Marketers Are Flying Blind When It Comes to Leveraging Customer Data

April 16, 2008
CMO Council says lack of customer data sharing is impacting competitiveness, retention rates, revenue and profitability.

Only 50% of global marketers report having a strategy for further penetrating or monetizing key account relationships, reports the Chief Marketing Officer (CMO) Council in a new research study, "Business Gain From How You Retain." In addition, a surprising 45% rate the effectiveness of customer relationship management (CRM) systems as deficient or needing more work, with only 15% of companies rating themselves extremely good or effective at integrating disparate customer data sources and repositories.

The study, funded by Computer Sciences Corp., IBM Software and D&B, found a significant lack of customer knowledge and substantial obstacles and roadblocks to integrating disparate customer data repositories across the enterprise. Just six percent of marketers say they have excellent knowledge of the customer when it comes to demographic, behavioral, psychographic and transactional data, while over 50% report they have fair, little, or no knowledge of the customer.

More importantly, marketers are struggling to gain a true and timely view of the customer due to inadequate or incompatible IT systems and databases, siloed data in functional areas, and a limited strategic focus or management mandate on Customer Data Integration (CDI). Compounding the issue is a lack of formalized data-sharing policies and practices in the organization, combined with internal political or cultural barriers and IT obstacles and objections to data integration.

"The study illustrates a disturbing fact: many global companies are doing an inadequate job of integrating and applying customer data to reduce customer defections and increase loyalty," says Alexander J. Black, a senior partner in the Strategic Services group within CSC's Global Business Solutions organization. "Unfortunately, this results in lost opportunities and revenues from up-selling and cross-selling new products -- as well as higher costs incurred in replacing lost customers. Most importantly, the inability to leverage data to reduce customer turnover hinders a company's long-term competitiveness and profitability."

Other key findings from the CMO Council's online engagement program revealed that:

  • Only 15% of marketers say their companies are doing an extremely good or effective job of integrating disparate customer data sources and repositories; 55% note there is room for improvement or a deficiency in this area.
  • More than 31% of companies surveyed had customer churn rates of more than 10% and 32% reported turnover of five to 10%. In comparison, more than 62% said they desired or expected a churn level of less than five percent.
  • Respondents believe customer churn significantly impacts business performance through revenue loss (59.9%), reduced profitability (39.6%) and greater marketing and re-acquisition costs (36.3%).
  • While churn is a big issue, nearly 67% of those surveyed say they have no system for re-activating dormant or lost customers, while just over half of respondents have a strategy for further penetrating or monetizing key account relationships.
  • While more than 35% of respondents report that the CMO or marketing department (38.9%) has primary responsibility for the customer analytics function, they are not leveraging its value. Over 31% of those surveyed do no data mining at all and 63% are only doing moderate levels of data mining for intelligence and insight.

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