Analytical CRM: The fusion of data and intelligence

Abstract

A good deal has been written about customer relationship management (CRM), one-to-one marketing and event-driven marketing, and the dramatic potential of these strategies is reasonably clear to all. However, the deployment of the necessary information systems to realise the marketing nirvana of genuine customer-centred enterprises is still a good way off. There is one single overwhelming reason why progress is slow: data is not being harnessed with anything like the degree of sophistication that technology allows. It may even be, from a casual observation of the enterprises that trumpet a CRM strategy, that many fundamentally misunderstand the concept. For a customer-centred strategy to be successful we need to comprehensively understand customer behaviour and responsiveness. This, in turn, will allow us to understand customer life cycle, customer loyalty, customer risk, customer profitability and customer segmentation. From here we may proceed to a corporate strategy based on this intelligence; a strategy that will undoubtedly precipitate a radical overhaul of business processes and culture. The systems associated with this customer discovery process are termed ‘analytical CRM’, in contrast to the operational CRM systems that are deployed in a call centre to handle the interaction with the customer. Many enterprises have invested heavily in the infrastructure for operational CRM (call centre technology, funnel management systems, campaign management technology, loyalty cards) without having any coherent strategy for analytical CRM. The result is that they are well positioned to deal with individual customer interactions but hopelessly blind to the history and pattern of customer transactions over time. The outcome is, generally, disappointing and predictable. The source of failure can be located in the contradiction of attempting to deal with customers as distinct individuals without retaining a corporate memory of those individuals.