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Four first steps for customer data management

Forrester's Mike Gualtieri details how to develop a unified plan to manage customer data that gives business users what they need to manage CRM programs.

Customer data silos are bad. We all know how it gets to that point: years of building requirements on top of requirements, the creation of business and technology stovepipes, and the lack of a clear customer data management strategy.

The resulting hodgepodge of databases, applications and systems leads to business process workarounds that limit the ability of a business to move forward with customer marketing and customer service efforts as fast as it wants to. Customer data management (CDM) has become a top priority now that we are living in the age of the customer, and an effective CDM strategy will set the table for successful efforts to foster continued customer loyalty.

The goal should be simple: Provide the various business functions to a company with quick and complete access to all of the customer data and analytics they need, both now and in the near future. The key question is: How do you formulate a next-gen strategy for managing customer data that is both visionary and pragmatic?

What is customer data management?

First, let's look at what the customer data management process involves. The ultimate goal is to harmonize data about customers and customer interactions from different source systems so it's clean and consistent and offers a unified view of individual customers.

Doing so creates comprehensive customer profiles that can be used to improve customer relationship management (CRM) programs. It also enables analytics applications that help drive targeted marketing to both existing and potential customers. For example, analytics and marketing teams can segment customers for different marketing campaigns, uncover cross-selling opportunities and identify high-value customers that merit special attention.

Customer data management initiatives often consolidate relevant data into a single customer database, a data warehouse or -- increasingly -- a big data system, such as Hadoop. Many also include data governance programs and associated master data management measures to help companies create common data definitions, reference data sets and data-usage policies, including procedures designed to protect customer privacy and prevent the misuse of personal data.

With that in mind, here are four steps that your organization should take to achieve its customer data management goals.

Step 1: Identify the stakeholders for your customer data -- and who owns it. No one person has complete visibility into customer data requirements across your entire business or the customer journey as a whole. While functional areas including product development, operations, marketing, sales, finance and customer experience management have many requirements in common, they all have unique ones as well. And when a business has multiple product divisions, customer data requirements become even more complicated.

The first step in formulating your strategy is to assemble a working group of customer data subject matter experts (SMEs) across all of the functions and divisions in your business. This working group will play a key role in helping you understand the requirements across the organization to avoid creating yet another customer data management silo.

How customer data management works
Key elements of customer data management initiatives

Step 2: Perform a needs assessment. With your strategy team in place, it's time to harvest their wisdom. The current and future requirements of your entire business must inform your customer data strategy development -- or it's doomed to fail. Your working group needs to help you perform a needs assessment. This assessment shares all of the characteristics of a traditional requirements-gathering process, but with a careful eye toward likely future requirements, as well.

Which business capabilities and processes create, transform and use customer data? The best way to get at these requirements is to ask SMEs to describe existing and planned business processes that directly involve customers or prospects -- doing so will reveal customer data needs and applications.

Reach out to the members of your working group through surveys, individual interviews and group meetings. It's also valuable to have an IT expert participate in sessions with business SMEs to fill in the technical details of where the data resides and how it flows from the various data sources through your technology architecture.

Step 3: Ideate your strategic options. You should now have the essential business and technical understanding of the customer data within your organization. Using that understanding to formulate a customer data management strategy is the fun part if you're creative and like to solve puzzles.

Your customer data management strategy must provide your business with quick and complete access to all of the customer data and analytics it needs, both now and in the near future.

You have to make sense of all of the requirements gathered during the needs assessment to generate strategic options for your stakeholders to consider. Remember the end game: Your customer data management strategy must provide your business with quick and complete access to all of the customer data and analytics it needs, both now and in the near future.

The key elements of your strategy will include business imperatives, technology and an implementation roadmap. The business imperatives will catalog the changes that the various functional areas and divisions need to make to streamline access to and sharing of customer data. The technology will make it possible. The roadmap will document what it will take to make it happen.

It can be hard to know where to start the ideation process. Looking from the top down can give you the best view and ideas, but it overlooks the mess of processes and technologies that a pragmatic strategy must address. Looking from the bottom up categorically acknowledges your existing processes and technologies, but it can overly constrain your ideas.

The best solution is to oscillate between the two. Devise a big-picture idea unconstrained by existing processes and technologies and then dive into the depths to see how practical the plan looks -- and to uncover technical ideas that magically resolve major requirements.

Step 4: Prioritize your strategic options. Now you're ready for the final step in this strategic planning exercise: an internal roadshow to get stakeholders to choose from among the two or three options you came up with during the ideation phase. This step includes getting business buy-in from all of the stakeholders, including the executives who will ultimately have to approve and fund the new strategy -- with more effective marketing and improved CRM as the primary selling points for the move to manage customer data in a more coordinated way.

Next Steps

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