How Business Intelligence Can Help You to Better Understand Your Customers PDF

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DOI: 10.4018/IJBIR.2020010104

How Business Intelligence Can Help You to Better Understand Your Customers

Rasha Hadhoud, Princess Sumaya University for Technology, Amman, Jordan Walid A. Salameh, Princess Sumaya University for Technology, Amman, Jordan

ABSTRACT

Companiescanincurheavylosseswhencustomersdonotreturn;therefore,theyneedtohavea

betterunderstandingoftheircustomers’behaviorsinordertoimproveserviceandproducts.And

nowadays,therearemultipleresourcesofcustomers’dataespeciallywithwebservices,suchas

websites,chatbots,emails,socialmedia,PoS,ERP,CRM,SCM,therefore,itbecomesdifficultto

collectallthishugedataaltogetherandanalyzeitmanuallyThispaperhighlightstheroleofbusiness

intelligenceinimprovingtherelationshipwiththecustomers,andexploresthetechniquesusedto

analyzecustomers’datainordertopredicttheirdemandsandreachtheirsatisfaction.

KYRS

Business Performance Management, CRM, Customer Retention, Data Mining, Data Warehouse, ETL, OLAM, OLAP

INTRUCTIN

Themarketisgrowingrapidlyandthedatabecomeshugeandfrommultipleresources,whichmeans

thatthedemandforuser-friendlyanalyticstoolsisgrowingtoo.Fromhere,theneedforbusiness

intelligencesystemsarisestohelpmakesenseoftheorganizationaldata.Thispapershouldhelp

identifyingtheroleofBIincustomerrelationshipmanagementandhowitbecomesvitaltousesuch

intelligenttoolsinthecrazilygrowingdataage.

Businessintelligence(BI)istheuseofcomputingtechnologies(applicationsandsoftware)to

collectbusinessdatafrommultipleresourcesandanalyzeitthentransformitintousefulinsightsthat

helpmanagersandownerstotaketherightactionsinordertoimprovethebusinessperformanceand

meetthegoalsrequiredtobusinesssuccess.TheneedforBIemergedinthelatterpartofthe20^th centuryandithasbecomeanintegralaspectofthedecisionmakingprocesses.

BusinessIntelligencecan helpthecompanyinunderstandingitscustomersinorder toimproveits

relationship withthem,suchasfasterconversionofpotentialintoactualclients,reducingthenumber

ofoutgoingcustomersandincreasesalestoexistingcustomers,and thatin itsturnwillincreasesales

andrevenue(Habul&Pilav-Velic,2010).ThispaperwilldiscusssomeofthetechniquesBIusesin

improvingtherelationshipwithcustomers,butfirst,itwillexplaintheconceptofBIsystemandthe

roleofeachcomponent.

Figure1showsa conceptualmodelofBusiness Intelligenceine-business,thismodedefines

e-businessasimplementationofanyelectronictransaction-relatedactivitiesfromenterpriseexternal

environment,includingCustomerRelationshipManagement(CRM),EnterpriseResourcePlanning

(ERP),SupplyChainManagement(SCM),PointofSale(Pos),andsoon.Afterthedataisgathered

fromthewebstoreandstoredinacentraldatabase,businessintelligenceconvertsthe datainto

Thisarticle,originallypublishedunderIGIGlobal’scopyrightonDecember13,2019willproceedwithpublicationasanOpenAccess

articlestartingonJanuary14,2021inthegoldOpenAccessjournal,InternationalJournalofBusinessIntelligenceResearch(converted

togoldOpenAccessJanuary1,2021),andwillbedistributedunderthetermsoftheCreativeCommonsAttributionLicense(http://cre-

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informationandknowledgethatcanbeusedforenterprisedecision-making.Technologiesusedinclude

extraction,transformationandload(ETL),datawarehousing,datamininganddataanalysis.The

resultsprovideanoverallviewofe-businessdataflowpatternsinvisualizedformsuchasdashboards,

reports,graphs,alertsandsoon.Thetechnologiesusedinbusinessintelligencearefurtherdescribed

inthenextsection(ShengHooi,2012).

ARCHITCTUR F BI

BusinessIntelligencehasfourcomponents:adatawarehouseanditssourcedata,businessanalytics–a

collectionoftoolsformanipulating,miningandanalyzingdata,businessperformancemanagement

(BPM)toolsformonitoringandanalyzingperformance,andauserinterface(ShengHooi,2012).

ataarehouse

A data warehouse is a centralized data repository that collects and manages data derived from operational systems (such as ERP, CRM, PoS, marketing and sales) and external data sources (such as Online Social Networks, Blogs, Videos, E-mails, Text Documents, Chat). ETL (extraction, transformation and loading) tools are used to perform the process of extracting data from multiple source systems, cleansing and transforming, then loading the data into the data warehouse in a standard and consistent format which is structured for query and analysis. A data warehouse is designed to help decision makers to take the right decisions by consolidating and analyzing data and creating reports at different levels.

Business Analytics

Businessanalyticsalsoknown asanalyticalprocessingisabroadcategoryofapplicationsand

techniquesforgathering,sortingandanalyzingdatatohelpenterpriseusersmakebetterbusiness

andstrategicdecisions. Forexample,OLAP(onlineanalyticalprocessing)whichhelpstoanalyze the

multi-dimensionaldatafromvariousanglesforusingtheminbusinessreporting, trendsanalysis,sales

forecastingandotherplanningpurposes,Adhocreporting,whichistheprocessofcreatingreports

ontheflybybusinessend-users(noneedfortechnicalskills),displayinginformationinatableora

chartthatistheresultofaquestionwhichhasnotalreadybeencodifiedinaproductionreport.Data

Miningisanothersetofanalyticaltechniquesthathelpstogetthepatternsfromlargedatasetsand

convertingitintounderstandableformtobeusedbyotherBIcomponents(Sheng,2012).Online

AnalyticalMining(OLAM):isanarchitecturethatintegratesOLAPanddatamining,ithelpsuser

toselectasetofdataandanalyzeitusingdataminingalgorithms(Ritbumroong, 2015).

Thefirstaspectofcustomerdataanalysisis“customerknowledge,”implying awarenessof

keycustomercharacteristicsthatarerelevanttoyourorganization’sbusinessprocessesmost likely

fromcustomerprofile.Examplesofrelateddataaredemographiccharacteristics (basicpersonal

information,includingage,gender,income,maritalstate,religion,familysize,occupationand

education),geographiccharacteristics(suchaswheretheindividuallives,whethertheindividualis

married),analyticalcharacteristicssuch aspurchasingpatternsorcreditworthiness,frequencyof

purchase,timeofhighpurchase)andpsychographic characteristics(suchasinterests,personality,

attitude,culture)(Gillespie,n.d.).

Customerdatasegmentationisanimportantanalyticalprocessthathelpsmarketerstosegment

marketbasedonconsumerpersonalitytraits,lifestyle,socialclass,location,andsoon.Someofthe

benefitsofsegmentationare:

• Identifythemostandleastprofitablecustomers

• Focusthemarketingonthecustomerswhowillbemostlikelytobuycompany’sproductsor

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• Avoidthemarketswhichwillnotbeprofitableforthecompany

• Buildloyalrelationshipswithcustomersbyimprovingcustomerserviceandproductstomeet

customerneeds

• Getaheadofthecompetitioninspecificpartsofthemarket

• Usecompany’sresourceswisely

• Identifynewproductsbypredictingcustomerdemands(Gillespie,n.d.).

Segmentsneedtobeidentifiedaccordingtobusinessgoals,forexample,ifthegoalisforattracting

userstobuyaproductorservice,onesegmentcouldbeforthosewho havecompletedapurchase

transaction.Secondcouldbeforthosewhohaven’tmadeapurchase.Athirdcouldbefortheones

whohavefrequentlypurchased.

Otherexamplesofcustomerdatasegmentationare:

Newandreturningusers,Paidsubscriptionvs.freemembers,femalesaged<45vs.femalesaged>

45,andsoon(Gillespie, n.d.).

Figure 1. Conceptual model of business intelligence in e-business (Ranjan, 2012)

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Afterthat,companiescantargettheirmarketingeffortsandcampaignstothemostprofitable

consumers,forexample,anIslamicclothingcompanywilltargettheirproductsandservices toMuslim

femalesaged>20andwhoareinterestedinmodestfashion.Afastfoodcompanywilltargettheir

marketingofferstoteenagersandtoemployees(Gillespie,n.d.).

Asuccessfuldataminingimplementationincludingcustomersegmentationshouldfollowspecific

plannedstepsasfollows:

• BusinessUnderstanding:theimplementationofdataminingprojectshouldstartwith

understandingofthebusinessobjective (whichshouldbeidentifiedasadataminingtarget),and

anassessmentofthecurrentsituationandalsoproblems.Successcriteriashouldbedefinedand

aprojectplanshouldbedeveloped(Ziafat&Shakeri,2014).

• Dataunderstandingandpreparation:Thisphasealsoincludesinitialdatacollectionand

explorationwithsummarystatisticsandvisualizationtoolstounderstandthedataandidentify

potentialproblemsinavailabilityandquality.

Thedatatobeusedforsegmentationshouldbeidentified,selected,andpreparedforinclusionin

thesegmentationmodeling.Thisphaseinvolvesthecollection,cleaning,integration,andformatting ofthecustomerdataaccording totheneedsoftheproject(Ziafat&Shakeri,2014).

• Modeling:ThisphaseincludestheIdentificationofthesegmentswithclustermodeling.Analysts shouldselecttheappropriatemodelingtechniquefortheparticularbusinessobjective.Basedon

clusteranalysis,customersaregroupedintodifferentgroups(segments).Particularly,customers

canbesegmentedaccordingtotheirvalue,socio-demographicandlife-stageinformation,and

theirbehavioral,need/attitudinal,andloyaltycharacteristics.Thetypeofsegmentationused

dependsonthespecificbusinessobjective(Ziafat&Shakeri,2014).

Theprepared datasetsarethenusedformodeltraining.Thisphaseinvolvestheexaminationof

alternativemodelingalgorithmsandparametersettingsandacomparisonoftheirfitandperformance

inordertofindtheonethatyieldsthebestresults,andthe modelsettingscanberevisedandfine- tunedasneeded(Ziafat&Shakeri,2014).

• Evaluation:Thegeneratedmodelsarethenformallyevaluatednotonlyintermsoftechnical

measuresbutalso,moreimportantly,inthecontextofthebusinesssuccesscriteriasetoutin

thebusinessunderstandingphase.Thesegmentationschemethatbestaddressestheneedsofthe

organizationisselectedfordeployment(Ziafat&Shakeri,2014).

• Deployment:Theproject’sfindingsandconclusionsaresummarizedinareport,andthecustomers

andsegments arescored,thenthesegmentationresultsshouldgetdistributedthroughoutthe

enterpriseandincorporatedintheorganization’sdatabasesandoperationalCRMsystem, and

willbeusedindevelopingdifferentiatedmarketingstrategiesandsegmentedmarketing.

Finally,amaintenanceplan shouldbedesigned andthewholeprocessshouldbereviewed(Ziafat

&Shakeri,2014).

Business Performance Management

ABusinessPerformanceManagement(BPM)systemusedto monitorandcontroltheperformance

ofan organization,andalertsmanagerstopotentialopportunities,impendingproblems,andthreats,

andthenempowersthemtoreactandtaketherightdecisionsinordertoachievebusinessgoals.

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SomeexamplesofKPIsthatshouldbetrackedtomeasurecustomer’sretentionare:

Repeat Customer Rate,thisiscalculatedbydividingtotalrepeatcustomers(whopurchasedat

least2times)bytotalcustomers(whopurchasedatleastonce).

Average Order Value,thisiscalculatedbydividingtotalrevenuebytotalnumberoforders.

Customer Retention Rates (CRR),youneedthefollowinginformationtocalculatecustomerretention:

• NumberofcustomerSattheendofatimeperiod(E)

• Numberofnewcustomersduringthatperiod(N)

• Numberofcustomersatthestartofthatperiod(S) Theequationis:CRR= ((E-N)/S)*100(Winsauer,2018).

Today,everyorganizationhashugedataoftheircustomers,includingbillinginformation,

customertransactions,websitehits,andsoon.Theorganizationcanusedataminingandanalysis

inordertodefineaprobabilityscoreforeachcustomer.Thisprobabilityscorereflectshowlikely

thecustomerswitchesthevendors.Then,thentheorganizationgivesthecustomerswithhigherrisk

morepersonalizedattention(Agrawal,2018).

AnotherKPIshouldbeconsideredforcustomerretentionpurposeiscustomerlifetimevalue

(CLV);itrepresentsthetotalamountofmoneyacustomerisexpectedtospendinyourbusiness,

oronyour products,duringtheirlifetime.Thisisanimportantfiguretoknowbecauseithelpsyou

makedecisionsabouthowmuchmoneytoinvestinacquiringnewcustomersandretainingexisting

ones.KnowingCLVcan answerimportantquestionsas:

• Howmuchyoucanspendtoacquireasimilarcustomerandstillhaveaprofitablerelationship.

• WhatkindsofproductscustomerswiththehighestCLVwant.

• Whichproductshavethehighestprofitability.

• Whoyourmostprofitabletypesofclientsare(Winsauer,2018).

User Interface

TherearemultiplevisualizationandreportingtoolsusedinBIsystem,dashboardisoneofthem,

abusinessintelligencedashboardisaninformationmanagementtoolthatisusedtotrackKPIs,

metrics,andotherkeydatapointsrelevanttoabusiness,department,orspecificprocess,itprovides

preconfigured orcustomerdefinedmetrics,statistics,insightsandvisualizationintocurrentdata

Throughtheuseofdatavisualizations,dashboardssimplifycomplexdatasetstoprovideuserswith

ataglanceawarenessofcurrentperformance(ShengHooi,2012).Figure2 showsanexampleofBI

dashboardforcustomerprofitability.

WhileDashboardisahigh-levelday-to-dayviewofmainKPIsof businessonasingle page

basedononeormoredatasets,itisconsideredanavigationpointtooneormoredetailedreports.BI

Reportisacombinationofmultiplevisualelements(charts,texts,values…)basedononedatasetand

can havemultiplepages.InBIReport,usercanhover,highlight,sliceanddice,drilldownthrough

multiplelevelsorchooseacolumninachartandcheckitsrelationshipswithothervisualizations.

Figure3showsareportexamplefortopcustomersales.

MASURFR GRATR SATISFACTIN

Afterthecompanyhasputitscustomerdatatouseandhasaltereditsbusinesstactics,itshould

assessthesuccessofitsimprovedstrategy.Measurefulfillmentratesanddeliverytimestofindout

howlikelyarethecustomerstopurchaseagain.Thecompanycanusethesemeasurementmetricsto

implementoralteritsstrategiesforbettercustomersatisfaction,resultinginhighcustomerretention

rates(Nielsen,2017).

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INFLUNCCUSTMR BHAVIR

BusinessIntelligencesoftwaretakesthemarketinggameastepforwardbyprovidingtheabilityto

influencecustomerbehaviorandthemarket.Whenyoucanmonitor,analyzeandmeasurecustomer

response,youcanallocateyourmarketingbudgetstothepracticeswiththehighestimpact.For

example,ifyoualreadyknowthatcustomersarereactingwelltooneofyourmarketingcampaigns,

say-afreeservicethatyouareoffering,youcancapitalizeonthisinformationbyeitheroffering

morefreeservicesindifferentproducts,orcomeupwithothersimilarplans.Thiswillinfluence

yourcustomerstokeepdoingbusinesswithyouandstrengthenyourrelationship,resultinginbetter

retention(Nielsen,2017).

Figure 2. Customer profitability dashboard sample for power BI (Microsoft Power BI, 2019)

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RCMMNATINS

Integration of BI and CRM Systems

CRMsoftwareismuchfocusedonfindingnewLeads,SalesPipelinesandacquiringnewcustomers.

Tobetterunderstandandfocusonyourexistingcustomersyouneedtoknowthingslike:what

havetheypreviouslyboughtandwhen?Whatproductgroupsaretheynotyetbuying?Whendid

theyreducevolumesorstopbuying?SuchquestionscanbeansweredbyBIsystem;therefore,

complementaryuseofCRMsystemsandbusinessintelligencewillprovidethepathtocustomer

loyalty.BypossessionoffullInformationaboutalltransactionsandcustomer’sexperience,companies

caneasilyidentifyopportunitiestoimprovesatisfaction,retention,upsell,agentproductivityand

otherkeymetrics.Therefore,inthemodernbusiness,CRMcannotbeconsideredseparatelyfrom

BusinessIntelligence.Theyconstituteauniquemodelthatenablescompaniesforecastcustomer

behaviorandmakedecisionsbasedontheseforecasts,andbuildlong-termandprofitablecustomer

relationships(Habul&Pilav-Velic,2010).

Social Media and Business Intelligence Hand by Hand

Socialmediaprovideshugeinformationthatcanhelpmarketerstounderstandthebehaviorsand

preferencesoftheircustomers,atthesametime;itcanincludeuselessthoughtsandopinions.

Therefore,marketersneedtodeeplyanalyzethedatainordertoreachusefulconclusions,andthatarises

theneedofBItoolsthatcanhelpmarketingdepartmentsmakethemostoftheseimportantchannels

tomarketbenefitinthewaythatallowsanorganizationtoteststrategies.Withsocialintelligence,

businessescancomparetheoutcomeofdifferentapproachesandidentifythebeststrategy.Business

intelligence(BI)solutions–whichdeliverAPIconnectorsforthird-partyWebapplications–offer

marketersthecapabilitytoanalyzedatacapturedandgeneratedbypopularsocialmediaplatforms,

suchasTwitter,LinkedInorYouTube.Thisanalysisprovidesaquickandcost-effectivewayof

understandingtheimpactofsocialmediamarketingactivities(James,n.d.).

Figure 3. Top 20 customer report (JetGlobal, n.d.)

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THNXT LVLF BI

Self-servicebusinessintelligence(SSBI)isanewtrendinBIwheresoftwaresandtoolsaremade

comprehensiveandsimplerthanbefore.Theaimisthemakebusinessintelligenceaccessible

toeveryoneincludingpeoplewithlimitedtonotechnicalorstatisticalknowledge.Itinvolves

simplificationofcurrentsystemsandprocesstodelivermoredirectandactionableinsights.With

advancementsinmachinelearninganddataanalysis,thisdreamwillbecomemorerealisticand

achievable(Newgenapps,2017).

CNCLUSIN

Today,customersaremoreandmoredemanding,Companiescanincurheavylosseswhencustomers

arenotsatisfiedanddonotreturn,thereforetheyneedtohaveabetterunderstandingoftheircustomers’

behaviorsinordertoimproveserviceandproducts.andnowadays,therearemultipleresourcesof

customers’dataespeciallywithwebservices,suchaswebsites,chatbots,emails,socialmedia,PoS,

ERP,CRM,SCM,therefore,itbecomesdifficulttocollectallthishugedataaltogetherandanalyzeit

manually,fromhere,thenecessityofbusinessintelligencearisestohelpenterprisesinteractefficiently

withdataregardlessofbusinesssizeorscope.Businessintelligencecanhelpcompaniesnotonlyto

betterunderstandtheircustomers,butalsotoforeseeandimpacttheirpreferencesandbehaviors.It

usesthatcollectionofBigDatatoprovideclearvisionofcustomers’actionsandspendinghabits.

Thisshouldhelptheorganizationstobetterservethecustomers,keeptheirexistingcustomersand

attractmoretargetednewcustomers,whichinitsturnwillincreasetheprofit(Hennel,n.d.).

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RFRNCS

Agrawal, P. (2018, March 29).Most Common Examples of Data Mining. Upgrad. Retrieved from https://www.

upgrad.com/blog/most-common-examples-of-data-mining

Gillespie,C.(2018).User Segmentation: A Guide to Understanding Your Customers.Mixpanel.Retrievedfrom

https://mixpanel.com/blog/2018/05/09/user-segmentation-guide-understanding-customers

Habul,A.,&Pilav-Velic,A.(2010).BusinessIntelligenceandCustomerRelationshipManagement.In

Proceedings of ITI 2010, 32nd International Conference on Information Technology Interfaces.IEEEPress.

Retrievedfromhttps://ieeexplore.ieee.org/document/5546381?arnumber=5546381

Hennel,P.(n.d.).Understanding Your Customers with Business Intelligence.Silvon.Retrievedfromhttps://

www.silvon.com/blog/understanding-customers

James,L.(2016).Marketing Analytics: The Role of Business Intelligence in Social Media Marketing.YelloFinbi.

Retrievedfromhttps://www.yellowfinbi.com/blog/2016/07/yfcommunitynews-marketing-analytics-the-role-of- business-intelligence-in-social-media-marketing-233181

JetGlobal.(n.d.).Top Customer Sales Analysis.Retrievedfromhttps://www.jetglobal.com/sample-reports/top- customer-sales-analysis

Microsoft.(2019,May7).Customer Profitability Sample for Power BI: Take a Tour.Retrievedfromhttps://

docs.microsoft.com/en-us/power-bi/sample-customer-profitability

Newgenapps.(2017,October24).5 Uses of Business Intelligence to Make Sense Out of Big Data.Retrieved

fromhttps://www.newgenapps.com/blog/importance-uses-of-business-intelligence

Nielsen,S.(2017,September11).3 Easy Ways to Improve Customer Retention.Retrievedfromhttps://swipx.

com/improve-customer-retention

Ranjan,J.(2012).BusinessIntelligence:Concepts,Components,TechniquesandBenefits.SSRN Electronic Journal.Retrievedfromhttps://www.researchgate.net/publication/256035431_Business_Intelligence_Concepts_

Components_Techniques_and_Benefits

Ritbumroong,M.(2015).AnalyzingCustomerBehaviorUsingOnlineAnalyticalMining(OLAM).International Journal of Business Intelligence Research.Retrievedfromhttps://www.igi-global.com/chapter/analyzing- customer-behavior-using-online-analytical-mining-olam/122984?camid=4v1

ShengHooi,S.,&Husain,W.(2012).AStudyonIntegratingBusinessIntelligenceintoE-Business.International Journal on Advanced Science Engineering Information Technology.Retrievedfromhttps://www.researchgate.

net/publication/267805638_A_Study_on_Integrating_Business_Intelligence_into_E-Business/download Winsauer,E.,&Jacobson,B.(2018,February3).4 KPIs You Should Track to Measure Ecommerce Retention.

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Using_Data_Mining_Techniques_in_Customer_Segmentation

Rasha Abu Hadhoud, received her bachelor’s degree in computer science from Al Hashemite University Jordan 2004. and currently she is a graduate student MS Enterprise Systems Engineering in Princess Sumaya University for Technology Jordan. She worked for 9 years in IT companies as software quality engineer.

Walid A. Salameh, is a Professor of Computer Engineering at Princess Sumaya University for Technology-Jordan.

His current research interest is Natural Language Processing, Data Mining, Big Data, and Deep Learning.