1.Integrating data mining in CRM business processes. 2. How to Choose CRM Software. Integrating data mining in business processes. Campaign management

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1 1.Integrating data mining in CRM business processes 2. How to Choose CRM Software Integrating data mining in business processes Data mining models have to be evaluated and integrated in business processes campaign management (many different processes) Win-back programs loan management Call centre etc.. Campaign management Example Test mailing to a random sample of customers Use responses to develop a predictive model (eg using for neural nets or decision trees) Use the model to predict responses to the new promotion

2 Campaign Management The output of a predictive model is often called a score usually a number between 0 and 1 It represents, for example, the probability of responding to a particular promotional offer Marketing dept. identifies a segment of interest The records of customers from the segment are selected from the data warehouse to a separate table The customers are then scored using the predictive model campaign management The customer records are then sorted by their score value The top 25% are selected to receive the offer The offer is then mailed out (by a mail house) to the selected customers Integrating data mining into campaign management software Campaign management software Enables companies to deliver to customer and prospects timely, and coordinated offers Automates and integrates planning, execution, assessment and refinement of marketing campaigns After mining the data, marketers must feed the results into campaign management software

3 Integrating data mining into campaign management software This process is often manual(creating a disc file) Typically, marketing dept. requests from the data mining group a file containing the scores required for a marketing campaign The scores are then input to the marketing data base time consuming, may be too slow for campaigns which run frequently Prone to errors Integrating data mining into campaign management software Many campaign management software is now closely integrated with data mining and with various OLAP tools (VALEX, Siebel) Technologies dragging and dropping the data from one application to the other Integrating data mining into business processes, problems Distributed business processes Typical process flow: Marketing Dept.(MD) wants to launch new marketing program MD makes a request to its analytics section The analytics section investigates the problem, identifies business requirements and requests a data extract from the IT division (may take days) The analytics dept then develops a model (may takes several days or weeks) and presents it to the MD If MD likes the model it will be used for the program

4 Integrating data mining into business processes, problems Problems: the process is too slow for fast changing markets prone to errors: data is transferred between departments different software and hardware platforms are used Embedded Data Mining Solution: embedded data mining Data mining needs to be embedded into the data warehouse The predictive model should be placed back into the data warehouse References Berry, M. and Linoff, G. (2000) Data Mining Techniques for Marketing, Sales, and Customer Support, John Wiley & Sons Berson A.., Smith S., Thearling K (2000), Building Data Mining Applications for CRM,McGrow-Hill BreurT., Integration of Analytical CRM in Business Processes: An application, ING Bank (Netherlands), from

5 How to Choose CRM Software by Jill Dyche, Feb 18, 2002 (COMPUTERWORLD) Don't let vendor hype or the CFO's golf buddy drive your CRM decision You need a plan based on business requirements There are many ways to make a bad technology decision for a customer relationship management (CRM) system "How did you go about choosing your CRM product? "The salesman gave it away for free for the first year." "The VP of product planning plays golf with the software company's CFO." "Because the competition is doing it." "Our end users liked the user interface... and they're footing the bill." "The vendor asked us to be on their advisory committee -- we're helping them plan how to integrate campaign response modeling into their product." "They pretty much convinced us they were 'best of breed.'" "They told us the whole thing could be done in three months." "We already had their database product, so we thought, 'What the heck?'" How to Choose CRM Software, Cont. base technology decisions on the business requirements identify the business need, or problem and then the functionality required to solve that problem. Jill Dyche, Feb 18, 2002 (COMPUTERWORLD

6 Defining functionality What aspect of our customer-focused processes do we need to support with technology? example : A major bank found that many of its customers did business with other financial institutions and were already using the product being marketed customer service representatives needed to offer alternative products when speaking with customers The bank decided to use CRM to generate a list of five different product recommendations for each customer, based on that customer's likelihood to buy them Jill Dyche, Feb 18, 2002 (COMPUTERWORLD) Example functional requirements Analyze purchase history among all customers to understand the most frequently purchased products by similar customers Rate the likelihood that a customer will buy a particular product Communicate the resulting customer list and product scores to the call center application system Collect response rates Refine scores based on campaign results How to Choose CRM Software, Cont. give each function a numerical score that rates its importance to the business goal is there a CRM tool that can perform each of these core functions? it may be that many products provide the functionality is the function available out of the box or only through customization? can you do without a particular function? are you prepared to change your process to match the tool's workflow? what about the product's overall usability?

7 How to Choose CRM Software, Cont. By scoring specific functions, you can compare a product's strengths and weaknesses against your most critical business requirements After narrowing down the product choices to a short list of vendors, it's time for IT managers to address the technical issues, from database compatibility to response times If the choice comes down to two vendors, the one that most closely aligns with your existing technology infrastructure should be the winner Question to ask your CRM Vendor What CRM functions does your suite provide? Is your product Web-based? Has your product dealt with customer data volumes similar to ours? Has your product dealt with transaction volumes similar to ours? Does your software work with our relational database (or data warehouse) product? How do you migrate data from your product into other software packages, and vice versa? (To understand interfaces with ERP and accounting packages) Question to ask your CRM Vendor Can end users extract data so they can use it locally? Can you provide a published data model? Is there a development toolbox with templates? What is your product s average implementation time? Does your company provide implementation help, or do you rely on partners to perform the work? How many other installations of your product are there in our industry? Source: The CRM Handbook (Addison-Wesley, 2001)

8 CRM product test drive Your vendor should offer an evaluation copy Verify that the promised functionality actually exists Ensure that the product works in their specific technical environment Gauge the product's usability Verify that the product works with the user's data Source: The CRM Handbook (Addison-Wesley, 2001) References Jill Dyche, Feb 18, 2002 (COMPUTERWORLD Jill Dyche, The CRM Handbook (Addison- Wesley, 2001), Boston.