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Truth Squad: Will Weaker Scoring Criteria Create a Mortgage Surge?

Participants and Influencers throughout the mortgage ecosystem have been told by the three main US credit bureaus through their jointly owned and controlled credit scoring firm, VantageScore, that the VantageScore can enable millions more consumers to gain access to a mortgage. It’s an appealing story — but is it true?

Claim: Loosening credit scoring criteria will bring lenders an additional 3.4 million potential borrowers, over 2.6 million of whom will qualify for mortgage credit.

Truth: Very few new people will both qualify for mortgages and want mortgages.

The “innovation” VantageScore claims can score more people is simply the weakening of credit score criteria. The minimum criteria needed to produce the FICO Score aren’t arbitrary — they are the result of decades of research into risk assessment. As a reminder, reliable credit scores can only be calculated from credit files with at least one open credit account for at least six months and that have had an update reported to the credit bureau in the last six months. These criteria are necessary because credit scores need to reflect a person’s true creditworthiness to a sufficient degree that lenders, regulators and consumers, themselves, can rely on them.

Frankly, it’s just not possible to produce an accurate credit score based on too little data, or data that’s very old. If two consumers score the same, lenders should expect their risk to be the same — but if one score is based on robust data and another on scanty or old data, these scores don’t mean the same thing.

But let’s set that aside, and look at the numbers to judge this claim. In a previous post, I pointed out that our research showed around 7.4 million Americans who don’t have a FICO Score today (because they don’t meet the minimum criteria) could receive a research score of 620 and above if we weakened the credit score minimum criteria to all credit files except credit reports that were noted as deceased or inquiry only.

7.4 million sounds like a lot of new borrowers. But let’s dig deeper.

Age

First, let’s remove the people under 25. I think we can all agree that consumers under the age of 25 are generally more concerned about getting their first job and paying off their student debt than buying a home.  Our research shows that over half of the population between 18 and 25 has at least one open student loan and more than half of those owe more than $ 8,000.

Now, let’s remove the people over 65. These people are focused on planning for retirement, not taking on a 30-year mortgage.

So focusing on the 25-65 group takes our 7.4 million down to 3.2 million. This makes perfect sense, as my last post showed that people who scored above 620 are predominantly in the Credit Retired segment, with a median age of 71.

Already a homeowner

People who already own their homes are not the target market for mortgage expansion. These people are in the system already. Still, removing them from the newly scored takes us down to 2.05 million.

Delinquencies and collections

Consumers that experienced a foreclosure in the last 24 months, had a 90-day delinquency or have collections only on file will not make it through the mortgage underwriting process given existing policies. There aren’t many of those scoring above 620 even with the reduced-criteria research score, so we’re only down to 2 million.

Inactive/stale

Of the 2 million consumers remaining, about 1.8 million are not actively using credit and have no recent update (no update in the last 6 months) to their credit file.  In fact, more than 65% of this population have not seen an update to their credit file in over 48 months. They don’t get a FICO® Score because of this long absence — information over 4 years old no longer reflects a person’s current credit risk. Making a decision regarding a consumer’s mortgage application today using a credit score calculated on an active credit file 4 years ago is unacceptable – all market participants require a current score.  (For mortgages the credit report and score may not be older than 120 days at the time of closing.)  In the same way, making a decision regarding a consumer’s mortgage application on a current credit score but calculated on data that is 4 years old is equally unacceptable.  Further, while VantageScore chooses to produce a score on them, we know that these consumers are not seeking credit.  In our prior blog, Will Looser Scoring Standards Help Millions More Americans Get Mortgages, typical application rates are very low, under 4%.  More detail and can be found in Figure 1.

We’re now down to fewer than 200,000 potential mortgage candidates.

Mortgage TS Figure 1 Truth Squad: Will Weaker Scoring Criteria Create a Mortgage Surge?

New to credit

Our final group of 200,000 consumers is in the mortgage seeking segment, they don’t already own a home, are not seriously delinquent and do have an active credit product being reported to the national consumer reporting agencies.  So far, so good.

But, they do not have FICO scores because they do not have at least 6 months of history with their very first credit product.  .  So, the reasonable question now is: Do these consumers have sufficient credit experience to handle a 30-year mortgage?

In fact, 73% of the new to credit consumers are managing less than $ 250 of debt, and 72% have never managed a credit limit of more than $ 1000. A mortgage would be a big leap up the credit ladder. In reality, these people will typically need more credit experience before they’re ready for a mortgage, and by that time they’ll have a FICO Score.

Mortgage TS Figure 2 Truth Squad: Will Weaker Scoring Criteria Create a Mortgage Surge?

What’s the final tally?

Applying common sense to the equation takes our 7.4 million newly scorable Americans down to just a few thousand potential mortgage applicants. Most of them aren’t ready for a mortgage yet. Scoring more consumers by weakening the minimum scoring criteria is not a game-changer for America’s mortgage system.  In fact, it can actually be harmful to consumers and delay their return to mainstream credit products.

Conclusion: Lowering credit scoring standards will not create sustainable homeownership.

The primary obstacle for many consumers to qualify for a mortgage is insufficient income to meet required debt to income ratios. Rather than weakening our risk management measures, the more impactful goal for the industry is to find ways to help consumers improve their financial picture through legitimate credit counseling so that they qualify for a mortgage. The only party that benefits from weakening the minimum scoring criteria is the company selling these scores.

How DO we find more creditworthy consumers who might be in the market for a mortgage? Read our white paper Can Alternative Data Expand Credit Access?, which shows that we can score more consumers safely and soundly by scoring alternative data. Credit counselors can play an active role in this journey, and FICO has recently extended our FICO Score Open Access program to credit counselors, to help them work with consumers seeking to qualify for a mortgage, ensuring that the dream of homeownership doesn’t turn into a nightmare for consumers unprepared for such a major shift in their overall finances.

Watch for the next post in this series, where we meet claims with facts.

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Truth Squad: Does VantageScore Use Alternative Data?

In the era of Big Data, so-called alternative data holds a special promise — to shine a new light on consumer behavior. When it comes to credit scoring, alternative data means data not being used today for risk assessment, and specifically data not found in the credit bureaus. Lenders hope scoring this data could allow them to make faster, better decisions on people who don’t have FICO® Scores — the “unscorables” with sparse or no credit bureau data on file.

Hoping to jump on the alt-data bandwagon, the three main US credit reporting agencies – through their VantageScore business – have been claiming that their score uses alternative data to score more consumers than the industry-leading FICO® Score. It sounds good, but is it true?

Claim: VantageScore leverages alternative data to score millions more consumers than FICO Scores.

Truth: The “alternative” data VantageScore uses is utilities and cell phone bills — as reported to the credit bureaus. The same data is also used by the FICO Score. Moreover, the vast majority of utility and cell phone bill data is NOT reported to the credit bureaus, and so is NOT used by VantageScore.

The fact is that VantageScore, like the FICO Score, doesn’t analyze any data that isn’t at the credit bureaus. By definition, that means it doesn’t score any alternative data whatsoever.
Nor is scoring utility payments and cell phone payments new. The FICO Score has been doing it since day one, in 1989.

What makes this claim even more misleading is that non-loan payments such as utility payments and cell phone bills CAN help score more people. That’s because the vast majority of this data is not reported to the credit bureaus. Only a tiny portion of it is included in the credit bureau data.

How sparsely reported is this information?  An estimated 92% of US adults have a cell phone — think about it, everyone you know does. However, just 2.5% (or roughly 7 million) of all consumer credit bureau files contain telco account information.

The story is similar on the utility account side, where over 60% of American adults pay for utilities, but just 2.4% of consumer credit bureau files contain utility (non-telco) payment information. Judging by credit bureau data alone — the data VantageScore accesses — you would think most Americans don’t have water or electricity in their homes.

Alt Data Chart 1024x531 Truth Squad: Does VantageScore Use Alternative Data?

As for the notion that using this data can score more people, here’s another fact: Of the unscorable population that have sparse data at the credit bureaus, less than 2% have any telco or utility data.

So where is Americans’ data on utility and phone payments? And how can we score it?

This data is reported to other databases, which contain payment information on more than 200 million unique consumers. This data is used by FICO® Score XD, FICO’s next-generation credit score meant to increase the scorable universe through the use of (truly) alternative data.

There simply isn’t an opportunity to safely and soundly score millions more Americans using credit bureau data alone. The value found in that data for assessing risk has been fully mined by the FICO Score. To score more people, we need to use truly alternative data — i.e., data not found at the credit bureaus. It’s perhaps not surprising that the three credit bureaus that own VantageScore want to stick to the data they own, but to call any of this data “alternative” is absurd.

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Truth Squad: Will Looser Scoring Standards Help Millions More Americans Get Mortgages?

Access to credit and the path to homeownership are important parts of the American way of life. That’s why it’s critical to understand what can be done to improve financial inclusion — and what won’t work.

For months now, the three main US consumer reporting agencies – through their VantageScore business – have been claiming that millions of credit-starved Americans can get access to mortgages through the “innovation” of simply eliminating long-standing and essential minimum credit scoring criteria. This isn’t innovation, and it won’t help borrowers.  It’s time to set the record straight.

Claim: By loosening the minimum scoring criteria, VantageScore can give millions of currently unscoreable Americans a credit score, making them mortgage-ready.

Truth: Scoring sparse and old data may give more Americans a score, but it won’t help those Americans who are actually seeking homeownership credit.  Even worse, it locks millions of Americans into unfairly low scores.

To begin, let’s look at why some people don’t have FICO® Scores. The answer is that there are FICO® Score minimum scoring criteria, which play a critical role in ensuring the robustness and accuracy of our credit scoring system, and by extension the soundness of lending decisions based on that system.

The so-called “unscorables” are people who don’t meet these minimum criteria, for one of four reasons:

Figure 1

Unscoreables chart 2 Truth Squad: Will Looser Scoring Standards Help Millions More Americans Get Mortgages?

Source: FICO Blog

The question is, if we were to loosen the FICO Score’s minimum scoring criteria, how many consumers would score 620 (a common lending threshold) or higher?  And how many of those consumers would be in the market for a mortgage?

To find out, we developed a research score that, like VantageScore, eliminates most of the time-tested FICO Score minimum scoring criteria. As a result, it can assign a score for the people with sparse credit files who are currently FICO unscorable. We aligned this score to the same 300-850 score range used by the FICO Score.

As shown in Figure 1, the largest of the unscorable segments is about 25 million people who have No Traditional Credit File whatsoever, and are therefore unreachable by any credit bureau score. Our research score couldn’t score these people, and neither could any other credit bureau score.

Let’s quickly walk through the three remaining segments and their need for credit:

  • Credit Retired: consumers with no recently active/updated accounts, and no historical signs of payment blemishes.  These consumers skew older (median age = 71), and have voluntarily walked away from the use of credit accounts – they’ve paid it all back.  Unsurprisingly, their appetite for new credit is extremely low; fewer than 5% of the Credit Retired population recently applied for credit.
  • Credit Impaired: consumers with no recently active/updated accounts, and with historical signs of serious delinquency or other negative behavior on file (e.g., collections, public records). This segment comprises almost two-thirds of all unscorable accounts on file at the credit bureaus, and in many cases captures consumers who had a negative event and subsequently lost access to credit.  As such, their traditional credit file is “frozen” at the consumer’s moment of financial distress.  These consumers tend to be middle-aged (median age = 43), and show moderate interest in new credit (20-30% recently applied for credit).
  • New to Credit: consumers with 1+ recently active/updated accounts, but with less than 6 months of credit history.  These consumers skew young (median age = 24), and a typical borrower in this segment has recently opened their first credit card with a very low (<$ 1,000) credit limit.  They are relatively credit hungry, with some 40% of this segment having recently applied for additional credit.

When we look at the research score distribution for these segments, something interesting emerges. People with higher scores are largely people in the Credit Retired category — people who aren’t looking for credit. (See Figure 2.)
Figure 2

Research score distribution Truth Squad: Will Looser Scoring Standards Help Millions More Americans Get Mortgages?

Source: FICO Blog

As a group, all the unscorable people together score lower than the traditionally scorable cohort: The median score on this unscorable population is 585, roughly 130 points lower than the median FICO score of ~715.  Only about 33% of this research population score 620 or higher, and the vast majority of those (80%) hail from the Credit Retired segment.  If we focus on a score threshold of 680 or above, that figure jumps to almost 95%!

Additionally, note the strong downward skew to the score distribution.  The majority of the more than 18M consumers in our Credit Impaired segment — the people who had a negative financial event and either lost or never had access to traditional credit — would receive a score too low to qualify for credit.

Even worse, because the Credit Impaired consumers lost all access to credit, they have no payment or account balance changes being reported to the consumer reporting agencies.  Therefore, these consumers have no way to demonstrate their return to credit-worthiness.  Many of these people have overcome, persevered, and recovered, and their recovery is not reflected in their frozen credit bureau file.  Every fairly constructed credit scoring approach must give people the ability to demonstrate their return to creditworthiness – FICO’s approach to scoring more consumers using alternative data does, VantageScore’s approach does not.

What does this show us? Despite claims by VantageScore, weakening the minimum scoring criteria will not empower millions of low-risk mortgage credit seekers. 

As articulated by the FICO white paper Can Alternative Data Expand Credit Access?, the responsible approach to scoring more consumers is to enhance sparse traditional credit files with rich data sources such as payment history on cable and telco accounts — data that  is very rarely found in credit bureau records.  This approach will help consumers on their financial journey into mainstream lending.

Stay tuned for the next post in our Truth Squad series where we will put more credit scoring claims to the test.

#scoretruth

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TRUTH IN ADVERTISING FOR CITIES

 TRUTH IN ADVERTISING FOR CITIES

The Hidden Truth about CRM Data Import Files

There is no denying that when working with importable data in CRM, data integrity is of the highest importance. Microsoft has gone a long way to help make importable templates much more manageable and safe for end users.  They have added a number of user friendly measures, such as tool tips that tell you the field type and set length, or minimum and maximum values of data for that field, including stopping measures if you exceed one of the rules.
Image 1 The Hidden Truth about CRM Data Import Files

For Lookups, they give you the tool tip that records must exist prior to importing them, and for Option Set Items, you are only able to select the available values that exist in the system:

Image 3 The Hidden Truth about CRM Data Import Files

This isn’t a revolutionary development… the CRM developers just learned to leverage the Microsoft Excel built-in Data Validation rules to enhance the user experience. For those of you that do not know where to find these, they can be navigated to in Excel by going to Data -> Data Validation -> Data Validation…

Image 4 The Hidden Truth about CRM Data Import Files

And here you can see the rule that was set for this particular text column:

Image 5 The Hidden Truth about CRM Data Import Files

If you look behind the curtain, you will see the rule for Option Set values as such:

Image 6 e1471379383168 The Hidden Truth about CRM Data Import Files

This format is shouldn’t come as a surprise as we need to get the data from somewhere to populate the drop-down list.  But that source…… hiddenSheet!$ A$ 17:$ Q$ 17

 

Where can we find this hiddenSheet?

Typically, you can find hidden worksheets by just selecting the worksheet tab at the bottom and choose the unhide option.  But for some reason, that option is not showing that anything is hidden.

Image 7 1 The Hidden Truth about CRM Data Import Files

So, this sheet has to be somewhere right? The answer is hidden in an advanced feature, where few tend to look: under View Code:

Image 8 1 The Hidden Truth about CRM Data Import Files

This will pop up a separate VBA page that may look scary to a standard Microsoft Office user, but fear not, we can help you find what you need as long as you follow along closely.

Once inside the VBA editor, you will need to view the project files.  To find them, Click View -> Project Explorer.

Image 10 1 e1471379254623 The Hidden Truth about CRM Data Import Files

Once the Project Explorer comes up, look what we find.  It’s our hidden DataSheet, and if we look at the Visibility status, it was set to a 2 – xlSheetVeryHidden (I’d say so).

Image 11 1 The Hidden Truth about CRM Data Import Files

To get that hidden sheet to appear, we want to change the Visibility value to 1 – xlSheetVisible.  You don’t need to save, just click back on your Microsoft Excel Document.

Image 12 1 The Hidden Truth about CRM Data Import Files

Once you are done in here, go back to your VBA Editor, and set the visibility back to 2 – xlSheetVeryHidden and close the extra window without saving.

So, you may be wondering: why would someone ever want to do this?

For me, it’s the same reason that the CRM developers went through all the work in the first place…to improve data integrity and make the end users life just a little easier.

When I am sending a data import template to my customers, I want to make this process as simple and easy as possible.  I will commonly take the lookups that have 10 items or less that would be used, add them to the hiddenSheet file. Then, I create the Data Validation rule for that lookup column.  This gives the user the ability to select the record from a dropdown and validate that it matches what exist already in CRM. When matching lookups, it must be precise as far as spelling, white spaces, abbreviations, punctuation, etc…  If I can make this easier, by already having the options as they exist in CRM available to the end user, I know I have improved the data integrity.  Additionally, if they are populating the file and something is missing from the list, we can be aware of that ahead of time to get the record added in CRM, so that it does not fail our import and have to be repeated multiple times.

This is certainly something that may only be relevant to a select crowd as it is more advanced, but in finding my way through this, it was not as easy as a quick internet search.  So in writing this up, I hope that a few will find this useful, save them time and that they can make someone else’s life just a little easier.  To me, that is a win, win win….

Written by Bryan Page, Developer at Rockton Software, a Microsoft Dynamics CRM Add-On Partner.

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Engagement at Moments of Truth

Lost somewhere in the pile that is a current research project is an article on customer loyalty that says that more than half of customers who recently exhibited loyal behavior toward a vendor said they’d switch to another vendor in an instant.

moments truth Engagement at Moments of Truth

The question prompting this answer is whether these customers would switch for a better deal. It was a trick question trying to determine loyalty.

Of course — who doesn’t want a better deal?

It also encompasses all that is not well in our approaches to customer loyalty today. We’ve developed a culture in which price is the primary motivator, and one’s effort in the marketplace is all about getting the lowest price.

Getting a low price and obtaining a great deal are not the same, however. For instance, the price of a car and the perception of getting a great deal hinge on the car’s brand.

Rewards ≠ Loyalty

We also have trained customers to expect a reward, discount, special deal or whatever you want to call it just for showing up. In fact, we’ve so confused the idea of customer loyalty with rewards that both are practically useless. We reward customers, they collect points, miles and stamps, and we consider those acts of collection to be evidence of loyalty.

If the article is to be believed (I wish I could find it), we’re deluding ourselves, thinking that rewards and loyalty are the same, or perhaps that one breeds the other.

They are separate and distinct. Rewards — or discounts, which is what they amount to — once were thought to be tools for optimizing something called the marginal consumer, someone who didn’t see value at your price point but might be induced to make a purchase at a lower price.

Gathering trade from the marginal consumer is a way to increase revenue, even if you can’t get the full price, and it’s particularly useful in a market that’s growing at the rate of population and no faster. It’s a way to goose revenues even if it erodes margins (and it is the direct ancestor of the punch line, “We’ll make it up on volume”).

What happens, though, if every customer becomes a marginal one? Specifically, what does this mean for list prices? You already know.

Nevertheless, current reward programs are working, or they’re working well enough. Of course, they aren’t making customers loyal and they aren’t enabling vendors to charge a premium for their wares, so maybe they aren’t working.

When I hear rewards, I automatically think about the wanted posters in the post office. We want you, but you probably don’t want us. Right?

Apple and Starbucks

Just when you think things couldn’t get worse for loyalty programs comes another report (which I can find) from McKinsey. “Companies with loyalty programs posted a 2.28 percent comp sales increase, while those without loyalty programs saw 4.26 percent gains,” wrote Liz Hilton Segel, Phil Auerbach and Ido Sege in “The Power of Points: Strategies for Making Loyalty Programs Work.”

Just because you have a loyalty program doesn’t mean it’s working.

To add insult to injury, there are many companies that don’t use rewards or loyalty plans that are doing just fine. Apple comes to mind. It has a robust business and everybody pays list price.

Starbucks has in its loyalty program more than 10 million customers who are actually loyal by various measures like buying more.

To be clear, loyal customers are those who would make repeat purchases even if there were no inducement. Over time, loyal customers buy more, expand their exposure to your brand, and become more profitable because they know and understand your drill.

What’s the similarity between companies like Apple and Starbucks and the rest of the trade who are giving the store away and barely making it?

Engagement plays a big role in loyalty. Presumably only masochists engage with vendors they don’t like, so engagement seems like a good place to start, but what comes first? Engaged customers become loyal over time, but you could say that every coupon clipper in the world is therefore engaged, so what’s the deal?

Simply put, when customers engage with a vendor on an area of mutual interest there’s the necessary spark for loyalty. Note the mutuality because it’s important. Coupon clippers are engaged, but the vendors really aren’t, and it takes no special talent to offer a discount.

Vendors have to be able to pick their spots for engagement; to engage in everything is profoundly wasteful.

What Customers Care About

That’s why I advocate for identifying moments of truth. They are the things that customers care about and that vendors need to uncover so that they can engage in a mutually beneficial way.

To engage customers this way is a route to developing their loyalty, and as more vendors discover this they effectively train customers in new practices. All of this makes older rewards programs seem quaint.

The next time you’re wondering how to generate loyalty in your customers or speculating about why they take the discount and run, don’t automatically assume that “customers have changed” or some other marketing cliché, and what you have is all you get.

Customers always do what they’re supposed to do. If it’s not what vendors want them to do, then it’s likely because vendors haven’t figured out how to ask the right question. end enn Engagement at Moments of Truth


Denis%20Pombriant Engagement at Moments of TruthDenis Pombriant is a well-known CRM industry researcher, writer and speaker. His new book, Solve for the Customer, is now available on Amazon. He can be reached at denis.pombriant@beagleresearch.com. You can also connect with him on Google+.

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Digital Transformation and Moments of Truth

I hadn’t been aware of one of the more important CRM stories of the year until I was doing research for a new book. It’s a great story and it deserves retelling, especially if you’re like me and think that focusing on customers’ moments of truth is important. Thanks to Narina Sippy for pointing it out.

moments truth Digital Transformation and Moments of Truth

Back in April, Starbucks announced revenues for the just-completed quarter that exceeded year-over-year attainment by a whopping 17.8 percent.

Usually a break this big needs explaining, and often there’s a logical reason. Maybe it’s because one company bought another or it introduced a world-beating product or it opened a lot of new stores.

Starbucks did add 210 stores in the quarter under discussion, but 210 out of 22,088 is not likely to move the needle in the way reported.

Still, there was Starbucks announcing record revenues of $ 4.56 billion and the aforementioned 17.8 percent improvement. That’s just about unheard of for a retailer in the restaurant business.

The company also had 10.3 million loyalty members, up 10 percent from the previous quarter, according to the earnings results.

An average loyalty member spends three times as much as a nonmember, according to Starbucks.

Understanding the Customer

Most of the credit for the outsized (should we say grande?) increase came from technology, specifically a mobile app that enables loyalty members to get their orders faster and with less hassle.

The mobile app now lets loyalty members order and pay without standing in line; moreover, it serves as a marketing platform for people well disposed to upsells.

This is a big deal and not simply because it exemplifies the digital revolution taking place. Like any hype cycle, there will be impressive successes in the everything-goes-digital transformation of business, and there will be failures.

The difference, as is often the case, is in understanding the application of the new technology rather than implementing it just because you hear voices.

Starbucks didn’t decide simply to build a mobile app. Instead, it decided to understand customer moments of truth and then tried to figure out how to be there for its customers.

As it turns out, waiting in line at a busy coffee shop not once but twice — to place an order and then to wait for your order — is a major time sink for busy people. Why not skip the lines altogether and just head right to pickup?

That’s part of the mobile app’s appeal. Best of all, you can order on your way so that your stuff is waiting for you when you arrive, and yes, you’ve already paid for it — so be on your way.

Digital Transformation

Now, perhaps you are reading this and thinking well, of course, why not build a mobile app to do this? It seems intuitive, but if it really was there would be so many examples of companies engaging this way that my book would have written itself by now. That’s not the case.

The Starbucks example does, however, show what moments of truth and digital transformation are all about and how they can work synergistically.

The transformation really is about finding ways to reach customers proactively with something of value for their consideration that leads directly to capturing customer data so the vendor can know beforehand where the moments of truth are and then forecast which customers to prepare for, like eliminating lines.

Sequence of Events

The Starbucks example shows two things. First, it demonstrates the right sequence for the transformation, which amounts to listen to customers first, then act.

The availability of powerful technologies made a mobile app possible, but it didn’t do anything to change the moments of truth. Without WiFi and mobile and all the rest, customers would have had the same moments of truth, and eliminating the waiting still would have been an important thing to tackle.

Previously, solving such a problem meant putting more people on duty or buying more machines to crank up output, but that was capital intensive. If no other vendor was competing on reducing wait time, those investments might have proved to be wasteful or without acceptable return on investment.

Changing Channels

The second thing I learned from this example is that the mobile app is effectively a new channel, newer even than social networking running on your phone.

As a channel, the mobile app needs to be filled. It needs content but not just any content. The nature of this channel is highly personal, so the content needs to be also. This channel needs to be able to predict customer needs well enough that the customer will always think a suggestion is valid even if that customer rejects it.

So that’s it in a small space. Digital transformation is about getting tighter with customers; it is not primarily about saving a few parts of a penny on a transaction.

The transaction is already basically free — the customer buys the device and airtime and supplies the labor of the interaction. The responsibility or duty for vendors now is to be relevant. end enn Digital Transformation and Moments of Truth


Denis%20Pombriant Digital Transformation and Moments of TruthDenis Pombriant is a well-known CRM industry researcher, writer and speaker. His new book, Solve for the Customer, is now available on Amazon. He can be reached at denis.pombriant@beagleresearch.com. You can also connect with him on Google+.

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rashadg: Truth

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Blogtastic!

AIN’T THIS THE TRUTH?

 AIN’T THIS THE TRUTH?

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ANTZ-IN-PANTZ ……

The single source of truth: Unifying customer identity data (webinar tomorrow)

Join us for this live webinar on Thursday, August 27 at 10 a.m. Pacific, 1 p.m. Eastern. Register here for free.

Like a lot of traditional business sectors, the energy management industry is notorious for relying on face-to-face sales. But as a lot of B2B marketers have realized, that’s not a strategy for growth in a digitally-led world.

According to Shawn Burns, “Once you’re able to digitize the customer relationship — and know who you’re talking to, and personalize who you’re talking to — you can massively accelerate the way they buy products from you as you’re chasing growth.”

Burns is SVP of digital marketing for Schneider Electric, a multinational energy management and automation company with 170,000 employees in over 100 countries. For Burns, growth has a lot to do with identity management and building one-to-one customer reationships at scale.

Central to this is building what Burns calls a single source of truth. And it’s what a whole lot of marketers are racing to figure out these days. How to bring together customer data files into one single, holistic source with accessibility to an entire organization — including marketing teams, sales teams, and inbound call centers.

It’s a strong focus for this webinar tomorrow in which a panel of experts, including Burns and VB Insight Analyst Andrew Jones will be joing by others and digging in deep to share what works and what doesn’t works in terms of customer identity management. While Jones will be sharing the findings of VB’s recent report on Identity and Marketing, including VB’s best bets for data collection and aggregation tools, Burns and colleagues will be sharing their best practice tips from the trenches.

“We know there’s an ongoing challenge of too many customer data files, and that only works against you,” says Burns, “So you really have to embrace a single source of truth. And it sounds simple but it’s one of the most complicated things for an organization to do because it requires governance, it requires an immense amount of change manageement, and it requires communication.”

The technology piece is paramount, but Burns also cannot overstate governance.

“If marketing wants to get credit for doing all this amazing effort to create leads and pipelines, then they have to be living and dying off of that technology solution, which in most cases, is the internal CRM,” he adds. And compensation needs to be tied to that adherance. That means compensating marketing teams not on what they do, but on the outcomes they achieve. “Anything short of that begins to look like ‘Hey, I’m running in the yard, look at me — I’m running in the yard.’” And that is how you get people to begin to build a single source of truth.

Yet, as paramount as that digital holistic view of the customer is, Burns has a cautionary note. To say today’s business world moves swiftly is an understatement — people move from job to job more than at any other time in history. Companies are constantly being merged, migrated, acquired, or even going out of business.

“Data has a very short life span. You can spend many, many years building a rich customer database, and you believe that you have this amazing data warehouse to conduct business with and you realize very quickly that the world has changed.” Which is why it’s imperative for him to be using just-in-time data — something too many businesses overlook when relying on customer identity.

Join us for this webinar as our panel explores essential challenges around customer data — and will answer the questions that are burning in your mind.


Don’t miss out!

Register here for free.


In this webinar, you’ll learn:

  • Why customer identity is more critical than ever
  • The challenges of collecting and unifying customer data
  • Key tools for capturing customer data
  • Best options for enriching existing customer profiles
  • Methods and technologies to unify customer data

Speakers:

Andrew Jones, Insight Analyst, VentureBeat
Shawn Burns, Senior Vice President, Web and Digital Marketing, Schneider Electric

Scott Kabat, CMO, Prezi
Zouhair Belkoura, CEO, KeepSafe


This webinar is sponsored by Janrain. All research presented was done in advance and entirely independent of any sponsor.

Prezi is a cloud-based presentation software that opens up a new world between whiteboards and slides. The zoomable canvas makes it fun to explore ideas and the connections between them. The result: visually captivating presentations t… read more »

Janrain makes it easy to acquire and recognize customers across all devices, and collect accurate customer profile data to power personalized marketing. Our solutions, including social login, social sharing, social profile data collect… read more »

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