Analytical CRM is responsible for analyzing customers’ behavior in terms of sales, marketing or any other service provided. It utilizes data warehouse to extract appropriate data regarding different customers.The valuable information thus obtained is used to satisfy customers.

Analytical CRM is composed of:

• Pattern discovery component
• Product and customer analysis component
• Multitude component
• Sorting and customer fractionation component
• Customer value evaluation component

Analytical solutions provided for most companies are integrated view of customer across all channels and applications, campaign performance analysis, customer profitability analysis, cross-selling and up selling. The analytical solutions help answer questions like:

• Who are their best customers?
• Whom they are likely to lose?
• How to retain them?
• How to attract new customers?
• How to improve profitability of customers?

Examples are data warehousing, online analytical processing (OLAP), and data mining systems.

Concept of customer segmentation: the value of customer is judged based on RFM analysis i.e. focusing on Recency, Frequency, and Monetary value from customer purchasing data in retail business. Accordingly the customers are divided into various levels. The four main segments of customers are:

• At the top is the VIP customer whose expenditure is most and form 1% of all customers in a certain period.
• Then the main customer forming 5%.
• Next the ordinary customer forming 20%.
• And at the bottom is the scattered customer an overwhelming 80%.

The first three categories create more than 80% of all profits for the company and as a result they are differentiated as the best customers. They are the real targets of Customer Centralization.