Datamining & CRM Software

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Thrills Drills and Barbecue Grills
by Mike Banks Valentine

Big business is being taken for a very expensive ride. By whom?
By each other. Confidence games are being perpetrated by Global
corporations upon the only victims that can afford huge losses --
other Global corporations.

How do the crooks get away with this? I submit that it's becoming
harder for them to do -- except with each other! Somehow the giant
corporations don't get that other giant corporations are scamming
them out of huge amounts of cash for dubious deliverables.

CRM (customer relationship management) software costs upwards of
$325,000 with additional integration costs of up to $100,000 and
according to a recent Interactive Week Magazine article,,4164,2777006,00.html

that expensive software is so effective that it triggered a direct
mail promotion from American Express to a heterosexual man, but
that promotion was targeted at gay men, lesbians and domestic
partners. His wife was as confused as he at the obvious blunder!
That interesting vignette comes from the same article.

Let's see now, I'm going to pay about a half million dollars so
that my company can offend and confuse my customers. Not a bad
investment! What this means to the consumer is that they may
receive appropriate advertising and promotional material if the
software can draw logical conclusions based on past purchases,
inquiries and page visits. A laudable goal if it worked perfectly
but it clearly does not!

What it means in reality is that users of datamining software can
send innapropriate promotions to people that may be confused,
may be offended and certainly annoyed by their material even when
it was requested, as it was in this case. You've taken a potential
sale and turned it into a blunder. What does that do for lifetime
customer value? How about return on investment figures with that?

I have a hosted application that can provide you incorrect and
mixed-up customer data mining which cost only $60,000 yearly to
host for you! I'd sure like to see the ROI (Return on investment)
generated by that chunk of change! I also have a bridge for sale.

Is it any wonder that corporations are going bust? They're falling
for scams that rip them off on a huge scale perpetrated by con
artists offering data mining, knowledge management, CRM solutions.

I'd like to offer up a scenario that might illustrate awful data
mining results. I also like to suggest that this is probably
illustrative of why this expensive software might work but is
inherently flawed in the conclusions it draws.

I visit an online book seller to buy a cookbook for my nephew,
who is considering attending a culinary college. The confirmation

page is prompted by the datamining software to display an
advertisement for a recipe site when the purchase is completed,
I'm not interested in that so I jump to my favorites and click
on Yahoo, where I notice a banner ad for power tools and recall
that I need a new reversible drill to help repair my patio deck.

I click on that banner ad to visit a hardware site and review the
information on their available drills, then I realize I won't have
time for it to be delivered by tomorrow, which is the weekend and
I want to complete those deck repairs before Monday. I'll run down
to the hardware store for the drill purchase. But I fill out the
contest entry for the giant tool giveaway before I leave their web

I return to my online book seller the following week to look up
a book my wife is interested in about flower gardening and buy
it for her. Based on my previous purchase of the cookbook and
combined with this purchase the CRM software figures I enjoy
cooking and gardening and serves up an ad on the confirmation
page for a Martha Stewart video on vegetable gardening. I'm not
interested in that and jump over to Yahoo to look up the latest
sports scores and I'm served an advertisement for barbecue grills.

Perfect, I'll order that now and it will arrive by the time
we're ready to enjoy the newly repaired deck for the 4th of July.
I click on the ad banner and complete the barbecue purchase. I'm
looking for a way to make the weekend perfect, so to I decide to
order flowers delivered to my wife.

When I complete that purchase, I'm served an advertising banner
for a newly released relationship book. I click on that banner
and end up back at the bookseller site. Their software sees a
return customer that is interested in cooking, flower gardening
and love. At the same time Yahoo sees a customer interested in
sports thrills, reversible drills and barbecue grills.

Now both of those parties, the book seller and Yahoo, have a
different picture of my surfing and buying habits.

The book seller is incorrect because I haven't bought a single
book that interests me. Yahoo has me pegged, but guess what? The
only value they have gained is increased ad revenue, which only
benefits companies that generate huge traffic and create
unwavering visitor loyalty. What if I switch my home page to iWon
from Yahoo?

The return on investment is negligible unless the site enjoys
record-setting traffic levels and commands complete customer
loyalty. Who's buying this software? It's bought by global
corporations. Who's selling? Really smart cookies.

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July 29, 2001