Customer Information Management

Definition: Customer Information Management is the practice of systematically collecting information about individual customers and making it available to staff within a company to better inform the decisions they make regarding interactions with that customer.


Customer Information Management

The term was in vogue during the late 1990s, but now, though it has not disappeared from use completely, has fallen somewhat out of favour, replaced by other buzzwords such as Customer Data Management, Customer Resource Management, Customer Experience Management, Knowledge Management or Customer Relationship Management.

The term Customer Information Management bears obvious similarities to the term Customer Relationship Management. Do they mean the same thing? If not, what is the difference between them. Customer Information Management, strictly defined, is concerned purely with the informational aspects of the customer relationship : how to collect, collate and make available that information. Customer Relationship Management goes beyond that and adds a strategy for handling the information in such a way as to enhance the customer experience, and ultimately benefit the businessís bottom line. Customer Information Management could be construed as a subset of Customer Relationship Management, then, and often is, except that some companies try and do CRM without a serious Customer Information Management system. This may be possible if your company is small in scale or operating in some business niche. In most cases, though, when large companies have attempted these ventures, the result has been a miserable failure.

Customer Segmentation

Customer Information Management is designed to assist in customer segmentation strategies. Customer segmentation involves analysing customer records to determine which customers are the most profitable. One of the classic business rules of thumb is called the 80/20 rule, also known as the Pareto principle : 80% of your profits come from 20% of your customers. A good customer segmentation strategy will accord preferential treatment to the most profitable customers, increasing customer loyalty and therefore customer retention and improving profitability over the long run. Itís a strategy born from another business truism : that itís easier to retain customers than to win new ones. A good Customer Information Management system creates the informational base on which sophisticated customer segmentation or customer relationship management strategies can be built.

Although itís a relatively new concept for most businesses, elite luxury hotels have been been pursuing similar strategies for some time. Information on the most frequent guests would be assiduously collected and made available to staff internationally, so that personalised welcomes and individually tailored service could be offered each time the guest visited.

Naturally, it is much easier to collate information about customers by means of software systems and a number of vendors now offer Customer Information Management solutions.

Customer Information Management Ė Data Integrity Issues

Some Customer Information Management applicates requires users to manually enter data on customers; others simply permit the collation and collection of data items which are normally produced in the course of doing business, such as emails or invoices. Some packages, of course, offer both facilities. Because of the near-ubiquity of Microsoft Office software in company offices, some Customer Information Management software is designed to interoperate with it. The Livelink product from Open Text corporation and Microsoftís own Business Contact Manager, which acts as an add-on to Outlook, are two of the most prominent examples.

Data duplication and data inaccuracy are serious concerns for any business which collects large volumes of customer information. Anything from typing mistakes, difficulty in reading bad handwriting or an error made by a customer services operator when talking to a customer over the phone can lead to imprecision in the data held in the company database. Although sometimes, the error may be trivial, ultimately, there can be serious consequences too, ranging from unsuccessful deliveries to failure to spot a bad credit risk at an early stage. For this reason, some customer information management solutions offer the option of integrating the internal customer database with external databases holding large quantities of verified information, such as names, addresses and credit histories. When this option exists, there will often be sophisticated matching routines designed to identify commonalities between records held in the different databases, even when some of the information stored may differ.

Customer Information Management Ė Putting the Data to Work

The data collected can be used in any number of ways. For example, when a call is made to technical support, the support staff should be able to see at a glance the customerís history with the company, including a display of purchases made and any previous difficulties they may have given rise to. Call centre staff can make use of the information to decide on whether it would be appropriate to make a sales offer to the customer and, if so, which one it should be. In the event of damage to the customer relationship from whatever source, sales staff can peruse the assembled customer information to put together a package designed to restore and renew the customerís confidence and loyalty.

Some Customer Information Management / Customer Data Management products are geared specifically towards use in certain environments, such as call centres. Some may even dedicate themselves to a specific industry. This allows the developers to add features design to assist business operations in that sector. For example, Soft Pak offers a customer information management solution for the waste management industry. As well as the standard list of Customer Information Management capabilities, it includes sector-specific features such as route selection and optimization routines. Others are more versatile and designed to be used in a number of contexts.

The rise to mass popularity of the World Wide Web has opened up new dimensions for the use of Customer Information Management. Web-based businesses have greater opportunities both to harvest information about their customers and to use that information to shape the customer experience. In some cases, when a customer visits the company site, unique web pages are generated based on previously gathered data about what it likely to appeal to that specific customer. This approaches the business ideal which lurks at the heart of all the talk of Customer Information Management or Customer Relationship Management : allowing the company to present a different face to every customer, based on the customerís unique needs, desires and characteristics.