Customer Knowledge Management or CKM is an innovative and important strategic process by which progressive companies are now able to emancipate their customers from being passive recipients of products and services to becoming empowered knowledge partners in the organisational value-creation and -sharing process itself. Indeed, in this age of knowledge-based competition, it is incumbent upon firms to pay increasing attention to the development of customer knowledge.
The concept of pursuing the direct involvement of customers to boost a firm’s knowledge assets, mainly for the purpose of product innovation, is not new. Yet the novel perspective at the heart of advanced CKM is the fundamental shift in emphasis from "the firm as knowledge creator" that learns about customers and creates value for them, to a perspective of "the firm as a co-creator of knowledge" that learns and creates value with its customers.
In an excellent article in 2003, University of St. Gallen academics Gibbert, Leibold and Probst distinguish CKM from the more dominant knowledge management (KM) and customer relationship management (CRM) perspectives across several dimensions. These include managerial mindset, knowledge-creating rationale, the alternative purpose of customer communications and an extended view of the role of the customer in the innovation and organisational learning process. But perhaps the most significant defining variable of CKM proposed by the three authors is the type of customer knowledge sought by CKM firms. Specifically, customer knowledge managers seek to acquire knowledge from the customer as well as knowledge about the customer (the latter being the more typical domain of customer relationship management [CRM]). Although it incorporates principles of KM and CRM, CKM they write, “moves decisively beyond both to a higher level of mutual value creation and performance. More specifically, the notion of CKM contributes to the KM literature by providing an expanded view of organisational epistemology; i.e. one that includes the customer as a knowledgeable agent in the knowledge creation process.
A shift in mindset towards looking at the customer as a knowledgeable entity has important implications. Significantly, firms developing a CKM capability are more likely to have an external perspective and outlook on knowledge creation and renewal and to exhibit higher levels of market experimentation or “probe and learn” behaviour and outcomes.
To achieve an advanced CKM competency, customer knowledge managers must seek opportunities for partnering with customers as equal co-creators of organisational value. Their focus is on how to generate growth for the organisation through acquiring new customers and through engaging in active and value-creating dialogue with them. In other words, CKM suggests that customers are more knowledgeable than businesses normally assume and consequently firms must mobilise customer knowledge using a variety of collaborative and dialogical means from a diversity of customers in order to co-create valuable personalised experiences, products and services.
Unfortunately, many businesses today view such potentially knowledge-rich customer interactions as a COST TO BE REDUCED rather than as a potential investment in dialogue and learning. By automating customer interactions or outsourcing them overseas for example, many companies are at risk of commoditising one of their most precious future innovation assets: the opportunity to learn from and create value with their customers. In most cases such cost-focused initiatives will fail to deliver lasting value. Why? Because organisations use them as quick-fixes instead of addressing their more deep-seated underlying problems - i.e. a lack of customer knowledge and a limited market orientation...
The problem is that many companies have become so internally focused they have gotten carried away with supply-side issues and have taken their eye off the customer and their needs. Until such organisations make a serious effort to understand their markets and their customers better, initiatives designed to take cost out of the customer interface will amount to expensive, time-consuming mistakes. Many financial services businesses in the UK for example are spending too much of their valuable resources on internal operational efficiency (i.e. doing things right at lower cost) at the expense of external customer effectiveness (i.e. doing the right things).
I was talking to one such organisation only the other day. Having already outsourced their customer management function, they were now concerned that each customer inbound call was costing them a "grossly expensive" 41 pence per contact. Their response? Shift them onto the web of course.... !
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