CRM Analytics: Reaching the Heart of the CRM Process

DEPARTMENTAL AGENDAS DIVERGE

As reported by Ted Kemp, getting customer relationship management projects to work across the enterprise is proving even more onerous than early skeptics predicted.

Part of the problem is cultural. Salespeople responsible for populating databases with customer information are balking because it's not clear what's in it for them.

On the technology side, some CRM implementations are designed too narrowly around the needs of the first department that uses them, without regard for the way other departments work. And large companies that communicate with customers through numerous departments struggle to reconcile customer data compiled in incompatible formats.

These hiccups may explain why only 23 percent of companies that implement CRM applications find they receive a distinct return on investment, according to research by The Yankee Group.

Liggett Group Inc learned firsthand the problems that arise when a CRM application is designed for only one department's needs. The tobacco company gathers spending information and other basic data from stores that sell the Liggett Select, Pyramid and Eve brands of cigarettes through its 60 sales representatives, who have frequent contact with the stores.

When the CRM project launched, the sales reps used handheld devices supported by sales force automation (SFA) software from AvantGo to send pricing and sales data back to a central Microsoft SQL database server. Merchandising staffers could examine the data and decide where geographically they should spend promotional dollars.

But eight months into the project, merchandisers were still seeing only a dribble of information coming in from sales reps. Salespeople resisted using the application because they got nothing in return, says Mike Lehman, IS manager for Liggett's Western business unit. "Though it did help out considerably in the office, it really wasn't of all that much benefit in the field. It was just something else for them to do," Lehman says.

To give sales reps incentive to populate the database, Liggett modified the AvantGo application so that salespeople could access data that was useful to them, including sales histories and even updates on whether the customer was paying on time.

Liggett also added new data fields to the application so that employees could enter useful information, such as observations of competing promotions found in stores.

Now the application helps the salespeople do their job -- selling -- rather than merely adding to their responsibilities. Liggett has seen a turnaround in reps' willingness to use the application to manage their customer relationships.

"We expanded the application to do all these things," Lehman says. "Instead of just collecting [information], we gave it back to them."

Networking technology giant Cisco Systems found, like Liggett, that the best way to get its 400 field personnel to use their SFA applications was to give something back to them.

Cisco, which stores almost all of its business data on Web-accessible databases, uses a program called FieldLink to capture URLs containing information that could be useful to field personnel. These URLs point to the same information that's accessible using a PC and Web browser, only with the HTML or XML coding stripped out for easy viewing on a handheld computer. Now, field personnel have easier access to CRM-related information.

"Trying to memorize things like baseball averages and ERAs on a baseball card -- there's only a few people who can do that. But we expected our sales force to do that," says Chris Timby, manager of field communications in the VPN security group at Cisco.

Among the technologies that help companies collect consumer data and communicate with customers, SFA applications prove especially problematic. Salespeople generally work differently from IT or merchandising people, preferring to communicate on the phone or face to face rather than analyzing data.

"We've learned that the single biggest reason these [SFA implementations] are failing is that they can't get salespeople to put data into the system. And without data, it's useless," says Evan Marwell, CEO of Quixi, a company that operates an answering service in which operators take information from salespeople over the phone and enter it into corporate databases.

"Salespeople are essentially nonbelievers," Marwell says.

"They've had tons of applications thrown at them and gotten nothing out of it."

CRM strategies that don't take into account the varied ways that different divisions or departments work will likely fail, says Dale Renner, founder of Andersen Consulting's CRM practice and now CEO of CRM vendor Seisint. Especially problematic are "point-by-point" approaches to CRM that involve implementing different CRM packages within different departments. This often happens when CIOs try to get in "quick hits" on CRM tasks, Renner says. But such a disjointed strategy can prove disastrous in the long term.

"The fact that one division doesn't like the interface and refuses to use it, that does not tell me it's a bad tool," Renner says. "It tells me that management hasn't really set out what they want to have accomplished here."

So-called point solutions contribute to problems with the way companies gather and analyze customer data from department to department. Customer data is central to customer relationship management, but many large enterprises interact with customers through multiple touch points run by separate departments: Web sites, e-mail, personal contacts and telephone call centers are a few examples.

A data migration challenge arises when different applications running those touch points either collect data in varied formats that are difficult to reconcile or store information in separate silos, says Mitch Bednar, president of the CRM division at consulting firm Harris Interactive.

A study this year by PricewaterhouseCoopers found that 28 percent of traditional businesses store data of all sorts within individual departments rather than using shared information systems. Among Internet businesses, 35 percent keep data in separate departments.

Businesses need to look beyond collecting data point by point with different CRM products and begin aggregating information in a usable way, Bednar says. "CRM is not a product; it's a strategy," he says.

Online travel service Expedia Inc uses customer spending and transaction data to forecast how much it should staff its support centers, how many servers it needs and other customer support considerations. Customer data is also pivotal when Expedia is deciding how to market toward individual consumers. The company captures customer information through inbound e-mail, the Expedia.com site and phone support.

Expedia is resolving the problem of varied data gathered at separate touch points by building a centralized customer data mart that accumulates information from different consumer-facing departments. The company downloads customer navigation information from its Web logs to the data mart nightly. It uses analytical CRM software from SPSS to analyze the data and build models of future consumer behavior. E.piphany supplied the software that manages targeted outbound promotional e-mails.

"The better we're able to collect data at each of those touch points, the better we're able to understand how we interact with the customer," says Jon Zimmerman, Expedia director of IT and applied research.

The information Expedia pulls together, when analyzed by the SPSS software, can be used to uncover the lifetime value of customer segments, determine their propensity to respond to different kinds of promotions and link shifts in revenue to specific customer behavior patterns.