Customer Relationship Management

CRM = Customer Relationship Management

• CRM is the practice of analysing and utilising marketing databases and leveraging communication technologies to determine corporate practices and methods that will maximize the lifetime value of each individual customer to the firm.
• Understanding how an organisation seeks to use their collective information (current of history) on customers to enable them to make marketing decisions in the areas of

• Customer acquisition
• Retention
• Customer maintenance

• Then, the organisation can seek to use the data (knowledge & information):

• Try to promote or deter consumers from activities or reactions
• To change their spending habits, the frequency of their purchases, the size of their purchases, their loyalty

Behavioural loyalty:

• The observed action that customers have demonstrated towards a particular product or service (Example: repeat purchase over again and again)

Attitudinal loyalty:

• The perceptions and attitudes that a customer has towards a particular product or service (Example: I like Coke; I think Commonwealth Bank provides more good service)

Key objectives of loyalty programs:

• Build true loyalty
• Increase efficiency (short-term) profits

Key changes in business environment:

• Consumers
• Technology

Traditional Marketing Metrics

(Market Share, Sales Growth, Penetration rate, Average purchase frequency)

• These metrics are ALL aggregate measures
• Provide firms with information about how they are performing against a similar previous period (example: in fiscal year reports/ sales reports)

Sales Growth:

• Change in sales in a given period compared to sales in the previous period
• Quick indicator of current health of a firm

Primary Customer Based Metrics (CRM Strategic Metrics)

Acquisition rate

• Defined as first purchase or purchasing in the first predefined period
• Evaluation: important metric, but cannot be considered in isolation

Survival Rate:

• Internal sales record
• Measured for a cohort of customers

Customer Lifetime Value:

• One of the best and accurate ways to measure loyalty’s effect
• Impacts on the decision making and profitability