First developed in the early 1990s by Siebel Systems as a management tool for sales personnel, customer relationship management (CRM) technology has since morphed to include campaign-management applications, call-center software, and customer self-service programs.
Despite years of declining interest in CRM, and despite its miserable track record — just 16 percent of projects result in a positive ROI, according to Boston-based AMR Research — spending on CRM products is now on the rise. The hottest segment in the market is customer analytics — tools that dissect consumer-buying patterns, suss out preferences, and predict future behavior. AMR reckons that sales of business-intelligence/analytics products will top $9 billion this year, up from $7.7 billion in 2001.
Why this surging interest in analytics? Analysts say frustration over earlier CRM projects may be fueling current sales of CRM analytics products. After funneling large amounts of capital into call centers — centers that are now faster but not better — executives appear keen to get something for their CRM money. "Companies want to know how they can turn these cost centers into revenues," notes Stan Martin, CEO of Deerfield, Illinois-based Adroit Consulting Inc. Mining the prodigious amounts of data generated by call centers and other points of customer contact may be one way.
Not surprisingly, software vendors have been quick to jump on the analytics bandwagon. Some vendors — prominently Business Objects, Hyperion, and Cognos — are flogging programs that collect and measure sales data. Others, such as business-software giants Oracle, PeopleSoft, SAP, and Siebel, offer software that analyzes buying trends. Still others (including Teradata and SAS) market predictive-modeling packages. And a number of vendors sell applications designed to group customers by categories, including profit potential.
Eventually, analysts believe, there will be a blurring of the lines, with software makers offering analytics products that measure, analyze, and cluster. But CFOs, some of whom saw elaborate call-center initiatives go awry, will take a bit of convincing. Says Rick McMahon, CFO of Sunstar Butler, a Chicago-based oral-care products company that is contemplating buying an analytics program: "It's just way too much money and time to end up being a toy." (For more, see CFO magazine's article "Head Games.")