This document discusses using customer data to become a customer-centric organization. It recommends taking a structured approach to determine data needs, including defining objectives, reviewing internal customer data, identifying gaps, and supplementing with third-party data if needed. Quality data is key to better understand customers and personalize experiences. Leaders focus data efforts on the most valuable customers and manage results to improve business metrics and strategic goals.

1. Data Management
Using Data to Become a Shep Parke
E. Holly Porter
Accenture
Customer-Centric Organization
http://parke.CRMproject.com
To become truly “customer-centric,” information about customers is
key – but data needs to be meaningful to help you meet your goals.
Q Define What You Want to Do with
uality, not quantity, is key in using much of the data they need is already
the Information You Gather
data to build customer relationships housed within their enterprise.
and personalize the products and services Understand your objectives behind gathering
Defining Data Requirements
you deliver. By now, we all know that we more information. Do you want to retain
have to know our customers, and we need to In our experience, we’ve found it worth- existing customers? Sell more products/serv-
personalize the products and services we while for companies to take a structured ices to existing customers? Attract new
deliver to our customers. To keep up with our approach to determining what data they customers? Tailor the delivery of service to
competitors, we need to become “customer- need, particularly when third-party data is customers based on their value to your
centric.” Many executives will tell you that to required. This approach includes three organization? Develop new products based
become customer-centric, you have to buy basic steps: on your customers’ preferences? Enter or
more and more data about your customers exit markets based on profitability and pene-
Start with What You Know
and feed it into a data warehouse with lots of tration within those markets? Your objectives
add-on software products. Begin by defining what you know about your may include all of these and others, but for
That bit of conventional wisdom is not customers. Profile your current customers by purposes of defining your requirements,
precisely true. The market for business using information such as purchase history, treat each objective as an individual project,
intelligence and data warehousing tools and length of relationship, purchase details, and define the data elements required to
services is growing at an average rate of transactions with other divisions within the support each project.
more than 50% and is expected to reach $113 enterprise, demographics, credit/financial This approach will help you avoid over-
billion by 2002.1 The race is on to develop details of the transactions, and customers’ loading the end users with irrelevant infor-
better, smarter technologies to facilitate most frequent means of interacting with you. mation and will ultimately reduce your data
Customer Relationship Management and to Often, companies have more data than acquisition costs by reducing the number of
buy more data about our customers and they realize, because much of that data data elements you need to purchase. For
prospects. But there is little evidence to is “hidden.” As enterprises implement example, Kraft General Foods developed a
show that the mere presence of more knowl- various CRM systems in an attempt to customer knowledge system that they use to
edge and more technology will lead to better understand and serve customers, they build share in product categories. This tool
customer relationships. The key to success sometimes blur, rather than sharpen their enables Kraft sales reps to obtain, analyze,
in today’s environment is to know what view of the customer, according to a recent and apply customer knowledge. Since sales
information drives your customers’ behav- report by the Aberdeen Group of Boston.2 reps do not have the time or resources to sift
ior and to apply that knowledge across the Sales force automation, telesales, customer through volumes of data and draw subjective
enterprise – in strategic planning, product support, and campaign management conclusions, Kraft built the system to focus
development, marketing, customer service, systems typically use different keys and on the most important data elements that
and sales. look at customers from different perspec- drive sales. As a result, Kraft sales reps use
In short, a wealth of relevant customer tives. Consequently, the enterprise finds it less than 20% of the data their competitors
data is a critical element in becoming a difficult to connect these data sources and use, and realize a marginal sales growth of
customer-centric organization. So, too, is a create a holistic view of the customer. 3-4% versus a control group.3
central repository to manage the data. The result is a weakened ability to deliver a
Define What You Don’t Know
Before purchasing either, companies need single face to the customer and to show
to have a plan. They need to know why they your customer that you know how to serve Define the gaps in what you know about your
are gathering data, what data to gather to him or her individually. Understanding the customers, what you want to do with the
achieve the desired results, where to get the data housed within all the information information and what you need to know
data they want and how they will apply the sources in your organization will sharpen about your customers, your prospects and
knowledge they gather. Quite often, compa- your understanding of your customer and your market(s) to achieve your objectives.
nies find that they need less data – but more of your requirements for centralization of Probably the most effective method of defin-
focused data – than they thought, and that the data. ing the gaps is to analyze your customers
using your existing data. By segmenting your
customers into unique groups with similar
Shep Parke is an Associate Partner in Accenture’s Customer Relationship Management practice.
characteristics, you begin to draw a hypothe-
Holly Porter is an experienced manager in Accenture’s Customer Relationship Management practice.
142 • Defying the Limits

2. Data Management
sis of how they behave, what they purchase, Touch” program to offer complimentary per- from which to purchase data and such infor-
and why they purchase. From this segmenta- sonal shopper service to customers. The pro- mation can be very useful in completing the
tion, further questions will arise – how does gram’s objective is to form long-term rela- profile of the customer. However it is impor-
the demographic profile of one group differ tionships with Nordstrom’s customers. The tant to understand the potential limitations of
from another? What motivates a segment to store’s personal shoppers have access to two third-party data before buying.
purchase from you at their specific life stage? systems that capture customer information – Many reputable companies offer demo-
What other hobbies or interests are common a database of customers’ likes, dislikes, graphic overlays. These companies generally
within segments? What level of service does lifestyle, and apparel needs that were gath- compile data from sources such as phone
each segment require to remain loyal to your ered from telephone and face-to-face conver- books and Departments of Motor Vehicles to
organization? Through what channel do they sations, and a database containing customer arrive at household-level demographics.
wish to be contacted by you? From the ques- purchase history. Armed with both previous Demographic overlays are an important ele-
tions that arise, identify those data elements purchase history and personal preferences, ment of analysis, profiling, and targeting;
you lack to answer the questions. the personal shopper is able to offer more however, an understanding of their relative
Once the gaps in data have been identi- targeted selections and truly personalized accuracy is critical. Census studies have
fied, the missing data elements may be gath- service to the customer.4 shown that more than 10% of the U.S. popu-
ered from a variety of internal sources – cus-
Quite often, companies find that they need less data
tomer surveys, focus groups, other systems
within the enterprise – or they may need to
– but more focused data – than they thought,
be purchased from a third-party provider. As
and that much of the data they need is already
always, measure the importance of the data
against the ultimate objective of this project.
housed within their enterprise.
Filling in the Gaps
As a rule, the best source of data about your
customers will be found inside your enter- Following a review of internal data lation moves every year, and an even higher
prise. Optimal match rates on purchased data sources, some “human” information will percentage changes jobs every year. Add to
are 70-90%, which means that as much as probably still be missing. It is likely that your that the previously mentioned typical match
one-third of the records you purchase are customer can provide this information. rates of 70 to 90% and it becomes clear that a
unusable. The source of the data you pur- Specific behavioral and buyer preference significant portion of the information a com-
chase can be very reliable – Department of information may be more effectively gath- pany purchases will not match the records in
Motor Vehicles or drivers license records – or ered through primary research such as sur- its database.
it can be inferred from less quantifiable veys and focus groups. It is also possible to In the United States, recently enacted pri-
information such as customer-provided war- simply “ask” the customer for information, in vacy laws have made the acquisition of actual
ranty cards, surveys, magazine subscription exchange for some incentive. Many Web- data more difficult. For example, under the
lists, or census tract-level deductions. This based companies like Free-PC.com and Shelby Act, an amendment to the Drivers
information can be very useful directionally E*TRADE are offering incentives for cus- Privacy Protection Act, effective June 1,
but your customers’ actual experience with tomer-provided information. E*TRADE 2000, states must offer notice and opt-in
you is recorded inside your own four walls. offers 500 air miles for the customer’s infor- rights to the consumer before making its
Start with your internal information systems. mation, then follows up with a certificate for drivers license and motor vehicle license lists
Examples of information sources that can $50 toward the first investment. Free-PC.com available to direct marketers. In other words,
help you fill the gaps in your customer joined with Compaq to offer free computers the consumer must explicitly agree to allow
knowledge include: in exchange for personal data. They offered this information to be sold for marketing pur-
• Complaints/inquiries to the call center 10,000 computers to people who were willing poses. This essentially renders two of the
• Credit and financial information to share personal information and receive most credible third-party data sources far less
• Business transactions with divisions targeted advertisements. About 300,000 peo- reliable than ever before.
other than your own ple visited the site and thousands who tried Similarly, Gramm Leach Bliley, the
• Aggregate purchases/history of the could not get through to the website. It Financial Modernization Act, enacted in the
relationship appears that for the right offer, people are United States on November 13, 2000, says
• Purchase details willing to exchange some of their privacy.5 that before a financial institution can share
• Preferences based on actual purchase non-public personal information (NPPI) with
Purchasing and Managing
history/trends anyone other than affiliates, it must provide
Third-Party Data
The information found internally can be the consumer with detailed notice and the
highly valuable in developing your customer Once internal sources of data have been ability to opt-out. NPPI has traditionally been
relationships. For example, Nordstrom’s explored, it may be necessary to purchase the source data providers use to derive such
department store, a renowned customer-cen- third-party data to fill in the final critical gaps demographic attributes as income, home
tric organization, created the “Personal you have identified. There are many sources value, net worth, credit card usage indicators,
Defying the Limits • 143

3. Data Management
They Aim for an Optimal Mix
and credit worthiness, among others. the bank’s profit per customer, and ulti-
of Data-Driven and Human Knowledge.
So it is critical to understand the limita- mately to increase customer loyalty by cross-
tions of the data you purchase and to care- selling the appropriate products when the The leaders creatively incorporate actual
fully test the information you purchase. To customer needs them. Analytics incorporate customer feedback into their analyses
do so, choose a few vendors for evaluation both transaction data and demographic data of transaction, purchase, and demographic
based on the available data variables, their and prompt the bank’s relationship managers data to complete the holistic view of
overall match rates and their sources of data. to react with a targeted solution to customer the customer.
They Manage to Results.
A wealth of relevant customer data is a critical Getting data into a repository is only the first
element in becoming a customer-centric organization. step toward managing the customer relation-
ship. Your efforts are only successful if they
improve your bottom line or meet your
Ask each vendor to enhance a sample of your events such as major withdrawals/deposits, strategic objective.
data file and provide match rate reports. home purchases, etc. By understanding the
Conclusion
Check the returned data against actual data customer’s complete relationship with the
elements in your database. For example, bank, First Union is able to introduce new In building a customer-centric organization,
match the “age” returned against customers services to the customer – investments, information about the customer is critical –
for whom you have date of birth in your data- home mortgages, insurance, credit cards, etc. but it needs to be meaningful information
base, or check “home value” against the – at the appropriate time. The bank expects that will help you meet your goals. To make
mortgage value on the customer’s credit file this capability will contribute $100 million in sure they are pursuing and using the right
if you house that information. Evaluate each revenues annually.7 data, companies can follow a structured,
vendor on the combined score of overall To understand how companies can use step-by-step approach: Begin with an under-
match rate, elemental match rate (the per- customer information more effectively, the standing of your objectives; Study your own
centage of elements that are populated per Accenture Institute for Strategic Change and customer data; Identify the gaps in the infor-
customer versus the number you requested) the Goizueta Business School at Emory mation you have and the information you
and the accuracy of the data variables against University recently conducted a study of the need; Ask your customers for information.
the actuals in your database. customer knowledge management practices Where needed, complement your data by
of 26 leading firms. The study found that evaluating and selecting the third-party
Putting It All Together to Build while the specific tactics varied by organiza- providers that can effectively supplement
a Customer-Centric Enterprise tion, the leading firms had at least four major your data. Then, and only then, build the
In the end, the point of gathering all of this strengths in common: systems and processes to support your
data is to develop deeper relationships with customer centric environment.
They Know Upon Which
your customers and ultimately sell more
References
Customers to Focus.
products and services. Today’s customer is
accustomed to a certain degree of “personal- For example, the leaders have each made a 1 1999 Business Intelligence/Data Ware-
ized” service as a baseline – the leaders of strategic decision to apply data to identifying housing Program Competitive Analysis
the premier customer centric organizations segments as a basis for action, such as Report, World Research Inc., San Jose,
are focusing on using that data that enhancing service delivery to the most California.
contributes to higher sales and more profitable segment, encouraging low-cost 2 DM Review, January, 2001. “Customer
personalized service to the customer. transaction options to unprofitable segments, Data Integration: The Essential Com-
Marriott has invested heavily in a Customer cross-selling additional products or services ponent of Effective CRM”
Relationship Management system that incor- to segments that have the potential to 3 “How Do They Know Their Customers So
porates both transaction and “human” data. become “best customers.” Well? Lessons from the Leaders in
Armed with this information, desk clerks see Customer Knowledge Management”
They Are Focused in their Objectives for
a display of any special needs, interests or 4 “How Do They Know Their Customers So
Customer Knowledge Management.
preferences the guest expressed when Well? Lessons from the Leaders in Cust-
making the reservation or in past visits to The leaders in customer knowledge man- omer Knowledge Management”
Marriott properties.6 Similarly, First Union agement know what they are going to do 5 “The Newest Currency. Are You Ready to
has recently implemented an enterprise- with the data – purchased and in-house. Pay For It?” Bob McKim
wide customer-centric data warehouse. For instance, they may use it to increase 6 “How Do They Know Their Customers So
Information from within the warehouse is market share in a specific market; encour- Well? Lessons from the Leaders in Cust-
first used for customer analytics, with the age the use of alternative channels in low- omer Knowledge Management”
objective of deepening the bank’s under- profit segments; identify product improve- 7 “How Do They Know Their Customers So
standing of who its customers are, and how ments or additions; or cross-sell products Well? Lessons from the Leaders in Cust-
these customers can be served, to increase and services. omer Knowledge Management”
144 • Defying the Limits