Responding to questions at two recent forums, 95 percent of the attendees, representing approximately 100 organizations, agreed that improving customer satisfaction was among their company’s strategic objectives. However, less than 5 percent of them said that they knew what would satisfy their customers. Is this a problem of culture, a failure to balance efficiency and effectiveness, a result of broken business processes? Or, as Ventana Research suspects, is it simply the lack of an enterprise-wide, coherent strategy for information management?
Through their actions, many companies demonstrate their structural inability to relate to their customers. Consider: Marketing deals with their target audience simply as an aggregation of demographic data, as prospects who may be induced to buy their products or services. Sales then woos prospective customers by all manner of means to encourage them to purchase. Yet once they have signed up, companies seem to view the same customers as individual cost centers, and often as a “pain in the backside.” As customers move through the company’s lifecycle, its relationship with them continues to bounce back and forth. The support organization may react indifferently, to the point where the frustrated customer has had enough and threatens to leave. Then the recovery department steps in and the wooing begins again.
All of this occurs despite the fact that businesses continue to quote research to the effect that it costs six times more to gain a new customer than to service a current one and seven years on average before a company can make a net profit from an individual customer.
The logical conclusion is that the time for caring should be during the support phase, but this requires organizations to carefully balance effectiveness against organizational efficiency when responding to customer contacts. In recent years this balance has been severely disrupted because, in Ventana Research’s estimation, many companies have cut costs to a point where there is no margin for further reductions. Now they must turn to improving the effectiveness of the people, processes and systems that handle customer care.
One common approach used in corporate attempts to improve effectiveness has been business process re-engineering. But such projects typically have focused on improving sales, support and production in isolation from each other; most projects have not looked at the processes that span the complete customer life cycle. This is short-sighted, since customers’ levels of satisfaction are determined by all their interactions with an organization. Broken promises made at the marketing or sales stage often lead to vastly increased support costs, customer frustration and disillusionment and an early end to the relationship.
Many people say that trying to design and execute end-to-end processes across a customer’s life cycle is an impossible dream. At Ventana Research we disagree. It is challenging but far from impossible. And the fact remains that success will be rewarded with improved customer satisfaction and increased market share.
Frustrated at this challenge, some business users and leaders are prone to blame IT, complaining that the systems simply don’t support a single customer view. It is true that, when customer data is stored in ERP, CRM and supply chain management systems as well as various business applications, lines of business are forced to search for and extract data from all of them and produce reports with whatever tools they have. Organizations have tried implementing enterprise data warehouses, but many have found this doesn’t solve the business issue, since the completeness and clarity of the customer view depends on the quality of the data. Ventana Research believes the answer lies in developing an Enterprise Information Management strategy that places key business reference data, such as customers and products, in one central repository from which all other systems draw. Doing so can create a single valid source for this critical business data.
Increasing customer satisfaction is a business necessity in today’s highly competitive markets. However, research indicates that not many organizations achieve it, despite rhetoric to the contrary. CRM was supposed to deliver the answer, but in fact all it really did was automate the management of customer contact transactions. Ventana Research believes that organizations must step back, take a wider look at their customer-facing processes and develop an enterprise information strategy rather than variations on the traditional systems architecture. Within such a strategy, customer- and business-focused BI tools can help reap the rewards of having a single view of customers.
About Ventana Research
Ventana Research is the leading Performance Management research and advisory services firm. By providing expert insight and detailed guidance, Ventana Research helps clients operate their companies more efficiently and effectively. These business improvements are delivered through a top-down approach that connects people, process, information and technology. What makes Ventana Research different from other analyst firms is a focus on Performance Management for finance, operations and IT. This focus, plus research as a foundation and reach into a community of over two million corporate executives through extensive media partnerships, allows Ventana Research to deliver a high-value, low-risk method for achieving optimal business performance. To learn how Ventana Research Performance Management workshops, assessments and advisory services can impact your bottom line, visit www.ventanaresearch.com.
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