David Raab Article Archive

Last month’s column discussed one set of technologies used to provide a “360 degree view of the customer”. Like other buzzwords that have reached a critical mass of acceptance, the “360 degree view” is now accepted as a self-evidently sufficient justification for a systems project. This puts it right up there with “lower costs” and “increased revenue” as objectives which a system must prove it supports, but which need not themselves be shown worthwhile.

But is the “360 degree view” really so valuable? If you know this article is written by consultant, you can guess the answer: it depends. But at the risk of losing my union card, I’ll give a definite answer instead.

No.

The reason will be familiar to any data warehouse developer. Different data sources have different values. As in a warehouse, sources should be added only when there is a specific business need for their contents. That fundamental rule doesn’t change just because the subject is customer data.

Nor is there a change in the fundamental process for assessing the value of adding a source. You identify the business process involved, estimate the benefits that would result from having the new data available, and compare those benefits to the costs. It’s easier said than done, but at least conceptually there’s nothing new.

Well, almost nothing. Data warehouses have traditionally supported reporting and analysis applications used by corporate management. The value of a new source is the value of improvements in management decisions made possible by the new data. The same approach applies to projects that give more timely access to existing sources, such as data for real-time sales or inventory analysis.

Customer data applications are sometimes also analytical, but are increasingly tied to live customer interactions. This may or may not require real-time updates–for example, a customer priority code that is used to select service levels may be updated just monthly. But interaction management always requires direct connections to operational touchpoint systems such as call centers and Web sites. This is something new, since traditional warehouse applications have rarely required such connections.

The difference is important because making connections to touchpoint systems is not trivial. A data source valuation must therefore consider not only the utility of adding the new source–say, the improvement in accuracy of a predictive model–but the cost and practicality of distributing the improved information to a touchpoint where it can do some good. In fact, the assessment goes beyond technology to include the ability to change business practices, such as the behavior of call center agents. Both data distribution and business practice change can be substantial barriers to taking advantage of customer data. This applies largely to the first project that integrates the customer database with a new touchpoint. Once that first project has built the basic connections and new business processes, later projects can incorporate new data sources with relatively little incremental cost.

Conducting this sort of valuation requires a true business process perspective. This perspective will be new to many data warehouse practitioners, who have not needed it to perform the simpler valuations appropriate for reporting and analytical system improvements. It is definitely more work than the older approaches. But there are plenty of people to learn from, since business process analysis is central to the increasingly common approaches of formal process and quality management.

Incidentally, there’s also a strong case to be made for applying the process-oriented approach to analyzing the customer experience. In this case, the analysis is organized around the “process” of being a customer: that is, the sequence of events experienced by a customer as she moves through the business relationship, rather than the sequence of events the follow an item being manufactured or an order being processed. It might even be worthwhile to extend the analogy to consider customer experience management as the “process of manufacturing valuable customers”. Sounds like a good conference presentation at the least. But someone else will have to pursue that thought–it’s a bit too abstract for my own tastes.

Back to customer data. The need to integrate it with touchpoint systems suggests an alternate meaning for the “360 degree view of the customer”: making customer data available to all company systems. It would be a “360 degree view” in the sense that every system gets the same information about each customer. Imagine all the customer systems around the edge of a circle, staring at a customer in the center and seeing the same thing. What they see is not necessarily complete, but at least it’s consistent. The business advantage of having the same information available to all systems is it enables them to treat each customer consistently. Consistency is something that customers care about, so it has a value of its own. Of course, consistently bad treatment is not particularly appealing, so it’s important that the consistent customer data be accompanied by appropriate, customer-specific business practices.

This brings us back to the original question: is the “360 degree view” (now defined as universal access to consistent customer data) so valuable that it constitutes a self-evident justification for all touchpoint integration projects? Is enabling consistent customer treatment important enough to justify any reasonable expense?

It depends.

* * *

David M. Raab is a Principal at Raab Associates Inc., a consultancy specializing in marketing technology and analytics. He can be reached at draab@raabassociates.com.