Question

Consider the following situation:

Kelly Sanders owns Verve, a high fashion boutique retailing in exclusive clothes, jewelry, and other accessories. Verve also sells a select range of bags and shoes. Kelly had to work very hard to find a niche among its elite clients. Earlier, she used to have a personal rapport with each client, knew their taste, their shopping history at Verve, and so on. However, the clientele of Verve has grown so large that Kelly is finding it difficult to keep track of her customers. Kelly is concerned that this may negatively affect her business.

You are a consultant specializing in business intelligence for small businesses. Kelly has approached you with her problem. She mentions that she has all sorts of data in her sales database, but she doesn’t know how to get out the information that she needs.

In an essay, explain how Kelly could use RFM and OLAP to make Verve more successful.

Helpful hints:

Break down the question. Identify the kind of information that was helpful when there was a smaller client base (remember to consider the products that are being sold).   Think about how this same information could be collected and analyzed with a larger client population. Define RFM and OLAP, describe how these tools can be used to acquire and analyze the information that would help you respond to your clients. Think about how this information can be used to improve response to client behavior and increase future sales.

Recap the question and address all of the parts of the question.

*Business information systems can use data analysis to track customer behavior, identify customer types, give insight into what influences customer choices, and predict future behavior.  

Answer 1

As per the case, Verve being a high fashion boutique has been successful in gaining customer attention by offering wide range of items (such as clothing, accessories and jewelry etc.) to its customers. Since the business is doing well the client population of Verve has also augmented.

Thus, it is quite challenging for Kelly (owner of Verve) to develop and maintain effective business relationship with her best clients as it used to be when number of clients were less to avoid hampering of its future business growth. This problem requires proper management of client data keeping in mind their distinctive buying behavior.

As a consultant it is primarily required to identify the elite customers before understanding their buying behavior. For this a database marketing model called Recency, Frequency Monetary analysis or RFM can be used for segmenting customers on the basis of their behavior. Using this model can be helpful for Verve to identify its best clients and their nature of purchase like how recently they purchased, how often they buy and how much they spend for purchasing Verve’s items.

Another tool that can be used by Verve would be OLAP that is also called Online Analytical Processing. It is an effective business management technology which is helpful in recognition of data, performing complex calculations, proper analyzing of the reports, financial planning like budget estimation and forecasting. Thus, OLAP is a multidimensional study and evaluation of business data which can be a useful tool for Kelly’s business to fetch relevant information about her business and clients.