Adriatico's Blog

It is widely recognized that firms of all sizes need to learn to emulate what small, service-oriented businesses have always done well—creating one-to-one relationships with their customers. Customer relationship management is a broad topic that is the subject of many books and conferences. Everything from lead-tracking software to campaign management software to call center software is now marketed as a customer relationship management tool. The focus of this book is narrower—the role that data mining can play in improving customer relationship management by improving the firm’s ability to form learning relationships with its customers.

In every industry, forward-looking companies are moving toward the goal of understanding each customer individually and using that understanding to make it easier for the customer to do business with them rather than with competitors. These same firms are learning to look at the value of each customer so that they know which ones are worth investing money and effort to hold on to and which ones should be allowed to depart. This change in focus from broad market segments to individual customers requires changes throughout the enterprise, and nowhere more than in marketing, sales, and customer support.

Building a business around the customer relationship is a revolutionary change for most companies. Banks have traditionally focused on maintaining the spread between the rate they pay to bring money in and the rate they charge to lend money out. Telephone companies have concentrated on connecting calls through the network. Insurance companies have focused on processing claims and managing investments. It takes more than data mining to turn a product-focused organization into a customer-centric one. A data mining result that suggests offering a particular customer a widget instead of a gizmo will be ignored if the manager’s bonus depends on the number of gizmos sold this quarter and not on the number of widgets (even if the latter are more profitable).

In the narrow sense, data mining is a collection of tools and techniques. It is one of several technologies required to support a customer-centric enterprise. In a broader sense, data mining is an attitude that business actions should be based on learning, that informed decisions are better than uninformed decisions, and that measuring results is beneficial to the business. Data mining is also a process and a methodology for applying the tools and techniques. For data mining to be effective, the other requirements for analytic CRM must also be in place. In order to form a learning relationship with its customers, a firm must be able to:

• Notice what its customers are doing
• Remember what it and its customers have done over time
• Learn from what it has remembered
• Act on what it has learned to make customers more profitable

Although the focus of this post is on the third bullet—learning from what has happened in the past—that learning cannot take place in a vacuum. There must be transaction processing systems to capture customer interactions, data warehouses to store historical customer behavior information, data mining to translate history into plans for future action, and a customer relationship strategy to put those plans into practice.

You will need a few tools for your work. I have provided them on the CD that comes with this book. Please resist any temptation to use tools from elsewhere. They will be excellent when you have gained confidence and fluency with programming. However, their complexity will overwhelm you while you are struggling to learn to program. It is enough to try to do something new without also trying to do it in an unnecessarily complicated environment.
You also need something to manage these tools with rather than having to remember every detail for yourself. Programmers use things called IDEs (Integrated Development Environments), which are rather like carpenters’ workbenches. Those that come with commercial compilers, or even the free ones that are used by experienced programmers, have a multitude of options that will simply get in your way and lead to confusion. (No differences here, then; professional work environments are rarely suited to the newcomer.)
So I have chosen a very simple IDE written and maintained by Al Stevens. He calls it Quincy and it provides just what we want: enough to work with but no frills to get in the way. If you have followed the instructions for installing the software you will have installed Quincy somewhere on your system (perhaps on the C drive, but possibly somewhere else; I have my copy on my E drive). You should have an icon of a cat’s face on your desktop. Click (or double-click, depending on how your system is set up) on it to open Quincy.

There are some things that you need to do every time you prepare to write a new program. I am going to walk you through them this time with images from my screen to help you. Until you get used to it, come back to this section each time you start a new program and follow through these steps.

• Create a new project Select ‘‘Project’’ by double-clicking on it (or click and select ‘‘OK’’). Type ‘‘my first program’’ (get into the habit of giving descriptive names to projects and other files) in the Target name box. Use the browse button to find the sub-directory. You should find that in the directory called ‘‘tutorial’’ on the drive where you installed the tools from the CD. When you have found it, left click the OK button in the browse dialog box. Check that the ‘‘Type of Build’’ selected is ‘‘Console application’’.
• Set the project options Select the ‘‘tools’’ menu and choose options. You should see the image at the top of the next page. Make sure that the boxes have been selected as in this image. Then use the browse button beside the Includes box to find the sub-directory called ‘‘fgw headers’’. That should be one of the other sub-directories in the same place. Click OK in the browse dialog and then click OK in the Options dialog box.
• Get the special libraries Much of the programming you will be doing relies on two special files. Do not worry about exactly what they are; they contain resources that one of the programming tools will need. You have to find these two files and include them in the project. Click on the Project menu and select ‘‘Insert Files’’. You should then use the drop down menu in the dialog box to find the fgw headers sub-directory. You should then see something like this (the exact file list may be different, but the two important files fgwlib.a and libgdi32.a should be there. (If they are not in the sub-directory, your installation from the CD is faulty. Copy the contents of the fgw headers directory on the CD to tutorial\fgw headers.)
• Save the project Go to the File menu in Quincy and save the project.