How do we develop a Customer Relationship Management (CRM) Strategy that is scalable? Here are four important steps:

Scale Customer Knowledge Base. A knowledge base that contains all customer data such as purchases, business interactions, interests, demographics, and estimates of customer life time value (CLTV). Based on CLTV, a firm can focus on its most valuable customers.

Scale Customer Understanding. A business should be able to simulate its customers' future behavior and requirements using the knowledge-base, data mining, and models. Simulation of a customer entails identifying mentors (other customers likely to have similar needs), determining personas (intrinsic characteristics based on life-stage, business- stage, activity models), and determining preferences over products and services based on affinity models, ratings, and satisfaction information.

Scale Communication and Value Proposition. Firms spend vast amounts of money repeatedly making customer offers that are irrelevant, untimely, or are not communicated properly. The concept of value proposition is reversed, based on what a company has to offer and not on customers' needs. Conversely, some companies provide highly targeted offers with clear customer value propositions.

Scale Organization. Organizational impact and change is the most overlooked aspect of data-driven marketing and relationship. This misconception often causes CRM failure. Success and scalability requires that (1) there be executive sponsorship, (2) most employees participate in implementing relationship management, (3) proper employee incentives be in place, (4) crossfunctional teams be formed to satisfy customer needs, and (5) in an indirect business model, a firm work with its partners in a beneficial and non-threatening way.

(Note: This is an abstract of an article written by Dr. Alok Choudhary, Director CRM, C3Research)