Tracking Competitor\'s Customers Competitive Intelligence

¶ … Tracking Competitor's Customers

Competitive intelligence is one of the most strategically important areas within companies today. It is in fact one of the most critical areas for continually monitoring in the context of strategic planning, execution and measurement of results (Fahey, 2007). The use of Customer Relationship Management (CRM) systems specifically for managing competitive intelligence including the continual monitoring of their customers has become an ongoing activity in many organizations (Fleisher, Wright, Allard, 2008). Using advanced analytics, business intelligence, data mining, and over the Web, website monitoring and evaluation, companies can more closely monitor their competitors more than ever before. In highly competitive industries where customers rarely change between vendors, for example in advertising agencies or in manufacturing where companies standardize on a supplier often for years, competitive response modeling is commonplace (Harkleroad, 1996). Add to this the pressure of an uncertain and recessionary economy and the urgency to monitor competitors' customers to see if there is an opportunity to gain them just gets accelerated.

Ethics of Monitoring Competitors' Customers

With many companies whose business models are centered on business-to-business (B2B) selling, nearly all include customer references in the form of not only the company's logos they sell to but often actual reference names of senior executives at their customers' companies as well. They do this to get greater credibility and trust with potential prospects, yet is its fertile area for companies doing competitive analysis as well. There are research companies that concentrate on evaluating how real these customer references listed on websites are, and often will contact references, do research, and publish it. Nucleus Research located in Boston Massachusetts does this often in the computer software industry for example. This is ethical and often embarrassing for the software companies who list references on their websites, only to have them contacted and interviewed to see if they are actually satisfied or not. Nucleus Research is careful to not divulge the names of the actual contacts to anyone, as this would give competitors to the software vendor profiled a competitive advantage. In 2002 Nucleus Research contacted 23 Siebel customers who had been listed on the company's website, finding 14 had yet to achieve payback two years after installing the company's software at an average cost of $6.6M (Songini, 2002). The question of ethicacy of research emerged and Nucleus was found to have the legal right to do this research as the customer data was available to the public over the Internet.

There have been other instances of customer monitoring that the U.S. government has seen as more industrial espionage and having the potential to undermine an industry the U.S. is dominant in or has ramification on national security (Richardson, Luchsinger, 2007). Due to these concerns and the ethicacy of industrial espionage was closely evaluated through the early 1990s by the U.S. Congress and the Economic Espionage Act of 1996 was passed to protect the rights of corporations to keep their trade secrets, confidential details about customers, pricing, and supply chain specifics protected (Richardson, Luchsinger, 2007). This has also had a significant effect on the types of advanced analytics software applications companies can use to monitor their competitors online, the use of competitive intelligence gathering practices that are potentially unethical including the purchasing of customer lists and advanced customer data from online services when the company has not released it for use in the public domain (Richardson, Luchsinger, 2007). The ethics of customer monitoring are today leaning more towards using publically available data on the Internet and in print. Using advanced analytics software it is also possible to interpolate which consumers are purchasing which products, and then using marketing automation strategies, seek to sell to them. This is also ethical. The deliberate purchasing or stealing of customer data however is not and results in fines to companies that pursue these unethical activates in violation of the Economic Espionage Act of 1996 (Richardson, Luchsinger, 2007).