Customer Lifetime Value Analysis: 1 SAP BW, 1 SAP CRM, and 1 SAP (SAP Library

Customer Lifetime Value Analysis: 1 SAP BW, 1 SAP CRM, and 1 SAP R/3

Purpose

The actual function for Customer Lifetime Value Analysis (CLTV Analysis) is executed in the SAP Business Information Warehouse (SAP BW) and is based on data that is stored there. If your system constellation incorporates SAP BW, SAP Customer Relationship Management (SAP CRM), and SAP R/3 Financials (with the productive component Profitability Analysis (CO-PA)), the integration of these systems means you have access to all the necessary data for performing CLTV analysis. This system integration allows you to achieve a closed loop scenario, whereby all data relevant for the CLTV analysis is transferred from OLTP systems into SAP BW for processing, and then applied in the OLTP system for operational processes.

This section of the documentation describes the process for this closed loop scenario and explains how you can set it up.

Note

If your system environment does not include any other systems apart from SAP BW, CLTV analysis can nevertheless provide you with useful information. However, you need to ensure that the data required for the analysis is available in SAP BW.

Prerequisites

Technical Prerequisites

An SAP R/3 System with Release 3.1l or higher, R/3 plug-in PI 2001.1, and productive Profitability Analysis (CO-PA)

SAP BW with Release 2.1C (Support Package 8) or higher.

SAP CRM with Release 3.0 or higher.

Customizing Prerequisites

Your SAP CRM system and your SAP R/3 System need to be connected as source systems to SAP BW (see Connection Between Source Systems and BW). Furthermore, it is important that you extract CRM data regularly into SAP BW.

You need to have set up data extraction for your operating concern for data to be extracted into SAP BW. For more information on the procedure and its special features, see the documentation in the SAP R/3 System in Customizing for extractors under Business Information Warehouse ® Settings for Application-Specific DataSources ® Profitability Analysis. For general information about CO-PA, such as about creating an operating concern, see the section on Profitability Analysis in the SAP Library.

Process Flow

You edit customer master data and customer profiles in SAP CRM

SAP CRM records transaction data, such as customer activities and sales orders.

SAP R/3 records profitability data in Profitability Analysis.

All of the above data relating to your customers, captured in this way in the different systems, is combined in SAP BW and forms the basis for the presegmentation.

SAP BW updates data in the customer knowledge base.

All available customer data is combined in a virtual database in SAP BW called the customer knowledge base and is made available for application in analyses and data mining methods.

You perform presegmentation on the basis of customer behavior patterns.

You can use the data mining method Clustering to create homogeneous customer segments and to set the result in an InfoObject that is an attribute for the customer. You can use this InfoObject as a segmentation characteristic in the next step. However, you can still use any other characteristic InfoObject instead.

You use a CLTV model to determine for a customer segment the CLTV, the customer retention rate, and the profit per customer.

For this, you use a segmentation characteristic to specify the customer segments. The system determines the key figures for each customer segment and the lifetime period.

For more information, see CLTV Model.

Using CLTV prediction, you determine future profitability.

You also have the option of using the results obtained as the basis for predicting the future profitability of a customer segment. For more information, see CLTV Prediction.

On the basis of the result of the CLTV analysis in SAP CRM, you create a target group and perform a campaign.