CRM and customer service market trends: Top ten buzzwords

Customer acquisition cost is the cost associated with convincing a consumer to buy your product or service. This can include research, marketing and advertising costs. An important business metric, customer acquisition cost should be considered along with other data, especially the value of the customer to the company and the resulting return on investment (ROI) of acquisition. The calculation of customer valuation helps a company decide how much of its resources can be profitably spent on a particular customer.

Customer valuation is a scoring process used to help a company determine which customers the company should target in order to maximize profit. Customer valuation requires that the company evaluate past data to learn which customers purchased recently, which customers purchased frequently and which customers spent the most money, in hopes that the company can forecast future purchase potential and make sure time and resources are spent only on its best customers. Customer valuation is based upon the 80/20 rule in marketing, whereby a company spends the majority of its time working with its best customers.

E-commerce (electronic commerce or EC) is the buying and selling of goods and services on the Internet. In practice, this term and a newer term, e-business, are often used interchangeably to describe this online shopping trend. For online retail selling, the term e-tailing is sometimes used.

Erlang B is a modeling formula that is widely used in call center scheduling. The formula can be used to calculate any one of the following three factors if you know or predict the other two: busy hour traffic (BHT); the percentage of blocked calls; and number of lines in a trunk group. This formula assumes that lost calls are cleared; i.e., if customers calling in get a busy signal, they will never retry. Erlang B is best used in situations with few busy signals. The Erlang B Extended formula takes into account the customers calling who will immediately retry if their calls do not go through.
Erlang C, is a related call center formula that uses different factors to plan staffing.

Personalization is the process of tailoring Web pages to individual users' characteristics or preferences to enhance customer service or e-commerce sales. Personalization is sometimes referred to as one-to-one marketing and can meet the customer's needs more effectively and efficiently, making interactions faster and easier and, consequently, increasing customer satisfaction and the likelihood of repeat customer visits. Though this market trend is related to a new push for improving the customer experience, it recalls earlier days of customer service when sales clerks called customers by name and customized transactions to individuals. Some of the technologies behind personalization include cookies, collaborative filtering, user profiling and data analysis tools.

Predictive analytics is the branch of data mining concerned with the prediction of future probabilities and trends. The central element of predictive analytics is the predictor, a variable that can be measured for an individual to predict future behavior. Multiple predictors are combined into a predictive model, which, when subjected to analysis, can be used to forecast future probabilities with an acceptable level of reliability. Predictive analytics can use customer data to analyze and segment customers to predict future activity.

Second Life is a 3D virtual world created by software maker Linden Labs. Second Life residents can design and build residences on land that they own or rent from either Linden Labs or other residents, and there is a high level of entrepreneurial activity in Second Life. As of late 2006, hundreds of thousands of dollars were changing hands daily as more than one million residents created and sold a wide variety of virtual commodities. Second Life uses a decentralized server architecture to meet the demands of thousands of users who may be online simultaneously. Many companies are setting up virtual businesses to serve customers in Second Life.

Speech recognition is the ability of a machine or program to recognize and carry out voice commands or take dictation. In general, speech recognition involves the ability to match a voice pattern against a provided or acquired vocabulary. Usually, a limited vocabulary is provided with a product and the user can record additional words. More sophisticated software has the ability to accept natural speech. Businesses may use speech recognition to provide customers with self-service options and free up time for call center agents.