chapter 11

Customer Relationship Management (CRM)

CRM enables an organization to:

• Provide better customer service
• Make call centers more efficient
• Cross sell products more effectively
• Help sales staff close deals faster
• Simplify marketing and sales processes
• Discover new customers
• Increase customer revenues

Recency, Frequency, and Monetary Value

Organizations can find their most valuable customers through “RFM” - Recency, Frequency, and Monetary value

How recently a customer purchased items (Recency)

How frequently a customer purchased items (Frequency)

How much a customer spends on each purchase (Monetary Value)

The Evolution of CRM

CRM reporting technology – help organizations identify their customers across other applications

• CRM analysis technologies – help organization segment their customers into categories such as best and worst customers

• CRM predicting technologies – help organizations make predictions regarding customer behavior such as which customers are at risk of leaving

THE UGLY SIDE OF CRM: WHY CRM MATTERS MORE NOW THAN EVER BEFORE

CUSTOMER RELATIONSHIP MANAGEMENT’S EXPLOSIVE GROWTH

Using Analytical CRM to Enhance Decisions

Operational CRM – supports traditional transactional processing for day-to-day front-office operations or systems that deal directly with the customers

Analytical CRM – supports back-office operations and strategic analysis and includes all systems that do not deal directly with the customers

Customer Relationship Management Success Factors

CRM success factors include:

1. Clearly communicate the CRM strategy 
2. Define information needs and flows
3. Build an integrated view of the customer
4. Implement in iterations
5. Scalability for organizational growth

The new information technology... Internet and e-mail... have practically eliminated the physical costs of communications.

Peter Drucker