A Model of CRM and BI for Catalogue and Online Retailers

1. A Model of CRM and BI for Catalogue and Online Retailers Dien D. Phan Douglas R. Vogel Information & Management, Vol. 47, Issue 2, 2010. Ranked 2nd of the top hottest articles on Information&Management

2. Concepts and Strategies Four key value propositions (Amit and Zott, 2001) • Search and transaction cost efficiency • Lock-in • Novelty • Complementaries

3. CRM Systems • Use CRM and BI to achieve and maintain the four key value positions: • Common novelties: • Price Discrimination • Switching Cost • CRM and BI

4. Long-Tail Phenomenon

5. CRM-BI Model

6. Hypotheses • H1: Price discrimination improve customer relationships • H2: Higher switching cost lower levels of customer satisfaction • H3: CRM and BI increase satisfaction and customer relations

7. Case study: Fingerhut CRM and BI success at first Fingerhut: Lock in and CRM/BI/DM novelties: • Closed-end credit coupon system: switching cost • CRM tailored sales to customer’s ability to pay • BI to predict customer buying patterns • Mail Stream Optimization algorithm to reduce impacts of cutting number of overlapped catalogs • Viral marketing

8. Fingerhut Failure in E-commerce • Entered e-commerce: 1998 • Acquired by Federated Department Store: 1999  Fingerhut.net • Abandoned BI/CRM: replaced closed-end credit system with credit cards • Suffered $400 mil. losses in unpaid credit • Liquidated Fingerhut: 2002

9. The new Fingerhut after 2002 • Fingerhut Direct Marketing • Back to closed-end credit system with CRM/BI • Strong growth: 2002-2008.

10. CRM-BI Impacts on Success

11. Lessons Learned • BI and CRM reduce the threat of low price market • High switching cost does not reduce customer satisfaction • Price discrimination reduces customer satisfaction • CRM and BI are critical for Fingerhut • Supply chain integration are important for online and catalog firms

12. Conclusions