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