Beware of supplier claims on analytical CRM, says Datamonitor

Companies purchasing analytical CRM applications need to be wary of supplier claims that the software will work immediately...

Companies purchasing analytical CRM applications should beware of supplier claims that the software will work immediately without being tailored to particular business requirements, analysts have warned.

Research firm Datamonitor has predicted that the global analytical CRM market will grow from $2.3bn (£1.4bn) in 2002 to $4bn (£2.5bn) in 2006, as companies, which have completed operational CRM rollouts, look for effective ways to exploit their existing investments.

Many software suppliers promise that their off-the-shelf analytical CRM applications can use data in the datawarehouse to segment and define customer groups and target outbound marketing.

However, the Datamonitor report said that users are often confused because the main suppliers, such as Siebel, SAS and Microsoft, all have a different definition of what analytical CRM comprises.

“The marketing messages used by most suppliers imply that true analytical CRM can be sold in an off-the-shelf packaged solution and this simply does not reflect reality,” said Ahmed Siddiqui, technology analyst at Datamonitor and report author.

“These [suppliers] are unlikely to succeed in the long term because customers buying their so-called analytical technology rarely see the benefits that can be realised with sophisticated analytical CRM packages and so become disillusioned.”

Data quality - the process of consolidating and cleaning every byte of data within a business - is the key to ensuring the success of analytical CRM, Siddiqui said, adding that the quality of data directly affects the effectiveness of outbound marketing, analytics and customer loyalty and, more fundamentally, the ability to do business

For example, when companies use inaccurate data about “life events”, such as getting married or moving house, this could annoy, upset and, potentially, lose a customer. Furthermore, the incorrect information may be about credit history and the customer could be mis-sold a product, Siddiqui said.

“Suppliers who offer analytics without emphasising data quality and its fundamental importance may be misleading the market,” he added. “Customers need to be careful that they do not buy a solution that will not work at 100% effectiveness.”

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