUE, AND THAT A DATABASE PROVIDING A 360-DEGREE VIEW OF THE CUSTOMER IS ALL ONE NEEDS TO ENABLE CUSTOMER CENTRICITY. YET TIME AND AGAIN, THE APPARENT SIMPLICITY OF THE CONCEPT IS UNDERMINED BY THE COMPLEXITY OF BOTH THE IMPLEMENTATION AND THE PRACTICES DESIGNED AROUND THAT PRESUMED GOLDEN CUSTOMER DATA REPOSITORY. THEREFORE, IT IS WORTH TAKING A STEP BACK TO CONSIDER PRACTICAL MEASURES FOR THE VALUE A BUSINESS CAN ACHIEVE THROUGH A CULTURE OF CUSTOMER CENTRICITY, AND HOW THAT CULTURE CAN BE ENERGIZED THROUGH A STRATEGY COMBINING GOOD DATA MANAGEMENT PRACTICES WITH GOOD BUSINESS PROCESSES. IN TURN, IN OUR INCREASINGLY-CONNECTED WORLD, ORGANIZATIONS WILL BE ABLE TO BROADEN THEIR PERCEPTION OF THE VALUE OF THE MANY DIFFERENT WAYS THAT THE CORPORATION INTERACTS WITH EACH INDIVIDUAL CUSTOMER. THAT VALUE CAN BE BASED ON MORE THAN JUST THE DESIRE TO UP-SELL OR CROSS-SELL MORE PRODUCTS. RATHER, THAT VALUE IS MANAGING THE DIFFERENT ASPECTS OF THE CUSTOMER EXPERIENCE IN CONCERT WITH OPTIMIZING BUSINESS ACTIVITIES TO INCREASE PROFITABILITY THROUGH A COMBINATION OF INCREASED REVENUES, DECREASED COSTS, AND MAXIMIZED CUSTOMER LIFETIME VALUE. AND CREATING THAT VALUE IS A COMBINATION OF STREAMLINED BUSINESS PROCESSES THAT ARE INFORMED WITH HIGH QUALITY INFORMATION ABOUT THE COMMUNITY OF CUSTOMERS.

3 THE CUSTOMER S PERSPECTIVE IS ASSESSED IN TERMS OF THE OVERALL EXPERIENCE WITH THE BUSINESS OVER THE LIFETIME OF THE RELATIONSHIP. The Customer Centricity End-State Properly scoping the technology and information needs for the culture of customer centricity means understanding how the business processes are optimized when the people involved have access to the right customer information. We propose that there are two perspectives to value: the customer s perspective and the business s perspective. The customer s perspective is assessed in terms of the overall experience with the business over the lifetime of the relationship. Some example value metrics might measure the customer s satisfaction with the quality of the product, whether the prices are appropriate, the level of service, the amount of time invested, or the warranty on purchased products or services. The business s perspective is based on providing the highest quality product at the most appropriate price in a way that maintains and elongates the customer s duration of active engagement, and might be reflected in terms of the length of the customer s lifetime ( stickiness ), the number of complaints, the number of customer references and degree of influence the customer exerts over other prospects and customers ( virality and influence ). This means that from either perspective, there are a number of measured metrics and a desired optimal measure for each of those metrics. In turn, the business will need to have the right information available for any of the business processes and channels through which customers are engaged and in which any of the parties (both the business representatives and the customers) are prompted to make a decision. And it should be noted that the channels for customer interaction can change depending on different factors, some of which are relatively unchanging (such as age), while others are dependent on ever-changing context, such as the customer s location, the current method of engagement (phone vs. web. vs. in person), and even what the customer is doing at the time of engagement. Therefore, providing the right information in each scenario will drive the best decisions: ones that lead to the best value for both the customer and the business. The Information Foundation for the Customer View But what is the right information? Certainly, there is a need for all business processes to be informed with information about who your customers are their names, locations, and contact mechanisms. Yet despite the oft-heard mantra of a need for a 360-degree view of the customer that relies on a single source of truth, having a data strategy that supports customer centricity requires more than just a single data repository storing a snapshot of your customers most upto-date data attributes. This forms the context for scoping a customer master data strategy that truly enables visibility into a unified view of all aspects of the customer relationship, including: Customer demographics, encompassing what is traditionally captured in a customer master repository, such as name, address, telephone number, and other identifying or inherent characteristic attributes. Customer profiles, which enhance the demographic information with analytical results. Analyses that are performed for customer classification and segmentation provide information for differentiation, especially within business process patterns. A customer-centric business would benefit from having access to a unified view of this data. Customer-product relationships, which can be used to explore patterns of product purchasing affinities that can help in enhancing the customer profiles. 3

4 WHITE PAPER: MASTER DATA MANAGEMENT Forging a Culture of Customer Centricity Using an Alternative Approach to Master Data Management 4 Customer-customer relationships, which show how individual customers are connected with each other; whether they share a household, a familial relationship, some previous associations and shared affiliations, live in the same location. All of this information is valuable for analyses whose results can inform business processes and customer-facing functions. Hierarchies and affiliations, which organize the relationships between customers and products, or among customers. These affiliations and organizations shed light on connections that can provide channels for viral communication and help key customers influence their related communities of shared interests. Integrated analytics, in which analytical programs funnel insights directly to the front line applications. It is at these articulation points of customer contact (such as enrollment, updates, Point-of-Sale, direct interaction via a web site, customer service portals, etc.) where the decision-making process can be improved. Transparent information access, such as mobile apps, which enables a variety of customer-facing applications to both contribute and read a consistent view of shared customer data. Incorporating these aspects into your business processes help in delivering the right value to the customer along all avenues of expectation, allows you to react to customer issues in a timely and effective manner, and incentivizes decisions that maximize customer lifetime value. Information Drives Mastering Customer Awareness The need to seamlessly incorporate customer information across transactional, operational, and analytical applications suggests against the traditional repository approach to master customer data, namely building what is essentially a siloed view of customer data isolated from the relationships that are inherent in the way you do business. Instead, the value is created and improved when the master data strategy establishes a foundation for customer information awareness.

5 WE PROPOSE FIVE LEVELS OF CUSTOMER DATA MANAGEMENT MATURITY THROUGH WHICH AN ORGANIZATION CAN EVOLVE CUSTOMER AWARENESS TO ENABLE ENTERPRISE-WIDE CUSTOMER CENTRICITY. This awareness builds upon some fundamental capabilities: Unique identification: Determining the key distinguishing characteristics associated with each customer that enable you to uniquely identify each customer, differentiate records associated with different customers, yet link different records that refer to the same individual; Data quality: Defining dimensions of quality for data (such as accuracy, currency, or completeness), measuring these dimensions, and maintaining high usability for the data associated with each customer; Accessibility: Once an individual can be uniquely identified, ensuring access to all the data instances associated with each customer across the different enterprise data assets; Mapping relationships: This includes the ability to understand the relationships among customers, as well as relationships between customers and other entities, such as products, location, social circles, and other relationship hierarchies that can provide insight into opportunities for improving the customer experience; Managing classification and hierarchies: Customers can be organized into different segments, products can be classified within different categories, and effective management of these classes and hierarchies is critical to customer awareness; Analysis: Analytical applications to deliver insight drawn from the collection and aggregation of information; and Knowledge delivery: Facilitating multi-way interaction across different channels to drive the right messages in the right context to the appropriate decision-maker. Most repository-based MDM solutions focus solely on some of these capabilities, such as unique identification and data quality. They are designed around data consolidation extracting data from different sources into a single dedicated database. While these applications can satisfy the desire for collecting customer data, these approaches are somewhat limited in providing customer insight. They can tell you who the individual is, but you will need a more mature integrated framework to tell you not only the value each customer brings, but also the value that customer s larger network brings to the business. Managing Change with Master Customer Data: Capability and Maturity This integrated framework depends on an evolving maturity that blends technical proficiency with increasing levels of process maturity. We propose that there are five levels of customer data management maturity through which an organization can evolve customer awareness to enable enterprise-wide business process support for customer centricity: Level 1. Initial: Most organizations begin at this starting point, in which there is little realization of the value of a focus on customer data; business processes employ customer data solely to execute and complete transactions. The result is degradation in the ability to provide satisfactory customer experiences, and customer issues are dealt with in a reactive manner, with no or limited repeatable processes. Level 2. Aware: As the desire to create and improve customer-based value evolves, key stakeholders in the organization become aware of the existence of customer data that is unsynchronized across different business application data subsystems. Approaches are considered for evaluating how accessibility to customer data across applications can enhance the customer experience, and there may be initial attempts at creating an analytical customer database (with periodic refreshes) for shared use. 5

6 WHITE PAPER: MASTER DATA MANAGEMENT Forging a Culture of Customer Centricity Using an Alternative Approach to Master Data Management 6 Level 3. Defined: The appetite for more comprehensive integration of customer data for both analysis and operational environments will drive activities for assessing business process dependency on customer data and documenting where the business processes use customer data, outward-facing applications and channels that use customer data, and how customer data centricity can enhance each business activity to improve corporate value. Level 4. Organized: At this level of maturity, master customer reference data, relationships, and hierarchies are used in developing master data models, methods for data integration, methods for linking data concepts in various relationships and enabling access to both analytical and operational applications for direct integration into business activities. Approaches are introduced for analyzing customer classifications and segmentation, with the idea that processes will be adapted based on customer segments and centricity. Level 5. Optimized: This highest level of maturity is demonstrated when business processes have been redefined to focus on the use of the comprehensive view of customer characteristics, associations with products and services, and sphere of influence within the customer and prospect communities to improve revenue generation, decrease costs, and provide the level of customer care and service deemed appropriate to each customer by customer segment. At this level, there is complete integration among key master data concepts: customer, product, suppliers, and the results of customer data analytics inform all decision points for any customer-facing activity. Considerations: Master Data Management Alternatives The two biggest challenges of the standard approaches to master data management are: 1) They foster a focus on consolidating data for a single domain at a time, and 2) They are not engineered with the consumption of customer data as part of renovated and improved business processes. Much of the existing MDM literature (and success stories) highlight the methods by which customer data has been extracted from various sources and dumped into a customer data hub. And while these solutions purport to provide a single source of truth, the process of consolidation followed by applying survivorship rules may strip much of the interesting (and often critical) pieces of data about the customer that could be used to inform the business processes and enhance the customer relationship. Yet these approaches may be found lacking when the business context demands broad accessibility to customer histories without the imposition of business rules that may have relative importance in different environments. Imposed business rule for survivorship may constrain provision of optimal customer service, so seek out MDM approaches that provide high quality customer data, enable access to the breadth of information that the business consumer deems relevant to success, and inform the business consumer s decision-making processes in a variety of scenarios.

7 HELP YOUR TECHNOLOGIST PROVIDE USABLE MASTER CUSTOMER DATA THAT IS TIGHTLY INTEGRATED WITH IMPROVED BUSINESS PROCESSES TO ENABLE THE TRANSITION TO A CORPORATE CULTURE THAT IS DRIVEN BY CUSTOMER CENTRICITY. That being said, there are still some prerequisites for any MDM solution before it can add value to the business, and when evaluating MDM alternatives, look for solutions that satisfy these criteria and provide these fundamental capabilities: 7 Unique identification that supports a single entry point for customer data visibility; Integration with techniques and methods for ensuring the best data quality; Accessibility that ensures that all data instances associated with an identified customer can be easily provisioned to the business data consumer; Master metadata and reference data management that helps standardize definitions, structures, and semantics; Visibility along hierarchies, classifications, and relationships that provide the valuable insights; Integrated analytics and knowledge delivery within operational processes to inform the business users at the right places; and High performance so that actionable knowledge is provided within a timely window of opportunity. These capabilities help your technologist provide usable master customer data that is tightly integrated with improved business processes to enable the transition to a corporate culture that is driven by customer centricity.

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