This article originally appeared on the BeyeNETWORK.
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In recent weeks, we have been involved in conversations with clients regarding their desire to start a master data management (MDM) program with a focus on customer data integration (CDI). Reviewing documentation, especially business cases and project charters often provides us with some insight into the core motivations for starting a new program, but also can raise some red flags. The relevance of that review is emerging as a critical step in gaining management confidence and support for MDM, especially when the hype about MDM (or any technology, for that matter) suggests that all business problems will be solved by incorporating the technology.
The concept of customer data integration into a consolidated master view is appealing because there is the perception that a “golden copy” of customer records enables business benefits that were unachievable in the absence of the “360-degree view.” One particular phrase that has cropped up numerous times in this context is cross-selling, and the promise of the ability to do cross-selling and upselling is often mentioned as one of the top drivers for master data management programs – to the point where articles indicate that in the absence of a single view of customer data, cross-selling is “ineffective”.
To better understand whether this is really true, let’s consider what cross-selling really is, where it happens and where the opportunities truly lie. First of all, a definition from businessdictionary.com:
“Encouraging a customer who buys one product to buy a related or complementary product.”
Alternate definitions talk about selling different products to one customer based on knowledge of their previous purchases, and there are even some definitions that include selling products to one customer based on the purchases of another customer.
A common example of a cross-sell happens at the local fast-food joint when, after placing an order for a hamburger, the customer is asked whether she would like to add an additional food item (the ubiquitous “Would you like fries with that?”). This should not be confused with the upsell, in which the customer is prompted to purchase a larger version of the same item for a relatively small price bump (“Would you like to supersize that drink?”).
There are many general opportunities for cross-selling that typically make sense (such as buying a helmet along with a bicycle), but the typical execution of the cross-sell is a logical purchase choice performed purely by the salesperson at the point of sale (POS). That being said, one might question the statement that in the absence of complete customer knowledge, cross-selling is ineffective since, in many situations, the salesperson only needs to know what the product is that is being purchased! And if that is the case, how will MDM improve upon it? It boils down to whether the cross-sell opportunities are the obvious ones that don’t need additional information or ones that require more comprehensive customer history and knowledge.
This suggests a few questions:
- Are there cross-sell opportunities that rely on more information than what is available at the point of sale?
- If so, what information is necessary, within what time frame and who needs to know in order to execute against a cross-sell opportunity?
- What processes need to be in place within the organization to make this happen?
- What obstacles exist to being able to exploit cross-selling opportunities?
- How do we prepare the organization to execute these newly uncovered opportunities?
Consider the scenario in which two distinct lines of business within a single organization interact with the same customer pool. Here, it is possible that there are complementary products or services across the lines of business, yet the salespeople might not be aware that the opportunity exists. One might conjecture that knowing about the possibility and the ability to determine the candidates for the cross-sell would make this a no-brainer. This involves answering the first two questions.
But hold on a minute, partner: considering segregation of sales duties, distinct line of business (LOB) profit & loss, sales promotions and campaigns funded by LOB marketing teams, and competing commission and sales incentive schemes, how does a salesperson from one group sell products coming from another group? If there is no ability to execute the transaction, then customer knowledge is irrelevant – this drives question number 3. Another issue involves incentives – what drives the salesperson in one area of focus to make sales on behalf of a different one? On the contrary, there may be little incentive in place for this to occur, driving our 4th question.
So in order to benefit from the types of cross-sell opportunities that are introduced via an MDM program and its corresponding unified customer history and view, it is necessary for the corporate managers to determine what needs to be done to enable the execution, identify organizational barriers, create incentives and provide a transition plan (answer to question number 5) that will transcend vertical boundaries. It would be reasonable to argue, then, that without being able to answer these questions, an MDM program is not likely to improve cross-selling. Therefore, if cross-selling is being specified as a driver for master data integration, these (and similar) questions should be asked and answered as part of the evaluation to determine the business case justifying MDM long before any implementation decisions are to be made.
Loshin is president of Knowledge Integrity Inc., a consulting and development company focusing on customized information management solutions including information quality solutions consulting, information quality training and business rules solutions. Loshin is the author of The Practitioner's Guide to Data Quality Improvement, Master Data Management, Enterprise Knowledge Management:The Data Quality Approach and Business Intelligence: The Savvy Manager's Guide. He is a frequent speaker on maximizing the value of information