Analytical CRM, (a sub section of the wider business intelligence [BI] market), enables businesses to gain a fuller understanding of their customers in order to serve them better, thus increasing customer longevity and generating more profit.

In a report titled, Analytical CRM, independent market analyst Datamonitor finds that analytical customer relationship management (aCRM) technology, considered the logical evolution of the CRM lifecycle, is being adopted by enterprises on a broader global scale. Tom Pringle, the author of the report explains what aCRM involves. A domain-b exclusive.

Analytical CRM is the active collection, concentration and analysis of data gathered about customers and their interaction with businesses. It represents the next, logical step through utilisation of customer data held within the enterprise. This analysis is then used to generate value, both for the enterprise and the enterprise's customers. It encompasses cultural change at every level as part of the wider CRM project - the creation of a customer- focused business.

aCRM is a technology and a concept
Analytical CRM (aCRM) is both a technology and a concept. As such, it requires a multifaceted definition to encompass its different uses. The question remains 'How will businesses adopt aCRM - as part of a wider enterprise business intelligence (BI) initiative, or, as an independent customer-focused solution?' The answer is both.

aCRM can be considered in terms of the technology which enables the concept. For a definition of these technologies we must look to the business intelligence (BI) market.

• Extract, transform and load (ETL) tools: These solutions are concerned with the collection of data from disparate systems (enterprise solutions across the business), the standardisation of data, and then population of the data warehouse (DW).
  
• Data quality (DQ) tools: The usefulness of analysis of data from the DW depends on its quality. So-called 'dirty' data can significantly reduce the value of aCRM, problems include duplicate records, incomplete records and issues relating to the formatting of data from different sources. DQ tools are focused on addressing these issues.
  
• Data warehouses (DW): Acting as an enterprise-wide data depository, the DW should enable what has become widely referred to as the 'single customer view'. The single customer view represents the full range of information a business holds on its customers and their interactions with the company. It should be held in a standardised format, and refreshed as appropriate for that company's needs
  
• Business intelligence tools: Rather than attempt to create an exhaustive list of the different types of tool used to analyse data, Datamonitor defines the broad range as business intelligence tools. These may include online analytical processing (OLAP), data mining, reporting, dashboards, ad-hoc reporting and numerous other tools.

This range of technologies can be simplified further:

• Analytical infrastructure, which include ETL and DQ tools;
  
• Data warehousing and data management tools;
  
• Business intelligence tools: The tools employed to analyse data collected by the first two components.

Source: Datamonitor

Who needs aCRM?
Power users: Usually the smallest group and by far the most advanced. They require the full flexibility BI tools can supply, and often provide other areas of the business with information from their own analysis.

Senior executives: Interest in aCRM is often limited to dashboards detailing performance against key performance indicators (KPIs). The breadth of this information, however, can be significant, with executives across different parts of the business having different priorities. While appearing simple, often the technology behind the dashboard is complex;

Marketing organisations: One of the larger groups and potentially one of the most advanced. They are in a position to become advanced users of aCRM, a process only just getting under way in most adopting businesses;

Sales organisations: A potentially significant user group. Their needs are often found in the output of other area's analysis. For example, the use of leads generated through marketing campaigns and timely information delivery, especially during closing periods when targets are either hit, or missed;

Customer-facing organisations: Predominately the call centre, but also retail environments. These users are dependent on timely and accurate delivery of information relating to the customers they are dealing with;

Customers: Offering customers intelligence about the way they use products purchased from that company can be a competitive differentiator. Simple, pre-defined queries and easy to understand delivery is key.

What to look for in an aCRM proposition:
Vendors should consider three key features when attempting to provide aCRM solutions:

• Symptoms of development: A well integrated operational CRM project is possibly the best indicator of readiness for aCRM. Simple sales force automation (SFA) is probably not enough. Operational CRM should touch marketing and service as well, two additional areas which are likely to create demand for analytics;
  
• Market education: Understanding amongst the potential customer base in this market is low. For many firms simple reporting may be the limit of their exposure to analytical-like functionality. As a market, it also retains a level of ingrained adoption resistance. Some CRM and data warehouse projects in the past have tainted the image of related technologies (BI, and therefore aCRM). While true of most technology markets, selling to a business need is likely to be a far more likely prospect than blinding customers with technology and its features;
  
• Other BI demand pulls: A key feature of the BI market is the rise in demand due to compliance issues being faced across a range of verticals; especially in the field of corporate governance / financial control. While it is inappropriate to attempt a 'piggy back' approach to sales, aCRM can – obviously – utilise the investments firms have made in BI for other purposes. This helps create significant gains from previous investment and, if used correctly, can drive greater revenue.

Competitive landscape
The aCRM space is occupied by two vendors types, BI-related vendors and CRM vendors. Datamonitor considers the aCRM space to be large enough, and diverse enough for a variety of plays, but each vendor group faces a number of unique challenges which need further discussion.

• BI-related vendors can be thought of in three technology areas, analytical infrastructure, data management and BI tools;
  
• Analytical infrastructure vendors need to maintain their operational independence in the market place to survive as independent entities;
  
• Data management vendors are well placed to maintain their role in this market and offer elements of other vendors' functionality;
  
• BI tools vendors need to offer three things, flexibility, some pre-packaging and an ability to integrate with anything;
  
• CRM vendors have a role to play in this market centered on market education and providing functionality for a wider audience.

The market for aCRM
Financial services, retail, manufacturing and communications are the clear leading vertical adopters. The key geographies are North America and Europe, Middle East and Asia, which in spite of their relatively higher level of development still show strongly positive growth through 2009 at CAGRs of 5.6 per cent and 6.5 per cent respectively.