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

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

3. 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!”

4. 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

5. Building a Customer Information Strategy is Like Building a House

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

7. 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

8. 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

9. 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

10. 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?

11. 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

12. 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

13. 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

14. 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

15. 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

16. 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

17. 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

18. 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

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

20. 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

21. 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

22. 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

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

24. 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

25. 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

26. 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