6.2 Strategies for managing customer information

6.2 Strategies for managing customer information

Large organizations routinely collect vast amounts of personal information about their customers through the transactions they conduct. Organizations such as financial institutions, health care providers, travel agencies, retailers, automotive manufacturers, and communication companies, among others, use this data in a variety of ways and for several reasons:

• For targeted marketing based on individual preferences

• To analyze customers for profitability

• To evaluate their own service levels

Simply gathering information and storing it will not produce measurable business results; many CRM strategies have failed to achieve objectives because of difficulties in developing a strong understanding of who customers are and what they really want and applying this knowledge to customer relationship strategies and processes. (see Figure 6.2) Some companies build large multiterabyte (1000 gigabytes equals 1 terabyte) data warehouses to crunch information about their customers in an effort to determine their buying habits or product preferences. Oftentimes, correlating customer purchasing habits is not properly done-just because data can be correlated doesn't mean the relationship between one set of data and another is significant from a business viewpoint. Obviously, technology and business processes must be applied in a logical context to ensure that customer data are applied in a way to meet CRM objectives. (see Figure 6.3)

Figure 6.2: Corporate functions and customer interactions.

Figure 6.3: Enhancing customer service with technology.

CRM brings technology to bear on business processes to enable organizations to use historical customer transaction data to manage customer relationships better. CRM is based on a set of technology tools that allows organizations to capture, analyze, and apply large volumes of detailed customer data to achieve a fuller understanding of their customers and to make more informed business decisions. Informed business decisions are the ultimate beneficial result of successful corporate CRM strategies. Those companies that adopted formalized CRM strategies early in their corporate histories have been achieving measurable business results through CRM initiatives, but, as noted previously, others may have to totally revise their corporate cultures, even completely do away with their traditional ways of dealing with customers in their sales and marketing programs. Organizations that do not have a formal process for managing customers by monitoring and gathering historical transaction data and then analyzing this data to determine how to respond to each customer's needs will have to put major efforts and budgets into developing CRM strategies. (see Figure 6.4)

Figure 6.4: Integrating customer knowledge with corporate functions.