CRM Analytics: Reaching the Heart of the CRM Process

THE QUEST FOR CUSTOMER DIALOGUE

As reported by Sue Hildreth, what will the market for e-CRM applications look like by 2002? According to Robert Mirani, director of CRM strategies at the Yankee Group, customers can expect to see an increased focus on customer analytics and interactive types of communication aimed at cementing the loyalty of existing customers.

That's a very different forecast than what was being predicted in 1999 for the CRM industry, notes Mirani. Back then, when mass e-mail campaigns were the rage in online marketing, e-CRM marketing applications focused on campaign management features to help marketers generate high response rates through direct e-mail and other types of campaigns. More sophisticated aspects of marketing, such as analytics and personalization, took a back seat to lead generation.

"Two years ago, it was felt that campaign management would really be the hub [of a marketing application]. If you were a vendor of other parts of the CRM equation, you'd have to partner with one of the campaign management folks to have that in your portfolio," says Mirani, who spoke on future CRM trends in a recent Webcast entitled "Marketing Automation After the Bursting of the Bubble: Platforms and Models for the Next Generation of e-CRM Marketing."

So what has changed in the CRM market since 1999?

According to Mirani, companies began to dabble in different types of Web-based marketing, and their interest shifted from mass e-mail blasts to more complicated approaches, such as personalized e-mail campaigns based on customer profiles.

"Whereas it had once looked as if campaign management and CRM workflow would be what drove things, instead most of the spending has been in the analytics and personalization side of the equation," he explains. "People began experimenting heavily with [marketing on] the Web, so Web analytics and personalization become a hot button.

In addition, people started to rethink what a marketing campaign meant in the context of overall multichannel marketing automation and e-CRM."

The conclusion of corporate marketers and CRM vendors, it seems, was that marketing required more than simple e-mail campaigns and the generation of high response rates. Rather, they became more concerned with the quality of the leads being generated and with how well those new customers were being engaged through more sophisticated types of communication.

"When we were looking at the rise of the Internet and a boom economy, there was much more of a focus on [customer lead] acquisition and acquisition-driven platforms," Mirani says. "You could automate the customer acquisition process and drive very high response rates, on the order of double-digit response rates, and you had less of a need to really integrate with other systems. In addition, the analytics didn't have to be very deep, because marketers were mainly concerned with just generating lists driven by broad profiles, broad segments. Now people are looking for deeper analytics, much more relevant and contextual profiles, and the creation of more customer loyalty and retention."

At the same time, marketers began to express a desire for more all-inclusive suites that would be easier to use and make sharing of customer data among the various components more seamless. Mirani credits E.piphany as a pioneer in creating an e-CRM suite that attempted to meet a number of e-CRM needs rather than focusing on just one aspect.

"Around 1999," he explains, "the companies who were actually gaining traction were those who could combine a subset of all these capabilities, with a focus on enterprise analytics and campaign management and maybe a sliver of data mining... When E.piphany first came out, they had just a little bit of everything and were initially viewed as somewhat thin all across the board. But they redefined this market ? and now they and other players have defined a turnkey e-CRM analytics and action platform."

The convergence taking place in CRM marketing is a reflection of the convergence under way in the CRM marketing in general, Mirani notes. "What we're seeing today is a lot more consolidation between different functions and a desire to get a really multichannel, single view of a customer," he says. "In order for that to happen, you've got to have a convergence at a basic level of customer-facing functions like marketing, sales and service." Mirani notes that, until recently, the marketing component of the equation has not been as mature or cohesive as the sales and service sides of e-CRM.

2001: Four e-CRM Marketing Models Emerge

Mirani outlines four types of marketing automation applications that have recently emerged on the market:

Online marketing/analytics, in which the primary focus is on Internet marketing, with some additional features to handle analytics as well as some ability to integrate with other front- and back-end systems. "These are the folks that use the online channel much more heavily than any other [customer communication] channel," Mirani says. "The problem is that it's really becoming a multichannel world, so it's very important for these platforms to at least integrate with other systems. To date, what we've seen from the online-only vendors is that they've been very focused on blasting e-mails, not on what the relationship to the customer is."

Online/offline marketing automation, which focuses on providing an enterprise marketing automation platform for both online and traditional marketing campaigns. This is the model pioneered by E.piphany. The challenge for vendors in this category, says Mirani, is to overcome the complexity and expense associated with converging the model's many interrelated analytics and communications functions. "It's a lot of work just to get those e-mails or other Web communications going out on a regular basis, let alone to make sure you understand where the customer is at any given point in time. You're monitoring how many communications they've received within a certain time frame and trying to reconcile the batch forms of communications with the real-time kinds of communications from the Web site or call center. This is where the action is [in the e-CRM market], but it's still very much a work in progress."

Analytic workbench with "action" components, where the focus is on marrying customer analytics with targeted, outbound marketing efforts. "We're seeing a lot of analytics companies ? with a strong focus on analytics but which are trying to tie themselves to marketing action components," Mirani says. "For instance, they may have their own e-mail capabilities or the germination of a campaign paradigm. But the reality is that while they can provide a pretty good analysis of what's happening on the Web sites, the marketing action components are usually done in a more superior fashion by other, more dedicated applications."

Vertical marketing automation solutions, which are more or less complete CRM packages--though usually with an emphasis on customer analytics--aimed at specific industry verticals. "These folks are answering the really tough questions from verticals," he says. "[But while] they do a pretty good job on the marketing automation side in terms of figuring out what the pain points are in a given vertical, they may not have some of the functionality or flexibility that is present in other, more horizontal systems."

2002: Customer Dialogue Takes Center Stage

What all these types of applications still lack, Mirani says, is the ability to create truly contextual dialogues with consumers. "Achieving true dialogue with a customer through the use of technology and business process is still something that a number of platforms are far from being able to do," he says. "A lot of marketing automation has really been driven off a batch view of the world -- in other words, doing analysis on the back end, pulling the lists and then sending out the direct mail. There's been talk about personalization, but the implementations out there have indeed been limited."

Creating a true dialogue with a customer, Mirani explains, requires complete synchronization of both the analytical and operational functions to provide marketers with the full range of data on a customer's activities and communications with a company. Companies must be able to consolidate information on everything from billing inquiries and online purchases to the number of mailings the customer has received and responded to.

That level of integration, Mirani says, is something that hasn't yet been achieved by existing CRM software packages. He also expects to see companies place a greater emphasis on opt-in marketing efforts, in which customers are invited to give increasing amounts of information to companies as well as permission to receive mailings and other types of communications.

"When people talk about campaigns now, it's not about polling large lists or assembling large databases and sending out blasts on a regular basis," Mirani observes. "Instead, they talk about monitoring every communication, both batch and real-time, and dynamically using context to engage the customer. That's not an easy thing to do."