Business Intelligence -- Customer Intelligence: BI Meets CRM

As Business Intelligence (BI) and Customer Relationship Management (CRM) systems become mainstream business solutions, it is increasingly common for an organization to have implemented some of each. In many instances, BI and CRM projects have been initiated independently and executed separately. Disconnected BI and CRM systems are abundant with missed opportunity. Carefully planned use of BI solutions to meet CRM needs is a highly-effective way to create a targeted program of customer-centric business strategies.

Let’s begin with a brief review of BI. Intelligence work includes the activities directed at collecting, integrating and organizing the information needed for research and analysis of a particular area of interest. BI activities support research and analysis of business subjects – the need to collect business metrics and answer business questions. Collecting and organizing information is achieved through data warehousing technologies. Analysis is supported by query, reporting and OLAP tools.

CRM work focuses on understanding the customer base of a business and managing relationships with those customers to achieve specific business goals. Typical CRM goals are of two types – those oriented toward retention of existing customers and those directed at acquiring new customers. Fundamental principles of CRM systems include unification (providing a single view of each customer) and segmentation (identification of customer groups based on shared characteristics).

At a general level, it is easy to see how BI and CRM fit together: CRM is about analysis of customer data, and BI offers data collection and analysis tools and techniques. CRM needs a unified view of each customer, and BI includes data integration methods. A CRM program needs to measure customer retention and acquisition, and BI automates implementation of business metrics.

These obvious relationships offer technical and tactical gains, but fail to realize the full potential of a combined BI/CRM solution. Customer Intelligence (CI) unites BI solutions with CRM programs in a significantly different form than simple technical associations. CI differs from less comprehensive BI/CRM solutions in four major ways: advanced business metrics, more kinds of data, more aggressive business goals and greater business impacts.

Business Metrics. Conventional CRM uses metrics, such as retention rates, attrition rates and new customer counts. CI works with more advanced customer metrics, like lifetime value, cost of care, share, frequency and satisfaction. Where CRM is oriented toward count-based retention and acquisition, CI focuses on the right kinds of relationships with the right kinds of customers.

Kinds of Data. The BI components of a CI program also have some distinct differences. Typical CRM data is reference oriented, with interest in customer identity, demographics and grouping. CI needs event data, as well as reference data. Several kinds of events – purchases, service, support, inquiries, complaints and returns – are all important to understanding the base of existing and potential customers in new ways. Data about resolution of service, support and complaint events is also important. Order transactions, service transactions and customer support transactions all become important data sources. In e-commerce enterprises, clickstream data may have a significant CI role.

Business Goals. CRM typically manages customer relationships with goals of retaining existing customers and acquiring new customers. Common CRM end users are marketing and sales organizations. The CRM system provides data and analysis capabilities to:

• Understand and evaluate existing customer segments.

• Analyze customer profiles and demographics.

• Measure customer retention, attrition and acquisition.

A CI program expands the group of end users to include customer service and support groups and product-development organizations. Extended system functions include capabilities to:

• Discover and identify previously unrecognized customer segments.

• Analyze the attitudes, interests and motivations of customers and prospects.

• Measure effectiveness of advertising, marketing and customer care processes.

Business Impacts. The true value of CI is found in the ways that it affects business activities and results. When CRM and BI work together, it is possible to develop experience-based customer care programs, define effective targeted marketing programs and evolve products and services based on sound knowledge of customer preferences. CI goes beyond simply managing customer relationships. Its goal is to develop customer relationships that turn the occasional customer into a loyal customer, and the first-time customer into a life-long customer.

David Wells is an Enterprise Systems Manager at the University of Washington, the founder and Principal Consultant of Infocentric, and a fellow of The Data Warehousing Institute (TDWI). He can be reached at