How do they know their customers so well?

Many firms know about their customers, but few know the customers themselve s or how to get new ones. Leaders in customer-knowledge management go beyon d transaction data, using a mix of techniques, and they aren't afraid to ta ckle difficult problems. Davenport, director of the Andersen Consulting Institute for Strategic Chan ge, and coauthors Harris, also from Andersen, and Kohli, professor of marke ting at Emery University, report results from interviews with 24 leading fi rms and describe seven practices that the leaders share. The companies inte rviewed - including Harley-Davidson, Procter & Gamble, and Wachovia Bank - have undertaken specific and successful initiatives centered around the man agement of customer knowledge. Within the seven practices, two results stand out: First, firms are beginni ng to rely more on data from actual interactions, such as sales and service . They are learning that customers are more than transactions, and they are seeking creative ways to turn data from these interactions - human data - into knowledge. Second, even the most ambitious firms are keeping data from different approaches separate. They are not accepting the notion of an int egrated data repository. Focus on the most valued customers. Know which customers are worth the orga nization's resources. Prioritize objectives. Successful firms begin all customer-knowledge manage ment initiatives by prioritizing business strategies and customer-relations hip objectives. They know which customers to Focus on and what new behavior s the customers should exhibit. Aim for the optimal knowledge mix. There's no single solution to knowledge management. Use a variety of approaches. Don't use one repository for all data. The fully integrated customer-knowle dge environment seems more an intriguing idea than a practical reality. Div erse forms of information are difficult to combine in one set of database r ecords, and firms risk having a departing employee walk away with highly de veloped knowledge. Consequently, customer data is fragmented across multipl e systems and locations. No one has been able to combine hard (transaction- based) and soft knowledge in one customer database. Think creatively about human knowledge. This is the main practice that sepa rates the leaders From the laggards. We saw many creative solutions to mana ging both explicit (documented and accessible) and tacit (understood but un documented and not accessible) knowledge. Look at the broader context. Customer-knowledge initiatives do not exist in a vacuum. Their success depends on the organization's roles and responsibi lities, the workplace culture, and the organizational structure. Establish a process and tools. Many firms seem to stop working when they've selected a management strategy - avoiding the planning that is critical to implementation. The leading firms work hard to deliberately manage custome r knowledge, using a defined process and creating touts as needed.