Smarter database design and improved validation helps with data stewardship. However, a more ambitious approach would involve an ongoing Customer Data Integration and Normalisation process. This would ultimately aim towards creating a Single Customer View, sometimes also referred to as a Customer Data Platform or a 360 Degree Customer View. Lack of a single source of truth for customers leads to disruptive double-handling in marketing. There are also potential regulatory requirements for certain financial companies to have a single customer view.
In our previous blog post we discussed what it means for a database, especially a customer database, to have data redundancy and data inconsistency issues. This post will cover what the drivers are in creating a consolidated view of customers and the specific benefits that this provides to organisations.
Why a Single Customer View?
A Single Customer View refers to a unified, consistent, holistic and dependable existence of customer data, metadata, history and prospects within an organisation. This sets itself against the common reality of such data within businesses, in which it enters through a range of channels, exists on a number of different systems and is used for a variety of different purposes, in separate iterations by different departments.
Levy and Dyché, in their book about customer data integration mention four points that are the basic principles anyone involved in long-term customer relationship eventually learns. Each point closes with the statement:
“they want you to stop asking the same questions over and over”
This emphasises an important point about customer relations management. Business thinking has been making the move from product focus to average customer focus and then even further to specific customer focus. However, CRM technology has not kept pace fast enough in order to live up to its name and maintain a truly personal feeling relationship with the customer.
From the customer’s perspective, there is a distinct capacity to discern when one is being communicated to by a series of unconnected accounts and systems, even when they belong to a single brand. This is where the case of “asking the same questions over and over” comes from and is an understandable cause of frustration. Additionally, this gives the impression of brand fragmentation, getting in the way of a single, unified presence and message that successful brands tend to present.
Additionally, when a customer is working to resolve an issue, lack of a consolidated perspective across an organisation will typically see them being bounced between contacts and departments. Needless to say, having to repeatedly explain a situation will create a feeling of being double or triple handled, and inevitably lead to an inferior experience. This is all before even considering the wasted resources that come with sending duplicate communication.
Customer Data Duplication and Fragmentation
An Experian white paper identified some interesting statistics about customer data duplication and fragmentation across certain sectors. According to the report, the financial services industry was seriously affected, with more that 20% of customers having more than one account. The telecommunications and home shopping industries were also serious offenders, with significant amounts of duplicate accounts.
Additionally, around 40% of surveyed businesses had more than 80% of their customer data stored across separate systems within the organisation.
This state of affairs within a business ties into something vital to the bottom line, customer retention. Since acquiring a new customer costs 5 to 25 times as much as keeping an existing one, leveraging existing client databases for recurring sales and preventing customer churn are important points of focus. Simply in terms of overall business operations, having a consolidated view allows for a customer retention team to be notified quickly when someone is about to drop and to take action with all the relevant details immediately available.
Effect of Duplication on Marketing
Bringing together all the disparate data points on a customer is also a potential marketing boon that can open up new avenues of actionable customer insights. In a comprehensive report, Seth Earley dissects the anatomy of a Customer Data Platform and defines it as essentially a "single customer view specifically built to work for the marketing team". The high impact benefits that this provides is the ability to bring together and process enough signals to create a vision of a customer’s or potential customer’s “electronic body language”.
This image of the customer is created from two sources, Explicit/Objective Metadata and Implicit/Subjective Metadata. The Explicit part of it are the defined data points such as demographic and account details as well as stated preferences. The Implicit, however, are the higher level, less tangible indicators, often based on judgement and synthesising data from a variety of source system. This can include generalisations about purchase and browsing history as well as dynamic or manual user segmentation into categories such as perceived loyalty, value, motivation etc.
These latter indicators are the ones that are only truly enabled by having a single customer view. By giving marketers the full extent of the data available to the organisation, it enables creative user segmentation and experimentation. According to Earley, a truly effective data platform would enable these insights to be immediately passed downstream to the relevant connected system in order to immediately customise a customer’s experience. This is the path to effectively leveraging all available insights into creating a more engaged customer experience.
Effect of Duplication on the Finance Industry
Aside from the nice-to-have benefits of a single customer view, there are some industries where having such a capacity is mandated by regulation. This is especially the case with finance where, as mentioned above, higher levels of data fragmentation and duplicate accounts can be found. Although differing by country, some common features of financial regulation involves risk mitigation and consumer protection through careful customer risk assessment and careful “ring fencing” of certain service types and customer segments. A single customer view is a valuable asset in being able to accurately set risk exposure limits.
In Australia, the Banking Royal Commission has placed serious questions about previous ideas of “open banking”, which imagined freer and looser transmission of customer data between departments and institutions. In the face of the Commission and assorted data use/privacy scandals, the finance industry is moving towards tighter control over their data, including better lineaging and reduced siloing, in order to present a cleaner slate for regulators.
Regulatory Requirements of a Single Customer View
In the UK, there are regulatory requirements for certain organisations to have a single customer view. The Financial Services Compensation Scheme specifically links deposit taking to being able to provide proof of one on request, within 24 hours. Given its function in ensuring the security of an individual’s money within the financial system, it is telling that the FSCS places such a heavy emphasis on organisations using clear and consolidated customer data.
In the US, the 2002 Sarbanes-Oxly Act legislated a set of strict requirements for data transparency within financial organisations. An Oracle white paper frames this as an “identity management” issue, which is mostly centred around the structure of IT architecture and processes within a business. Ensuring compliance with the Act necessarily means a move towards a single customer view, with all the centralisation, de-duplication and data lineage tracking that is involved.
Achieving SCV and CDI
Businesses are overall very much aware of the benefits offered by a single customer view. According to another Experian report, 93% of organisations believed that they could decrease their costs and improve their overall data efficiency by implementing one. However, at the same time,
only 16% of UK businesses surveyed actually had such a consolidated system in place. The appeal is big, but the road to it is not exactly straightforward.
A big part of the confusion stems from nailing down the terminology and identifying what business goals are ultimately being met. In their book, Levy and Dyché frame this space as a customer data integration (CDI) process. This process is what eventually leads to a single customer view (SCV). They also specify a list of what this solution isn’t:
“A CRM tool, a solution to a technical problem, a replacement for a data warehouse, an ‘application’, an analysis tool, an operational data store, the automation of a customer data model”.
Any single one of those aspects can be a part of the overall solution, but it is much more helpful to see a single customer view as an organisation-wide shift to truly moving from the “average customer” to “individual customer” mode of relationship management. Such a shift will necessarily affect many aspects of business infrastructure. To learn more, tune in to the BizData webinar on 360 Degree Customer Analytics: