Hack:
Vision for a Sustainable Customer-Focused Enterprise

Sustainable competitive advantage comes from actively measuring and managing to customer behavior and profit patterns better than the competition. Though multiple competitors might have relationships with the same customer, each is different. Each relationship is unique.

Unlike the purveyors of competitive advantage in the past—control of resources, economies of scale, and technology—competitive advantage and differentiation derived from unique customer relationships can’t be copied by competitors.

Relationships with profitable customers are of mutual benefit to both parties. Profitable customers behave differently. They buy value. They want a relationship. You can see the difference in the relationship patterns.  

When the relationship is actively measured and managed, your organization can unleash the potential of all the staff to create value.

In a sustainable customer-focused enterprise, everyone is focused on the customer, from the people who engage the customer directly to those who support them throughout the organization, from finance to operations. Being customer-focused is everyone’s job.

Every interaction with the customer, by anyone in the organization, strengthens or weakens the relationship. Whether it is an assigned account representative for an industrial supply chain; a client representative at a financial services company who integrates all of the financial products used by an enterprise client; or even security at the front door-- customer-focused companies have realized the importance of relationships. 

In a customer-focused enterprise, customers are seen as active participants in the business.

• Customer relationships are tied to profit. 
• The customer relationship measurement is tracked and managed like any other operational effectiveness measurement.
• The organization is aligned in a cohesive framework for high-profit revenue, while still being extremely responsive to its customers.

It’s time to think differently to achieve breakthrough performance like this.

With Customer Relationship Intelligence (CRI) and our breakthrough metric, Relationship Value, you can. 

COLLABORATE:  To Take a Customer Point of View.            

1. Collaborate on a Relationship Development Process.
   1. Relationships drive business. Always have. Always will.
   2. Relationships are created one Interaction after another over time.
   3. The Relationship Value metric measures whether an Interaction moves the relationship forward or backward. For example, downloading a demo is worth less than meeting with key executives. One bad Interaction can destroy the goodwill built up by a series of positive interactions; undermining the relationship and jeopardizing the company’s ability to build a sustainable competitive advantage. 
   4. It is the cumulative effect of the Interactions in developing the relationship that is determinative--not what Interactions were used or even how many--as long as the Interactions are cohesive and integrated.
   5. The Relationship Value KPI expresses the cumulative effect of a series of Interactions in developing or destroying a relationship, essentially becoming a numeric proxy for the underlying Interactions.
   6. Relationship Value measures cause-and-effect. With numbers there are patterns, enabling a strategic overview.  Good patterns can be replicated.  Destructive patterns can be avoided.
   7. Relationships are cross functional. A relationship development process aligns key Interactions found in marketing, sales, services, social media, community, finance, operations, and more BIG Data sources in one Interaction Record in one CRI Interaction Database.
2. Collaborate to build a unifying Operational CRI System.
   1. Operational CRI is real-time operational Business Intelligence for the front office. Operational CRI is a ‘game changer’ and the only enhancement to a Business Intelligence tool that balances individual customer Interactions with the cost to engage. Accumulated Interactions create the Relationship Value KPI, improving relationship development effectiveness and profitability.
   2. Integrate the Industrial Age and social media silos at the data level. Build a unifying Operational CRI (Customer Relationship Intelligence) System into existing BI / database infrastructure and then embed in contact management program(s).
   3. Enable the Operational CRI process using a collaboration layer cross-functional platform to access BIG Data. Our relationship development process highlights the Interactions that matter, including their Relationship Value (RV) and variable costs. Transform customer relationship management from anecdotes and “gut feel” into quantitative data based directly on these actions and transactions.   
   4. Control the layer with Business Intelligence dashboards. Access the dashboards directly or through windows in other applications. The CRI Strategic Dashboard provides management the ability to track strategy implementation. The Operational CRI Interaction Dashboard is operational and interactive. Frontline Staff, interacting with customers, provide updated reactions not otherwise captured within BIG Data.                       
   5. Leverage Collaboration Layer Platform Services: A host of new database tools and techniques have been introduced in recent years including Data Virtualization, Data Integration, ETL, Master Data Management, Data Federation, Data Governance, and Advanced Analytics like Predictive Analytics, Data Mining, Sentiment Analysis, Text Analytics, Discovery, and more.  They can now be employed in what was previously managed in an ad-hoc fashion at best– collaboration to affect customer relationships.
      

Innovators’ Note: An enterprise deployment of Operational CRI is built into a sophisticated BI / dashboard infrastructure to integrate the entire customer lifecycle at the data level. The BI tool is then embedded in contact management program(s) across the enterprise.  Until recently most BI tools have been used as point solutions for individual functions. Operational CRI needs an enterprise view.  

Early on we had envisioned that the Operational CRI System would be built on top of existing CRM tools, then we thought Marketing Automation tools, and then the community/ collaboration platform for Social Business. (We put that Social Business POV in earlier HACKs. See Materials for links.) These customer-facing and community systems do have contact management programs, which are needed. But each of these tools alone is incomplete. Some of the cross-functional Interaction data needed is collected by each of these tools and other existing customer-facing and community systems. But we also need ERP data that includes shipping, billing, and collections information.

In other words, we need BIG Data. Interactions are harvested from BIG Data sources—all the customer-facing and community systems, and finance and ERP systems. The CRI Interaction Database integrates and links the data from all these sources to show one view. —one Interaction Record for each Individual Contact at play within each Enterprise Customer Segment or Stakeholder Community Initiative. Any one person could have a series of Interaction Records for different segments or initiatives being created simultaneously—so a sophisticated database infrastructure is mandatory.

Business rules make the integration of the Interactions collected in each system into the Operational CRI System seamless. It merges into the Individual Contact’s Interaction Flows across the Acquisition/ Closing/ Retention continuum as if it had been collected by only one system instead of dozens or hundreds. Where the Interactions are unstructured, or only partially structured like the activity streams coming off collaboration or gamification tools, business rules convert the Interactions to a structured data stream.

In addition to tapping into the Interaction data already being collected in these operational customer-facing and community systems, there are extension opportunities already built into these systems that could be taken advantage of without needing additional software.

COLLABORATE:  To Harvest Relationship Age GOLD.       

1. Spend time and money where there is the greatest payoff.

1. The money is in Retention. In a typical established business, some 80% of revenue comes from repeat business and renewals; only 20% comes from new customers. (In reoccurring revenue businesses, the Retention percentage is even higher.)
2. Another 80/20 rule. 20% of customers account for ~ 80% of revenue and often 100% of profit.
3. These high profit customers cost more to engage, but the payoff is HUGE. (In our starting benchmark, 3X the cost, but 16X the revenue.)
4. These high profit customers behave differently than other customers. They want to engage. They want a relationship.
5. With our new metric Relationship Value we can capture their behavior patterns to tie the patterns to profit and to optimize value creation.

2. Understand customer behavior—their relationship patterns—early enough to act to make a difference in outcomes.

1. Relationship Value is a real-time leading indicator for profit and for sustainable competitive advantage. This matters because profitable customers behave differently. You can see it in the relationship patterns. Shown here are results from our starting benchmark. Lagging indicators like historical profit or satisfaction—which most Executives use-- won’t let you act in time to matter. Averages or aggregates don’t let you see which relationships to pay attention to.

2. Operational CRI (Customer Relationship Intelligence) is
   1. As simple as Frontline Staff knowing the next best action to take because they can see what their company’s best practice pattern is.
   2. As mission critical as a Manager having time to investigate an exception and optimize the results—good or bad—when they see a relationship fall out of pattern.
   3. As sustainable as capturing the innovation of top performers in relationship development for process improvement and repeatable process. Comparing the RV relationship patterns of the set of Individual Contacts managed by top performers to other team members to see how far off the norm they are. See our HACK Measure Performance Innovation with CRI.  
3. With CRI you can identify customers with profit improvement potential—within high profit customers and others that could move up in value.
4. Identify customers at risk—hard to do with averages, as most Executives rely on. Losing even one key customer relationship is a hard-to-manage risk…after the fact. With RV relationship patterns you can see what is going on in real time. You can measure and share the depth and risk of the multiple relationships at play in high-value Business-to-Business up and down the organization.
5. Managers compare RV relationship patterns across industries, territories, product lines, regions, divisions, business units, etc. Correlate to profit and satisfaction.
6. Innovate cross-functional best practices for their own company and allocate resources--tied to outcomes.