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CRM: WEEK 10 (3/13 – 3/17)

CRM: WEEK 10 (3/13 – 3/17). Last Week Highlights: Brand Equity vs. Customer Equity Drivers of Customer Equity Brand, Value, Relationship Equity Loyalty: Attitudinal vs. Behavioral Customer Profitability Metrics Types Short term/cross sectional vs. Longitudinal

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CRM: WEEK 10 (3/13 – 3/17)

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  1. CRM: WEEK 10 (3/13 – 3/17) • Last Week Highlights: • Brand Equity vs. Customer Equity • Drivers of Customer Equity • Brand, Value, Relationship Equity • Loyalty: Attitudinal vs. Behavioral • Customer Profitability Metrics • Types • Short term/cross sectional vs. Longitudinal CONSUMER EQUITY = VALUE EQUITY + RELATIONSHIP EQUITY + BRAND EQUITY

  2. CRM: WEEK 10 (3/13 – 3/17) • Monday (3/13) Objectives: • Simple CLV formula: • CLV=m(r/(1+i-r) • Where m=margin or profit from a customer per period • r= retention rate • i=discount rate • Retention rate/Churn-typically in the 60-90% range. • Discount rate-related to firm’s cost of capital

  3. CRM: WEEK 10 (3/13 – 3/17) • Assumptions to Simplified LTV/CLV: • Profit margins remain constant over the live of a customer • Retention rates stay constant over time • Customer lifetime value is estimated over an infinite horizon.

  4. CRM: WEEK 10 (3/13 – 3/17) Margin Multiple = r/(1+i-r) Retention RateDiscount Rate 10% 12% 14% 16% 60% 1.20 1.15 1.11 1.07 70% 1.75 1.67 1.59 1.52 80% 2.67 2.50 2.35 2.22 90% 4.50 4.09 3.75 3.46

  5. CRM: WEEK 10 (3/13 – 3/17) • “CHURN BABY CHURN” • Churn/Retention Rate= Number of customers who left the company in a period/(number of old and newly acquired customers) • Churn/Retention Rate: rate in wireless industry ranges from 23.4% to 46%.

  6. CRM: WEEK 10 (3/13 – 3/17) • Wednesday’s Objectives: • Kansai Case Discussion • Recommendations should focus on Initiatives and metrics that would be used to determine success. • Friday’s Objectives: • Chapter 12 – Data Mining

  7. CRM: WEEK 10 (3/13 – 3/17) • Friday’s Objectives • Definition of Data Mining/Customer Analytics: • The process of exploration and analysis, by automatic or semiautomatic means, of large quantities of data in order to discover meaningful patterns and rules.

  8. CRM: WEEK 10 (3/13 – 3/17) • Customer Analytics enables the enterprise to classify, estimate, predict, cluster, and more accurately describe data about customers, using mathematical models and algorithms that uniquely simplify how it views its customer base and how it behaves towards individual customers.

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