Analytics on the Rise

META Group recently called analytics the fastest-growing area of CRM, anticipating average annual growth of 82 percent through 2004. So what are analytics, and what can they do for you? In short, if you use a CRM application to track customer information, analytics can provide insight into all that data you’re collecting, using data-mining algorithms to determine, for example, customer-lifetime value or the affinity between a customer segment and such certain behaviors as the propensity to buy. The result: analytics enables companies to better market to, sell to and service customers.

The reason we’re hearing so much about analytics these days is three-fold, says Scott Cotter, vice president of marketing at Visual Insights. First, with the economy in a downturn, businesses are under increasing pressure to determine which programs and e-business initiatives provide the greatest return on investment so they can make tough, but smarter, budgeting decisions. Analytics can prove which applications will provide the biggest payoffs. Second, the concept of the knowledge worker is becoming more prevalent. “It used to be that statistics and analysis was someone else’s job,” says Cotter. “Now business intelligence is everyone’s job, so analytics has become mainstream.” Finally, with the Web so critical to nearly all CRM-driven business functions today, data is captured and accessible electronically, making it more readily available for analysis.

“More and more, we’re seeing companies are recognizing the need for analytics because it’s a way for them to pick out and establish key performance indicators and deliver it in a report,” says Cotter. In other words, it’s not enough anymore for the HR department to measure the success of an online job posting in terms of the number of people who saw it. Now they can – and should – be measuring how many times that posting drove a resume submission, then the conversion rate of resumes to successfully filling the position. “As more and more business is driven to the Web, companies are starting to have those kinds of questions,” says Cotter. As a result, “they’re being forced to recognize analytics are critical to the success of their business.”