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Analyzing Marketing InformatonComments by Dr. Laukamm
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Information
gathered in internal databases and through marketing intelligence and
marketing research usually requires more analysis. And managers may
need help in applying the information to their marketing problems and
decisions. This help may include advanced statistical analysis to learn
more about both the relationships within a set of data and their
statistical reliability. Such analysis allows managers to go beyond
means and standard deviations in the data and to answer questions about
markets, marketing activities, and outcomes.
Comments by Dr. Laukamm
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Information
analysis might also involve a collection of analytical models that will
help marketers make better decisions. Each model represents some real
system, process, or outcome. These models can help answer the questions
of what if and which is best. Marketing scientists
have developed numerous models to help marketing managers make better
marketing mix decisions, design sales territories and sales call plans,
select sites for retail outlets, develop optimal advertising mixes, and
forecast new-product sales.
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CUSTOMER RELATIONSHIP MANAGEMENT (CRM)Comments by Dr. Laukamm
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The
question of how best to analyze and use individual customer data
presents special problems. Most companies are awash in information
about their customers. In fact, smart companies capture information at
every possible customer touch point. These touch points
include customer purchases, sales force contacts, service and support
calls, Web site visits, satisfaction surveys, credit and payment
interactions, market research studies—every contact between the
customer and the company.
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The
trouble is that this information is usually scattered widely across the
organization. It is buried deep in the separate databases, plans, and
records of many different company functions and departments. To
overcome such problems, many companies are now turning to customer relationship management (CRM)
to manage detailed information about individual customers and carefully
manage customer touch points in order to maximize customer loyalty. In
recent years, there has been an explosion in the number of companies
using CRM. In fact, one research firm found that 97 percent of all U.S.
businesses plan to boost spending on CRM technology within the next two
years.
Comments by Dr. Laukamm
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CRM
consists of sophisticated software and analytical tools that integrate
customer information from all sources, analyze it in depth, and apply
the results to build stronger customer relationships. CRM integrates
everything that a company's sales, service, and marketing teams know
about individual customers to provide a 360-degree view of the customer
relationship. It pulls together, analyzes, and provides easy access to
customer information from all of the various touch points. Companies
use CRM analysis to assess the value of individual customers, identify
the best ones to target, and customize the company's products and
interactions to each customer.
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CRM analysts develop data warehouses and use sophisticated data mining
techniques to unearth the riches hidden in customer data. A data
warehouse is a companywide electronic storehouse of customer
information—a centralized database of finely detailed customer data
that needs to be sifted through for gems. The purpose of a data
warehouse is not to gather information—many companies have already
amassed endless stores of information about their customers. Rather,
the purpose is to allow managers to integrate the information the
company already has. Then, once the data warehouse brings the data
together for analysis, the company uses high-powered data-mining
techniques to sift through the mounds of data and dig out interesting
relationships and findings about customers.
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Comments by Dr. Laukamm
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Companies
can gain many benefits from customer relationship management. By
understanding customers better, they can provide higher levels of
customer service and develop deeper customer relationships. They can
use CRM to pinpoint high-value customers, target them more effectively,
cross-sell the company's products, and create offers tailored to
specific customer requirements. Consider the following examples:
Comments by Dr. Laukamm
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FedEx recently launched a multimillion-dollar CRM system in an effort to cut costs, improve its customer support, and use its existing customer data to cross-sell and up-sell services to potential or existing customers. The new system gives every member of FedEx's 3,300-person sales force a comprehensive view of every customer, detailing each one's needs and suggesting services that might meet those needs. For instance, if a customer who does a lot of international shipping calls to arrange a delivery, a sales rep will see a detailed customer history on his or her computer screen, assess the customer's needs, and determine the most appropriate offering on the spot. Beleaguered sales reps can use such high-tech help. FedEx offers 220 different services—from logistics to transportation to customs brokerage—often making it difficult for salespeople to identify the best fit for customers. The new CRM system will also help FedEx conduct promotions and qualify potential sales leads. The CRM software analyzes market segments, points out market "sweet spots," and calculates how profitable those segments will be to the company and to individual salespeople. Comments by Dr. Laukamm
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Ping, the golf equipment manufacturer, has used CRM successfully for about two years. Its data warehouse contains customer-specific data about every golf club it has manufactured and sold for the past 15 years. The database, which includes grip size and special assembly instructions, helps Ping design and build golf clubs specifically for each of its customers and allows for easy replacement. If a golfer needs a new nine iron, for example, he can call in the serial number and Ping will ship an exact club to him within two days of receiving the order—a process that used to take two to three weeks…. This faster processing of data has given Ping a competitive edge in a market saturated with new products. "We've been up; the golf market has been down," says Steve Bostwick, Ping's marketing manager. Bostwick estimates the golf market to be down about 15 percent, but he says Ping has experienced double-digit growth. Comments by Dr. Laukamm
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Most
experts believe that good customer data, by itself, can give companies
a substantial competitive advantage. Just ask American Express. At a
secret location in Phoenix, security guards watch over American
Express's 500 billion bytes of data on how customers have used its 35
million green, gold, and platinum charge cards. Amex uses the database
to design carefully targeted offers in its monthly mailing of millions
of customer bills.
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CRM
benefits don't come without cost or risk, not only in collecting the
original customer data but also in maintaining and mining it. U.S.
companies will spend an estimated $10 billion to $20 billion this year
on CRM software alone from companies such as Siebel Systems, Oracle,
and SPSS. Yet more than half of all CRM efforts fail to meet their
objectives. The most common cause of CRM failures is that companies
mistakenly view CRM only as a technology and software solution.
But technology alone cannot build profitable customer relationships.
"CRM is not a technology solution—you can't achieve…improved customer
relationships by simply slapping in some software," says a CRM expert.
Instead, CRM is just one part of an effective overall customer relationship strategy. "Focus on the R," advises the expert. "Remember, a relationship is what CRM is all about."
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When
it works, the benefits of CRM can far outweigh the costs and risks.
Based on regular polls of its customers, Siebel Systems claims that
customers using its CRM software report an average 16 percent increase
in revenues and 21 percent increase in customer loyalty and staff
efficiency. "No question that companies are getting tremendous value
out of this," says a CRM consultant. "Companies [are] looking for ways
to bring disparate sources of customer information together, then get
it to all the customer touch points." The powerful new CRM techniques
can unearth "a wealth of information to target that customer, to hit
their hot button."
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