The Hindu Business Line : Reading between the numbers

EASILY one of the biggest buzzwords of the '90s, CRM - Customer Relationship Management - has gone from being regarded as a panacea for every imaginable ill to something akin to a compulsory ritual: no one quite knows what it's meant to do, but does it all the same. One result of implementing CRM, and of effectively managing the many `touch points' or customer interfaces, is the large volumes of data that are generated. The data can come from the company's face-to-face interactions with the customer, its direct mail, e-mail or call centre interactions, mass media, or market research. However, not many organisations have been able to use this data effectively.

Ogilvy Analytics, OgilvyOne's data services division, plans to fill this gap with special tools to convert CRM data into useful marketing insights. The division was set up in April, and is headed by C.S. Krishna Kumar, who has 14 years of database marketing experience. "Despite the dull environment, there is a great pent-up need for insights from data," says Krishna Kumar. "It is very relevant now."

Companies that rely heavily on face-to-face and data touch points - like cell phone service providers, banks, hotels, credit card services, business-to-business marketers and automobile dealers are especially in need of these insights because they seek to establish long-term relationships with the customer, says Krishna Kumar. Even companies in the communications business need special tools because of the volume and diversity of data, says a spokesperson for MindShare, which has used Ogilvy Analytics' programme for mass media data analytics. "Once the data is no longer just a sheet of paper, you need a fairly robust and sophisticated tool," he says.

Ogilvy Analytics offers a multi-pronged, `holistic' approach to analysing CRM data because it cannot be done any other way, Krishna Kumar says. "Companies complain that they have spent a lot of money on CRM software and that it hasn't delivered," he says. "But that's because companies have gone in thinking that CRM is a piece of software; they are looking at it in isolation. If they think it's a piece of software, they are going to be disappointed."

First, there's CRM consulting, which entails managing the touch points efficiently. A proprietary tool, CMAT (Customer Management Assessment Tool), enables an organisation to identify and resolve problems in the day-to-day operations, recommend ideas for `customer delight' at these points, and work with partners to automate these points and exploit the data. "The tool enables the organisation to see how they are managing their customer processes - from billing to answering customer calls to seeing if a customer is truly satisfied," says Krishna Kumar.

Another key service that Ogilvy Analytics provides is Campaign Management, which entails creating a single repository for all advertising and marketing campaigns. Through a proprietary software programme called `Bridge', which was developed in-house, every piece of work - from creatives to media budgets to people involved to results - can be stored on a single database.

"Companies spend a lot of money on campaigns and want to know how they worked," says Krishna Kumar. "This enables you to evaluate campaign spend and see which format of creative worked - did Shah Rukh or Hrithik get more responses - which media was more effective, and how many pieces of DM it took to get the desired response." When creating a great campaign, it is no longer enough to rely on a gut feel or years of experience, he adds. "You cannot ignore the facts when one piece of creative is giving you more leads and better results," he says.

The third service is CRM Analytics, which provides a way to analyse touch point data - from marketing campaigns, call centres and sales force; customer segmentation models - categorising customers to better target them; response prediction models - increasing response rates by predicting who is likely to respond to a solicitation; attrition models - predicting who is likely to leave a service and designing a retention strategy; market basket analysis - identifying items bought simultaneously for better merchandising; cross sell models - identifying products to market to customers with the highest probability of purchase; and customer life time value - determining how much to invest in acquisition, development and retention.

For example, if a company sends out 60,000 mailers a month, spending Rs. 6 on postage. Using a response prediction model, if the company is able to see that it only needs to send 15,000 mailers to get the same response, there is substantial saving in printing and postage, plus it will reach an audience with a high likelihood of responding, Krishna Kumar explains. Or, when data shows that people who buy premium shirts also buy Barbie dolls, then a market basket analysis would enable setting up the merchandising so that Barbie doll displays are near the premium shirts.

For the purpose of CRM evaluation, Ogilvy Analytics has a proprietary tool, "Evaluate," of which it is particularly proud. This measures the impact of marketing spend across various parameters: financials (sales, profits, market share), acquisition (customers acquired, the cost and revenue they bring in), retention (attrition rate, loss from customers lost, customer loyalty scores), knowledge (of the market, the product, the customer, the competition), internal process optimisation (cost of service, cost and revenue per head), brand impact (brand equity, top of mind recall, intention to purchase), customer experience (from all touch points, to create customer delight and measure their financial viability) and market place perceptions (awards or citations).

"It's not always possible to measure impact only from sales, profits and market share," says Krishna Kumar. "This is a robust, holistic way of looking at CRM and seeing whether the money put into it is worth it."

Thus far, Ogilvy Analytics has held seminars and workshops, and has provided some services to IBM (response modelling), SAP (campaign management), HLL (customer segmentation model) and WPP's MindShare (mass media data analytics); IBM has also bought the franchise for installing CMAT. Krishna Kumar believes that as more companies realise the need to analyse their data, there will be greater demand for these services.

But no matter who is delivering the CRM tools - a technology specialist like Oracle, or a communications expert like Ogilvy - they can only be as effective as the strategy, says Dr S.Ramesh Kumar, Chairperson and Professor - Marketing Area, IIM, Bangalore. "An agency has to define what is a relationship and its long-term orientation, and see if it could be profitable and if it could serve the mutual interests of the client," he advises.

Finally, despite the numbers and the acronyms, there is no danger of overshadowing the more creative aspects of advertising and marketing, says Krishna Kumar.

What is needed is a merging of the numerical aspect with the creative and esoteric aspects. "Analysis of data actually helps you deliver a better creative product; it gives you insights that you didn't have before and greater conviction," he says. "Besides, clients are far easier to convince with numbers."

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