Building the Customer
Customer relationship management begs the question: How does your organization define "customer-ness"?

Terry Moriarty                
December, 1998

To achieve business success, you must understand who your customers are and what they need. To reach this understanding, you must examine customer behavior. What relationships do they participate in that indicate that you should consider these parties customers? The first step toward getting to know your customers is specifying what traits you think your customers have.

The answer to the question "who is a customer?" depends on who you ask within your organization. The term "customer" originally referred to the party responsible for paying the bills. In this case, we have everything we need to know about the customer to collect money for our products and services (including name, address, and products or services ordered). Other business areas such as marketing and customer service, however, may include other parties in their definition of customer, including the decision maker, the purchasing decision influencer, and the product or service’s end user.

The customer billing view alone is no longer sufficient for determining customer identity, and the emerging definition of customer is more marketing-oriented. This definition encompasses a lot more than just the party that is responsible for paying for the product; it includes anyone who has the potential for influencing the sale, including third-party agents who sell your products to the end user.

To complicate matters further, the customer of one line of business may be a competitor to another business area in the same company, which is often the case in the long distance telephone industry. The line of business that provides access to the local network considers the long distance companies its customers. But if the local network provider also offers long distance services, within that same consumer market, the long distance companies are its largest competitors. To complicate matters even more, businesses have also been known to apply the word "customer" to their alliance partners, agents, and brokers. Customer is becoming a catch-all term that encompasses almost anyone with whom you do business.

"Customer-ness" Is a Relationship

Business language is extremely rich and expressive. A single term can connote an entire scenario about anything of interest and its relationship to anything else. For example, customer implies the existence of a person or organization that is purchasing the products or services of another person or organization. When you say the word customer, your audience assumes that at least two parties (whether person or organization) are involved in a relationship in which the products or services of one party (the service provider or vendor) are being rendered to the other party (the customer). We may not know the nature of the customer relationship (that is, the types of service or products involved), but we can glean a lot of information from the use of a single word. A business term is often shorthand for a set of hidden business rules associated with business concepts that appear in the dynamic model.

The definition of customer connotes a provider-receiver relationship between people and organizations (or business parties) and your organization. The customer receives your products and services, and your organization is the supplier or vendor. You must manage your relationship with your customers. From this perspective, it is easy to see that it is the nature of the purchaser role that some parties assume that causes us to consider those parties to be customers. When you apply this definition to your suppliers, it becomes obvious that your organization is just another business party assuming the customer role with respect to your vendors. Therefore, it is possible to define a customer based on the roles he or she assumes with respect to your products and services. Three types of roles interest us when we determine whether we should consider a business party a customer: stakeholders, participants, and interpersonal. (See Customer Role Types table)

As Figure 1 shows, a business party assumes a role with respect to your product and service offerings and business events that provides a formula for describing your customer’s characteristics, and these characteristics can vary by line of business or product line. For example, the Pension Plan Trust department may consider both the company administering the pension and the employees the plan covers to be customers. However, for individual trusts, only the donor or the executor is considered the customer; the beneficiaries are not. Because each area of the business can have its own unique language based on the products offered, you must examine the business vocabulary to identify the significant roles indicating the existence of a customer relationship.

Customer Relationship Building Blocks

To get a full perspective, you must identify all the organizations that work with your customer in some way. Working with your customer can include marketing, accounting, sales, and service. Stakeholders have a perception of customers’ identity that is based on the nature of their interactions with the customers. Each stakeholder must articulate what it means when it uses the word "customer." You can use the customer relationship building blocks in Figure 2 as a framework for developing your enterprise’s definition of customer.

The customer relationship building blocks represent a view into the "Dynamic Business Model" that encompasses the entities, relationships, and attributes that provide the knowledge base for customer management across the enterprise. (See Figure 1.) Just to be in business, an organization must make fundamental decisions about the products and services it offers, the markets it wants to compete in, how it will keep track of its finances and resource usage, and how it wants to do business. Seven sibling subject areas that represent the DNA of any organization emerge from these decisions. (See Table 1)

The customer relationship subject area represents the business classes involved in managing customer relationships. (See Table 2) As such, customer relationships only focus on the aspect of the dynamic business model that supports customer management. The inner workings of another subject area and the relationships among the siblings is outside the scope of customer relationship management. Likewise, other major business roles, such as vendor, employee, shareholder, and regulator, look at different areas of the dynamic business model.

The customer subject area consists of only one business class: the customer portfolio, which serves as the glue between all the links to the seven building block subject areas. For example, the finance subject area defines account structure and behavior, and service agreements mimic the structure of offerings. In essence, the customer relationship link classes must mirror the structure of their associated subject areas

You can also use the customer relationship building blocks as a framework that can facilitate the process of identifying business rules. You can structure business rule analysis sessions for customer relationship management into a series of questions

• Who are your customers (people or organizations)?

• In which interpersonal relationships (including household membership and organization structure) are you interested?

• Which points of contacts (such as address, phone, and email) are of interest to you about your customers?

• What customer portfolio components (such as service agreements and accounts) do you require to deliver your offering?

• What stakeholder roles (including owner, cardholder, signer, and decision maker) can you assume with respect to those business items

• What business events (such as campaigns, sales calls, customer service offering setup, and financial activities) does your organization perform to deliver its offerings to its customers

• What profile items (such as age, hobbies, and occupation) do you need access to about your customers?

With this approach, it’s more likely that you will configure business rules within the dynamic business model.

When you define customers in terms of the roles they assume, supporting their different views becomes quite easy. Each line of business can specify the circumstances under which a business party is considered to be a customer. Within a product line, the roles that you can assume are normally static. For example, a loan can involve the borrowers who receive the money and the cosigners who agree to pay the loan if the borrowers default. No one will question that the borrowers are customers. But what about the cosigners? Are they customers, too? The answer may differ depending on the point of view of the managers involved. Furthermore, the answer may change as the organization becomes more customer-focused. When we define "customer-ness" in terms of the roles business parties assume with respect to products and services, how they participate in events, and their interpersonal relationships, the business is free to assume as many definitions of customer it needs to achieve success.

Terry Moriarty, president of Inastrol, a San Francisco-based information management consultancy, specializes in customer relationship information and metadata management. Her common business models have been used as the basis of customer models for companies within the financial services, telecommunication, software/hardware technology manufacturing, and retail consumer product industries. You can reach her at terry@inastrol.com.