Chapter 11 : Building a Customer-Centric Organization – Customer Relationship Management

Customer Relationship Management (CRM) :

CRM enables an organization to:

1)Provide better customer service
2)Make call centers more efficient
3)Cross sell products more effectively
4)Help sales staff close deals faster
5)Simplify marketing and sales processes
6)Discover new customers
7)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


Customer Relationship Management’s Explosive Growth

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

The primary difference between the two is the direct interaction between the organization and its customer.

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