Turn Information Into Competitive Power

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Today's customer has more choices than ever. Exploding media channels and messages have made the customer more sophisticated, while the ability to shop and compare products and services 24/7 has increased customer promiscuity. According to a recent Accenture study, more than one-third of customers in most industries shop for better or different products or services as opposed to going to their main brand on a regular basis.


Many executives recognize that the only route to success in this increasingly competitive, dynamic marketplace is to forge long-term relationships with their best customers. They also realize that proactive identification of customer needs offers the greatest chance to build these relationships ... and profits.


But while terabytes of data are available to most organizations, too little of it is used to create, enhance and sustain customer relationships and, therefore, create business value. In short, CRM initiatives often fail to generate business results because the implementation of technology preceded the development of a sound customer information strategy. This strategy includes understanding customer needs, communication with customers based on those needs and integration of customer information across the organization.


Understanding the customer. In 1993, Don Peppers and Martha Rogers discussed the value of capturing differentiated customer information in their book, "The One to One Future." They illustrated how companies that collaborated with customers and developed a learning dialogue would create a competitive advantage that was defendable, unique and permanent.


Ten years later, most firms still collect only information such as demographics, product use and channel preference as opposed to gaining knowledge about customers' needs, values and behaviors. This has been compared with driving while watching the rear-view mirror, since conventional information collection is based mainly on historical data.


To develop a competitive differentiation, firms must access their "customer DNA" by using traditional external and internal information sources (demographics, product use, transaction data and channel use), combined with customer-specific knowledge acquired through dialogue and surveys. This customer interaction can be achieved in various ways including face-to-face conversations, direct channels (direct mail, e-mail or phone) or customer panels.


Whether one or several methods are used, the key is to determine your customers' underlying motivations for buying your service and what affects their decisions, including economic, technological, societal, cultural and competitive forces.


From this foundation, specific needs-based customer segmentation can occur. This personalized segmentation strategy is more effective than current segmentation that either targets by standardized demographics and product use or by historical "next most likely" product ownership trends.


Communicating with the customer. Simply having a data warehouse and accessing customer data only bring an organization to competitive parity. Competitive advantage is gained based on the quality of the insight a firm gleans from its warehouse and the ability of the organization to apply that insight to add value to each customer interaction.


This process begins through customer communication and dialogue using direct channels such as direct mail, telesales, e-mail, personalized Web experiences and even the sales floor. Customer interaction should apply whatever is already known about the customer, such as recent purchases, indicated preferences and future needs.


During each interaction, additional knowledge about the customer that can be used going forward should be captured. As rapport and trust are established between the buyer and seller, more information will be transferred, enhancing the buyer's experience.


Integrating knowledge across the organization. One of the biggest hurdles many organizations face is the breakdown of silos in the marketing department and in the organization as a whole. Today, customer knowledge is held in many disparate locations throughout the organization, with inconsistent and incomplete views of the customer used for marketing and decision making.


Leveraging knowledge across an organization is the only way to enhance a customer's experience. By applying customer insight across multiple points of customer interaction, organizations can better understand customer expectations, determine how to accommodate them and customize the relationship.


Ideally, a demand-driven strategy moves an organization from a one-size-fits-all customer approach to one that treats customers as individuals, based on their needs and preferences. This results in greater customer satisfaction, increased profitability per customer and long-term customer relationships.


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