- customer value>
- customer relationship
Marketing seems to be running in place for most businesses. Mass marketing is increasingly ineffective. Database marketing ignores real consumer needs. The role of research for insightful understanding of consumer needs is clearly very important. We need to have a good understanding of the customer life-cycle – from customer acquisition, business growth, loyalty, and retention. How do we develop a Customer Relationship Strategy (CRM) that is scalable? Here are four important steps:
Scale Customer Knowledge Base. A customer 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 of customers (other customers similar to the customer being simulated, and therefore, likely to have similar needs), determining customers' personas (identification of customers' intrinsic characteristics based on life-stage, business- stage, activity models), and determining customers' 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. Credit card companies repeatedly make offers to reduce credit card interest rates for their own customers who pay in full. Mortgage companies offer higher interest rates to their current customers. The concept of value proposition is reversed, based on what a company has to offer and not on customers' needs. On the other hand, 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 management because it is considered a marketing or IT problem. 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, Northwestern University)
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