Analytical CRM

Analytical customer relationship management focuses on

blending the customer data collected in Operational
CRM with data from external sources in order to
ascertain key customer identities and directions
required for boosting organizational and customer
values.

Applications of Analytical CRM

Financial Forecasting
Programme Evaluation
Price Optimization
Customer Satisfaction Evaluation
Customer Satisfaction Growth
Product Development
Fraud Detection
Risk Management
Contact Optimization
Sales Coverage Optimization

Impact of Analytical CRM

Customer

Relationship Data Management

Customer Identification
Operationalizing Data Quality
Expanding the Size of the Customer Database
Customer Profiling

Customer Lifetime Value

3M Global is concerned about retention of its client base. As a result CRM deptt. is
interested in calculation of Full Customer Lifetime Value to decide future
strategies. CRM Deptt. collected the related information as under:
Total acquisition cost = Rs. 100000
New customers acquired = 200
Average customer revenue in 1st year = Rs. 500 and there is an increase of Rs. 500
per year in average customer revenue for next 4 years.
Company calculated 60% average customer cost.
Customer retention rate is 100% for 1st year, 60% for 2nd year and steady increase
of 10 % for next 3 years.
Discount Rate = 10%.

Data Analysis & Data Mining

Data Analysis
Problem formulation
Preparations
Final Analysis

Data Mining Techniques

Neural Networks
Evolutionary Computation
Association Rules
Decision Trees
Case Based Reasoning

Segmentation & Selection

Segmentation Criteria (Measurable, Substantial, Accessible, Differentiable, Actionable)
Segmentation Technique (Cluster Analysis, Discriminant Analysis)
Profiling a Segment
Developing Marketing Service Concepts for each Segment
Segmenting Research Used in compiling the List
RFM
CHAID (Chi-Squared Automated Interaction Detection)
CART (Classification & Regression Trees)
Response gain Chart & Composing the List

CHAID (Chi-Squared Automated Interaction Detection)

It is a form of analysis that determines how variables best combine to explain the
outcome in a given dependent variable.
The model can be used in cases of market penetration, predicting and
interpreting responses or a multitude of other research problems.
CHAID analysis is especially useful for data expressing categorized values instead
of continuous values.
For this kind of data some common statistical tools such as Regression are not
applicable and CHAID analysis is a perfect tool to discover the relationship between
variables.
One of the outstanding advantages of CHAID analysis is that it can visualize the
relationship between the Dependent Variable and the related factors with a tree
image.

CHAID (Chi-Squared Automated Interaction Detection)

CHAID Analysis can be used to analyze all characteristics within the file of
historical data, for example, product/service purchased, dollar amount spent,
major demographics and demography of the customers, and so on.
A blue print can be produced to provide an understanding of the customer profile:
Strong or weak sales of products/services;
Active or in-active customers;
Factors affecting customers decisions or preferences, and so on.
Such customer profile will give the Sales & Marketing Team a clear picture of
which type of person is most likely to buy the products and services based on
factual purchase history, geo-demographics and lifestyle attributes.

Retention & Cross-Sell Analysis

Retention
Exploratory Analysis
Which Variables should be Included in the Final Model
Model Development

Cross Selling
Cross Selling Over Time
Cross Selling Within the Product Range
Verification of the Data Quality
Economic Significance of Cross - Selling
The Final Analysis
Utilizing the Research Outcomes in Designing Policy

Effects of Marketing Activities

Evaluating the Effect of Marketing Activities on the Customer
Value
The Effectiveness of the Sales Process
The Effectiveness of Targeting
Allocation of resources
Contribution of Marketing Activities to the Lifetime Value
Experiments
Alternative Experimental Settings
The Learning Organization

Reporting Results

Lifetime Value
Alternatives for Lifetime Value
Balanced Scorecard