A man walked into a Target store near Minneapolis demanding to speak to the manager, a jumble of coupons for baby clothes and cribs in his hands. His 16-year-old daughter had just received them, and he was fuming. But when the store manager called a few days later with an apology, the man had one too. His daughter was pregnant after all. Target knew it before he did. It's an anecdote many have heard, after a New York Times article went viral last year, , and it's widely used in business circles to illustrate the possibilities of CRM analytics.
In the simplest terms, CRM analytics involves drilling into customer data to make smarter business decisions and to offer customers more personalized service. Target used information about customers' past purchases -- unscented lotion and vitamin supplements, for example -- to identify women who were statistically likely to be pregnant, then sent them coupons for baby products.
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For all the issues of privacy and corporate snooping the Target case raises -- and the retailer has since toned down its marketing campaigns, it shows just how efficiently customer data can be put to use. The right technology is paramount, but no single tool or technology works for every company, and wading through the options is not easy.
There are myriad software products, from complete CRM platforms that offer analytics to standalone or add-on software products that focus solely on analytics. There are analytics apps that can be added to an existing CRM platform. And there's the option to outsource analytics to a growing number of service providers.
"The technologies are changing rapidly. There are a zillion startups offering either new tools or technologies, so it is kind of hard to navigate," Mike Gualtieri, an analyst at Forrester Research Inc. in Cambridge, Mass., said in a recent webcast about analytics. "There isn't just one platform that you're going to need. There's a whole ecosystem of platforms."
Having the right people on staff who know how to use the technology is equally important, analysts say. Analytics aren't just for statisticians anymore -- they're used by sales, marketing and customer service teams in daily decision making.
First step: Getting a CRM platform
Getting the most from CRM analytics starts with eliminating data silos. This means investing in a standard CRM software platform that organizes all of a company's customer data, stores it in one place and makes it easy to extract.
"Most data is siloed in applications: databases, warehouses, file systems," Gualtieri said. "You can't do good data science if you don't have the right data."
U.K. publishing house The Superyacht Group bought a standard CRM platform in 2009 after realizing a hodgepodge approach to storing customer data wasn't working, said company strategy director Pedro Müller. Account information was stored in FileMaker, for example, and accounting was done in QuickBooks.
The Superyacht Group, whose publications cater to the luxury yacht market, has four types of customers -- readers, advertisers, contributors and people who speak at company conferences. It needs analytics to cater each interaction to the specific type of customer. But without all of the customer information in one place, that wasn't always happening. "The bulk of our income comes from advertising. If we're wasting our time by contacting leads that are not going to pan out, we're losing out to competition," said Müller, who decided on a cloud-based platform by NetSuite.
John Tannone, vice president of business systems for the ESET North America security company, said a good CRM platform can identify things like spikes or declines in sales of a particular product. "That information can be used to drive product changes, make changes to sales territories or develop quotas for sales representatives," he wrote in an email. "It's not enough to have just a ton of good data. The data needs to be in the hands of business managers who are making key decisions."
Other CRM analytics tools and technologies
Some CRM platforms have greater analytics capabilities than others. In companies whose platform focuses more heavily on sales, for example, there might be a need for separate tools, applications or products to enhance analytics capabilities.
Bill Band, also a Forrester analyst, said apps that do analytics in real time are particularly hot right now, as are predictive analysis apps, which use data to make predictions about customer behavior. There are also marketing analytics tools, which help companies understand their market segments, he said.
New standalone analytics software products are emerging all the time, too. For example, a New York company called SundaySky is selling software that mines company data to create real-time videos that are personalized to each customer. AT&T creates videos with the software that offer a detailed explanation of each customer's bill, thus reducing call center volume.
Social media listening tools and mobile platforms also are in high demand, said Brad Cleveland, a consultant in Sun Valley, Idaho, and former president of the International Customer Management Institute. Social media listening tools gather what customers are saying about a company or brand on social media sites, and mobile platforms allow CRM software to run on smartphones and tablets. Sometimes these features come as part of a CRM software platform; other times they are apps or tools bought separately.
Choosing a CRM platform
Forrester's Band has three pieces of advice for wading through all of the technology. First, be aware of the landscape: What technologies are out there? Second, figure out what analytics will accomplish. Third, develop a clear understanding of your company's strengths and weaknesses when it comes to using analytics tools and systems.
According to consultant Cleveland, organizations also need to think about whether they need a turnkey product or one that is customizable. Also, are there systems already in place that need to be integrated? Compatibility is important.
Yet another thing an organization should consider is which employees will be using the analytics tools. Traditionally, analytics has been the work of employees with technical, highly specialized backgrounds and credentials, such as statisticians, programmers and data scientists. Target relied on statisticians-- with the help of computers -- to predict which customers might be pregnant. "If you don't have people with the chops and tools to use these, that points you to outsourcing," Band said.
All that's changing. More vendors are coming out with user-friendly software. Data scientists still do most of the heavy lifting when it comes to analytics, Forrester's Gualtieri said, but today's platforms and applications are being designed so that nontechnical employees can use them, too. "There's a certain amount of these analytics that have the potential to be democratized," he said. "Look, you don't want to be dependent on programmers. ... You need a platform to do analytics that has the algorithms built in."
ESET's Tannone said analytics is more than just an IT function at his company. For example, his marketing team uses analytics to create leads for the sales team by running reports on leads by territory, by source and the like. "Every business needs a good partnership between IT and business management in order to use these types of tools effectively," he said.