Decisions, Not Data, Drive CRM Improvements

Companies should employ analytics and use the information to make business changes to benefit from continual improvement on CRM projects, Gartner research director Gareth Herschel told attendees at the Gartner Business Intelligence Symposium 2006 in Chicago Tuesday. Companies should perform analysis in the context of decisions, not in the context of data, according to Herschel. Collecting data alone does little, and even analysis of the data is a waste of time unless an enterprise uses the analysis to drive business decisions. According to Herschel, there are gaps between data collection, analytics, and the technologies that aid execution based on analytics results. Closing these gaps will help enterprises gain more from their CRM investments; failure to close them will provide competitors with opportunities to grab market share. Because the three areas are growing at different rates-data collection fastest, execution slowest-Herschel recommends companies concentrate their investments first on execution, then on analytics, and last on data collection. The more a company can close these gaps, the better understanding it will have of its customers, Herschel says. "Recognize that customer value is composed of many aspects and that different decisions will require different aspects to be considered." A company doesn't always need a "360-degree view" of the customer, according to Herschel. The more a potential customer value, such as doctors in networks with other doctors who have large, disposable incomes, the more important it is for an enterprise to have a full view of the customer. Customer value includes immediate value, lifetime value, and the potential to bring other customers to the company. These factors have different total values to different companies, so the CRM analytics need to be different for each and the data collection and analysis capabilities may involve a combination of techniques. "Collaborate on evolving, multiple-phase effort to determine customer profitability," Herschel says. "Different CRM strategies require different metrics to drive performance and measure success. Select the smallest number of connected, predictive metrics to run the enterprise." Ideally, a company will learn what factors drive customer satisfaction, including analysis of customers' priorities of those factors. This in turn should drive customer retention, which drives customer profitability. There needs to be analysis between each step because the underlying data will change over time. "The project is never done," Herschel says. "Plan a series of phases for the project that allow ROI at each stage. Each phase introduces greater rigor to the assumptions made in the previous phase." Related articles: BI Will Be Pervasive Bigger BI Budgets Are CIOs' Priority for '06 Gartner Releases Its BI Magic Quadrant