Air Force Institute of Technology AFIT Scholar Theses and Dissertations Student Graduate Works 3-2006 Headquarters Air Force Material Command Customer Relationship Study Damelsa D. White Follow this and additional works at: https://scholar.afit.edu/etd Part of the Operations and Supply Chain Management Commons Recommended Citation White, Damelsa D., "Headquarters Air Force Material Command Customer Relationship Study" (2006). Theses and Dissertations. 3431. https://scholar.afit.edu/etd/3431 This Thesis is brought to you for free and open access by the Student Graduate Works at AFIT Scholar. It has been accepted for inclusion in Theses and Dissertations by an authorized administrator of AFIT Scholar. For more information, please contact [email protected]. HEADQUARTERS AIR FORCE MATERIAL COMMAND CUSTOMER RELATIONSHIP MANAGEMENT STUDY THESIS Damelsa D. White, Captain, USAF AFIT/GLM/ENS/06-17 APPROVED FOR PUBLIC RELEASE; DISTRIBUTION UNLIMITED AFIT/GLM/ENS/06-17 HEADQUARTERS AIR FORCE MATERIAL COMMAND CUSTOMER RELATIONSHIP MANAGEMENT STUDY THESIS Presented to the Faculty Department of Operational Sciences Graduate School of Engineering and Management Air Force Institute of Technology Air University Air Education and Training Command In Partial Fulfillment of the Requirements for the Degree of Master of Science in Logistics Management Damelsa D. White, BS Capt, USAF March 2006 APPROVED FOR PUBLIC RELEASE; DISTRIBUTION UNLIMITED AFIT/GLM/ENS/06-17 CUSTOMER RELATIONSHIP MANAGEMENT IN HEADQUARTERS AIR FORCE MATERIAL COMMAND Damelsa D. White, BS Captain, USAF Approved: ____________________________________ ________ Kirk A. Patterson, Maj, USAF (Chairman) date ____________________________________ ________ John Bell, Maj, USAF (Co-Chairman) date AFIT/GLM/ENS/06-17 Abstract Because of the lack of product and price differentiation, many organizations consider Customer Relationship Management (CRM) their primary focus. CRM uses information about each customer to make each customer more valuable to the organization, and the organization more valuable to the customer, while decreasing the cost of servicing the customer. However, an organization cannot conform to customer specifications if the needs of the customers as well as what the customer values is not known. As a result, Headquarters (HQ) Air Force Material Command (AFMC) is taking the initiative to gain an understanding of their customers. The purpose of this study is two-fold; the first is to identify HQ AFMC’s internal and external customers and secondly, segment these customers based on significant organizational characteristics. This thesis also looks at the approaches private and public sector organizations have taken to segment their customers and discusses possible ways in which HQ AFMC can use segmentation to develop or improve a CRM strategy to more effectively communicate with customers and ultimately improve operational efficiency, decrease costs and improve customer satisfaction. Conducting archival analysis on customer requisition records from HQ AFMC Air Logistic Center (ALC) Customer Service Centers (CSC) is used to reveal HQ AFMC customers. A Recency, Frequency, Location (RFL) model was developed and implemented for the purpose of segmenting HQ AFMC customers. v AFIT/GLM/ENS/06-17 To Father and Mother vi Acknowledgements First and foremost, I would like to thank God for helping me complete this research study. “I can do all things through Christ that strengthens me” - Phillipians 4:13 I would like to express my sincere appreciation to my faculty advisors, Major Kirk Patterson and Major John Bell, for their guidance, support, and patience during this research effort. Thank you for your knowledge and feedback which was instrumental in completing this research. I appreciate the confident and trust you had in me in being up the challenge. I am also grateful for the latitude I had in choosing the path to take for this research effort. I’d also like to thank my sponsors, HQ AFMC/A4S for giving the opportunity to conduct this research. A special thanks to HQ AFMC senior leadership for taking the time out of their busy schedules to assist in the completion of this research. I’d also like to thank the Customer Service Center Representatives at Warner Robins Air Logistic Center (ALC), Ogden ALC, and Oklahoma ALC for their support. A special thanks to Pamela Green for her vast knowledge, patience, and hospitality. I’d also like to thank Toya Banks and M.E. for their encouragement and support. Thank you for keeping me on track and refusing to be sympathetic to my cries during the last nine months. Last but not least I would like to thank my parents. You had tremendous faith in me and gave me continuous encouragement. Thank you for all your much needed prayers! Damelsa D. White vii Table of Contents Page Abstract................................................................................................................................v Acknowledgements.............................................................................................................vi Table of Contents………………………………………………………………………..viii List of Figures ....................................................................................................................xi List of Tables ....................................................................................................................xii I. Introduction ..................................................................................................................1 Background .................................................................................................................1 Problem Statement ......................................................................................................4 Research Objective…………………………………………………………………..5 Research Question.......................................................................................................6 Investigative Questions ...............................................................................................6 Scope of Research…………………………………………………………………....6 Summary .....................................................................................................................7 II. Literature Review…………………………………………………………………….8 Chapter Overview ……………………………………………………………….….8 Customers…………………………………………………………………………...8 Customer Relationship Management……………………………………………....11 Benefits of CRM…………………………………………………………………...17 What Makes CRM Successful……………………………………………………..20 Customer Focused Approaches………………………………………………….....27 Customer Identification……………………………………………………………30 Customer Segmentation…………………………………………………………....36 HQ AFMC…………………………………………………………………………45 Summary…………………………………………………………………………...51 III. Methodology……………………………………………………………………….52 Chapter Overview…………………………………………………………………52 Research Design Comparison …………………………………………………….52 Data Sources, Data Collection and Analysis……………………………………...57 Summary…………………………………………………………………………..66 viii IV. Results……………………………………………………………………………...67 Chapter Overview………………………………………………………………..67 Investigative Question One………………………………………………….…...67 Investigative Question Two………………………………………………….......70 Investigative Question Three………………………………………………….....75 Investigative Question Four……………………………………………………...79 Investigative Question Five……………………………………………………...80 Summary……………………………………………………………………….…87 V. Conclusion…………………………………………………………………………88 Chapter Overview………………………………………………………………..88 Findings………………………………………………………………………….88 Applications………………………………………………………………….…..91 Limitations……………………………………………………………………….93 Recommendations for Future Research………………………………………….94 Research Summary……………………………………………………………....94 VI. Appendix A: HQ AFMC Internal Customers……………………………………..98 VII. Appendix B: HQ AFMC External Customers…………………………………....99 VIII. Appendix C: HQ AFMC More Recent Customers…………………………….111 IX. Appendix D: HQ AFMC Less Recent Customers………………………….……122 X. Appendix E: HQ AFMC High Frequency Customers…………………………....125 XI. Appendix F: HQ AFMC Medium Frequency Customers……………………..…127 XII. Appendix G: HQ AFMC Low Frequency Customers……………………….….129 XIII. Appendix H: HQ AFMC Deployed Location Customers……………………...137 XIV. Appendix I: HQ AFMC Non-Deployed Location Customers…………………138 XV. Appendix J: More Recent, High Frequency, Deployed Location………………151 XVI. Appendix K: More Recent, High Frequency, Non-Deployed Location….……152 XVII. Appendix L: More Recent, Medium Frequency, Deployed Location…….…..154 XVIII. Appendix M: More Recent, Medium Frequency, Non-Deployed Location…155 ix XIX. Appendix N: More Recent, Low Frequency, Deployed Location………..……157 XX. Appendix O: More Recent, Low Frequency, Non-Deployed Location……...…158 . XXI. Appendix P: Less Recent, Low Frequency, Deployed Location……………....165 XXII. Appendix Q: Less Recent, Low Frequency, Non-Deployed Location……..…166 Bibliography…………………………………………………………………………169 Vita…………………………………………………………………………………...174 x List of Figures Figure Page 1. Transition Plan…………………………………………………………………………3 2. Customer Retention Programs ……………………………………………………….10 3. “What is CRM?” online survey results…………………………………………….....13 4. CRM Model…………………………………………………………………………..15 5. Modified CRM Model…………………………………………..……………………16 6. The Drivers of CRM Success………………………………….……………………..23 7. Relationship Between Metrics……………………………………..…………………27 8. IDIC: Analysis and Action.……………………………………….………………….29 9. Customer Segmentation……………………………………………..………………..32 10. Assure Information Availability Process Flow………………………..…………….33