CHAPTER 11 : BUILDING A CUSTOMER-CENTRIC ORGANIZATION – CUSTOMER RELATIONSHIP MANAGEMENT

Learning Outcomes

1. Compare operational and analytical customer relationship management
2. Identify the primary forces driving the explosive growth of customer relationship management
3. Define the relationship between decision making and analytical customer relationship management
4. Summarize the best practices for implementing a successful customer relationship management system

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

-Three phases in the evolution of CRM include reporting, analyzing, and predicting

The Ugly Side of CRM

Customer Relationship Management’s Explosive Growth

- CRM Business Drivers

- Forecasts for CRM Spending (in billions)

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

- Operational CRM and analytical CRM

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