1) Fit an appropriate model in the data provided. State the assumption clearly.

Predict
the sales when average CRM spend is 15.0
See Excel
2) Conditions for Stationarity of Time series
A stationary time series is one whose statistical properties such as mean, variance and
autocorrelation, are all constant over time
Stationary time series is one whose properties do not depend on the time at which the
series is observed

3) Pros and Cons of moving average

Pros
 It offers a smoothed line, less prone to temporary price swings back and forth.
 It provides a more stable level indicating support or resistance.
 Can be used for measuring the trend of any series. (Linear or non linear)
Cons
 It is slower to respond to rapid price changes .
 For this reason the trend cannot be extended for forecasting future values.
 This method is not applicable to short time series.
4) What are the pros and cons of single exponential smoothing
Pros
 The forecast is considered accurate
 Weight given to the most recent data values.
 The random variation is neglected. As such, it’s much more easier to see the
underlying phenomenon.
Cons
 It neglects the ups and downs associated with random variation. (smoothing)
 Forecasts aren’t accurate when data with cyclical or seasonal variations are present.
 It’s best suited for short-term forecasting as it assumes future patterns and trends
will look like current patterns and trends.

5) Explain the differences between Strategic, Operational and Analytical CRM

Strategic CRM Operational CRM Analytical CRM
Strategic CRM, enables an Operational Analytical CRM helps top
organization to share CRM streamlines the management, marketing,
 customers’ information
among various business
units like sales team,
marketing team, technical
and support team.
Collaborative CRM helps to
unite all groups to aim only
one goal – use all
information to improve the
quality of customer service
to gain loyalty and acquire
new customers to increase
sales.
Features:
For example, feedback from
a support team could be
useful for marketing team to
approach targeted customers
with specific products or
services. In real world, each
business unit works as an
independent group and
rarely shares customers’
data with other teams that
often causes business losses.
business process that
includes Sales automation,
Marketing automation and
Service automation. Main
purpose of this type of CRM
is to generate leads, convert
them into contacts, capture
all required details and
provide service throughout
customer lifecycle.
Features:
Sales Automation:
Sales automation helps an
organization to automate
sales process. Main purpose
of sales automation is to set
standard within organization
to acquire new customers
and deal with existing
customers.
Marketing Automation: 
Main purpose of marketing
automation is to find out the
best way to offer products
and approach potential
customers.  Help organization to set
 Improve the CRM system
sales and support personnel
to determine the better way
to serve customers. Data
analysis is the main function
of this type of CRM
application. It analyzes
customer data, coming from
various touch points, to get
better insights about current
status of an organization. It
helps top management to
take better decision,
marketing executives to
understand the campaign
effectiveness, sales
executives to increase sales
and support personnel to
improve quality of support
and build strong customer
relationship.
Features:
Gather customer’s
information, coming from
different channels and
analyze data in a structured
way
business methodology in
Sales, Marketing and
Support to improve
customer relationship and
loyalty
effectiveness and analyze
key performance indicators,
set by business

6) Map out the CRM value chain and explain each component of the value chain

Customer portfolio analysis: this involves an analysis of the actual and potential
customer base to identify which customers you want to serve in the future. Top of the list
will be strategically significant customers, including those that will generate profit
(value) in the future.
Customer intimacy: you will get to know the identity, profile, history, requirements,
 expectations and preferences of the customers that you have chosen to serve
Network development: you will identify, brief and manage relationships with your
company’s network members.
These are the organizations and people that contribute to the creation and delivery
of the value proposition(s) for the chosen customers.The network can include external
members such as suppliers, partners and owners/investors, as well as one important
internal party, employees
Value proposition development: this involves identifying sources of value for
customers and creating a proposition and experience that meet their requirements,
expectations and preferences.

7) Conduct a 2-way ANOVA for the following data set. The data set depicts the calls received
in Delhi, Hyderabad and Chennai from 3 different segments of customers. Please state the
Null and Alternative Hypothesis. Check for interaction effects. State your conclusion clearly
See Excel Sheet

8) What is interaction effect in ANOVA?

Interaction effects occur when the effect of one variable depends on the value of another
variable. Interaction effects represent the combined effects of factors on the dependent measure.
When an interaction effect is present, the impact of one factor depends on the level of the other
factor. Part of the power of ANOVA is the ability to estimate and test interaction effects.
9) When do we use MSE, MAD and MAPE? (Do some research on this). [75 words total]
MAD can be used to conclude if the forecast model generated by linear regression is better or
worse than the model generated by past sales.
MSE weighs large deviations more heavily because it takes the square of the deviations. The MSE
optimal forecast will have fewer large errors but may have much more small errors than MAD
optimal forecast.
MAPE is a useful because it shows the ratio, or percentage, of the absolute errors to the actual
demand for a given number of periods.

10) Fit an appropriate time series model for the data provided.
See Excel for answer
11) When is Holt-Winters method used? You don’t have to worry about the mathematics of
it. You should know in which situation it is used because I have mentioned this several times
in class.

Holtz method is used to forecast data when there is linear trend and seasonality in a data. This
comes under time series analysis.
12) Explain the various retention strategies. [75 words]

There are four main forms of positive retention strategy. These are
1. Meeting and exceeding customer expectations
2. Finding ways to add value
a. Loyalty schemes
b. Customer clubs
c. Sales promotion
3. Building bonds
a. Social
b. Structural
4. Establishing emotional commitment.
a. Instrumental
b. Relational
c. Values based