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Ensure Intelligent CRM with Integrated, Agile Analytics

by Siegfried Leiner | SAPinsider

July 1, 2005

CRM products are often considered failures because they are isolated as a front-office tool, they don’t improve decision making, and they are not agile enough to keep up with business change. Intelligent businesses must circumvent these pitfalls by turning CRM analytics capabilities into powerful enablers for growth, customer satisfaction, and improved efficiency. Learn three crucial success factors for using analytics to ensure insightful customer relationship management.
 

For many enterprises, despite having invested heavily in customer relationship management (CRM) and business intelligence (BI) technology, there still remains an "analytical gap" within their sales, marketing, and service organizations. It is the gap between data collection and business processes, between receiving a report and reacting to business change, between thought and action.

According to a recent IDC study, only 14 percent of managers say they are confident that the reports developed in their organizations deliver relevant information to the right people at the right time.1 To bridge this gap, and to enable better decision making on all customer-facing levels of the organization, companies must be able to transform insight into action and model their business processes across the enterprise. This enterprise-wide approach is essential to erasing the disconnect between analytics and transactional, operational processes, enabling companies to overcome critical CRM challenges.

CRM projects are often considered failures because:

  • They are implemented as an isolated, front-office tool. While CRM systems can analyze customer value by using broad metrics such as revenue generated, frequency of purchases, or even length of time required to resolve a telephone query, they fail to provide the much talked-about 360-degree view of the customer.2 Customers evaluated on these CRM factors may be judged superior, despite the fact that data elsewhere within the company not accessed by the CRM system would demonstrate the exact opposite: that this prime customer frequently sends back products, constantly complains, and, by ordering low-profit products on short notice, causes the company a lot of work for little return.

  • They do not improve decision making. While automating many processes, the new CRM technology adds no efficiency or insight to improve decision making within business processes inherent to sales, marketing, and service functions — a key value driver and benchmark of success for end-user adoption.

  • They prove too cumbersome to enable the system to be adapted quickly to meet ever-changing business conditions. The maintenance effort for the many touch points between operational CRM applications, back-office systems, and a plethora of different BI tools causes managers to question the long-term sustainability of this type of approach. As a result, many CRM and BI projects suffer from relatively high total cost of ownership.

Intelligent businesses must circumvent these pitfalls, bridging the analytical gap by turning CRM analytics capabilities into powerful enablers for growth, customer satisfaction, and improved efficiency. To ensure insightful customer relationship management, successful CRM projects live by three crucial success factors:

Success Factor #1 — Link Front End to Back End

To achieve a 360-degree view of their customers, CRM project teams have to consider their organization's entire value chain. CRM needs to be much more than a toolset for sales force automation, campaign management, or call center organization.

A leading energy provider, for example, linked mySAP CRM front-office data with consumption data from an energy supply system to make narrowly targeted offers to specific customer groups. The company analyzed energy consumption of its customer base to create homogeneous load profiles and answer the fundamental question: What type of customer uses what amount of electricity, and when? The results of the analysis were imported into mySAP CRM. Sales staff, wielding the integrated campaign management function, compared the load profiles with customer data to determine target groups and send out offers. The campaign was a success. The company was able to retain the majority of the customers who had been in danger of defecting, but only because it smartly connected data from both the front and back office.

Enabling Smarter Campaign Management

To enable a high level of integration and flexibility within your own organization, look for SAP Analytics to deliver intelligent tools for taking CRM business processes to the next level of enterprise insight. With the Campaign Automation tool, for example, you can model your marketing campaigns from start to finish in a single screen (see Figure 1). Consider a campaign where you contact target customers through several different channels — the customer call center, email, and direct mail — and with a variety of offers (for example, repeat customers get an additional five percent discount, or customers who order online get $100 off the standard retail price). How do you know which combination of channel and offer you should use for each customer to achieve the highest profit?

The Campaign Automation tool introduces your marketing team to the best mix of channel, product, and customer for your particular campaign. This tool also enables you to consider your company's different constraints by channel if, for example, your call center can only handle up to 1,000 customer calls on a given day. Or maybe you're constrained by your marketing costs, and you don't want to spend more than $50,000 for this campaign. You can enter all these conditions and constraints directly into the Campaign Automation tool (under the "Conditions" tab in Figure 1) and run a simulation of the campaign, which then shows you your expected costs, your expected response levels, and your return on investment per channel. Perhaps you'll find that direct mail is not a profitable channel for this campaign, and that you should go exclusively with the call center. Intelligent analytics, embedded within mySAP CRM, provide this integrated, fact-based insight.

Figure 1
Enabling Insight with the mySAP CRM Campaign Automation Tool

Success Factor #2 — Integrate Analytics into Your CRM Processes

BI technology must be designed into operational CRM processes in order for companies to implement a fact-based, decision-making culture in marketing, sales, and service departments.

Consider a leading publishing company that implemented mySAP CRM, SAP for Media, mySAP ERP, mySAP Supply Chain Management (mySAP SCM), and SAP Business Information Warehouse (SAP BW) — all integrated thanks to the SAP NetWeaver platform — to create an "intelligent" CRM solution. The company discovered that integrated CRM has helped them to convert their existing customer base into a vital enabler of their ability to grow.

The integration between these components enabled the publisher to create a direct-marketing business model that looks like this:

  • Marketing managers use SAP BW to analyze customer behavior by reviewing data from previous purchases, and to execute more targeted campaigns using mySAP CRM, resulting in more inquiries by customers to the company's call center.

  • Call center agents are able to see a customer's credit standing, prior sales history, and other important data that enables them, for example, to recommend a related product that would be of interest to the customer, increasing sales generated per call.

  • Supply chain partners receive orders automatically, thanks to integration with the call center, improving reliability of order entry and product shipping.

  • All transactions are automatically updated by the SAP logistics execution software, which confirms product availability and shipping, and records the transaction within the customer's account in the billing system. This data is now accessible to marketing personnel for subsequent analysis and future fine-tuning of the promotion.

Embedded Analytics in Practice: Intelligently Define Target Groups for Your Marketing Campaign

With SAP Analytics, end users can leverage embedded analytics to optimize or enhance their day-to-day business processes. Consider, for example, a marketer trying to determine a target group for the next major campaign. With a segmentation tool offered within mySAP CRM — the Segment Builder, shown in Figure 2 — the marketer can intelligently build the most profitable target group for a given campaign. Here, SAP goes beyond a simple, manual tool where the marketer selects different criteria by hand — for example, narrowing the target group to those over age 30, living in California and Oregon. The marketer now leverages analytical capabilities inside the Segment Builder — based on customer behavior, response rates, and data from past campaigns — to further refine the target group and achieve more profitable results.

So how does the Segment Builder work? On the left-hand side of Figure 2, the marketer sees the different demographics of the customers, which can be used to filter the customer base and come up with a target group. The right-hand side of the figure displays embedded analytics that enable you to simulate how much profit you would make with this specific target group, based on expected response rates and marketing costs. With these analytics, you could run a simulation to determine the profit you would derive for this marketing campaign, based on that chosen target group. You could also modify the customer demographics and determine the expected profit based on this new target group.

With this type of embedded analytics, CRM Analytics is no longer a toolset for highly specialized business analysts, but an ingredient that can drive a company's mission-critical marketing processes end to end — from target group selection through fulfillment. Business users need only enter two or three bits of information (product costs, for example), and the embedded analytics take care of the rest, providing tangible, relevant insight to the end user while hiding the data analysis and technical complexity behind the scenes.

Figure 2
Refining Your Target Customer Group with the mySAP CRM Segment Builder

Success Factor #3 — Go for Standardization

By limiting the number of different CRM tools and related platforms, companies avoid the pain points of custom integrations and interfaces. mySAP CRM, for example, integrates seamlessly with SAP BI. Sales, marketing, and service staff can use the BI methods and functions to analyze all relevant front-office and back-office data, even that from non-SAP systems.

With multiple data repositories resulting in an incomplete view of their customer base, and with an inability to effectively track sales leads, a leading developer of digital video, audio, and 3-D production systems wanted to collapse their heterogeneous systems into one integrated environment. To streamline their technology infrastructure and reduce the complexity of servicing existing and new customers, the company integrated mySAP CRM and SAP BW to leverage their existing investment in SAP technology and consolidate their business applications into one integrated user interface.

As a result, the company enjoyed more accurate visibility into their customer data, allowing better targeting of their customers. How much better? Achieving a 68 percent internal rate of return on their mySAP CRM and SAP BW investment, the company's more targeted campaigns resulted in over 450,000 additional customer interactions in one year, resulting in more than $1.85 million in revenue.

By implementing a combined enterprise platform for business applications and business intelligence, companies of all sizes can reduce costs while implementing a solution that scales to grow with your organization.

The Future of Intelligent CRM

The future of intelligent CRM will be driven by the more and more complete fusion of operational CRM and the underlying IT infrastructure. SAP Analytics will establish a new framework for intelligent, composite applications that will enable a new level of business agility — as needed by tomorrow's smart businesses.

Intelligent businesses must erase the disconnect between analytics and transactional, operational processes by turning CRM analytics capabilitites into powerful enablers for growth, customer satisfaction, and improved efficiency.

To become an intelligent business, and get measurable return out of your combined CRM and business intelligence investments, revisit your company's key customer touch points and consider how analytics can optimize every step of your customer-focused business processes.

For more information on CRM Analytics, visit www.sap.com/solutions/business-suite/crm/featuresfunctions/index.epx. You can also visit https://websmp204.sap-ag.de/solutions, and select mySAP Business Suite --> mySAP Customer Relationship Mgmt --> Solution Library --> Key Capabilities --> Analytics.


1 Dan Vesset, 'the Intelligence Gap — Disconnect Between Investments in Business Analytics and Transaction Processing Software," IDC (December 2004).

2 For more on this 360-degree customer view, see "4 Questions to Assess How Well You Know and Serve Your Customers" by Peter J. Kirschbauer in the April-June 2005 issue of SAP Insider (www.SAPinsider.com).


Siegfried Leiner is the Vice President of CRM Application Solution Management for SAP AG, focusing on CRM technology and business strategy. Before joining SAP in 2001, he worked for seven years at ORBIS AG, managing international CRM customer projects and the development of CRM standard software. Siegfried studied Physics and Mathematics at the University of Saarland in Saarbrucken, Germany.


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