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July 24, 2000 |
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Analysis Turns To Action
New CRM packages emerge to help companies better understand and serve customers
By Jeff Sweat
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n the quest to better serve their customers, businesses are using a variety of tools to gather and evaluate as much customer data as they can. An emerging category of software promises to let them collect, analyze, and act on that information--in one integrated system and in real time. The result: Businesses can more easily turn customer analysis into action.Enter E.piphany Inc., the fast-growing software developer with roots in customer-data analysis and a new set of integrated tools for customer-relationship management. Second-quarter sales, reported last week, hit $24.5 million, a 650% increase over a year ago, prompting financial analysts to raise their estimates for future quarters.
E.piphany this week will introduce E.piphany E.5, the first version of its flagship product to incorporate the applications gained through its acquisition of CRM vendor Octane Software Inc. Also this week, E.piphany's rival in the customer-analysis market, Broadbase Inc., will release Broadbase 4.0, which integrates features from its acquisition of Rubric Inc., a marketing automation specialist.
Both packages let businesses collect and analyze customer data and, in some cases, initiate real-time responses. "We need to find out what makes a customer unique, then apply that in our business," says Ted Ross, manager of owner loyalty and CRM at Nissan North America Inc. in Gardena, Calif., which will deploy E.piphany E.5. When a valuable Nissan customer calls in for a wheel alignment, for example, the software would see that he's near the end of his lease and suggest offering the service for free. "Previously, it would be based on mileage or how loudly the guy complains. That's not a good strategy," Ross says.
Traditional, also called operational, CRM applications gather data from customer interactions such as service calls, sales transactions, and Web-site activity. The newer analytical CRM applications evaluate customer data for patterns that help companies craft marketing campaigns and build targeted sales pitches. They then suggest ways for businesses to act on the findings.
"The analytics alone are great, but you'll get 10 times the data if you connect to your sales systems and your [customer] touch points," says David Welch, eCRM manager for Hewlett-Packard's Business Customer Organization, which is evaluating Broadbase 4.0.
The new packages don't always include traditional CRM functions such as sales-force automation and heavy-duty call-center activity. Instead, they focus on Web personalization, self-service, and marketing tools tied closely to customer analysis. "The new world is very much about customers taking charge of relationships and driving sales," says E.piphany CEO Roger Siboni. "The new CRM has to have a completely connected action piece. That requires the marriage of analytical CRM and operational CRM."
Although analytical CRM makes up only $414 million of the $8.45 billion CRM market, Meta Group expects its sales to grow 111% this year, compared with 56% for operational CRM packages. Not surprisingly, traditional CRM vendors are jumping in. Siebel Systems Inc. says it will integrate analytic apps from Informatica Corp. with its front-office package. Oracle has built several customer-focused business-intelligence packages into its Oracle 11i front-office suite, though analysts say those apps are best at handling Oracle transactions and data.
Many of the leading business-intelligence software vendors have debuted CRM-oriented products, including Hyperion Solutions, Informatica, MicroStrategy, and NCR. The tools collect data about customers and sales from Web sites, call centers, E-commerce systems, and other sources and analyze it to spot trends, identify sales prospects, and calculate the effectiveness of marketing campaigns. But unlike E.piphany or Broadbase, they don't provide execution capabilities.
Businesses are drawn to the new CRM packages because they offer analysis and an ability to take action in a single suite. Web personalization software has enabled similar capabilities for a while, but not every customer comes through the Web. The new tools might ensure, for example, that when customers phone a call center to complain about poor service, they don't get a sales pitch the next time they call or visit the Web site. Instead, they would get a personalized message apologizing for the problem.
Although the new CRM suites are filled with promise, Meta Group analyst Steve Bonadio says E.piphany and Broadbase are still in the early phases of integration and a more complete combination of analytic CRM and operational CRM won't occur until subsequent versions of their products. E.piphany initially will let businesses see customer data in a single view, regardless of which data repository--E.piphany's or Octane's--holds that information. E.5 will also have a unified user interface, as well as feed E.piphany's analysis and personalization technology directly into a contact center so customer-service reps have access to personalization capabilities typically available only on a Web site.
Most companies are only starting to explore such features. Giant Eagle, a Pittsburgh grocery chain with 203 stores in three states, is implementing Blue Martini Software Inc.'s Customer Interaction System so it can better understand, target, and interact with its online customers. The company also uses custom-built CRM software, a data warehouse, and analytical software from SAS Institute and Cognos Inc. to better serve its customers. Russell Ross, VP of strategic planning, says the company is thinking about pulling all the pieces together. "You could provide even better service to the customer,'' he says.
But analytical and operational data are difficult to integrate. And even E.piphany, an early leader in the market, has more work to do. For example, although E.piphany users see customer information as a single record, the data actually resides in two databases--a transactional database that stores information on recent interactions and a data mart that allows for deep analysis.
And there are organizational issues. Marketing staffs and salespeople don't always communicate well, let alone share data. Companies must overcome such issues before a system that ties analysis and action can be fully effective, analysts say.
The new CRM systems are hybrids of analytic and operational technology. That means they may not have the analytical depth of longtime business-intelligence products.
And the tools aren't exactly cheap. E.piphany's software starts at $250,000, but many implementations cost $1 million or more. Broadbase pricing starts at $195,000, with a typical implementation ranging from $400,000 to $500,000.
Still, some customers say the systems stack up favorably against traditional CRM software, especially if they don't need full-blown CRM capabilities. Buy.com, a $600 million Web retailer of computers and electronics in Aliso Viejo, Calif., is deploying E.piphany to capture and leverage data from its millions of customers, says Travis Fagan, VP of customer support. An integrated suite is easier to implement and manages all the customer data in a single place, Fagan says. "Other CRM vendors aren't taking as holistic a view of the customer," he adds.
Buy.com also has been able to avoid cultural clashes over the new system because it encourages information exchange. "Putting the analytical side of the business and the operational side of the business together is a natural evolution," Fagan says. "If you don't get that, you won't be in business very long."
--with Beth Bacheldor and Rick Whiting
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