A model of customer relationship management and business intelligence systems for catalogue and online retailers

As more retailers evolve into customer-centric and segment-based business, business intelligence (BI) and customer relationship management (CRM) systems are playing a key role in achieving and maintaining competitive advantage. For the past ten years, the authors have had the rare opportunity of observing and interviewing employees and managers of three different management teams at three separate Fingerhut companies as they experimented with various ITs for their companies. When the first Fingerhut company peaked in 1998, as many as 200 analysts and 40 statisticians mined the database for insights that helped predict consumer shopping patterns and credit behaviour. Data mining and BI helped Fingerhut spot shopping patterns, bring product offerings to the right customers, and nurture customer relationships. By 1998, Fingerhut was the second largest catalogue retailer in the U.S. with revenues nearing $2 billion. However, after Federated acquired Fingerhut in 1999 and made it a subsidiary, Fingerhut Net, it suffered great losses and was eventually liquidated. Finally, a new company, Fingerhut Direct Marketing, was resurrected in 2002 under a new management team, and it once again became successful. What went right? What went wrong? The paper concludes with CRM and BI systems success factors and a discussion of lessons learned.