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Chapter 6

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University of British Columbia
COMM 310
Julie Kim

CHAPTER 6 Customer Relationship Management 61 CRM Fundamentals IntroductionCRM involves managing all aspects of a customers relationship with an organization to increase customer loyaltyretentionan organizations profitability Because customers are experts not just a source of revenueCustomer satisfaction is keyOne of the most valuable assets a company can acquire especially because product differentiation is difficultRepresents a shift in focus away from sales to the customerAllows an organization to gain insights into customers shopping and buying behaviorsEnhanced through information technologiesCRM as a business strategyCRM is a strategy that an organization must embrace on an enterprise levelHelps an organization identify customers and design specific marketing campaigns for each customer increasing customer spendingBusiness Benefits of CRMCan benefit small and large businessA typical return on investment ROI is 6 monthsPhilosophical stance organizations that understand the needs of individual customers are best positioned to achieve sustainable competitive advantage in the futureAcknowledgement that treating existing customers well is the best source of profitable and sustainable revenue growthRFM formula to find an organizations most valuable customers Recency Frequency and Monetary Valuean org must track how recently a customer purchased items how frequently a customer purchases itemshow much a customer spends on each purchase The Evolution of CRMReportinghelps identify customers across other applicationsAnalyzinghelps segment customers into categories such as best and worst customersPredictinghelps make predictions regarding customer behavior eg whos at risk of leaving
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