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Research
Society
?2002
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Introduction
Gathering,managing,and sharingcustomerknowledge can
be a valuable competitivetool that companies and scholars
have not yet considered.A good illustrationof the type of
interactionand knowledge that we want to capture in the
model that we propose in this paper is presentedin Nash's
paper on customer knowledge.' Here he narratesa scene
from the movie 'Miracleon 34th Street'where SantaClaus
collects informationfrom kids and then relays it to parents
including not only the children'sdesires but also the availability of the toys at the Macy's store where Santaworks or
at other storeswhen Macy's did not carrythem. Like Santa,
our objective is for the salesperson to be the collector of
knowledge from customersand then use that knowledge to
help other customers.
The objective of this paper is therefore to propose a
conceptualmodel that incorporatescustomerknowledge as
part of a firm's knowledge. It attemptsto fill a gap in the
knowledgemanagementliterature,which has recognizedthe
importanceof the customer as a source of knowledge but
has not addressedit. The model proposes a process in the
knowledge exchangewith the customerwhere the company
takes advantages of the knowledge that each customer
brings to the interaction.The paper does not explain the
coding and sharing functions of knowledge management
since this has been extensively treatedin the literature.
Knowledgemanagementin generalhas been of interestto
corporationsbecause they realize that it can contributeto
their competitive advantage. Because of the recognized
*Correspondence:M Garcia-Murillo,4-206 Centerfor Science and Technology, School of InformationStudies, Syracuse University,Syracuse, NY
13244-4100, USA.
E-mail:mgarciamgsyr.edu
positive impact, scholars have devoted resources to understanding the process of knowledge sharingand acquisition.
Theseworkshavenonethelessfocusedon intra-organizational
knowledgemanagementpractices.Figure 1 presentssome of
the differentcomponentsof firms' knowledge that scholars
have identified.It highlightsthe knowledgepieces thatfirms
shouldgatheras partof theircustomerknowledge strategies.
There are several sources of customerknowledge. Some
pertainto structureddata that is gatheredfrom transactions.
Others come from interactionswith customers. This paper
will concentrate specifically on the later. Knowledge
managementscholars have indeed recognized the value of
personalinteractionsbut they have not generallyincludedthe
customer.This is because they have emphasizedthe socialization and sharingaspect of knowledge managementthat
takes place within organizations.Their focus has been on
capturingknowledgewithin organizationsto help employees
create and share their knowledge. We argue that personal
interactionswith customers,unliketransactionaldata,lead to
richercontentand can help explain why customersdo what
they do. While transactional data is useful to identify
problems and preferences, it is difficult to determine the
reasons for customer decisions. With personal interactions
firms can ask customers directly and have an idea of the
source of problems,preferences,and needs.
This paper uses Davenport and Prusak's definition of
knowledge as a 'fluid mix of framed experience, values,
contextual information and expert insight that provide a
frameworkfor evaluation and incorporatingnew experiences and information'.2 Additionally the distinction
between informationand knowledge lies in the usage of
information.In other words, knowledge is informationthat
has been processed by people.3 Additionally customer
knowledge in this paper refers to two differentaspects of
Vol.53,No.8
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Firm
|
| Knowledge
>
>
CutmrIndustry
Products
Suppliers
>
>
>
Suppliers' K of products
Suppliers'K of other
suppliers
Suppliers'K of firm and
comrpetitions
Firm's K of suppliersand
comnpetition
>
K of suppliers
K of customers
K of products
K of industry
K of market
K of operations
K of firm
history/strengths/weaknesses
>
K of product
characteristicsfrom
the firm's perspective
K of product
characteristics from
customer's
perspective
>
>
>
>
>
>
>
>
>
>
>
>
>
>
K of Market
opportunities
Product needs
K needs (product
characteristics)
K needs (firm)
Transfer K to customer
TransferK from firm to employee
TransferK from employee to fsrm
TransferK between employees
Transfer K from supplier to
flrm
TransferK to allies (suppliersand
like firms)
K of regulations
K of economic Factors
K of resources
K of market
K of competitive factors
Competitors
Operations
Employees
>
>
>
>
>
>
>
l
|
>
>
>
>
>
As collaborators
Knowledgeable
aboutcustomers
K of market
K of suppliers
K of products
K: Knowledge
Bold: Knowledge that can be useful
to the customer.
Figure 1
MGarcfa
Murillo
andHAnnabi-Customer
knowledge
management
877
Perhapsbecause the socialization process with the customer entails unpredictableand unstructureddata, companies as well as scholarshave devoted little attentionto this
issue in spite of the fact that they recognize its importance.
Koenig and Srikantaiah,for example, examine customer
knowledge. They believe that having good processes and
systems to managecustomerknowledge is importantfor the
following reasons:7
* better and more timely design of new products and
services;
* early warning and competitiveintelligence;
* customercommitmentand loyalty;
* the synergy of collaboration.
Nonetheless, they do not elaborateon how customerknowledge is to be managed.
Butler,on the otherhand,warnsus of the lack of attention
paid to customer knowledge. She states that 'customers
invariably know more about the organizations they do
business with than the business knows about its customers.
Whilst all businessesrecognizethatthey arenothingwithout
their customers,they rarelyfully capitalizeon the customer
knowledge that their employees informallycollect'.8 Butler
states that 'customer intimacy' is one of the business
strategies that organizations adopt for competitive gains.
Customerintimacy focuses on capitalizing on information
of customer'sneeds to improve customer satisfaction and
increase buying behaviour. She also states that once customer intimacyis achieved,the customerwill avoid the high
costs of switching to other businesses. Although Butler is
accuratein her statements,she does not provide insight on
how to capitalize on the customer'sknowledge, or how to
improvethese practices.
The most recent contributionto the knowledge management literature that specifically addresses the value of
customer knowledge is Davenport's most recent piece
'How do they know their customers so well?'9 His paper
focuses on three elements of customer knowledge: (1)
companyeffortsto capturecustomerknowledge;(2) marketing; and (3) customerrelationshipmanagement(CRM). He
presents a comprehensivereview of the efforts that companies have made to captureknowledge about customers.
Among the efforts presentedis the value of personal interactions, which is the focus of this paper.In this respect his
paper concentratesprimarilyon examples that companies
have adoptedto take advantageof the knowledgethatcan be
generated from customer encounters.The other areas that
Davenportidentifies as contributingto customerknowledge
are explained below.
The marketingapproach
In marketingthe customer is the centre of attention. The
purposeof marketingstudies is to increaseunderstandingof
customer preferences.One approachhas been throughthe
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Customer relationship
management
Customerknowledge
management
Direction
Medium
Information
Objective
One way
Technology
Data
Identify profitable
customers, customized marketing
Two way
Personal
Customer experiences
Gather customer ideas,
identify service improvement areas,
new product development
Gather knowledge from
conversations with the customer
Differentiating
factor
MGarcia
Murillo
andHAnnabi-Customer
knowledge
management
879
The model
Step 1: knowledgerevealing
When the customer and salesperson come together, they
both bring their knowledge and experiences to the interaction. In this face-to-face encounter the customer seeks to
satisfy a need. The need can be for a productor service. On
some occasions the customerknows well what he intendsto
buy but in other circumstances,the customer may not be
orientedand hopes to find informationat the store.
Although the customer does not expect to be educated
about a particularproduct,since this has not generallybeen
a store practice, he could learn something. On some occasions he may be lucky and find a helpful salespersonthat is
willing to offer some advice. In customer knowledge
managementthe role of the salespersonchanges considerably and, insteadof just providingbasic informationabouta
location or availabilityof a product,he becomes an attentive
listenerwho is tryingto understandthe customer'sneeds. In
additionto informing,the salespersoncan gatherknowledge
from the customerabout:(1) preferenceswith respectto the
productor service, such as colour,size, shape,textures,style
for products and requirementsfor services; (2) competing
products and in particularthe attributesthat are appealing
about them; and even (3) industrytrends such as incoming
products or services. The type of knowledge he/she can
gather can be about reasons for buying a product, such as
functionality, aesthetic considerations, price, time limitations, convenience, entertainment,beliefs, and conspicuous
consumption.Although differentpeople will place different
weights on these reasons, the combination of all of these
factors across multiple customers exposes general trends.
This data can prove to be very valuable to the firm if
capturedand analysed. They can reveal new marketopportunities, services, and productfeatures.
At the initial part of this step, the customer and the
salesperson identify the objective of their interaction.This
is an importantrequirement.Otherwise two-way learning
would be difficult. Yoon and Nilan refer to this primary
exchange as topic defining utterances. In attempting to
identify his/her need, the customer reveals what he/she
knows. The customer'ssharing of what he/she knows can
be characterizedas knowledge revealingin this first step of
the interaction.The customerrevealshis/herpreferencesand
prior knowledge; this is what Yoon and Nilan refer to as
certainty,as opposed to the informationneed, which they
880 Journal
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Vol.53,No.8
Customer
Initialhasic informationof
product
- Prefrenowled
Describing
- Competitorinformwion
Listening
Cl
ing
Stage 2
Knowledg
SortinKnowledge Sorting
Salesperson
Firm information
- Learningprocess
Assimilation of new
knowledge
Changesin preferences
Specifying
A knowledge
ge of product
_
Knowledge sorting to
Sle
Selecting
Defining
Clarifying
Stage 3
Knowledge Leveling
Clafying
Bold Italic: what firm is
interested in capturing from
customer
Figure 2
21
MGarcia
Murillo
andHAnnabi-Customer
knowledge
management
881
Dialogue
Salesperson: Good evening madam. How are you today?
Customer: Fine thank you.
Salesperson: My name is Tom, is there anything I can help you with?
Customer: I am looking for a rug for my Ifamily room
-*
Functionality and use
Salesperson: Do you have anything particular in mind?
Customer: Hmm, kind of.
Salesperson: How about we start with price? What is the price range you are looking at?
Customer: About|$5000 to $600:01 *
Price range to help guide
sorting by the salesperson
Salesperson: Are there any particular colors you are looking for?
Customer: Well, not really, I want to[have a the
my family that will reflect a few antiques and a painting that I am
planning to put there.
*
Help identify the context of the customer44
Salesperson: Why don't we talk about the pieces you have. What colors are they?
Customer: Before we go on, I would like to know a bit aboutlyour servi
your rugs
and thelorigi
Information
needs
Salesperson: Certainly! We are a family owned store that has branches in 5 different big cities. We have been in business for
about 70 years. We import rugs from Iran, China, Pakistan, and India. We have our agent visit these countries and the
shops
we do business with regularly. We import pieces that are rare as well as common pieces. We offer warranties,
repair, and
maintenance services in case of accidents.
Customer: Are the services reliable? Or are they like those of store X,
*
Information about competitors
which ruined an invaluable Persian rug that my grandfather inherited from his family?
Salesperson: We have professional repair people that will be able to give you an estimate for the repair, as long as they
are
certain they can do it. If they can't, we can send them abroad to some of our partners who are experts in
difficult repairs.
Customer: You know, there are many people who have oriental or Persian rugs that need repair but have no idea where to go
... Oh, this is a nice piece it looks like it is Persian.
Salesperson: You are right it is from Iran.
New knowledge needs the firm should acquire
Customer: Do you know the Lnatureor the history or the design?
Salesperson: Unfortunately Ildo not have that information.
Customer: I just moved here and I live on the east side of town where there is a large Pakistani community. They would love
the carpets you have. These designs are beautiful!
l
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Sharing knowledge
Once this knowledge has been codified, there should be a
mechanism by which all of the employees acquire the
knowledge that each has gathered. This is necessary not
just to make each of them more knowledgeableabout the
productbut as a precautionarymeasurein case of employee
turnover.The sharingshould also reachhigherlevel officials
in the organizationbecausethey could use this knowledgeto
make productrelateddecisions. The sharingthat we intend
here is consistent with the sharing that other scholars in
knowledge managementhave alreadyidentified.
also examples of this type of product.We focus on knowledge-intensiveproductsbecause both the companyand the
customerneed to have a good understandingof the product
before they are able to purchaseor sell it. Although general
informationabout the productcould be used, true customer
knowledgewould involve both generalcharacteristicsof the
product and less obvious elements such as maintenance
options that are not in the manual, common problems and
solutions, and unintendeduses of the product.This type of
knowledge can be generated from interacting with customers. Although no single customerwill know everything,
talking to many of them will lead to a collection of knowledge that the firm could relay to new customers.
MGarcia-Murillo
andHAnnabi-Customer
knowledge
management
883
Coding
Sharing
Firm Knowledge
I
~~~~~~~N
Knowledge
Revealing
*
*
*
*
*
*
*
Cding
Coding /owledge
Leveling
ProductImprovement
CustomerServiceImprovement
CustomerSatisfaction
IncreaseSales
ImproveCustomerRetention
RevealNew CustomerKnowledgeNeeds
FirmAcquisitionof KnowledgeSpecificto Customer
Figure 3
Customerknowledge outcomes.
oftheOperational
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Conclusions
Although the customerhas been identifiedas an important
source of knowledge, scholars have devoted little attention
to customer knowledge. Areas related to knowledge
managementsuch as marketingand CRM have concentrated
primarilyon transactionaldata and anthropologicalstudies
that ignored the potential of simple personal interactions.
This paper is an initial attempt at incorporatingcustomer
knowledge. The model establishes the steps that sales
personnel can use when talking to customers. It also
illustrates with an example the type of information that
companies can collect from customers. Some of the information may not be relevantto the firm and occasionally.It
may even entail gathering informationabout competitors
and other related businesses that can be useful to the
customer's decision making. Additionally this model
proposes the sharing of knowledge with company officials
to help in the developmentof future services and products
and with customersas part of the service that the company
provides.
Although knowledge gained from personal interactions
with customers can benefit companies, culture and incentives may have to be changed for the process to be successful. Future studies should compare sellers that use this
process with those that do not and determinethe impact
on customer satisfaction. At a larger scale a comparison
could be made between a firmthatuses this process and one
that does not in terms of the impact on sales, customer
loyalty, and developmentof new products.
References
1 Nash JC (2000). Know thy customer-from customer knowledge to customer insight. In: Montgomery Research Inc.
[Online]. Available at: www.crmproject.com/wp/nash.html