CRM Analytics: Reaching the Heart of the CRM Process

CRM ANALYTICS PROVIDE INSIGHT INTO CUSTOMER BEHAVIOR

As reported by Dana Norton, TechRepublic, adding an analytics component to your customer relationship management (CRM) strategy can give your organization a valuable snapshot of customer behavior. But managing the data to produce timely and targeted results can be a challenge for IT managers.

The adoption of CRM analytics, an offshoot of traditional data mining, is a fast-growing, but misunderstood, area of CRM, according to a presentation by Gartner analyst Walter Janowski at the Gartner CRM Summit Spring 2001 in Chicago. (TechRepublic is a subsidiary of Gartner.)

Some IT pros hold a false impression that the use of CRM analytics requires a staff of statisticians and produces incomprehensible data reports. CRM analytics is simply a business process-powered by CRM technologies-that drives customer data through rigorous mathematical formulas. Organizations can use the statistical results to make business decisions, plan targeted sales campaigns, and expand their customer base.

IT managers worried about being buried in reams of reports or working with hordes of number crunchers can take heart: There are CRM analytics applications available that make analyzing customer data a straightforward process, according to Janowski.

This article will focus on the advice Janowski presented in Chicago and highlight the benefits of CRM analytics.

Analytics give full customer picture

CRM analytics culls, evaluates, and uses customer data-collected via CRM applications-to decipher customer behavior or derive customer insight. Using CRM analytics can be a proactive part of managing customer relationships, enabling an organization to see the complete "picture" of its customers.

For example, to determine customer profitability, an organization can rank customers according to the amount of money they spend. Analyzing customers through different filters such as product purchases, geography, and purchasing channels helps the organization identify factors that influence profitability.

After the analysis, the organization can use the results to target products and services to customers most likely to purchase those products and services.

However, CRM analytics can become muddled when an organization has too much data to filter or when there is no plan to determine which data should be analyzed first, Janoswki said. For example, organizations that rely on an e-commerce solution may want to determine where the bulk of their customers are from and their domains.

He suggests starting with a plan to determine what data is critical to the business and then approach that data using baby steps. Instead of tackling a large pile of data at once, "look at simple creative solutions as a starting point and build from there."

Use data quickly

Making the most of customer data is as important as discovering what data is mission-critical to an organization's success. Organizations collect data from each exchange between an organization and a customer-through telephone interactions, e-mail, and Web sites.

Although such data accumulates rapidly, its shelf life is limited. At times, data used in marketing campaigns may be too old by the time a campaign begins, Janoswki said.

Most analytical applications employ real-time capabilities-making the data for marketing campaigns as "fresh" as possible. But with CRM analytics riding the crest of CRM technology, this freshness can come with a hefty price tag.

"I would say if you're spending $500,000 just to look in the rearview mirror (old customer data), that is the peak of hype, and you are wasting your money," said Eric Carrasquilla, Business Line Manager for Nortel Networks.

Delano's analytical skills

One of the many vendors showing their analytical products during the CRM Summit was Delano Technology Corporation. Its Delano Discovery Suite and Delano Customer Discovery products offer platforms that decipher data from online and offline customer interactions to provide statistical reports and other analysis-based functions. Delano's intuitive products provide a level of flexibility to marketing campaigns without the time commitment of a long product implementation and without the assistance of a team of statisticians.

"We think (our) customers will see that they can get measurable business value without going into an epic implementation that doesn't have a horizon 18 months down the road," said Delano spokesperson Ross Sedgewick.

Buy the hype?

The use of CRM analytics is escalating. According to Gartner, by 2002, the number of data-mining projects will grow more than 300 percent as organization's work to improve the effectiveness of customer relationships. The good news is that, while the market is still new, there are intuitive programs available that automate the statistical formulas that drive the data. And the need for analytical solutions is growing.

"Right now, we're at that discovery stage where companies are realizing that there's a huge untapped potential and that in a more competitive environment, they can't afford to ignore that (analytic information)," said Delano Technology Corporation spokesperson Ross Sedgewick.