Questions and Answers of Customer Relationship Management

Ensure that your firm has the necessary capabilities to manage its LP effectively. These capabilities include data storage, data analysis, and empowerment of employees, among others.
Design the LP to achieve maximum effectiveness in marketing operations. This goal can be achieved by learning customer preferences and responding to these preferences with the offering.
Avoid withdrawing an existing LP, which can have negative consequences in the form of customer dissatisfaction and defection. Customers do not like it when LPs are withdrawn, once they have grown
Measure the predicted benefits of the LP for your organization. Although it is difficult to specify these benefits accurately, you should attempt to conduct a trade-off analysis between the cost and
Manage the costs of LPs. LPs are expensive, so cost management will always be a critical component. Consider all the costs involved(e.g., opportunity cost of the time of the managers involved). Can
Align the design of your LP with the characteristics of your market, your customer base, and your firm. Knowing the customer base is important, because segments’ preferences for LP benefits vary.
Clearly determine your LP’s goals. Is its goal compatible with your marketing strategy and the positioning of your organization in the market?
3. From the firm’s perspective, is the LP design aligned with desired goal(s)?
2. From the consumer’s perspective, are rewards relevant?
1. From the consumer’s perspective, are rewards attainable?
3. Describe some of the key CRM software applications and their functions.
2. What are the various ways to deploy CRM? What are their advantages and disadvantages?
1. Practicing CRM without technology is not possible. Do you agree with this statement?
2. How are databases classified based on the information they contain? Are these different classes of databases complements or substitutes?
1. What are the various ways to categorize databases?
Create a new valuable management resource.A marketing database could be used to support not only the traditional marketing practices, but also a wide range of other business functions such as
Integrating the marketing program. A complete and integral marketing database can track all marketing efforts toward a customer.Marketers will be able to avoid duplicate, supplemental, and
Conduct product and market research. In a customer-centric company, product, and market research must focus on customer needs.Marketing databases provide a unique resource of information on customer
Increase effectiveness of distribution channels.Customers’ transaction data and customer service data can tell how existing distribution channels work and how to make them more effective.
Maintain brand equity. Match brands with customers who fit the brand profile and keep communicating with those customers using specially designed brand-building messages.
Research potential opportunities
Contact the decision maker best suited to hear their sales pitch, and
Qualify developing sales leads,
Why are they inactive?
How they were initially acquired?
How much did they spend?
What was their purchasing pattern when they were active?
How long have they been active?
How long have the customers been inactive?
Other relevant information: inquiries and referrals, satisfaction, loyalty In addition to firms collecting data at the point-of-purchase, some companies buy large amounts of data from third party
Transaction history: What transactions have the customers conducted? How frequently do they purchase? How much did they spend?How were they acquired?
Psychographic information: values, activities, interests, preferences, etc.
Demographic information: age, gender, marital status, education, number of people in household, income, and so on
Basic information: name, address, ZIP code, and telephone number
Scoring data. Used for model-based prediction.Typically, this data set is large as compared to the previous ones.The data sets must be carefully examined and designed to assure statistical
Test set. Used for out-of-sample tests of the model quality and to select the final model candidate.
Train set. Used to build the models.
5. By applying these weights to individual characteristics of prospective customers, we can arrive at a value for each customer which indicates how likely it is that the customer will purchase a
4. With that information, develop a regression scoring model to obtain a series of weighted variables that either predict which prospects are more likely to become customers or the value of profits
3. Initiate a marketing campaign directed at the random sample, and record the individuals who become customers.
2. Obtain data from the sample that profiles individual consumer characteristics. The R, F, and M scores are variables which profile behavioral characteristics of a customer and are typically used in
1. Draw a random sample from the overall population of prospective customers.
3. Is there a way to move established clients accustomed to receiving a large number of ancillary services for free to paying for these services?
2. What types of systems and processes are needed to document client profitability in a systematic and ongoing fashion?
1. How can an organization compute client-level profitability?
5. What is the link between customer lifetime value and the profitability of an organization?
4. Describe three business situations where you would consider using logistic regression as the preferred technique for analysis and decision making.
3. How will you use lift charts to determine future marketing action?
2. Whatever RFM analysis can do, regression analysis can do as well. Evaluate this statement.
1. A hotel chain wants to analyze its customer base with RFM. Describe the data fields (variables)in the database necessary to do this.
OR predicted response rate based on the model for each decile: computed by dividing the predicted number of buyers by the number of customers for each decile
Actual response rate for each decile: computed by dividing the number of buyers by the number of customers for each decile
Cumulative number of buyers: The number of buyers up to and including that decile
Cumulative percentage of customers: The percent of total customers up to and including that decile
Whether a person bought a car or not These observed values for the dependent variable take on only two values and are usually represented using a 0–1 dummy variable.
Whether a customer responded to a marketing campaign or not
3. Do you think Catalina’s practice (which is entirely legal) is ethically acceptable?
2. Discuss the role of traditional metrics (such as market share) in this new CRM environment.Should they be discarded?
1. Explain why Catalina’s approach is superior from a retailer’s perspective vis-a-vis the traditional mass media approach.
What are some specific marketing actions you would take in the four quadrants?
5. How would you implement the recommended strategies
4. How will you determine if a customer is still your customer in noncontractual settings?
3. Try to predict retention rates using (5.13).
2. How will you calculate the acquisition cost per customer? Consider a mail-order catalog company, an IT services company, and a retail store. What are the underlying assumptions in each case? How
1. How would you calculate the retention rate of your company’s customer base? What assumptions do you need to make?
write it down the
3. What are the barriers to increased cooperation between the companies?
2. If DPWN creates an integrated key account management system, which key processes need to be integrated across the three companies?
1. How would one define and measure the potential for cross selling in this context?
5. What customer backlashes can be expected when a company introduces CRM practices?What are the cautionary steps that you would advise companies to take to avoid these?
4. What analysis is involved in assessing the value of a customer?
3. What are the various components of the CRM architecture from an operational perspective?
2. What are advantages and disadvantages when implementing CRM on an organizational basis versus on a limited functional basis (e.g., sales force only)?
1. What factors will you consider when measuring the ROI of CRM investments?
3. Implementation projects that deploy the operational and analytical outputs to improve marketing decision and customer relationships
2. Analytical projects, whose objective is to obtain a good understanding of the customer’s needs, expectations, and behaviors
1. Operational CRM projects that enable the company to meet the technical and functional requirements of the CRM strategy
Integrated process management through CRM provides instant updates about inventory levels, customer complaints, recommendations, and so on. In turn, sales and production strategies can be updated
Although some of IBM’s competitors have been implementing Siebel solutions, none has a full-scale CRM implementation covering as many people and functions as IBM’s system.
The On-Demand operating environment establishes an ability to provide customized solutions, available on an immediate and, if desired, piecemeal basis.
Transformed contract management process to more efficient and simpler procedures.As of today, IBM estimates its internal CRM implementation has provided it with $2 billion in cost reductions
Decreased time to complete the sales cycle and serve a customer. (These times also are lower than competitors’, so IBM serves its customers faster.)
A top-ranking position for IBM in the IT area, according to a recent survey by Forbes.
Enhanced partnership management.
Better forecast accuracy and reporting.
Improved sales management effectiveness, reflected in tighter management controls and proactive sales coaching.
Higher customer satisfaction through better responsiveness and ease of doing business.
Greater awareness of market dynamics and the elimination of integrated legacy applications.
Improved sales productivity, effectiveness, and channel integration.
Build a fully integrated IT infrastructure to support the business vision and reduce the total cost of operations.
Focus on core capabilities while shedding its less profitable or nonstrategic business activities.
Share information and collaborate easily internally and across the entire value chain.
3. The impact of learning and innovation. The enhanced learning and innovation resulting from CRM add more value by reducing the cost incurred by the company through higher marketing effectiveness
2. Reference and referral effects. The preceding calculations alone cannot justify ROI. If the company is investing more to satisfy the needs of customers, there should be a significant impact in the
1. The planned increase in the economic value of the customers over the duration of their connection with the company. The lifetime value, risk involved in unlocking that value, and growth potential
How are you involved in lead tracking, lead follow-up, data transfer, and other daily actions, and how can these processes be improved?
What are your reporting needs and requirements?
How involved are you in outreach activities such as telemarketing and direct mail?
How can you reduce administrative and scheduling requirements that detract from the time available to build relationships?
How can you improve your communication with customers and management?

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