Customer relationship management (CRM) is a business philosophy and set of strategies, programs, and systems that focuses on identifying and building loyalty with a retailer’s most valued customers (Levy, Weitz 275). A loyal customer is one who is committed to purchasing merchandise and services from a specific retailer, he or she resists the efforts of competitors, and also has an emotional attachment to a retailer. The four steps involved in the formation of a CRM program are collecting customer data, analyzing customer data, developing a CRM program, and implementing the CRM program. Implementing CRM programs can be extremely beneficial in increasing business and creating/maintaining a competitive edge. They also categorize customers into the four categories of the customer pyramid. The lowest level is lead. These customers actually have a negative lifetime value, which means they cost the retailer money. A successful CRM program can identify these customers so the retailer can strategize ways to get them out. The next level is iron. These customers don’t receive much attention because their spending levels, loyalty, and profitability are not substantial. However, if the retailer can identify them as iron, they can strategize ways to make them into the next highest level, gold. These customers are slightly price conscious, but buy a significant amount of merchandise. The goal of the retailer is to utilize their CRM program to turn them into the highest level of the customer pyramid, platinum, which brings the retailer the highest profit. These customers are the best and most loyal. They’re also the least price-sensitive, and they have the highest lifetime value. If retailers utilize CRM programs to their full potential, they can be extremely beneficial. A few retailers that have exceptional CRM programs are The Ritz-Carlton, Neiman Marcus, and The Buckle.
The Ritz-Carlton is a prime example in demonstrating how a business can use the data generated by their CRM program to convert it into action. “Coined "Mystique," the Ritz-Carlton database is used to track information such as guest preferences, frequency of visits and issues that have come up for guests during their previous stays” (Take It From Ritz-Carlton). This information, however, is only as useful as the staff’s compliance to create an experience better than the last and perform above all expectations of their guests. In order to accomplish this, they implemented a guest relationship management program called CLASS (Customer Loyalty Anticipation and Satisfaction System) in 1998. CLASS is a simple system designed to bring consistency to the process of servicing the guest in the best possible way. “At each of Ritz-Carlton's 32 hotels, a guest recognition manager is the repeat guest "expert," and all other hotel staff are responsible for noting guest preferences and sharing them with the guest recognition office” (For Ritz-Carlton, It All Begins With Customer Knowledge). When guests book their reservation, they can include relevant information like smoking vs. non-smoking rooms, bed-type preferences, favorite snacks, magazines, etc. in order to assist the staff in preparation of their arrival. At this point, the guest’s reservation is linked to his or her existing profile. Up to ten days prior to actual check-in, the guest recognition office accesses this information to review profiles of incoming guests and compiles an arrival report in CLASS. This information is then allocated throughout the hotel. Each department uses the information to specify what is needed for each repeat guest. “CLASS is fully integrated with the Ritz-Carlton's property management system and allows users to do most of their work at one time in one application” (For Ritz-Carlton, It All Begins With Customer Knowledge). Guest preference information is dispersed through guest recognition department staff at each of the 32 Ritz-Carlton locations. This team has the responsibilities of entering...
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