IT and CRM
A basic CRM model
Data source &
gathering system
Database system
Data warehouse
Information delivery system
Information users
Markets have always recognized the
importance of gathering detailed data for the purpose of producing information that enable them to develop marketing strategies.
Both hardware and software technology enable the retention of massive files of in- depth data for long periods of time in a data warehouse.
IT and CRM
A Basic CRM Model
Data sources and gathering
system
Database system
Date warehouse
system
Information deliver system
Information users
Data sources provide data that describes relationships with customers.
Data gathering system converts this incoming data to a database.
The data warehouse system prepares the data for storage, stores the data, describes the data so that it might later be retrieved, and performs a management and control function.
An information delivery system makes the contents of the data
A Basic CRM Model
Data sources and gathering
system
Database system
Date warehouse
system
Information deliver system
Information users
1. Data sources and gathering system
Data consists of facts and figures that are difficult to uses because of their volume.
Information consists of meaningful compilations and summaries of data that tell the user something he or she needs to know.
1. Data sources and gathering system
1. Data sources and gathering system
Company collect data from contact points which provides the opportunity to learn more about the customer’s behavior, background, and needs.
Contact points, or touch point is any transaction or
customer interaction with the organization. A purchase transaction, telephone call, sending email, are all
contact points.
1. Data sources and gathering system
For example, a warranty card can ask for demographic information.
Point of sale input (POS) or electronic data interchange (EDI) can scan product data from the bar codes and
customer data from credit cards.
Internet input, a web-based system allow customer to
1. Data sources and gathering system
Research confirms that 70%
of consumer decisions are made at Point of Sale, so it’s critical to keep your product and brand in full view of the consumer.
A Basic CRM Model
Data sources and gathering
system
Database system
Date warehouse
system
Information deliver system
Information users
2. Database system
Database is an accumulation of computer-based data that is arranged in a format to facilitate
retrieval.
It is a corporate resource, and a firm can have more that one.
2. Database system
For example,
the marketing department or financial department
can have its own customer and salesperson
databases.
2. Database system
Database structure : Relational structure
The beauty if this structure is that it makes use of data elements already in the data tables to
integrate the contents of multiple tables.
It is the current standard for the storage of business data, but they were not specifically
designed to handle data views that involve large number of dimensions.
2. Database system
Database structure : Relational structure
2. Database system
Database structure: Multidimensional structure
To overcome the relational structure limitation, software vendors have developed database
management systems for multidimensional databases.
2. Database system
Database structure: Multidimensional structure
The term hypercube has been coined to describe data arrayed by three or more dimensions.
The 3D analysis of customer, product and time. The star identifies the location in the cube where a quantitative
measure (such as sales amount)
A Basic CRM Model
Data sources and gathering
system
Database system
Date warehouse
system
Information deliver system
Information users
3. Data warehouse system
A data warehouse is a large reservoir of detailed and summary data that describes the firm and its
activities, organized by the various business units in way to facilitate easy retrieval of information that describes the firm’s activities.
The data warehouse is the central element in the CRM system.
A Basic CRM Model
Data sources and gathering
system
Database system
Date warehouse
system
Information deliver system
Information users
4. Information delivery system
Generally, data mining is the process of analyzing data from different perspectives and summarizing it into useful information.
A natural source resides in the ground, if the resource is to be used, it must be
4. Information delivery system
Data mining 4 main functions - Classification
- Clusters
- Associations
- Sequences or patterns
4. Information delivery system
Data mining functions
1. Classification : determining classifications for the data
Business often classify their customers based on the customers’ behavior so that special products and services can be offered to the more valuable classes- the best customers.
4. Information delivery system
Data mining functions
1. Classification : determining classifications for the data
We can use RFM = Recency, Frequency, Monetary
RFM enables customers to be arrayed in terms of recent purchases, frequency purchases, and
average purchase amount.
The data warehouse is queried to obtain the data on each customer, and then a quantitative analysis is conducted to arrive at the classifications.
4. Information delivery system
Data mining functions
1. Classification : determining classifications for the data
The goal of classification is to accurately predict the target class for each case in the data.
For example, a classification model could be used to identify loan applicants as low, medium, or high
4. Information delivery system
Customers
Watching move time/month Gary = 10 days
Peter = 7 days Kel = 2 days Mimi = 5 days Ano = 4 days Criteria
Watching move time/month Heavy users = 10-12 days Medium users = 6-9 days Light users = 1-5 days
Heavy Medium Light 1
3 3
4. Information delivery system
4. Information delivery system
Data mining functions
2. Clusters: Data items are grouped.
Marketers like to be able to identify clusters of customer with similar characteristics.
For example-demographics, geographic, activity, psychographic, and behavioral.
4. Information delivery system
People love People always go watch movie People love
fishing
4. Information delivery system
Data mining functions
3. Associations: Data is mined to anticipate behavior patterns and trends.
Company wants to know whether such association exist, and their strength, so that they can make
decision based on the related products.
For example, when deciding on store layout, a food retailer can locate items in the same area if the
items are frequently bought together.
Beer and diaper case.
4. Information delivery system
Data mining functions
4. Sequences or patterns : Data is mined to anticipate behavior patterns and trends.
Companies are also interested in any patterns or sequences in a customer’s purchase behavior.
Perhaps certain behaviors occur in a certain sequence.
4. Information delivery system
Look at the time customer made a purchase
Buying order
(sequence)
What is the most
frequent pattern?
4. Information delivery system
Data mining functions
4. Sequences or patterns : Data is mined to anticipate behavior patterns and trends.
Not only discovers a sequential pattern but it also identifies other behaviors with similar pattern.
A customer cluster may make purchases in a certain sequence and similar time sequence
4. Information delivery system
Data analysis
In order for the CRM system to discover patterns in the warehouse data largely independent of user
direction, the system must exhibit some type of intelligence.
Several methodologies have been employed.
Among the more popular are decision trees,
genetic algorithms, memory based reasoning, and neural network.
4. Information delivery system
Information delivery software (to do an analysis we need a software)
OLAP is geared to the needs of the data warehouse user, enabling the interactive user to perform
multidimensional analyses and obtain quick responses.
OLAP also supports drill down, roll up, drill across, and drill through.
4. Information delivery system
OLAP also supports drill down, roll up, drill across.
Summary info.
(Net sales for Phuket sales region) Hierarchy 1
(Customer) Hierarchy 2
(Salesperson) Hierarchy 3 (Product) Detailed info.
(Net sales for Customer No.21198) Detailed data.
(Sales items for Customer No.21198) Roll up
Drill across Drill down
A Basic CRM Model
Data sources and gathering
system
Database system
Date warehouse
system
Information deliver system
Information users
5. Information users
The information will be used by problem solvers and decision makers throughout the firm. Within each businesses areas, user can be
- novices - analysts
- power users
5. Information users
Novice is someone with no special computer training, who typically wishes to obtain information without the need for a great deal of analysis. (Executives)
Analyst is someone who is skilled in the use of
analysis and statistical tools and transform data into a form that is usable by someone else. (Manager’s staff)
5. Information users
Power user is someone who can sophisticatedly perform the work of analyst plus perform more advanced operations. Information professional.
(Marketing researcher, industrial engineers)