Market Watch: 2003 Is ''The Year of Analytics''

This year marks the year of analytics, says Ro King, executive vice president of client relations at Quaero Corp., a CRM consulting company. Based on the results of industry reports, she could be quite right. "Over the past several years companies have spent their time, effort, and money on getting their data together to see what kind of data they have. In doing so they've become more efficient and cost effective, but the real return on investment comes in getting the right product to the right customer at the right time," King says. The analytics market, which includes infrastructure, tools, and applications, according to Boston research firm Aberdeen Group, is expected to grow to nearly $11 billion in 2005, from $4 billion in 2001. "If you look across the spectrum of CRM suppliers," says Bob Moran, research vice president and managing director, data knowledge and analytics, at Aberdeen, "they either have analytics, are looking to get analytics, are increasing the sophistication of their analytics, are making analytics easier to use, or are attempting to make their analytics available to a broader population of business users." Leading the charge is SAS Institute Inc. "SAS leads the analytical CRM field by revenue for the third year in a row, and now leads the CRM analytical applications market with an 18.1 percent share," said Robert Blumstein, director of CRM analytics at IDC, in a statement for a report released late last year entitled, "Worldwide Analytics Applications for Customer Relationship Management Software: Competitive Forecast and Analysis, 2002--2006." "This growth demonstrates that companies continue to invest in analytical CRM technology, even with the current economic slowdown," he says. Siebel recently crowned itself the market-share leader in customer-oriented analytics software, claiming more than $157 million in 2002 revenues for that product line. Analytics no longer applies primarily to sales forecasting--it's also finding its way into customer satisfaction strategies. At The Orange County Register (Orange County, CA), a huge disconnect existed between the editors and the readers. "One of the major issues we had was hearing feedback from subscribers on news articles," says Michael McFarland, business systems specialist at the newspaper. "We didn't feel the information we were getting was accurate enough to portray the feelings readers have regarding the articles." After implementing Witness Systems' eQuality workforce performance product, support professionals at the newspaper analyzed readers' reactions received by the paper's help desk. Capturing subscriber feedback firsthand and sending it on to editorial now helps form future editorial content. Similarly, Affina, a call center outsourcing company, is also using analytics to improve customer interactions, but in this case it is to manage leads for a luxury car manufacturer. By getting access to segmentation data, Affina agents could determine whether the caller is a 16-year-old who wants a poster for his bedroom or a prospect who owns a competitor's car. Without this data agents would not know right away whether to send the information requested via overnight mail and make sure a dealer follows up with a phone call within 24 hours to invite the customer in for a test drive, or to send out a poster via regular mail, says Amy Sherman, senior director of business development at Affina. Additionally, she says, "We were sending most of the leads to a dealer that was following up on fewer than thirty percent of them. We did some business intelligence and determined that if we sent the leads to another dealer, which has a higher lead follow up--rate, it would result in a one percent increase, [which equaled] three to four million dollars in new sales for the company." According to King, the analytics market is already breaking into segments, with leaders in each. SAS is most popular with statisticians, King says, and SPSS is the next most-popular choice. Quadstone is best at data visualization, which "helps make the data pop graphically. Packaged CRM vendors are bundling analytical tools with their software, she adds, but "I can't look at Siebel and say 'Wow! Modules for campaign management, call center, and sales force automation are aligned.' It is happening, though."