My Comment on Schwartz Video: Too many choices – Intelligent Recommender System is one option.

It was exciting to watch the video of Schwartz giving his opinion about choices. Somehow, he’s got the point that sometimes too many choices can hinder someone to make decision, or make someone regrets the decision she / he makes. However, it’s inevitable that “world” has provided us many choices, and we have to make decision upon those choices.

Regarding this matter, there is a technological approach called intelligent recommender system. It observes the reality that sometimes people rely on others to make decision. People have other people’s opinion as their based to make decisions. One method used is collaborative filtering. Collaborative filtering works by grouping people base on their similar taste upon certain things, and whatever these people think of something based on their experiences and taste, the opinion are passed through to someone else that need the recommendation of those same certain things. Imagine we could build a recommending society that consists of all people of world, and then we could recommend each other. It sounds good enough. It might shorten the time taken to decide something. Somehow it works quite well, despite the fact that it also needs some enhancement – like the value of the recommendation, the trust, etc (and the dedicated researchers are working on them).

My conclusion is: people do make problems – in this case, by making many choices available, then make people are more confused to decide – but people also try to build solutions of the problem. Human is blessed with the capability of learning from mistakes. So………. Keep the spirits alive…… keep creative….. :-)

The Implementation and Technology Utilization For Analytical CRM – Is It As Good As It Sounds?

(A Thought Based on a paper by Ron Swift – “Analytical CRM Powers Profitable Relationship: Creating Success by Letting Customers Guide You” and SAS White paper - “Implementing the Customer Relationship Management Foundation – Analytical CRM”)

Both papers describe technology of customer relationship management thoroughly. Although they do mention operational CRM, analytical CRM is the main focus of these papers. As depicted in its name, analytical CRM consists of data management and various analysis and modeling tools used to analyse and understand customers’ values, needs, and wants. The result will be applied as customer relationship strategy.

The SAS white paper highlights four major technologies implemented in analytical CRM, such as 1) data warehouse; 2) data mining; 3) OLAP; and 4) decision support and reporting tools. SAS gives a well structured explanation of how analytical CRM uses these four technologies step by step. It starts from the “data cleansing” stage; building data warehouse; adding metadata; analysing data in the data warehouse using data mining tools and OLAP; and then deploying the information discovered from the previous stage with reporting tools and executive information system.

Meanwhile in another paper, Swift emphasizes the process undergone by analytical CRM. He illustrates four processes in the “CRM intelligence management cycle”, i.e. data collection; analysis and modeling; action; and measurements. Data collection involves gathering all the customer data, transaction, operational and financial data. Analysis takes place after data being amassed. The analysis is done to get comprehensive information in three related areas, i.e. customer behaviour and preferences; operational factors possessed by the organization; and financial factors. The third process is action which means to implement the result of analysis by managing communication to customers. There are several concepts involved in this phase, such as 1) personalization - an understanding that you cannot treat your customers the same way; 2) optimization – a way to prevent conflicting communication by setting up a priority in communication; and 3) consistent customer communication experiences through all touchpoints. The last process is the measurement of business value in implementing CRM.

Both papers give “flawless” descriptions of how good analytical CRM is, especially SAS white paper. Perhaps, it is because SAS tries to sell its products. It shows how SAS has all products that fit in all major technologies needed by CRM. Does it mean there will be no problems in implementing them? I see two groups of problems in this matter. The first one is technological related. Many questions emerge in this category. For instance, how to integrate a ready software solution (like ones that SAS has) to a previously established system of a business institution? If the integration is successful, are the users – the management, employees and customers – instantly ready to migrate to a new system? How this would affect the business process? Other thing is related to “centralized repository” as Swift mentions in his paper. If “centralized repository” is meant to support a reliable data access, then it could result in the opposite direction. To be able to maintain the reliability of a single repository to be accessed by many users in the same time, the system should be powerful without the chance of being down or even off. So in order to be able to provide reliable “up-to-the-minute information” in a timely manner and at the frequent refresh rate, decentralized repository is one choice.

The second group is related to non technological matters. It is consist of management commitment and customer satisfaction. Are the managers committed to implement the technology? If they only justify the statement by Swift – “the ROI for effective CRM projects has been exponential, surpassing typical financial expectations of 30 to 80 percent tenfold”, managers would willingly implement CRM. But, it isn’t clearly stated for how long it takes to get an exponential ROI. How if it takes more times, until there is a change in management. The new managers are appointed. Then are they still going to be committed to use the technology? There is a possibility that the new managers would make the new policies affecting CRM. So, it’s not the matter of whether the technology works or not, it because the organization has a new management, and the management want to change the way they do the business.

What about customers? Are they satisfied? I had annoying experiences of promotion conducted by a bank in my country. The bank officer kept on calling me in her effort to promote products that I didn’t need. Perhaps, the system promoted a recommended strategy that carried bias. For example, it gives a suggestion that a customer prefer certain product, but the fact is the customer doesn’t need it (it is called false positive, if I’m not mistaken). In the other hand, certain product is not suggested to a customer even though she needs it (it is called false negative). Instead of only measuring how analytical CRM support organizations in maintaining customer relationship, it should also involves measuring customer satisfaction. Nevertheless, technology does give a great favor for organizations in doing their CRM, and there are many proof of it. It is just there are many things to be considered.

“Customer Scenario” – The Vital Scenario to Companies’ Success (A Reflection of Reading Material: Get inside the Lives of Your Customers)

People are different indeed, so are customers. Never treat them the same way as they have different purposes and preferences. Company has to understand how these customers want to be treated in the business or “customer scenario” as named by Seybold. Seybold also gives three examples of how these companies struggle to win their customers by paying great attentions to their “customer scenario” and providing them services and supports even though they are beyond their line of products.

National Semiconductor for instance, it supplies a one-stop on-line design tool, called “Webench”, to its customers (designers). It helps them finish their designing job faster and easier, allows them to run as many real-time simulations as needed until they have come to a final design, and enables them to purchase all the required components not only from National semiconductor, but also other distributors.
It doesn’t stop there. By listening to the need of designers, the system had been developed since then by adding more function, namely “WebTherm” and “Wireless design tools”. National keeps on listening, learning and engaging itself to its customers. Although National has to put much effort, but it gains significantly at the end. There is also one good thing resulted from this. National has built a network with other distributors by enabling the customers buy their product through National’s site. According to Buttle (2004, p.172), the trend of competition is shifting from “head to head between independent companies” to “between networks”. It would be a great future ahead as long as National can manage this network, especially the network position based on their activity links, resource ties and bonds.

Another example is Tesco. Its Tesco Direct, an on-line shopping application, has been claimed as “the world’s largest and profitable internet grocer”. Tesco has reached its success by paying attention to their “customer scenario”. Their customers don’t think that on-line shopping would replace conventional shopping. In response to this, Tesco combine its on-line and off-line promotion. Tesco also does its on-line shopping operation in a different way. While others minimize cost by strengthening their supplies and processes in the main warehouse, Tesco builds its on-line shopping from every store where its customers are used to shop. It doesn’t force its customers to change their habits. It is a good strategy. Since customers might experience a “switching cost of time, money or personal risk” (Zikmund, McLeod, & Gilbert, 2003) in facing a new situation, they might be reluctant to change their habits. More important, customers’ habit is one factor that influences customer loyalty. So Tesco makes it as if customers buy from the usual stores unless now it is online.

The last illustration is Autodesk’s Buzzsaw.com. Buzzsaw.com is an on-line collaborative work space enabling building owners, architects, engineers, other construction professionals, and even banks or financial institutions. Again, it is built as an effort to accommodate customers’ needs. It has reached its success not only because it pays a great attention to “customer scenario” but also enables customers to develop their own scenarios.

Those three examples give a clear model how those companies trying to know who the customers are, what goals they expect to achieve, etc. They do it by developing “customer scenarios”. They learn from the scenarios, revise it, and give more support to the customers. Customers feel that the company knows and understands them better. This situation builds good interaction and relationship between customers and company which eventually will contribute to the customer loyalty. Also from the “customer scenario”, companies are able to give a bundled of product and service that sometimes beyond their own business, and it creates more value to companies and customers. So it can be said that a “customer scenario” is definitely a scenario to companies’ success.

References:

Buttle, F. (2004). Customer Relationship Management: Concepts and Tools. Oxford, UK: Elsevier Butterworth-Heinemann.

Zikmund, W. G., McLeod, R., & Gilbert, F. W. (2003). Customer Relationship Management: Integrating Marketing Strategy and Information Technology. Hoboken, NJ, USA: John Wiley & Sons, Inc.