InformationWeek

September 14, 1998

Executive Report: Maximum Value From Customer Data

By Justin Hibbard

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f your company doesn't have a strategy for using customer data, the time to get one is yesterday. Business battles in the next decade will be won and lost according to how well companies know their customers and how fast they respond to customers' needs. These days, companies are no longer asking whether to invest in customer information systems-they're asking how much to invest.

The evidence is clear. In an InformationWeek Research survey of more than 700 IT managers this year, respondents ranked improving customer service as their No. 1 business priority. Forrester Research expects sales of customer-management technologies such as software for sales-force automation, customer interaction, and technical support to grow to $3.5 billion in 2000 from $1 billion last year.

Building an organization focused on customers requires masterful integration of data warehouses, call centers, Web sites, and all the other technologies that monitor customers' vital signs minute by minute. But technology alone is not enough. Companies have to be prepared to act on the intelligence their customer information systems provide and adapt quickly to customers' ever-changing demands.

chart Take Citibank, which collects information from its customers through its Web banking services. The information is fed directly to developers who are building upgraded versions of the bank's Web applications. The bank rolls out upgrades every three months, so developers must be able to respond to customer feedback quickly.

Citibank's top managers recognize that the speed at which companies must respond to market changes is accelerating. Two years ago, CEO John Reed told managers to do away with yearly budgets in favor of 18-month rolling forecasts, which managers update every quarter. Today, if customers suddenly want new Web banking features, Citibank's developers can switch gears and deliver them quickly.

But speed is just one requirement for responsive customer service. Customers also want personal attention. In an era in which companies know each consumer's shoe size, consumers expect tailored shoes, not one-size-fits-all. Some innovative companies are building entire lines of business around systems that deliver customized products and services on a mass scale.

For instance, the integrated marketing group at magazine publisher Meredith Corp. is one of the company's fastest-growing business units. The group is made up of marketers and publishers who use Meredith's customer database to create highly targeted custom publications. The database contains information about 70% of U.S. households.

When Solo Eyeglasses approached Meredith, it had almost no brand identity or loyalty. The integrated marketing group mined its database for customers likely to wear eyeglasses and created an eye-care magazine geared toward them. Market research shows customers now ask for Solo eyeglasses by name.

That kind of innovation doesn't come from a database alone. It comes from knowing how to use customer data effectively. Ronald Griffin, senior VP of information services at the Home Depot Inc., a hardware retail chain, puts it this way: "Information in the absence of execution is just overhead."

Associate editor Justin Hibbard covers intranet applications.

"Executive Report: IT Innovators"

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