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What do they know?

Managing customer knowledge is critical to ensure the survival of your organisation. Fail to manage such knowledge and you will be out ...

By Kevin C. Desouza and Yukika Awazu . 01 September 2005

Managing customer knowledge is critical to ensure the survival of your organisation. Fail to manage such knowledge and you will be out of business; leverage it and you can lure your competitor's customers. Kevin C. Desouza and Yakika Awazu describe how companies can use customer knowledge management to optimum advantage.
What do they know

Essentially, customer knowledge management (CKM) involves leveraging three types of customer knowledge:


  1. About the customer
  2. To support the customer
  3. From the customer.

Most organisations focus on only one type of customer knowledge. But unless a company can competently leverage about, support and from, their CKM agenda will be found wanting. Even organisations that recognise all three often fail to integrate knowledge management activities across the three.


About turn


There are three types of about knowledge:



  1. Processed demographic
  2. Psychographic
  3. Behavioural.


Processing information leads to knowledge. Nowadays, technology has led to an abundance of information on customers. This is collected from multiple sources – financial institutions, credit reporting agencies, local stores, etc. And we can obtain more detailed information than ever before. Loyalty cards and RFID (radio frequency identification devices) give us accurate and detailed information about customers’ purchasing habits which we would have had to guess at just a few years ago. And we can record and store this information with ease. But the organisation must be able to extract relevant knowledge from these information stores in an effective and efficient manner. To avoid succumbing to information overload syndrome, the management of about knowledge is mainly conducted via technology and automated solutions. To extract relevant knowledge, the information is processed via statistical and logical analysis techniques.

The most common technique is data mining, which seeks to uncover patterns hidden in vast amounts of information. Restaurant chain TGI Fridays used knowledge about its customers to redefine its food offerings. The managers observed that customers sought healthier options, so they offered choices such as baked potatoes instead of chips. Data mining analysis of point-of-sale data uncovered the ways in which patrons customised the standard offerings, and this led to the creation of low-diet menu items.

This kind of knowledge helps an organisation understand its customers and target them effectively. TGI Fridays modified its product offerings and gained competitive edge as a result of data mining.


Supporting role


Support knowledge improves the customer’s experience with products and services. It’s five times more expensive to find a new customer than retain an existing one, and ensuring a pleasant user-experience is critical for retaining customers. The growth of e-commerce makes a pleasurable user-experience even more vital, because the previous factors that induced passive loyalty – geographical constraints and lack of information on rival products – no longer exist. In addition, the internet enables customers to talk with other customers about their experiences of the organisation. Vocal net communities can influence purchase decisions by shaping customers’ opinions on key issues.

Having such communities can be good or bad for the company. AOL Watch is bad for AOL as it highlights negative opinions and complaints from ex-customers. On the other hand, sales generated by referrals from the Harley Davidson User Community are estimated to be as many as those from paid advertisements. The Harley Community helps riders share routes, plan and organise excursions and interact with fellow riders. Potential Harley customers can ask questions of seasoned riders and learn about their biking experiences. This positive activism helps Harley retain its brand image and attract new customers. Potential customers are offered not merely the experience of riding a bike, but have joined a community.

To enable management of support knowledge, a wide array of technology is deployed. Customer Relationship Management (CRM) systems are used to track interactions with customers and improve the delivery of products and services. And the internet is again useful, as it can transmit product documentation, troubleshooting guides, repair manuals, and other forms of support knowledge. Some organisations have gone a step further and are using the internet as an interactive medium to handle customer support queries. Through the use of chat rooms, emails and structured reasoning systems, customers can resolve queries and problems online. Most computer manufacturers have interactive web-based programmes that allow their customers to find answers and debug problems.

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