Analysts to Discuss Trends in Master Data Management at Gartner Enterprise Information & Master Data Management Summits 2014, March 12-14 in London and April 2-4 in Las Vegas
Master data management (MDM) is a critical success factor in constructing optimal customer relationship management (CRM) processes, according to Gartner, Inc. Gartner said that through 2017, CRM leaders who avoid MDM will derive erroneous results that annoy customers, resulting in a 25 percent reduction in potential revenue gains.
"Over the last several years, CRM software sales have outstripped overall IT spending," said Bill O'Kane, research director at Gartner. "CRM leaders must understand the benefits of the MDM discipline to CRM and make it part of their CRM strategy. MDM is critical to enabling CRM leaders to create the 360-degree view of the customer required for an optimized customer experience."
Mr. O'Kane said that organizations are moving to a more integrated CRM approach that focuses on the customer experience through improved customer engagement, across marketing, sales, customer service, e-commerce and all other customer-facing channels. This approach requires an understanding of the customer's entire relationship and interactions with the company at any point during the customer journey.
"This single or '360-degree' view of the customer requires that all the operational master data pertaining to the customer — and often to product and service as well — be combined from all of the data silos where it currently resides," said Mr. O'Kane. "This data is then checked and cleansed for duplicates while selecting the highest quality values across all data sources for each master data attribute. The result is a 'single version of the truth' for the master data that can then be integrated in different ways with those remaining data elements specific to transactions and interactions in the operational systems."
In organizations applying best practices, this integration is most often done in a real-time service-oriented architecture (SOA) environment, with the MDM hub acting as a peer to the other mission-critical operational systems (such as CRM and ERP). This typically results in a virtual (federated), rather than a physical 360-degree view of the underlying data. A typical use case in this scenario is for the operational systems (typically including one or more CRM systems) that create or maintain customer master data to check the MDM hub for current instances of the customer data being entered or changed, and to alert the end user (as appropriate) to prevent the creation of duplicate customers or erroneous master data values. This process proactively protects the quality of the customer master data, enabling a 360-degree view.
Once this holistic, multichannel view of the customer's activity within the organization has been accurately assembled, then the only limit to its usage is the imagination and creativity of business and IT management working as a team. For example, buying patterns can be accurately aggregated across product types to enable creative cross-selling and upselling. Identification of customers more likely to cease doing business with the organization in the near term is facilitated, so that they can be engaged earlier for retention purposes.
"In this scenario, customer segmentation becomes far easier and more accurate, giving organizations a better understanding of their customers and their likely patterns of behavior," said Kimberly Collins, research vice president at Gartner. "Moreover, the MDM hub can be used to support these operations during real-time customer interactions, as well as to accurately populate analytics platforms — such as data warehouses or data marts — to support larger scale customer analysis efforts."
MDM also provides new opportunities for CRM leaders to effectively utilize big data sources — such as social networks — and external data enrichment providers. Organizations have long made use of commercial data enrichment providers for applications such as customer segmentation, customer acquisition and prospecting. However, in the past this usage has most often occurred within a single system silo or business function such as marketing or sales, with no coordinated reuse across the organization.
"Companies are using social data to help them understand customer sentiment and behaviors, either in aggregate, for areas such as customer segmentation or issue resolution, or at the individual level to personalize campaigns and offers," said Ms. Collins. "As interest in the corporate use of big data sources like social network data has increased, so issues with master data of suboptimal quality are being raised that are virtually identical to those previously described with commercial data enrichment, and similar benefits are being achieved by those organizations that implement MDM to resolve those issues. Without MDM, attempting to identify a customer will result in the same issues of inaccuracy and expense as those using the more traditional commercial data providers with fragmented or unmanaged master data."
A further emerging area of MDM-driven enhancement to CRM is business operations. As the pertinent master data in an organization is identified and integrated under the MDM umbrella, it often becomes clear to organizations that they have an opportunity to both consolidate and substantially improve the scope of responsibility within their CRM-related business functions such as customer service, sales, marketing and e-commerce. An MDM approach across these functions can provide a 360-degree customer view to the entire organization, ensuring consistency of the customer experience.
Marketing, particularly in business-to-consumer (B2C) organizations, is taking more ownership of the consolidated or 360-degree view of the customer, to help drive better customer engagement and ultimately develop improved customer experience by reducing the amount of time customer-facing staff have to spend determining the next-best action to take with a customer. MDM makes these changes feasible by providing a single point of entry for this data, which is then published automatically to the appropriate operational systems' data stores.
A few enterprises have actually reported relieving their sales force of the responsibility for selling low-margin maintenance items, and instead providing their customer service teams with sales training to enable them to sell these items, both during service interactions and (in some cases) active phone and email campaigns. This has allowed the more cost-intensive sales teams to concentrate on higher margin sales to new and existing clients, resulting in significant increases in revenue and higher morale for both the sales and service teams. Another customer service enhancement enabled by the "360-degree view" is the enablement of cross-selling and upselling based on marketing techniques such as segmentation based on static data values, as well as providing incentives to purchase new items based on previous purchase sequences.
More detailed analysis is available in the report "MDM Is Critical to CRM Optimization." The report is available on Gartner's website at http://www.gartner.com/doc/2663817.
Gartner analysts will share additional information on MDM use in CRM at the Gartner Enterprise Information & Master Data Management Summits 2014 being held March 12-14 in London and April 2-4 in Las Vegas as well as at the Gartner Customer 360 Summit, May 19-21 in Orlando and the Gartner Customer Strategies & Technologies Summit 2014, on April 28-29, in London.
Additional details on the London EI & MDM Summit are available at http://www.gartner.com/technology/summits/emea/data-management/. Members of the media can register for this event by contacting Laurence Goasduff at firstname.lastname@example.org. Additional information on the Las Vegas EI/MDM event is at www.gartner.com/us/mdm. Media can register by contacting Janessa Rivera at email@example.com.
Information from the EI & MDM Summits will be shared on Twitter at http://twitter.com/Gartner_inc using #GartnerMDM. The hash tag for the CRM Summits is #GartnerCRM.
Gartner, Inc. (NYSE: IT), is the world's leading research and advisory company and a member of the S&P 500. We equip business leaders with indispensable insights, advice and tools to achieve their mission-critical priorities and build the successful organizations of tomorrow.
Our unmatched combination of expert-led, practitioner-sourced and data-driven research steers clients toward the right decisions on the issues that matter most. We're trusted as an objective resource and critical partner by more than 12,000 organizations in more than 100 countries—across all major functions, in every industry and enterprise size.
To learn more about how we help decision makers fuel the future of business, visit www.gartner.com.
Comments or opinions expressed on this blog are those of the individual contributors only, and do not necessarily represent the views of Gartner, Inc. or its management. Readers may copy and redistribute blog postings on other blogs, or otherwise for private, non-commercial or journalistic purposes. This content may not be used for any other purposes in any other formats or media. The content on this blog is provided on an "as-is" basis. Gartner shall not be liable for any damages whatsoever arising out of the content or use of this blog.