Customer intelligence, interpretation and insight
Information >>> Intelligence >>> Interpretation >>> Insight >>> Innovation
Information: just a beginning
Customer information is just information until it has been through a process to convert it into real customer understanding and insight. You may start with collecting information, but even the best data bank is pointless if collection is where the process ends. This article is intended to shift the focus towards interpretation and the use to which you put information about key customers, so that it makes a difference to what you do with them. The objective is insight, although innovation is the ultimate goal. That is another subject in its own right, but you should be clear that key customers are expecting some kind of innovation from key suppliers, so you need to have routes to finding it.
“There are no facts, only interpretations.” Friedrich Nietzsche
Customer insight: the key differentiator
Both research and practical experience have shown that depth of understanding of the customer’s business is one of the fundamental differences between companies genuinely practicing good and productive key account management, and those just building relationships. In order to achieve real customer understanding, information must be developed through intelligence - in both senses of the word: the gathering of data from widespread sources, and the astute use of it in analyses. It does not end there, however – a process of active interpretation must be applied to change intelligence into insightful knowledge.
Pro-active customer knowledge management
Being ‘the expert in the customer’ is one of the most important roles of the key account manager. If that is to mean anything, customer knowledge management must form a vital part of the brief. Furthermore, the role demands a kind of knowledge management that is pro-active and drives out creative strategies, not the kind that just reactively responds to requests for information. It follows that an organised and meaningful way of capturing information from all kinds of sources is an essential platform in fulfilling the role.
However, many key account managers receive an on-going stream of customer-related information that either passes through their hands or just stops on the top of their desks. Sadly, much of this valuable material is not accessible when it is required, because it is long gone, or because it is sitting in a large, unsorted, unapproachable heap.
Look outside your company
Where do you start? You will probably already have plenty of information about what your company does with customers: what they buy, when they buy it, how much they pay, projects in progress etc. But this view of the customer is as seen through your very specific and rather narrow telescope, not theirs: it certainly does not describe the customer’s business as they would themselves.
Clearly, it is senseless to look into your own systems to find the missing information, because it is external to your company. You will have to use outside sources, i.e. the customer directly and/or third parties; like research agencies, analysts, journalists, government departments. Since all of these sources, if they pre-exist, have a purpose different from yours (e.g. investment, government monitoring and regulation, or just news), you will probably need to use several of them to complete a balanced picture.
Using the framework as a filter
You may find overwhelming amounts of information about popular sectors, such as automotive or retailing. If large amounts of ‘raw’ data are on offer, you need to scan it through the perspective of your framework in order to deal with it efficiently. On the other hand, there may be plenty about the sector, like healthcare, but not necessarily much related to your customer’s part in it. If your customer and your customer’s sector are of interest to only a few people, you may find a distinct shortage of information about them. But again, you will more easily spot the nuggets of information that are available if you have a clear idea of the kind of thing you want.
Your key customer may well participate in several very different marketplaces, like medical and printing, and you then need to decide whether you should run more than one framework in parallel, divided by marketplace. Although using one system for all markets may appear easier initially, in the end, lumping them together is more likely to lead to insomnia than insight. You can be sure of one thing - information about your customer and its environment will rarely come neatly sorted into your categories, ready for capture in your framework.
Build the framework first
Start your search backwards by first building a framework to hold the information, before the material you find has a chance to become unmanageable. Information-capture frameworks should be built around the purpose to which the information will be put rather than, for example, the different sources, so that it starts to develop into intelligence right from the beginning. How you will use a piece of information tells you where to keep it, alongside other pieces that relate to the same purpose. However, while it will be useful to group together any information about, for example, the customer’s competitors, that is only stage one, and grouping alone will not lead to great insight.
Building a framework for customer intelligence
To develop raw material into intelligence and interpretation, the individual items need to be juxtaposed with other items that, seen simultaneously through an analytical model, lead on to the customer insight you want. The information should be housed within the analysis models/tools ready for use, rather than kept as ‘buckets’ of raw information.
The information-capturing framework tabled below lists the kind of subjects you might find described and discussed by various sources, and the kind of information you would typically expect to see under each of those broad headlines. It then lists the models that are useful in key customer analysis, and it is these models and their constituent parts that should form the shape of the framework or ‘drawers in filing cabinet’.
The last column in the table shows further interpretation tools which are fed by the models which hold the primary data, or by collected information directly. For example, you may work out from analysed information what the customer’s strategies are and their expected outcome, but an article in the financial press may give the investment analysts’ view, which you can add in directly and compare with your own conclusions, in order to reach a different or more robust view.
The analytical tools shown in the table are not the only ones that can be applied, but avoid model overload and duplication. If you have come across an analytical approach that you find useful, add it in or, if it does the same job as another, take out the model you like less.
An information-capture framework
Build a framework so that most of the information you need to capture has a place to be. Even trying to avoid duplication as far as possible, a single piece of information may have something to say about several parts of the customer’s world, so you may need to keep a few items in more than one place.
Material should be kept in two forms within each model: firstly, the raw, undigested information; and secondly, your extracts, précis and conclusions drawn from using models which recognise and develop the importance and implications of the material, to the extent that the particular analysis allows.
Focus of information
Typical kinds of information
Examples of analysis and interpretation models
Customer's customer segments
Routes to market
Suppliers inc you and your competitors
Economic health and trends
Market map: defining the market and participants
STEEP analysis: identifying changes and pressures in the customer’ marketplace
Porter’s five forces: identifying the customer’s opportunities and threats
SWOT analysis and strategies: identifying the customer’s objectives and strategies
Financial results and investor reactions
Objectives and strategies
Mergers and acquisitions
Alliances and partnerships
Marketing, pricing and promotions
Financial strength: stability and ability to invest
Value chain: identifying the customer’s strengths and weaknesses
Customer’s organisation and facilities
Organisation and restructurings
Promotions and moves
Internal relationships and alliances
Facilities and activities
Openings, shutdowns, productivity
Organisational structures: identifying key players
Physical structures and locations: monitoring activity
Culture web: understanding underlying influences in the customer
Customer’s relationship with your company
Projects and project teams
Relationships with suppliers
Sales and margin
Relationship mapping: monitoring relationship development
Measurement framework: tracking performance metrics
Action plan: anticipating the customer’s activity
Customer profitability: evaluating customers
Piloting your framework
Before putting your framework into full-blown use, check it out with a varied sample of pieces of information (news items, surveys, customer presentations) to check that:
- all the relevant information has somewhere to go
- you can readily see where to put the information
- the number of times you want to put one piece of information into several different places is limited and manageable.
Having constructed an insightful framework, there are some practical considerations in collecting and managing your information.
Some key account managers make the mistake of only collecting information about the customer specifically, without following the sector and the customer’s marketplaces as well. Without this context, however, you cannot hope to understand their business. Besides, information from the customer’s environment, e.g. their competitors, can tell you a lot about them that you will not be able to find out directly.
Your particular key customer may well fall into the same segment as others in your company, so you should combine forces with the marketing department in your organisation, if it has people working on market research and intelligence, or with other key account managers whose customers operate in the same marketplace. Sharing information will produce a better picture for less effort, so you should give the process by which it is achieved active consideration and support: all too often, good intentions fade and the exchange process falls into disuse.
Sources of information
Even if you do not have regular access to market intelligence professional, aim to find one and ask how he/she would conduct searches in your customer’s sector. Obviously, the internet is a great source of material, but it can eat up hours of time, and does not always offer great depth of information. Do not reject a good commercial library, which will be staffed with knowledgeable people who are there to help you.
Some sectors are very well documented, either by government bodies or by suppliers themselves, and though the information may stop short of your particular area of interest, you can sometimes find far better-informed estimates of market growth and production capacity than yours would be. Sometimes you will find a treasure of a survey that you do not have to buy because the library has already subscribed to it, and it may give your analysis a terrific boost.
If you have a choice, simple Word documents probably represent the best and most flexible way to hold information electronically, unless you have software specific to this purpose. You will have material in both electronic format and hard copy: so decide on your framework, develop a file structure to match it, and then duplicate this structure physically and on your computer. You should keep track of your sources: someone may well ask you where you found important pieces of information, or you may want to revisit the whole original item yourself. Develop a simple numbering system that identifies in which analysis model you keep an item, and make sure you date all of them.
Keeping up to date
You should be constantly reviewing and developing your interpretation: possibly not every time you gain a new piece of information, but whenever something apparently significant has changed, or at least on a quarterly basis. As you repeat your analysis and interpretation and learn from it, so the quality of your insight will improve, and you should see fewer major changes to your conclusions. You will have anticipated events, so the latest news should mostly amplify and confirm your understanding. However, take care not to be so confident in your conclusions that you begin to make the information fit the interpretation, rather than vice versa.
A last word
You may feel that you are beginning to turn into a librarian rather than a key account manager, but remember: knowledge is power. You can come close to understanding your customer as if it were your own business. A few innovative approaches, based on such superior insight into your customer’s business, will gain the kind of appreciation that leads to real business growth. You could spend your time a lot less productively than developing great ideas based on great customer insight.