Marketing segmentation allows marketing managers to categorize existing and prospective customers into groups based on similar attributes. Defining marketing segments allows the marketing manager to communicate more effectively with a customer through tailored messaging designed to build brand awareness, retain customers, and increase revenue. To support this process, SAP CRM provides Segment Builder, which allows a user to build customer segments according to the demographical and behavioral data that the organization collects on its customers.

Segment Builder empowers the marketing manager to create marketing segments on the fly. The tool allows users to refine a segment through an easy-to-use, drag-and-drop interface. You can then target the customers in this refined segment for marketing communications or promotions. Additionally, the user can choose to export the list of customers for third-party campaign processing.

We will first review the data sources that you can use with Segment Builder and describe the specific business benefits of using SAP NetWeaver Business Intelligence (SAP NetWeaver BI) segmentation queries. Then, we will provide a high-level overview of the SAP NetWeaver BI platform. Finally, we will conclude with some tips concerning the integration of SAP CRM 2005 and SAP NetWeaver BI 7.0 for use with Segment Builder.

Sources of Data

Segment Builder provides several data sources that a marketing manager can use to build customer segments. The three major sources it uses are CRM InfoSets, attribute sets, and InfoCubes.

CRM InfoSets: Segmentation data from CRM InfoSets typically includes customer characteristics found on the business partner master record. A few examples of data sourced from CRM InfoSets are the customer’s city, region, and country. It can include key fields on a contact record, such as the company’s standard relationship contact. It can also contain partner classifications and roles.

Attribute sets: Attributes are data fields that the business can define freely. The business can choose to create marketing attributes to capture company data ranging from company sales revenue to employee size. You can also include data from large business information providers, such as Dun & Bradstreet. Once you capture it, you can use it for customer segmentation.

InfoCubes: Segmentation data from SAP NetWeaver BI InfoCubes typically contains transactional data and can include installed base (IBase) data as well. This data source is important in building segments that are based on a company’s direct contact with a customer and the activities that this contact generates. InfoCubes require integration between SAP CRM and SAP NetWeaver BI.

Business Benefits of Using SAP NetWeaver BI Segmentation Queries

Using transactional data for customer segmentation allows the marketing manager to create segments based on the activities between a company and its customer. This includes both inbound and outbound communications, as well as a customer’s purchase history. This capability allows the marketing manager to go beyond targeting a customer on the basis of demographical data. It allows the marketing manager to start building targeted messages that are based on the behavior of a customer, thereby enhancing the customer experience.

Some business examples of how you can use transactional data pulled from SAP NetWeaver BI for customer segmentation are:

• Analyzing lead and opportunity transactional data to understand where prospects are in the sales pipeline. A lead qualifier can segment all hot leads that are interested in a particular product for a campaign communication that encourages the user to buy.
• Using order transactional data, customer care representatives can identify customers new to a product and engage them in a program designed to enhance the customer’s purchasing experience
• Reviewing campaign activities to understand how often you have marketed to a customer over a specified period of time and determining whether or not you should send additional communications to that customer

Using IBase data for customer segmentation allows the marketing manager to create segments based on the products or services that a customer currently owns. For example, the marketing manager can target customers who own a particular product and engage them in a promotional campaign to buy additional, related products. They could also use IBase data with transactional data to target customers who should upgrade prepaid service plans based on their current use.

The SAP NetWeaver BI Platform

The SAP NetWeaver BI architecture is suitable for processing large volumes of transactional data because its primary purpose is to provide an analytical platform. In contrast to segmenting customers on readily available master data through InfoSets or marketing attributes, a search and lookup for high volumes of transactional data in SAP CRM can affect the operational performance of the system. Instead, the task of processing transactional data shifts to SAP NetWeaver BI.

SAP NetWeaver BI is usually built based on the company’s reporting and analytics requirements, and potential benefits of segmentation queries might not have been taken into consideration. The BI implementation team builds InfoCubes in various functional areas in which the business has determined that it needs reporting. Therefore, InfoCubes in SAP NetWeaver BI implementations might not always support all functional modules implemented for SAP CRM. For instance, your SAP CRM implementation might involve Service Management and Interaction Center (IC), but you developed reporting requirements only for Service Management. Consequently, you wouldn’t have any InfoCubes available for IC segmentation queries.

When planning to use segmentation queries for certain functional areas, you need to understand how your SAP NetWeaver BI platform is set up. If your project is in its analysis phase, you should map out and communicate the functional areas where you would like to use segmentation queries.

An SAP NetWeaver BI database that contains lead records is an example of an InfoCube. As shown in Figure 1, transactional data is extracted from SAP CRM. Organizations typically schedule data transfers on a daily basis, usually at night, when large extracts of SAP CRM data to SAP NetWeaver BI do not impact SAP CRM operational performance. After SAP NetWeaver BI extracts the data from SAP CRM into the InfoCube, you can use segmentation queries to generate target lists based on patterns that exist in the transactional records. You can see an example of this in the next section.

Figure 1

SAP NetWeaver BI data flow

Segmentation Queries

The InfoCubes filled with transactional data are accessible through queries created in the Business Explorer (BEx) Query Designer application. This is a graphical interface where the query developer can drag and drop fields that are defined in the InfoCube to create a report.

You can think of a segmentation query as a report that lists a number of business partners. The query developer builds this query in a similar way as he would build a general BI report, but with some limitations that we discuss in the “Tips and Hints” section. The key is to include attributes of transactional records that will be a part of the segmentation query. As an example, a segmentation query can include a lead classification field that allows the marketing manager to produce a list of business partners that have leads classified as Hot (Figure 2).

Figure 2

BEx Query Designer with a simple query showing prospects with records containing Hot leads

Segment Builder

After you create the query in SAP NetWeaver BI, you must define it as a DataSource in SAP CRM (Figure 3). This means that the list of business partners that the query generates in SAP NetWeaver BI is now available for use in Segment Builder. This is a one-time technical configuration process that your BI team carries out. A full discussion of the process is outside the scope of this article.

Figure 3

Example of a segmentation query defined as a DataSource in SAP CRM

Segment Builder is then enabled to use the segmentation query for target group generation. To the marketing manager, the integration between SAP CRM and SAP NetWeaver BI is transparent. Just as in the usual use of Segment Builder, the user drags and drops SAP NetWeaver BI queries with certain selections to generate the desired target list (Figure 4).

Figure 4

Drag and drop the queries into the right side of the screen to generate the target list

Tips and Hints

Now that we’ve explained the overall functionality of segmentation queries, we would like to provide some advice about the strategy involved with implementing segmentation queries, both from a technical and functional standpoint. These tips apply to SAP CRM 2005 and SAP NetWeaver BI 7.0.

From a functional point of view, keep it simple. Take advantage of the functionalities in SAP CRM segmentation queries to implement complex segmentation logic. For instance, you can create a single segmentation query that allows you to create a target list of customers who are hot leads and who have made one or more purchases in the last quarter.

However, this query is complex to create and might force inefficient architectural changes in SAP NetWeaver BI. Instead, create two separate queries. The first segmentation query returns prospects that are labeled as hot leads and the second segmentation query returns customers with one or more sales in the last quarter. The original requirement of joining these customer classifications works as the result of Segment Builder’s ability to merge several queries into one target group — including only those prospects that meet the criteria in both queries. This approach is least likely to require physical changes in SAP NetWeaver BI. Be prepared to favor workarounds over complex solutions.

From a technical point of view, keep it simple. SAP NetWeaver BI is a powerful platform that can apply complex logic and functionalities to end-user reports. Although a segmentation query technically is identical to a BI report, this does not mean that Segment Builder can use complex SAP NetWeaver BI functionalities. Generally, you should use the basic BEx Query Designer functionalities. Simply speaking, you should base segmentation on the physical data stored in a record. Avoid complex mathematical computations and other more advanced analytical tools in BEx Query Designer.

During implementation and testing, use the checklist in Figure 5 to debug segmentation queries. This is helpful when you encounter an unexpected or incorrect list of business partners.

Figure 5

Debugging checklist

Martin Ringvold

Martin Ringvold, MBA, is an independent, certified BI solution consultant focusing on functional and technical aspects around SAP NetWeaver BI/SAP CRM integration projects. He has a background in computer science and four years of SAP NetWeaver BI implementation experience. He is currently affiliated with Nsight, Inc.

You may contact the author at mringvold@yahoo.com.

If you have comments about this article or publication, or would like to submit an article idea, please contact the editor.

Stephanie Yee

Stephanie Yee is an SAP CRM 2005 certified consultant. Working at Deloitte Consulting, LLP, she has almost six years of professional consulting advisory service experience focused on leading and delivering customer relationship management business transformation projects.

You may contact the author at editor@CRMexpertOnline.com.

If you have comments about this article or publication, or would like to submit an article idea, please contact the editor.