Kansas State University


Department of Marketing

Companies turning to customer relationship management to make the sale

By Kansas State University Division of Communications and Marketing

Excited, surprised or annoyed when those holiday catalogs or promotional offers start coming in the mail or via email?

According to a Kansas State University expert in customer relationship management, your shopping habits play a big role in determining when and if you receive retailers’ promotional information. Your habits can also influence whether you receive the information through the mail and electronically.

“It’s all being done today by data analysis,” said Reo Song, assistant professor of marketing in the university’s College of Business Administration. “The data companies analyze include customer demographic information; purchase history, such as purchase time, amount, quantity, price; purchase channel — online, offline or catalog; payment medium — cash, debit card or credit card; and whether the purchase was a response to promotion.”

The business world is changing from opinions-based decision-making to data-based decision-making, which makes customer relationship management so important to companies, Song said. He added that intuition is still important in business, but that its value is enhanced when complemented by data analyses.

“That data-driven decision-making plays a huge role in all areas of our life, including business, sports and politics,” he said. “The role of the business managers who make decisions based on hunches is dwindling, being replaced by analysts who can tackle massive data for insight. Customer relationship management is one of the most important areas in business in this sense. Developing customized offerings to different customers by analyzing customer data is an inevitable trend in business.”

Another benefit of customer relationship management, he said, is that companies can develop probability of purchase or response to marketing programs and send targeted promotions and offers to different customers.

“In this way, firms can increase return on investment, or ROI,” Song said. “That is, given the same amount of investment, profits or revenues become higher when they use customer relationship management techniques. This is because more people will respond to advertising and promotions as firms target the right customers who have higher probability to purchase.”

According to Song, businesses can get data on current and potential customers from various sources. Purchase history and demographic information come typically from a store’s customer loyalty cards or website registration information. Data from credit card companies can be purchased and combined. Social media websites provide additional valuable source of data. Data warehousing companies combine data from multiple sources, analyze and provide consulting services.

Customer relationship management also is trending more toward mobile devices like smartphones and tablets.

“Companies still send mail catalogs, but many customers purchase on the companies’ websites after looking at catalogs instead of ordering via phones,” he said.

The best way to get information on deals, promotions and new products from a company is to register your email at their websites. Obtaining a company’s loyalty card is an additional way to receive information, Song said.

Song’s research on customer relationship management includes several current projects that use movie industry data to predict customer choice and help companies develop marketing strategies, including international launch strategies. More information is available at http://www.k-state.edu/media/newsreleases/may13/movieworld52213.html.

In 2012, Song received a Kansas State University Faculty Development Award to present his work at an international conference. He also received a 2013 international incentive grant from the university’s international programs office for his work on social network.

Song also is teaching what he is studying. His course, Business Intelligence, MKTG 580 and MKTG 880, is about a systematic approach to harnessing customer data and competitive information to drive strategic business decision-making. The course deals with how to collect and analyze business data to enhance quality of decision-making in modern enterprises. Along with lectures, students also do case analysis as well as hands-on exercises to become comfortable with software tools used for data analysis.