Golden Customer Records pay the bills and drive a company 160% profitability increase, the joys and returns of Master Data Management ?

Today I sat in on a presentation at the Technology Association of Georgia (www.tagonline.org and www.tagthink.com) BI and EPM group where representatives of Autotrader and NCR and the CEO of Profisee (a  Master Data Management company) talked about their initiatives to create Master Data records and its importance in supporting effective marketing, sales and service strategy.

At its simplest level this is all about creating “Golden Customer Records”, a golden customer record being the one instance of a customer record that everyone agrees is correct (or most correct).

Huh you ask .. so what ? A few anecdotes from the session as to why that is such a big deal especially today

Imagine you are a company with a little spare cash who is acquiring companies which is pretty common here in December 2011 when companies have a lot of cash and are looking to bring new products to their existing customers, acquire new customer, enter new markets or even acquire employees who happen to come with a customer or two.

With every company comes a customer database and many of them will have slightly different data formats for the same customer and a different customer identifier etc.

And let’s say you are acquiring companies somewhat in your market space (construction was mentioned). So you end up with 7 different divisions with 7 different customer databases and each division has extended $1m in business credit to a given customer based on their $10m revenue stream to you.

1. How do you identify what business you are doing with a given customer so you can cross sell to that customer (let alone stop 7 different sales people calling on them). If they are happy or unhappy with a given product or service that affects your customer strategy.
2. And when they go bankrupt (did I say construction was mentioned!) you suddenly find yourself not with a $1m liability but with a $7m liability. You need to know.

You can make your own scenario.

They also talked about how hard it is to get any company, large or smaller, to understand the importance of having a single Golden Master Customer Record and what business events tend to trigger executive interest in this which are:

1. An epiphany which causes a company to move from being product or service centric to being customer centric. More on that for another time
2. An acquisition or two (which probably causes #1)
3. A material customer centric event (usually negative) like 7 different sales people calling on the same customer, violating some regulation.
4. A new senior executive who identifies the ability to make an impact by reducing cost of operation or increasing effectiveness and efficiency.

So easy right, not !

The process of aligning data and databases is complicated but there are lots of tools and help available (did I mention the CEO of Profisee presented).  And much more importantly the process of getting all the various interested parties to agree on whose customer record is Golden and then potentially realigning your processes and organizations to support this model  is a long process.

The results from Customer Results experience not from the workshop today are phenomenal especially if this is seen as an opportunity to move to customer centric company.  There is a reason it is called a “Golden Record”. We have seen 30%-40% increase in sales and a 40% reduction in customer marketing, sales and service costs. With an average net income in a company of <10% and 30%-40% of a customer’s revenues being spent on marketing, sales and support reducing customer support costs / increasing customer results by 30%-40% you are driving a 10% – 16% impact on your financials or a 100%-160%  corporate profitability increase. Wow .. not bad.