Analytical and operational CRM software solutions

The CRM acronym stands for “Customer Relationship Management”.

Let’s now assume that you want to do a direct-mail marketing campaign for one of your product. You must find all the customers that are susceptible to buy your product and send them a brochure or leaflet (this is a classical “propensity to buy” setting but the same reasoning applies to any other setting: cross-selling, upselling, probability of default, etc.).

The best “list of candidates” is a list that ONLY contains people that will actually buy the product. The worst “list of candidates” is a list that actually contains no buyers at all. Different approaches to the generation of this “list of candidates” will lead to different ‘quality’ of the list.

The creation of the “list of candidates” is crucial to the success of your marketing campaign: a good list means a high ROI and a bad list can put you into debt (negative ROI because of the inherent cost of the campaign)!

There are many different software solutions whose only objective is the creation of the best “list of candidates”. This list must be as accurate as possible (i.e. it must contain the highest number of buyers). The software tools that create the “list of candidates” are named “Analytical CRM” or “Advanced Analytics” software because they are making some analytical computation based on the data available about your customers to create the most accurate “list of candidates”. We’ll try to use the name “Advanced Analytics software”, “Predictive Analytics Software”, “Scoring Tool” or “Modeling Tool” rather than the name “Analytical CRM” tool to avoid any confusion with simple reporting/OLAP tools (because some people are calling simple OLAP tools “Analytical” tools).

Depending of the “Advanced Analytic” software that you are using, you can obtain very accurate “list of candidates” (generating a very high ROI) or you can obtain a very bad “list of candidates” leading to marketing campaigns where you actually lose money.

Here are some numbers: When you contact some randomly selected people to offer them your product, you can expect a typical ‘response rate’ from 1 to 4%: i.e. there will be from 1% to 4% of the contacted people that will actually buy the product. If you use a randomly generated list for your marketing campaign, you will most certainly lose money in your marketing campaign because the gain that you will realize during your marketing campaign does not cover the different expenses (typically: the cost of creating, printing and sending the brochure) that you have to pay in order to launch the campaign.

Good Advanced Analytic tool (like the TIMi framework) can easily generates ‘response rate’ that are from 10 to 30 times higher than the ‘random-selection-response-rate’, leading to an incredible ROI for all your marketing campaigns.

Most of the time (99% of the time), ‘classical’ Analytical CRM tools are using a poor ‘segmentation-based technology’. These ‘segmentation-based’ Analytical CRM tools deliver, in the most optimistic cases, ‘response rates’ that are only 2 times higher than the ‘random-selection-response-rate’, leading to marketing campaigns with very low ROI.

In technical terms, a “list of candidates” is called a ‘ranking’. More precisely: in most marketing campaign, you don’t know ‘up front’ the size of your campaign: For example, this size depends on your budget that might still change. So, to give you more flexibility, most Predictive Analytics tools generate ‘Ranking lists’ (or, in short, ‘rankings’). A ‘Ranking’ is an ordered list that contains all your prospects sorted from the one with the highest probability of purchase to the one with the lowest probability of purchase. Typically, to obtain you “list of candidates” you simply select the top 5% or 10% of the ranking generated with your preferred Predictive Analytic tool.

TIMi framework includes a predictive analytical engine that consistently and automatically delivers the most accurate ranking (or “list of candidates”), leading to an unmatched ROI for all your marketing campaigns (and for any and all types of campaigns: propensity-to-buy, cross-selling, upselling, probability-of-default, etc.).

There are many different ways to use the ranking (or “list of candidates”) that you created using your preferred “Analytical CRM” software. The software tools that allow you to use an already-generated ranking are named ‘Operational CRM’ tools. Using ‘Operational CRM’ tools, you can do many different things with your precious ranking:

• Simply give the “list of candidates” (typically a simple table in Excel with a list of people to contact) to a phone-center that will call all the people in the list to offer them your product.
• Split the “list of candidates” into smaller ‘chunk’ and give one different chunk to each sales representative in your team (if you have a large team of sales representative). Thereafter, each sales representative will contact and follow the leads that have been assigned to him. You can also monitor the number of sales that each sales representative is doing.
• Send a personalized e-mail (or a ‘paper’ mail) to the people in the “list of candidates”. Typically, the personalization is something simple: For example: If the person to contact is a man, the letter will start with ‘Dear Sir’. If the person to contact is a woman, the letter will start with ‘Dear Madam’. You can change small elements of text inside the letter to adapt the letter to the gender, age & social class of the contacted person.

To summarize: There are 2 types of CRM tools: Analytical CRM tools (also named “Advanced Analytics” tools, “Predicitve Analytics” tools or “Modeling” Tools”) and Operational CRM tools.

Differences in results between these tools:

1. For Predictive Analytic tools (Analytical CRM tools)There exists big difference in terms of ROI between the different tools because each tool generates a different ranking (or “list of candidates”) that leads to different marketing campaigns with different ROI. The marketing campaigns created with TIMi are unmatched, in terms of ROI.
2. For Operational CRM toolsGiven enough time and enough human resources, there will be no difference in results between different Operational CRM tools: Most of these tools offer you the same set (or a very similar set) of functionalities.