Analyze your customers: Page 2

Posted September 26, 2000

Alan Radding

(Page 2 of 2)

The initial eBags CRM analysis is based on OLAP. Managers download CRM data into multidimensional cubes provided by Broadbase. The cubes allow managers to view the data from different angles and, at the same time, drill down or up to get more detailed or higher level views. "We offer a huge selection, which makes it hard for people to find what they want," Frazzini continues. The company has already redesigned its tab system based on CRM analysis to make it easier for customers to navigate the site. It is now analyzing the CRM data to understand what drives increased sales at the product level.

Sunrise Medical's Respiratory Product Division, based in Somerset, Pa., a conventional provider of medical equipment, has turned to CRM analytics to help it manage its customer base of 12,000 distributors in the United States. It has collected every transaction from the past three years--more than 10 million records in all--in a data warehouse. Using Cognos Inc.'s PowerPlay, it now loads that data into multidimensional cubes for CRM analysis.

The goal is to boost customer and product profitability. "We have thousands of products, some more profitable than others. So we try to understand and control the mix of products customers buy," explains Richard Kocinski, president. CRM analytics help guide the company's salespeople in putting together programs and offers that meet the customers' needs while ensuring account profitability.

Companies learn to manage relationships
Data warehousing software and services for customer relationship management will increase dramatically over the next five years.

Copyright: International Data Corp.

As interest in CRM analytics spreads, both new and established vendors are rushing to offer solutions. All the data warehousing vendors either directly or through partnerships offer CRM analytics. Similarly, established datamining and OLAP firms such as Cognos and SAS are providing tools suitable for CRM analytics. Finally, a crop of young companies, including Broadbase, Digital Archeology Corp., E.piphany Inc., thinkAnalytics Corp., and Unica Corp., offer CRM analytical applications. The big CRM application providersClarify Inc., Clarus Corp., Peoplesoft Inc., and Siebel Systems Inc.--are starting to address analytics, but their offerings are rudimentary at this point. Peoplesoft, for instance, promises a full set of CRM analytics, but it won't appear until the fourth quarter.

Vendors rush in

"A couple of the tools are pretty good, but for most, the best you can hope for is that they take over a lot of the dirty work," says Bob Moran, managing vice president, decision support research at Aberdeen Group, in Boston. The dirty work revolves around capturing the data and getting it into a form that can be analyzed. Most of the CRM analytic offerings require technical skill, and users must be prepared to do some serious work to get meaningful results. At best, they provide some basic cubes or analytical models. Beyond that, you are on your own. A few, such as Unica Corp., promise actual applications--something managers can run almost out of the box. Almost, but not quite.

Star Tribune Direct, the direct mail operation of the Minneapolis Star Tribune newspapers, turned to Unica's Affinium application, which offers a push-button model for CRM analytics, to analyze newspaper subscriber data, zip code address data, and demographic data to create effective direct mail campaigns for its clients. "With Affinium, we just have to set up the criteria for the campaign," explains Don Poepping, director, direct marketing operations. The application handles scoring and modeling and allows managers to run what-if scenarios. As a result, the direct mail group is able to put together complex campaigns using newspaper, direct mail, and telephone, hitting each person in the target market the way he or she prefers to be contacted.

Arc International, in Melville, N.J., sells glassware through retailers. It collects data captured by POS scanning from its retail customers and combines it with syndicated research provided by companies like ACNielsen Inc. But it ran into difficulties because of differences between the various data sources. "We had groups look at different data sources and come to different conclusions," recalls Narsi Bodapati, director of business development strategy.

Often the mistakes occurred because of the time lag between when an event would show up in one or another data source, such as order and shipping systems, and customer POS data. This could easily result in faulty demand forecasting and inventory imbalances. To overcome this would have required an enormous data warehouse integration effort, but "our IT group was already overtaxed," Bodapati explains.

Instead, the company turned to thinkAnalytics, which enables Arc to analyze patterns in data coming from multiple data sources. "This is very complex, but thinkAnalytics was able to do it," Bodapati reports. Setting up the linkages between the data and mapping the different data sources took considerable planning. Bodapati's team had to be particularly careful, for instance, to match product numbers to ensure the system was tracking the right item end to end. The effort took just a few months, and Arc expects to collect its payback within six months.

Customer analytics as company strategy

CRM analytics is taking on increased importance as CEOs everywhere shift focus to the customer. In a recent Compass America Inc. survey of 400 CEOs, the most important IT area for impacting competitive advantage turned out to be building customer relationships, with 38% ranking it among the top three. Exploiting new technology and supply chain management rounded out the top three at 33% each.

But as AXA Financial discovered, a customer focus involves more than implementing CRM analytics. "CRM is really a strategy consisting of a number of components," says Sibigtroth.

CRM analytics becomes just one piece of a larger customer-centric IT effort. IT must provide an entire infrastructure to support a customer-focused strategy, including data warehousing, datamarts, datamining, OLAP, modeling, data integration, customer interaction, and CRM itself. Only then can the organization capitalize on CRM analytics. //

Alan Radding is a freelance writer specializing in business and technology. You can contact him at

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