Customer relationship management (CRM): The overall process of building and maintaining profitable customer relationships by delivering superior customer value and satisfaction. (Software that keeps your files, banking systems have all your information stored). The software can be assessed from wherever because its on the companies server.
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CRM entails cultural changes: CRM is an overall company strategy. It requires changes internally in the company if the company is really interested in instituting a positive customer service. Without employees putting the system to use, it is completely useless.
Customer acquisition: Data driven software can examine profiles of a company’s most popular customers and use these characteristics to find prospective customers.
Customer retention: A company that has a strong relationship with their customers will retain these customers, resulting in more sales and profits than the company normally would have if it focused only on getting new customers.
– The cost of acquiring a customer occurs only at the beginning of a relationship, so the longer the relationship, and the lower the amortized cost.
– Long-term customers tend to want to switch less then new customers.
– Long-term customers may initiate word-of-mouth activity and referrals.
Loyalty programs: Programs specifically designed for customer retention.
Pareto’s rule: 80% of a company’s sale come from 20% of its customers. The implication is to take care of the 20% by offering them better rewards. (Air miles)
Data mining: A process of analyzing customer patterns and insights to make better marketing decisions. (Buyers trends…)
Data warehouse: A central repository of an organizations electronically stored data.
Customer lifetime value: The potential sales that will be generated by a customer if that customer remains loyal to that company for a lifetime. (Reimbursing a customer who had his tennis racquet lost during a car fix up).
Share of wallet: The percentage of a customer’s purchases that a company has in a specific product category. (Bank finds out you have kids, they then try and get them a savings plan).
CRM and customer reacquisition: Losing a customer means more than losing a sale. It means losing the entire future stream from that customer. Often, customers stop dealing with a business because of poor customer service. They check their system for customers who haven’t bought in a while. They then show interest.
Decision figure (4 bubbles)
Evidence: Body of systematic knowledge that we have accumulated in a systematic discipline
evidence: Data collected within an organization
Managerial judgment and experience
Ethical implications of the decision, effect on stakeholders, the contextual consequences