In this competitive banking landscape, organizations face increased pressure to forecast business conditions that allow employees to react and drive value from data. As common sense would dictate, companies should evaluate performance based on increases to firm value. To generate these cash flows, many companies focus on the development of new products and services. However, the firm’s value can be more specifically defined as the present value of cash flows generated by customers. This makes gaining and maintaining relationships with profitable customers the single most important factor in generating firm value. This relationship between customers and firm value is the fuel behind the competition for customer loyalty within the banking industry.
Adding Fuel to the Customer Loyalty Engine
Enterprise Performance Management (EPM), a Business Intelligence-enabled approach to the balanced scorecard, can create strategic advantage in a competitive business landscape. Using EPM a company can compete for loyalty using analytics. This is done through creating and managing a customer-centric electronic scorecard that is based upon a company’s important relationship with its most profitable customers. EPM is used to help create strategic goals through the discovery of key objectives and performance measures based on analytical tools such as predictive modeling, customer relationship management, dashboards, and automated scorecards. EPM also helps companies manage performance goals by linking those goals to the individual employees responsible for outcomes.
In order to create a customer-centric organization that capitalizes on the power of Business Intelligence, companies must identify the goals they would like to achieve and incorporate them into a formal business strategy. The strategy map found in the balanced scorecard approach is a widely-used method for achieving this challenging task.
Tracking the Customer Data that Counts
Ultimately, understanding your customers is key to building strategy. In order to drive firm value, companies must track customer performance based on a single view of each customer as opposed to reviewing a random collective of siloed data points across the organization. Using Business Intelligence tools, customer groups can be segmented and compared with regard to their ability to drive value. When attempting to acquire new customers, a company must identify prospects that will generate positive customer lifetime values that exceed acquisition costs. Likewise, maintaining relationships with current customers translates into identifying those customers whose predicted future value is higher than the investment necessary to maintain that relationship. Doing otherwise would essentially translate into paying your customers for doing business with you. This seems so wrong, yet so many companies do it. Why? Because they are not tracking customer data correctly.
Tracking this level of detail in your traditional “spreadsheet mart” is a challenge. Tracking this data using Business Intelligence tools will allow you to truly compete with analytics. Ultimately, defining customers in this way provides a company with a valuable financial tool. When an organization fulfills unmet needs in a growing market of profitable customers, then financial returns, and increases in market share, will result.
