AGU 695
Lesson 7
Application Lesson—Lessons 1 through 6
Case Study #1 (50 Points) “Buy Experiences, Not Things” pgs. 3-4
1. Explain the difference between efficiency MIS metrics and effectiveness MIS metrics.
Efficiency MIS metrics measure the performance itself, throughput, transaction speed
and system availability. Effectiveness MIS metrics measure the impact MIS has on
busines processes and activities, things like customer satisfaction and customer
conversion rates. Efficiency is something that is more easily measured, data can be
pulled to pinpoint exactly where in the process something is below the bar and also
where processes are exceeding expectations. On the other hand, effectiveness is
measured by something subject to change based on the person and output also leaves
room for interpretation. It is also hard to apply a standard across the board when the
satisfaction of a person will be specific to that individual and their experience that day.
2. Imagine you are working for Costco as a manager in its Chicago store. List three CRM
metrics Costco should track, along with the reasons these metrics will add value to
Costco’s business strategy.
CRM stands for Customer Relationship Management and it is used to manage all aspects
of a customer’s relationship with a company. In order to add value to the business
strategy used by Costco, they should track who their customers are. Identifying their
customers can help them better understand the types of items they will be shopping
for. An example would be, understanding that there are a high number of families with
multiple children with ages varying from newborn to school age would help Costco
understand the need to ensure diapers, wipes and formula are stocked in their stores
due to high demand is important for customer retention. Another way understanding
the customers is important is to also ensure they are providing for the people who have
pets, as well as those who are new homeowners and need to find affordable furniture.
Tracking these items helps Costco cater to the correct audiences in their stores. Another
aspect to track includes high-value/low-value customers. Through tracking these
customers, it is possible to ensure there are promotions available to them to entice
them to increase their spending as well as their loyalty. For example, understanding that
you have several small businesses in the area that purchase baking supplies from the
store could help Costco develop promotions on high demand items for bakers (ie:
butter, flour, milk and eggs). For those that are low-value customers the goal is to
increase customer spend. Understanding the items these people consistently buy will
