Data culling creates controversy

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David Spinelli doesn't want to know that you caught a cheap flight to the Bahamas last March. But he does want to know your birthday.

For Spinelli, general manager of Lowell, Mass.-based Action6, a travel-related services firm, it's not the transactional data that matters most when it comes to cross-selling to customers.

"We need [the travel agents] to collect things about demographics -- if they have a birthday coming up, and if they prefer to ski," said Spinelli. "This data is extremely valuable."

Deciding what information is collected and how it's used is going to be a thorny issue for companies this year as many embark on customer relationship management projects, predicted Erin Kinikin, an analyst at Giga Information Group Inc. in Santa Clara, Calif.

Giga's new CRM forecast sees infighting among corporate departments this year over who owns the customer -- and the knowledge about the customer.

"There's going to be a huge culture clash," Kinikin said.

Translating this data into repeat business isn't going to be easy, as sales, marketing and service branches step up their fight over the best way to leverage information to produce results. Kinikin suggests that to resolve these CRM data clashes, companies make sure everyone involved gets a reward. For example, if the sales force is sharing their data, they should be able to get special access to it later to help them sell better.

It's also just starting to dawn on companies just how hard it is to define the return on investment for these data-gathering e-mail, call center and Web site CRM applications, said Sarwar Kashmeri, president of Niche Systems Inc., a New York-based consultancy.

A basic CRM implementation can run anywhere from $100,000 for a small firm to millions of dollars for a multinational one, Kashmeri estimated. And figuring out the value of the knowledge generated by these applications is extremely tricky, if it's even possible, he added.

Among those facing the CRM data management dilemma is audio equipment maker Bose Corp. in Framingham, Mass. The firm has been undertaking a multimillion-dollar project to install a set of applications designed to allow Bose's sales, service and marketing channels to share customer data. Siebel Systems Inc. in San Mateo, Calif., and Akibia Inc. in Southboro, Mass., are the software vendors.

Tim Arnold, manager of CRM strategy at Bose, said a company needs to justify each piece of data it collects, since it must pay to acquire, store, analyze and transmit the information through various departments and IT systems. The firm must then make tough decisions about how to use the data. For instance, a company's marketing department might want to use a set of customer data to launch a campaign that's similar to data a salesperson might use to try to close a deal.

This data also enables companies to automatically classify customers according to their profitability, which can tempt businesses to automatically deliver lower levels of service to some groups and subsequently alienate a significant set of customers, said Kashmeri.

Not so, say some corporate executives. "Everybody gets excellent service, and higher-value customers get better," said Kent Miller, CIO at Centura Banks Inc., a Rocky Mount, N.C.- based full-service financial firm with 250 branches.

Centura has been using CRM software from Denver-based Customer Insight Co. (now called NuEdge Systems) and other vendors to ggather, analyze and share data through the company's call centers, branch offices and insurance and investment units since the mid-1990s, said Miller. The company is now ramping up its efforts to disseminate data in real time.

Miller said he believes the CRM applications have paid for themselves, partly by letting Centura retain its most profitable customers through a spate of mergers, including its $608.4 million marriage to Raleigh, N.C.-based Triangle Bancorp Inc. last February.

Atlanta-based United Parcel Service of America Inc. takes customer data and studies it for behavioral patterns -- not just to sell more effectively but also to advise its customers on how to optimize their operations, said a company spokesman.

Its investment in CRM applications costs UPS millions of dollars per year, but the knowledge gleaned saves UPS and its customers money, said a company spokesman.

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