Investment ramps up for analytics

The focus of customer relationship management investments has typically been to collect data generated across channels (operational CRM). That will change in 2004. According to a recent report, “Customer Analytics: 85 Percent Do Not Achieve ROI – Know Why Before You Invest”, so-called “analytical CRM” will help executives make sense of – and make decisions based on – the numbers.

According to AMR Research Inc., CRM investment will grow to US$10.8 billion in 2004 – that’s US$1 billion more than 2003’s investment figure. Laura Preslan, research director at AMR, says companies that have made initial investments in data collection tools are now looking to spend as much as US$1 million to $2 million on analytic and predictive modeling tools that will help put more relevant data into their forecasts. Such large-scale investments take anywhere from six to 12 months to deploy.

“Companies have spent millions of dollars to collect data,” Preslan says. “Now, what do you do with it? With analytic tools, companies will have the visibility to make decisions using real-time data.”

Before companies can make new investments in analytical CRM, Preslan says, they must clean up their data warehouses, which are likely polluted with incorrect data culled from legacy databases that were put together in piecemeal fashion and flat-out bad data that was entered incorrectly or submitted falsely. This painstaking process can take several months in severe cases.

What can companies do with this data? For starters, they can change their marketing campaigns on the fly to adjust to real market conditions, not just preliminary forecasts. Preslan says one technology company she recently spoke with saw the response rate to one of its campaigns jump from 0.50 percent to 3 percent (an uptick of .05 percent is considered good) that has contributed $15 million per quarter to the organization’s bottom line. Preslan says analytical CRM has the potential to improve response rates anywhere from 30 percent to 70 percent.

The analyst stresses that it’s not enough just to collect the data and generate reports from it. Executives must devise strategies and communicate them to the rest of the organization to maximize the benefits of CRM investment. Too often, Preslan says, the data stays within the marketing department.

Would you recommend this article?


Thanks for taking the time to let us know what you think of this article!
We'd love to hear your opinion about this or any other story you read in our publication.

Jim Love, Chief Content Officer, IT World Canada

Featured Download

Featured Articles

Empowering the hybrid workforce: how technology can build a better employee experience

Across the country, employees from organizations of all sizes expect flexibility...

What’s behind the best customer experience: How to make it real for your business

The best customer experience – the kind that builds businesses and...

Overcoming the obstacles to optimized operations

Network-driven optimization is a top priority for many Canadian business leaders...

Thriving amid Canada’s tech talent shortage

With today’s tight labour market, rising customer demands, fast-evolving cyber threats...

Staying protected and compliant in an evolving IT landscape

Canadian businesses have changed remarkably and quickly over the last few...

Related Tech News

Tech Jobs

Our experienced team of journalists and bloggers bring you engaging in-depth interviews, videos and content targeted to IT professionals and line-of-business executives.

Tech Companies Hiring Right Now