Customer Intelligence Management

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As products become commodities, the importance of services rises. That is, as differentiation from product advantages is reduced or neutralized, the customer relationship grows in importance. There is an unarguable shift from product-driven differentiation to service-based differentiation.

Strategists all agree that differentiation is a key to competitive advantage. The implication is clear: Profit growth for suppliers and service-providers will come from building intimate relationships with customers, and from providing more products and services to one’s existing customer base. Earning, not just buying, customer loyalty is now mandatory. But how much do you spend in marketing to retain customers, and which type of customers should you spend more on? Which marketing channel capacity or marketing activity should you spend more or less on? What tailored offer can you up-sell or cross-sell to a customer on an inbound call? How do you prioritize which customers should get which type of communication? Few organizations can answer these questions.

Customer intelligence/customer relationship management (CI/CRM) systems evolved as a result of advanced information technology and large databases used to refine marketing and sales efforts. The CI/CRM tools enable companies to target individual customers or micro market segments with pinpoint accuracy and manage the dialogue and interactions. In the earlier applications of operational CRM (without much analytical CI) in the 1990s, the goal was simply to promote products and emphasize key services to specific types or groups of sales prospects or existing customers.

Customer intelligence management is differentiated from customer relationship management:

  • Customer intelligence (CI). This is the internal, company-facing repository of data used to determine and analyze customer segments and then used to formulate strategies in order to satisfy and retain each customer segment. Analysis is the key word. CI is an internal process for truly understanding who your customers are and what they want from you. CI anticipates their needs. The results of CI are then put into action by CRM. CI leverages data warehousing and data mining tools for data extraction, reorganizing, and analysis.
  • Customer relationship management (CRM). These are the operational methods and tools, such as marketing campaigns, to interact with customers and new sales prospects regardless of the communication channel. CRM and CI bi-directionally feed each other input data in a continuous figure-eight cycle. Operational CRM generates transactional data that feed input to CI (as well as do other systems). Analytical CI then converts this data into actionable business information that becomes the input to operational CRM for further customer interactions or communications.

An objective for operational CRM is to ensure that customers enjoy consistently good experiences to increase their loyalty and the likelihood that they will purchase again from you—and possibly refer your business to others. That is, the goal is to forge long-term relationships with customers by consistently delivering exceptional service and tailored products for repeat business and referrals. Consistent treatment of customers is a key descriptor because customers can become finicky and impatient with one poor experience (i.e., below their ever-rising expectations), causing them to explore alternative providers—competitors.

Firstly,   customer data is collected and is easily data-mined. The arrows reveal the iterative process cycle, shown in the shape of a figure eight. Much of the customer data in the back office CI (analytical CRM) side is typically captured in the right-side operational CRM. This explains why the figure-eight loop operates as a continuous cycle. The cycle starts with analyzing customer data to synthesize and distill patterns. After that, marketing analysts formulate strategies that are tailored to the various micro segments of customers and are obviously intended to motivate customers to continue purchasing the supplier’s goods and services. The next steps involve mobilizing the organization to execute the strategies; this can range from new product development programs to new value-added services that support existing products and service lines.
The process cycle next crosses into the front-office CRM domain, where the
customer is touched and feedback about their responses is collected. Powerful sales force automation, marketing automation, and customer service tools are applied.

Good CI and CRM helps organizations make smarter decisions faster. A work flow or business process without the ability to measure, analyze, and improve its effectiveness simply perpetuates a problem. In sum, CI and CRM allow end-to-end functionality from sales lead management to order tracking—potentially seamlessly. CI includes data warehouses that are used by analytical applications that dissect the data and present it in a form that is useful; and CRM executes CI’s plans.
The process cycle then flows continuously as a figure eight. The feedback about customer behavior—whether in response to a marketing campaign or as monitored consumer preferences—crosses back into the analytical CI domain, where that data is again gathered and analyzed for the next reformulation of strategies. Dozens of campaigns and strategies of different
magnitudes can continuously and concurrently cycle with this CI/CRM process. Each campaign may target a unique promotion to a particular niche market.
To summarize, the main co-dependencies between CI and CRM are these:

  •  CI systems are analytical and need to extract from the front-office operational CRM systems data useful for analysis (e.g., customer, transactional, and third party data). Ideally, CI drives CRM.
  •  CRM systems need to surface the intelligence generated from the analytical CI systems to be more effective and actually make use of the derived intelligence.

Acquiring and retaining customers must eventually be recognized as an organization’s most important core process. A key to releasing the value of CI/CRM lies in differentiating your products and services in relation to the existing or future levels of profitability of each customer segment.

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