Using a Data Warehouse to Identify Profitable Customers

However, few have yet managed to reach this goal. It is not an impossible dream, but it does require a sophisticated IT system encompassing query tools, the latest operational CRM technologies, dynamic pricing applications and, at the epicentre, an enterprise-wide data warehouse.

Identifying which customers are profitable right now is difficult enough, but assessing future customer value cannot be done without an array of integrated software applications. Fundamental among these is a data warehouse that stores all sorts of information about a customer. As hardware prices plummet and network capabilities expand at an incredible rate, it makes sense that this data warehouse is centralised, even for companies with source systems all over the world. This approach allows ease of administration and as all data is in one place, queries are easy to construct and run.

Query tools allow firms to profile customers according to common behaviour patterns. With more sophisticated data mining and multi-dimensional tools, they can score individuals on their 'propensity' to close an account or buy a specific product. Having a range of query capabilities is important because not all tools do the same thing and a company must learn how to use them in context. There is great value in using simple tools to understand historical information e.g. "what happened last month?" However, a more advanced set of tools is needed for a company to understand why it happened, and even more complexity is involved in guessing what will happen in the future.

Marketing focuses on identifying customer segments and contacting them through the customer's preferred medium to try and influence behaviour. New CRM applications can automate much of this with Computer Telephony Integration (CTI) technology allowing routing of calls to appropriately skilled call centre staff, or for low-profitability customers, perhaps to a cheaper Voice Response Unit. The intelligent company will therefore link its operational CRM systems to the data warehouse so that those customer identified as the most profitable will immediately get routed to the most knowledgeable call centre staff and receive the best overall service. For example, information stored in the data warehouse can alert a call centre employee, via pop-up windows, when it is appropriate to try to sell a specific product to a caller, or when it is better to desist.

Another step towards retaining profitable customers is to provide individual pricing models based on customer profiles. Here, configuration software can be used in conjunction with the deep profiling and scoring capabilities enabled by Business Intelligence and Data Warehousing. The most advanced companies are already providing their their sales force with mobile computers armed both with complex price/packaging configuration applications and the latest information from the data warehouse about the behaviour and likely behaviour of key customers.

To summarise, the competitive nature of today's market is driving the need for companies to identify and retain their profitable customers as effectively as possible. Perhaps the most important element in this context is the rich customer data which in many companies is just sitting unused in a variety of databases, but which with the careful implementation of an integrated system based on a centralised data warehouse, can become the engine that drives a successful customer relationship management strategy.