I recently read a report, Get Ready for the Private-Equity Shakeout, prepared by The Boston Consulting Group and the IESE Business School University of Navarra, a top business school in Europe. According to the report, private equity firms should focus their portfolio companies on operational improvements in order to survive. Operation value creation holds the key to success and is the most critical differentiator in today’s recession.
While I have discussed many of the topics below separately, I thought it would be a good idea to present these topics together and discuss how Customer Data Integration/Master Data Management (CDI/MDM) can assist with operational improvements for the portfolio companies of private equities firms. Of course, these points are equally relevant to all organizations regardless of whether they are independent, public, owned by private investors, non-profit, or other institutions.
Rolling-Up Companies
Whether it’s an opportunity or a merger of necessity, many organizations are combining to reduce expenses. The first thing an organization needs to understand is the proper number of customers and prospects and current and potential revenue by markets or territories in order to determine how many sales reps, service personnel, service locations, and other expenses that can be consolidated to manage profitability. CDI/MDM software can enable you to determine the overlap and uniqueness in the combined organizations and develop the proper counts for the analysis.
Additionally, CDI/MDM software can be used to organize the accounts, contacts, and other information to help build the combined databases after the roll-up so that the new company can effectively market, sell, and service the combined organizations after the merger.
Also, CDI/MDM software can help the combined organization succeed in these difficult times by assisting with the daily operational improvements described below.
Daily Operational Improvements
Communications
By properly identifying/counting contacts, you can have the appropriate number of communications to your contacts by email, direct mail piece, and by phone. This ensures that your sales and marketing efforts are complete, do not waste expenses with duplicate communications, and do not annoy your customers with extra and unnecessary communications.
Cross-Sell/Up-Sell
By developing a single customer view across multiple databases, sales and marketing programs can be developed to identify organizations that have Product/Service A, but not Product/Service B, locations that have Product/Service A and other locations within the organization that do not have Product/Service A, and referral contacts within the same organization that can help open doors to other locations, divisions, departments, subsidiaries, and other parts of an organization.
Internal Coordination
A single customer view across multiple data sources can help the different parts of the organization work as a team in a more efficient and effective manner.
At their fingertips, authorized information is available to representatives. Here are few examples:
- Sales reps can see financial information such as products/services sold, revenue, and contract expirations prior to making the next sales contact
- Customer service reps can see Project/Opportunities in the CRM system for the account in order to make sure that the customer is receiving the proper care
- Accounting can see customer service tickets prior to sending out past due notices
Analysis
Similar to the discussion as described in rolling up companies, understanding the proper relationships and accounts within your multiple data sources, even if a merger is not involved, is the key in determining how to right size your business in this economic environment.
Customer Building/Preservation
It’s important to build relationships with not only with your key contacts, but also with your customer’s additional contacts in order to retain customers. Therefore, if your key contact leaves, you will already have a relationship with either the replacement key contact or at least the key influencers who can point you to the replacement key contact and be your advocate. Otherwise, you risk being replaced when a new decision maker is in place. In these challenging economic times, an organization can not afford to lose its existing customers. A CDI/MDM system can pull together all of the contacts within an organization even if they are represented in different ways and even if they are contained within multiple data sources.
If a representative leaves, it’s important that all of the client contacts are centrally located. However, if the rep keeps all of their contacts in their handheld device, then when the representative leaves, the relationships may leave as well. Additionally, a rep may not be focused on cultivating the relationships with secondary contacts and therefore it’s important that these contacts be maintained and organized centrally. A CDI/MDM system can be used to match up the handheld device with the central database in order to facilitate the transferring of the data from the handheld into the central database.
