The Customer, the Unknown

Originally Posted On March 14 2012

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The customer is one of the business basic notions. It is also a subject of interest in Business Intelligence implementations. Nonetheless, the notion of customer may be very complex and counterintuitive, and it may depend upon the business nature and upon who is looking at the customer. So, implementing the customer dimension may prove to be very complex.

The most basic and immediate customer notion comes from invoices. The customer is who appears in the invoice. Usually known as the “bill-to” customer, this is also the customer recorded in the accounting ledgers. They are usually designated by the VAT code or a similar id.

Orders may be delivered to an address different than the address of the customer in the invoice. In some cases this can be sorted by managing an address for delivery, but not always.

Example: the owner of two restaurants wants all the invoices to be sent to an accountant, while the two chefs refill their kitchens according to their own judgment. The wine salesman of the same company has the two chefs as customers. From a sales point of view they are two different customers, and the common property is useful but secondary information. This is often known as the “ship-to” customer.

Orders may come from a central unit, but decision points are distributed. In this case decision points are the customer but there’s no reference in documents about.

Example: mass retailers with in house distribution based on regional warehouses. Orders are invoiced to a single company, deliveries go to warehouses but deciders are the local shops. Finding a way to capture the last destination is paramount to correctly manage the customer.

Orders may be issued by and delivered to the same point, but the commercial agreement is defined elsewhere.

Example: franchising chains often operate in this way. The franchisor sets the commercial agreement with suppliers and franchisees order at preset conditions. In this case, they can be both a customer, in the commercial sense of the term.

Order is placed by a point, is paid by someone else and delivered to a third party.

Example: car advertising on newspapers. The upper part of the ad is all about the car model and is paid by the manufacturer, the lower part addresses the customer to a couple of local resellers and those spaces are paid by the reseller themselves. The order to the advertising dealer is placed by the manufacturer, but money goes to the newspaper with a fee for the dealer.
Finding who the actual customer is can be a little discomforting, sometimes.

Orders are placed by different entities, though the service is the same.

Example: hotels receive reservations from single guests, travel agencies, internet aggregators or companies. Every order, though, produces a stay by individuals who are themselves, customers. In the commercial sense, the relevant customer is completely different depending upon who placed the reservation.

Many other combinations could probably be found,  but I think that the point is clear enough. Defining the customer is a complex task, sometimes overlooked on implementing a BI system.

So, while designing the solution, special attention should be devoted to defining all the customer types required for managing the business.
The worst case occurs when a relevant customer is not recorded anywhere in the systems. In this case, modifying the systems and changing business processes to record it is unavoidable.
To implement all these customers the easiest path is to add the key directly to the facts and make them independent dimensions. While it may seem natural to think as the invoicing customer as a group of delivery points, commercial rules are not always enforced. For example, the delivery point that often routes orders through a central point, in emergency, could place direct orders, thus risking questioning the hierarchy/grouping. Making them independent dimensions has the side advantage to highlight all these exceptions for further management.

We, as BI professionals, should always be aware of these possibilities while implementing a system. Do not trust the first person, whom you speak with; chances are that her customer is much different than her coworkers’.

Enjoy.

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2161 views and 1 response

  • Mar 14 2012, 4:48 AM

    DavidWLocke (Twitter) responded:

    I worked in the grocery business. In a grocery store company, the customer would be the store manager. In a grocery chain company, the customer would be the category buyer at HQ. These two types of companies are very different. The latter will have lower prices and competes on logistics. The latter has thin backends that don't have much warehousing space. The former has larger backends and larger warehousing spaces. The customer out in the front these businesses look the same. For a seller, the former has very little power as a buyer; the latter, otherwise. A seller can follow their promo dollars. If they move in aggregate, then you have the latter situation. If they go to the individual stores, you have the former.