3. Start Forecasting

Until recently, most midsize companies did not have the technology or finances to collect and analyze information to help predict sales. That's now changing as the cost of contacting customers and analyzing responses goes down, and companies are becoming more aware that they need to use technology to create or maintain advantage, says Dennis Gaughan, a research director at AMR Research.

Favorite Recipes Press (FRP), another division of Southwestern/Great American, helps raise funds for nonprofit organizations, such as Habitat for Humanity and Junior League chapters, with the production and sales of custom cookbooks.

When an organization signs up, it provides FRP's sales force with lists of potential cookbook buyers. Instead of printing a run of the cookbooks based on past customers, FRP "pre-sells," or estimates the number of books people are likely to buy based on the number that respond to marketing campaigns and sign up to receive an announcement when the books are printed. The number of pre-sales determines how many books are printed in each run.

Today, FRP develops direct mail, e-mail and Web marketing campaigns to pre-sell books, and it tracks the success of those efforts in spreadsheets and a Microsoft Access database. "The tracking and analysis is done manually," Tabor says. But starting in January, FRP expects to analyze marketing efforts in a new customer relationship management software package, Microsoft Dynamics CRM 3.0. The browser-based application, which can be used offline through Microsoft Outlook, will run off a server in the company's data center and keep track of information such as names and e-mail addresses of potential customers, and the marketing campaigns sent to each one.

Tabor expects the $50,000 investment to "greatly" reduce the length of time between the receipt of a customer list and the tracking and analyzing of marketing campaigns: "It's virtually real time, and it will cut out all the manual analysis."

Still, when it comes to analyzing customer data, smaller companies haven't quite caught up to their big brothers. According to CIO Insight's November Customer Strategies Survey, 40% of the customer data collected by companies with less than $500 million in revenue is used to understand customers better. That's compared to 49% in companies with annual revenue greater than $500 million.

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