UNIT-III: CRM Architecture: IT Tools in CRM; Introduction to Data Warehousing, Data

Mining, and Benefits of CRM Technology.

CRM System Architecture

In addition to building sales and increasing profits through the gathering of data, CRM systems are also
valuable for maintaining and nurturing a loyal customer base. But how is the architecture of such a
system designed, and how does each part integrate with the others?

CRM system architecture can be broken down into 3 broad categories:

There are three fundamental components in CRM:

1. Operational - automation of basic business processes (marketing, sales, service)

2. Analytical - analysis of customer data and behavior using business intelligence
3. Collaborative - communicating with clients

1. Collaborative

All communications between a business and its customers are recorded, organised and processed in the
collaborative section of the software. This means communication by telephone, in person, and by email.

Customer relationships can be nurtured using data already provided by them which demonstrates their
shopping patterns and behaviours, likes and dislikes, the times they are most likely to buy, and how much
they spend on average.

Businesses use this information to provide enhanced customer service, cross-sell products based on
previous buying history, and offer targeted deals to segments of their customer base. Customers can be
segmented by various criteria including geographical location, age, gender, and profession, and can be
targeted via personalised emails or newsletters offering discounts and deals.

2. Operational

This category within a CRM system deals with the automation of business processes including customer
service, data on competitors, industry trends, customer account information and management.

Data is collected and stored within the database, ready for use in day-to-day operations such as
management of customer accounts, in addition to overall strategic planning. Detailed information about
special customer needs, destined for the sales force, is also stored here. Use of this type of data further
enables a business to personalise its approach to customers.
3. Analytical

Analytical CRM might result in cross-selling certain items to particular customers based on their previous
buying habits, or imparting information relevant only to certain segments of a customer base.

This part of the CRM architecture is also invaluable for identifying changes in the industry as a whole, so
that businesses remain agile and respond quickly to changing market demands. Data can be analysed in a
number of ways, and graphs, reports and diagrams produced to better illustrate the results.

This is the basic architecture of a customer relationship management system, but the rise of social media
and mobile working has brought other, more defined systems to the market. Popular add-ons to the basic
structure of a CRM solution might include cloud based systems that are accessible from any device.

The key word in CRM is integration integration of data so that it can be put to use in a way that benefits
not only the business, but also customers, suppliers and the workforce. Using mobile technology and
social media was the obvious next step in this process, and targets a whole new potential customer base.

CRM Architecture as a whole

The underlying aim of a well-structured CRM system is to provide an enhanced customer experience and
enable businesses to gain valuable information as their customers shop. Business owners can use this data
to increase sales and boost their bottom line, analysing marketing campaigns, and offering added value to
existing and potential customers.

TYPES OF CRM

Operational CRM
Operational CRM provides automated support to xxx "front office" business processes (sales, marketing
and service). Each interaction with a customer is generally added to a customer's history, and staff can
retrieve information on customers from the database as necessary.

According to Gartner Group, operational CRM typically involves three general areas:

Sales force automation (SFA)

SFA automates some of a company's critical sales and sales force management tasks, such as forecasting,
sales administration, tracking customer preferences and demographics, performance management, lead
management, account management, contact management and quote management.

Customer service and support (CSS) CSS automates certain service requests, complaints, product
returns and enquiries.
Enterprise marketing automation (EMA)

EMA provides information about the business environment, including information on competitors,
industry trends, and macroenvironmental variables. EMA applications are used to improve marketing
efficiency.

Integrated CRM software is often known as a "front office solution", as it deals directly with customers.

Many call centers use CRM software to store customer information. When a call is received, the system
displays the associated customer information (determined from the number of the caller). During and
following the call, the call center agent dealing with the customer can add further information.

Some customer services can be fully automated, such as allowing customers to access their bank account
details online or via a WAP phone.

Analytical CRM

Analytical CRM analyses data (gathered as part of operational CRM, or from other sources) in an attempt
to identify means to enhance a company's relationship with its clients. The results of an analysis can be
used to design targeted marketing campaigns, for example:

1. Acquisition: Cross-selling, up-selling

2. Retention: Retaining existing customers (antonym: customer attrition)
3. Information: Providing timely and regular information to customers
4. Other examples of the applications of analyses include:
5. Contact optimization
6. Evaluating and improving customer satisfaction
7. Optimizing sales coverage
8. Fraud detection
9. Financial forecasts
10. Price optimization
11. Product development
12. Program evaluation
13. Risk assessment and management
14. Strategic Marketing
15. Operational marketing

Data collection and analysis is viewed as a continuing and iterative process. Ideally, business decisions
are refined over time, based on feedback from earlier analyses and decisions. Most analytical CRM
projects use a data warehouse to manage data.
COLLABORATIVE CRM
Collaborative CRM focuses on the interaction with customers (personal interaction, letter, fax, phone,
Internet, e-mail etc.)

Collaborative CRM includes:

1. Providing efficient communication with customers across a variety of communications channels

2. Providing online services to reduce customer service costs
3. Providing access to customer information while interacting with customers

Driven by authors from the Harvard Business School (Kracklauer/Mills/Seifert), Collaborative CRM also
seems to be the new paradigma to succeed the leading Efficient Consumer Response and Category
Management concept in the industry/ trade relationship.

Uses of CRM

In its broadest sense, CRM covers all interaction and business with customers. A good CRM program
allows a business to acquire customers, provide customer services and retain valued customers.

Customer services can be improved by:

Providing online access to product information and technical assistance around the clock
Identifying what customers value and devising appropriate service strategies for each customer
Providing mechanisms for managing and scheduling follow-up sales calls
Tracking all contacts with a customer
Identifying potential problems before they occur
Providing a user-friendly mechanism for registering customer complaints
Providing a mechanism for handling problems and complaints
Providing a mechanism for correcting service deficiencies
Storing customer interests in order to target customers selectively
Providing mechanisms for managing and scheduling maintenance, repair, and on-going support

Technical Considerations

The following factors need to be considered:

1. Scalability: the system should be highly scalable, as the volume of data stored in the system
grows over time
2. Communication channels: CRM can interface with a variety of different channels (phone, WAP,
Internet etc.)
3. Workflow - a company's business processes need to be represented by the system with the ability
to track the individual stages and transfer information between steps
4. Assignment - the ability to assign requests, such as service requests, to a person or group.
5. Database - the means of storing customer data and histories (in a data warehouse)
6. Customer privacy considerations, such as data encryption and legislation.
Introduction to Data Warehousing, Data Mining

Data Warehousing For CRM

Data warehouses consist of

operational data,
decision support data, and
data external
to organizations business units to offer reliable and submissive business intelligence. In
spite of developing, maintaining and managing the warehouse environment, warehouse
administrators also perform the tasks of analyzing and transforming the data.

Data warehouses which fulfil CRMs basic requirements of granular customer transaction data are termed
as customer data repositories (CDR).

Effective CRM collect data at every customer interaction and then analyze it for future improvements.
The data warehouse becomes the repository for all customer information from all sources including
operational systems, interaction data (solicitations, call centres), demographic data, behavioural data and
customer- provided bio data.

The key focus of a data warehouse is to support enterprise decision support system and is not restricted to
a specific LOB (Line of Business).

The way data is ordinarily stored is in a series of databases, there's one for sales force automation, one for
the call center and so on.

The problem with these information silos is they have limited, if any, insight into other databases in the
company. That means instead of offering an integrated, 360-degree, view of the customer, the data is
spread over several different sources and it is anything from difficult to impossible to get a complete
picture of the customer's interactions with the company

As a result, most companies have trouble tracking down critical information on the history of the
customer's transactions with the company. According to Forrester Research, only 37 percent of those
surveyed knew if they shared a customer with another division of the company. Only 20 percent could tell
if the customer had visited the company web site and only 23 percent of the customer service
representatives could get a history of the customer's interaction with the company via the web.

The answer to this problem is a data warehouse. A data warehouse is a special kind of database that is
easy to extract data from and do data analysis on. In the context of CRM it is designed to provide a
complete view of the customer as distinct from the data silos you often get from a conventional
transactional databases. Since it is designed strictly for analysis rather than supporting transactions, it is
usually faster at such tasks than the transactional database that runs the company.
Although an integrated database can do just about anything a data warehouse can do, the data warehouse
is designed to do analytical tasks faster and easier that an ordinary database. A data warehouse is the ideal
way to store a full 360-degree view of the customer to guide customer interactions.

Data warehouses were originally designed for large companies with a lot of data they needed analyzed.
Originally they were large programs that ran on mainframes or big mini computers. They were expensive,
complex and required the care of experts. What was worse they were just about undecipherable to anyone
but experts.

Like everything else in the computer business data warehouses have changed markedly over the years.
Now smaller, cheaper data warehouses are available with front ends that are easier to non-specialists to
use. As a result data warehouses have proliferated even in small and medium-sized businesses.

DATA MINING FOR CRM

A simple definition of data mining is that it is a collection of tools and techniques, offering support for
informed decisions for the organizations that are interested in adapting to their customers needs . It is a
process of extracting information from a large data volume, without prior assumption or model. Taking a
look in the marketing field, a data mining process should be based on the data collected using a Customer
Relationship Management (CRM) system. This way, companies have the opportunity to observe their
customers and learn from the past interactions and act according to what has been observed. In time,
companies adapt to customers needs more quickly and the customers value for the organization may
increase.

The main objective of the data mining is to discover patterns in the analyzed data and based on those
patterns to help the managers taking different decisions. Some authors refer to data mining as Knowledge
Discovery in Database.

Knowledge mining a shorter term may not describe the importance of mining from large amount of
data

According to Data Information - Knowledge- Wisdom (DIKW) model, Data simply exists. It gains
context to become Information by human interaction, which itself becomes Knowledge by inter
conversion of different forms of information. Wisdom comes from repetition of DIK cycle.

Data mining helps organizations to learn from the data they have from the past, extract information and
apply what was learned in the future activities.

The data mining developed a lot due to following reasons: companies collect much information based on
customers transactions (e.g.: supermarkets, banks, telephone companies).

If a person has a loyalty card from a supermarket that is scanned each time that person buys something
and, moreover, he uses a card to pay for the merchandise, one visit at the supermarket will be recorded at
least in two places (in the database of the supermarket and in the database from the bank). Another
possible reason is that the IT technologies developed a lot: the hardware is cheaper, the data processing
technologies are being developed constantly (e.g.: cloud computing, parallel processing) and networks
become more secure (WMN) and more accessible for the public).
Even if data may be stored in different databases inside an organization, they can be collected in a
common data warehouse that becomes the memory of the organization and provide the raw material for
the data mining process. Last but not least, companies are more and more interested in developing long
term relationships with their customers and this is the reason why they need to adapt to their needs very
fast and create customized offers.

There are two main types of data mining models: supervised models and unsupervised models

The supervised models are defined by two types of fields: input field (predictors) and an output field.
The input field is analyzed with respect to their effect on the target field. An input-output mapping
function is generated by the model, which associates predictors with the output and permits the prediction
of the output values

These models are categorized into classification and estimation models. Compared with the supervised
models, the unsupervised models have no output field and the pattern recognition is not guided by a
specific target attribute. The unsupervised models are categorized into clusters and grouping. Some
researchers deep further into association rule mining.

The common frame of these two methodologies is:

i. Defining the business problem and transforming it into a data mining problem;

ii. Defining the data requirements;

iii. Selecting the required data;

iv. Validating and consolidating the data;

v. Creating a model for data mining and choosing a technique (e.g.: for predictive models: splitting the
dataset into training set and testing set for evaluation purposes);

vi. Applying the model chosen during the previous step;

vii. Testing the results and making decisions.

The Benefits of CRM ( From Salesforce.com ) in terms of Technology

Improved Informational Organization

The more you know about your customers, the better youll be able to provide them with the kind of
positive experience that really pays off. Everything that they do, and every interaction that they have with
your organization needs to be identified, documented, and recorded. To do this, you need to move beyond
the sticky-notes and disorganized filing cabinets, and start utilizing advanced organizational technology
that can not only accurately quantify and categorize data for easy future reference, but also make that data
available across departments. Thanks to CRM this all becomes a possibility, it allows you to store a vast
list of customers and any important information regarding them. Access to their file is even more
convenient than before due to the cloud, so no matter who it is that is helping the customer in question,
theyll have the same actionable data instantly available. This will result in less wasted time for clients
and employees.

CRM for Enhanced Communication

As mentioned above, CRM makes it possible for any employee to provide the same high level of service,
by having access to the same customer data. After all, even if your customers have a single, main point of
contact, theres a good chance that at some point that contact may not be available, and the client will be
forced to have to work with someone new. When that happens, many customers face the unhappy
prospect of having to start fresh with someone who doesnt understand their own unique preferences and
issues. CRM does away with this concern, by making detailed customer information communicable to
whomever might need it. As such, it wont matter who it is that is currently assisting the client, because
theyll be working from the same information. And given that CRM is cloud-based and accessible from
any device with an internet connection, the communication benefits of mobile CRM are not limited to the
office.

CRM Improves Your Customer Service

Your time is valuable, but so is your customers time. And, should your customers experience a problem
that needs resolution, theyre going to be unhappy unless that problem can be taken care of quickly. With
CRM, as soon as a customer contacts your company, your representatives will be able to retrieve all
available activity concerning past purchases, preferences, and anything else that might assist them in
finding a solution. In many cases, your more experienced representatives, armed with past information
and history, will be able to locate a solution within the first few minutes, thanks to an accessible database
of potential issues. And, should a solution not be readily apparent, then bringing in other representatives,
or even crowdsourcing for answers through customer portals, is a simple matter. With CRM, customer
support becomes a walk in the park.

Automation of Everyday Tasks

Completing a sale is never as easy as just getting a customer to agree to commit. Along with the surface
details of any sale, there are hundreds of smaller tasks that must be completed in order for everything to
function properly. Forms need to be filled out, reports need to be sent, legal issues need to be addressed
these ancillary chores are a time consuming, yet vital aspect of the sales process. The best CRM systems
are designed to take the burden of many of these tasks from off the shoulders of your employees, thanks
to the magic of automation. This means that your representatives will be able to focus more of their
efforts towards closing leads and resolving customer pain points, while the automated CRM system takes
care of the details.

Greater efficiency for multiple teams

Automatically stored communication allows you to view emails, calendar and phone call details in one
easily accessible place. Add that to the ability for multiple teams to access the same information, it simply
sky rockets the amount of achievable progress. Sales, marketing, and customer service teams can share
valuable information about clients to continue to funnel them down the pipeline to get the desired result
of closing a sale, knowledge of new products, or excellent customer service. Every department can now
tag team to get the right information to the right individual. With this new found ease, teams can
seamlessly work together to improve the bottom line.

Improved Analytical Data and Reporting

Miscalculated data should not be the reason you cannot succeed, with CRM this is no longer a possibility.
CRM systems store information in one place which leads to improved analyzing of the data as a whole.
Easily integrated with different tools or plugins, you have the ability to generate automatic reports to
maximize your time. Personalize your dashboard views to quickly locate information needed such as
customer information, sales goals, and performance reports to reach untapped opportunities. With better
reporting data you can make resourceful and effective decisions to reap the rewards in customer loyalty
and long run profitability.