In previous roles, I have delivered Single Customer View
projects twice. In each case I prepared a very positive business case before
getting approval for the project, and in each case the benefits were evaluated
after implementations. Unlike other projects that I have delivered the business
case at the end actually ended up being more positive than originally forecast.
In this blog I would like to share with you how a well
implemented Single Customer View can deliver benefits far beyond the associated
costs.
Put simply it’s about having a single “golden” record for
each of your customers, so that whenever you refer to a customer, you’re using
the most up to date details, and everything you know about that customer is correctly
linked to them. It means that when a customer calls your call centre, you can
find their details quickly, and can see their history. It means that you know
how many customers you actually have, and what they are worth to you. It means
that customers are central to your business model rather than accounts,
subscriptions or orders.
Single Customer View as
a requirement for compliance
If a government or regulator mandates that you strive to
achieve a Single View of your customers, then you don’t need a business case.
Either you do it, or you lose your licence to operate. An example of this is
the Know Your Customer rules that apply to banks, who need to successfully
identify their customers in order to avoid being used for money laundering
activities.
However, I would argue that the other benefits that come
from a Single View are so important that you should consider them too. If it is
mandatory, there is a temptation to stop there and do it because you have to. I
would encourage you to keep reading. If you have to implement a Single Customer
View, then you may as well get as much value out of it as possible.
Cost reduction
If you have a large number of customers and communication
with them is a major cost for your business then you can make surprisingly big
savings by implementing a Single Customer View. This would typically be an
important part of the business case for energy suppliers, telecoms, insurers,
banks or local government where regular postal communication to all of your customers
is a major cost. In some cases, it may be worth going one step further and
thinking in terms of Single Household, and thereby avoid needless costs by
sending duplicate communication to everyone in a household.
Risk Management
One of the reasons why governments have mandated Know Your Customer
practices for banks is to facilitate better risk management. Each customer has
their own risk profile, and if you are managing that risk profile, then it will
be a lot more accurate if you make the effort to link everything that you know
about a customer via a single customer record. The risk profile for a customer
will be much more complete if you can link their borrowing to their savings for
example. If you can identify a returning customer who has been with your
competition for a while, then you can assess their risk profile much more
accurately than if you treated them like a new and unknown customer.
The more accurately you can assess your total risk, the less
provision you need to make to cover unknown risks. This in turn releases
capital for other opportunities or further investments.
Customer Loyalty
It often comes as a surprise, but most customers actually like it when the companies they deal with have a complete picture of them. It boosts confidence that they are treated as an individual and not just as an account. Admittedly it’s not universal, and some customers value their anonymity, but in my experience the overwhelming majority of customers expect you to know them. When customers hold multiple accounts with you, they expect you to join up the dots, and treat them as individuals. Personally, I like it when Amazon suggests books to me that I might like but I get annoyed when my bank tries to sell me a credit card that I already have. One is showing me that they know me, and the other is showing me that they don’t care about me.
Fraud
If combating fraud is important to your business, then a
Single Customer View can be an invaluable weapon in your armoury. This is
particularly true if you are operating on tight margins. Losses due to fraud
scale typically with turnover, but they go all the way to the bottom line. So,
if you are losing 2% of your turnover to fraud, this could easily be 20% of
your net profits.
Fraudsters benefit from anonymity and multiple accounts, but
many of them don’t apply particularly sophisticated techniques. Significant
fraud can be avoided simply by matching small changes in names or dates of
birth. Even more can be avoided if you can identify members of the same household
who take it in turns to run up debts they have no intention of repaying.
I have seen business cases where fraud reduction was the
biggest single benefit for the Single Customer View, and yet it is often
overlooked because fraud prevention is not considered as part of the core
business.
Business Analytics
The benefit in terms of Business Analytics is one of the
least obvious benefits, and also the most difficult to quantify in advance.
Nevertheless, I have seen the difference that it makes, and it can be
substantial if your business analytics are aimed at understanding customer
behaviour in order to be able to anticipate it. Examples are churn prediction
or credit scoring.
In these scenarios the benefit comes from improving the
quality of the data going in to your analytics. Practitioners of business
analytics generally agree that improvements in the quality of input data have a
far greater effect than using the latest algorithms. It’s not accounts that
decide to leave your company for the competition, it’s customers. If one
customer is having problems on one of his four accounts, then he won’t just
take that one account to the competition. He will take all four, but if you
don’t know that they are linked, you won’t be able to see it coming. Similarly,
by linking all of a customer’s accounts you will be able to assess their credit
rating accurately when they place a large order that you don’t want to lose but
can’t afford to give away.
Conclusion
I have highlighted six areas that I think you should consider when evaluating the benefits side of the business case for the Single Customer View. If you are considering implementing a Single Customer View, the chances are that you are championing one of these benefits as the case for action. I would strongly recommend that you consider the others. For most companies, I would expect the benefits to be at least twice the costs. If you time it right it can even be possible to achieve pay back in the same financial year that you launch the project.