“Predicting Customers’ Purchasing Patterns”

You don’t need psychic powers to read your customers’ minds — just a little high-tech help.

Customer-relationship-management software uses artificial intelligence and advanced information-modeling techniques to deliver meaningful data about purchasing patterns and behavior.

"The more I know about you, the more I can tailor the products or promotions I offer you," says Gene Alvarez, senior analyst at The Meta Group, an IT research and consulting firm in Stamford, Conn. For example, if a Web merchant knows that a customer keeps returning to a certain page but doesn’t buy, the retailer can offer a promotion on the item.

Back-to-the-future business: Be it online or in-store, automating sales and customer-service processes allow companies to deliver similar personal service and customer intimacy like the storekeeper of the 1800s — only on a mass customer base, says Alvarez, dubbing the phenomenon "the electronic storekeeper."

In fact, customer-relationship-management software is expected to generate $10.7 billion by 2003, reports The Radicati Group, a research firm in Palo Alto, Calif.