Column: Making CRM Work Through Customer Data Integration
But very few companies are doing CRM well. Why?
The problem is found in the basic, but too often ignored, dimension of CRM called customer data integration, or CDI. This is where all of the data sources that will be used to create a single view of the customer are brought together. The core technology layer of a CDI solution includes the hygiene, linking and grouping of customer data, as well as the recognition processes necessary to present a comprehensive and integrated view of all your customer data to the applications driving your CRM strategy.
But CDI technology has not evolved much in the past 15 years. Yes, there are faster computers, faster networks and better data storage devices, but for the most part companies are still performing CDI processing the way they did in the 1970s. CDI still relies on traditional merge/purge software that has not changed dramatically in 20 years. Traditional string matching software is still at the heart of most CDI solutions, and that is just not very efficient by today's standards. To complicate matters, virtually all of the increases in data processing horsepower in the past 20 years have been more than offset by the sheer volume of data available to be integrated today.
So, for the most part, CDI is still a relatively expensive, large-scale batch process. There are really only two options for most companies: Develop all the systems and expertise inhouse (something even the largest companies have had difficulty doing) or work with a company that specializes in CDI solutions. Most large enterprises have tried the first option and, after much frustration, have now turned to the second.
Comprehensive CDI is critical to today's CRM strategy in two ways:
• First, it is the way you define your entire relationship with your customer. You need to know all of the purchasing behavior and customer service interactions from all of your product lines in order to complete an accurate picture of your customers. Nothing makes you appear more ridiculous to your customers than to promote them for a product or service they already own. It broadcasts to your customers that you really do not understand their total relationship, and it wastes money.
• Second, you must use CDI to be able to assemble other demographic and predictive characteristics about your customers. This kind of information will typically come from external data sources. This is important because it helps round out your customer profile and it is required to map your customer base into a prospect universe.
The biggest technological breakthrough in CDI in the past 25 years is "linking technology." Linking technology not only provides dramatic improvements in grouping accuracy but also enables integrated customer information to be presented, in real time, at the point of contact.
First of all, linking technology significantly outperforms old CDI technologies. With traditional de-duplication technologies, we would be thrilled if our enhancements created a 0.5 percent better de-duplication rate or a 2 percent overall performance improvement. Linking technology creates a minimum de-duplication improvement of more than 5 percent, and in some cases we have seen improvements of 20 percent over conventional technologies. Perhaps more importantly, the efficiency of the CDI process has improved on order of magnitude - that is a ten-fold increase in performance.
So, there is no doubt that linking technology is a real breakthrough. But how does it work? At its heart is a knowledge base. This is a large repository of both consumer, and business names and addresses that is created from many sources and continually maintained and updated.
The fundamental idea behind the knowledge base concept is that historical occupancies and entity representations are maintained and tracked. In many ways it is a temporal database that keeps track of how consumers and businesses change over time. The knowledge base also contains associative information as well as business rules that help link occupancies together.
The knowledge base houses the information used to create and maintain consistent links for each name and occupancy in the knowledge base. As new information and sources are added, all changes affecting representations of names and addresses are incorporated into the business rule structure that leads to the creation of the links.
Creating and maintaining the knowledge base and building the links from it is a highly specialized activity. It is unlikely that most enterprises will have the resources or the inclination to develop this capability internally. It makes sense to take advantage of a CDI solutions provider's expertise in distilling enormous amounts of information into a tool that can link together all of your disparate silos of customer data without having to redesign your infrastructure.
Here are things you should be thinking about as you prepare to implement CDI using linking technology. First and foremost, the technology used to perform customer linking, matching and grouping must be built from a knowledge base. Without a knowledge base-driven CDI solution, CDI results will not be satisfactory because they are, at best, derived from an inexact algorithm system for matching, not historical data linked with current information.
Your CDI solution must be able to perform linking for customer information on both consumers and businesses. In addition, the CDI solution must be global in scope because the Internet has created a global economy and almost everyone has a need for a global CRM strategy.
So why aren't companies doing a better job with CRM? Primarily it is because they typically underestimate the importance and the complexity of the customer data integration component of CRM. CRM is the most essential business process in any enterprise, yet the ability to execute an effective CRM strategy has been elusive because of the inadequacies of traditional CDI technologies.
Now, however, the emergence of linking technology has created the potential for a quantum technological leap forward in CDI. In fact, the demands of real-time CRM requires a CDI linking technology to work. There really is no effective way to do real-time CRM without employing a CDI linking technology.
The bottom line is that linking technology holds the promise of dramatic increases in the efficiency and effectiveness of CDI, which, in turn, has the potential to impact the overall effectiveness of a company's CRM strategy.