Customer Information Strategies: Delivering Value From Customer Information Erin Kinikin Vice President, Research Director Forrester Research

Spending on Customer Information is Increasing Source: The State Of Technology Adoption, May 2004, Forrester Research

But results aren’t always in line with spending “All our customer data is in silos by product line — we can’t recognize customers across products” “It’s not just providing the information — it’s teaching people how to use it” “By the time we get back to a customer at risk -- they’ve already left.” “Star schema? No, we don’t have a snowflake schema either, we have a blizzard!”

Different Industries Target Different Goals Industry Information Revenue, sales effectiveness High tech, pharmaceutical Purchase trends, product mix, growth Profitability, retention Banking, retail, communications Net new customers, product mix, interaction history Compliance Financial services, insurance, high tech Service levels, contracts, identity validation, privacy preferences Risk mitigation Insurance Product portfolio, risk exposure Lower IT costs All Cost of integration, CRM adoption rates

Building a Customer Information Strategy is Like Building a House

From Data to Business Value Strong governance model Clear strategy and ROI Comprehensive information practices Continuous measurement

Governance: Build the Right Team Executive steering committee (ESC) Prioritizes initiatives Approves funding Resolves conflicts as required Customer information strategy group Empowered by the ESC Defines how information can be used to drive value Recommends and justifies Cross-functional program team The critical bridge between business and IT Executes the action plan Within the LOB or IT Manages a discrete project Monitors post-execution performance Data stewards Project teams

Example: Insurance Company Executive steering committee (ESC) Move from product to customer centricity Central funding — $25 million over five years Customer information strategy group New function establishes enterprise processes Uses pilots to demonstrate value Cross-functional program team Central compliance and privacy management Consistent processes across LOBs Data stewards Project teams Single application process standardizes customer inputs Security model protects proprietary information

What it Means to You Pick a business sponsor with a vision for change Use information and pilots to prove the vision Plan for organizational and process change

Information Must Support Customer Strategy CRM value plan Information Measure business performance Market share, retention rates, profitability, segment ownership Business goals Why? Corporate business objectives Strategies What? Customer-focused approaches in support of business goals Analyze, segment and target Value, propensity, risk, products, trends Initiate action (e.g., trigger events) Incentives and outcomes Specific business actions required to implement each strategy Tactics How?

Customer Example: Retail Bank CRM value plan Information Increase retention and value Customer retention Share of wallet Usage of online channels Optimal product mix by customer type Customer preferences Behavioral detail Promote product mix to drive loyalty Trigger events: new customer or account, address change, change in usage pattern New customer program, retention alerts

What it Means to you Start with a business goal Define how information can support the strategy Develop use-case scenarios to make the strategy real

Establish Information Processes That Support the Strategic Plan Establish a source of record Assess the state of the data Define business rules Address data quality at entry Define exception handling Standardize, consolidate, and enhance Breadth of data Cross-reference keys Build aggregates Define update frequency Maintain Establish clear owners Define maintenance rules Build ongoing validation and alerting processes

Customer Example: Retail Banking Goal Increase customer penetration Data sources Solution Customer data from all major lines of business Weekly match/merge and householding process — 285 million records per week Linkage between analytic and operational systems Staging area Highly parallel, custom wrappers around Trillium and Abinitio Householding engine Benefits Better alignment of products to customer needs More timely customer response Contact center and branch desktop Marketing automation Xref

Customer Example: Pharmaceutical 12 data sources Goal Faster insight to prescription patterns More comprehensive and accurate data Solution Customer hub automates consolidation Change requests via SFA Siperian customer hub Customer data warehouse Results Reduced load times from one month to one week Add new data sources in days, not months Siebel Marketing system

Setting Policies and Practices — Data Stewards Establishes policies and best practices Maintains a policy Web site Monitors compliance Arbitrates disputes Central quality group Ongoing cleansing Identifies company of record Addresses match/merge issues Monitors quality over time Regional business operations Rapid response to sales requests Local quality monitoring

Customer Example: High Tech Goal Streamline order processing Sales efficiency Leads Unverified Hot opportunities, Web orders Pending validation Solution Single customer master Tiered stewardship model Validated customers Active Results Reduced cleansing costs by 40% Reduced sales order time Inactive contacts or accounts Inactive

What it Means to you Stop bad data at the point of entry, if possible Build the people processes to maintain the data Understand data timeliness requirements

Measurement: Measuring the Right Things CRM value plan Type of metrics Performance Business goals Why? Strategies What? Diagnostic Tactics How? Interaction

Customer Example: Retail Bank CRM value plan Type of metrics Increase retention and value Performance Market share, retention, customer profitability Promote product mix to drive loyalty Diagnostic Products per customer New customer programs, retention alerts Interaction Response rates, activations, usage metrics

What it Means to You Match the metrics to the goals Use diagnostic and interaction metrics to monitor and tune Make sure incentives are in line with customer objectives

Recommendations To avoid this… Remember that the customer view is only the foundation Make sure leadership owns the vision and the right team is in place to deliver Define a clear strategy and specific business tactics to drive usage and value Put the proper measurements in place

Thank You Erin Kinikin +1 408/327-4321 ekinikin@forrester.com www.forrester.com Entire contents © 2004 Forrester Research, Inc. All rights reserved.

What is the current state of your customer information? 1. Inconsistent 2. Mostly consistent within a function or line of business 3. Consistent across functions and lines of business 4. Only consistent in the data warehouse

What is the biggest barrier to leveraging customer information? 1. Lack of executive commitment 2. Project and technology expense 3. Inconsistent processes and policies 4. Barriers to sharing information 5. Unclear business value 6. Other business priorities 7. Other IT priorities

What is the single greatest driver at your company for better customer information? 1. Cross sell / up sell 2. Customer retention / tiered service 3. Cost savings 4. Improved compliance (privacy, Patriot Act, etc.) 5. More timely response to customer change 6. Better coordination across business units or geographies 7. Other