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Chapter 5

Commerce 2KA3 - Chapter 5 Summary

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Department
Commerce
Course
COMMERCE 2KA3
Professor
A L I R M O N T A Z E M I
Semester
Winter

Description
Chapter 5 Customer Relationship ManagementIntroductionCustomer Relationship Management involves managing all aspects of a customers relationship with an organization to increase customer loyalty and retention and an organizations profitabilityBusiness Benefits of CRMCRM 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 futureCRM BasicsAn organization can find its most valuable customers by using a formula that industry insiders all RFMRFM Recency Frequency and Monetary ValueoHow recently a customer purchased items recencyoHow frequently a customer purchases items FrequencyoHow much a customer spends on each purchase Monetary ValueOnce a company has gathered this initial CRM information it can compile it to identify patterns and create marketing campaigns sales promotions and services to increase businessThe Evolution of CRMThere are three phases in the evolution of CRM 1 reporting 2 analyzing and 3 predictingCRM reporting technologies help organizations identify their customers across other applicationsCRM analysis technologies help organizations segment their customers into categories such as best and worst customersCRM predicting technologies help organizations make predictions regarding customer behaviour such as which customers are at risk of leavingOperational and Analytical CRMThe two primary components of a CRM strategy are operational CRM and analytical CRMOperational CRM supports traditional transactional processing for daytoday frontoffice operations or systems that deal directly with the customersAnalytical CRM supports backoffice operations and strategic analysis and includes all sytems that do not deal directly with the customersThe primary difference between operational CRM and analytical CRM is the direct interaction between the organization and its customersUsing Information Technology to Drive Operational CRMMarketing and Operational CRM
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