The increased attention paid to CRM means that the traditional metrics used by managers to measure the success of their products and services in the marketplace have to be updated. Financial and market-based indicators such as profitability, market share, and profit margins have been and will continue to be important. However, in a CRM world, increased emphasis is being placed on developing measures that are customer-centric and give managers a belter idea of how their CRM policies and programs are working.
Some of these CRM-based measures, both Web- and non-Web-based, are: customer acquisition costs, conversion rates (from lookers to buyers), retention/churn rates, same customer sales rates, loyalty measures, and customer share or share of requirements (the share of a customer’s purchases in a category devoted to a brand).
All of these measures imply doing a better job acquiring and processing internal data to focus on how the company is performing at the customer level.
The Future of CRM
With the increased penetration of CRM philosophies in organizations and the concomitant rise in spending on people and products to Continue reading “Metrics of Customer Relationship Management”
While customer contaa through direct e-mail offerings is a useful component of CRM, it is more of a technique for implementing CRM than a program itself. Relationships are not built and sustained with direct e-mails themselves but rather through the types of programs that are available for which e-mail may be a delivery mechanism.
The overall goal of relationship programs is to deliver a higher level of customer satisfaaion than competing Hnns deliver. There has been a large volume of research in this area.’^ From this research, managers today realize that customers match realizations and expectations of product performance, and that it is critical for them to deliver such performance at higher and higher levels as expectations increase due to competition, marketing communications, and changing customer needs. In addition, research has shown that there is a strong, positive relationship between customer satisfaction and profits.” Thus, managers must constantly measure satisfaction levels and develop programs that help to deliver performance beyond targeted customer expectations.
A comprehensive set of relationship programs is shown in Exhibit 5 and includes customer service, frequency/loyalty programs, customization, rewards programs, and Continue reading “Customer Relationship Management Programs”
Analyzing the Data
Traditionally, customer databases have been analyzed with the intent to define customer segments. A variety of muUivariate statistical methods such as cluster and discriminant analysis have been used to group together customers with similar behavioral paiterns and descriptive data which are then used to develop different product offerings or direct marketing campaigns.** Direa marketers have used such techniques for many years. Their goals are to target the most profitable prospects for catalogue mailings and to tailor the catalogues to different groups.
More recently, such segmentation approaches have been heavily criticized.” Taking a large number of customers and forming groups or segments presumes a marketing effort towards an “average” customer in the group. Given the range of marketing tools available that can reach customers one at a time using tailored Continue reading “Analyzing the Customer Database, Customer Relationship Management”
The World Wide Web is the opportunity afforded companies to choose how they interact with their customers. The Web allows companies to build better relationships with customers than has been previously possible in the offline world. By combining the abilities to respond directly to customer requests and to provide the customer with a highly interactive, customized experience, companies have a greater ability today to establish, nurture, and sustain long-term customer relationships than ever before. These online capabilities complement personal interactions provided through salespeople, customer service representatives, and call centers. At the same time, companies can choose to exploit the low cost of Web customer service to reduce their service costs and offer lower-quality service by permitting only electronic contaa.
The flexibility of Web-based interactions thus permits firms to choose to whom they wish to offer services and at what quality level. Continue reading “A Framework for Customer Relationship Management”