InformationWeek
Defining The Business Value Of Technology
May 17, 1999
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Being customer-centric is also about aligning a business to a customer's every need. The American Management Association, a New York company that publishes business books and provides educational forums and seminars to many large companies, used to design products without tapping its customers for ideas. The company had as many losers as it did winners. "The customer's only input was either to buy or not to buy the product," says CIO Bruce Alper.
So AMA set up a knowledge base built on the Lotus Domino server to let sales, marketing, and product people share information about customer needs. The company implemented Oracle's database and sales and marketing applications to help it track individual customers, the seminars they're taking, and the skills they're trying to build. It also polls customers over the Web to get feedback. Because the companies that use AMA's services need to know which of their employees are participating and how they are benefiting, AMA will soon offer an extranet containing that data.
AMA's initiatives have worked for Bellmay Inc., a Yonkers, N.Y., manufacturer of fragrances that began using AMA's seminars six months ago. The company is about to adopt AMA's seminar-tracking service.
"We have to find out which dollars were spent, and if they were spent well," says Sari Masin,
Bellmay's seminar coordinator. That's a complex task, because the employees come from both
coasts and all parts of the business, and often take as many as four to six seminars
each.While new technologies such as customer-relationship management packages and data mining tools are key to customer centricity, the InformationWeek Research survey illustrates how far most companies have to go. Packaged front-office applications will be used by 36% of the respondents, while 57% will use data mining tools. A much higher percentage of companies use relational database records and spreadsheets.
Analysts say that such solutions may have served well for years, but they pale against the data mining capabilities of decision-support software, or the best practices and automation contained in front-office packages. "You can have your customer in a database, but that doesn't help you do things like up-sell and cross-sell," says Hurwitz analyst Bonadio. "In the Web world, the companies that still use those solutions are going to lose out to the ones that move on."
Profitability Assessment
Data warehouses and data marts can help play a part. In InformationWeek's Priorities survey, 70% of companies say those products will be critical to their customer-centric efforts. People's Bank and Trust has a formidable data warehouse initiative that includes data warehouses focusing on company profitability, product profitability, and customer profitability. Using its customer profitability data warehouse, based on a product called Harland Maxsell from Harland Co., the bank recently targeted a group of clients whose certificates of deposit were retiring and offered them incentives to open a money-market account. The bank achieved an unheard of 135% of its goal in just two weeks.
The company can also use the data warehouse to determine which customers are profitable: "We've found that our clients have managed us very well over the years," says VP Connors, noting that many have negotiated better deals than their business merits. People's Trust can now tailor appropriate interest rates and pricing for customers; it recently decided not to subject some of its longtime profitable customers to a new price increase.
The U.S. Mint, which has a strong business in coin collectibles, uses decision-support tools to help it find new customers. The Mint turned to consulting firm Dialogos Inc. to build it a custom data warehouse, called Marcus, that "lets us track customer's buying habits, so we can see what they look like and where they live," says CIO Jackie Fletcher.
The Mint--which will spend $5.2 million on IT this year--can now send targeted mailings to those people who may be interested in a particular collectible, depending on their demographic.
Few technologies have changed the notion of customer centricity like the Internet, and 71% of IT executives surveyed said Web customer-support software will be important, while 56% already use personalized Web sites to tailor goods and information. Cyberian Outpost Inc., an online computer store in Kent, Conn., uses a Sagent data mart to create what it calls "transparent personalization"--what the customer sees on the Outpost.com E-commerce site is dictated by the customer's preferences, past actions, and current purchases. While personalization helps customers make decisions, it has clear benefits for Cyberian Outpost, too: The company's ability to cross-sell to existing customers is dramatically boosted. Chief technology officer Michael Starkenburg says sales margins have significantly improved as a result.
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