What is ABC analysis in SAP CRM-ANA - CRM Analytics?

SAP Term: ABC analysis

• Component: CRM-ANA

• Component Name: CRM Analytics

• Description: Procedure for determining the importance of an object; it is used to classify objects according to specific criteria or key figures. It allows you to put the objects into common groupings by dividing them into the following areas: A: Important B: Less important C: Relatively unimportant ABC analysis is used in SAP NetWeaver Business Intelligence.

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• Key Concepts: 
  ABC analysis is a method used in CRM Analytics to categorize customers, products, or other items based on their value. It is based on the Pareto principle, which states that 80% of the effects come from 20% of the causes. In ABC analysis, items are divided into three categories: A, B, and C. Items in category A are the most valuable and account for the majority of the total value. Items in category B are moderately valuable and account for a smaller portion of the total value. Items in category C are the least valuable and account for a very small portion of the total value. 
  
  How to use it: 
  ABC analysis can be used to prioritize resources and focus efforts on items that will have the greatest impact. For example, if a company is trying to increase sales, they can use ABC analysis to identify which customers or products are most likely to generate the highest revenue. This information can then be used to target marketing efforts and allocate resources accordingly. 
  
  Tips & Tricks: 
  When using ABC analysis, it is important to consider both quantitative and qualitative factors when assigning items to each category. For example, a customer may not generate a large amount of revenue but may be important for other reasons such as their influence in the industry or their potential for future growth. 
  
  Related Information: 
  ABC analysis is closely related to other methods such as Pareto analysis and 80/20 rule. These methods can be used together to gain a better understanding of how resources should be allocated for maximum impact.