With the global economy taking such a downward turn during 2001, many companies have seen sales and profits, as well as stock values dropping. For many, the answer has been to cut expenses. Should an organisation cut the budget allocated to the CRM strategy? After all, a lot of salary and marketing rands and technology upgrades are tied up in this effort.
"Many businesses are faced with this dilemma, and surprisingly, they are finding ways to allocate even more money to their CRM initiatives," says Andre Zitzke, Chief Technology Officer at SAS Institute SA.
"Improving the consistency and efficiency of customer interactions is fast becoming a universal goal," he explains. "Yet there is also a growing realisation that efficiency alone is not enough. To satisfy the demands of customers and achieve a competitive edge, companies must understand who their customers are - and the individual characteristics of their most profitable ones."
Zitzke maintains that these analytical aspects of CRM have been relatively ignored so far. "To truly maximise the return on customer relationships, users must achieve a holistic customer view via data warehousing and acquire domain-specific analytical applications to successfully improve marketing efforts."
This means organisations need to be able to collect data from any source, including a Web site, reveal hidden information within that data, and gain a complete process for identifying, targeting and responding to the needs of the most profitable customers.
Essentially, the organisation needs to turn the data collected at all customer contact points into knowledge for understanding and anticipating customer behaviour, meeting customer needs, building more profitable customer relationships, and gaining a holistic view of a customer's lifetime value.
In a time when the competitive advantages that differentiate one company from the masses are growing slimmer and slimmer, the one competitive advantage they do have is knowledge about their customers.
Says Zitzke: "The secret is discovering how to leverage this knowledge effectively, in a way that will promote strong sales and bottom line profitability."
Businesses today are seeking the ability to pull together and analyse information from all channels to create a single, complete view of their customers. Conversely, companies want to deliver the intelligence derived from that one view back into the relevant channels, providing a consistent perspective from which employees can better interact with customers.
"Organisations with this multi-channel perspective have seen that customers who use more than one channel are considerably more profitable than single-channel clients," he explains.
Many companies collect data from a large variety of sources, but the trick is analysing the data to create knowledge that can be acted upon. The types of applications companies are seeking to provide such intelligence include segmentation management. By grouping customers, companies can carry out more effective marketing strategies. Companies are looking for sophisticated ways to segment their customers, beyond simple demographic groupings, into smaller groups that have similar behaviour patterns, characteristics and desires.
Says Zitzke: "Effective management of knowledge also incorporates predictive analysis. Conducted through data mining, predictive analytics permits marketers to determine what offer the customer should receive next, whether the communication is outbound or inbound. They also are finding the best channel for customer communications.
"Event-triggered marketing is also crucial. With the intelligence derived from analytical applications, marketers can create rules to automatically deliver different marketing communications when 'triggered' by a certain event. The ability to conduct event-triggered marketing allows companies to leverage customer information and communicate at the most appropriate time.
"So whether it is a telecommunications company trying to reduce churn, a retail vendor focused on cross-selling, or a bank challenged with increasing customer profitability, an organisation must always bear in mind that it cannot afford not to invest in CRM," he concludes.
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