CUSTOMER DATA: WHAT'S IT WORTH?

From the Editor, Gabriele Piccoli

It is now clear that organizations can wring significant value from their customer data. There are plenty of exemplar cases of firms that have achieved substantial success in this arena -- Harrah's Entertainment, Anheuser-Busch, and Ritz-Carlton Hotels, to name a few. As a matter of fact, the majority of the 106 organizations that participated in our survey recognize the potential value of customer data and have some strategy in place that uses it. Most of the remaining organizations have minimal efforts in place or are still in the planning stage, and only 3% have no plan to employ customer data as a resource in their strategy in the future.

Interest and awareness is high, but significant challenges remain to be overcome when developing and implementing strategies that leverage customer data -- as witnessed, for example, by the fact that only one-fifth of our respondents are currently satisfied with their organization's ability to effectively leverage customer data for analytical purposes.

With the considerable pressure that more informed customers are able to put on a firm, the importance of customer data as a strategic resource for a firm is bound to grow. A successful firm will increasingly be one that is efficiently and effectively customer-focused. An efficiently customer-focused firm is one that will optimize its customer strategy not by underserving and alienating valuable ones while wasting precious resources overserving unprofitable customers; rather, it is one that will be able to achieve the most with its marketing and operational resources by attracting the most profitable customers and retaining them with appropriate personalization and reward strategies. An effective customer-focused firm is one that will implement strategies that leverage its available customer data while not fighting the nature of its industry but instead leveraging its unique characteristics and capturing the opportunity it affords. It is one that is able to implement the selected strategic initiatives by matching appropriate technology and identifying suitable metrics and analytical methods.

Perhaps most importantly, the effective customer-focused firm is one that practices the notion that strategic implementation goes well beyond technology implementation, starting with the development of a business case that clearly articulates the purpose of the initiatives and its strategic objectives -- a business case that creates the necessary championship to enable process change, overcome inertia, and institute a reward system that ensures the initiative's success.

In this issue of Cutter Benchmark Review, Ken Collier and I sought to offer guidance and ideas for how to use customer data as well as decision-making tools to prioritize initiatives and maximize their effectiveness. In an attempt to be as comprehensive as possible, we span both strategic decision making and individual initiative's implementation issues. For most organizations in the new millennium, it is not a matter of whether to extract business value from customer data, it is a matter of how to do it. We hope that our work will help you and your firm to chart the optimal customer data strategy.