Best Practices in CRM
Maintaining Customer Intelligence
By Dr. Nancy Rauseo

Customer intelligence is the application of customer knowledge. It is a company’s ability to effectively utilize what it continuously learns about a customer. A company must first identify and then capture customer intelligence. Once your company has done so, the next step is to establish best practices for maintaining the customer information you have worked so hard to identify and capture. In this month’s article, we will explore strategies to maintain your customer intelligence accurate, valid and measurable.

In my experience with CRM projects, I have found that customer information becomes obsolete very rapidly, sometimes as soon as it is captured! Consider that in the U.S., about 45 million people change their home addresses each year. Change is a constant in our business world today – job titles change, phone numbers change, products change -- and more importantly, customers’ needs and expectations change. Your Intelligence Blueprint contains the location (department, function and processes) of the required information and the method for capturing it. We will now expand this blueprint to define the following for each information requirement:

• CRM metrics
• Data integrity
• Intelligence ownership
• Rewards and incentives for performance management

CRM Metrics

An important component of shifting from a product focus to a customer-centric focus is a change in your measures of performance. New business metrics and supporting analyses are required to continuously monitor the customer dimension of your business. You’ve identified your company’s CRM objectives, but now how do you know whether you are achieving them or not?

CRM metrics help us set and gauge the progress and level of success in meeting our CRM objectives. They also aid in establishing performance baselines and standards as well as monitoring customer experiences at all relevant touch points. Metrics are also used to the change the way employee performance is measured and compensated. As CRM objectives change over time, so must the CRM metrics.

Let me give you an example. Let’s say that last year, one of your CRM objectives was to retain existing customers. You chose retention rate as your CRM metric and your target performance was 25%. This year, one of your key competitors has begun a campaign to ‘take away’ business from you. Your retention rate target has now been changed to 50%. Your job is to make certain that you are maintaining the data used to calculate this retention rate and ensure their accuracy and validity. You need to go back to your information requirements and blueprint documents and update them as a result of changes to CRM objectives and consequently metrics.

Data Integrity

In order for data to remain useful and create value, customer databases must be kept up-to-date. Be sure to work with your CRM technology provider, information technology staff and process owners to:

• Ensure that new customer information is immediately updated in the CRM database.
• When possible, get customers to update their own records.
• Track the level of usage for each data field in your CRM system and question the usefulness if below a certain usage level, which your company will need to determine.
• Purge customer records that have remained inactive for a certain time period.
• Conduct a regular audit for a subset of the files each year.
• Change the business rules (or metadata which is also called ‘data about data’) as required through the use of proper software.
• Make sure the updated information is disseminated to the rest of company, particularly to the customer-facing employees.

Intelligence Ownership

Last month, we discussed the importance of assigning an owner to each business process, whether customer-facing or analytical. The same holds true for categories or portfolios of customer intelligence. A person(s) or process owner(s) within the company must be responsible and accountable for facilitating the data maintenance process. If this ownership is not established, things will fall through the cracks result in poor decision-making.

Many companies create a formal or informal matrix structure, particularly when similar business processes (rather than functional areas) are used for different customer portfolios. A matrix organization chart can have process managers on one side and customer managers on the other side. This works well when the intelligence captured is done within the business processes. Some companies have taken it a step further and defined customer intelligence teams or committees to monitor intelligence quality for specific customer groups.

Rewards and Incentives for Performance Management

One of the challenges in maintaining customer intelligence is figuring out how to motivate and compensate employees for keeping information up-to-date. Employee performance is driven by the criteria used to measure results. If a sales rep’s success is measured by new revenues from new customers, will he or she focus any attention on retaining existing customers? The reality is that sales compensation programs usually go against the customer retention or loyalty philosophy. Compensation programs for operational areas normally focus on productivity increases rather than customer value. If customer retention and profitability are key CRM objectives for your company, then you must establish CRM metrics and compensation and incentive programs that reinforce the new intelligence capturing and maintenance behaviors.

Best practice companies have incorporated reward and incentive programs into the performance appraisal process by:

• Modifying job descriptions to include the specific behaviors and actions employees must display in order to achieve the CRM objectives.
• Training employees on the new CRM-focused activities.
• Working with HR to develop appropriate customer-based compensation and reward systems.
• Developing recognition programs for accuracy and validity of customer intelligence.
• Creating career progression programs focused on the achievement of customer-centered objectives.

Dr. Nancy Rauseo is on the faculty of Florida International University’s College of Business Administration where she teaches marketing. Nancy holds a Bachelor of Science in Industrial Engineering from Purdue University and an M.B.A and Ph.D. from Nova Southeastern University. Prior to her teaching career, she held various senior management positions for over 20 years in the areas of sales, marketing and technology implementation. Dr. Rauseo is also Instructor for FIU’s Professional Certification Program in CRM. For more information, visit: http://business.fiu.edu/epe/crm.cfm