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Customer Equity Maximization: An e-Commerce Approach

Customer Equity Maximization: An e-Commerce Approach. What are the questions?. Cingular Wireless loses about 15% postpaid customers each month, accounting for billions of revenue. Why would the customers leave? How to identify and prioritize the sources of customer dissatisfaction?

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Customer Equity Maximization: An e-Commerce Approach

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  1. Customer Equity Maximization: An e-Commerce Approach

  2. What are the questions? • Cingular Wireless loses about 15% postpaid customers each month, accounting for billions of revenue. • Why would the customers leave? • How to identify and prioritize the sources of customer dissatisfaction? • How to exercise effective managerial interventions to prevent customers from churning?

  3. How to answers these questions… • Analyze customer churning: is a kind of trapped customer equity (TCE) • Use confirmatory CRM strategy to treat it, as a result, maximize customer equity • Distinguish exploratory CRM – data mining, vs. confirmatory (primary data) • Demonstration: CEMS (customer equity maximization system)

  4. What is trapped customer equity • Customer equity is business driver of CRM: to retain customers • Customer satisfaction is the main force of customer equity • Customer equity is financial representation of customer satisfaction • TCE: customer dissatisfaction

  5. How to liberate TCE • Enlarge CE: advertising to acquire more customers • Liberate TCE: customer retention program to retain customers • Both intend to maximize customer equity • “Liberate TCE” is under-studied

  6. TCE vs. MCE (materialized)

  7. Liberate TCE with CRM strategy • New CRM distinction: sources of data • Exploratory (data mining) vs. confirmatory (collect direct customer response) • Exploratory: data mining, secondary data • Confirmatory: customer survey, primary data

  8. What are the sources of TCE? • Treat the sources to minimize customer dissatisfaction • Categorize the sources • Customers vs. providers • Internal vs. external • Example: strength of attitude to product is the source of internal and customer

  9. How to demonstrate the strategy? • CEMS (customer equity maximization system) • Online questionnaire • Online data collection • Algorithm of automated prioritization: SQL • Identify sources and their impact • Guide managerial decision making

  10. What is in the online questionnaire? • Online questions are designed to address the four categories of constructs • “I do not like the product very much” addresses the “strength of attitude” factor • Customers are presented with the questions and respond thru Web • Data are collected in a centralized database

  11. How to analyze the primary data? • Automated prioritization Algorithm • select b.code, b.reason, count(*) from buyerresp a, codeandreason b where a.code=b.code group by b.code • SQL: structural query language • Count(*) are prioritized with a Java Pie Chart

  12. How to prioritize? • Graphically with Java Applet • Count(*) for each sources are represented as slices of the pie • The pie chart is presented to manager users on the Web • Sources are prioritized with the size of the slices of the pie.

  13. CEMS example

  14. Summary • Analyze customer churning: is a kind of trapped customer equity (TCE) • Use confirmatory CRM strategy to treat it, as a result, maximize customer equity • Distinguish exploratory CRM – data mining, vs. primary data • Demonstrate the strategy: CEMS (customer equity maximization system)

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