1. A database for customer activity - Ideally the database should contain information about the following:
* Transactions - including a complete purchasing history with accompanying details
* Customer contacts from multiple channels and contexts
* Descriptive information for segmentation and other data analysis purposes
* Response to marketing stimuli - whether or not the customer responded to a direct marketing initiative, a sales contact, or any other direct contact
* This data should also be collected over time.
2. Analyses of the database - For many years customer databases have been analyzed with the intent to define customer segments. However, taking a larger number of customers and forming groups or segments presumes a marketing effort towards an 'average' customer in the group. With the range of marketing tools available that can reach customers one at a time through personalized messages, there is less need to consider the usual market segmentation schemes. Instead there is an increase in attention being paid to understanding each "row", or customer, of the database, and what he or she can deliver to the company in terms of profit. The idea is that each row/customer of the database should be analyzed in terms if current and future profitability to the firm.
3. Given the analyses, decisions about which customers to target - Looking at past and current purchases a model of the profitability of a customer can be used by the marketing manager to target specific customers. The profit that a customer has produced for the firm is the sum of the margins of all products purchased over time less the cost of reaching that customer. These costs include any that can be broken down at the individual customer level such as direct mail, sales calls etc. Cross-selling is also becoming of interest to... [continues]
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(2010, 11). Customer Relationship Model. StudyMode.com. Retrieved 11, 2010, from http://www.studymode.com/essays/Customer-Relationship-Model-487909.html
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