As the holidays approached, I found myself thinking back on all the neat CRM toys we received this year. Technology vendors made great strides this year in developing solutions to accelerate, create and monitor CRM applications. The trend has been toward decreasing the development and deployment time of CRM solutions, allowing marketers to quickly reap the benefits of advancing technologies. Most of these new “gifts” are still evolving, which should make the next 12 months very exciting for proponents of CRM. Let’s take a look at the changes of the past year and where the industry will go in 2000.

Analytic Applications

Churn analysis, cross-selling, up-selling, lifetime customer value, promotion analysis and campaign management are among the many terms that came into vogue this year. New applications have brought targeted, one-to-one marketing to the mass market. On the decision support side, we’ve seen the development of off-the-shelf – or “canned” – data models, prepackaged reports, predefined statistical models and standard methodologies and workflow patterns.

Not all of the advances have been helpful. Canned data models have been the least effective decision support application. Since almost every company’s data modeling needs are different, it’s difficult, if not impossible, to develop off-the-shelf applications. Prepackaged reports, on the other hand, are extremely helpful. They provide a simple starting point for companies that have never engaged in detailed analysis of customer data. Standardized reports are most powerful when the attributes, dimensions and measures of the report can be quickly mapped back to a company’s customized data model.

Predefined data extractions are probably the greatest advance of 1999. Developing data extraction tools has traditionally been the most difficult aspect of building a data warehouse, but prepackaged solutions have made this task significantly easier. Top decision support vendors have developed “data extractors” for SAP, Seibel, Clarify, BroadVision and other popular platforms. The key advantage is that data warehouse developers no longer need to maintain expert knowledge of the data models these applications employ. Developers simply link their target database with a standardized extractor rather than building a customized tool to link fields, records and tables.

Campaign Management

Automated campaign management became a viable approach to managing CRM efforts this year – due, in no small part, to the fact that system prices dropped by more than 50 percent. Campaign management systems, when used effectively, allow companies to create and deploy targeted marketing programs in record time. Consequently, cutting-edge companies can quickly react to customer churn trends and unexpected competitive pressures. Automation of the “grunt work” allows a marketing department to easily become the multichannel (mail, telemarketing, e-mail, etc.) focal point for all customer interactions.

Although some campaign management vendors are behind, most will have “e” offerings by early 2000. In the coming months, vendors will begin to focus on integrating their tools with data warehouses and operational systems. Analysis tools (OLAP, Web site analysis and statistical) will become standard. Vendors will also begin to link their tools with popular e-commerce, sales force automation, call center and telemarketing applications.

A warning: Once an organization conquers automated campaign management and can create and execute promotions flawlessly, what I call the “risk of chaos” arises. Redundant campaigns, or campaigns that do not fit in the company’s overall marketing strategy, are a definite possibility. The risk grows in companies that employ third-party marketing or advertising agencies. New tools just coming on the market designed to help guide organizations, particularly those geographically disparate operations, will help ensure order.

Web Site Analysis

Marketers have always dreamed of an effective way to track the actions of their customers as closely as possible. While the World Wide Web has made it theoretically possible to track every move a customer makes, in reality it is extremely complex to track every click, link, URL and banner ad a customer follows.

Site analysis tools have been available for the past three or four years, but they are finally starting to come of age. Initially they focused on administrative analysis – response times, download times, etc. In 1999, vendors started developing more important capabilities, such as campaign conversion, click-through analysis and referral analysis. Mainstream decision support tools are also starting to include analytical applications that provide “click-stream” analysis, campaign response analysis and dynamic content success rates. All of these tools help companies understand what is actually occurring with every customer interaction over the Internet.

Soon, Web sites that do not employ sophisticated analysis tools simply won’t be able to compete effectively. Site analysis can help ensure your developers focus their time enhancing the most profitable areas of your site. Companies can even leverage site analysis tools to “beta test” marketing campaigns, getting instant feedback to creative content and pricing, allowing ongoing, real-time campaign refinement.

Recommendation Tools

Like Web analysis tools, recommendation tools are not new. They are designed to personalize customer experiences at a company’s Web site by offering products and services that interest the customer based on an analysis of their actions and buying patterns. Employing statistical analysis, artificial intelligence and plain old common sense, recommendation tools make offers, develop dynamic pricing structures, cross sell and up sell – all in the interest of increasing revenue one customer at a time.

Recommendation tools come in a variety of shapes and sizes. They can be based on rules, statistics, key events and scenarios. They can be driven by collaborative filters, neural nets or motivated by campaign management. Recommendation tools are helping companies interface with their customers on a personalized, one-to-one basis. They are designed to cut through the “information overload” Web users currently face, helping customers find what they are looking for faster than ever. The most sophisticated companies are not only linking their recommendation tools to the Web, but also to call centers and point-of-sale systems for further competitive advantage.

Currently there are no standout developers of recommendation tools. In fact, companies have many products to choose from. The key is to not get bogged down in evaluating every option on the market – remember, customers are visiting your Web site even as you read this.

Operational CRM Implementations

As with the back office overhaul made possible by ERP systems starting in the early 1990s, CRM has spurred a front-office makeover that will continue into 2000. Most large companies took steps this year toward implementing sophisticated sales force automation, customer service, call center, telemarketing and field support systems. These systems are designed to collect and analyze customer information through traditional sales and support channels. In combination with the Internet, these applications are a key component of the new concept of the “customer channel.”

The benefit for marketers is an integrated set of customer information that, when analyzed, should help them understand the complete sales cycle, customer call patterns, customer churn trends and other important issues. The key is to leverage all of this information to drive customer retention. The idea is that every customer interaction should be cataloged and analyzed to help generate future interactions, enhancing customer relationships.

It has been quite a year, and 2000 promises to be just as exciting, if not more. Personally, I believe we have only seen the first glimpse at the benefits of these new technologies – to both companies and their customers. The next few years will bring even more dramatic changes as we learn to truly leverage all of our new CRM toys. Happy New Year!

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