creating superior customer value with operational

CREATING SUPERIOR CUSTOMER VALUE WITH OPERATIONAL INTELLIGENCEEMPLOYING CRM ANALYTICS TO ENHANCE DECISION EXCELLENCE

SAP Thought LeadershipCustomer Relationship Management

With operational analytics, individual workers are no longer “flying blind”; many more staffers have access to information that traditionally has been available only to managers. Each customer touch point can thereby become much more valuable.

CONTENT

4 Executive Summary

5 Empowering Frontline Workers with Pervasive Analytics

5 The Value of Personal Customer Relationships

5 Enhancing the Effectiveness of Frontline Workers

6 The Rise of Pervasive Analytics

7 Deploying Analytics to Enhance the Customer Lifecycle

7 Insights to Execution: A Closed-Loop Process

7 Customer Acquisition: Achieving a Positive First Step

7 Sales and Service: The Mainstay of the Customer Expe-rience

7 Customer Retention and Development: Maximizing Lifetime Value

8 The Value of Strategic Alignment and Process Integration

9 Enhancing Performance with Operational Analytics for CRM

9 Addressing Increasing Data Volumes While Containing Costs

9 Need for Text Analytics 9 Demand for Intuitive and Robust

Tools 9 Requirements for Embedded

Applications 9 The Need for Predictive

Analyses

11 Integrated Business Intelligence Software from SAP

11 Find Out More

Satisfying customers in distinctive ways has always been important, but the new economic environment sub-stantially elevates the need. With increasing global competition, shor-tening product lifecycles, and industry consolidation, the requirements to retain customers and enhance profit-ability in innovative ways have never been greater.

To succeed now, companies must look beyond capabilities that can be easily replicated by competitors. Standardized offerings, optimized pricing, and streamlined call centers are all essen-

tial for profitability and customer satis-faction, but may be readily copied because they depend on structured processes that can be diagrammed and codified. Thus, such capabilities cannot form the basis for a durable advantage.

On the other hand, processes that depend on circumstances and judg-ment can greatly enhance the customer experience while boosting revenues – and these processes are much more difficult to imitate because they are not easily mapped. Supporting the right people with robust data and manage-

ment guidance is essential for the design, alignment, and superior exe-cution of these processes. With all ingredients properly in place, you’re in a better position to anticipate cus-tomer needs, quickly determine the right services to provide, and develop offers that have a good chance of being accepted.

Above all, better decision making is the key. By making use of vast amounts of data encompassing market trends and customer interactions, your company can develop unique tools based on business analytics. As

organizations become leaner, opera-tional analytics – packaged business intelligence tools that focus on a spe-cific function, such as market analysis or sales – are becoming pervasive and easier to use. You can thus enable your frontline workers to make real-time decisions that matter to customers. These decisions enhance customer interactions, help you align day-to-day activities with corporate strategy, and position the firm for profitable growth in the emerging economic order.

EXECUTIVE SUMMARY BUILDING AN ADVANTAGE WITH UNIQUE PROCESSES

Processes that depend on circumstances and judgment can greatly enhance the customer experience while boosting revenues. Supporting the right people with robust data is essential for the design, alignment, and superior execution of these processes.

4 SAP Thought Leadership – Creating Superior Customer Value with Operational Intelligence

The work of frontline employees has evolved along with the demands of a competitive environment and the com-plexity of customer relationships. The activities of these knowledge workers are anything but routine. Their interac-tions – which economists call “tacit interactions” – are complex, depending to a large extent on context, judgment, and problem-solving abilities.

In the past, businesses were organized more strictly akin to pyramids, with a small number of managers – effectively, “tacit knowledge workers” – orches-trating the work of employees engaged in more routine labor. Today, companies are much flatter, and there are many more tacit knowledge workers on the front lines dealing with customers and collaborating both externally and within their group. Their complex interactions cannot be structured.

So instead of trying to automate the processes of tacit knowledge workers for better efficiency, companies need

The Value of Personal Customer Relationships

Developing real and personal relation-ships with customers can bring many benefits. When staffers know custom-ers individually, they can establish a dialogue, develop insights into require-ments, tailor products and services to meet their needs, and build loyalty.

Regrettably, while building genuine cus-tomer relationships may be possible today for small companies or niche players, this is a business model that doesn’t scale. In years past, some banks and retailers could develop inti-mate relationships with customers. However, mass marketing eventually took hold as these firms needed to compete on price and variety – and abandoned the personal touch.

Today, even large companies can offer both a diversity of well-priced offerings and close, individual relationships. By making use of data captured about

customers, your company can develop products and services that meet dis-tinct needs and provide information to customer-facing workers that enable personal interactions. In fact, by mak-ing use of advanced analytical tools leveraging vast amounts of customer and market data, firms can deploy their frontline workers to satisfy customer needs far better than they ever could through one-on-one interactions alone. Call center agents, sales reps, market-ers, procurement specialists – all those who make decisions that affect the customer can get access to the opera-tional intelligence they need for effec-tive action.

Enhancing the Effectiveness of Frontline Workers

To succeed today, companies need more than an ability to employ good data. They need to accommodate and enable the efforts of their frontline staff.

EMPOWERING FRONTLINE WORKERS WITH PERVASIVE ANALYTICSALIGNING WITH STRATEGY, MAKING THE MOST OF EVERY INTERACTION

The rise in what are known as “pervasive analytics” supports the armies of business users who are looking for data to support the numerous decisions they make every day.

5SAP Thought Leadership – Creating Superior Customer Value with Operational Intelligence

to help them become more effective, providing timely access to information and enabling decision making. That way, these workers – who possess intimate customer knowledge and insights – can make the most of every interaction.

Employees adept at serving customers through tacit interactions are an essen-tial asset; a company’s brand image and ability to add value increasingly depends on these well-executed cus-tomer contacts. Firms that act on this shift in the nature of work will be rewarded with improved performance and an advantage that’s not easy to replicate.

The Rise of Pervasive Analytics

As tacit knowledge work has migrated from management to frontline employ-ees, the data to support decision mak-ing has increasingly shifted from the back office to the front office. In the back office, this data has traditionally been used to support trend reporting and strategic analysis for executives. In the front office, demand has grown as frontline workers require faster access to information and richer insights to support their work.

This rise in what are known as “per-vasive analytics” supports the armies of business users who are looking for data to support the numerous deci-sions they make every day. These tools are often focused on operational activi-ties executed within a limited time frame, facilitating an adaptive environ-ment that enables responses to events

such as an inbound customer call or a stock-out. Increasingly intuitive and tightly aligned with industry-specific business processes, these real-time tools can thereby enable agility and decision-making speed – essential for serving customers in competitive envi-ronments. Features include:• Dashboards that provide company

data to support relatively minor decisions (for example, establishing margin for a service job) and more strategic decisions (such as sourcing policies)

• Other types of visualization, such as alerts that provide information about events such as late shipments

• Search engines that find the best price now for a commodity and can forecast the direction of prices to support hedging strategies

• Advanced analytics enabling person-alization of cross-sell offers

Individual workers are no longer “flying blind”; many more staffers have access to information that traditionally has been available only to managers. Each customer touch point can thereby become much more valuable and thus provide the opportunity to fully capital-ize on customer interactions.


Insights to Execution: A Closed-Loop Process

Customer relationship management (CRM) is an area where pervasive analytics can make a major impact – in particular, on the end-to-end processes of the customer lifecycle. These pro-cesses encompass customer acquisi-tion, sales and service operations, and customer retention and development.

Senior management should establish the characteristics of these processes to improve the customer experience

and increase customer lifetime value. Then, in addition to providing intelli-gence for daily operational decisions, senior management can leverage per-vasive CRM analytics to coordinate execution with high-level strategy. By collecting information at the point where customer-facing decisions are made, these analytics enable better information to be returned to a compa-ny’s databases for subsequent opera-tional decisions and analyses. This closed-loop process (see Figure 1) may be manifested in the customer life-cycle, as follows.

Customer Acquisition: Achieving a Positive First StepCustomer acquisition programs are usually a high priority for management as the starting point to fulfill business strategy: the key to future revenue growth and the first touch point in the customer experience. Typically, cus-tomer acquisition programs aim to ensure that the right customers are tar-geted and campaigns are run efficient-ly. Once management defines objec-tives, marketers can determine market segmentation, establish targets for lead numbers, and align sales initiatives with marketing campaigns.

DEPLOYING ANALYTICS TO ENHANCE THE CUSTOMER LIFECYCLEBEST PRACTICES FOR INCREASING CUSTOMER LIFETIME VALUE

Intelligence for frontline decision making

Analy

tics e

ngin

e

Logistics and finance

Channels

Marketing

Intelligence for Strategic Decision Making

Data

Logistics and finance in ERP

Sales and services in Web channel

List management and segmentation

Customer acquisition Sales and service operations

Customer retention and development

Customer acquisition in Web channel

Customer analytics and segmentation

Accelerating lead to cash and differentiating through service excellence

Sales and services in interaction center

Creating the optimal offer

Figure 1: CRM Analytics – Enabling the Customer Lifecycle in a Closed-Loop Process

Loyalty management

Customer acquisition in interaction center


Pervasive CRM analytics support the execution of these campaigns – in particular, focused targeting and one-to-one marketing where appropriate. Reporting systems can help frontline marketers predict response rates, understand performance versus plan, and issue alerts in instances when lead rates miss targets. Through a closed-loop process, management can keep tabs on overall progress of customer acquisition programs and thus make timely decisions.

Sales and Service: The Mainstay of the Customer Experience With regard to sales and service ope r-ations, senior management is chiefly concerned with revenue growth, profit-ability, and ensuring a favorable cus-tomer experience. Sales and service operations are becoming increasingly intertwined, and the strategic frame-work needs to be established before designing execution processes.

Once the framework is established, sales and marketing managers can design offers for each segment; decide how service will vary by customer tier; and determine how much to invest in first contact resolution. By securing a 360-degree view of customers, they can establish how these elements of offer creation, service, and other high-level processes will operate.

There are myriad opportunities for measurements in this area, reflecting the importance of sales and service processes to the customer experience. Customer satisfaction, retention rates,

co-promotion data, and other data about customers, products, and sales are a few examples of worthwhile mea-surement and analysis.

Customer Retention and Development: Maximizing Lifetime ValueCustomer retention and development activities are closely linked to a com-pany’s long-term viability and growth. Here, senior executives are concerned with increasing market share, securing repeat business, and customer lifetime value. With a framework in place – encompassing investment levels and profitable growth targets – managers can proceed to analyze segments and customers to determine appropriate strategies.

Here, relevant measures tend to be similar to those for sales and service operations – customer satisfaction, retention rates, and complaint statis-tics. Particularly valuable for this pro-cess are specific methods that analyze the recency, frequency, and monetary value of orders to define segments and predict future customer behavior.

The Value of Strategic Alignment and Process Integration

Operational intelligence is comparable to the dashboard of a car. Both display information in a format that’s easy to see (total revenue, miles driven) and highlight warnings when something is wrong (declining profitability, low oil pressure).

Operational intelligence has the great-est value if it’s collecting information from end-to-end processes. For exam-ple, a sales process integrated with back-end accounting will show more accurate information about revenue and receivables. If the indicators are limited in scope, then potential issues may be missed. For example, if reporting cov-ers only isolated sales data but not inventory, then managers may miss information about potential stock-outs. Similarly, an automobile dashboard should be an integral part of the car. A driver who can see only speed and fuel levels is better served with a more complete view from the dashboard (the condition of the brakes, for example) to prevent serious problems in the future.


By supporting decision excellence among frontline workers, pervasive CRM analytics are allowing companies to better serve customers in an envi-ronment of growing complexity. The demand is being met as the technology has become available to make this information consumable, usable, and relevant to frontline roles. Develop-ments include the following.

Addressing Increasing Data Volumes While Containing Costs

There is an explosion of data – espe-cially unstructured data, such as text encompassing customer comments and feedback – coming from existing channels such as retail stores, as well as newer channels such as social media Web sites. The massive amounts of data are generated by a range of business processes, and traditional relational databases are not equipped to handle this type and volume of data.

To address these trends while minimiz-ing costs, companies are increasingly building linearly scalable applications on a single platform. They are taking

advantage of innovations such as in-memory indexing and incorporating service-oriented architecture (SOA). SOA is particularly important because it enables cost containment by facilitat-ing reuse of software objects.

Need for Text Analytics

Processing large amounts of text data is increasingly vital. Analyzing text obtained from interactions in call cen-ters, from Web site comments, and from other sources can help companies more deeply understand customer sen-timents, wins and losses, competitive moves, and so forth. Using advanced tools, the text can be extracted and categorized in structured formats to derive insights from vast amounts of information.

Demand for Intuitive and Robust Tools

In the past, analytical tools required extensive training for building reports – using methods such as cluster analysis and data-mining algorithms. To be use-ful to frontline staffers, the tools must enable intuitive exploration of data.

Some applications include prepackaged key performance indicators and other content related to best practices, directly supporting end users in their roles. It’s crucial that these more consumable analyses be presented in formats that are clear; they must not lead to misinterpretation by a user community lacking specific analytical training.

Requirements for Embedded Applications

Traditionally, analytics applications have been disconnected from operational processes. There is a growing need for contextual analytics solutions that are embedded in operational applications, enhancing usability by reducing the need for application switching. For example, analytics embedded in a sales pipeline application can allow staff to understand the current pipeline status and readily determine adjust-ments to the sales force that may lead to improvements.

The Need for Predictive Analyses

There is growing demand for real-time tools that can help frontline workers determine expected customer behavior, predict response to campaigns, and forecast the lifetime value of a custom-er. These capabilities – involving regression techniques, churn analyses, and other methods – have traditionally been the domain of statisticians who would create analyses requiring a sig-nificant amount of time to develop. Today, packaged analytical applications that embed advanced algorithms are

ENHANCING PERFORMANCE WITH OPERATIONAL ANALYTICS FOR CRM CONSUMABLE, USABLE, AND RELEVANT TO FRONTLINE ROLES

Instead of trying to automate the processes of tacit knowledge workers for better efficiency, companies need to help them become more effective, providing timely access to information and enabling decision making. That way, these workers – who possess inti-mate customer knowledge and insights – can make the most of every interaction.

SAP Thought Leadership – Creating Superior Customer Value with Operational Intelligence 9

bringing predictive CRM analytics to the masses. For example, real-time offer management can leverage data-mining algorithms to provide highly rele-vant offers to service agents while they are speaking with customers.

Operational intelli-gence has the great-est value if it’s collect-ing information from end-to-end processes. Integration is vital for the accurate and com-plete data necessary for decision excel-lence within end-to-end processes.


INTEGRATED BUSINESS INTELLIGENCE SOFTWARE FROM SAPADVANCED, COST-EFFECTIVE TOOLS UNITED WITH SAP® CRM

SAP® BusinessObjects™ business intel-ligence (BI) solutions provide compre-hensive business intelligence function-ality. These solutions can empower your users to make effective decisions about customer-facing processes based on solid data-based analyses. SAP BusinessObjects BI solutions are tightly integrated with the SAP Custom-er Relationship Management (SAP CRM) application and include the fol-lowing features.

Dashboards and visualization: Xcelsius® software provides data visu-alization tools specifically designed to create interactive analytics and consoli-dated dashboards.

Reporting: Crystal Reports® software provides interactive real-time reporting, connected to virtually any data source.

Unstructured data analysis: SAP BusinessObjects Text Analysis software unlocks insights hidden in unstruc tured text sources such as blogs, Web sites, e-mails, support logs, research, and surveys – so you can gain an analytic view of people’s thoughts and feelings on your products and services.

Search and exploration: SAP BusinessObjects Explorer software combines intuitive information search and exploration functionality with high performance, so you can extend the reach of BI to all of your frontline and

other business users. Insight derived from SAP BusinessObjects Explorer can be exported to SAP BusinessObjects Web Intelligence® software to enable analysis and publication.

Advanced analytics: Relying on engines that can access both numeric and text data, SAP BusinessObjects advanced analytic tools interrogate complex historical data to look for trends and patterns through a visual interface.

In addition to integration with SAP CRM, all SAP BusinessObjects business intelligence solutions are tightly integrated with SAP ERP, SAP Supply Chain Management, and other SAP applications. This level of integra-tion is vital for the accurate and complete data necessary for decision excellence within end-to-end processes – leading to streamlined operations and superior customer interactions.

Find Out MoreTo learn more about how SAP can help your company create superior customer value with operational intelligence, call your SAP representa-tive today or visit us on the Web at www.sap.com/solutions/sapbusinessobjects; (SAP BusinessObjects solutions), www.sap.com/crm (SAP CRM), and www.sap.com (overview of SAP).


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