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Start small, and analytics will pay big dividends

Analytics can reveal the profitability secrets locked in your customer data. Analytics is also a convoluted process that can swallow time and resources. These tips can help you make the most of your customer relationship management (CRM) effort.


The effective use of customer information generated by a customer relationship management (CRM) initiative can boost your organization’s bottom line. But where do you start and how do you identify the most valuable data to track?

The answer involves Web analytics, a growing segment of CRM that can help you uncover the secrets contained in customer data. For example, analytics can determine how often a single customer visits your site compared with how often a visit results in a purchase.
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With information like this, your organization can understand what your customers want and prefer. Yet, realizing and leveraging the profit potential in customer data is not easy. Each organization must determine the type of analytics that work best, based on the company’s goals and customer base.

IT managers are often involved with analytics because it’s typically IT’s responsibility to run reports and cleanse customer data.

This article offers advice to help you make Web analytics pay off and help improve your return on investment (ROI).

A new spin on CRM
Many organizations use analytics to remain competitive in their marketplaces, according to Gartner, a Stamford, CT-based consultancy.

The growing focus on analytics is a natural progression of CRM, according to Gartner analyst Walter Janowski, who explained that early CRM implementations centered on operational issues instead of enhancing the customer experience.

As CRM has matured, businesses with a CRM infrastructure have been able to focus exclusively on customers.

“[But] analytics and personalization, that takes you to the next level, where you’re learning to understand your customers better and you’re learning how to interact with and respond to your customers better,” Janowski said.

The use of analytics is still growing, according to the Gartner report. “By 2005, enterprises will need three times as many professionals on their analytic staff as they need today, and the demand for analytic talent today outweighs supply by at least two to one.”

“[Analytics] It’s really about touching the customer and interacting with the customer and improving their interaction with your company,” Janowski said. That improved interaction, driven by CRM, can help increase profits.

Begin slowly by targeting data
The advice from the experts is to start small. Most analytical efforts fail because organizations bite off more than they can chew, according to Forrester Research.

Janowski agrees: “I think a lot of companies are really struggling to get their arms around it and really understand what it means and how it fits into their whole process.”

Forrester recommends that firms start using Web analytics in 2001 with targeted efforts. For example, don’t try to analyze each piece of stored data you have to find a magical connection between selling hair dryers to retirees in Florida and mufflers to soccer moms on the East Coast.

Rushing into analytics will likely waste your organization’s time and money. Instead, stick to basic data comparisons such as a report that evaluates product sales by geographical region. “Lay out a plan and a process and find out what you need to accomplish with the interactions with customers and then work backwards from there to determine the tools that will help you get there,” Janowski said.

Make certain you see the big picture
Don’t forget to look at the big picture, even if you’re slowly adopting analytics. You’re still recording customer information over the Web while you’re implementing analytics. You should adjust analytics applications to meet your organization’s goals.

After you’ve practiced with simple analytical comparisons, you can move on to more complicated analytical research. This advanced research will shed the most light on customer preferences and activity.

Advanced research allows you to identify customer behaviors and put a value on your more profitable customers, said Janowski. “It also gives you the ability to focus more on retaining and developing customers where the focus in the past has been on getting new customers,” he added.

But for advanced research, you’ll need applications with scale. Thinking big also means looking for a set of applications that fits your organization’s growth plans.

Plan to expand
Forrester suggested that organizations start analytics projects in 2001 to prepare the organization for more advanced research in 2002. This way, the organization can learn analytics slowly and practice for complicated work next year when analytics will be an even larger part of e-commerce and online business. This year-to-year plan may give you a jump on the competition.

Forrester also said that organizations should spend no more than $100,000 on any analytical project in 2001. Sticking to this monetary figure, along with starting with small comparisons and projects, should ensure that your organization will see a quick ROI on analytics project.

The role of analytics can be expanded after the results of initial projects are analyzed.

Are you using analytics?
Does your organization use analytics to get in touch with its customer base? If so, how is the process working? Are you, as an IT manager, involved in running reports or translating statistics for a business manager? Let us know by sending us an e-mail or starting a discussion below.


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