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Overview
Traditionally, firms focused on sales and market share growth to compete and generally followed a 'product orientation'. However, with
intensifying competition in local and global markets and new opportunities enabled by technology, firms are increasingly adopting a 'customer orientation'. The term Customer Relationship Management was
popularized in the 1990's – but all too often meant software or technology. This course focuses on customer relationship strategy where the philosophy is to view customers as assets of the firm and the goal
is to use customer information to build customer loyalty and relationships, applying differential attention to more valuable customers with the ultimate goal of improving customer satisfaction while optimizing the
current and future value of the customer base. The course will focus primarily on firms in 'data-rich' environments – that is, firms with detailed data on individual customers and firms with many customers.
Built around the notion of the customer lifecycle, this course emphasizes strategic initiatives in customer relationship management including
identifying good prospects and customer acquisition; customer development via up-selling, cross-selling and personalization; customer attrition and retention; and winback. Topics covered include the
satisfaction-profit chain, customer loyalty and loyalty programs, customer economics including customer profitability and lifetime value, as well as ethical issues raised by the use of individual customer data.
The course will also provide an introduction to commonly used marketing analytic tools and techniques including decile analysis, RFM
(recency/frequency/monetary) analysis, and predictive models using regression and some data mining tools (e.g. classification trees such as CHAID).
Goals
The principal objectives of the course are:
- To give you a solid foundation in customer-centric marketing
- To emphasize how strategic CRM combined with marketing analytics can help accomplish strategic marketing initiatives and improve firm profitability
- To increase your analytical skills through exposure to commonly used marketing modeling and analytics techniques
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Course Format, Readings and Resources
The course focuses on analytical CRM (in contrast to operational CRM which focuses on managing customer touchpoints) and its applications for strategic
marketing initiatives. Course topics center around three themes: 1) Customer-centric marketing, customer lifecycles and customer economics, 2) Marketing Analytics and Predictive Modeling, and 3)
Strategic Initiatives in CRM. We begin by exploring what 'customer-centric marketing,' customer relationship marketing, and customer-based strategy mean. The customer lifecycle is introduced as an
integrating framework and you will learn how to estimate customer profitability and lifetime value.
The marketing analytics component includes tools of varying sophistication. Often we are interested in predicting something – whether a customer will
respond to a particular marketing offer, whether a customer will attrite or leave, or which additional product a customer would be most likely to purchase next. There are different methods for building
predictive models ranging from simple to complex. RFM (recency/frequency/monetary) analysis is a relatively simple – but powerful – technique that has long been used by direct marketers and is still
widely used. Statistical models such as regression are also common and recently there has been growing interest in and use of data-mining techniques.
The strategic initiatives component of the course focuses on how customer data combined with marketing analytics can be applied to strategic marketing
applications including customer acquisition, loyalty programs, customer development, and customer retention.
Readings
Most of the required course materials are available electronically. These readings are found in the course materials section of the BlackBoard
site where you will find a folder for each day of the in-residence session (April 23 - 26) and for each of distance weeks
The Harvard and Darden cases are available through a link on the BlackBoard site (though not in the daily/weekly folders) – which also includes
instructions for how to access these readings..
The course website contains all the information in this syllabus – plus more. In particular, you will find suggestions for further reading
including business press books (grouped by topic) as well as a page focusing on CRM Practices which includes links to downloadable white papers and articles focusing on CRM in different industries and contexts (I
will continue to update this page). Finally the course website has a sentence or two describing each of the course readings.
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Assignments and Grading
Individual Assignments
There are 4 written individual assignments. These all focus on analytical tools: (1) lifetime value analysis, (2) RFM analysis, interpreting (3)
logistic regression and (4) decision trees.
Team Paper
In teams of 3 or 4, you will complete a 6-8 page paper (1.5 spaced) examining how CRM can create competitive advantage. Each team will choose an
industry to focus on and each person on the team will further examine a specific firm within that industry. Project components:
- The first part should develop the context for customer-based strategy in your chosen industry. What are the specific customer, competitive,
& technological factors that are particularly relevant for that industry?
- The second part will focus on the selected firms within the industry:
- For each firm analyzed, you should describe what their CRM strategy is and how it links to the firm's business model.
- Assess the appropriateness and effectiveness of the CRM strategy for the given firm. Does it generate competitive advantage?
- The third part should integrate the findings in part 2 and also consider forward-looking recommendations:
- Highlight differences in strategy, implementation and results across the firms
- How might these firms - and the industry in general - further leverage a customer-based strategy?
Final Exam
There is a final exam which will include a mixture of objective (True/False and Multiple Choice) and short answer questions. It will be posted
toward the end of the course.
Grades will be based on the following course requirements:
Assignment: Tuscan Lifestyles: Lifetime Value 10 %
Assignment: Assessing RFM at Tuscan Lifestyles 10 %
Assignment: Predicting Response at BookBinders: Logistic Regression 10 %
Assignment: Predicting Response at BookBinders: Decision Trees 10 %
Team Paper 20 %
Deliverables & Participation during in-residence session 15 %
Final Exam 25 %
Total 100 %
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