Database is business

Why gathering, manumitting and using data should be included in every manager’s appraisal…

Ignorance is not bliss.

“The purpose of business is to create customers at a profit,” avers Peter Drucker.

‘Business’, ‘customer’ and ‘profits’ are inseparable words, mention the first, the other two automatically follow. Or to put it bluntly, ‘No customer, no business.’

Any business that has difficulty in getting, and then holding on to its customer, is unlikely to survive. Especially in today’s market, where, given the array of choice customers enjoy, it’s become far more difficult to get and keep customers. No wonder the majority of businesses now earn less profit than their predecessors did a few decades ago.

The relationship between having customers and making profits is seems obvious.

So what do you find when you check how many businesses have records or lists of their customers? Surprisingly, shockingly few.

Even the simplest questions about customers go a begging for answers.

• Who are they, when did they begin doing business with us? Don’t know.
• What brought them here in the first place? Don’t know.
• Why have they stayed? Don’t know.
• Just how much business have the two of us have done to date? Don’t know.
• Do they also do business with our competitors? What’s the size of that business? Don’t know.
• Without the answers how do we plan to make our business relations more profitable? Don’t know.

Even when businesses have this data, it’s recorded so haphazardly that it’s impossible to turn into actionable information. Worse, quite a bit of it resides in the heads of the managers employed with the organisation, and it vanishes once these managers leave!

Why don’t they find out?

Why don’t businesses record data? I can think of three possible reasons:

1. They actually don’t care! As long as profits and revenue grow at projected levels, the only place customers feature prominently are in ‘media quotes’. When a downslide begins, initiatives in understanding customers gain great urgency. But before a customer can finish smiling, the revenues may come on stream. So, it’s party time folks! We’ll discuss the customer tomorrow.

2. There’s a deep-rooted fear that customer focus initiatives require huge investments. Fearing that it’d cost too much, they do nothing at all. What they do not realise that 80% of the journey can be covered with basic customer data, which need no special skills to collect, and can be easily managed using existing resources, including desktop software like Microsoft Excel.

3. When the CEO uses words like customer-focus publicly, they acquire an altogether different meaning within the organisation. “Let’s do CRM,” becomes the slogan. Budgets are allocated, and many meetings are held. Then, management changes.  And CRM lands on the new management’s cost-cutting block.

A long-term CRM project is exactly that, long-term, and can involve quite a few false starts and wrong turns before it strikes gold. To terminate such a programme, without giving it a fair chance, always looks good on the balance sheet. Since data can lead to uncomfortable questions being asked, nobody minds.

What they can do

Yet all that most organisations need do is this: Create a simple format for recording and retrieving important details about its customers. Then, keep this updated on a monthly or quarterly basis.

True this is far from full-blown CRM. But if a small investments and a little discipline can bring in useful data month after month, why not?

I’d also suggest a small policy change: Make maintaining a customer database a part of managers’ appraisals, directly linking it to their career progress. Because it is an easy way to take a business closer to its purpose, creating customers for a profit.

(Also published in Business Standard in 2001)