What Are Analytics? - Customer Relationship Management

Analytics, in the realm of CRM at least, are the collection, extraction, modification, measurement, identification, and reporting of information designed to be useful to the party using the analytics. On the technical side, to chuck terms at you, this includes multidimensional online analytical processing (OLAP) techniques as well as calculations, logic, formulas, and analytic routines/algorithms against data extracted from operational (OLTP) systems (the “T” stands for “transactional, ”where the data is too granular to be useful for analysis). This means the slice and dice engine that is used to determine why you should be given a 10 percent discount on your next purchase of an Amtrak Acela ticket to New York from Washington, D.C., where you live. When you drill down from the offer you received for this, the analysis shows that you live in D.C., make 7 to 10 trips per year via train or plane to New York, are between 45 and 54 years old, have an income level over $150, 000, and are a professional with a college education. That puts you in a segment likely to take Amtrak with some carefully offered incentive to do so. Especially the high-tech east coast corridor train Acela, which gets you where you want to go in two and a half hours.

What magnifies the value of analytics is the real-time nature of many of the products, such as those offered by our Superstah! Winner this chapter, SAS, or the products that are offered by companies specializing in price, revenue, or offer optimization. Each of them is available to capture the moment almost literally. If you go online to buy something, you might get an offer for something else related that pops up on the screen while you are still in the web session. That is because of an optimization engine that is working to compare your customer history with your current online activity and then “thinking through” what would be the best possible up-sell or cross-sell opportunity on the spot. These real-time analytic engines are maturing now and can make a valuable difference in transforming customer behaviors or improving customer experiences.

But the social customer makes things more complex—as if you needed that headache. Now it is no longer good enough to have just transactional data for insight or to have an optimization engine making an offer they can’t refuse. It’s now necessary to be able to dissect conversations that might have nothing to do with their transactions with you. That could mean text and sentiment analysis. It’s also no longer good enough to just analyze data that is stored in your internal databases. Web analytics become mission-critical since 74 percent of the U.S. population and comparable amounts in many places throughout the world have a social web presence. Old web measures like page views are no longer seen as the benchmark for that presence, creating such a dilemma that Nielsen Buzzmetrics changed their web benchmark from page views to time spent on the web page by unique visitors. Frankly, that’s incredibly silly—especially with tabbed browsing being the norm for web visitors. Do me a favor. Open up copies of Google Chrome, Firefox, and IE8 and open up my blogs on ZDNet and PGreenblog on separate tabs in each. Then go on a two-week vacation.

See what I mean? Time spent on open web pages doesn’t mean you’re reading the web pages. Buzzmetrics hasn’t exactly nailed it yet. But no one has a total handle on this, though there are some fair stabs out there.

But how to measure customer activity on the Web is not a trivial issue. So I’ve recruited Jim Sterne, president of the Web Analytics association, to show you what the fairest of stabs actually is, later in the chapter.

Using analytics to assess customer value is an important part of your CRM portfolio, but there are hundreds of analytics products out there and picking one is like walking through a (data) minefield. The wrong one can destroy you, and the right one can support your efforts to actually know your customer. At the risk of sounding like a broken MP3 file, note I said support the effort. It doesn’t substitute for the effort.

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