E-MailThe Business Value of Customer Data
According to a recent survey by Cutter Consortium, 64% of the corporations surveyed lack a formalized strategy pertaining to the use of customer data.
The survey, analyzed by Cutter Benchmark Review Editor, Dr. Gabriele Piccoli and Cutter Consortium Senior Consultant Ken Collier, was devised to investigate the perceived value of customer data in organizations worldwide. With this foundation, Piccoli and Collier tackle the issue of customer data head-on and benchmark current organizational practices. They set out with the goal of determining the challenges that organizations face when it comes to collecting and using customer data and provide some guidance and ideas focusing on the strategic possibilities of customer data use.
Survey Results: To what extent does your firm currently seek to extract value from customer data?
- Currently have some effort in place - 36%
- Currently have significant effort in place - 23%
- Currently have minimal effort in place - 22%
- Planning to do so in the future - 16%
- Currently have no effort in place and are not planning one - 3%
While there is no doubt that customer data has business value for most firms, implementing a formal strategy is difficult.
Survey Results: Do you have a formalized strategy pertaining to the use of customer data?
- We are planning a formal strategy - 27%
- We will start planning a formal strategy soon - 24%
- We have the strategy and are executing it - 21%
- We have the strategy and are implementing it - 15%
- We don't have a strategy and don't plan to create one - 13%
According to Dr. Piccoli, "Extracting value from business data requires an attentive cost-benefit analysis. Such cost-benefit analysis, particularly when focusing on customer data, is not straightforward because it calls for us to make a number of assumptions about the uncertain gains the use of the data will yield and for an estimation of costs associated with collecting, storing, processing, and distributing this customer data."
Survey Results: What challenges do you face in getting projects that use customer data for analytical purposes approved?
- It is difficult to show acceptable ROI - 43%
- Inertia and resistance to change - 42%
- Turf battles over data ownership - 34%
- Privacy concerns - 29%
- Other - 12%
"This report provides suggestions for how to develop a compelling business case for initiatives that leverage customer data. It offers a convincing framework for decision making, including a roadmap for developing a customer analytics strategy, and a thorough discussion of the technical infrastructure and data acquisition strategies needed to enable such initiatives," says Piccoli.
Piccoli concludes, "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."
To request the Cutter Benchmark Review Report in which these comments were made, or to schedule an interview with Gabe Piccoli or Ken Collier, contact Ron Pulicari (+1 781 641 5114) or e-mail at press@cutter.com.
See more information about Gabe Piccoli and Ken Collier.