Welcome to the June
2002 edition of our newsletter. I hope you find it interesting.
Please forward it to colleagues and friends who may also find it of interest.
Topics in this edition include:
Kind regards,
Trevor Richards
Managing
Director
Interact CM Pty Ltd
Interact has recently shed its generic "management consultant" tag and re-positioned its name, logo and value proposition squarely in the Customer Management space. Our new logo, InteractCM, was launched in May, along with our new website and other corporate livery.
From our perspective, Customer Management covers all aspects of the process of converting customer information into business value - in our terms, "unlocking the true potential" of the customer base. With our client base of "blue chip" companies nationally and internationally, Interact has cemented its position as the leader in this CM marketplace.
Our new website contains a wealth of information and ideas about Customer Management (http://www.interactCM.com). We invite you to visit the site and try the quick on-line CM Survey to see how your organisation measures up.
We are all excited about these developments at InteractCM, and we are looking forward to the CM challenges and opportunities ahead.
Top
Leading national optical group OPSM has identified a wealth of information in its 2 million plus customer database as part of its CRM implementation. With a clear focus on customer retention and growth, short-term non-IT initiatives using the information already in-place, are yielding results.
In a recent update on OPSM's CRM implementation progress, Alan Smith Group General Manager, commented that: "Now that we are in the stage of building our core Customer Management IT systems and organisational capability, it's easy to see how we could get completely distracted by the technology itself. Our consultants, Interact, forewarned us about this, and fortunately, we have stayed focused".
"We have made excellent progress on some of our non IT-related initiatives. For example, a 20% improvement in customer response rates has been achieved in a pilot project to improve in-store business processes, simply using the information we already have. We are now ready for full-scale roll-out of this initiative across our retail network".
According to Alan Smith, the CRM project has highlighted the fact that the business was sitting on a wealth of customer information. "By using some very practical approaches, Interact has shown us how to start unlocking the potential of the information that we have. Indeed, we are already seeing signs that our ability to generate customer knowledge and insight from existing customer data has vastly improved".
Investment in keeping customer information accurate and up-to-date can deliver a 10-fold return to the bottom line, according to a recent global study conducted by a leading international IT group with the assistance of Interact.
Commenting on the results of the study, the Team Leader said:"Accurate information about our customers is essential if we are to communicate effectively with them and offer products & services relevant to their needs. If we know who to contact, how to personalise our messages and the offer to them is appropriate, our sales efforts tend to be much more productive and the customer knows that we care".
"This study has shown that response to direct marketing campaigns is significantly higher for those customer records which are up-to-date and enhanced with more information about the interests and needs of the customer".
The ROI study was supported by a major international study of the rate at which customer data decays. This decay study confirmed Dun & Bradstreet's finding that B2B data deteriorates by 35-50% annually due to company name & address changes, company mergers or closures, staff movements, duplication and errors.
This work endorses Interact's contention that Customer Information is one of the organisation's core strategic assets, and as such, must be the focus of continuing investment to maintain the integrity and value of the asset.
"Less than 5% of the world's firms achieve the full potential of their customer relationship initiatives" according to author and academic, John McKean.
In his ground-breaking book entitled "Information Masters", McKean contends that it is only through information mastery that organisations will win the race to customer intimacy and profitable customer relationships.
McKean is Executive Director of the Center for Information Based Competition, which advances the thinking on how firms in customer-intensive industries achieve competitive advantage from applying customer information (http://www.informationmasters.com). He defines information mastery in terms of seven dimensions:
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People |
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Processes |
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Organisation |
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Culture |
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Leadership |
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Information, and |
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Technology |
Importantly, McKean's research has found that more than 80% of investment by firms in information capability is in technology, whereas the other six non-technological components are those that actually determine the firm's information competency.
His book presents a compelling, research-based argument that the most brilliant marketing and customer loyalty strategies are doomed to failure when there is insufficient and balanced investment across all seven information mastery factors.
To successfully "unlock the true potential" from large customer bases, organisations need to have clear visibility and explicitly understand the detailed processes of how the organisation drives value from Customer Information.
A good way for senior executives to get a view of how transparent these process are in their organisations is to measure how well they are doing in five key areas.
Interact has not only developed key metrics to help clients monitor the status of these key processes in their organisation, but has also defined the detailed processes and key impediments to their effective execution.
Rigorous and consistent application of these processes across the whole organisation can deliver a 2- to 3-fold step improvement in the value unlocked from a customer base.
Interact MD Trevor Richards has presented a paper on Interact's Customer Information Quality (CIQ) Methodology at a prestigious international IQ conference in London. Trevor's presentation was based on methodology developed and applied by Interact in very large-scale consumer and business customer environments.
Several of the 60 plus conference participants from a broad cross section of industries commented that Mr Richards' experience in Customer Information Quality "really showed" and that his paper was "practical, insightful and full of tips for Information Quality practitioners".
Interestingly, Trevor was on the same podium as Larry English, the American author of "Improving Data Warehouse and Business Information Quality".
Contrasting the Larry English presentation with his own, Trevor observed that information quality practices for Customer Information were quite different from all other data types for several reasons. Customer Information is all pervasive, it is required for unique customer identification, yet it is typically dispersed through multiple (un-linked) repositories and, because of the common use of 20-year old industry standard ETL technology, master customer repositories and data warehouses alike are continually being polluted. As a result, the quality of these repositories naturally decays without any pro-active CIQ process in place.
Knowledge of your customers, their status with your organisation, their behaviour and potential, is "manufactured" from the information you collect about them. In your "knowledge factory", the same as any conventional factory, the quality and usefulness of your knowledge is directly affected by the quality of the input raw material. Unfortunately, in many organisations, the raw material has been designed to suit administrative or billing purposes and is typically not "fit for purpose" for relationship marketing.
The concepts of TQM (total quality management) are completely transferable to the "knowledge factory". Do you operate with "inspectors" (clean team) fixing up data errors? Is the data warehouse routinely supplied with "polluted" data which requires cleaning before it can be used for marketing? Do staff adopt a "don't care" attitude because management doesn't promote an information quality culture? Are people frustrated because their tools (systems) make it difficult to maintain data integrity?
TQM is about building-in quality, getting it right first time. In a total customer information quality (TCIQ) environment:
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Management drives a culture of customer information quality |
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There is clear organisational responsibility for customer information quality |
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Plans and budgets are in-place for continuous investment in information quality |
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Standards are set for the type, content and quality of information |
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Systems and processes are built to maximise information quality and integrity |
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Staff are trained in information quality processes and are recognised for high quality |
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Metrics are in-place to monitor deviations from standards and targets and drive continuous improvement. |
TCIQ requires a "paradigm shift". Executives typically tolerate high levels of "waste" and "rework" in their information factories because they are not aware of the magnitude of the problem. The new environment requires that customer information quality attains a far higher profile as people recognise and respect information as a vital corporate asset.
Another South Australian has "migrated" to Sydney to join the growing Interact team to focus on cross-sell cultural change.
Janine Peckham is a registered psychologist and experienced consultant with skills and track record in change management. Her role within Interact is to establish cultural change programs for organisations that are implementing customer management strategies. She is excited about the opportunities with Interact: "In every Interact customer management project there are cultural issues which need to be addressed. Technology creates the platform for change, but it is people who will make it work".
Specifically, Janine is currently working on a project to change the culture (attitudes and behaviours) of customer-facing staff to improve current customer cross-sell rates. She and the client team have initiated several significant initiatives which have included defining what it means to be customer-focused, a cross-sell training plan, establishing new cross-sell KPI's to reward staff more effectively for excellent performance. The team has identified and enlisted the help of customer cross-sell 'champions' from existing customer-facing staff for the cultural change process.
Janine will also raise the "academic standing" of the Sydney office, having recently submitted the final draft of her PhD. The topic of her thesis is 'organisational factors that can affect employee acceptance of new information technology' - a very relevant topic for her work with Interact.
According to a recent GartnerG2 study, commercial e-mail is quickly displacing conventional direct mail in the US. It is said that direct mail has peaked and will account for less than 50% of messages received by households within three years (http://www.gartnerg2.com).
The two main reasons for the switch to e-mail - it's faster and cheaper. Interestingly, although average DM response rates are similar at around 1%, the response time for direct e-mail is said to be three days compared with 6 weeks on average for a direct mail campaign.
What does this trend mean for customer information quality? Firstly, it means that valid (current, correctly-formatted) e-mail addresses are required for target customers. This may require that product application forms are re-designed to capture e-mail addresses, that on-line transaction sites enable customers to record/update their e-mail addresses, or that special e-mail address acquisition programs be implemented. Secondly, it will be important to gain customer permission to use this channel for direct marketing. And finally, processes analogous to return mail processes will be needed to handle "bounce backs".
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www.interactCM.com