CRM Analysis Boosts Customer Knowledge

As businesses gather more and more information about customers through their customer relationship management systems, CRM technology has become a natural partner of data-hungry business intelligence and analytics tools. Companies can score some big business wins by pairing up their CRM and analytics initiatives -- but there are some best-practices ground rules to get straight first in order to achieve the desired BI benefits.

For organizations seeking a competitive edge, applying analytics to customer data makes perfect business sense, said Mike Gualtieri, an analyst at consulting company Forrester Research Inc. Effective CRM analysis enables marketing managers and customer service workers to treat people as individuals rather than faceless members of market segments, Gualtieri said. That kind of customer knowledge can lead to more-tailored marketing campaigns and improved customer engagement efforts.

But organizations need to make sure they're applying the right kinds of analytics tools to their customer data. CRM vendors may say that their software includes analytical features, but Gualtieri said the functionality they provide pales in comparison to what fell-fledged analytics applications can deliver -- especially when it comes to doing predictive analytics and other forms of advanced analytics.

For example, Gualtieri said one of the best reasons to analyze customer data is to predict customer churn, which involves identifying individuals who are likely to take their business elsewhere so customer service representatives can intervene in an effort to keep them in the fold. CRM software on its own typically struggles to detect customers who are about to defect; it requires a fairly straightforward indication of customer dissatisfaction, such as an angry email, according to Gualtieri. Analytics software, on the other hand, can analyze a broader sample of customer data to find more subtle indications of dissatisfaction.

In addition, a CRM system might be just one of the data sources feeding a customer...

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