ABV-INDIAN INSTITUTE OF INFORMATION TECHNOLOGY AND

MANAGEMENT, GWALIOR

REVIEW PAPER

On

“CUSTOMER INTELLIGENCE SYSTEM”

Under the Guidance of

Dr. Deepali Singh

(Professor)

Submitted By:
Ashish Dudeja (2010MBA-03)
Ashish Kumar (2010MBA-04)
Executive Summary

The paper gives a brief introduction of the Customer Intelligence

System presenting it as one of the key elements to implement
Customer Relation Management successfully in an organization. This
paper discuss about the basic process that leverages the capabilities of
business intelligence in the context of customer relationship
management and entails developing a full view of the customer and
using not only the traditional business intelligence. In this, need and
objectives of customer intelligence system are discussed. Further the
paper presents a number of research evidences that have been
conducted to understand the applications and advantages of customer
intelligence under ‘Literature Review’. And then it discuss about the
various examples of different companies who are focussing on
customer intelligence system is discussed because Organisations
primary focus has shifted to the customers because organizations can
enhance their marketing by evolving to a customer-centric business
model that focuses on insight, interaction and improvement - the three
I’s. Finally it shows that how the CIS concept may contribute towards
improving the quality of customer strategies in any organisation,
sound decision making, better customer service and some increase in
customers’ loyalty.
Introduction
Customer intelligence is the data and insight from and about your
existing and potential customers. The analysis and use of this informs
many of the decisions taken by businesses and, as such, is one of the
most important processes of customer relationship management.
Need of Customer intelligence
Most businesses are now on a mission to become more customer-
centric. The emphasis is shifting from transactions, processes,
products, and channels to the ultimate source of immediate and long
term profitability—the customers. This change is driven by intensified
competition, deregulation, globalization, and saturation of market
segments. Last, though not least, this change is driven by the Internet,
which offers a bonanza of choices online, thereby raising customer
expectations.
There are some reasons of new marketing scene as follows:
Customers are empowered: They have more choices and channels,
available on demand. With a few clicks of a mouse, they can compare
your offerings to competitors worldwide, and they can publish
opinions that sway millions of other consumers. You must earn their
goodwill with every interaction.
Increasing marketing complexity: The proliferation of customer
channels and touch points makes it harder than ever to manage and
synchronize the customer experience. The growing diversity of media
channels fragments the audience and dilutes your advertising
messages. Your innovative product or service can be quickly copied
to become tomorrow’s undifferentiated commodity.
Demand for accountability: CEOs, CFOs and shareholders are
demanding greater transparency and proven ROI from marketing
investments. Who can blame them, when marketing budgets can
represent as much as 20 percent of revenues? Marketers that don’t
have empirical evidence to justify their spending face shrinking
budgets and diminished clout in the organization.

Objectives
 Ability to aggregate in a single view all the data you have
about a customer.

It means having a full view not only of their purchase history,

but also of all their interactions with your company. Interactions
can happen through multiple sales channels (direct sales, online
purchases, resellers, etc.) and through multiple points of contact
or “touch points” (customer support centre, marketing programs,
sales force interaction, and so on). By tracking, observing, and
analyzing these interactions, you can gain great insight into the
customer’s needs and desires at any
given moment.

 Ability to segment the customer base in such a fine grained way

that you can implement pure one-to-one marketing.

In this new ruthless environment, it has become essential for

companies to find new ways to attract new customers, to maximize
the value of each existing customer, and to retain the most profitable
ones. Numerous studies show that it is easier and as much as six times
less expensive to sell to an existing customer than to acquire a new
one.
This can be achieved by:

 Knowing the customers better than the competition does—not

only knowing who they are and what they have purchased, but
also understanding what they want at a particular moment in
time.
  Exploiting that knowledge to create the best possible customer
interaction—informed, personalized, and insightful, but not
intrusive—and then increase customer satisfaction.
 Building switching costs into the customer relationship.

To accomplish all of the above, you will need to collect and analyze
all the pieces of information available to your organization that relate
to the customer. This will allow you to understand the customer’s
profitability, as well as his or her expectations and preferences. With
this knowledge you can then determine the customer’s lifetime value
to your organization.
LITERATURE REVIEW

This paper divides the research on customer intelligence into three

types: 

1.Research on the role and content of customer intelligence

Mark Allen Smith (2001) equals customer intelligence to customer

analysis. Paul Clark of BO Company (2001) depicts the relationship
between customer intelligence and CRM as: customer intelligence is
the brain behind CRM. 
2. Research on customer intelligence realization

Jim Berkowitz (2000) is of the opinion that business intelligence is

the base of CRM. He said that the analysis of the components
included by business intelligence such as OLAP, data warehouse and
data mining cover everything.
3. Research customer intelligence correlation theories.

Emma Chablo (1999) considered customer knowledge an important

component of CRM while marketing data intelligence as the part of
CRM that offers true customer knowledge. See defined marketing
data intelligence as ways of utilizing data-driven technique to promote
the understanding and the knowledge of customers, product and
transaction data to help users use CRM to make strategy decisions.

 There are many research papers on customer intelligence like:

 A book report of 'Raving Fans: A Revolutionary Approach

to Customer Service' By Ken Blanchard which includes  that in
making adjustments and adaptations to the particular business
environment, the Area Manager has learned how to
process customer service with the success and reliability that
consistency offers. The writer points out that this is the final premise
of 'Raving Fans: A Revolutionary Approach to Customer Service' by
Ken Blanchard. The writer looks at how Blanchard presents a plot
related to developing success and consistency in customer service
relations in the business community through realizing the three
aspects of vision, customer needs, as well as incremental steps needed
to apply these criterion in customer relations, Blanchard reveals the
secrets of success for "Raving Fans" or customers. By analyzing the
character of the golfer in relation to his fairy godmother, there is a
storyline that reflects all of these principles in presenting a solid
forum for customer service excellence. The first aspect of vision is
essential the lesson that the fairy godmother, Charlie, presents to an
"Area Manager", whom she sponsors."

Another research paper "Using "Cross-Departmental Teams

Memorandum Research Report" on organizational response to
increasing customer expectations of exceptional service, Abstract
Customer service is extremely important in today's business world -
so much so that companies need to shift to being "customer-centered".
Companies are increasingly using teams to change organizational
behaviour. However, it is important that teams be constructed and
managed in such a way that they work together for the common good.
This study reviewed the way in which Sisu, manufacturer of vitamins,
enhanced customer service by using cross-departmental teams."

A research paper named as role of knowledge management and

analytical CRM in business: data mining based framework. The
purpose of the paper is to provide a thorough analysis of the concepts
of business intelligence (BI), knowledge management (KM) and
analytical CRM (aCRM) and to establish a framework for integrating
all the three to each other. The paper also seeks to establish a KM and
aCRM based framework using data mining (DM) techniques, which
helps in the enterprise decision-making. The objective is to share how
KM and aCRM can be integrated into this seamless analytics
framework to sustain excellence in decision making using effective
data mining techniques and to explore how working on such aCRM
system can be effective for enabling organizations delivering
complete solutions.

Another research paper by Martha Rogers Peppers & Rogers Group

founding partner which includes that Call center agents can have a big
impact on customer profitability and build customer value for their
organization. In this instalment of our Creating Customer Value
podcast series, Peppers & Rogers Group founding partner Martha
Rogers explains how companies can encourage call center agents to
focus on customer profitability, discusses the difference between
inbound call center agents and outbound call center agents in handling
customer interactions and gives tips for leveraging predictive
analytics technology to build profitable customers.

Another research paper by Reinhold Decker and Michael Ho¨ppner

(Department of Business Administration and Economics, University
of Bielefeld, Germany) concentrates on requirements and conditions
of implementing customer intelligence in academic libraries.
Moreover, a conceptual framework for a library management
information system based on a data warehouse that links external and
internal data to support strategic planning processes is introduced
here. Content-related and technical aspects of customer intelligence in
academic libraries are outlined and analogies are drawn to
commercial enterprises to motivate the conceptual reflections. The
paper closes with two examples that demonstrate how multifaceted
the data pool for customer intelligence can be in librarianship.

The paper sensitizes to the advantages of systematically generating

customer knowledge in academic libraries for strategic planning and
customer orientation. The suggested approach can serve as a basis for
the development of data-based decision support systems focusing on
the tracking of the usage of library services and customer preferences
over time.

A research paper by Dien D. Phan & Douglas R. Vogel (Information

Systems Department, St. Cloud State University, USA) discusses a
model of customer relationship management and business intelligence
systems for catalogue and online retailers. The paper identifies
strategies and the successes and failures at Fingerhut Inc., the second
largest catalogue mail order company in the U.S. in 1999, presents
case studies on the success and failure of customer relationships and
business and addresses the following: impacts of price discrimination
on customer relationships, impacts of CRM and/or BI systems on
catalogue and online retailing businesses & successful outcome model
for catalogue and online businesses.
LAYERS OF CUSTOMER INTELLIGENCE SYSTEM

Customer intelligence is an aggregation of concept, method, process

and software. It is about the innovation and the use of customer
knowledge, and how to promote the decision ability towards
optimizing customer relationship and the whole operations
process. The customer intelligence architecture shown in Figure1 can
help you understand the definition with five layers explored. 

1) Theoretical foundation: 
The theoretical foundation of customer intelligence is a guide
for how the enterprise makes customer related decisions. It may
include not only theory and the methods the enterprise uses to
analyze and treat customer but also value analysis from both
customer?s and enterprise?s view. With index measures and
weights placed on variables such as consumption behavior,
customer satisfaction and profitability analysis, a scientific and
logical decision is obtained. 

2) Information system layer: 

This layer is defined as a physical basis for the customer
intelligence architecture. It is characterized as an information
system platform oriented to special application fields with
strong analysis and decision functions, such as CRM, ERP, sales
automation and business campaign management systems. Note
that this is different from an operational MIS system in that a CI
architecture can offer decision functions such as analysis and
trend prediction. 

3) Data analysis layer: 

This includes a series of algorithms, tools and models. Firstly,
qualified data or information must be obtained. Then these
algorithms, tools and models help people analyze the data or
information, draw conclusions, form hypothesis and validate the
hypothesis automatically or through a manual process. 

4) Knowledge discovery layer: 

Like the data analysis layer, this layer includes a series of
algorithms, tools and models. It helps transform data to
information, information to knowledge after discovery or
information to knowledge directly. 

5) Strategy layer: 
This layer puts information or knowledge to use in promoting
decision-making and enterprise modeling. It is an aggregation of
concepts, methods and processes utilizing information from
several data sources, experience and hypothesis to promote
decision ability of enterprise. Through capturing, managing and
analyzing data, it provides all kinds of members throughout the
 enterprise with knowledge to make decisions on strategy and
enterprise tactics. 

Benefits of Customer Intelligence System

TIME SAVINGS 
The process of looking for and interpreting disparate sets of data
amounts to an incredible cumulative amount of time lost. Time, and
therefore profits, area also lost when up-to-the-minute market
information isn't available. Business Intelligence solutions save time
by combining information into quickly and easily accessible and
interpretable formats. Business Intelligence systems also saves time
by enabling managers to be immediately notified -via phone or
emailed to their PDA, for example -when events happen, thereby
shortening the reaction time.

REDUCED LOSSES 
Business Intelligence solutions are imperative in order to prevent and
reduce losses. As mentioned above, shortening the reaction time to
unforeseen events can save not only time, but also millions of dollars,
especially in industries such as technology, insurance or stock trading.
Risk is also reduced if information is more accurately represented.
Risks and events can be appropriately managed if acted upon in a
timely manner and if accurate information is applied. Losses can also
be prevented by utilizing automated alerts. Executives and managers
can be informed automatically as soon as a specific performance
metric goes above or below a certain threshold, and respond
appropriately before losses are incurred.

LOWER OVERHEAD COSTS 

Business Intelligence vendors can provide single, easily navigable and
user-friendly web portals that paperlessly bring all kinds of customer
and product information to employee fingertips, thereby reducing
overhead costs and saving both the organization and client time and
money. Being able to monitor inventory and supply and compare that
data to the sales and marketing information allows companies to
tightly and efficiently manage resources. Most companies see a very
quick and profitable Return on Investment (ROI) after investing in
Business Intelligence applications.

BUILD MORE DYNAMIC CUSTOME RELATIONSHIP

Organizations can create long-lasting and dynamic customer

partnerships by gaining greater insight into the needs of customers.
Customer intimacy gives companies the ability to understand and act
on observed customer behaviors in order to better serve them. By
analyzing these behaviors, it is possible to segment customers in a
way that will surface trends and future needs. These results can be
used to change the behavior of your customer facing systems for the
better.

GET AN INTEGERATED VIEW OF CUSTOMER

The integrated view of the customer provides a 360° perspective of

key information related to the customers’ demographics and
interactions with the organization. Sources of this information include
ERP, CRM, call center, ecommerce sites, and potentially other
systems, including external sources. The integrated view of the
customer includes information about opportunity pipeline, purchase
history, sales order status, fulfillment history, support and service
incidents, credit and payment history, and relevant market
demographic information. The integrated view of the customer
enables various types of in-depth customer analysis including:
 Customer Segmentation / Profiling
 Customer Churn / Retention / Loyalty Analysis
 Customer Lifetime Value Analysis
 Customer Profitability Analysis
 Customer Credit Analysis
 Customer Fulfilment Performance Analysis
 Customer Service Analysis

IDENTIFY PATTERNS AND CREATE PREDICTIVE MODEL

Companies have plenty of detailed customer interaction data about

browsing behaviour, purchase behaviour, returns, complaints, wishes,
and more. Yet few businesses use this data effectively. The reason for
this paradox is that technology for generating, capturing, and storing
data has far outpaced the human capacity to understand, analyze, and
exploit it for maximum impact. Data-mining technology applies
algorithms to sets of data to help identify interesting patterns and
predictive models of behaviour. This functionality offers some of the
greatest potential for enabling businesses to use data resources most
effectively for strategic business success.

Examples of companies implementing

Customer Intelligence System
In today’s competitive business environment, having access to the
right information can make the difference between prosperity or
merely survival. CI systems can help track the pulse of vital
performance factors. CI requires information on demand—achieved
by combining multidimensional data analysis and data mining with
advanced statistical and analytical functions in a real-time, integrated
environment. Data collection methods, multimedia files and rapid-
access tools that grow and adjust as needed create this dynamic
system. Constant vigilance, including tuning and monitoring of these
systems, helps maintain a sharp focus for overall enterprise
effectiveness.

By IBM
IBM CI systems solutions have been developed to address our
customers demanding expectations. We begin with a customer-centric
orientation so that we can understand customer needs and then match
them with our state-of-the-art hardware and software tools while
working to minimize implementation disruption. Our broad
experience includes business planning as well as technical
competencies. For CI software on IBM hardware, we test
interoperability and scalability at various levels. Base-level
interoperability tests examine functional compatibility with the IBM
DB2®suite and select IBM Business Partner software for analytics,
reporting or Web posting. These tests can serve as system
compatibility proof-points. Sometimes, more intense testing to
emulate specific enterprise environments is the only acceptable path
when the future of the enterprise may be at risk. We routinely conduct
such tests at our labs with IBM hardware and

Skills
• CI business practices by industry
• Technical infrastructure Integration
Software
• IBM: data warehousing, tools, storage Management
• ISV: industry leader’s data warehousing, Analytics
Scalability
• Proof of performance
• Hardware, software, data warehouse, tools
Interoperability
• Proof of performance
• Hardware, software, network, data Warehouse, ETL, analytics

software as well ISV tools. Using customer workloads and patterns of

queries and reporting, we stretch the system to monitor peak
performance workloads and choke-points. Customer database
administrators and IT managers routinely participate to gain system
insights for fine-tuning and optimizing performance.
Many products available in the marketplace provide “point solutions”
that address only a few of the important aspects of BI solutions. IBM
provides solutions in each of the areas today. IBM offers ~™
systems for IBM z/OS®, IBM OS/400®, UNIX, Windows NT,
Windows 2000 and Linux operating systems; IBM Total Storage®
disk and tape products; and the IBM DB2 suite of database products.
In addition, we work with best-of-breed software vendors to provide a
selection of pretested options. The IBM product families and
offerings span the capacity, performance and cost spectrum, enabling
you to select products and services that are right for your needs—
today, and tomorrow as your needs change. For example, to help you
address your organization’s storage needs, IBM offers IBM
Capacity Upgrade on Demand (CUoD), an offering designed to help
provide a flexible framework that matches your dynamic workload
requirements. By enabling you to proactively size your capacity
needs, these solutions can help provide the flexibility to stay a step
ahead of your actual storage requirements.
IBM products are designed to operate in a heterogeneous environment
to support both IBM and other vendors’ servers.
IBM solutions for managing DB2 and Oracle data warehouse
environments provide high functionality, integrated software products
from leading vendors in the relational database management
marketplace. Other products offer functions similar to other point
solutions, but with an important difference—they are integrated. That
is, they are designed and tested to work together and are supported by
one vendor, providing perhaps the greatest advantage of all: your IT
professionals can address your organization’s business needs, rather
than their spending time integrating point solutions from different
vendors and continually supporting them.
Comprehensive CI solutions from IBM can help combine business
applications with superb technical performance and reliability. These
solutions comprise server and storage hardware, database and
analytical software and consulting services that address CI needs from
all angles. The strength of IBM CI solutions has been fuelled by
technology advancements, including powerful parallel processing
systems, self-diagnosing infrastructures, self-managing server and
storage technologies, versatile and innovative data storage systems
and the creation of new algorithms for data protection, analysis and
data mining.

BY ORACLE
Oracle Customer Intelligence (OCI) is a customer information viewer
that enables you to access enterprise-wide (360-degree) view of
customer information. OCI provides you with information viewing
tool, so you can search for and view detailed enterprise-wide
customer information. You can search for a specific customer through
simple, advanced search features, or alpha (A to Z) listing of
customers.
OCI provides graphical representation of results from analytics for
customer acquisition, customer profitability, customer retention,
customer satisfaction, customer loyalty and customer lifecycle that
you can view at a high level. You can get detailed information by
drilling down to group of customer for a specific period and
eventually to an individual customer.

Architectural Overview of Oracle Customer Intelligence

Client Personal Home Page

Web/Reports server
Mid-Tier

Repor
t

DB
BIS Core BIS Product
Schema Schema

Workflow Application
Applications
alerts s Schema

Customer Intelligence’s is based upon a summary table driven

architecture; in addition, customer intelligence uses a web-enabled
front-end applications for complex analysis.
The summary tables store key measures of customer acquisition,
retention, profitability, satisfaction, loyalty, lifecycle, and information
from other CRM and ERP databases using collection programs to
ensure timely retrieval of data. One can use the information in the
summary tables to refresh collection programs at any frequency that is
set up, but the minimum granularity of data stored will be monthly.
For security and logging into Customer Intelligence, one must access
the PHP (Personal Home Page) architecture. One can configure the
Homepage and allow users to view the information that is considered
most important. Each user will be given a PHP to access all Oracle
BIS applications. Included in the Homepage are the Performance
Measures area, Navigator (to access other BIS products), Customer
Intelligence uses Oracle Reports 6.0 to build reports, which are web
enabled. One can view the reports using a standard browser.
REFERENCES
 http://www.thewisemarketer.com/features/read.asp?id=119

 www.emraldinsight.com

 http://www03.ibm.com/systems/resources/systems_storage_s
olutions_business_intelligence_pdf_business-intel.pdf

 http://www.business-intelligence-software.biz/business-
intelligence-systems-benefits.html

 http://www.charter-uk.com/customer_intelligence.asp

 http://www.g-cem.org/eng/content_details.jsp?
contentid=1308&subjectid=2

 A report of 'Raving Fans: A Revolutionary Approach

to Customer Service' By Ken Blanchard

 "Using "Cross-Departmental Teams Memorandum Research

Report"

 Role of knowledge management and analytical CRM in

business: data mining based framework.
 Research paper by Martha Rogers Peppers & Rogers Group
founding partner.