Viewpoints
Guest Perspective
The customer
is back!
Humanizing decisions is crucial in the evolving business environment.
by Rodney Nelsestuen
As counterintuitive as it seems, many organizations lost sight of the importance of the customer as the recent economic crisis unfolded. Business leaders—caught up in cost-cutting initiatives based on a survival mentality—began to live out the old saw: “We could really get a lot done around here if we didn’t have to deal with all of these customers.”
Of course, they soon discovered that they would not have customers to “deal with” as business declined. As a fragile long-term economic recovery emerges, that attitude is changing, and companies in all industries are refocusing on customers as the key asset they are—one that needs better management.
More specifically, organizations must better manage the decisions that affect customers. In most relationships, decisions are made that define both the consumer’s attitude toward the business and the value of that individual to the business. Product, service and price decisions create the framework for a customer’s experience. Err in any aspect of those decisions and the business loses.
The quality of decision management, then, drives the level of success in building desirable, loyal and profitable customer relationships over the long term. As recovery continues, leading organizations are enhancing decision management as a central part of their strategy.
The new reality
Decisions regarding any customer relationship cannot be made in a vacuum. For this reason, an increase in both business and customer intelligence has become fundamental to surviving and thriving in a more competitive environment. Although data about individual customers, markets and market segments continues its rapid growth, few organizations have found the means to leverage that information successfully and on an enterprise scale. In addition, regardless of how economic recovery unfolds, it is not going to mean a simple return to the past for two key reasons:
1. Customers have changed. On one hand, they are more cautious, discerning and distrustful. On the other hand, their dollars are dear, which means they do not make buying decisions as freely or quickly as they once did.
2. The competition has sharpened. First, many businesses re-engineered their internal operations and are better positioned to compete on price without sacrificing margin. Second, as the new focus on the customer evolves, leading organizations are leveraging data to make better decisions about product, price and service, and to enable a superior experience across the customer spectrum.
Technology, process and people
What exactly is decision management, and how does a company leverage the ever-expanding amount of data and information to effectively acquire, retain and satisfy customers profitably? Let’s begin with a definition:
Decision management is a supporting framework of technology, process and people that automates, improves and connects data to decisions across the enterprise and enhances business results. Data quality lies at the foundation of sound decision management. The ability to gather, sort and analyze relevant data in a manner that indicates actionable steps determines whether business decisions will succeed. This is where technology comes into play.
Consider an example from the financial services industry. Say that a long-term, high-quality credit card customer simply forgets to make a payment on time. When that customer calls, the agent needs to have a concise picture of the whole customer relationship to make sound servicing decisions. Most card servicers are able to review only the credit card history and have little or no insight into other business relationships that the customer might have with the issuing bank. Although it is possible to determine the advisability of waiving late fees and penalty interest charges based on the card account information alone, such decision models are incomplete.
Business processes become important in such situations. One financial institution allows a customer to have fees and penalties on its credit card products waived only once every six months. This limitation may seem like sound business, given that it provides freedom for the agent to deliver on customer service when needed while discouraging repeated problems. However, with more information about that customer—say the person also has a home equity line of credit, car loan and college savings account with the bank—that hard-and-fast, six-month policy might put the bank’s entire relationship at risk if a second incident occurs.
"The quality of decision management, then, drives the level of success in building desirable, loyal and profitable customer relationships over the long term."
The human touch
Siloed decision making is often driven by separate organizational processes, resulting from a varied supply chain such as an outsourced call center. This creates a fractured and disconnected set of supply and service chain data. Meanwhile, the logic of a servicing policy or process is only as good as the quality of customer intelligence. And customer intelligence means having the right data in a manner that is linked to flexible processes on which people—the third element of decision management—can act.
Processes become even more important as the use of self-service channels grows. Customer portals as well as online and mobile services are expanding, which requires automated processes and decisions in cases where direct human interaction is limited. These are now part of the service mix, which must also meet rising customer expectations.
In short, organizations—particularly financial institutions—face the challenge of humanizing virtual servicing decisions and actions. Here the depth and breadth of customer data and intelligence make all the difference in the world. By integrating customer intelligence with sophisticated self-service technology, a consumer’s experience can be uniquely his or her own. That’s because well-managed decisions enable highly personalized (and profitable) relationships, and not just the delivery of standard policies applied in a rote manner.
The bottom line
How well an organization manages decisions in its customer interactions will determine the value of those customers. Whether choices are made by direct interaction with employees or through more virtual channels, gaining insight and intelligence through data and technology, and designing appropriate processes are key components in making high-quality and prof-itable decisions over the long term. Then, to differentiate the business, its technology and processes must humanize decisions to enable a superior customer experience.
Rodney Nelsestuen is a senior research director with the Financial Strategies and IT Investment practice at TowerGroup, a leading research and advisory services firm focused exclusively on the global financial services industry.
Photography by John Mowers