A SAS White Paper:

The Role of e-Intelligence in Customer Relationship Management (CRM)

Table of Contents
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 First, Whats Customer Relationship Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 The CRM Application Landscape . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 The SAS Solution for Customer Relationship Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 Your E-Channel to Business Intelligence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 The Awarding-winning Technologies Behind the SAS Solution for CRM . . . . . . . . . . . . . . . . . . . . . . 2 The Benefits of Data Warehousing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 The Value of Data Mining and Analytical Processing. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 The Power of Online Analytical Processing. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 The Advantages of Decision Support and Reporting Tools . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 Typical Pains, Typical Gains . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 Summary: Add E-Intelligence to Customer Relationship Management . . . . . . . . . . . . . . . . . . . . . . . 5 A Note About Privacy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

Introduction
Today's business leaders understand the impact of emerging technologies on their company's success. Those businesses who can best leverage these technologies will be well positioned to prosper. Customer Relationship Management (CRM) itself an innovative, technology-based strategy has emerged as a way to develop long-term and profitable relationships with chosen customers. As the Web has become a key customer touch-point, it has grown to be a fundamental component of CRM strategy. Specifically, e-intelligence, the technology which gives you the ability to derive intelligence from and provide intelligence to the Web, can significantly enhance the effectiveness of a CRM solution which seeks to improve customer profitability and loyalty through better communications with the customer at every customer touch-point. This white paper describes how e-intelligence, as applied by SAS Institute, adds a key new dimension to the rich data picture made possible by CRM: fast, dynamic, reliable information about customers and their evolving behavior, based on their real-time web-based interactions with your business.

The CRM Application Landscape Customer relationship management is a broad term

encompassing a variety of strategies and tactics. Unfortunately, it is not uncommon for narrow subsets of CRM technology to be mistaken for a total solution, so it is important to understand how various components fit within the broader CRM application landscape. The META Group views the CRM architectural framework as having three primary components: operational or process management technologies, analytical or performance management technologies, and collaborative or business collaboration management technologies all of which are required to achieve a balanced CRM approach (The Customer Relationship Management Ecosystem, 3/16/99).

Operational CRM

The automation of horizontally integrated

business processes involving front-office customer touch points sales, marketing, and customer service via multiple, interconnected delivery channels. Analytical CRM The analysis of data created on the

First, Whats Customer Relationship Management?

Customer relationship management (CRM) is the process by which your company maximizes what you know about your customers so they remain loyal, and so you can respond to their changing requirements. CRM solutions are designed to: Build long-term and profitable relationships with chosen customers. Get closer to those customers at every point of contact. Maximize your companys share of the customers wallet. CRM combines a progressive approach to gathering customer data with advanced database and decision-support technologies that help transform that data into business knowledge. In brief, you monitor and understand your customer behavior. Then you retool your front- and back-office systems to supply what your customers really want, how they want it. This means that you must gather data from every customer contact point voice, mail, person-to-person, fax, Internet and analyze that data quickly and reliably. Combining this information with data from other sources (such as demographic data) can provide added dimensions to what you know and understand about customer behavior. For many businesses, the Internet contact point is swiftly becoming predominant. This e-channel will be the principal source for much customer information as Web-based business continues its exponential growth. The e-intelligence your business gains from e-channels keeps your business focused strongly on customer needs and lets you respond nimbly and intelligently to shifting markets. 1

operational side of the CRM equation for the purpose of business performance management. Analytical CRM is inextricably tied to a data warehouse architecture and is most often manifested in analytical applications that leverage data marts. Collaborative CRM The application of collaborative

services (e.g., e-mail, conferencing, real time) to facilitate interactions between customers and organizations and between members of the organization around customer information for the purpose of improving communication and coordination, to raise customer switching costs, and to increase customer intimacy and retention.
(Source: META Group)

On the operational side, improving the efficiency of customer interactions through specialized front-of fice applications sales force automation, campaign management, call center management, and field service support has been the major focus of many companies CRM initiatives. More recently, the complete integration of these front-office applications with existing back-office systems (ERP, transactionprocessing, and various other legacy systems) has become a top priority for some companies as they pursue the goal of making customer relationship processes as efficient as possible. Operational CRM and efficient processes are obviously crucial to succeeding in today's marketplace. But the analytical side of the equation is an untapped source of increased profits and competitive advantage for many organizations. By allowing

you to anticipate the characteristics, behavior, and value of customers, the SAS Solution for Customer Relationship Management lets you create an integrated customer view to serve as the basis for better, faster business decisions.

Real-time, enterprise-wide, e-business architectures such as those provided by SAS Institute enable this kind of flexible, quick-response, personalized service. Through predictive modeling, your business can also proactively identify trends and needs, and thereby market to, and service, existing and prospective customers.

The SAS Solution for Customer Management Relationship A Sustainable Competitive Advantage
As corporate competition continues to increase due to external market factors and a market-savvy customer-base, companies must discard their business philosophies of the past and adopt new and innovative ways to maintain customer loyalty and profitability. Building loyalty among customers involves understanding the various ways that they are different and using that knowledge to tailor products, services, and marketing techniques for those customers. Companies must adopt a customer-centric strategy that stresses the concept that longterm profitability lies in fostering unique lifetime relationships with small numbers of carefully chosen customers. To make that strategy work, companies must continuously learn from interactions with each individual customer and be prepared to dynamically respond to information and knowledge gained from those interactions. Interactions your customers have on your Web site must be part of that learning process. Without it, you do not have a holistic view of customer interactions.

Decision makers, marketing managers, corporate communications teams, customer leads groups, and salespeople can collaborate with business partners and customers in the new competitive space of Web-based business and e-intelligence. Because the e-channel is used as a call to action in advertisements, faxes, e-mail, and direct mail campaigns, the information you gather on the web can be used to measure the success or failure of all your marketing campaigns. At the same time, it helps you determine which channels of communication are most appropriate for a given customer base. For example, if you use a different web address for each campaign, you can quickly collect information such as quantity and quality of hits, the paths your customers take through your site, the forms they voluntarily fill out, and their exit points. Each campaigns success can be evaluated in a timely and quantitative manner. Adding e-intelligence to the SAS Institutes CRM solution optimizes your customer knowledge to drive value across your entire organization from customer development to product management at every customer interaction, with every

Your E-Channel to Business Intelligence

Intended to complement, and not replace, other valuable channels of communication among customers and businesses, the e-channel contains specialized kinds of data. When combined with information you collect from traditional channels, this e-intelligence helps you anticipate and satisfy customers needs, as well as provide a personalized interaction that tells each customer: We recognize you as an individual with unique requirements. Businesses from booksellers to used-car dealers, and enterprises from universities to national governments, all recognize that the Internet and ubiquitous connectivity have already transformed commerce and the world. Your businesss e-channel is your link to the business of this new world. When customers access your Web site, and begin to browse or download its contents, they are engaged in an electronic dialog with your company. They are asking for information, but they are also providing information. As you lear n their interests, customs, and habits, you can shape your sites response to their next visit and you might, if appropriate, use that same information in other, non-Web, marketing efforts. 2

audience, across all channels. This comprehensive, valueadded approach derives its business-development power from technologies in which SAS has long been recognized as an industry leader: data warehousing, data mining, analytical processing, and decision support and reporting.

The Award-winning Technologies Behind the SAS Solution for Customer Relationship Management
Effective CRM depends on data data about who customers are, their preferences, their behavior, their purchase history, and their classification based on demographic and psychographic information. Much of the data-intensive work involved in CRM initiatives begins with a repository of customer data created within a single, customer-centric data warehouse. This integrated customer view can then feed a wide variety of data analysis processes.

The technologies most commonly involved in the analytical portion of a CRM initiative are: data warehousing data mining online analytical processing (OLAP) advanced decision support and reporting tools

customer needs and profitability, and construct predictive models of customer behavior to fuel target marketing and campaign management activities. Since its release in July 1998, Enterprise Miner has solidified SAS Institute Inc.'s world leadership in providing state-of-theart data-mining solutions for all major industries. In 1998, French software analysts Yphise rated SAS Enterprise Miner the best data-mining software on the market for the second

The Benefits of Data Warehousing widely recognized as the global leader in data SAS software is
warehousing technology, highlighted by its ability to capture and integrate data from a large number of sources, and to support a broad range of hardware platforms and operating systems. SAS/Warehouse Administrator offers a single point of control for empowering IT to effectively manage complex data warehouse processes. While customer-centric warehouses are necessary for any CRM solution, the integration of e-channel customer data with data form other customer touch-points is vital for truly comprehensive CRM. Understanding your business data establishing data about data, or metadata is essential to any CRM initiative. As an executive and leader, you should be able to see, for example, how the profit variable was calculated, if sales territories were divided differently prior to a certain date, or when your data was last updated. These kinds of metadata help extend the value of your customer information. Using metadata as a business multiplier, data warehousing allows you to access, manage, and organize all relevant customer data from operational systems, legacy systems, valueadded data providers, and market-research sources. Because youre in control of your data, because you understand your data, you understand and can better serve your customers.

consecutive year. In the U.S., SAS Enterprise Miner captured top honors in both the 1998 and 1999 International Conference on Knowledge Discovery and Data Mining. Industry market research firm IDC has identified SAS Institute as the leading vendor of statistical and data mining sof tware, based on worldwide revenues, according to Henry Morris, Vice President of Data Warehousing and Information Access (IDC report #19130.)

A well-constructed data warehouse combined with SAS Institute's data mining technology can help organizations uncover answers to some of their most important questions about their customers: Associations: What do people buy together? If you know which combinations of products and services your customers tend to purchase together (for example, annuities with mutual funds or fine cheese with quality wine), you can create more efficient marketing campaigns, change the Web site advertisement, and increase your ROI. Segmentation and Profiling: What attributes do people share? What do customers who desert you for the competition have in common? Do you know which customer characteristics are most relevant to your profitability? Which type of customer is likely to exit after a short path through your Web site? Once you've identified groups of customers with similar characteristics, you can conduct special sales promotions and targeted mailings that take into account the particular needs of each group. Behavioral: What do people do, how do they react? What do your customers do when their checking account balance increases? When they return to your Web site after a purchase? When they miss three loan repayments? When they move into a new house? With the ability to anticipate likely behaviors given certain circumstances, your organization can confidently determine how best to respond. Exceptions: Who does not fit the norm? Data mining techniques can alert you to sudden drops in service usage, suspicious credit card purchases, and various other divergences from usual customer behavior. The ability to quickly identify such anomalies gives you the chance to take appropriate action before the window of opportunity closes.

The Value of Data Mining and Analytical Processing

Data mining involves software tools that let you sift through large amounts of data to uncover hidden relationships, and to build models that predict customer behavior. Predictive modeling can segment and profile customers, and this information can be integrated into your data warehouse and other marketing applications. SAS Institutes data-mining solutions are acknowledged market-leading technologies that enable analysts to model virtually any customer activity and find previously hidden patterns relevant to current business problems. Most notably, the award-winning Enterprise Miner software enables your business analysts to model virtually any customer activity and find patterns relevant to business evolution and growth especially in the Web-based arena. With Enterprise Miner, you can define a set of comprehensive and consistent customer profiles to better understand 3

The Power of Online Analytical Processing OLAP is a powerful tool that lets you quer y and analyze the
information in your data warehouse. For example, in CRMbased campaign-management systems, OLAP is an excellent means for determining quickly, accurately, and on-line the success or failure of a campaign. OLAP does this by giving you the ability to drill down into the roots of the information, putting information into its context, and allowing you to have more perspective on, and multiple views of, the information. SAS Institute offers a multidimensional database product, the SAS/MDD server, which allows executives and analysts to B work with multidimensional views of your data, and to surface information that leads to better-informed decisions and more effective customer management.

Solution Even when a potential customer remains anonymous, : SAS software can make the visit to your Web site more personalized. Using data-mining techniques, the anonymous visitors click-stream patterns can be compared to those of other customers to predict what the visitor would like to see next. You can then modify the site for this customer (or type of customer) to highlight the products or services most likely to be of interest. Problem: We are not able to predict how our customers

prefer to be communicated with, or how to make sure they are getting the same personalized message wherever they choose to communicate. Solution SAS software lets you consider all channels for : customers, allowing you to determine what type of all

The Advantages of Decision Support and Reporting Tools

In this new millennium, the Web and Internet/intranet technologies are mission-critical components in corporate strategies. The valuable intelligence you gain through e-channels can be deployed through Web-enabled reporting tools and executive information systems. Your enhanced customer knowledge is rapidly distributed to decisionmakers at all levels of your organization. Web technology ensures a fully informed CRM process. Using SAS/IntrNet software, you can create advanced informationdelivery systems like Web-enabled OLAP and query and reporting tools. SAS/EIS software, and our Web-based data warehouse exploitation tool MetaSpace Explorer both offer powerful reporting capabilities that put timely knowledge into your hands. E-intelligence manages and exploits the huge quantities of customer, performance, and business data generated by your Web site and does so transparently, consistently, and reliably. The resulting information is the ideal basis for sound decision-making about customer relationships and campaign planning. Click-stream analysis supplies the knowledge you need to support Web design and campaign decisions, and lets you both monitor their effects and respond quickly.

communication is best suited for any given customer. Specifically, a customer-centric data warehouse that includes information about the different channels can then be mined to determine which campaign strategies fit which customers giving you intelligent campaign management and maximum campaign optimization. Problem: We can not get a handle on what our customers

need or want. Nor do we really understand our market space or that of our competitors. Solution : SAS software tools help you define and optimize product positioning by providing true market intelligence. The gains you can expect include:
A single, customer-centric data warehouse that brings

sof tware, together all relevant information about customers and competitors, including market research data from internal and external sources.
Data mining techniques that uncover hidden truths about

customers, products, and campaign results.

Realtime and near-realtime reports that allow quick

adaptation to evolving markets and trends, as well as customized responses to customer inquiries.

Problem:

My IT department can not easily link my e-commerce

transactions to our customer records in back-end systems.

Typical Pains, Typical Gains

How does CRM work in the real world of business pains? These brief scenarios present problems you might be facing, and the solutions now available. Problem: When customers call or send e-mail, I know who

Solution SAS software lets you link e-business functions to : customer-profile and other databases which lets you track each customers transactions, personalize Web pages based on preferences and history, and automate the process of responding to customers. The Institutes solution features these typical gains:
Warehousing strategies that link back-office information

they are and I can look at their customer record. But when customers visit my Web site, they are anonymous. What can I find out about them that will help personalize their experience on my site while making me more profitable? 4 with front-office and historical information through metadata management.

 Integration of e-business collaboration with decision-support

functions to surface customer preferences and behavior.

Integration of SAS software with back-office ERP and legacy

A Note About Privacy

The rapid expansion of the Internet and Web-based business has made consumers more conscious of the ability to collect and store information. SAS Institute is in the process of formulating a privacy policy that is compatible with our role as a responsible multinational corporation, and will soon place that policy on our Web page. As a rule, SAS software mines the enormous amounts of data that companies have collected, most of it non-personal data, and we are guided by these

systems for intelligent exploitation of business information. Customers essentially teach your enterprise how best to serve their unique needs. And you can respond with tailored offers, building appreciation and loyalty.

Summary: Add E-Intelligence to CRM

Electronic commerce is transforming how companies sell products and services, while CRM is transforming how companies perceive and interact with clients. The Internet is transforming businesses, governments, and individual lives around the world, and many companies are struggling to integrate both new technologies and new marketing paradigms with their more established channels. Incorporating e-business strategies into corporate CRM objectives allows savvy organizations to offer their customers a unique, personalized experience across all enterprise channels. With the addition of e-intelligence, companies can now benefit from customer data off the Web, and enhance it with other enterprise customer data to analyze, discover, and anticipate the individual needs of customers and prospects. E-intelligence, as supplied by SAS Institute, supports your companys overall CRM goals your business has an accurate, consistent view of your customers, and your customers have an accurate, consistent view of your business, across all your available channels.

privacy-related principles: Data mining is beneficial for both businesses and consumers. Abusing personal data is simply bad business, as customers will reject companies, which do not respect their privacy.

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