Customer Relationship Management (CRM)
CRM is a business philosophy based on the premise that those organizations that understand the needs of individual customers are best positioned to achieve sustainable competitive advantage in the future.
- A customer strategy starts with understanding who the company's customers are and how the company can meet strategic goals.
- As the business world increasingly shifts from product focus to customer focus, most organizations recognize the treating existing customers well is the best source of profitable and sustainable revenue growth in the age of e-business, however, an organization is challenged more than ever before to truly satisfy its customers.
Recently, Frequency, and Monetary Value
An organization can find its most valuable customers by using a formula that industry insiders call RFM-recency, frequency, and monetary value. In other words, an organization must track:
- How recently a customer purchased items (recently)
- How frequently a customer purchases an item (frequently
- How much a customer spends on each purchase (monetary value)
The evolution of CRM
Knowing the customer, especially knowing the profitability of individual customers, is highly lucrative in the financial service industry.
There are three phases in the evolution of CRM:
1. CRM Reporting technology help organizations identify their customers across other applicants
2. CRM analysis technology helps organizations segment their customers into categories such as best and worst customers.
3. CRM predicts technological help organizations make predictions regarding customer behavior such as which customers are at risk of leaving.
Using Analytical CRM to Enhance Decisions
The two components of a CRM strategy are:
- 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.
The primary difference between operational CRM and analytical CRM in the direct interaction between the organization and its customers.
-Personalization occurs when a website can know enough about a person's likes and dislikes that it can fashion offers that are more likely to appeal to that person. Many organizations are now utilizing CRM to create customer rules and templates that marketers can use to personalize customer messages.
CUSTOMER RELATIONSHIP MANAGEMENT SUCCESS FACTORS
CRM success factors include;
Ø Clearly communicate the CRM strategy
Ø Define information needs and flows
Ø Build an integrated view of the customer
Ø Implement in iterations
Ø Scalability for organizational growth