Saturday, July 10, 2010

Six Things Customer Intelligence is Not

While they may be related to customer intelligence, none of these can stand steady alone

In my last post, I reviewed six important, defining characteristics of Customer Intelligence (CI is cultural, it's organizational, is interdisciplinary, involves two-way communications with customers, is focused on customer profitability, and is above all customer-centric). Now, I will contrast that list with six things that Customer Intelligence is not.

Although these six things are often associated with successful Customer Intelligence initiatives at organizations, any one of them taken individually is certainly not Customer Intelligence.

How many of these have been implemented in your organization?

Database Marketing

Database Marketing is a very specific set of tools and methods that tailors marketing, in particular direct marketing, to targeted groups of customers based on their characteristics (typically stored in a database, hence the term "database marketing"). It is, in essence, a more sophisticated form of direct marketing (that is, sending communications directly to customers or prospects to sell or promote a product or service), relying on vast collections of data and sophisticated techniques to determine who is likely to respond to such a communication (e.g., statistical response modeling and other techniques).

This is certainly a step in the right direction – more targeted communications are better for both the customer and the business sending them, because customers are being told about something truly interesting to them, and marketers will generate a higher response rate, and therefore greater profitability, if they talk about something that customers actually want to buy – but it falls short of true "customer intelligence" because it is too narrowly defined.

Customer Relationship Management (CRM)

A CRM system's primary purpose is to help front-line customer service representatives interact with customers by providing "at-your-fingertips" access to customer profile data, in effect allowing reps to speak knowledgeably to customers about their relationships, take notes, and resolve issues. CRM systems consist of a front-end computer interface which the service reps use to call up customer profiles, and a back-end database which stores all of the customer data (often this is not a standalone database but part of a larger data warehouse).

A CRM by itself does not constitute CI nor does it provide CI, although it can be a critical component of CI since it provides a critical feedback loop, allowing service representatives to speak to customers with full knowledge of a customer's relationship, and to gather information from customers on issues that are important to them. The CRM does not provide high-level analytic capabilities, but can provide a distillation of what is known about the customer and best practices and rubrics for handling inbound and outbound communications handled by service representatives.

Business Intelligence (BI) or Decision Management (DM) Business Intelligence, or BI, refers to a set of tools (primarily software such as that produced by Cognos, for example) and the information provided by those tools to business users to provide insight into the business and support business decisions. BI is sometimes used directly by business decision-makers but more often used by specially-trained professionals in a separate Decision Management, or DM, function. In that case, business decision-makers will present their business problems to DM, who will employ BI to research those problems and present results to the business decision-makers who ultimately will be responsible for any decision-making as a result.

The diagram below illustrates a typical flow of information between the Marketing team, the Decision Management team, and the Business Intelligence infrastructure (tools and data):

Marketing (business)

Decision Management

Business Intelligence Infrastructure (Tools +Data)

Decision Management and the supporting Business Intelligence infrastructure help define and direct the various customer strategies that the business pursues, but they do not constitute Customer Intelligence by themselves since they do not connect to the customer nor to the operational functions of the organization. Again, as with CRM or Database Marketing, DM and BI can be critical components supporting the development and deployment of Customer Intelligence, but alone they are not enough to be a sufficient Customer Intelligence solution.

Sales-Force Automation (SFA)

SFA tools are used to support the sales function in an organization. Typically a SFA implementation provides a "seat" or license to each sales person, who is then able to log in to the SFA software and load, manage, and work his or her leads. With an SFA tool, a sales person can input contact names, classify them, add notes as the relationship with the contact changes over time, send communications, and keep track of tasks – it is like contact management software on steroids.

SFA tools can range from simpler, more easy-to-use packages like GoldMine or ACT! (which can also be customized), to enterprise-class platforms such as which is served over the web as a service (it doesn't require installation but is instead "hosted" on servers which the client company's sales force accesses over the web) and Oracle's Siebel platform, which has features of both CRM and SFA systems and is installed on a company's own computers.

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