12 Customer Relationship Management ting on how the product is delivered to the customer. ‘The approach of focusing on customer satisfaction and loyalty rather than focus- ing self satisfaction and profit. The acceptance of the fact that using high end technologies and software the cost can radically be decreased without compromising on quality and service of pro- duets. ‘The increasing tendency to retain existing customers and trying to get more and more business out of them. ‘The realization that the traditional trends of marketing and selling are increa- singlw fading out in the current economic scenario, These additive approaches helped a lot in building up consequently the modem CRM. Today we have well defined and sophisticated CRM systems into being which are always in process of improvement. ss o rs “44 DEFINITIONS OF CRM “CRM is the core business strategy that integrates internal processes and func- tions, and external networks, to create and deliver value to targeted customers at a profit. itis grounded on high-quality customer data and enabled by information technology." Francis Buttle (2004) “A business strategy that uses information technology to provide the enterprise with a comprehensive, reliable, and integrated view of its customer base so that all business processes and customer interactions help maintain and expand mutually beneficial relationships.” Zikmund, McLeod, and Gilbert (2003) “An enterprise ide business strategy for achieving custemer-specific ob- jectives by taking cusiomer-specific actions.” Peppers & Rogers (2004) “CRM is a business strategy to select and manage the most valuable customer relationships CRM requires « customer-centric business philosophy aad culture to support effective marketing, sales and service processes. CRM applications can enable effective customer relationship management, provided that an enterprise has the right leadership, strategy & culture.” CRMGuru.com (2003) “CRMis a philosophy and a business strategy, supported by a system and a technology, designed to improve human interactions in a business environment.”Greenberg (2004) erence ene RE ET TAT EE SS 4.5 FEAT Customer nization tc for achiev tures: 4 Cust need and mod int ust the pat ton ton ise or ingOverview of RM 13 Custom = Relationship Managcment is a strategy which is customized by an orga- ste manage and administrate its customers and vendors in an efficient manner excellence in business. It is primarily entangled with following fea- Castomers Needs- An organization can never assume what actually a customer needs. Hence it is extremely important to interview a customer about all the likes and dislikes so that the actual needs can be ascertained and prioritized. Without modulating the actual needs it is arduous to serve the customer effectively and maintain a long-term deal. 2. Customers Response- Customer response is the reaction by the organization to the queries and activities of the customer. Dealing with these queries intelligently is very important as small misunderstandings could convey unalike perceptions. Success totally depends on the understanding and interpreting these queries and then working out to provide the best solution. During this situation if the sup- plier wins to satisfy the customer by properly answering fo his queries, he suc- ceeds in explicating a professional and emotional relationship with him, 3. Customer Satisfaction- Customer satisfaction is the measure of how the needs and responses are collaborated and delivered to excel customer expectation. In today’s competitive business marketplace, customer satisfaction is an important performance exponent and basic differentiator of business strategies. Hence, the more is customer satisfaction; more is the business and the bonding with cus- tomer. Customer Loyalty- Customer loyalty is the tendency of the customer to remain in business with a particular supplier and buy the products regularly. This is -asually seen whena customer is very much satisfied by the supplier and re-visits # organization for business deals, or when he is tended towards re-buying a ar product or brand over times by that supplier. To continue the cus- aalty the most important aspect an organization should focus on is cus- ion. Hence, customer loyalty is an influencing aspect of CRM and for business success. ‘Customer retention is a strategic process to keep or retain dnot letting them to diverge or defect to other suppli- pusiness. Usually a loyal customer is tended towards stick- or product as far as his basic needs continseto be prop- erly fulfill js the pes ‘business. Custom complai of dissal Jaunch dissatis derstar the suy timate itis e these | 1, Caste ing t satis! orga pros qua iss Let it be prove te organizL an orga- 3 Customer Relationship Management erly flied. He does not opt for taking a siskin going for a new product. More is the possibility to retain customers the more is the probability of net growth of business. Customer Complaints- Always there exists a challenge for suppliers to deal with complaints raised by customers. Normally raising a complaint indicates the act of dissatisfaction of the customer. There can be several reasons for a customer to Iauncha complaint. A genuine reason can also exist due to which the customer is dissatisfied but sometimes complaints are launched due to some sort of misun- derstanding in analyzing and interpreting the conditions ofthe deal provided by the supplier regarding any product or service, Handling these complaints to ul- timate satisfaction of the customer is substantial for any organization and hence it is essential for ‘rem to have predefined set of process in CRM to deal with these complaints and efficiently resolve it in no time. 1 Customer Service- In an organization Customer Service is the process of deliver- ing information and services regarding all the products and brands. Customer satisfaction depends on quality of service provided to him by the supplier. The organization has not only to elaborate and clarify the details of the services to be provided to the customer but also to abide with the conditions as well. If the cuality and trend of service gobeyond customer's expectation, the organization is supposed to havea good business with customers. Let it be a start up enterprise or a well established organization the above aspects | prove to be of prime importance in dealing with a genuine customer through a well organized CRM system. 1.6 IMPORTANCE OF CRM Customer Relationship management is the strongest and the most effciont epprocch in maintaining and creating relationships with customers. Customer relationship managemertt i3 not only pure business but alse ideate strong personal bonding within people. Development of this type of bonding drives the business to new levels of fo identify the actual needs of customer and help thens to serve them in a beter teay ea Beli that more the sophisticated strategies incolved in implementing the cus- Somer relationship management, the more strong and fruitful is the business. Most of | ‘SMCCESS. nce this personal and emotional linkage is built itis very ensy for any organization | i he organizations have dediceted word class tools for maintaining CRM systems inio | their are Bat Cur CRM, i stands ple cha Lookir why a ° 2 we oe eS:ustomer to customer is t of misun- rovided by aints to ul- and hence deal with Customers of deliver Customer pplier. The vices tobe well. If the ganization Seurce wuwsivel.com veaspas | COLE effec, implios building long-term relationship with the customers. It under- Veber | sands customers needs and respond via multiple products and services via mult ple channels. Various multiple channels covers — 1. web & email 2 Call Centres 3. Field 4 Partners etc. pproacls Honsitip Looking at some broader perspectives given as below we can easily determine i why a CRM System is always important for an organization, evels of 1. ACRMsystem consists of a historical view and analysis of all the acquited or to be acquired customers. Tis helpsin reduced searching and corzelating custort- nor ers and to foresee customer needs effectively and increase business. oe 2. CRM contains each and every bit of details ofa customer, hence itis very easy for Most of track a customer accordingly and can be used to determine which customer can on be profitable and which not., customers are grouped according to different aspecis according ‘business they do or according to physical location and arc allocated customer managers often called as account managers. This helps in and concentrating on each and every customer separately, system is not only used to deal with the existing customers but is also in acquiring new customers. The process first star!s with identifying a mer and maintaining all the corresponding details into the CRM system. is also called an ‘Opportunity of Business’. The Sales and Field representa- ‘Gves then try getting business out of these customers by sophistically following up with them and converting them into a winning deal. All thisis very easily and efficiently done by an integrated CRM system The strongest aspect of Customei Relationship Management is thatitis very cost- effective. The advantage of decently implemented CRM system is that there is very less need of paper and manual work which requires lesser staff to manage and lesser resources to deal with. The technologies used in implementing a CRM system are also very cheap and smooth as compared to the traditional way of business. Alll the details in CRM system is kept centralized which is available anytime on ev. sibel.com fingertips. This reduces the process time and increases productivity. Iunder __Eificently dealing with al the customers and providing them what they actully ia mul, __‘Reedincieases the customer satisfaction. Thisincreases the chance of getting more . business which ultimately enhances tumover and profit. If the customer is satisfied they will always be loyal to your offerings and will remain in business forever resulting in increasing customer base and ultimately enhancing net growth of business. n today's commercial world, practice of dealing with existing customers and thriving ermine >usiness by getting more customers into loop is predominant and is mere a dilemma {stalling a CRM system can definitely improve the situation and help in challenging new ways of marketing and business in an efficiant manner. Hence in the era of dor to ess “very organization should be recommended to have a full-fledged CRM sys- astom- ‘tocope up with all the business needs, sy for ‘CRM AND MARKETING € = can leverages and amplifies customer base of an organization through efficacious efficient marketing, In fact CRM has brought up new dimensions in the field of ay marketing tive CRM e-mail me strategies they help melioratir low assct ‘The vario 1. Web towe erst ther 2 2 2 2 2 2. Ema inex cust feat ever forn pro’ beh pro: wet ani pro: grov240 Customer Relationship Management a “ 174 CUSTOMER LIFE CYCLE He “The customer life cycle is the series of steps that identifies the dynamics of the atc relationship between the customer and the supplier over a period of time. While ja there are several different approaches to defining the stages of the relationship with a a customer, most methods begin with the attempt to attract the interest of a poten- “a tial client and culminate in securing the ongoing loyalty of that customer. In al its bt incamations, each phase or step in the life cycle holds the potential to deepen the pr connection between the consumer and the provider, or to cause the relationship to pla deteriorate and finally come to an end. A typical customer life cycle begins with what is known as the attraction or reaching phase. Here, the supplier takes proactive steps to secure the attention of the con- sumer and generate interest. It is during this process that trust begins to be estab- lished hetween the two parties, providing a basis for ongoing dialogue Catone an | Pentre Rettten fet an | | ra | The above diagram offers one view on the value of a customer and why the organisation think of them in terms of a value curve, Itis shown as a simple pictare and broken into five distinct phases: . Acquisition 2 Conversion 3. Penetration 4 Retention 5. ReactivationRelationship Management in B2B Commerce 241 —_ have been intentionally left out of the customer lifecycle because they are not customers at all. They are individuals or companies that your company to do business with but you a:e still in pursuit. They have not yet been won and are merely prospective customers and because they have noi yet given you money for your goods or services. Acquisition really is the first stage of the customer lifecycle. The customer was been persuaded by your overtures and hes finally given you money for your goods or services. They have placed their first order. They have decided to do business with you... or have they? Conversion fas been carefully chosen to represent a stage in the customer expe- rience where even though the cusomer has bought from your company they really need to become “converted.” The second purchase or more in some indus- tries, identifies a state of mind wherein the customer is feeling pretty good about their first purchase experience but need a lot more before they become loyal This is why the Loyalty Gap falls here. Conversion is frequently a very large point of prediction (aka tipping point or leverage point) on whether or not you have acquired « loyal new customer or if they simply dipped their toe in your business and then went elsewhere. Penetration is really the point at which profits occur. This is one ofthe lifecycle stages that is critical to long term success and profitability ‘of every business. The ability to have a relationship that is deep and wide with a company or individual ig at the heart of high value customers. Retention is the second half of the equation that represents high value custom- ers. When a customer bays from your company, year after year after year, their -value to you increases exponentially - keep them or perish. Reactivation is that wonderful group of customers that you have offended, ne- glected or simply lost out to the competition, They know you and have done business with you. They are distinctively different than a prospec that has never done business with you befoxé 17.2 CUSTOMER RETENTION Customer retention reflects the soul of your company. In order to serve the cus- tomer, we must think like the customer and the employee. Customer retention 1e-944 Customer Relationship Management ‘ team to deliver content that can help service foiks do theirjob. In my experience : many thorny customer service issues stem from 2 mismatch between the offering functionality and customer expectations. Marketing can create conteit that can set customer expectations for functionality: and performance to make sure there q is a good match between the product and what the customer is trying to do. 4, Listen (and then talk) ~The overwhelming majority of unhappy customers will never communicate their dissatisfaction with you. Regularly checking in on cus- E tomes will help you to see signs of ar impending departure while there's stil 7 time to fix problems. Regular customer contactthrough customer advisory ‘boards 1 or other less structured customer calls will often alert you to bigger problems i before they're reflected in your metrics. You can learn a lot by eavesdropping on customers on blogs, Twitter and forums. Just remember that if you are going to engage with customers in this way you need to be prepared to act on the issues they ate complaining about Z 4 Loyalty programs, appreciation awards and customer referral rewards—seward- a ing customers for relerring you new business or for repeat buys s alwaysa good idea. Even an in market where that isn't appropriate (I've never seen a rewards i program for enterprise infrastructure software for example) you can still give ! customers an award to recognize them ° 5, Bring Your Customers Together - at the larger companies | worked at our an- nual aser conference was one of the most successful marketing tactics we did. Companies with smaller user bases and budgets are doing similar things by cre- ating online spaces (in the form of forums, custom social networks, face book or LinkedIn groups, etc} where customers can connect, share their experiences and ' 4 leam from each other. 5 47.3 CUSTOMER LOYALTY The term customer loyalty is used to describe the behavior of repeat customers, as well as those that offer good ratings, reviews, or testimonials. Some customers do a particular company a great service by offering favorable word of mouth publicity a regarding a product, telling friends and family, thus adding them to the number of . Joyal customers, However, customer loyalty includes much more, It is a process, program, or a group of programs geared toward keeping a client happy so he or she | will provide more business.sec tint i Relationship Management in B2B Commerce 245 loyalty can be achieved in some cases by offering a quality product with firm guarantee, Customer loyalty is also achieved through free offers, coupons, ‘ow interest rates on financing, high value trade-ins, extended warranties, rebates, ‘and other rewards and incentive programs. The ultimate goal of customer loyalty programs is happy customers who will retum to purchase again and persuade others to use that company’s products or services. This equates to profitability, as \ well as happy stakeholders customer Keeping edger ay siomer loyalty may be a one-time program or incentive, or an ongomg group of to entice consumers. Buy-cne-get-one free programs are very populat, as ases that come with rebates or free gifts. Another good incentive for achiev- er loyalty is offering a tisk free trial period for a product or service. Also as brand name loyalty, these types of incentives are meant to ensure that will return, not only to buy the same product again and again, but also products or services offered by the company: omer service is another key element in gaining customer loyalty. Ifa jlem, the company should do whatever it takes to ake things right. “falty, it should be replaced or the customer's morey should be d he standard procedure for any reputable business, but thosene Pane 8 a 246 Customer Relationship Management who wish to develop customer loyalty on a large-scale basis may also go above and beyond the standard. They may offer even more by way of free gifts or discounts to appease the customer. 17.4 TEN TIPS TO BUILD CUSTOMER LOYALTY The key to a successful business is a steady customer base. After all, successful businesses typically see 80 percent of theit business come from 20 percent of their customers. Too inany businesses neglect this loyal customer base in pursuit of new customers. However, since the cost to attract new customers is significantly more than to maintain your relationship with existing ones, your efforts toward building customer loyalty will certainly payott Here are ten ways to build customer loyalty 1. Communicate: Whether it isan email newsletter, monthly flier, a reminder card fora tune up, ora holiday greeting card, reach out to your steady customers. 2. Customer Service: Go the extra distance and meet customer needs. Train the staff to do the same. Customers remember being treated well. 3. Employee Loyalty: Loyalty works from the top down. If you are loyal to your employees, they will feel positively about their jobs and pass that loyalty along to your customers, 4, Employee Training: Train employees in the manner that you want them to inte- act with customers. Empower employees to make decisions that benefit the cus- tomer. 5, Customer Incentives: Give customers a reason to retum to your business, For instance, because children outgrow shoes quickly, the owner ofa children’s shoe store might offer a card that makes the tenth pair of skces half price. Likewise, a dentist may give a free cleaning to anyone who has seen him regulatly for five years. 6. Product Awareness: Know what your steady patrons purchase and keep these items in stock. Add other products and/or services that accompany or compli- ment the products that your regular customers buy regularly. And make sure that your staff understands everything they can about your products. 7. Reliability: Ifyou say a purchase will arriveon Wednesday, deliveriton Wednes- day. Be reliable. If something goes wrong, let customers know immediately and compensate them for their inconvenience.re and Eis to messful E their fnew more ding be a = worn ne Relationship Management in BZB Commerce 247 le: Try to solve customer problems or complaints to the best of your Excuses — such as “That's our policy” — will lose more customers then the store on fire. Read our 60-Second Guide to Managing Ugset Custom- ers for more information. 3. People over Technology: The harder it is for a customer to speak to a human being when he or she has a problem, the less likely it is that you will see that customer again 7 10. Know Their Names: Remember the theme song to the television show C Get to know the names of regular customers or at least recognize their =) + 17.5 SERVICE RECOVERY MANAGEMENT Service businesses are characterised by simultaneous production and delivery of s service. At times, because of the involvement of human element, the service gets ¢ distorted when it reaches customers. For example, an insurance claim cheque may hb have a spelling mistake, or the cheque or claim form may get misplaced which ir increases claim settlement time, or the restaurant waiter instead of no sugar coffee n tay offer low sugar coffee to the customer. In the case of failure of service, it is in imperative for the service company to address the customer complaints and thus comes the phenomenon of service recovery. Reasons of Service Failures th et al, (1999) found that the existing literature underlines two types of service mres- outcome (Flaw in the core service) and process (flaw in the delivery of ce). Bitner et al. (1990) classified service failures into four categories. 1g on the same line, Lewis and Spyrakopoulos (2001) suggested that unique eristics of services as well as individual psychographic factors associated service delivery process can be held responsible for service failure. They “grouped service failures into five categories: ions of the organisation that are against the sense of fair trade emipact of service failure on business interests of service companies, ncept came forth. The emergence of service companies leads toiB ti we = mn. cency is Hence the cus- s. Many ssessing promi- Se phi- nable. atially ion rate butnot classes twould to offer oge stu- iservic- se they ortance valued 1s types is they parent- of cus- stomers could idefec- -quiva- ally en- could sthigh higher much Customer Retenti lower rates. This will result in serious business losses. Heace it is im realize that it tums out to be profitable by loosing some high valued by compromising on retention rates. This is because the profit eamed ing higher to the majority of retained customers always exceeds the profil out from defectors. Hence, in normal situations the philosophy, that by ing customer retention, business profits also increase, does not stand goo over, itis very essential for the organization to make subsequent strat cordingly to manage cusioncer retention and always aiming at business By understanding the above myths, following are the crucial aspects that ofganizations should focus on: > — The ideabehind customer retention is not to focus on zero defection. Rath organizations should manage customer retention in such a way that it maximum profit and optimize customers’ equity. > — Without incurring cost customer retention cannot be maximized. Focus s be on indulging these expenses efficiently in increasing customer equity of vidual customer and understanding that retention is net at all free. 10.6 DIFFERENCE BETWEEN CUSTOMER LOYALTY AND CUSTO! RETENTION Retention is usually measured with new orders from existing customers wit defined time span. This definition of retention may alter from company to comp but it carries a similar notion everywhere that: if a customer is revisiting the c pany at least once in a financial year, he must be regarded as a retained custom A retained customer may be understood as one who is familiar to the company hence, does not demand further investment or efforts on the part of the comp: Loyalty, however, goes beyond the regular features of retention and capitalises up customer’ trust, relationship and repeatedly and willingly buying the products services of the company. These customers tend to be more lenient in the case of error and remain profitable to the company. The difference between retention ani loyalty can be highlighted through understanding the role of competitive pressut and customers’ take on that. Ifa customer, in a year, purchases once at one store an 10 times at the competitors’ store, he may be termed a retained customer but not loyal customer as loyalty encompasses negligible switching orientation and regular buyingor Relationship Management = loyalty results in customer retention but custumer retention does not aly lead fo cu tomer loyalty. The importance of customer retention connat be amed by charg-§ as it is unlikely to tam every customer into a loyal one. However, loyaley ® profit washedfisce giving than retention. Some of the advantages of loyalty, when compared that by inereas-pigon, are long-term relationship, regular revenues in increasing amount, better ind good. How-jRanding of customer expectations and greater potential for business growth. mt strategies ac- asiness profit. § in its simplest form means “faithfulness to one’s allegiance.” On the other Fetention originates from the word “retain” which means “to keep possession cis that all the fen the basic meanings of these two terms highlight the difference between [Loyalty finds its source into the customer, whereas retention suggests its con. Rather, the B22 © the company. To retum or not to retum depends on a customer's Fthat it yields | experience and certain personal factors but retaining a customer involves from the company. These efforts may range from special offers to special jens, - Focus should equity of indi- oe these terms can be explained as follows: a ity comes from the ability to develop emotional and psychological connec- o swith the customers, Companies can build relationships with their customers CUSTOMER be desicning customer loyalty programs which establish cormection with the Beart as well as minds of the customers and motivate them to revisit the com- Bers Within a esention does not call for any emotional bonding or psychological attachment yf company, the customers. It can simply be attained by giving incentives for rev: Sng the com- Re company and ignoring competitive offers. med customer, ° company and Se company. (TEGIES FOR CUSTOMER RETENTION well carved-out strategy to retain the existing customer with the com- mialises upon sith its offers. Following is a set of strategic initiatives required for cus- zoducts or ement System Pressures nt management system must ensure that the complainant is kept me store and ‘understand the complaint processes, the complaints are taken mex but not a employees are empowered to deal with situation. and regular int management system should have the following basic Lv 2 A tt a 3. OR « 4A pl Ga th 6 6 a pl 2) Servic Itisv which an eff 16M co 2. Br 3 A 4, Tt or a Consider th An aircraft the door ur that was ro that a custo that they ge compliment (3) Manag Somet cusion er, butCustomer Retention 135. does not annot be +, loyalty ompared nt, better growth he other ossession, between ogests its sstomer's involves o special | connec- ‘ustomers with the = the com- \ , tachment = revisiting the com- = |} for cus- antis kept aretaken 1. Visibility: The customer should know where to complain. 2, Accessibility: The customer should know how to complain. Asa. ruleof thumb, the more formal the system for lodging complaints, the less accessible itis to customers. 3. Responsiveness: Complaints need to be dealt with quickly. The quicker the complaints are dealt with, the higher the customer satisfaction. 4. Accountability: Someone in the organisation has to take responsibility for com- plaint handling. 5. Conttinuous improvement: This is about looking at the root causes and fixing them. 6. Customer-focused approach: A service provider who adopts @ customer-focused approach invites complaints and indicates ‘commitment of resolving the com- plaint by its words and actions in al fairness (2) Service Recovery Strategies It is very important for service companies to have service recovery strategies, which can be applied in case of service failure. The following steps are useful in an effective service recovery system. 1. Measure the costs of effective service recovery, It should include the indirect cost also, when a customer departs wihappily. 2 Break customer silence and listen closely for complaints } 3. Act fast. 4, The frontline people ot employees must be trained and empowered by the ' organisation. j 5. Close the customer feedback loop Consider the following incident regarding an aisline (British Airways)- ‘An aircraft door was left open in a rainstorm before take off and a passenger near the door unfortunately got showered. The flight attendant not only did everything that was routine-offered to have the customer's garments cleaned and made sure that a customer relations representative contacted the customer later to demonstrate that they genuinely cated-but also made special gesture by offering the passenger 2 complimentary choice of certain tax-free goods. @) Managing Customer Waiting Sometimes, it is not possible to match demand and capacity; hence, waiting by customers becomes inevitable. Reducing weiting time is important fora matket- er, but it is equally important, if not more, to reduce the customer's perceivedention 135, Customer Acquisition 93 acquiring, the nature of response provided to acquisition is the key aspect to ruleofthumb, | Cus spec > Sale sand via t > = Autc offic pers: ing f 12.3 PUF SFA has t I. Incr inth suffiy sales sales your 2 Redw fewe abou dinat toex time Byre efforl of SE 3. Custe with the re peop! casto valuedoes ann ome nt,E gre ges sto inv 28 a (CRM) nenjoy ion are: adivities provide ot man- yd infor- ‘lutions such as ong oth- , service ulate all and easy y access ‘istory of ions and approve urce cost gerof the ne. questions sine what deability Sales Force Automation > Custom product competition- This allows sales person to provide custo specific set of products that meets their actual needs. » — Sales order creation from quotes- This generates actual order for customer ‘on quotes those were developed from price and product configuration d via the needs assessment. » — Automated customer billing- This is an integration point. It means that th office can generate customer invoice automatically form information that the person has entered into customer records. This feature is consequence of pa ing features. 7 a 12.3 PURPOSE OF SFA SFA has the following purposes:- 1. Increased Revenue: Quite obviously, gross income in the profit (1. improve: in the bottom line) is the main goal of implementing SFA. But it is not jus! sufficient answer to SEA’s success. Justas important is the increase in revenu salesperson and in the gross profit per year. If you have an increase 0 100 sales revenues but your cost of sales has increase or it strictly came as a rest your increased sales force, your SFA implementation fails. 2. Reduction in the cost of sales: This doesn't stand for reduction in force (mean fewer employees which obviously means to you). But in this case, we are talk about a reduction in the amount of time that is used by the sales people in c dination of their efforts, continuous data entry and often unsuccessful attem to extract and interpret data without the tools to do so. Studies show that s: time to fulfill administrative functions is almost half of a salesperson’s activit By reducing the time engaged in these administrative or other non-sales relat efforts, the cost of the sales is reduced. This is one of the most successful res of SFA. 3. Customer retention due to company: If your customers are happy, they will st with you even if they are paying a bit more. It is not about the money but abo the relationship with the company and often the relationship with particular sale people within the company, SEA’s benefit is to provide you with a view of t customer that allows an intelligent salesperson or a company to understand th value of the individual customer through customer history and communicatioip Management facts, numbers, or text that can be processed by a computer. Today, are accumulating vast and growing amounts of data in different for- ferent databases. This includes: mal or transactional data such as, sales, cost, inventory, payroll, and ac = asin designed Bifut the back Bhat the sales- mee of preced- . . / m s, associations, or relationships among all this data can provide informe- example, analysis of retail point of sale transaction data can yield informa- Eeprovement [MP Which products ae seling and shen, not just the venue per Mledge Seo 100% in ation can be converted into knowledge about historical patterns and future S352 result of |S. For example, summary information on retail supermarket sales can be ana- Zin light of promotional efforts to provide knowiedge of consumer buying ior. Thus, a manufacturer or retailer could determine which items are most (meaning eptible to promotional efforts, are talking incoor- | Warehouses rational data, such as industry sales, forecast data, and macro economic data - data about the data itself, such as logical database design or data ary definitions attempts advances in data capture, processing power, data transmission, and stor- ‘that sales ilities are enabling organizations to integrate their various databases into ites. ss. Data warehousing is defined as a process of centralized data man- retrieval. Data warehousing, like data mining, is a relatively new term Sales related concept itself has been around for years. Data warehousing represents results of maintaining a central repository of all organizational data. Central- needed to maximize user access and analysis. Dramatic technolog- ce making this vision a reality for many companies. And, equally in data analysis software are allowing users to access this data bey will stay ey but about software is what supports data mining. Scalar sales- swiew of the TA MINING fesstand the ication today by companies with a strong consumer focus - \ | retail, fix panies b position petition, on sales “drill de Data mi: entails u discover ‘ous tech summar changes. abling b With dal to send demogre products For exan recommi ucts to il 14.3 EL eo Ext © Stor e =©Pro als, e An eo Pre: 14.4 LE ee Art ing e Ger com ofnad doe an th Today, om tent for- at} gi andac- she nomic 238 be or data ge ast. in’ ‘9: }iorma- ‘oforma- x lc w /be ana- jth tbuying 1 re most ad stor- ses into 1 taman- thw term oresents Wentral- 2hnolog- Fequally an his data a vi : focus - Data Mining relail, financial, communication, and marketing organizations. It enables th panies to determine relationships among “intemal” factors such as price, p positioning, or staff skills, and “extemal” factors such as economic indicators petition, and customer demographics. And, itenables them to determine the on sales, customer satisfaction, and corporate profits. Finally, it enables ¢ “drill down” into summary information to view detail transactional data. Data mining is the drawing aut of hidden predictive data from huge datab: entails utilizing data mining software, human creativity, and sound methodol discover relationships, dependencies, pattems, and anomalies. It incorporates ous technical approaches including clustering, studying classification rules, summarization, locating dependency networks, detecting anomalies, and eval changes. The tools used for data mining foretell future behaviors and trends abling business firms to make wise, proactive decisions. With data mining, a retailer could use point-of-sale records of customer puree to send targeted promotions based on an individual's purchase history. By m demographic data from comment or warranty cards, the retailer could dew products and promotions to appeal to specific customer segments For example, Blockbuster Entertainment mines its video rental history databa recommend rentals to individual customers. American Express can suggest p ucts to its cardholders based on analysis of their monthly expenditures. 44.3 ELEMENTS OF DATA MINING «Extract, transform, and load transaction data onto the data warehouse syst ¢ Store and manage the data in a multidimensional database system. «Provide data access to business analysts and information technology profess als. + Analyze the data by application software. + Present the data in a useful format, such as a graph or table. 14,4 LEVELS OF ANALYSIS FOR DATA MINING «Artificial neural networks: Non-linear predictive models thatleam through tr ing and resemble biological neural networks in structure. * Genetic algorithms: Optimization techniques that use process such as gene combination, mutation, and natural selection ina design based on the conce of natural evolution. aye 7352