As the market tries to return to the past when all employees knew their customers on a first-name basis, many sales and marketing technologies promise to let businesses interact with customers on a more personal level. Companies are looking to technology to help serve as the collective conscience of the individuals within a business.
Because of this, data warehouses, sophisticated software decision-making tools, middleware and the Internet are becoming the rudimentary foundation for an institutional nervous system capable of supporting institutional memory and decision making.
Delivering this reality centers on the ability to manage customer identities and the complexity of customer relationships. A main challenge for companies is to consistently identify, remember and relate to customers across all touch points. The inability to do so results in a failure to leverage interactions with customers and wasted marketing. It usually is accompanied by customer dissatisfaction and defection.
Getting a more accurate view of customers and learning how to relate to and service them are crucial. Companies risk losing 20 percent to 50 percent of their customer base yearly by being unable to configure the right price, service, sales and marketing strategy. Improving the ability to identify, remember and relate to customers can bolster customer retention and growth. Retaining just 5 percent more customers can boost revenue as much as 85 percent in a year.
Companies need to develop a flexible customer taxonomy and a common customer directory to identify and manage an integrated view of all customers.
According to the Massachusetts Institute of Technology, this need is especially critical when managing business customers. But what is a business customer? Depending on the context, it could be the company, the contract signer, the end user, the bill-to location or ship-to location. Or should the overall customer be identified as part of a related franchise?
MIT recently identified this challenge/opportunity as “corporate householding.” Corporate householding provides a framework for a company to manage the various views of a business customer without neglecting any one view. The views can be thought of as the various ways to look at a customer, as described above.
According to MIT, one source to manage these views is the D-U-N-S Number. This number, managed by D&B, is a nine-digit identifier used to track a business and create the corporate linkages in parent-child relationships in the corporate family, as well as tying together franchise locations and minority ownership in companies. Beyond this, a company must tailor and develop additional company-specific taxonomies to help manage each view that is important to retain and grow customers. The challenge is that every part of the organization has its unique requirements that must be recorded and managed.
Consider the marketing department. Marketing teams work with IT departments to integrate and analyze customer information to identify customers that provide the most revenue and profit. Sophisticated marketers may try to identify any predictive variables that may determine future purchase or signs of attrition, and use the profile to guide customer penetration and acquisition efforts.
The first step is customer integration. This process presents challenges for marketers because customer information is collected and maintained in discrete information systems across the enterprise and often is stored in inconsistent formats, representing different views of a customer. Accounting may view the customer from a bill-to perspective, the service group sees it as a ship-to and the sales team focuses on the economic buying unit – giving the customer three faces..
The true identity is expressed by all of these views as part of a complex corporate household that has different members responsible for different activities. The marketer has the delicate job of piecing together these views to reveal a story that can form the basis of actionable information.
Once the marketing team integrates all of the customer information, it needs to derive insight through analysis. Yet, even in this activity, the customer definition is important. The customer can be an economic buying unit in a large organization, often referred to as a strategic business unit. As these businesses within a business can buy directly, the customer can be a SBU or a corporate parent.
Defining the customer based on the corporate parent conceals an important view of the SBUs in a larger organization, preventing insights into additional revenue and profit opportunities. The marketing department must be able to look at the customer at all levels of decision-making authority to identify the needs of the small operation within a large organization as well as the overall organization itself. By doing so, the marketing organization uncovers the best opportunities and learns how to relate and penetrate the complex organizations.
The marketing team has multiple views that need to be managed. Considering other needs in the organization to manage views, such as credit and accounting, the situation can get complex quickly. The need for corporate householding is apparent, but it must address back-end needs as well as achieve front-end efficacy of customer interaction so the company can keep and grow them. A common customer directory that allows storage of taxonomies and presents them based on the view or context is the next phase.
This scenario lets companies interact with customers on a first-name basis and cross-sell and upsell more effectively. With this enhanced customer interaction throughout the organization, companies better manage all stages of the customer life cycle, particularly with the ability to retain and grow customers.