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Marketing Analytics > 4: Analytics for Customer Management > Flashcards

4: Analytics for Customer Management Flashcards

1
Q

What is Database Marketing?

–>driving force of Customer Management

A

is the use of customer databases to enhance marketing productivity

by more effective acquisition, retention and development of customers

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2
Q

What is Customer management?

A

View and strategy where customers are clustered into portfolios –>maximize customer value

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3
Q

When is CRM relevant?

A

Especially relevaant if:
- Frequent customerr interactions
- High expertise for purchasing is required
- Multiple products are purchased

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4
Q

What is CRM?

A

= analysing marketing databses and leveraging communication technologies to apply methods to maximize individual CLV

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5
Q

Customer centricity and segmenting

A
  • Focus on Custoemr centricity
    1. segmenting customers based on acquired information regarding CLV
    2. Heterogenous segments, different to each other
    3 inside homogenous Same characteristics
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6
Q

How to apply CRM?

A
  1. usage of CRM software to track activity
    2 select profitable customers and develop relationships
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7
Q

What is customer equity?

A

total discounted lifetime values of all customers of the firm

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8
Q

CLV quantifies

A

quantifies long-term value of a customer to the firm

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9
Q

Why is expected CLV important?
also in context of customer centricity

A
  • reaching customers that have a high potential value
  • avoid wasting money by spending too much on customers with low potential

–>Customer centricity: looking at each individal customer in the marketplace in terms of potential value

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10
Q

What are the basic components needed to calculate CLV?

A
  • Business must be contractual or must be able to tie purchases to individual customers
  • need CRM that: stores customers, revenues, expenditure
  • obtain useful discoount rate
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11
Q

Advantages of CLV?

A
  • Management of customer relationship as an asset
  • Measurement of customer loyalty
  • Focus on long-term value of customers
  • Monitoring of impact of managmenet and marketing invest. on the value of customer assets
  • determination of optimal level of investments in marketing and sales
  • Basis fo customer selection and customer-specific communication strategies
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12
Q

What signals the CLV to Customer Acqusition ratio?

A

it is a signal of customer profitability, and of sales and marketing efficiency

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13
Q

CLV|CAC ratio interpretation ranges?

A
  • ratio < 2 –>bad ratio: Business is bleeding money
  • 2 < ratio < 3 –>good ratio
  • = 3 –>benchmark (very good ratio)
    >3     –>Harvesting cash because business cannot grow anymore
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14
Q

What is the Initial goal of customer acquisition? (Customer selection)

A

The initial goal is to select the right prospect for the acquisition campaign

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15
Q

Process in Customer selection
RFM method

A
  1. Use RFM model that summarizes past consumer behavior
  2. Assumption: right cusotmer in the futue similar to right customer in the past
  3. Build groups of customers based on RFM characteristics
  4. Assign probabilities to each group in accordance with its differential response behavior –>and prioritize
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16
Q

What is an alternative model to RFM for customer selection?

A

Alternative: probability models in which prob that a cusotmer will react to an invitiation is related to his behavirpporal characteristics

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17
Q

What is the main challenge of probability models in customer acquisition?

Proability models?

A

main challlenge: is that the transaction history is not available for prospects

—>Consider clickstream data which entails information about customer environment in an online shopping environment

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18
Q

What is done after the decision on which customer to focus on?

A
  1. Decision which customer to focus on

–>adequate resource allocation
2. leverage customer acqusition

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19
Q

What are the acquisition channels?

A
  • Personal selling
  • Mass media
  • Direct marketing channels
  • Internet
  • Retail outlets

–>Use of different messages to attract different customers

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20
Q

What is customer retention?

A

customer retention focuses on preventing customer attrition or churn
- loalty/reward programs
- Churn prediction models

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21
Q

Churn prediction models:
What is churn meaning on the customer and firm level=

A

customer level refers to the probability customer leaving the firm

Firm level: is the percentage of the firm´s customer base that leaves in a given time period

22
Q

Do loyalty programs have an effect?

A

Consuemer participation in loyalty programs continous to increase

But: no agreement on whether loyalty programs have a positive impact on cusotmer retention

23
Q

What are the two types of Churn prediction models?

A
  1. non-contractual setting
  2. contractual setting
24
Q

What is the challenge of Non-contractual setting in Churn prediction models?

A

Challenge: to infer wheter a cusomter is still active or not

–>probability models to asses whether a customer is still alive

25
What is the **contractual setting** in Churn prediction models? What is the **churn problem**
custiomer churn: **termination** of the contract between firm and customer **Churn problem** is traditionally stated a **binary issue** -->it **aims to predict** whether a customer is likely to defect during a pre-given period
26
What does the **two-stage least square model** developedl by Reinartz el al(2005) balance? (What are the 3 models it consists of?
**balance acquisition** and **retention resoueces** in order to maximize customer profitability 1. Acquistion model 2. Relationship duration (retention model) 3. Customer profitabilty model
27
How does the **Retention model** work? 2 of the 3 models from ***probit two-stage least square model** (what is the length of the relationship with company?=
the **duration of the relationship** with the firm is **influenced** by the amount of **money** that is spent on retention, the contact channels, ( frequency of transaction, degree of cross buying)
28
What do the 3 equations of the 3 model of the **retention and profitability model**? by **reinart et al (2005)** (Two-stage least square model) form?
--> the 3 **equations** together form a **recursive simultaneous system** -->The equations are **conditional regressions** detemrmined partly by the **acquisition liklihood** of a customer
29
Why is it important for coompanies to find the right balance between **acquisition and retention?**
**acquisition** is significantly more **expesive** —> **retention is important** to any business -->balance acquisition of **new customer** and retention of **old customers**
30
What are the main finding os the two-stage model of **reinart et al 2005)?**
Many of the **communication channells** have the same effect on duration as on acquistion -->the **duration of a relationship** is correlated with the **liklihood of acquiring a customer** which means that a customer who is more likely to be acquired is also expected to engage in a **longer relationship** with the firm
31
What are the defintion of the 3 steps in the **Customer Journey process**? (Stages, Channels, Touchpoints)
**Stages**: pre-purchase, purchase, post-purchase **Channels**: customer contact point, or a medium through with cust and firm interact (offliine, online, mobile) **Touchpoints**. episodes of **direct or indirect** contact with a brand or firm
32
What was the **traditional Customer Journey**?
Prospect engaged and moved through the funnel in **predictable, linear stages** - People started at the **same period** (i.e. similar level of knowledge - and were methodically guided through the process -->company controlled the brand, message, conversation and buying process
33
The components of the traditional funnel? (5)
1. Awareness 2. Familiarity 3. Consideration 4. Purchase 5. Loyalty
34
What is the big challenge for companeis in digital customer live journey?
**Big challenge**: -->Numerous **digital and non-digital channels** used by customer to obtain information and impression about product or service -->**variety** of channels makrs it **difficult for companies to track the customers journey**
35
What is the Role of channels in the Customer Journey?
**Channels** differ in benefits and costs -->However, these **differences are shrinking** due to **technological developments and diffusion of new channels** Specific **multichannel segments** can be identified that differ in terms of consumer characteristics
36
why are channel choices in the purchase funnel affected by each other?
**channel choices** in the **purchase** funnel are affected by one antoher because of - **lock-in effects** - **channel** inertia and - **cross-channel** synergies
37
What the 2 types of customer journey ?
customer journey depends on both **product category** and the **individual**
38
FOr what is **customer journey analctics** used?
used to **understand** customer **purchasing** **behavior**
39
Customer Journey: What is idea behind **product category**?
- **spillover effect** from TV advertising to online chatter is **stronger for hedonic than utilitarian products** - Products wwith **experiential value and cheap prices** compared to shipping costs, are preferably bough in **physical stores** - **Mobile** devies used to purchase habitual **products**
40
Customer Journey: What is the idea behind **individual category**?
- Scholars account for **customer heterogeneity** in their models - **not** all customer more through all custoomer journey stages - **Multiple multichannel customer segment** identified by research
41
Why is CLV no longer suffient?
CLV is no longer **sufficient** for business success - People place **high value on relationships** and conversations - **Customers** should be in the **center** of company
42
What is the **total customer engagement value?**
**Total customer engagement value** = Lifetime + Refferral + Network + Knowledge value
43
What are the 3 parts of Customer Management in Enterprise today?
* **Voice of the customer** * **Customer** experience **transformation** * Customer **contact strategy**
44
What is the method Voice of the customer?
= method by which **expressed and unexpressed customer** wishes are **identified** and **transformed** into quantified,structued and evaluated customer requirements Collect throug: - Questionaire - Publlic comments in social media - Customer interview
45
Key fact about Voice of Customer
Voice of customer... - combines **qualitative with quantitative analysis** - sets clear **priorities** - analyzes **journeys** and **touchpoints** - involves **employees** in closing the loopp
46
What is **Customer contact strategy**?
defines ***how, when, why and what** you will **communicate** to your customers at each stage of the customer journey -->**develop process and purpose** for customer contact through the organization
47
What is the goal of Customer contact strategy`?
Goal: **optimize the customer experience** for different customer segments through out the whole customer journes
48
What are the **design strategies** for each type of customer contact?
**Simplify:** Irritable to customer, valueable to you, make these tasks easier to do **Encourage**: Valueable to customer, valueable to you, spend more time on these conversations **Eliminate:** Irritable to customers, irritablle to you; fix the cause of these conversations **Automate**: Valueable to customers, irritable to you; prodive low touch self-service ## Footnote [](http://)[](http://)[](http://)[](http://)
49
What are the building blocks of **customer experience transformation**? (A-C)
A. Build **aspriation and purpose**: set aspiration and purpose including clear definition of value at stake B. **Transform** the business: Redesign/innovate and implement product/servie experience along proven **discover-design-deliver approach** C. **Establish** critical enablers: to drive transformational change via mindsets, behaviors and capabilites A and B are **potential starting points**
50
Customer Experiene Transformation: **Customer Journey Analytics** 3 Steps
**Touchpoint** optimization: operational excellence **Process** optimization: Service excellence **Customer Jobs & Outcome** optimization: value excellence
51
**Traditional Customer journey**: How did messaging and distribution of product work
Messaging occurred through **traditional one way channels ( Tv, print)** Distribution of product through **brick and mortar channels**

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