The Role of Customer Information Management and Usage in CRM

1. The Role of Customer Information Management and Usage in CRM CIO Conference August 20, 2002

2. The Integrated Enterprise DrivesValue Creation through CRM Research shows that companies not investing in CRM are leaving millions of dollars in profit on the table.1 Added Revenue per $1 Billion Improvement AreaAdded Revenue (MM) • Customer Insight $25 • Customer Offers $19 • Customer Interactions $40 • High Performing Organization $40 • Enterprise Integration $17 • Total $141 1How Much Are Customer Relationship Capabilities Really Worth? , Accenture, 2001

3. Managing Customer InformationIs Critical to CRM Success The number one reason CRM projects fail is the customer data is ignored. Gartner Research, 2001 Inability to “access all relevant customer information” emerged as the top CRM challenge in a worldwide survey of 125 financial services companies. Cap Gemini Ernst & Young, 2001 Integrating disparate distributed data, applications, and legacy systems across multiple organizations is the single most significant technology barrier to enterprise CRM execution. Meta Group, 2000

4. Data Quality and Integration Impact Business Intelligence “Sources agree that the most difficult early stage in the BI deployment process is finding and fixing discrepancies in data – a client’s name spelled 10 different ways in different departmental systems for example…” Attacking the Data Dilemma, Business Week, 2002 According to IDC, efforts to prepare data consume some 70% of the effort of any analytical undertaking. International Data Corporation, 2002 “Experience is revealing that more than half of data warehouses built fail to meet expectations because of poor information quality.” Improving Data Warehouse and Business Information Quality, Larry English, 1999

5. Common Challenges Of Information Management • Fragmented, inaccurate or outdated customer data • Data is not accessible where needed • Recognizing customers at all points of contact and synchronizing data continuously • Real-time access & update capability • Business Intelligence reporting (also SEC) • Intermediary control of customer data • Privacy compliance

6. Research Analysis The Role of Customer Information Management and Usage in CRM Myths & Realities August 2002

7. Best Practice Recommendations in Information Management and Usage • Create an Enterprise Customer Information Plan • Obtain Resources to Support the Plan • Build Measures of Data Quality • Define a Single Customer View • Collect Transaction History Data • Use Customer Data to Understand Customer Worth, Lifetime Value, Preferences, and Retention Drivers • Build a Customer Infrastructure that Supports Recognition and Welcoming of Customers • Account for Third Party Data (Intermediation) • Understand Privacy • Consider Outsourcing Business Processes

8. RESEARCH FINDINGS Understanding and measuring the impact of data quality Incentives and sanction supporting data quality Build Measures of Data Quality “The Data Warehousing Institute estimates that data quality problems cost U.S. businesses more than $600 billion a year.” Data Quality and the Bottom Line, Data Warehousing Institute, 2001

9. The Constantly Changing Consumer Landscape is the First Challenge Annual U.S. Consumer Change Statistics 4.7 Million Marriages (National Center for Health Statistics) 1.53 Million First Births (National Center for Health Statistics) 2.04 Million First Time Home Buyers (National Association of Realtors / Fannie May) 1.9 Million Divorces (National Center for Health Statistics) 1.4 Million Work Retirements (Social Security Administration) 43 Million Residential Moves (USPS) Life Stage Changes

10. ACCURACY COMPLETENESS ACCESSIBILITY AVAILABILITY REDUNDANCY CONSISTENCY PRIVACY ETC… Improving Data Quality:Key Areas to Measure Only 23% of data warehousing projects show ROI. 75% of the successful projects have formal metadata mechanisms. Data audits reveal that invalid data values in the typical customer database average 15% to 20% Information Impact In a Gartner Group survey, the perceived data quality level of companies interviewed was 93%, but the actual quality discovered through audit was 43%. 1.5 million new addresses are added every year USPS 40% of keyed customer data has errors USPS

11. Case: Impact of Data Quality & Integration RODALE Rodale wanted to improve their CRM performance. They already had extensive experience in managing large volumes of customer data but the sources, quantity and complexity was reaching a critical point. Step 1: Customer Data Quality & Integration Corrected data quality issues (40% of Rodale’s keyed data contained errors and there were 16MM duplicates in one file of 70MM records) and created a 360 degree customer view across all product lines and delivering immediate access to the full range of a customer’s past transaction activity and external data. Step 2: Prospect & Customer Marketing State of the art database with 187 million names and close to 2,000 variables per record with high speed update system to minimize downtime and speed up processes. Database supports 270 million promotions a year and holds data from 53 web sites that draw a total of 19.3 million visitors each year. Database grows 30%-40% each year.

12. RESEARCH FINDINGS In depth understanding of 360 degree customer view issues Ability to share customer data at multiple touch points Appropriate access to data across the organization Define a Single Customer View “The bedrock of CRM is having a single customer view – being able to identify all the products, services…as well as knowing all the interactions that have taken place.” Gartner Group, 2000

13. 2. Enables a single, integrated view Single View 360o Credit Names & Addresses Marketing Account Relationships 270o 90o Risk Demographics Customer Interactions Profitability / Life Time Value 180o What is a Single Customer View? 1. Accurately recognizes your customers 3. Provides appropriate degree of recency

14. Recognition Single View Analytics Offers Interactions Measurement Business Decisions Build a Customer Infrastructure that SupportsRecognition and Welcoming of CustomersThe Ripple Effect Accurate customer recognition, will avoid data fragmentation, Leading to analytics based on full information. This will often make your offers more relevant, strengthen your customer interactions, resulting in accurate business measurements, and quality business decisions.

15. Case: Leveraging the Single Customer View To improve customer care for their high end consumers, Mercedes Benz needed to gather all the information they had about a customer into one, comprehensive, meaningful view. MERCEDES- BENZ “We had excellent depth of customer data, but the information in our databases was fragmented and redundant, even though we had built a lot of internal tools to remove duplicates.” Mark Juron, Mercedes-Benz Step 1: Customer Data Quality & Integration Specific integration problems included linking disparate records that could not be reconciled using traditional efforts, integrating business and consumer records, tracking customers through life stage changes and creating a more usable household level view. Step 2: Single Customer View Mercedes was then able to built models to determine projected lifetime value and begin to market specific vehicles to individual customers. Now, Mercedes is able to integrate data on a real-time basis in support of all consumer touch points.

16. CMAT RESEARCH FINDINGS Understanding of privacy/ data protection issues Gathering and use of customer preference data Understand Privacy “True consumer advocacy actually represents a significant opportunity for businesses to improve customer loyalty, boost retention and increase market share.”Jennifer Barrett, Chief Privacy Officer of Acxiom

17. Businesses FaceA More Regulated World • Fair Credit Reporting Act (FCRA) • Gramm-Leach-Bliley Act (GLB) • Health Insurance Portability and Accountability Act (HIPAA) • FTC Telemarketing Sales Rules • State Do-Not-Call Laws • U.S.A. Patriot Act • EU Privacy Directive

18. Building Trust Requires… • Appropriate Policies and Practices • Reducing Public Relations Risks • Development of Supporting Technology

19. Conclusions • Data quality perception vs. reality: it is mission critical to the integrated enterprise. • Single customer view is dependent upon your ability to recognize the customer. • Privacy brings great bottom-line opportunities – and risks. • Acxiom Research Paper will be sent to all conference attendees; please leave your business card.