THE DATA ADMINISTRATION NEWSLETTER – TDAN.com
ROBERT S. SEINER – PUBLISHER

Published in TDAN.com December 1998

The key to this "better way" is the development of a customer-centric business strategy that rethinks how organizations craft business processes and their supporting IT infrastructures to gain customer share and create a competitive stronghold.

Historically, the strategic focus of product companies has been manufacturing and logistics; the strategic focus of service companies, delivering quality services. These core competencies of the past aren't enough to keep pace with change and stay ahead of today's competitors who are beginning to leverage customer information.

There's a strategic shift from efficient product or service production to a strategy that seeks to answer the question: "Who are my customers, and what do they want to buy?" This will be the strategy for competitive advantage as we enter the new millennium.

As organizations seek new ways to understand their customers, a key enabler is the ability to capture information about customers and use it effectively - throughout the enterprise. The best approach for gathering and leveraging information about customers is a data warehouse. A data warehouse is the optimal way to collect, resolve, and store data from various information sources and deliver it across the enterprise. In large organizations it is the only way.

Data Warehousing: An Enabling Technology

Using the data warehouse to integrate disparate sources of data and provide the optimal flow of customer information across the organization is a key component of a technical architecture that facilitates a customer-centric business strategy.

Data warehousing allows organizations to acquire and leverage customer data at every opportunity. Customer centric organizations capture this information each and every time the customer touches them (when they buy something, call the help desk, even visit the company's web site). In addition, they supplement this information with purchased information such as demographics, psychographics and spatial data to crystalize customer understanding.

These forward thinking organizations are integrating new and meaningful measurements into their business processes that allow for the attainment of organizational objectives.

Data Warehousing and Delivery Chain Management

For an organization to be truly customer-centric, it must gather customer information and use that information to tailor its offerings back to its customers. The data warehouse can help organizations gather information at every interaction.

These interactions comprise the delivery chain. The data warehouse is the optimum solution for managing the delivery chain-all the activities you perform to interactively manage your customers at every touchpoint.

This concept of managing customer interactions is known as Delivery Chain Management (DCM). Superior DCM facilitates the appropriate treatment of customers based on their specific characteristics. The data warehouse helps organizations capture information about customers across the delivery chain and enables them to synthesize the knowledge gained from these interactions to develop and deliver products and services at a finer level of customer segment granularity.

Data Warehousing and the Customer of the Future

To be positioned as an industry leader, you must absolutely know your customer, treat them the way they expect to be treated, anticipate their needs and respond positively to their actions. Legacy systems weren't designed to support that goal – and in fact, do not. They are operational, not analytical, tools.

The data warehouse, on the other hand, is centric to gathering and utilizing disparate kinds of information. It has evolved specifically for the purpose of "informationalizing" the organization and is the only effective way to ensure superior Delivery Chain Management.

The data warehouse helps organizations achieve superior DCM by helping them leverage customer information that is generated across the delivery chain. There are four "links" on the delivery chain critical to gathering and using customer information to manage current customer relationships and to shape future business activities. These are marketing, sales, fulfillment, and service.

Marketing

The new role of marketing within the delivery chain is to have customers pull products rather than to push products to customers. In other words, marketing as a function within the delivery chain, must generate sufficient information to answer the question, "What products or services do our customers want to buy?"

Traditional marketing activities--research, strategy, planing, collateral development, lead generation--are all done vain if marketing can't effectively identify the organization's current and future customers, segment them, forecast accurately against those segments, and inform the product development process so that the right product mix arrives in the marketplace at the right time for the right customer groups.

Sales

The sales function plays an important role in gathering information that can be leveraged across the delivery chain. With every purchase, customers provide valuable information that can be captured and fed into the data warehouse, and then accessed for decision-making purposes across the delivery chain. In addition to the purchase, the sales function also encompasses, product and information requests, surveys, complaints, complaint resolutions. All of these interactions bring with them data--data that can be utilized by marketing to inform the organization about its current customers, and to help shape offerings to the customer of the future.

The data warehouse is also an essential source of information for sales. With a mutually beneficial long-term relationship as the number one objective, a sales person is best prepared for customer interaction when an account history, a forecast, and detailed information about the prospect's or customer's current status is available. By accessing information generated at each point in the delivery chain and stored in the data warehouse, sales people can leverage this information to construct offers tailored specifically to customer wants and needs. This positions the sales associate with the best chance for mutually profitable business--a win for both the salesperson and the customer.

Fulfillment

Fulfillment is the yardstick by which customers measure organizational performance. During fulfillment the promise to the customer is either fulfilled or broken--the product is delivered, the utility is turned on, or the software is enabled. The difference between fulfilling or breaking that pledge can mean the difference between lost business and a lifetime customer.

The unique interaction that takes place during fulfillment determines customer satisfaction or disappointment and offers additional potential for the organization. The fulfillment function offers significant opportunities for cross-selling and upselling to satisfied customers. If customers are happy with the organization's service or product, what better time to sell additional services or products to compliment and enhance what the customer just purchased?

Regardless of whether the customer is satisfied or dissatisfied, information on how well the organization delivered on its pledge must be captured and leveraged across the delivery chain. Effective use of this information helps ensure that customers are treated appropriately and that future business is tailored effectively to specific customer groups. Using the data warehouse to track performance against each customer segment is critical to the evaluation of an organization's relationship with a particular customer group over time. More importantly, this information can help the organization identify strategies for future interactions with its customer groups.

Service

The Service function also offers vast opportunities for collecting and disseminating customer information. Data gathered within the service function includes complaints and resolutions, frequency of problems, problem types, time to resolve, and so on. This is powerful information that helps the organization tailor responses to customers. Information generated at other points along the delivery chain is also critical to assisting service representatives in tailoring their customer responses. An organization's most profitable customers should receive a superior level than that of least profitable customers. Customer profiles developed in marketing, and fed through the delivery chain to fulfillment, provide the service representative with the information required to provide the proper level of treatment for each customer segment.

Getting Your Share

No matter the industry, customers are enjoying conveniences that save them time, money, energy, and headaches. They expect the same treatment every time they interact with an organization. If their expectations are not met, it is ever easier--and sometimes even lucrative--for them to switch to a competitor's product or service. Each loss of a good customer means lost revenue for an organization.

With such rising customer expectations, only the organizations equipped with superior customer-centric information management abilities can survive. Leveraging customer information across the delivery chain means learning who your customers were, are, and will be, and then using that information to run every facet of your business. Effective use of the data warehouse, is key to achieving superior delivery chain management, allowing you to build relationships with the customer of today, while building product and service offerings for the customer of tomorrow.