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The BI Tools Bonanza
Simple, rewarding BI tools have been developed over the past three years, quietly accelerating marketers' ability to see and hear.
For the rest of the December 2006 issue of CRM magazine please click here
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Marketing without using metrics is like going hunting with earplugs in and a blindfold on. Campaign managers, like hunters, are much more likely to hit the mark if they can assess the situation during the hunt--or campaign--through their senses: spotting the target, seeing how fast it's moving, watching what direction the wind is moving in. Listening is important, too. Are there any loud noises that might scare away the prey? A marketer producing ad campaigns and direct mailings without being able to see what her markets look like, hear their experiences, know what her audience is, or have a measured view of the state of the market will inevitably miss the target. There is, however, some incongruence in this parallel. The blindfolded hunter can simply take it off to see. Hearing doesn't need to be learned or acquired. However, these capabilities are not intrinsic to a marketer, but must be sought out, invested in, and integrated. It is then up to the marketer to learn how to use these tools to get the most value from them. Business intelligence tools have rapidly increased in importance and usage over the past few years. Now marketers are finding it easier to remove their blindfold. Here's a look at what they're seeing. Leslie Ament, director of customer intelligence research at the Aberdeen Group, says that only a few years ago most companies relied on statisticians and business analysts to understand the modeling and decode the analytics. This did allow businesses to run off a BI platform, but the process was clunky and slow. "If I have to rely on an analyst for information to drive decision-making," Ament says, "that could be a whole day discussion." Colin Shearer, senior vice president of market strategy at SPSS, says, "Almost any decision in an organization has to be subject to scrutiny--what's gone down is, companies are making decisions on gut feel or by the seat of their pants." Driven by SARBOX and other legislated imperatives, however, marketers now look to find hard numbers to defend their decisions. BI solutions have stepped in to lend concrete support, and marketers have increasingly made deeper use of their functionality. "The art-plus-science imperative is moving marketers away from art and toward science. Slowly but surely, we're getting there," Ament says.
This science has been injected into marketing strategies in part due to the development of solutions that are easier for the average businessperson to use. Many BI vendors are now working to offer products that integrate the front-end graphical user interface with the back-end engine. Ament cites SPSS, Genalytics, and Business Objects as vendors at the forefront of the ease of use trend. Shearer explains SPSS's product strategy to increase ease of use: "Vendors like us have taken what are very, very complex analytics and have wrapped them up and configured them inside a front end that a marketer can use. The interface is following the marketing work rather than the analytical work." Additionally, marketers can now do more with the tools that they are using. Because of the CRM and data mining systems many companies implemented a decade ago, businesses have been left with a huge pool of customer metrics. After the initial backlash against these systems, in which many companies felt betrayed when they did not see the hoped-for ROI and targeted improvements, companies wondered what to do with these huge systems they had put so much time and money into. Headlines read "CRM Is Dead," but this turned out to be far from the case. Millions of valuable data points had been collected and were now waiting to be leveraged. Jill Dyche, partner at Baseline Consulting Group, explains that over the past few years, companies have been getting much better at milking true value from this data. "The newest stuff," she says, "is the sort of concept of knowledge discovery." BI tools now allow a marketer to troll through data with no specific hypothesis in mind to find trends that he otherwise would not have anticipated, using historical data to improve future decision making at a higher level than any RFM (recency, frequency, monetary) model could provide. The ability of these tools to create models automatically allows for a much richer understanding of customer behavior. Gareth Herschel, research director at Gartner, says that BI tools have allowed marketing teams to increase models to predict customer behaviors from five or 10 per campaign to 1,600. This enables marketers to gain much more specific information about their customers so that they may better target them, he says. "Instead of building a model to say, 'Would this person be interested in buying a DVD?' you can say, 'Is this person interested in Star Wars?'" "There's an increased focus on aggregating all campaign data into one central depository," say Suresch Vittal, a senior analyst at Forrester Research. Knowledge discovery can only be powered by good clean data, and in the past few years marketers have been thinking creatively about data collection. Data integration through BI has allowed marketers to acquire numbers across all channels. Data from direct marketing campaigns, email campaigns, paid click, click to conversion, paid search, natural search, key word performance, ad banner performance, and more can now all be leveraged to improve campaign effectiveness, regardless of channel. Many companies are starting to move beyond the data available through marketing efforts to dig into valuable metrics in other departments. Call centers are providing a somewhat unexpected gold mine for marketing data. Both emails from customer service requests and notes taken by call center agents can lend great insight into customers' problems, desires, hopes, and needs. Shearer recommends that companies begin to put more of an effort into cleaning up and integrating this data. "In maybe 80 percent of calls from a service center, the agent takes notes in the conversation. Most of these notes just sit there. Here are records of customers expressing their thoughts and feelings about your company." With BI solutions that can be deployed cross-departmentally, it has become much easier for marketers to integrate data to better understand the customers they target. In addition to call center notes and text, online service requests and Web data are becoming more accessible to marketers. As more buying experience is gained online, the amount of information available from the Web has greatly grown. A company can now track customers to examine behavioral data about those consumers who have been navigating business's site. At the end of transactions, service requests, or site registrations the company can ask its customers to fill out a satisfaction survey, which gives the marketer access to attitudinal information. Ryma Technology Solutions, a provider of product management solutions for software development companies, initially implemented Eloqua to automate a large piece of its marketing activity (primarily to lower head count in the department). However, Ryma soon found that Eloqua's Web analytics gave it much deeper insight into its customers than it had anticipated. By tagging different pages on its site, Ryma was able to tell which pains its customers were having, and target the marketing experience accordingly. Russell Foy, vice president of sales and marketing, says, "This insight goes across different verticals and different people we're talking to." He also says that this has enabled Ryma to better understand its customers, and has as a result notably increased leads and allowed the company to see a higher sales return. Ryma's efforts also underline another trend--a closer relationship between marketing and sales. As part of the Eloqua implementation, Ryma automated outreaches previously completed by individuals on its marketing team, allowing it to focus more on bringing leads to its sales reps. Foy says his title, vice president of sales and marketing, says much about Ryma's philosophy behind these two departments: They do not stand alone. Foy says that with the new solution, "marketing is not off doing something separate, just creating a report." According to Dyche, BI solutions allow marketers and salespeople to interact through the same platform that helps marketers put more valuable information more quickly into salespeople's hands, and facilitates better communication. There are vendors now like Prolifiq, whose sole functionality surrounds bridging the gap between sales and marketing by mobilizing marketing content to accelerate the sales cycle. A closer relationship between the two will ensure that all valuable information is used and used well. One of the most valuable pieces of information marketers can advance to sales representatives is how to get in front of their leads, how to be a step ahead of potential customers. BI today is allowing marketers to do more and better predictive analytics. Vittal says, "Three years ago, BI was used primarily for reporting on campaign performance, so the focus was purely tactical and operational in nature." Now, however, many marketers are looking to improve performance and lower costs by segmenting the customers with the most value. Ament says that in the market today there is an increased focus on precision marketing, which she defines as "the use of predictive analytics or rules-based workflows based on propensity to buy." Companies can save money by interacting with customers according to their predicted value to the company. This in turn is good for customers, as it means those who are not interested in the company are not bothered as often and those who are very interested are eligible for more perks. With more customer case studies (see sidebar "Or Pearls Before Swine") that prove smarter marketing pays off, more companies are implementing these tools and making use of their functionality. However, analysts agree that marketing with business intelligence is still very much in its infancy. Shearer says, "I don't think there will be changes in direction exactly. There will be more and more people going this way." With so many trends still emerging, there is a consensus that BI will continue to grow in usage in the marketing department. As the tools mature, there will likely become a tighter focus on vertical solutions as well, with more attention paid to the specific needs of specific marketing departments. Herschel predicts, "There will be more interest in targeted applications, a move away from very generic tools." As with any tool, however, its value is directly related to the skill one uses in its deployment. The hunter will never hit his target using his senses and strength alone; practice and skill are deciding factors in his success. The same is true for marketers using BI applications. "It's not just about the technology," Ament says, "it's more about deployment and process." This takes effort by the company to both implement the solution properly and adequately train its employees. It also means training marketers to use these tools as well as training customer-facing employees to deploy the tools in real time, so that the staff of a company knows what to do with the data it has. Now, with the tools available and the practices developing, marketers should be able to take their blindfolds off, pull their earplugs out, hone their skills, and mine their diamonds. Contact Editorial Assistant Jessica Sebor at jsebor@destinationCRM.com.
Or Pearls Before Swine Corona Direct, the second largest insurance company in Belgium, implemented SPSS PredictiveMarketing in 2006. The company had been growing rapidly, investing large amounts into direct marketing campaigns. However, Corona soon found that these campaigns were producing a negative ROI--the cost of securing new customers exceeded the company's revenue during the first year by nearly 50 percent. With SPSS, Corona used customer information to assess which target groups were most likely to respond and shaped their direct mailing campaign accordingly, cutting down on unnecessary contacts. Corona Direct had been sending approximately two to three million letters to target groups within the Belgium population of roughly 10 million. Phillipe Neyt, commercial director for Corona Direct, says the company had been using the analytics of "common sense," creating spreadsheets to analyze about five to 10 target groups. However, Neyt says, "Using the human mind and a simple spreadsheet, going over millions of records--it is impossible." Corona was able to lower costs by 30 percent the first year without seeing any decrease in response in sales and after the first year, sales rose, leaving a 20 percent increase in customer profitability. The use of tools without an understanding of what they mean, Neyt says, is "showing diamonds to pigs." --J.S.
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To contact the editors, please email editor@destinationCRM.com
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