CSR 282 Exam 3 Study Guide Notes

Chapter 9 Key Concepts

  • General Data Protection Regulation (GDPR)
    • Law designed to secure data and protect the privacy of citizens of the EU and EEA (European Economic Area).
    • Aims to enhance citizen control and rights over their personal data.
    • Seeks to simplify the regulatory environment for international businesses operating within Europe.
  • Children’s Online Privacy Protection Act (COPPA)
    • U.S. federal law enacted in 1998, updated in 2020.
    • Regulates the collection, use, and disclosure of personal information from children under 13 by websites, online services, and apps.
    • Requires verifiable parental consent before collecting or using a child’s data.
    • Ensures greater privacy protections for children online.
  • Opt in/Opt out
    • "Opt in" refers to customers proactively electing to receive future communications or services from a business.
  • Data and Privacy
    • Refer to all information provided in Chapter 9, Slide 8.

Chapter 10 Learning Objectives

  • Understand how customization enables businesses to build learning relationships by meeting individual customer needs efficiently through mass customization.
  • Apply the principles of modularization and configuration to efficiently deliver personalized products and services.
  • Identify and address expanded need sets by differentiating between basic needs and expanded needs, and explain how businesses can enhance customer satisfaction through ancillary services and offerings.

Key Concepts

  • Expanded Need Set
    • Broader needs related to a customer's basic need.
    • Satisfied not just by the product itself but by ancillary services, information, or supplemental offerings.
  • Modularization
    • The process of designing and structuring products or services into separate, standardized, and interchangeable modules.
    • Modules can be combined in various ways to meet individual customer preferences or requirements.
  • Configuration
    • The arrangement or combination of various components or elements (modules) within a system, product, or service.
    • Aims to achieve a specific functionality, design, or outcome.
  • Business Rules
    • The instructions that an enterprise follows in configuring different processes for different customers.
  • Satisfaction gap
  • Pine & Gilmore 4 approaches to mass customization Learning Relationships
  • Examples of algorithms that customize based on learning relationships (Wirth & Sweet, 2017)
    • Basic: Trending items, Similar items, Recently published items, Soon to expire items, Co-browsed items, Co-buy items.
    • Advanced: Collaborative filtering, Decision trees, Text analysis, Contextual analysis.
  • Subscription economy
    • A business model focused on recurring revenue through ongoing customer subscriptions.
  • Customer success Management
    • A relationship-focused process ensuring customers achieve customer success (i.e., their desired outcomes while using your product or service).
    • Aligns client and vendor goals for mutual benefit.
    • Reduces churn and drives up-sell opportunities.

Chapter 11 Learning Objectives

  • Describe how businesses create customer value over time and why balancing short-term and long-term goals is important.
  • Identify the trade-offs businesses face when trying to get, keep, and grow customers, and how these choices affect customer equity.
  • Explain how companies use customer data and proxy variables to measure customer value and predict future customer behavior.

Key Terms

  • Customer Lifetime Value (LTV)
  • Return on Customer (ROC)
  • Customer Equity
  • Proxy Variables
  • RFM (Recency, Frequency, Monetary Value)
  • Short-termism
  • Content Marketing
  • Customer Advocacy
  • Customer equity

Applied Concepts: Customer Value Creation

  • Short-term value: Immediate purchases, profits.
  • Long-term value: Future purchases, loyalty, referrals.
  • Customers create value both now and later — they are like “bundles of cash flow with memory.”
  • Short-termism crisis: Many companies prioritize quarterly profits over long-term customer relationships.

Economic Objectives

  • Product-focused: Maximize value from each product.
  • Customer-focused: Maximize value from each customer.
  • Goal with CRM is to maximize value from each customer; Align metrics with the goal of building long-term customer equity.

Get, Keep, Grow Framework

  • Get: Acquire more customers.
  • Keep: Retain profitable customers longer, win back lost profitable customers.
  • Grow: Up-sell, cross-sell, get referrals, and reduce service costs.

Farming Analogy

  • Good Farmer (long-term focus): Conserves resources, ensures future harvests.
  • Bad Farmer (short-term focus): Overuses land for immediate gain, harms long-term productivity.
  • Lesson: Businesses must resist short-term temptations to protect long-term customer value.

Customer Lifetime Value (LTV)

  • LTV is a real economic measure; proxy variables and other metrics are used to measure customer lifetime value.
  • Proxy variables and metrics that can be used to measure CLTV – RFM, Volume purchased, duration of relationship, customer feedback (VOC), recent interactions help rank customers by value when exact LTV is unknown.
  • Prospects have value based on:
    • Their potential lifetime value.
    • Their likelihood of becoming customers.

Two Ways to Create Customer-Centric Value

  • Focus on high-potential prospects.
  • Increase the likelihood that prospects become customers (through content marketing, trust-building, and customer advocacy).
  • Return on Customer (ROC) - measures how much value is created from the customers a business has (not just money invested like ROI).
  • Trust leads to stronger loyalty, higher LTV, and greater customer equity.

End of Semester Topics

  • Know the basics of IDIC, Customer Insight/Experience, Analytical/Operational CRM.
  • Identifying, Differentiating, Interacting, and Customizing are crucial steps in building strong customer relationships.
  • Apply IDIC principles to create personalized and meaningful customer experiences.
  • Recognize every touchpoint in the customer journey and its impact on perception and satisfaction.
  • Strive to enhance each (customer) stage to foster loyalty and engagement.
  • Appreciate how value is not just about price but about meeting and exceeding customer expectations.
  • Consider your customer’s potential value.
  • Customer equity:
    • See the bigger picture of how individual customer interactions contribute to the overall equity of a brand or company.
    • Emphasize long-term relationships and strategic customer retention for sustainable success.
  • Remember to look at quizzes from the chapters as some quiz questions are used for exams.
  • Customer Insight – Analytical CRM
  • Customer Experience – Operational CRM
  • MANAGING CUSTOMER RELATIONSHIPS …customers as uniquely addressable individuals …more cost - efficiently and effectively …some aspect of the company’s behavior or offerings … customers, by their value and their needs, individually IDIC