A recent spate of trade press articles and industry analyst research has documented the trend that the delivery and implementation of customer relationship management initiatives and other enterprise systems are most often late and over budget. Return on investment has often been minimal, if any.
Key factors have been poor data quality and an incomplete, distorted, inaccurate single customer view. Companies find themselves in the unenviable position of needing to ensure the accuracy of customer information while having to integrate this data from several different data streams.
Customer data integration is playing an increasingly important role in helping companies profit from their substantial CRM investments. According to analyst Scott Nelson at Gartner Group, Stamford, CT, CDI is the combination of technology, software, processes and services required to achieve a single, accurate and complete view of the customer across multiple sources of customer data (internal and external), databases and business lines.
Why is CDI growing in importance? The rapid growth and adoption of CRM and customer-focused initiatives is focusing increasing attention on customer data. The number of businesses worldwide implementing such systems, with the concomitant multimillion-dollar expenditures, has not slowed with the economy. With such extensive resource allocations, business executives are under tremendous pressure to realize a return on investment from these expenditures.
A key driver for obtaining ROI from CRM investments is the ability to build and maintain an accurate, single customer view. Gartner Group found that despite substantial CRM investments, less than 10 percent of enterprises have a single, companywide view of their customers, a critical steppingstone toward customer loyalty. Interestingly, this statistic does not even address data accuracy. If a business can see that John Smith has policies with five of its operating divisions but is unable to ensure the accuracy of his address, a single customer view has no real value. Accordingly, Gartner noted that at least 50 percent of enterprises undertaking a CRM strategy are unaware of data quality problems, a bellwether for CRM success, in their environment.
With increased customer touch points (i.e., sales, Web, partners, call centers) organizations must manage more moving parts in the data infrastructure. These added data sources are a particular challenge for global 2000 organizations that have numerous operating divisions, each with their own customer relationships. According to Forrester Research, Cambridge, MA, despite large CRM investments, only 37 percent of companies that know they share customers across divisions actually share customer data among divisions. For these organizations, simple spot solutions may not be up to the task of providing enterprisewide CDI.
What are some of the ingredients for successful CDI? The foundation of a CDI solution is the ability to provide an accurate, single customer view. Decisions at the highest levels of customer-centric organizations are driven by customer intelligence. With accurate, consolidated customer information, organizations can develop more focused marketing initiatives while enhancing service and support via a clear picture of the products and services being used across the enterprise.
The solution must also be flexible enough to meet an organization's information technology needs. CDI solutions are not out-of-the-box products. The requirements of today's enterprises vary greatly – some may demand an inhouse or an outsourced solution. Others will need a solution that is a component of an extract, transform and load or enterprise application integration system. CDI products should support batch and real-time processing, as well as provide interoperability with a variety of platforms. Any solution must also be scalable to meet the continually increasing data volumes of today's enterprises. Finally, end-users must look to vendors with the methodology, knowledge and experience that can deliver a solution that meets the enterprise's needs. Of course, knowledge of the organization's business objectives and information technology capabilities must also be taken into consideration.
Not only does the amount of data an organization must handle grow steadily, the data itself is not stagnant. CDI solutions must ensure the accuracy of customer data. For instance, 15 percent of Americans change residences each year, according to the U.S. Postal Service. Thus enterprises must ensure data quality if they wish their communications to reach customers.
What value does CDI provide? The decision-making processes of the enterprise are only as good as the information upon which they are based. There is a monumental paradigm shift accompanying the growth of CRM and other customer-oriented enterprise applications — corporate data is being transformed from an IT cost burden to a unique, ongoing competitive asset. Enterprises realize that successful CDI contributes to increased customer satisfaction and lifetime value, and greater operational efficiency and savings. A single, accurate customer view increases the effectiveness of enterprise systems such as CRM, data warehousing, data mining and personalization efforts. With an inaccurate customer view, organizations cannot measure their customers' true value to the enterprise. Consequently, they are unable to take the necessary steps to increase loyalty and grow business among their best customers.
CDI also increases enterprises' operational efficiency by enabling them to focus resources on their most profitable customers. According to a CRM study by Oracle Corp., Redwood Shores, CA, many large businesses get 95 percent of their profits from their top 5 percent of customers. So with successful CDI, by analyzing their customer data on the back end, enterprises can generate the right message to the right person at the right time. With increased intelligence, organizations can more effectively develop and introduce targeted cross-selling and upselling offers that strengthen the bottom line. By taking measures to identify unique customers across operational divisions, businesses can avoid the costs associated with marketing to “John Smith,” “John S. Smith” and “J. Smith” all at 123 Main St. in Athens, GA. CDI, if properly architected and implemented, can maximize the ROI of other enterprisewide initiatives, including CRM and enterprise resource planning systems.
What's the bottom line? Any organization adopting customer-centric operations, such as those deploying CRM solutions, must build and maintain an accurate, single customer view to realize ROI from these enterprise systems. Is cost an issue? The cost of CDI pales in comparison to the cost of making poor business decisions based on poor information. In fact, an effective CDI solution will more than pay for itself since the operational savings it provides usually exceed the cost of implementation.