Case 1.2: Using Loyalty Data at Flowers4U: Customer Relationship Management (CRM) and Recency, Frequency, and Monetary Value (RFM Flowers 4U is an online flower and plant service. Like 800-Flowers, Flowers.com, and FTD(.com), Flowers 4U takes customers' orders by phone or online and executes the order by contacting their preferred local florists nearest the requested delivery site. The local florist partner then fulfills the order and delivers the flowers to the recipient Currently, Flowers 4U is much smaller than these other competitors, and it is trying to expand its market share. It knows that it needs to build relationships with more local florists, and it is working on that. But Flowers 4U wants to go beyond that. The marketing manager knows that once their distribution channels are extended, the company will merely be meeting the existing competition. The manager is thinking about how the brand can be perceived as better than the competition. The company has been considering offering a variety of additional services, from a yearly planner with reminder-prompts to buy flowers for birthdays and anniversaries, to the delivery of gourmet foods, to partnering with other retailers to allow customers to pay for a variety of gift certificates to accompany the flower delivery, such as $100 salon treatment, $35 dry-cleaning pick-up, $50 local restaurant coupon, etc. Flowers 4U knows that it will need to grow by attracting new customers. However, in developing these service expansion efforts, the marketing manager plans to ask current customers to voluntarily complete online surveys. The manager wants to sample the company's "best" customers. Traditionally, to define "best customer," customer relationship marketing and direct marketing programs look at three dimensions, known popularly as RFM-recency, frequency, and monetary value (see Figure 1). That is, good customers have probably made purchases recently, they probably purchase frequently, and their orders are probably bigger than other customers. All three dimensions. RFM, are used because they do not provide redundant information (in other words, R, F, and M are not that highly correlated). Figure 1: Recency, Frequency, and Monetary Value Best oustomers: Most (R)ecent Most (F)requent Most (M)onetary Value Very recent Spent $500+ lyr Haven't bought in past 6 months Spent $0-50+ lyr 0-1 buy last year 12+ buy last year 48. CASES FOR PARTI The marketing manager is confident that once a sample of best customers are contacted, the company will get good guidance about what additional services Flowers 4U should offer. Questions: 1. What is the decision problem? 2. What is (are) the research problem(s)? 3. What recommendations would you make to the marketing manager to address the research problem(s)? That is, what data would you collect and how might those data be used to answer the research question(s) posed