Establishing Profitable Customer Relations

July 21, 2003 by admin

Expansion Stages of mySAP CRM Analytics

Expansion Stages of mySAP CRM Analytics

mySAP CRM Analytics channels customer information and makes it available to aid decision-making in the sales, marketing and customer service sectors. The integrated SAP Business Information Warehouse (SAP BW) can be used to gather together and analyze customer data from different systems. The results of these analyses serve as a basis for decision-making within the various divisions. Every company and every division asks itself the same questions:

  • What type of customer has the potential to boost the growth of my company?
  • How much should we invest in acquiring a new customer in a specific segment?
  • Which customers offer potential to increase the “Share of Wallet”?
  • How successful have previous marketing, sales and service activities been?
  • What customers are threatening to move over to a competitor and why?

The answers to these questions are to be found in the corresponding KPIs. Some of these KPIs can be determined from historical data, e.g. customer profitability, complaints per product or number of customers lost/won per month. Measurement and analysis procedures that can identify and describe relationships and project them into the future are also frequently used. Processes such as ABC customer classification, Customer Lifetime Value or customer scoring are typical examples of this.
For most companies, the introduction of mySAP CRM Analytics involves four expansion stages which are described in detail below:

  • Measuring and monitoring (Measure)
  • Forecasting and identifying patterns (Predict)
  • Planning and controlling using target specifications (Plan)
  • Optimization and applying analytical results (Optimize)

To describe the applications of the measurement and analysis process in more depth, we will use the example of a fictional computer manufacturer. In its early stages, the company had already grown from being a traditional wholesaler supplying selected retailers with PCs into a solution provider for all office products and services. Numerous well-known customers regularly order PCs, accessories or services from this company via a Web shop, the Interaction Center or through selected partners.

Measuring and monitoring

In the first expansion stage of mySAP CRM Analytics, the company concentrated on measuring past sales and marketing success. To do this it loads order data across all sales channels with the help of extractors supplied in the SAP BW analysis platform. It also performs comprehensive evaluations of customer profitability. The result and market-segment calculation delivers the required profitability data, structures this in the form of a profit contribution calculation and adds any customer-specific costs. User-friendly analysis cockpits provide employees with rapid, personalized access to the calculated KPIs.

Measure

Measure

In the marketing sector in particular, our company has paid out huge sums annually both for direct campaigns and general image campaigns. mySAP CRM Analytics allows it to measure the success of a given campaign. This applies to both the campaign-specific revenues and the costs. The comprehensive back-office integration of the CRM solution allows all revenues related to a particular campaign to be posted in Financials. Each campaign also has its own accounting object where the actual marketing costs are collected and compared with the revenues.
And last but not least, our company uses comprehensive customer surveys to obtain a better understanding of its customers’ profiles and requirements. This information, together with information on customer activities, offers, complaints or service procedures, completes the overall picture of a comprehensive knowledge base relating to customer loyalty.

Forecasting and identifying patterns

Predict

Predict

Our manufacturer has realized that just analyzing historical data is not enough in itself. Although this information is important, it will only secure a competitive advantage if it is used proactively. For example, by analyzing cross-selling rules, our company can easily find out which product combinations customers often buy together. Since the company has been using this information proactively in its dealings with customers and creating made-to-measure offers based on this information, it has seen a considerable increase in its sales.
Particularly in its business with direct customers, the manufacturer has been able to secure the loyalty of its most valuable and profitable customers through mySAP CRM Analytics. By systematically analyzing lost customers, the company was able to identify from customer profiles which customers are most likely to move over to a competitor. For instance, our manufacturer deduced by this method that 40% of its customers had left after more than three incorrect or delayed deliveries. These relationships are systematically investigated and quantitatively described using decision trees, making it easy for employees to use this information. This knowledge allowed the employees in the Interaction Center to provide better support for customers that were likely to leave, thereby holding onto valuable customers. This considerably reduced the number of customers defecting to competitors.

Planning and controlling using target specifications

Plan

Plan

In the past, the company has undoubtedly placed considerable emphasis on managing employees using concrete sales targets and marketing budgets. However, this process was often difficult and protracted and involved consolidating very large Excel tables. Since our company moved its planning processes over to an integrated planning solution from SAP (based on SAP SEM-BPS), it has been able to considerably shorten its planning cycles. Now all employees contribute to realistic plans as part of a counter current process and have access to up-to-date information about planning progress and planning targets.
The marketing budgets are integrated with campaign planning. This means that up-to-date figures on current budget spending are always available. As part of an effective availability monitoring process, a check is carried out to establish whether the marketing budget is sufficient to implement the marketing measures.
Sales activities are also managed using sales planning. Sales targets are distributed top-down from the management to the individual sales sectors, customer segments and product categories. The sales team also provides bottom-up feedback about whether the planned measures can be carried out. This helps all parties reach a consensus on a realistic sales plan which can be observed and monitored continuously to check whether its targets are being reached.

Optimization and applying analytical results

Optimize

Optimize

It is very important for the manufacturer that analytical findings, rather than being derived solely in the data warehouse where they then remain, are also used in operational decisions. This is particularly important in the Interaction Center where mySAP CRM Analytics supports operatives in their personal dialog with the customer. For example, the main themes of these discussions are influenced by the KPIs and information obtained from the analyses, e.g. customer value, ABC classes or the customer’s likelihood to move his business over to a competitor. These main themes allow the employee in the Interaction Center to concentrate his time on important customers and make it easier to conduct a targeted dialog with them.
The success of marketing campaigns could also be noticeably improved by paying more attention to probable returns. Using the “Recency, Frequency, Monetary” method, our company used test campaigns to work out probable returns for its customers. These probable returns, combined with the planned revenues and costs, determine the overall success of the campaign. This gives the campaign manager the means to optimize campaigns and target groups directly as part of the campaign management process. He can also factor in restrictions such as budgets, products available in stock or the maximum number of calls possible in the Interaction Center. These processes mean that customers who would probably not reply anyway are not even approached, thus optimizing the success of the campaign.
The manufacturer has therefore evaluated his earlier measures, improved them and analyzed the improvement. Armed with this knowledge, he is now able to make more reliable plans and optimize his processes so that his customers receive better support, thereby closing the circle.

Stefan Kraus

Stefan Kraus

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