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Analytics Accelerate e-Customer Feedback
A look at how analytical technologies can help accelerate customer feedback in a Internet environment.
Posted Sep 1, 2000
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If e-commerce just going to function as a powerful channel, it needs to be treated like a powerful channel, which mandates establishment of a data warehouse--one facilitated by clickstream and other "e-data." Increasingly driven by the influence of "e-customers," the twenty-first century business model is evolving from a business-to-consumer (B2C) model towards a consumer-to-business (C2B) model, wherein customer intimacy will demand the analysis of data from both Web-site transactions and marketing co-mingled with that of data from traditional channels.

By providing technology integration foundation for CRM and supply chain management packages, IT organizations can again become strategic in creating business value for the enterprise. The interlinkage of "click" and "mortar" data via a customer data warehouse represents a critical opportunity for IT to re-establish its value and to also help recreate the business to help get it to the critical next stage of e-customer relationship management.

During the waning weeks of the twentieth century, a series of vendors made announcements and acquisitions to increase their capabilities for data mining clickstream and Web-site data. For instance, E.piphany paid $400 million for data mining vendor RightPoint, Microsoft announced its Business Internet Analytics and Accrue acquired data mining vendor NeoVista.

Concurrently, enterprise marketing automation vendors (such as AIMS, Exchange Applications, Harte-Hanks, MarketFirst and Rubric) are increasingly essential for "click and mortar" vendors to effectively create and manage online marketing campaigns via their e-commerce Web sites. There is growing impetus to incorporate advanced analytical capabilities to fine-tune these one-to-one marketing capabilities, especially technologies such as intelligent data mining statistics, case-based reasoning and software agents/avatars. These help to perform customer behavior modeling to calculate credit scoring, churn predictive analysis, customer profitability profiles and so on. Clearly, the primal imperative for savvy enterprises is to use this to intelligently get closer to the e-customer.

Enterprises are just beginning to employ data beyond the clickstream or call detail records. While market-creating or industry-leading enterprises are currently purchasing third-party data to overlay with their own e-customer data, longer term it will be essential for businesses to have such data sharing agreements with the right partners. For example, if an airline were to team up in an exclusive relationship with a high net-worth private banking firm and hospitality/gaming enterprises, the business might gain strategic competitive advantage by locking out its competitors' access to such vital lifestyle/consumer behavioral data. We believe strategic data sharing partnerships will help determine the dominant players in key areas such as online retail and related e-commerce during 2002 to 2004 (such as MCI with Blockbuster and United Airlines with the starwoods family of hotels and restaurants).

While generating a large amount of data about customer behavior and preferences, Web businesses have lacked the tools to access and make use of this information easily. A major challenge for any business seeking to chase the e-customer is the interlinkage of stove-piped massive internal databases. For example, telecommunications vendors may have up to 20 terabyte (TB) data warehouses used for call detail record analysis yet have little or no overlay capability with their 1 to 5 TB master customer data warehouse. The same is frequently true regarding clickstream data (there are good tools like net.genesis for analyzing Web-site traffic) but these do not link with the demographic data in the customer data warehouses. By 2005, e-customer data privacy issues will be resolved through ISO-style certification so that an organization's treatment of consumer data according to national data privacy rules will become a competitive advantage.

E-customer centricity is predicated on intimate knowledge of consumer behaviors. It is becoming increasingly demand-driven such that online book retailers can go back to the author community and specify what they should write, to have the right books to sell tomorrow. In turn, that means back-office supply chain management (production and available-to-promise) must integrate with the front-office marketing automation systems.

In terms of technology, intelligent planning algorithms are sufficiently mature and available, and the savvy G2000 and "click and mortar" businesses are rapidly embracing this approach. Data warehouse is another mature technology to provide the necessary input to the planning algorithms of supply chain management.

META Group's larger Global 2000 clients tell us that generally, it appears e-channels are not cannibalizing other channel sales--that customers who purchase via both the e-channel and another traditional channel actually buy more product overall. Coordinated channel alignment strategies help companies migrate customer segments to lower-cost Engage and Transact channels. Such cross-channel data can also assist in the Fulfill and Service customer patterns to enable more effective marketing campaigns and improve customer satisfaction.

By 2001, real-time linkages/relationships with the ad network facilitators (such as CMGI/Engage, DoubleClick, Flycast and 24/7) and recommendation engines (such as NetPerceptions) will evolve as an adjunct to the clickstream analytics vendors. By 2002, the next generation of databases (IBM UDB, Informix Enterprise Decision Server, NCR Teradata, Oracle ORACLE8i, SQL Server 8.0) will provide built-in clickstream analytics. Concurrently, these same vendors' investments in data mining will provide accelerated payback as the combination of data mining technology, advertising, transaction and demographic data and comprehensive Web-based visitor data will result in a powerful solution for making effective merchandising decisions that will help captivate the twenty-first century e-customer. These new products will deliver highly personalized e-mail, such as newsletters and targeted promotional offers, to individuals based on Web visitor activity data collected as well as known demographic, psychographic and transaction information about the customer. Twenty-first century marketers will be able to take one-to-one marketing to a new level achieving a higher ROI on marketing and sales initiatives.

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