CRM Exam 1

CRM Concepts Flashcards

CRM Basics

• Q: What is CRM?
  A: CRM (Customer Relationship Management) is the strategic process of selecting and shaping interactions with customers to optimize their current and future value to a company.

• Q: What is the key goal of CRM?
  A: To retain high-value customers, as small increases in retention lead to significant results.

• Q: What three factors drive CRM?
  A: Changes in consumers, marketplaces, and technology.

Customer-Centricity

• Q: What is customer-centricity?
  A: An organizational mindset that prioritizes understanding and delivering value to customers at every touchpoint.

• Q: What are key questions to assess customer-centricity?
  A: - Does the company understand customer value?

  • Are processes aligned to maximize value?

  • Do processes ensure continuous improvement?

CRM vs. Customer-Centricity

• Q: How are CRM and customer-centricity related?
  A: CRM is a process that helps implement customer-centricity and build shareholder value by leveraging customer knowledge across the organization.

Generations of CRM Tools

• Q: What was the focus of First Generation CRM (1990)?
  A: Sales force automation (SFA), customer service, call center management, and order processing.

• Q: What was added in Second Generation CRM (1996)?
  A: A unified customer-facing front-end integrating marketing, sales, and service.

• Q: What shift happened in Third Generation CRM (2002)?
  A: Integration of customer-facing systems with back-end processes, focusing on revenue growth.

• Q: What was the key characteristic of Fourth Generation CRM (2008)?
  A: Agile, flexible CRM adoption by SMEs, with on-demand and self-service solutions.

• Q: What defines Fifth Generation CRM (2015)?
  A: Social CRM, leveraging Web 2.0 and real-time social data for engagement.

Strategic CRM

• Q: What is strategic CRM?
  A: A top-down approach integrating CRM across all organizational functions, requiring management commitment.

• Q: What does "strategic" mean in CRM?
  A: It involves all organizational functions, rejecting a silo mentality and viewing CRM as an ongoing process rather than a software project.

Key Account Management (KAM)

• Q: What is Key Account Management (KAM)?
  A: A strategy where companies dedicate special resources to their most valuable customers to build long-term relationships.

• Q: What are the quantitative criteria for selecting key accounts?
  A: Sales volume, market share, revenue contribution, and profit.

• Q: What are the qualitative criteria for selecting key accounts?
  A: Image, reference potential, technological know-how, and interorganizational fit.

• Q: What activities add value to key accounts?
  A: Special pricing, product customization, workflow coordination, and exclusive events (e.g., 3M’s “Fascination Glue” event).

Customer-Centricity Components

• Q: What are the key components of customer-centricity?
  A: - Deep customer understanding

  • Tailored products/services

  • Personalization

  • Effective communication

  • Ongoing engagement

  • Customer satisfaction and delight

  • Cross-functional collaboration

  • Customer lifetime value (CLV)

  • Adapting to external changes

  • Empathy

  • Data-driven insights

Customer Value & Lifetime Value

• Q: What is customer value?
  A: Understanding what high-value customers prioritize and maximizing their profitability over their lifetime.

• Q: What are the components of customer value?
  A: - Customer acquisition

  • Customer retention

  • Customer engagement

  • Customer emotions

• Q: What is Customer Lifetime Value (CLV)?
  A: The total predictable revenue a business can generate from a customer over their lifetime.

• Q: How was CLV calculated in the Starbucks case?
  A: By analyzing the average order value, frequency of visits, and length of time as a customer.

Case Study Insights

• Q: How did IBM transition its CRM approach?
  A: Shifted from a development-focused to a customer experience-focused model, integrating agility and customer insights.

• Q: What was Rich Products' CRM transformation?
  A: Moved from siloed operations to customer journey mapping with cross-functional teams.

• Q: What is Intuit’s “Design for Delight” strategy?
  A: A focus on intuitive, customer-driven product development.

Regression Analysis & Hypothesis Testing

• Q: What is regression analysis used for in CRM?
  A: To determine the impact of different factors on customer retention and profitability.

• Q: What does significance in regression output indicate?
  A: Whether a variable meaningfully impacts the outcome.

• Q: What does the beta coefficient tell us?
  A: The strength and direction of a variable’s impact on the dependent variable.

• Q: What is the null hypothesis in CRM analysis?
  A: That there is no significant relationship between the studied factors and customer behavior.