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Expert Opinion
What is Customer Knowledge Management (CKM)?
Scott Paquette (2005) of the Faculty of Information Studies at the University of Toronto writes that CKM refers to the methodologies and systems employed in the acquisition and distribution of valuable customer derived information. CKM, he notes, goes beyond capturing simple transactional information, and extends to the formation of strategic partnerships and the development of new products. He believes that CKM concerns the processes and the tools for capturing, managing, and distributing knowledge concerning the provision of customer services or products throughout an enterprise. In a paper published by the University of Geneva, CKM is described as the creation of new knowledge gained by companies and their customers sharing platforms and processes.
If is often thought that (a) Customer Knowledge Management (CKM), (b) Customer Relationship Management (CRM), and (c) Knowledge Management (KM), are the same. However, this is not so. The differences and similarities between these has been identified by Gibber et al (2002), and are outlined below:
Knowledge Management (KM)
- Scope: Involves employees and company networks.
- Objective: The sharing of information held by organisations (intellectual capital) about customers among its employees.
- Customers: Products and services are developed without the direct involvement of customers.
- Driver: Customer retention.
Customer Relationship Management (CRM)
- Scope: Focuses on customer database information.
- Objective: Mining and using customer information to benefit long term relationships.
- Customers: Sought and retained using loyalty and incentive schemes.
- Drivers: Customer satisfaction and loyalty.
Customer Knowledge Management (CKM)
- Scope: Focuses on customer creativity and experiences.
- Objectives: Gaining, sharing, and developing customer insights.
- Customers: Collaboration and joint value creation sought.
- Drivers: Performance against competitors, customer success, innovation, growth, and organisational learning are key business drivers.
Customer knowledge sharing commonly involves a bi-directional exchange of information. It is also associated with close, or intimate, interactions between the organisation and its customers. Within this context an organisation's "customers" may include:
- Existing and future consumers
The intention of such customer interactions is to create improved value for both parties. CKM incorporates the principles of both KM, and CRM, while moving beyond these to seek mutual customer/organisation value creation and performance improvements. CKM includes the collection of explicit (quantitative) information about customers and most importantly, tacit (qualitative) knowledge arising from the discovery of customer ideas and experiences.
Customer Knowledge is a valuable organisational asset for the following reasons:
- It cannot be easily copied by competitors;
- Customer knowledge can enable the needs of valuable customer groups to be targeted and thereby to differentiate the organisation from its competitors;
- Advantages can be achieved by being the first to market with improved products and services that better serve customer wants, needs and expectations;
- Organisations can better compete in highly price-sensitive marketplaces by focusing on product and service parameters customers value most and eliminating unnecessary features that reduce profit margins;
- Through understanding the patterns of customer demand inventories may be reduced and redundant capacities eliminated.
CKM - Methods for Collecting Customer Information
A balance of both quantitative and qualitative customer information is required for the building of a sound CKM base. Quantitative methods tend to yield information that is more numerical and statistically based. Qualitative methods can provide more personal information about how people feel and what they want and is frequently more 'detailed' and 'personal' in nature. Judy Melanson (2004) vice president of Chadwick Martin Bailey writes that qualitative research provides organisations with an in-depth understanding concerning how their customers think and feel.
When specifically seeking qualitative information it is often useful to gather data from multiple sources and to use multiple methods. Qualitative research takes three main forms:
- Stand-alone qualitative research which is used to help generate ideas. Stand-alone research may also be carried out within a narrowly defined customer-related area, or perhaps where larger costs cannot be justified.
- Qualitative research carried out in preparation for more extensive quantitative measurements. Pre- quantitative research can be useful in refining hypotheses; and to gather information concerning the language and culture of the target market before launching a larger (and often expensive) quantitative research project.
- Qualitative research which is carried out at the completion of quantitative work. Such qualitative research can be used in an attempt to delve deeper into the subject matter and results from quantitative research and assist in gaining further or more in-depth insights.
The following chart developed by Melanson outlines some of the means used, and groups involved, in gathering qualitative information.
| |
Focus Groups |
1:1 Interviews |
Open Ended Survey |
Observation |
Customer Journals or Diaries |
Mystery Shopper |
| Customers |
* |
* |
* |
* |
* |
|
| Non Customers |
* |
* |
* |
|
|
|
| Employees |
* |
|
* |
* |
|
* |
| Industry Experts |
|
* |
* |
|
|
|
Some of the more commonly used tools for gathering customers' insights and experiences are outlined in more detail below:
- Customer Focus Group interviews
A customer focus group interview is a research method where a small group of consumers is bought together to discuss products, services, or specific topics under the guidance of a trained interviewer or facilitator. The interviews are a structured process seeking detailed qualitative information about a particular topic. They are particularly useful for exploring attitudes and feelings, and for drawing out information about issues for which the researcher may have little information.
Typically focus groups:
- Represent a particular segment of the population;
- Have 6 to 9 participants;
- Use a facilitator who stimulates discussions by using open-ended questions.
Some advantages of customer focus group interviews include the fact that:
- They are relatively easy to undertake;
- Results may be obtained promptly;
- The social interaction involved may produce open and reasonably complex responses;
- Researchers can probe for clarification and thereby solicit greater detail in responses; and
- Responses obtained tend to have a high validity.
Disadvantages associated with focus group interviews include:
- They require highly skilled facilitators;
- Individual responses may not be totally independent of the views of others in the group;
- The results obtained may not be representative of the general population due to selection biases.
Samantha Kennedy (2002) a senior research associate from Dialogue Resource Inc., a marketing research and consulting firm, comments that customer focus group interviews are ideally suited to probe the dynamics driving customer behaviour. Customer focus groups offer the opportunity to listen to, and to observe customers in person, and thereby to gather a significant understanding of their viewpoints and ideas; however they require skilled facilitation to maximise the opportunities presented for gaining fresh insights.
Focus groups may be beneficial for:
- Exploratory work which gains a measure, or indication, of past, present, and future market behaviours;
- Diagnostic purposes i.e. the identification of needs, problems, or susceptibilities in given market segments;
- Developmental purposes when working on new products, services, or communications concepts.
Kennedy highlights that it is important not to overlook the need for a formal analysis of the focus group findings. By taking this step, the interviewer/facilitator or researcher consider the interpretations and conclusions they reach and seek to understand the strategic implications of their findings for the organisation.
- Customer Listening Posts
Customer listening posts (CLPs) incorporate tools such as customer satisfaction indices, customer telephone surveys, and customer advisory groups. In essence CLPs are a vehicle for discovering what customers want, need, and expect. CLP's are generally part of a long-term programme that is established to capture customer experiences, and for measuring subtle shifts in customer sentiment. The ongoing customer feedback gathered is useful for shaping, guiding, and improving marketing communications.
- Customer Feedback
Customer feedback systems are processes established for gathering customer opinions concerning products and services. A continuous flow of information concerning customer requirements, opinions, and viewpoints can enable organisations to remain competitive, and to react quickly to changing customer needs. This information may be obtained; formally by requesting comments directly from customers; or, informally via sales visits, reports, customer satisfaction surveys, customer complaints, and customer conferences. The information gained may then be used to more effectively manage customer interactions, adapt products and services, and to modify or better control specific processes. Ed Schipul (2004), CEO and founder of a Web marketing company, deploys proprietary software designed to help organisations maximise the effectiveness of their online marketing and communications initiatives through customer feedback. Schipul claims that Web tools can enable organisations to closely monitor the impact of their marketing initiatives. By using web tools customer awareness, attitudes, and behaviour can be followed and adjustments can be made to campaigns as required. In addition, web traffic analysis tools enable both real time and historic customer metrics to be monitored e.g:
- Readership over time; what is being viewed, and how often;
- Geographic breakdown; from where in the country or work the people are responding;
- Positive and negative reactions; what people are saying about the service/organisation;
Each of these factors can contribute to a powerful mechanism for gathering customer feedback. Direct feedback can also be gathered through enabling users to rate the usefulness of the site. Short surveys can be provided along with an incentive for replying.
- Mystery Shoppers
These are people who contact businesses (in person, on-line, or by phone) posing as customers with the intention of evaluating the service they receive. They then provide a formal report back to the organisation that requested their assistance. The information that is collected is analysed by the business with the aim of ensuring that employees are practising good selling techniques and are providing quality service to customers.
Jeff Hall (2004), CEO of Second To None, a marketing consulting company, writes that mystery shopping provides an important means of gauging customer experience. Traditional customer satisfaction measurements offer subjective feedback of impressions from customers at some time subsequent to their shopping experiences. In comparison, mystery shopping reports can offer objective and unbiased feedback, and provide near real time insights into actual brand and organisation performance. Mystery shopping reports can provide actionable information in support of critical business decisions. Hall states "Mystery shopping, as a stand-alone or complementary form of research to customer satisfaction, provides an immediate and deeply insightful understanding of very specific attributes related to the customer experience." Store appearance, cleanliness, product presentation, interactions with sales associates, helpfulness, professionalism, speed of service, adherence to policy, along with display and marketing promotions can be measured.
Technology can be used to leverage the value of mystery shopping programs by integrating audio, video or digital image capture as a component of the shopper's report. This can have the effect of extending traditional mystery shopping reports to become an operational compliance audit.
- Quality Function Deployment
Quality Function Deployment (QFD) is a structured process in which customer needs are translated into the appropriate technical requirements associated with the various stages of product , manufacturing, or service development. The QFD process is often referred to as listening to the 'Voice of the Customer' (VoC), and involves a pro-active planning approach that promotes teamwork within an organisation. A series of cascading matrices are used where the weighted output on one matrix becomes input for the next (see the following diagram for a simple visual picture of this theme). The main features of the QFD methodology include:
- Focusing on meeting market needs by using actual customer statements (referred to as the `Voice of the Customer`);
At key points throughout the life of the product or service the VoC should be canvassed and the findings documented ready for action using the 'House of Quality'. The process often involves customers being asked to rank specified needs according to importance, and according to how well the organisation and its competitors are meeting those needs. Results are then analysed using the QFD process to highlight the most critical aspects relating to the development of improved products or services. By using this process an invaluable understanding can be obtained of the marketplace, as it is seen through the eyes of the customer. The process is intended to leave no doubt as to where priorities lie, what to work on first, and where to spend resources.
The QFD process has been attributed with benefits such as:
- Less product/service design changes;
- Decreased design and manufacturing costs;
- Increased customer satisfaction.
Karen Becker (2005), president of Becker Associates, a consulting organisation in Colorado, writes that focus groups incorporating cross-functional teams are a most effective way of capturing the VoC, and that the QFD methodology is highly effective for documenting this information in enough detail to determine how the perceived market needs will be met, and that ideally some six to eight employees should follow the development of products/services from the "…cradle to the grave."
Dr. Neil Eldin (2002), professor of civil engineering at Oregon State University, states that QFD provides a systemic approach to determine, prioritise, and translate customers' needs into product design parameters. The design parameters are frequently checked against customer needs throughout product development cycles. This ensures customer satisfaction with the end product.
QFD is used by a significant number of US industries including automotives, electronics, banking, insurance, healthcare, utilities, and food processing. QFD also provides a clear communication methodology that is able to coordinate the efforts and skills available in an organisation from the project's inception through to its completion. A motivating force behind the adoption of QFD by many manufacturing companies has been the potential savings in development time and costs that can be gained by using the methodology.
- Virtual Product Design Systems: An important aspect of product development is designing products that meet or exceed customers' needs. John Hauser (2002), Professor of Marketing, MIT Sloan School of Management, believes that consumers are served better, and many organisations become more profitable, because they have given the customer the opportunity to participate in product design. With the introduction of powerful and easily used computer systems it has become simpler to engage individual customers in qualitative product research activities. Systems that Hauser's team at MIT developed included:
- The Information Pump which was arranged in the form of an online game which encouraged respondents to think deeply and to give honest answers to the questions posed. Respondents were given incentives to encourage high quality output. Game rewards were maximised in accordance with the perceived truthfulness of the answers and for their uniqueness. The Information Pump proved easy to implement and provided an input to product development that was more creative than existing qualitative methods.
- FastPace, a Web-based system for conjoint analysis. Questions were posed which gave choices relating to proposed product features and benefits. The options given were changed adaptively according to the responses given. Using specialised mathematical programming methods algorithms were developed to provide accurate measures of consumer preferences using fewer questions than existing systems. Securities Trading of Concepts (STOC) which was a procedure that used stock-market-like trading rooms where consumers bought and sold virtual product concepts. This method gathered information concerning customer reactions to new product concepts by recording how they traded the virtual product concepts.
- Securities Trading of Concepts (STOC) which was a procedure that used stock-market-like trading rooms where consumers bought and sold virtual product concepts. This method gathered information concerning customer reactions to new product concepts by recording how they traded the virtual product concepts.
These Virtual Product Design Systems provided a cost effective and productive means of encouraging customer participation in new product design activities.
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