Case Assignment 6

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Summary:
Robert Davis, the provider of data warehouse technology in Teradata had a meeting with Mark Johnson, a CFO of GST Inc., and a telecommunication company. Three years had passed since Davis proposed a data mart consolidation pilot program for GST. The results exceeded even the most optimistic forecasts and management was thrilled. The programs have documented the return on investment (ROI) after the consolidation of data marts in to an enterprise data warehouse (EDW), the documentation of ROI is 65% and had resulted in $27 million in savings in just one year. Erica Kolks, GST’s vice president of marketing have joined the meeting with Mark Johnson. The meeting was about how GST might maximize marketing investments and improve sales revenue; the solution for this given by Davis is to leverage the new EDW for top-line growth with customer relationship management (CRM) solutions. Four years ago Jill Newberg, vice president of sales for region 2, and Dominique Arnold, vice president of sales for region-3, had convinced Johnson that GST needed CRM. That investment resulted in an updated call center and new sales force automation tool. Although the CRM investments seemed to be worthwhile, but it was not what the marketing needed. Kolks explained that they needed to identify which customers should be targeted for new service offerings, determine how to cross-sell/up-sell the most profitable mix of product offerings, and maximize return their marketing investments. She clearly wanted to analyze customer behavior over time and have the ability to respond more quickly to detailed customer information for enhanced decision making. Johnson did not want to acknowledge that the CRM investments had any payback, so he looked to Davis, hoping he would steer the discussion toward new possibilities. Davis sensed the tension because this was not the first time that the ROI of GST’s CRM initiative had been discussed, it was also apparent that CRM was a topic of confusion. He continued his presentation by telling “I was thinking about analytical CRM. Your new enterprise data warehouse combined with analytical CRM solutions could improve the rate of your import marketing programs and the retention of your most profitable customers, significantly contributing to top-line growth. Telecommunications industry experienced significant market changes: an explosion in wireless service demand, deregulation, the elimination of European market barriers, and an ever-growing internet market. Consolidation replaced expansion as the industry practice, and trend of almost unlimited spending for new infrastructure had reversed. Experts believed the United states and European telecommunications companies, burdened with about $700 billion in debt, would either default on or force lenders to restructure dampened enthusiasm by wall street, limited available capital for new entrants and negatively affected everything from customer service to spending on new technologies. As the number of telephone calls and the amount of data transmitted continued to rise, Customers demand lower prices. This resulted in modest revenue growth and a declining return on equity. According to Lehman Brothers, return on equity fell from 13.8% in 1996 to 5.9% in 2000. The industry found itself in the unenviable position of scrambling to keep up with a technological explosion while margins evaporated and the regulatory landscape changed. To thrive in this environment, telecommunication business needed to understand their customer’s present and future demand. A successful communications service provider would have to analyze detailed customer data to better understand why a particular demand existed and then proactively manage to better forecast what be demanded and they neede to meet that demand. Customer Relationship Management (CRM), it is an organizational strategy to understand and influence customer behavior through continuous communication to improve customer acquisition,...