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Bad data prevents firms’ focus on customers
09/04/08
Companies in
the IT, telecoms, media and entertainment industries have long
needed to have a sharp customer focus. The notion of "customer
centricity" has been around for ages. But several trends in these
industries have taken the need to focus on customer preferences to a
whole new level, according to Conquering Convergence: Focussing on
the Customer, a briefing paper published by the Economist
Intelligence Unit and sponsored by Oracle.
This renewed
focus on the customer seems to be driven by two key developments-the
rise of user-generated content, and the convergence of products,
companies and customer groups. Technologies that foster
collaboration and sharing of content (often called Web 2.0) have
enabled customers to communicate their views about companies using
blogs, home-grown commercials, personal videos and other
technologies. Hence the need for greater customer focus-a single
customer can, via the web, reshape public perceptions about an
entire company or product line. Meanwhile, convergence is changing
the game for companies in the IT, telecoms, media and entertainment
arena. Clearly defined delivery channels blur, as customers start to
view entertainment on their mobile phones, or stream video over
their broadband internet connection. Customer preferences are
changing fast, so firms need to focus even harder on what clients
want, and how those demands are changing.
These two
trends have combined to create a business environment so fluid that
many firms seeking to understand and predict customer behaviour have
a hard time keeping up. Conquering Convergence: Focussing on the
Customer examines how firms are attempting to deal with this
challenge. Based on a global survey of 164 senior executives in the
information, communications and entertainment (ICE) industries, the
paper draws some striking conclusions:
- Almost all
of the IT, telecoms, media and entertainment companies surveyed
(92%) say they have a strategy for focussing on their customers. Yet
less than 15% rate their strategies as highly successful. As a
result, nearly 70% of firms plan to do more to focus on the customer
in the future.
- Direct
customer feedback via call centres or the web is the most popular
method of keeping track of customer preferences, cited by 49% of
respondents. Surveys (41%) and focus groups (29%) are also popular.
But specialist technology is important too, with 43% using CRM
software and 22% using analytics software.
- Nearly half
of respondents say they have trouble identifying the best emerging
technologies to use in achieving customer-focus goals. This is a
significant problem, given that one-quarter of survey respondents
feel their firms’ current technology is inadequate to the task of
staying abreast of changing customer preferences.
- Regardless
of whether firms use technological or non-technological means to
track customer preferences, lack of data on customers is the number
one obstacle to being client focussed (cited by 41% of respondents).
But almost as significant are issues which are harder to address-a
lack of clarity on what customer data would actually be useful to
collect (32%), and a sense that customer preferences are too
fragmented to track (29%).
- Despite
these difficulties, most firms regard convergence in the IT,
telecoms, media and entertainment areas as being of benefit to their
individual business-56% see convergence as creating opportunities to
expand into new areas, and a similar number hope for improved
revenue or fatter margins. But others are fearful, with 38% seeing
convergence as a threat to margins.
“Most
companies in the IT, telecoms, media and entertainment industries
embrace convergence as a potential source of growth, allowing them
to move into new product areas,” said Winter Wright, a senior editor
at the Economist Intelligence Unit. “But convergence means that
customer preferences are changing rapidly, and firms are finding it
increasingly difficult to keep up. They often lack good quality
customer data, and even struggle to identify which items of data
would be useful. These issues are relevant regardless of whether
firms track their customers using technological solutions, or market
research. But for firms that use technology to track their
customers, there is the additional complication of firms not being
confident that they have implemented the most appropriate systems."
“The survey
results support what we’ve been seeing in the industry first hand:
changes in the industry create a real opportunity for growth and
improved profitability, but a difficulty in understanding customer
preferences gets in the way. Firms that use specialist technology to
track consumer preferences often feel hamstrung by legacy, bespoke
technology infrastructures. And even those that rely on
non-technological solutions still struggle with issues of data
quality,” said David Sharpley, vice president of marketing an
alliances, Oracle Communications. "Yet most survey respondents
acknowledged the gains in improved bottom line performance
associated with becoming more focussed on the customer."
Conquering
Convergence: Focussing on the Customer is available free of charge
at www.eiu.com/sponsor/oracle/conqueringconvergence/
Nick Gibson, editor
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