Transcript Analytical CRM

Customer Equity Maximization: An
e-Commerce Approach
What are the questions?
• Cingular Wireless loses about 15% postpaid
customers each month, accounting for billions of
revenue.
• Why would the customers leave?
• How to identify and prioritize the sources of
customer dissatisfaction?
• How to exercise effective managerial interventions
to prevent customers from churning?
How to answers these questions…
1. Analyze customer churning: is a kind of
trapped customer equity (TCE)
2. Use confirmatory CRM strategy to treat it,
as a result, maximize customer equity
3. Distinguish exploratory CRM – data
mining, vs. confirmatory (primary data)
4. Demonstration: CEMS (customer equity
maximization system)
What is trapped customer equity
• Customer equity is business driver of CRM:
to retain customers
• Customer satisfaction is the main force of
customer equity
• Customer equity is financial representation
of customer satisfaction
• TCE: customer dissatisfaction
How to liberate TCE
• Enlarge CE: advertising to acquire more
customers
• Liberate TCE: customer retention program
to retain customers
• Both intend to maximize customer equity
• “Liberate TCE” is under-studied
TCE vs. MCE (materialized)
Liberate TCE with CRM strategy
• New CRM distinction: sources of data
• Exploratory (data mining) vs. confirmatory
(collect direct customer response)
• Exploratory: data mining, secondary data
• Confirmatory: customer survey, primary
data
What are the sources of TCE?
• Treat the sources to minimize customer
dissatisfaction
• Categorize the sources
• Customers vs. providers
• Internal vs. external
• Example: strength of attitude to product is
the source of internal and customer
How to demonstrate the strategy?
• CEMS (customer equity maximization
system)
• Online questionnaire
• Online data collection
• Algorithm of automated prioritization: SQL
• Identify sources and their impact
• Guide managerial decision making
What is in the online questionnaire?
• Online questions are designed to address the
four categories of constructs
• “I do not like the product very much”
addresses the “strength of attitude” factor
• Customers are presented with the questions
and respond thru Web
• Data are collected in a centralized database
How to analyze the primary data?
• Automated prioritization Algorithm
• select b.code, b.reason, count(*) from
buyerresp a, codeandreason b where
a.code=b.code group by b.code
• SQL: structural query language
• Count(*) are prioritized with a Java Pie
Chart
How to prioritize?
• Graphically with Java Applet
• Count(*) for each sources are represented as
slices of the pie
• The pie chart is presented to manager users
on the Web
• Sources are prioritized with the size of the
slices of the pie.
CEMS example
Summary
1. Analyze customer churning: is a kind of
trapped customer equity (TCE)
2. Use confirmatory CRM strategy to treat it,
as a result, maximize customer equity
3. Distinguish exploratory CRM – data
mining, vs. primary data
4. Demonstrate the strategy: CEMS
(customer equity maximization system)