Most sensible 5 Industry Prices of Legacy Buyer Information Onboarding
Traditional approaches to customer data onboarding are highly inefficient, slow, and difficult to scale. This can result in significant impact on business operations, ability to deliver products and services, and on customer experiences. In the previous blog post of this series, we described how to identify key signs that should inform management that they are doing customer data onboarding with outdated methods.
Focus group discussions with EDI HERE customers indicate that older approaches for customer data onboarding result in following negative business impacts:
1. Poor customer experience results in low Net Promoter Score(NPS)
EDI Here clients advise that a major driver for their digital transformation initiatives is the need to improve customer experiences. Having conducted customer satisfaction surveys, they found that their customers are not too happy. This was reflected in lower than expected Net Promoter Scores (NPS). When they dug deeper to find specific areas of improvement, one of the most common points of frustration for customers was the time and friction required in setting up and managing automated data exchanges with the company, aka customer data onboarding. They are told this process is slow, cumbersome, and requires a lot of IT-skilled effort on the part of the customer.They wish there was a more seamless approach that placed less burden on them.
2. Delay in service delivery causes delayed and lost revenue
Another result of the slow process in setting up data exchanges within the business data ecosystem of customers and partners is lost revenue. If a company can onboard a new customer in 2 weeks, they can start deliveringservices and value, and subsequently commence invoicing faster. But if the same process takes 12 weeks, then those 10 additional weeks of potential revenue is lost forever.
Here is an example of an EDI Here client: A well-known payroll processing company did an audit to find that they were taking 14 weeks on average to setup data exchanges with new customers before they could start doing payroll for the employees of those customer companies. Once on the EDI Here service, they were able to reduce this time to an average of 2 weeks, an 86% reduction in time. This acceleration meant they started providing services to new customers in 2 weeks, instead of needing 14 weeks. Let us estimate the potential loss of revenue:–
– Payroll fees charged to customer per employee per pay-period = $2.5- Average number of employees per customer = 80- Revenue per pay-period per customer = 80 x $2.5 = $200 per pay period- Revenue lost in 12 weeks or 6 pay-periods per customer = $200 x 6 = $1200- Number of new customers per year = 2000- Total revenue delayed or lost per year = 2000 x $1200 = $2.4M loss
3. Less productivity of both business and IT teams
A big disadvantage of the legacy approach for onboarding customer data is that it takes too long and leads to loss of productivity. Business and operations users are less productive because they are waiting for data connections to be setup before they can start providing services to customers. They are frequently checking with IT team to know when these connections will be setup and the customer data will become available. On the other hand, the IT teams also lose productivity because they have to be in numerous meetings with customers to identify who will do what. A lot of time is also spent waiting for customers to provide information or configure part of the data flows on the external side.
When you consider the scarcity and expense of the IT skills that are being applied to the mission-critical effort to onboard customer data exchanges versus what those highly skilled IT resources might be able to do instead, if only business people could achieve the new customer data onboarding without them, it’s staggering.
4. Expensive error and exception handling
Whenever information and business data are exchangedwith external entities, there is always a chancethat something may go wrong. There are just too many moving parts and potential areas of failure in end-to-end data integration. The data may be sent incorrectly by a customer or partner, it may not be updated, the data may have missing fields, or it may be old and inaccurate. Similarly, there are multiple failure points in data encryption &transmission, and network disruptions are possible. Finally, when the data is received on the other side, its processing may be missed, certain validation checks may not run correctly, and it may not end up at the right place in the right format. Any of these failures require investigation, analysis and correction. This costs money and time. Thus, older approaches of customer data onboarding cause more failures and cost more money.
Let us consider an example of a payroll processing use case. The old approach to customer data onboarding was causing errors and high overhead expenses.
– Number of customers = 12,000- Number of pay-periods per year to do payroll = 26- Total number of payroll processing events = 12,000 x 26 = 312,000- Average error rate they tracked over 2 years = 4% errors- Total number of errors requiring manual intervention = 4% of 312,000 = 12,480- Average time and cost of fixing errors = 2 hours = $100- Total expense of fixing errors per year = $1.25M
5. Fear of disruption
EDI Here clients also describe certain strategic business disadvantages that accompany older approaches to customer data onboarding. While their clients experience slow data integration that betrays legacy IT architecture, in many cases it provides an opening for new, more agile competitors to come in with a fresh and more efficient approach to disrupt their markets and displace their market share. This is particularly a concern for companies not only in business services delivery sectors but also in other data-intensive industries such as healthcare, finance, retail, distribution, and logistics.
Line of Business (LoB) managersand IT leadership executives live the reality of outmoded customer data onboarding every day and are usually well aware of the associated excess costs and resulting substandard customer experiences. However, they have come to expect this as cost of doing business, and they often don’t realize that an easier and more efficient approach is available. In some cases, they’re investing additional IT coding skills to attempt to build a better approach—but in reality, it’s a very difficult software journey.