The Age Of The Customer Requires A More Intelligent Enterprise

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1 January 22, 2014 The Age Of The Customer Requires A More Intelligent Enterprise A Framework For Company Change Fueled By Customer Insights by Jody Sarno with Carlton A. Doty and Collin Colburn Why Read This Report Companies across the globe and from every industry are building teams to translate mountains of information into a better understanding of their customers. In the age of the customer, knowing your customers and quickly translating and applying that knowledge across the entire enterprise is no longer a competitive advantage, it s a competitive necessity if you are to win, engage, and retain customers. Customer insights (CI) teams will play an essential role in their firms success or failure during these changing times. This report explores the transformation that customer insights professionals firms will need to make to become a data-driven, customer-centric, intelligent enterprise that thrives in the age of the customer. This is No Time for Business as Usual Your customers expectations are changing, fueled by the constantly connected world and the mindboggling speed of technology enablement. Despite the pace and magnitude of all this change, many firms that we speak with insist upon conducting business as usual. A CI leader in a global financial services firm said, Change is exactly what we need as companies struggle to survive in competitive markets with commoditized products that we are desperate to differentiate. Customer insights professionals who embrace change and enable their businesses to act quickly on customer knowledge will transform their firms into an intelligent enterprise, which Forrester defines as: A company in which customer knowledge is drawn from everywhere, created centrally, and shared across the entire enterprise, so all stakeholders can act upon it and measure the results. This sounds like the aspiration of nearly any customer insights team, but in reality, few can claim success at such a transformation. Why is it so difficult for firms to become an intelligent enterprise? This is a journey, not a destination, and it s a difficult one because: Leaders lack real commitment to customer centricity. Many firms deliver little more than lip service to customer centricity. A line in a mission statement about exceptional customer experience is pointless and impossible to achieve if the firm doesn t know its customers current and future needs. A financial institution we interviewed that is struggling to keep pace with competitors shared that its executives are spending freely to understand the pain points in customer experience, but spending very little in deriving the insights that would inform how to improve the experience. Firms that operate with inadequate CI staffing, substandard tools, and a lack of visible executive support will fail to meet customer expectations. Headquarters Forrester Research, Inc., 60 Acorn Park Drive, Cambridge, MA, USA Tel: Fax:

2 The Age Of The Customer Requires A More Intelligent Enterprise 2 Silos create a disconnected view of the customer. When channels or departments deliver differing views of information, leaders lose confidence in the company s data, resulting in delays, dissension, and disappointment. Most firms we interviewed fall victim to this problem and fail to deliver an enterprisewide view of the customer. Even the iconic Disney, which is touted for excellence in customer intelligence, struggles with this same issue because the insight is siloed within each of its five business segments. What s the risk? Incomplete or disjointed customer insight often forces leaders to make blind and potentially dangerous decisions. Legacy organizational structures inhibit strategic impact. Nearly all CI teams we spoke with are unsure how to best organize themselves or elevate the value they deliver. Furthermore, we found that the number of teams touting to improve marketing and business performance through customer-focused data-driven activities is multiplying, even within the same business unit. Leaders are perplexed with the internal alphabet soup that claims to deliver customer knowledge and competitive advantage, including CI, MI, CX, and BI (customer insights, market insights, customer experience, and business intelligence). A major insurance firm recently reorganized the analytics function completely out of marketing to put it under the chief financial officer (CFO), further widening the knowledge gap. Forrester believes this is a mistake, and it won t take long for the firm to realize it. Insufficient technology investments slow progress. Firms of all sizes are failing to enable their CI teams with appropriate tools and technology. SQL, Excel, SPSS, and Access are no longer adequate, as CI professionals struggle to meet internal expectations with multiplying volumes and varieties of data. Chief information officers (CIOs) and chief marketing officers (CMOs) alike must shift budgets and talent to interpret, analyze, and automatically act on the massive amounts of customer data collected. Left unchecked, this underinvestment will result in a crippling inability to act at the speed of business, and it will leave leaders to rely on guesswork to drive marketing and business decisions. WHAT Intelligent enterprises do well Now that we ve explained how most organizations fall short, you re probably asking what intelligent enterprises do differently. What are the key characteristics of these intelligent enterprises? You ll know your firm is on the right track when you excel at: Culture. Intelligent enterprises rally around the cause. They put the customer at the center of everything; they embrace change; and they understand the importance of business agility. The intelligent enterprise leaders we consulted share a common passion to enable the firm to meet its goals and objectives by applying customer knowledge to the business. These leaders consider their CI teams to be a strategic weapon and depend on them for an unvarnished view of customers.

3 The Age Of The Customer Requires A More Intelligent Enterprise 3 Organization. Intelligent enterprises break down organizational barriers by creating customercentric centers of excellence. This doesn t necessary mean they centralize all data-centric teams. Some centralize, while others mandate collaboration and data sharing across departments, including CI, MI, CX, and BI, to deliver more complete insight. Whether dedicated or virtual, this new approach to creating and sharing customer knowledge is an essential step in the journey. Other departments that focus on the latest priorities like digital, mobile, and big data along with self-contained business units like customer care or product groups are typically slower to adopt this new approach. But eventually, as the firm learns the value of a complete view of customers, these silos will become beneficiaries of the new path forward. Automation. Intelligent enterprises act at the speed of business through automated responses to opportunities or risks as they arise. A financial services CI team that we spoke with replaced a process driven by ad hoc requests for information with an automated system built on rules-based algorithms that trigger actions such as personalized communication, offer optimization, and crossdepartmental notifications. This kind of automation frees resources for more strategic activity, but more importantly it speeds insight to action timeframes needed to meet customer expectations. Identification. Intelligent enterprises create a unique identifier for customers. Unique identifiers enable firms from industries as diverse as telecom, financial services, media, retail, and high-tech to avoid the agony and inefficiency of manually tracking, trending, and tying together customer interactions from disparate databases. This approach is often accompanied by strong data governance and management and a robust tag management strategy that enables intelligent enterprises to know their customers regardless of channel, device, and touchpoint or business unit. HOW intelligent enterprises will win in the age of the customer CI professionals will enable the intelligent enterprise as the market and customers expectations continue to challenge firms, but they will need to think differently about the way they serve the rest of the organization. In the age of the customer, it s no longer just about driving more efficient marketing campaigns. Today customer insights must: Inform business strategy. The one consistent message heard from CI professionals is the need to educate executives about the power of the unified insight they can create. Some leaders have heard the message and have charged CI with the role of strategic advisor to the firm. HP s Enterprise CI Team is tasked with setting the tone for annual planning by reporting on the state of the firm, delivering performance metrics, market share, and the voice of customer. The objective of all of this information is to point out opportunities, risks, and predictions for the coming year. Later, the CI team acts as an internal advisory firm by conducting analytic scenario planning and predicting the business impact of proposals from individual business units.

4 The Age Of The Customer Requires A More Intelligent Enterprise 4 Drive profitable growth. CI leaders who have harnessed the power of the unified view of customers will use the enhanced knowledge to drive revenue growth. By aligning with customerfacing sales endeavors and assisting them in gaining more ground, faster, CI teams will move from an internal support organization to a strategic partner. The senior vice president of an iconic entertainment brand did just that, enabling the firm to achieve far-reaching growth objectives even in the toughest of economic times by applying customer knowledge to the business. Improve experiences everywhere. What good is great experience design without the knowledge of whether that design truly meets customer needs? An industry-leading airline renowned for customer and employee satisfaction transformed its customer experience by applying deep customer insight. The new leader of customer strategy and development gathers all customer knowledge entities across the firm and consolidates them into a customercentric center of excellence. In this new CEO-initiated team, you ll find skill sets spanning customer experience, customer insight, market insight, customer loyalty, data, and analytics, as well as a CMO mandate to deliver the ability for the firm to make all decisions through the lens of the customer. Recommendations START YOUR JOURNEY NOW, BEFORE IT S TOO LATE The process of successfully transforming into an intelligent enterprise will be a different challenge for each firm. Understand that there is no quick fix, no magic pill, no marketing fairy dust but there is also no alternative. Firms that choose to continue with business as usual during the age of the customer will find themselves in the annals of failed companies. Success will be defined by your firm s ability to meet your customers expectations better and faster than your competitors. To do that, you must: Create a road map. CI professionals hold the keys to success in the journey to become an intelligent enterprise. By preparing an inventory of what and where customer knowledge exists in the firm, CI leaders can begin to understand the gaps that exist across the enterprise and develop a road map for filling those gaps. This road map will help executives understand how an optimized view of customer will enable greater speed and precision in the firm s ability to meet customer needs. Evangelize the vision. As keepers of customer insights, it s necessary to effectively communicate this knowledge to the leaders of the firm. Prepare a strategic view of customers, creating profiles, personas, and methods to leverage the knowledge to help position sales and marketing to win. Think of this as a state of the customer review that should be delivered monthly to senior leadership. Be prepared to listen to leaders about the challenges they face, and find ways for a data-driven decision to be made that resolves the

5 The Age Of The Customer Requires A More Intelligent Enterprise 5 issue. It won t take long before you find a senior executive sponsor willing to lead the charge to become an intelligent enterprise. Improve the product. CI must consider the insight it delivers as a strategic asset to the firm the customer intelligence product suite. Instead of delivering stats and facts to overburdened decision-makers, CI leaders must manufacture and distribute data-driven recommendations that can be easily consumed and understood. The product you deliver must enable the user to anticipate what will happen next if action is not taken. Consider the experience of your internal customers when providing this insight, give them more than queries and reports, and don t guess at what they want or need. Make data-driven decisions. You must remove one critical obstacle to success before becoming an intelligent enterprise the obstacle of indecision. Leaders are risk adverse. Void of empirical evidence, many move slowly to decide or choose to make no decision at all. Educate leaders on the insights available and listen to what they need. CI must create and deliver the data-driven insight needed to know where there are opportunities and risks and why they exist. Render executive decision-making safer and simpler to allow leaders to quickly act on customer desires and demands in order to delight them. Forrester Research (Nasdaq: FORR) is a global research and advisory firm serving professionals in 13 key roles across three distinct client segments. Our clients face progressively complex business and technology decisions every day. To help them understand, strategize, and act upon opportunities brought by change, Forrester provides proprietary research, consumer and business data, custom consulting, events and online communities, and peer-to-peer executive programs. We guide leaders in business technology, marketing and strategy, and the technology industry through independent fact-based insight, ensuring their business success today and tomorrow Forrester Research, Inc. All rights reserved. Forrester, Forrester Wave, RoleView, Technographics, TechRankings, and Total Economic Impact are trademarks of Forrester Research, Inc. All other trademarks are the property of their respective owners. Reproduction or sharing of this content in any form without prior written permission is strictly prohibited. To purchase reprints of this document, please clientsupport@forrester.com. For additional reproduction and usage information, see Forrester s Citation Policy located at Information is based on best available resources. Opinions reflect judgment at the time and are subject to change