Mining, Data Bases and Considerations While Choosing CRM Technology CRM by Shainesh and Sheth Chapter 7
Lesson 08 - Sales Force Automation,Data
Management for Data Mining and Data Warehousing, 1/96 CRM Technology Choice Sales Force Automation (SFA)
Lesson 08 - Sales Force Automation,Data
Management for Data Mining and Data Warehousing, 2/76 CRM Technology Choice Sales Force Automation • CRM’s metamorphosis from a focused application to an enterprise-wide business initiative has everything to do with its beginning in sales force automation (SFA). • SFA products were originally meant to improve sales force productivity and encourage salespeople to document and communicate their field activity. However, SFA products are increasingly becoming focussed on customer relationship and improving customer satisfaction. Lesson 08 - Sales Force Automation,Data Management for Data Mining and Data Warehousing, 3/76 CRM Technology Choice Evolution of Sales Force Automation – (1/3) • The more business the field sales force closed, the more information they had to record and track about their customers. This made software vendors understand that salespeople needed help. That is how SFA started. • In non-SFA organisations salespeople kept on recording their information on their own notebooks. And, if they left the organisation, they took away all the information too with them forcing the company to start anew. Lesson 08 - Sales Force Automation,Data Management for Data Mining and Data Warehousing, 4/76 CRM Technology Choice Evolution of Sales Force Automation – (2/3) • Meanwhile salespeople needed better tools to help them manage their accounts, track opportunities, establish and monitor sales pipeline and organise their contact lists. • Moreover, the headquarters had all the account information that had to be passed on to the sales force, making them more accountable and more productive. SFA provided the necessary data to the salesmen when they needed.
Lesson 08 - Sales Force Automation,Data
Management for Data Mining and Data Warehousing, 5/76 CRM Technology Choice Evolution of Sales Force Automation – (3/3) • SFA also helped managers in both front- end and back-end offices, who lacked timely sales forecast and failed to keep up with demand. Organisations needed up-to- date sales data and sales forecast that could be communicated throughout the organisation easily and automatically. Management considered potential of SFA as a competitive tool. Lesson 08 - Sales Force Automation,Data Management for Data Mining and Data Warehousing, 6/76 CRM Technology Choice Today’s SFA – (1/6) • SFA vendors try to automate the answers of some of the questions that salespeople always ask. Thus, SFA run the full gamut from rudimentary calendar support and scheduling to real-time alerts about customer events. Irrespective of the vendor or product, most SFA tools fall into one or more of the following categories:
Lesson 08 - Sales Force Automation,Data
Management for Data Mining and Data Warehousing, 7/76 CRM Technology Choice Today’s SFA – (2/6) – (1/6) Process/Activity Management. – (2/6) Sales and territory management including account management. – (3/6) Contact management (data about company’s clients) – (4/6) Lead management (also known as ‘opportunity management’ or ‘pipeline management’) #
Lesson 08 - Sales Force Automation,Data
Management for Data Mining and Data Warehousing, 8/76 CRM Technology Choice Today’s SFA – (3/6) – (5/6) Configuration support (that is the product configuration most suitable for a customer and decide price automatically) – (6/6) Knowledge management #
Lesson 08 - Sales Force Automation,Data
Management for Data Mining and Data Warehousing, 9/76 CRM Technology Choice Today’s SFA – (4/6) – (6/6) Knowledge management (1/2): Selling requires more than just customer data. Information available in the company are helpful and salesmen should be able to access information like: • Corporate policy handbook, • Sales presentation slides / PPTs / video presentations • Company phone list #
Lesson 08 - Sales Force Automation,Data
Management for Data Mining and Data Warehousing, 10/76 CRM Technology Choice Today’s SFA – (5/6) • Proposal and contract templates • Expense statement / tour report formats • Historical sales and revenue report • Partner and supplier profile • Transcripts of sales meetings. • Industry and competitor data • New product releases • Trade show and event schedules. #
Lesson 08 - Sales Force Automation,Data
Management for Data Mining and Data Warehousing, 11/76 CRM Technology Choice Today’s SFA – (6/6) • How effectively salespeople can use these disparate information depends on how easily they can access it. • Systems that can locate and store such information and provide users with a means of communicating and adding to its contents from a single application are known as knowledge management (KM) systems. Lesson 08 - Sales Force Automation,Data Management for Data Mining and Data Warehousing, 12/76 CRM Technology Choice Data Warehousing
Lesson 08 - Sales Force Automation,Data
Management for Data Mining and Data Warehousing, 13/76 CRM Technology Choice Data Warehousing – (1/9) • Data warehouse is an important component of Analytical CRM effort. Data- warehouse is the infrastructure in which Analytical CRM resides and on which it runs. • Data warehouse is not same as database, although data warehouse is not physically different from traditional databases, but they are maintained primarily for the purpose of decision support. # Lesson 08 - Sales Force Automation,Data Management for Data Mining and Data Warehousing, 14/76 CRM Technology Choice Data Warehousing – (2/9) • Data warehousing is a collection of decision support technologies, aimed at helping the decision-maker make better and faster decisions. • A data warehouse is a subject-oriented, integrated, time-varying, non-volatile collection of data that are primarily used in organisational decision-making. #
Lesson 08 - Sales Force Automation,Data
Management for Data Mining and Data Warehousing, 15/76 CRM Technology Choice Data Warehousing – (3/9) • Data warehouses are maintained separately from the organisation’s operational databases. • Operational databases are optimised for day-to-day transactions that are repetitive and structured, for example, an ATM operation. Redundancy is minimised to increase speed of operation by keeping only relevant data available. # Lesson 08 - Sales Force Automation,Data Management for Data Mining and Data Warehousing, 16/76 CRM Technology Choice Data Warehousing – (4/9) • Data warehouse on the other hand, contains historical data collected and collated from all parts of the organisation and over long period of time. Redundancy is acceptable as data warehouses are optimised for decision-support and not for transaction speed. The data warehouse may be as large as hundreds of gigabytes and often in terabytes in size. • Query throughput time and response throughput time are more important in analytical CRM than transaction throughput time. # Lesson 08 - Sales Force Automation,Data Management for Data Mining and Data Warehousing, 17/76 CRM Technology Choice Data Warehousing – (5/9) • Decision support requires data from: – (1/3) heterogeneous (sales, marketing, accounting etc.) sources, – (2/3) external sources, – (3/3) different sources of varying quality or using inconsistent representation, codes and formats. • Hence, data warehouses are constructed separately from standard company databases. # Lesson 08 - Sales Force Automation,Data Management for Data Mining and Data Warehousing, 18/76 CRM Technology Choice Data Warehousing – (6/9) • This approach for analysis of data warehouses called Online Analytical Processing (OLAP) was named for a set of principles and was proposed by Codd (1993). OLAP tools focus on providing multidimensional data analysis, which is superior to SQL (Structured Query Language) in computing summaries and breakdowns along many dimensions. OLAP tools are targeted towards simplifying and supporting interactive data analysis. # Lesson 08 - Sales Force Automation,Data Management for Data Mining and Data Warehousing, 19/76 CRM Technology Choice Data Warehousing – (7/9)
Lesson 08 - Sales Force Automation,Data
Management for Data Mining and Data Warehousing, 20/76 CRM Technology Choice Data Warehousing – (8/9) • Process of using data warehouse: – (1/5) Data warehouse includes tools for extracting data from multiple operational databases and external sources. – (2/5) These data are then cleaned and made consistent by transformation tools as well as integrate data from various sources. – (3/5) There are tools for loading the data into the warehouse, periodically refresh them and also removing some unnecessary data. # Lesson 08 - Sales Force Automation,Data Management for Data Mining and Data Warehousing, 21/76 CRM Technology Choice Data Warehousing – (9/9) • Process of using data warehouse: – (4/5) Data in the warehouse are stored and managed by one or more servers, which offer multi-dimensional data to various front-end tools (for example, visualising data in desired form). These front-end tools can be for query, reporting, operational CRM, data mining and so on. – (5/5) Finally, of course, there are tools for monitoring and administering the warehouse.
Lesson 08 - Sales Force Automation,Data
Management for Data Mining and Data Warehousing, 22/76 CRM Technology Choice Advantages of Data Warehouse for CRM Application – (1/6) • Better information integration for decision- maker: – (1/3) Customer-centric firms use many channels for effective dialogue with customers. As the number of channels increases data integration becomes increasingly difficult. A data warehouse provides much better information integration to the decision-maker than normal database. # Lesson 08 - Sales Force Automation,Data Management for Data Mining and Data Warehousing, 23/76 CRM Technology Choice Advantages of Data Warehouse for CRM Application – (2/6) – (2/3) In web based transactions with customers, it is often found that customers drop off halfway through and finally do not buy. Capturing the information of how customers access websites and what do they do when they get there is an important information for mounting effective CRM. This can be done by integrating the data warehouse with the web servers as it will collect huge click-stream data as the customer accesses the company website. # Lesson 08 - Sales Force Automation,Data Management for Data Mining and Data Warehousing, 24/76 CRM Technology Choice Advantages of Data Warehouse for CRM Application – (3/6) – (3/3) For successful CRM application, it is important to capture customer’s buying behaviour and steps, even in cases where a customer finally aborts the purchasing process. Data captured in data warehouse can assist marketers to tailor their offers for individual customer to suit customer’s personal preferences looking into the customer’s past history. #
Lesson 08 - Sales Force Automation,Data
Management for Data Mining and Data Warehousing, 25/76 CRM Technology Choice Advantages of Data Warehouse for CRM Application – (4/6) • Campaign benefit (1/2): – (1/3) Data warehouses provide support in campaigns. Campaign management is the process of planning, executing and assessing outbound campaigns. As a company undertakes many campaigns, it collects considerable volume of data about prospective customers, targeted segment and people, and how they responded to various forms of communication used and so on. # Lesson 08 - Sales Force Automation,Data Management for Data Mining and Data Warehousing, 26/76 CRM Technology Choice Advantages of Data Warehouse for CRM Application – (5/6) • Campaign benefit (2/2): – (2/3) Historical data in conjunction with campaign management tool makes it possible for the company to determine ideal size of campaign market, identify prospective customers, and evaluate the success of campaigns vis-à-vis the inputs. – (3/3) It permits a company to plan better for future campaigns. #
Lesson 08 - Sales Force Automation,Data
Management for Data Mining and Data Warehousing, 27/76 CRM Technology Choice Advantages of Data Warehouse for CRM Application – (6/6) • Summarising, it can be said: – Data warehouse is an important constituent of a balanced CRM ecosystem. It aids in critical decision-support by consolidating and integrating crucial customer information along with other information, (such as, demographics, competitor information, market condition and so on) from various sections of the company. #
Lesson 08 - Sales Force Automation,Data
Management for Data Mining and Data Warehousing, 28/76 CRM Technology Choice Data Mining and CRM
Lesson 08 - Sales Force Automation,Data
Management for Data Mining and Data Warehousing, 29/76 CRM Technology Choice Data Mining and CRM – (1/15) • Aided by technology, companies daily generate huge data measuring gigabytes, which do not lend themselves to traditional analysis like those used in say, statistics. This has given birth to a special field of data hunting and analysis technology called Knowledge Discovery in Databases (KDD). Data Mining (DM) is a step in KDD.# Lesson 08 - Sales Force Automation,Data Management for Data Mining and Data Warehousing, 30/76 CRM Technology Choice Data Mining and CRM – (2/15) KDD Sequence
Lesson 08 - Sales Force Automation,Data
Management for Data Mining and Data Warehousing, 31/76 CRM Technology Choice Data Mining and CRM – (3/15) • Definition of KDD and DM (1/3): – (1/4) Knowledge Discovery in Databases (KDD) is a non-trivial process of identifying valid, novel, potentially useful and ultimately understandable patterns in data. By non- trivial, it is meant that some search or inference is involved; that is, it is not a straightforward computation of predefined quantities like computing the average value of a set of numbers.# Lesson 08 - Sales Force Automation,Data Management for Data Mining and Data Warehousing, 32/76 CRM Technology Choice Data Mining and CRM – (4/15) – (2/4) Knowledge Discovery in Databases (KDD) is a set of tools and techniques that operate on and extract implicit patterns from data. #
Lesson 08 - Sales Force Automation,Data
Management for Data Mining and Data Warehousing, 33/76 CRM Technology Choice Data Mining and CRM – (5/15) – (3/4) KDD is the overall process of discovering knowledge from data and Data Mining is a particular step in it. Data mining is a step in the KDD process that consists of applying data analysis and discovery algorithms that produce a particular enumeration of patterns (or models) over the data.#
Lesson 08 - Sales Force Automation,Data
Management for Data Mining and Data Warehousing, 34/76 CRM Technology Choice Data Mining and CRM – (6/15) – (4/4) Data mining is the principle of sorting through large amounts of data and picking out relevant information. The term data mining is based on the idea that very large databases are mountains “of information that can be mined” for “nuggets” of great value if right technology can be used. #
Lesson 08 - Sales Force Automation,Data
Management for Data Mining and Data Warehousing, 35/76 CRM Technology Choice Data Mining and CRM – (7/15) • The term data mining is often used to apply to the two separate processes of knowledge discovery and prediction. Knowledge discovery provides explicit information that has a readable form and can be understood by a user. Forecasting, or predictive modelling provides predictions of future events and may be transparent and readable in some approaches (e.g. rule based systems) and opaque in others such as neural networks. # Lesson 08 - Sales Force Automation,Data Management for Data Mining and Data Warehousing, 36/76 CRM Technology Choice Data Mining and CRM – (8/15) • What will it (DM) do? – Automated predictions of trends and behaviours. – Automated discovery of previously unknown patterns. • Data mining can tell things that you didn’t even know that you were looking for. *** #
Lesson 08 - Sales Force Automation,Data
Management for Data Mining and Data Warehousing, 37/76 CRM Technology Choice Data Mining and CRM – (9/15) • What will it (DM) not do? – No pattern search without clear instruction. – You still have to know your business and its data. – It cannot find why a correlation exists; it can only fish out a correlation. – It is an assisting analytical tool only. – Patterns found must be verified in real life. – Results will vary depending upon input and software.# Lesson 08 - Sales Force Automation,Data Management for Data Mining and Data Warehousing, 38/76 CRM Technology Choice Data Mining and CRM – (10/15) • How does it work? – DM uses models to discover unknown patterns. • DM and Business intelligence (BI): – BI is the superordinate concept. – DM is a central aspect of BI. – Technologies and tools used in BI are: OLAP, MIS, DSS (Decision Support System), EIS (Executive Information System), KDD. # Lesson 08 - Sales Force Automation,Data Management for Data Mining and Data Warehousing, 39/76 CRM Technology Choice Data Mining and CRM – (11/15) • Common goals of data mining in CRM applications are to predict which people are most likely to: – a) Be Acquired – b) Be Cross-Sold or Up-Sold – c) Leave / Churn – d) Be Retained, Saved, or Won back #
Lesson 08 - Sales Force Automation,Data
Management for Data Mining and Data Warehousing, 40/76 CRM Technology Choice Data Mining and CRM – (12/15) • These applications can contribute significantly to the bottom line: – (1/3) Rather than contacting all prospects or customers through a call centre or sending mails, only prospects that are predicted to have a high likelihood of responding to an offer are contacted. #
Lesson 08 - Sales Force Automation,Data
Management for Data Mining and Data Warehousing, 41/76 CRM Technology Choice Data Mining and CRM – (13/15) – (2/3) More sophisticated methods may be used to optimise across campaigns so that we can predict which channel and which offer an individual is most likely to respond to - across all potential offers. – (3/3) Finally, in cases where many people will take an action without an offer, uplift modelling can be used to determine which people will have the greatest chance in responding if given an offer. # Lesson 08 - Sales Force Automation,Data Management for Data Mining and Data Warehousing, 42/76 CRM Technology Choice Data Mining and CRM – (14/15) • Another example of data mining, often called the Market Basket Analysis, relates to its use in retail sales. If a clothing store records the purchases of customers, a data mining system could identify those customers who favour silk shirts over cotton ones. (... Continued) #
Lesson 08 - Sales Force Automation,Data
Management for Data Mining and Data Warehousing, 43/76 CRM Technology Choice Data Mining and CRM – (15/15) • (.. Continued from last slide) Although some explanations of relationships may be difficult, taking advantage of it is easier. The example deals with association rules within transaction-based data. Not all data are transaction based and logical or inexact rules may also be present within a database. #
Lesson 08 - Sales Force Automation,Data
Management for Data Mining and Data Warehousing, 44/76 CRM Technology Choice OLAP, ROLAP and MOLAP
Lesson 08 - Sales Force Automation,Data
Management for Data Mining and Data Warehousing, 45/76 CRM Technology Choice OLAP – (1/5) • OLAP is part of the broader category of business intelligence, which also encompasses relational database, report writing and data mining. OLAP tools enable users to analyse multidimensional data interactively from multiple perspectives.
Lesson 08 - Sales Force Automation,Data
Management for Data Mining and Data Warehousing, 46/20 CRM Technology Choice OLAP – (2/5) • At the core of any OLAP system is an OLAP cube (also called a 'multidimensional cube' or a hypercube). It consists of numeric facts called measures that are categorised by dimensions. • The measures are placed at the intersections of the hypercube.
Lesson 08 - Sales Force Automation,Data
Management for Data Mining and Data Warehousing, 47/20 CRM Technology Choice Example of OLAP Cube
Lesson 08 - Sales Force Automation,Data
Management for Data Mining and Data Warehousing, 48/76 CRM Technology Choice Querying an OLAP Cube
Lesson 08 - Sales Force Automation,Data
Management for Data Mining and Data Warehousing, 49/76 CRM Technology Choice OLAP – (3/5) • The usual interface to manipulate an OLAP cube is a matrix interface, like Pivot tables in a spreadsheet program, which performs projection operations along the dimensions, such as aggregation or averaging. #
Lesson 08 - Sales Force Automation,Data
Management for Data Mining and Data Warehousing, 50/20 CRM Technology Choice OLAP – (4/5) • The cube metadata is typically created from a star schema or snowflake schema or fact constellation of tables in a relational database. Measures are derived from the records in the fact table and dimensions are derived from the dimension tables. #
Lesson 08 - Sales Force Automation,Data
Management for Data Mining and Data Warehousing, 51/20 CRM Technology Choice OLAP – (5/5) • Each measure can be thought of as having a set of labels, or meta-data associated with it. A dimension is what describes these labels; it provides information about the measure. • A simple example would be a cube that contains a store's sales as a measure, and Date/Time as a dimension. Each Sale has a Date/Time label that describes more about that sale.
Lesson 08 - Sales Force Automation,Data
Management for Data Mining and Data Warehousing, 52/20 CRM Technology Choice MOLAP – (1/2) • MOLAP (multi-dimensional online analytical processing) is the classic form of OLAP and is sometimes referred to as just OLAP. MOLAP stores this data in an optimized multi-dimensional array storage, rather than in a relational database. #
Lesson 08 - Sales Force Automation,Data
Management for Data Mining and Data Warehousing, 53/20 CRM Technology Choice MOLAP – (2/2) • Some MOLAP tools require the pre- computation and storage of derived data, such as consolidations – the operation known as processing. Such MOLAP tools generally utilise a pre-calculated data set referred to as a data cube. The data cube contains all the possible answers to a given range of questions. As a result, they have a very fast response to queries. Lesson 08 - Sales Force Automation,Data Management for Data Mining and Data Warehousing, 54/20 CRM Technology Choice ROLAP –(1/4) • Relational OLAP (ROLAP) works directly with relational databases and does not require pre-computation. The base data and the dimension tables are stored as relational tables and new tables are created to hold the aggregated information. It depends on a specialised schema design.
Lesson 08 - Sales Force Automation,Data
Management for Data Mining and Data Warehousing, 55/20 CRM Technology Choice ROLAP –(2/4) • This methodology relies on manipulating the data stored in the relational database to give the appearance of traditional OLAP's slicing and dicing functionality. • In essence, each action of slicing and dicing is equivalent to adding a "WHERE" clause* in the SQL statement.
Lesson 08 - Sales Force Automation,Data
Management for Data Mining and Data Warehousing, 56/20 CRM Technology Choice ROLAP –(3/4) • ROLAP tools do not use pre-calculated data cubes but instead pose the query to the standard relational database and its tables in order to bring back the data required to answer the question. #
Lesson 08 - Sales Force Automation,Data
Management for Data Mining and Data Warehousing, 57/20 CRM Technology Choice ROLAP –(4/4) • ROLAP tools feature the ability to ask any question because the methodology does not limit to the contents of a cube. ROLAP also has the ability to drill down to the lowest level of detail in the database. • In contrast with MOLAP, ROLAP is slower. • Databases are to be designed for specific tool. They are not interchangeable. Lesson 08 - Sales Force Automation,Data Management for Data Mining and Data Warehousing, 58/20 CRM Technology Choice Data Mining
Lesson 08 - Sales Force Automation,Data
Management for Data Mining and Data Warehousing, 59/76 CRM Technology Choice Business Opportunities in Using DM in CRM – (1/4) • Business employing data mining quickly see a return on investment, but also they recognise that the number of predictive models can quickly become very large. Rather than one model to predict which customers will churn, we could build a separate model for each region and customer type. #
Lesson 08 - Sales Force Automation,Data
Management for Data Mining and Data Warehousing, 60/76 CRM Technology Choice Business Opportunities in Using DM in CRM – (2/4) • Then, instead of sending an offer to all people that are likely to churn, we may only want to send offers to customers that will likely take the offer. And finally, we may also want to determine which customers are going to be profitable over a window of time and only send the offers to those that are likely to be profitable. In order to maintain this quantity of models, they need to first manage model versions and then move to automated data mining. # Lesson 08 - Sales Force Automation,Data Management for Data Mining and Data Warehousing, 61/76 CRM Technology Choice Business Opportunities in Using DM in CRM – (3/4) • Understanding customer behaviour and refine CRM: – Implementing activities that reach the right customers with right messages (direct marketing). – Understanding what benefits customers want from products. – Refining customer segments into profitability segments to enable use of effective CRM. # Lesson 08 - Sales Force Automation,Data Management for Data Mining and Data Warehousing, 62/76 CRM Technology Choice Business Opportunities in Using DM in CRM – (4/4) • Product demand: – Forecast the right product demand – Facilitate mass customisation. – Determine the most effective or feasible sales channel for new products and services. • Related market dynamics: – Knowing what segments are price sensitive to enable price discrimination. #
Lesson 08 - Sales Force Automation,Data
Management for Data Mining and Data Warehousing, 63/76 CRM Technology Choice Characteristics of Data Mining – (1/4) • Differences in characteristics between data mining and traditional data analysis: – (1/5) Firstly, data mining is an inter- disciplinary field taking inputs from such disciplines as statistics, artificial intelligence, machine learning and many others. – (2/5) Data mining tools and techniques operate with large data bases. Earlier tools for normal database analysis are not suitable. #
Lesson 08 - Sales Force Automation,Data
Management for Data Mining and Data Warehousing, 64/76 CRM Technology Choice Characteristics of Data Mining – (2/4) – (3/5) Data mining techniques give the search methods some degree of search autonomy resulting in automated or semi-automated nature of discovery. – (4/5) Data mining data are collected from everyday transaction and have less bias than data collected specifically for some analysis. – (5/5) Lastly, non-technical end-users can use it without the help of experts in discovery journey. # Lesson 08 - Sales Force Automation,Data Management for Data Mining and Data Warehousing, 65/76 CRM Technology Choice Characteristics of Data Mining – (3/4) • Challenges facing data mining: – The grand challenge in knowledge discovery in databases is to automatically process large quantities of raw data, identify the most significant and meaningful patterns, and present these as knowledge appropriate for achieving the user’s goals. #
Lesson 08 - Sales Force Automation,Data
Management for Data Mining and Data Warehousing, 66/76 CRM Technology Choice Characteristics of Data Mining – (4/4) • The algorithm used in extracting knowledge by using data mining are of two types: – Descriptive, and – Predictive • Descriptive involves finding out the properties that describe the data under consideration, for example SEC of customer groups. • Predictive is finding future state of a variable, say, default in payment of a particular customer.#
Lesson 08 - Sales Force Automation,Data
Management for Data Mining and Data Warehousing, 67/76 CRM Technology Choice Data Mining Tasks – (1/8) • (1/5) Classification – behaviour prediction, product and customer categorisation etc. • (2/5) Regression – for finding out correlation between independent and dependent variables. • (3/5) Link analysis for market basket analysis • (4/5) Segmentation (of data – naturally occurring clusters to describe data, say market segments) using clustering algorithms. • (5/5) Deviation detection – detecting most significant changes from previously measured data or expected values. #
Lesson 08 - Sales Force Automation,Data
Management for Data Mining and Data Warehousing, 68/76 CRM Technology Choice Data Mining Tasks – (2/8) • (1/5) Classification – Classification is a process that maps a given data item into one of the several predefined classes. In CRM, classification is used for a variety of purposes like behaviour prediction, product and customer categorisation, and in campaign management to identify prospective customers for new product from a database of old customers. Lesson 08 - Sales Force Automation,Data Management for Data Mining and Data Warehousing, 69/76 CRM Technology Choice Data Mining Tasks – (3/8) • (2/5) Regression – (1/2) It is an operation of learning a function that predicts the value of a dependent variable based on values of other independent variables. Suppose the effectiveness of an advertisement campaign is measured in terms of brand recall…. (contd.)
Lesson 08 - Sales Force Automation,Data
Management for Data Mining and Data Warehousing, 70/76 CRM Technology Choice Data Mining Tasks – (4/8) • (2/5) Regression – (2/2) If the marketing manager has an a priori feeling that the ad effectiveness is dependent on the total advertisement budget and other related variables that might be important, and if a new campaign is proposed to be launched, the manager can estimate its effectiveness based on the above regression equation that he has estimated. The campaign management budget and other parameters can then be finetuned to achieve the required degree of effectiveness. # Lesson 08 - Sales Force Automation,Data Management for Data Mining and Data Warehousing, 71/76 CRM Technology Choice Data Mining Tasks – (5/8) • (3/5) Link analysis – Link analysis seeks to establish relationship between items or variables in a database record to expose patterns and trends. Link analysis can also trace connections between items of records over time. The most important link analysis application in CRM, called market basket analysis, is an operation that seeks relationship between product items characterising product affinities or buyer preferences. As an example, display can be organised on items that sell together. # Lesson 08 - Sales Force Automation,Data Management for Data Mining and Data Warehousing, 72/76 CRM Technology Choice Data Mining Tasks – (6/8) • (4/5) Segmentation – Segmentation aims to identify a finite set of naturally occurring clusters or categories to describe data. This is done in such a way that cases belonging to a segment or cluster are more similar with respect to the clustering criterion while they differ significantly from the cases belonging to other segments. This is done using clustering algorithms that segment database based on the required criterion. # Lesson 08 - Sales Force Automation,Data Management for Data Mining and Data Warehousing, 73/76 CRM Technology Choice Data Mining Tasks – (7/8) • (5/5) Deviation detection – Deviation detection focuses on discovering the most significant changes in the data from previously measured, expected or normative values. Many of the CRM packages routinely keep checking critical parameters as they change with market scenario.
Lesson 08 - Sales Force Automation,Data
Management for Data Mining and Data Warehousing, 74/76 CRM Technology Choice Data Mining Tasks – (8/8) • Data mining tasks are exploratory in nature and hints at possible relationships between variables which otherwise would be impossible to link. They, however, cannot ascertain reasons of a correlation. Knowing that a link exists, and knowing the correlation coefficient are the leads for the manager to find reasons. #
Lesson 08 - Sales Force Automation,Data
Management for Data Mining and Data Warehousing, 75/76 CRM Technology Choice Data Mining Tools and Techniques – (1/10) • Data mining tools and techniques are algorithms and methods to carry out the data mining tasks. They differ from one another in the type of data handled, assumptions made about data, scope and interpretation of the output. A single tool can carry out several tasks and a task can be carried out by many tools. #
Lesson 08 - Sales Force Automation,Data
Management for Data Mining and Data Warehousing, 76/76 CRM Technology Choice Data Mining Tools and Techniques – (2/10) • Various data mining tools and techniques are: – Decision trees – Rule induction – Case-based reasoning (CBR) – Visualisation techniques – Nearest neighbour techniques – Clustering algorithms #
Lesson 08 - Sales Force Automation,Data
Management for Data Mining and Data Warehousing, 77/76 CRM Technology Choice Data Mining Tools and Techniques – (3/10) • Decision Trees: (1/2) A decision tree is a predictive model; that is, a mapping from observations about an item to conclusions about its target value. More descriptive names for such tree models are classification tree (discrete outcome) or regression tree (continuous outcome).
Lesson 08 - Sales Force Automation,Data
Management for Data Mining and Data Warehousing, 78/76 CRM Technology Choice Data Mining Tools and Techniques – (4/10) • Decision Trees: (2/2) In these tree structures, leaves represent classifications and branches represent conjunctions of features that lead to those classifications. The machine learning technique for inducing a decision tree from data is called decision tree learning, or (colloquially) decision trees. # Lesson 08 - Sales Force Automation,Data Management for Data Mining and Data Warehousing, 79/76 CRM Technology Choice Data Mining Tools and Techniques – (5/10) • Nearest neighbour method: A technique that classifies each record in a dataset based on a combination of the classes most similar to it in a historical dataset . • Rule induction: The extraction of useful ‘if-then’ rules from data based on statistical significance. • Data visualisation: The visual interpretation of complex relationships in multidimensional data. Graphics tools are used to illustrate data relationships. #
Lesson 08 - Sales Force Automation,Data
Management for Data Mining and Data Warehousing, 80/76 CRM Technology Choice Data Mining Tools and Techniques – (6/10) • Case-based reasoning (CBR): CBR tries to simulate logical thinking process of a human being. When an example is presented to CBR solution, it tries to match the current example with other examples in its warehouse and retrieves the case that is the most similar to the current one. Decision can then be taken by extrapolation. # Lesson 08 - Sales Force Automation,Data Management for Data Mining and Data Warehousing, 81/76 CRM Technology Choice Data Mining Tools and Techniques – (7/10) • Clustering Algorithm: Clustering Algorithm divide databases into different groups called clusters such that intra-cluster similarity is maximum and inter-cluster similarity is minimum. As an example, market segmentation is done by this clustering algorithm. #
Lesson 08 - Sales Force Automation,Data
Management for Data Mining and Data Warehousing, 82/76 CRM Technology Choice Data Mining Tools and Techniques – (8/10) • Data mining packages come with many different kinds of tools (that is algorithm) • The algorithm to be run on the data depends not only on the data that one has but also on the answers to the questions one asks. • Thus, algorithm to find out risk of payment default would be to run classification algorithm and the algorithm to find link between sales of two products would require to run an association rule algorithm. #
Lesson 08 - Sales Force Automation,Data
Management for Data Mining and Data Warehousing, 83/76 CRM Technology Choice Data Mining Tools and Techniques – (9/10) • With every fresh transaction, fresh data come to the data warehouse, sometimes adding to and other times updating data. Data mining solution must be capable of addressing itself to such dynamic state. • Thus, tools should be able handle incremental data, as running algorithm all the time for total data is expensive in terms of time and resources. # Lesson 08 - Sales Force Automation,Data Management for Data Mining and Data Warehousing, 84/76 CRM Technology Choice Data Mining Tools and Techniques – (10/10) • Finally, integration between front-end CRM solution like a campaign management solution and backend data mining solution helps to ensure consistency in and timely dissemination of information throughout the company. This can be leveraged to make more informed and better decisions. #
Lesson 08 - Sales Force Automation,Data
Management for Data Mining and Data Warehousing, 85/76 CRM Technology Choice Evaluating Technological Solutions for CRM
Lesson 08 - Sales Force Automation,Data
Management for Data Mining and Data Warehousing, 86/76 CRM Technology Choice Evaluating Technological Solutions for CRM – (1/10) • CRM vendors offer a wide variety and range of products and they come with various functionalities and they support different operations of the firm. Moreover, they use different terminologies to mean the same thing. As IT and telecom technologies evolve, CRM vendors are offering new and more interactive solutions based on Java, CGI*, ASP etc. in place of the earlier ones based on HTML. Lesson 08 - Sales Force Automation,Data Management for Data Mining and Data Warehousing, 87/76 CRM Technology Choice Evaluating Technological Solutions for CRM – (2/10) • Some of the functional and technical requirements of CRM solutions are: – Business intelligence and analytical abilities – Unified channels of customer interaction – Support for web-based functionality – Centralised repository for both customer and other enterprise information – Integrated workflow* for business rules and procedures – Integrated with ERP and other enterprise-wide applications #
Lesson 08 - Sales Force Automation,Data
Management for Data Mining and Data Warehousing, 88/76 CRM Technology Choice Evaluating Technological Solutions for CRM – (3/10) • Functionally CRM application can be categorised into three main segments: – Sales application – Sales Force Automation (SFA) solutions – Marketing applications – Campaign Management (CMA) – Customer Service and Support (CSS) applications #
Lesson 08 - Sales Force Automation,Data
Management for Data Mining and Data Warehousing, 89/76 CRM Technology Choice Evaluating Technological Solutions for CRM – (4/10) • Almost all CRM suites in the market provide the following capabilities: (1/2) – Category management – Promotion management – Demand planning – Interactive selling – Sales and service contact centre – Analytics capability #
Lesson 08 - Sales Force Automation,Data
Management for Data Mining and Data Warehousing, 90/76 CRM Technology Choice Evaluating Technological Solutions for CRM – (5/10) • Almost all CRM suites in the market provide the following capabilities: (2/2) – Contract management – Account management – Campaign management – Automatic routing capability – Workflow management – Mobile sales and service support with access support to mobile devices. #
Lesson 08 - Sales Force Automation,Data
Management for Data Mining and Data Warehousing, 91/76 CRM Technology Choice Evaluating Technological Solutions for CRM – (6/10) • Criteria for evaluating technological solutions of CRM: (1/4) – Functionality supported by the package – Catering to multiple channels of interaction: phone, internet, VoIP, fax etc. – Compatibility with existing infrastructure like data warehouse, supply chain management and so on: If the solutions use open source code and the compatibility is high, the integration expenses are lower. On the other hand there will be times when advantage of software outweighs added expenses of integration. # Lesson 08 - Sales Force Automation,Data Management for Data Mining and Data Warehousing, 92/76 CRM Technology Choice Evaluating Technological Solutions for CRM – (7/10) • Criteria for evaluating technological solutions of CRM: (2/4) – Scalability: A CRM solution should be highly scalable as business is expected to grow. There should be no deterioration of performance with increased load. – Integration: It is better to choose products that provide tight integration with existing systems. Buying CRM solutions from a single vendor usually is helpful in this respect. # Lesson 08 - Sales Force Automation,Data Management for Data Mining and Data Warehousing, 93/76 CRM Technology Choice Evaluating Technological Solutions for CRM – (8/10) • Criteria for evaluating technological solutions of CRM: (3/4) – Choice of framework: A product that can serve as a framework, i.e. a solution, around which the other solutions can fit and integrate, will increase the level of integration within a system and with other systems. #
Lesson 08 - Sales Force Automation,Data
Management for Data Mining and Data Warehousing, 94/76 CRM Technology Choice Evaluating Technological Solutions for CRM – (9/10) • Criteria for evaluating technological solutions of CRM: (4/4) – Flexibility in incorporating changes and upgradeability: As technology changes and new requirements come up, the CRM solution should be flexible enough in upgrading. – Experience in implementation: Does the vendor have capable and experienced system integrators? This is a crucial requirement. – Checking references – Price Lesson 08 - Sales Force Automation,Data Management for Data Mining and Data Warehousing, 95/76 CRM Technology Choice Evaluating Technological Solutions for CRM – (10/10)
Global CRM Product Market
Main Target Server Centric Web Centric Siebel, Oracle / Siebel CRM on Large enterprises Peoplesoft, MySAP demand, CRM Saleforce.com Talisma, SalesLogix, Small and medium SalesNotes.net, Microsoft, Onyx, enterprises NetCRM SalesNotes
Lesson 08 - Sales Force Automation,Data
Management for Data Mining and Data Warehousing, 96/96 CRM Technology Choice