Section1 CRM Theory and Development Chapter 1 Introduction to Customer Relationship Management © Taylor & Francis 2016 1.1 Definition of CRM and CRM Applications “CRM is often so broad that it lacks definition. If you can’t define it, how can you assess it? No one knows what it is, but we know we have to have it.” “CRM Starting to Live Up to Its Promise,” Wall Street & Technology (January 4, 2004) © Taylor & Francis 2016 1.1 Definition of CRM and CRM ApplicationsCRM = Customer Relationship ManagementCRM enables an organization to better manage relationships with suppliers, distributors, dealers, etc. CRM is a difficult business practice to define:It can apply to different levels of customers.Some of the key components of CRM shift when considering business-to-business (B2B) versus business-to-consumer (B2C) relationships.The composition of CRM systems will be different in big versus small companies, even though their objectives will be the same. © Taylor & Francis 2016 1.1 Definition of CRM and CRM Applications5 Key Processes that help define CRM:Strategy developmentValue creationMultichannel integrationInformation managementPerformance assessment © Taylor & Francis 2016 1.1 Definition of CRM and CRM ApplicationsDefinitions of CRM can be grouped as:Those that equate CRM with a software package, process, system, or technology.Those that equate CRM with a focus on data storage and analysis.Those that equate CRM with a change in corporate culture from a transaction focus to a relationship or customer-centric focus.Those that equate CRM with the important concept of “managing demand.”Those that equate CRM with new strategies focused on current customers. © Taylor & Francis 2016 1.1 Definition of CRM and CRM ApplicationsWhen CRM is viewed in terms of systems, it must:Gather customer data from all touch pointsWarehouse the data, providing easy access for all Deliver useable information based on the data © Taylor & Francis 2016 1.1 Definition of CRM and CRM ApplicationsA comprehensive CRM system should contain four major technology components:A data warehouseAnalytical tools Campaign management toolsInterfaces © Taylor & Francis 2016 1.1 Definition of CRM and CRM ApplicationsWhen CRM systems fail, it tends to be as a result of cultural, as opposed to technological, issues.Many companies focus on the opposite of “relationship” (i.e., on the transaction itself).Transaction marketing views the sale as the end of the relationship, whereas relationship marketing views the sale as the beginning.Relationships require two-way communications between customers and the organization. © Taylor & Francis 2016 1.1 Definition of CRM and CRM ApplicationsCompanies should not necessarily make it their goal to attract the greatest number of customers.By giving a product away free, a company can achieve 100 percent market share.But, it would not be in business long.A company should make its goal to attract the greates.

1. Section1
CRM Theory and Development
Chapter 1
Introduction to Customer Relationship Management
© Taylor & Francis 2016
1.1 Definition of CRM and CRM Applications
“CRM is often so broad that it lacks definition. If you can’t
define it, how can you assess it? No one knows what it is, but
we know we have to have it.”
“CRM Starting to Live Up to Its Promise,” Wall Street &
Technology (January 4, 2004)

2. © Taylor & Francis 2016
1.1 Definition of CRM and CRM ApplicationsCRM = Customer
Relationship ManagementCRM enables an organization to better
manage relationships with suppliers, distributors, dealers, etc.
CRM is a difficult business practice to define:It can apply to
different levels of customers.Some of the key components of
CRM shift when considering business-to-business (B2B) versus
business-to-consumer (B2C) relationships.The composition of
CRM systems will be different in big versus small companies,
even though their objectives will be the same.
© Taylor & Francis 2016
1.1 Definition of CRM and CRM Applications5 Key Processes
that help define CRM:Strategy developmentValue
creationMultichannel integrationInformation
managementPerformance assessment
© Taylor & Francis 2016
1.1 Definition of CRM and CRM ApplicationsDefinitions of
CRM can be grouped as:Those that equate CRM with a software
package, process, system, or technology.Those that equate CRM
with a focus on data storage and analysis.Those that equate
CRM with a change in corporate culture from a transaction

3. focus to a relationship or customer-centric focus.Those that
equate CRM with the important concept of “managing
demand.”Those that equate CRM with new strategies focused on
current customers.
© Taylor & Francis 2016
1.1 Definition of CRM and CRM ApplicationsWhen CRM is
viewed in terms of systems, it must:Gather customer data from
all touch pointsWarehouse the data, providing easy access for
all Deliver useable information based on the data
© Taylor & Francis 2016
1.1 Definition of CRM and CRM ApplicationsA comprehensive
CRM system should contain four major technology
components:A data warehouseAnalytical tools Campaign
management toolsInterfaces
© Taylor & Francis 2016
1.1 Definition of CRM and CRM ApplicationsWhen CRM
systems fail, it tends to be as a result of cultural, as opposed to
technological, issues.Many companies focus on the opposite of

4. “relationship” (i.e., on the transaction itself).Transaction
marketing views the sale as the end of the relationship, whereas
relationship marketing views the sale as the
beginning.Relationships require two-way communications
between customers and the organization.
© Taylor & Francis 2016
1.1 Definition of CRM and CRM ApplicationsCompanies should
not necessarily make it their goal to attract the greatest number
of customers.By giving a product away free, a company can
achieve 100 percent market share.But, it would not be in
business long.A company should make its goal to attract the
greatest number of profitable customers.
© Taylor & Francis 2016
1.1 Definition of CRM and CRM Applications“Management” is
also important when defining CRM as it pertains to the
organization’s ability to develop strategies that attract and
retain customersManagement = the identification of prospects,
selection and acquisition of relevant prospects, and
development of the relationshipManaging strategies and tactics
requires effective planning and effective and timely
implementation

5. © Taylor & Francis 2016
1.1 Definition of CRM and CRM ApplicationsCRM is founded
on four tenets: Customers should be managed as important
assetsNot all customers are equally desirableCustomers vary in
their needs, preferences, and buying behaviorBy better
understanding their customers, companies can tailor their
offerings to maximize overall value
© Taylor & Francis 2016
1.1 Definition of CRM and CRM ApplicationsThe more a
company knows its customers, the greater the opportunity to
increase market penetration and share of wallet
This leads to greater market share and the opportunity to trade
customers up and increase the speed of new product acceptance
Which eventually leads to quickened cash flow with less
volatility and risk
© Taylor & Francis 2016
1.1 Definition of CRM and CRM Applications

6. Add a hyphen after “Up” on the right, if editing the image is
possible. -MG
© Taylor & Francis 2016
1.2 The Purpose and Benefits of CRMThe focus of CRM is the
customer, particularly all existing onesThe knowledge base
contained in a CRM system will, in fact, aid in the acquisition
of new customersAs companies gather information about their
current customers, view their purchase history and interactions
with the organization, compute customer lifetime value, and
understand what motivates them to increase their purchases or
trade up to higher-priced items, the company forms a knowledge
base that will enable them to attract others
© Taylor & Francis 2016
1.2 The Purpose and Benefits of CRMAs companies gather
information about current customers who buy infrequently, buy
only when products or services are on sale, frequently return
merchandise, and complain often, the company can avoid
attracting similar customersMany nonusers are long-time
customers, so the purpose of CRM systems is not simply to
retain customers, nor is the purpose simply to please customers

7. © Taylor & Francis 2016
1.2 The Purpose and Benefits of CRMA good CRM system
identifies potentially profitable and unprofitable customers
early onTo create value, CRM systems sometimes point toward
de-marketing to certain groupsFor example, it may benefit a
company to add or raise fees to certain customers in order to
either make them profitable or drive them away
© Taylor & Francis 2016
1.2 The Purpose and Benefits of CRMCRM systems are being
used because they can enhance productivity across the range of
key marketing functions:Identifying prospectsAcquiring
customersDeveloping customersCross-
sellingUpsellingManaging
migrationServicingRetainingIncreasing loyaltyWinning back
defectors
© Taylor & Francis 2016
1.2 The Purpose and Benefits of CRMFour Steps in
CRM:Identify your customers in as much detail as possible,
including demographics, psychographics, habits, and
preferencesDifferentiate among them (for example, most and
least profitable)Interact with your customers (make this
interaction more cost effective through automation whenever

8. possible)Customize your offerings to fit each customer’s needs
through mass customization or individual tailoring
© Taylor & Francis 2016
1.2 The Purpose and Benefits of CRM
Objectives of CRMIdentification of potential
customersUnderstanding of customer needs, both current and
latentDifferentiating profitable from unprofitable customers and
segmentsDecreasing attrition by increasing value and
satisfactionIncreasing usage of current products and
servicesIncreasing usage of a greater number of a company’s
products and servicesIncreasing usage of more prestigious items
produced by a company (trading up)Increasing customer service
and satisfactionImproving campaign managementIncreasing
referralsWinning back lost customersMoving customers up the
relationship hierarchy from strangers to acquaintances to friends
to partnersIntegrating marketing and sales efforts throughout
the various channels used by the company
© Taylor & Francis 2016
1.3 The Tangible Components of CRMTangible components to
CRM:Data warehousesCustomer touch pointsCustomer call
centersSales-force automation360-degree view of customers

9. © Taylor & Francis 2016
1.3 The Tangible Components of CRM
Basic Architecture of a CRM System
© Taylor & Francis 2016
1.3 The Tangible Components of CRMMultichannel MarketingIs
the variety of channels (store, telephone, ATM/kiosk, catalog,
social networks, and online) that consumers use to interact and
transact with an organizationMultichannel users have two to
four times more to spendIn retail banking they are 25-50
percent more profitable
© Taylor & Francis 2016
1.3 The Tangible Components of CRM
The Multichannel Customer Buys More
© Taylor & Francis 2016

10. 1.3 The Tangible Components of CRMTouch Pointsany point of
contact that a customer or prospect has with a companycan be
an inquiry over the phone, in person, or via e-mailSocial media
channelsInternet forums, blogs, microblogs (e.g., Twitter), and
social networking sites (e.g., Facebook)Short message service
(SMS)messages sent to people in a business’s market area using
geolocators and systems provided by a Web-based service
provider
© Taylor & Francis 2016
1.3 The Tangible Components of CRMCall Centerwhere
customer communications occurfewer than 10% of call centers
are based outside the U.S.telephone-centeredContact
Centerextends coverage to telephone, mail, fax, and e-
mailCustomer Interaction Center has the ability to generate
revenue for the organizationextends across all channels and
functions
© Taylor & Francis 2016
1.3 The Tangible Components of CRMSales-Force
Automationoriented toward developing customer relationships
and improving satisfaction360-Degree Viewcompanies should
treat customers throughout the business cycle based on their

11. lifetime profitability focus on profitability, not revenue or value
© Taylor & Francis 2016
1.4 Customer Lifetime Value (CLV) and Second Lifetime Value
(SLTV)Customer lifetime value (CLV) = the net present value
of the future profits to be received from a given number of
newly acquired or existing customers during a specified period
of yearsLifetime value (LTV) = the net present value of the
customer’s profitability throughout the customer-firm
relationshipSecond lifetime value (SLTV) = focuses on only the
net present value generated after a customer has been reacquired
© Taylor & Francis 2016
1.5 Who Uses CRM and Why?Firms develop CRM systems for
the following reasons:To increase customer retention and
customer loyaltyTo stay even with their competitionTo attempt
to differentiate themselves from their competitors based on their
ability to provide outstanding customer serviceTo encourage
development of customer communities and social networks

12. © Taylor & Francis 2016
1.5 Who Uses CRM and Why?
The Types of Companies Benefiting Most and Least from CRM
Systems
Section1
CRM Theory and Development
Chapter 1
Introduction to Customer Relationship Management
© Taylor & Francis 2016
1.1 Definition of CRM and CRM Applications
“CRM is often so broad that it lacks definition. If you can’t

13. define it, how can you assess it? No one knows what it is, but
we know we have to have it.”
“CRM Starting to Live Up to Its Promise,” Wall Street &
Technology (January 4, 2004)
© Taylor & Francis 2016
1.1 Definition of CRM and CRM ApplicationsCRM = Customer
Relationship ManagementCRM enables an organization to better
manage relationships with suppliers, distributors, dealers, etc.
CRM is a difficult business practice to define:It can apply to
different levels of customers.Some of the key components of
CRM shift when considering business-to-business (B2B) versus
business-to-consumer (B2C) relationships.The composition of
CRM systems will be different in big versus small companies,
even though their objectives will be the same.
© Taylor & Francis 2016
1.1 Definition of CRM and CRM Applications5 Key Processes
that help define CRM:Strategy developmentValue
creationMultichannel integrationInformation
managementPerformance assessment

14. © Taylor & Francis 2016
1.1 Definition of CRM and CRM ApplicationsDefinitions of
CRM can be grouped as:Those that equate CRM with a software
package, process, system, or technology.Those that equate CRM
with a focus on data storage and analysis.Those that equate
CRM with a change in corporate culture from a transaction
focus to a relationship or customer-centric focus.Those that
equate CRM with the important concept of “managing
demand.”Those that equate CRM with new strategies focused on
current customers.
© Taylor & Francis 2016
1.1 Definition of CRM and CRM ApplicationsWhen CRM is
viewed in terms of systems, it must:Gather customer data from
all touch pointsWarehouse the data, providing easy access for
all Deliver useable information based on the data
© Taylor & Francis 2016
1.1 Definition of CRM and CRM ApplicationsA comprehensive
CRM system should contain four major technology
components:A data warehouseAnalytical tools Campaign
management toolsInterfaces

15. © Taylor & Francis 2016
1.1 Definition of CRM and CRM ApplicationsWhen CRM
systems fail, it tends to be as a result of cultural, as opposed to
technological, issues.Many companies focus on the opposite of
“relationship” (i.e., on the transaction itself).Transaction
marketing views the sale as the end of the relationship, whereas
relationship marketing views the sale as the
beginning.Relationships require two-way communications
between customers and the organization.
© Taylor & Francis 2016
1.1 Definition of CRM and CRM ApplicationsCompanies should
not necessarily make it their goal to attract the greatest number
of customers.By giving a product away free, a company can
achieve 100 percent market share.But, it would not be in
business long.A company should make its goal to attract the
greatest number of profitable customers.
© Taylor & Francis 2016
1.1 Definition of CRM and CRM Applications“Management” is
also important when defining CRM as it pertains to the
organization’s ability to develop strategies that attract and

16. retain customersManagement = the identification of prospects,
selection and acquisition of relevant prospects, and
development of the relationshipManaging strategies and tactics
requires effective planning and effective and timely
implementation
© Taylor & Francis 2016
1.1 Definition of CRM and CRM ApplicationsCRM is founded
on four tenets: Customers should be managed as important
assetsNot all customers are equally desirableCustomers vary in
their needs, preferences, and buying behaviorBy better
understanding their customers, companies can tailor their
offerings to maximize overall value
© Taylor & Francis 2016
1.1 Definition of CRM and CRM ApplicationsThe more a
company knows its customers, the greater the opportunity to
increase market penetration and share of wallet
This leads to greater market share and the opportunity to trade
customers up and increase the speed of new product acceptance
Which eventually leads to quickened cash flow with less
volatility and risk

17. © Taylor & Francis 2016
1.1 Definition of CRM and CRM Applications
Add a hyphen after “Up” on the right, if editing the image is
possible. -MG
© Taylor & Francis 2016
1.2 The Purpose and Benefits of CRMThe focus of CRM is the
customer, particularly all existing onesThe knowledge base
contained in a CRM system will, in fact, aid in the acquisition
of new customersAs companies gather information about their
current customers, view their purchase history and interactions
with the organization, compute customer lifetime value, and
understand what motivates them to increase their purchases or
trade up to higher-priced items, the company forms a knowledge
base that will enable them to attract others
© Taylor & Francis 2016
1.2 The Purpose and Benefits of CRMAs companies gather
information about current customers who buy infrequently, buy
only when products or services are on sale, frequently return
merchandise, and complain often, the company can avoid

18. attracting similar customersMany nonusers are long-time
customers, so the purpose of CRM systems is not simply to
retain customers, nor is the purpose simply to please customers
© Taylor & Francis 2016
1.2 The Purpose and Benefits of CRMA good CRM system
identifies potentially profitable and unprofitable customers
early onTo create value, CRM systems sometimes point toward
de-marketing to certain groupsFor example, it may benefit a
company to add or raise fees to certain customers in order to
either make them profitable or drive them away
© Taylor & Francis 2016
1.2 The Purpose and Benefits of CRMCRM systems are being
used because they can enhance productivity across the range of
key marketing functions:Identifying prospectsAcquiring
customersDeveloping customersCross-
sellingUpsellingManaging
migrationServicingRetainingIncreasing loyaltyWinning back
defectors

19. © Taylor & Francis 2016
1.2 The Purpose and Benefits of CRMFour Steps in
CRM:Identify your customers in as much detail as possible,
including demographics, psychographics, habits, and
preferencesDifferentiate among them (for example, most and
least profitable)Interact with your customers (make this
interaction more cost effective through automation whenever
possible)Customize your offerings to fit each customer’s needs
through mass customization or individual tailoring
© Taylor & Francis 2016
1.2 The Purpose and Benefits of CRM
Objectives of CRMIdentification of potential
customersUnderstanding of customer needs, both current and
latentDifferentiating profitable from unprofitable customers and
segmentsDecreasing attrition by increasing value and
satisfactionIncreasing usage of current products and
servicesIncreasing usage of a greater number of a company’s
products and servicesIncreasing usage of more prestigious items
produced by a company (trading up)Increasing customer service
and satisfactionImproving campaign managementIncreasing
referralsWinning back lost customersMoving customers up the
relationship hierarchy from strangers to acquaintances to friends
to partnersIntegrating marketing and sales efforts throughout
the various channels used by the company

20. © Taylor & Francis 2016
1.3 The Tangible Components of CRMTangible components to
CRM:Data warehousesCustomer touch pointsCustomer call
centersSales-force automation360-degree view of customers
© Taylor & Francis 2016
1.3 The Tangible Components of CRM
Basic Architecture of a CRM System
© Taylor & Francis 2016
1.3 The Tangible Components of CRMMultichannel MarketingIs
the variety of channels (store, telephone, ATM/kiosk, catalog,
social networks, and online) that consumers use to interact and
transact with an organizationMultichannel users have two to
four times more to spendIn retail banking they are 25-50
percent more profitable
© Taylor & Francis 2016
1.3 The Tangible Components of CRM

21. The Multichannel Customer Buys More
© Taylor & Francis 2016
1.3 The Tangible Components of CRMTouch Pointsany point of
contact that a customer or prospect has with a companycan be
an inquiry over the phone, in person, or via e-mailSocial media
channelsInternet forums, blogs, microblogs (e.g., Twitter), and
social networking sites (e.g., Facebook)Short message service
(SMS)messages sent to people in a business’s market area using
geolocators and systems provided by a Web-based service
provider
© Taylor & Francis 2016
1.3 The Tangible Components of CRMCall Centerwhere
customer communications occurfewer than 10% of call centers
are based outside the U.S.telephone-centeredContact
Centerextends coverage to telephone, mail, fax, and e-
mailCustomer Interaction Center has the ability to generate
revenue for the organizationextends across all channels and
functions

22. © Taylor & Francis 2016
1.3 The Tangible Components of CRMSales-Force
Automationoriented toward developing customer relationships
and improving satisfaction360-Degree Viewcompanies should
treat customers throughout the business cycle based on their
lifetime profitability focus on profitability, not revenue or value
© Taylor & Francis 2016
1.4 Customer Lifetime Value (CLV) and Second Lifetime Value
(SLTV)Customer lifetime value (CLV) = the net present value
of the future profits to be received from a given number of
newly acquired or existing customers during a specified period
of yearsLifetime value (LTV) = the net present value of the
customer’s profitability throughout the customer-firm
relationshipSecond lifetime value (SLTV) = focuses on only the
net present value generated after a customer has been reacquired
© Taylor & Francis 2016
1.5 Who Uses CRM and Why?Firms develop CRM systems for
the following reasons:To increase customer retention and
customer loyaltyTo stay even with their competitionTo attempt
to differentiate themselves from their competitors based on their

23. ability to provide outstanding customer serviceTo encourage
development of customer communities and social networks
© Taylor & Francis 2016
1.5 Who Uses CRM and Why?
The Types of Companies Benefiting Most and Least from CRM
Systems
Section1
CRM Theory and Development
Chapter 1
Introduction to Customer Relationship Management

24. © Taylor & Francis 2016
1.1 Definition of CRM and CRM Applications
“CRM is often so broad that it lacks definition. If you can’t
define it, how can you assess it? No one knows what it is, but
we know we have to have it.”
“CRM Starting to Live Up to Its Promise,” Wall Street &
Technology (January 4, 2004)
© Taylor & Francis 2016
1.1 Definition of CRM and CRM ApplicationsCRM = Customer
Relationship ManagementCRM enables an organization to better
manage relationships with suppliers, distributors, dealers, etc.
CRM is a difficult business practice to define:It can apply to
different levels of customers.Some of the key components of
CRM shift when considering business-to-business (B2B) versus
business-to-consumer (B2C) relationships.The composition of
CRM systems will be different in big versus small companies,
even though their objectives will be the same.
© Taylor & Francis 2016

25. 1.1 Definition of CRM and CRM Applications5 Key Processes
that help define CRM:Strategy developmentValue
creationMultichannel integrationInformation
managementPerformance assessment
© Taylor & Francis 2016
1.1 Definition of CRM and CRM ApplicationsDefinitions of
CRM can be grouped as:Those that equate CRM with a software
package, process, system, or technology.Those that equate CRM
with a focus on data storage and analysis.Those that equate
CRM with a change in corporate culture from a transaction
focus to a relationship or customer-centric focus.Those that
equate CRM with the important concept of “managing
demand.”Those that equate CRM with new strategies focused on
current customers.
© Taylor & Francis 2016
1.1 Definition of CRM and CRM ApplicationsWhen CRM is
viewed in terms of systems, it must:Gather customer data from
all touch pointsWarehouse the data, providing easy access for
all Deliver useable information based on the data

26. © Taylor & Francis 2016
1.1 Definition of CRM and CRM ApplicationsA comprehensive
CRM system should contain four major technology
components:A data warehouseAnalytical tools Campaign
management toolsInterfaces
© Taylor & Francis 2016
1.1 Definition of CRM and CRM ApplicationsWhen CRM
systems fail, it tends to be as a result of cultural, as opposed to
technological, issues.Many companies focus on the opposite of
“relationship” (i.e., on the transaction itself).Transaction
marketing views the sale as the end of the relationship, whereas
relationship marketing views the sale as the
beginning.Relationships require two-way communications
between customers and the organization.
© Taylor & Francis 2016
1.1 Definition of CRM and CRM ApplicationsCompanies should
not necessarily make it their goal to attract the greatest number
of customers.By giving a product away free, a company can
achieve 100 percent market share.But, it would not be in
business long.A company should make its goal to attract the
greatest number of profitable customers.

27. © Taylor & Francis 2016
1.1 Definition of CRM and CRM Applications“Management” is
also important when defining CRM as it pertains to the
organization’s ability to develop strategies that attract and
retain customersManagement = the identification of prospects,
selection and acquisition of relevant prospects, and
development of the relationshipManaging strategies and tactics
requires effective planning and effective and timely
implementation
© Taylor & Francis 2016
1.1 Definition of CRM and CRM ApplicationsCRM is founded
on four tenets: Customers should be managed as important
assetsNot all customers are equally desirableCustomers vary in
their needs, preferences, and buying behaviorBy better
understanding their customers, companies can tailor their
offerings to maximize overall value
© Taylor & Francis 2016
1.1 Definition of CRM and CRM ApplicationsThe more a
company knows its customers, the greater the opportunity to
increase market penetration and share of wallet

28. This leads to greater market share and the opportunity to trade
customers up and increase the speed of new product acceptance
Which eventually leads to quickened cash flow with less
volatility and risk
© Taylor & Francis 2016
1.1 Definition of CRM and CRM Applications
Add a hyphen after “Up” on the right, if editing the image is
possible. -MG
© Taylor & Francis 2016
1.2 The Purpose and Benefits of CRMThe focus of CRM is the
customer, particularly all existing onesThe knowledge base
contained in a CRM system will, in fact, aid in the acquisition
of new customersAs companies gather information about their
current customers, view their purchase history and interactions
with the organization, compute customer lifetime value, and
understand what motivates them to increase their purchases or
trade up to higher-priced items, the company forms a knowledge
base that will enable them to attract others

29. © Taylor & Francis 2016
1.2 The Purpose and Benefits of CRMAs companies gather
information about current customers who buy infrequently, buy
only when products or services are on sale, frequently return
merchandise, and complain often, the company can avoid
attracting similar customersMany nonusers are long-time
customers, so the purpose of CRM systems is not simply to
retain customers, nor is the purpose simply to please customers
© Taylor & Francis 2016
1.2 The Purpose and Benefits of CRMA good CRM system
identifies potentially profitable and unprofitable customers
early onTo create value, CRM systems sometimes point toward
de-marketing to certain groupsFor example, it may benefit a
company to add or raise fees to certain customers in order to
either make them profitable or drive them away
© Taylor & Francis 2016
1.2 The Purpose and Benefits of CRMCRM systems are being
used because they can enhance productivity across the range of
key marketing functions:Identifying prospectsAcquiring
customersDeveloping customersCross-
sellingUpsellingManaging

30. migrationServicingRetainingIncreasing loyaltyWinning back
defectors
© Taylor & Francis 2016
1.2 The Purpose and Benefits of CRMFour Steps in
CRM:Identify your customers in as much detail as possible,
including demographics, psychographics, habits, and
preferencesDifferentiate among them (for example, most and
least profitable)Interact with your customers (make this
interaction more cost effective through automation whenever
possible)Customize your offerings to fit each customer’s needs
through mass customization or individual tailoring
© Taylor & Francis 2016
1.2 The Purpose and Benefits of CRM
Objectives of CRMIdentification of potential
customersUnderstanding of customer needs, both current and
latentDifferentiating profitable from unprofitable customers and
segmentsDecreasing attrition by increasing value and
satisfactionIncreasing usage of current products and
servicesIncreasing usage of a greater number of a company’s
products and servicesIncreasing usage of more prestigious items
produced by a company (trading up)Increasing customer service
and satisfactionImproving campaign managementIncreasing
referralsWinning back lost customersMoving customers up the

31. relationship hierarchy from strangers to acquaintances to friends
to partnersIntegrating marketing and sales efforts throughout
the various channels used by the company
© Taylor & Francis 2016
1.3 The Tangible Components of CRMTangible components to
CRM:Data warehousesCustomer touch pointsCustomer call
centersSales-force automation360-degree view of customers
© Taylor & Francis 2016
1.3 The Tangible Components of CRM
Basic Architecture of a CRM System
© Taylor & Francis 2016
1.3 The Tangible Components of CRMMultichannel MarketingIs
the variety of channels (store, telephone, ATM/kiosk, catalog,
social networks, and online) that consumers use to interact and
transact with an organizationMultichannel users have two to
four times more to spendIn retail banking they are 25-50
percent more profitable

32. © Taylor & Francis 2016
1.3 The Tangible Components of CRM
The Multichannel Customer Buys More
© Taylor & Francis 2016
1.3 The Tangible Components of CRMTouch Pointsany point of
contact that a customer or prospect has with a companycan be
an inquiry over the phone, in person, or via e-mailSocial media
channelsInternet forums, blogs, microblogs (e.g., Twitter), and
social networking sites (e.g., Facebook)Short message service
(SMS)messages sent to people in a business’s market area using
geolocators and systems provided by a Web-based service
provider
© Taylor & Francis 2016
1.3 The Tangible Components of CRMCall Centerwhere
customer communications occurfewer than 10% of call centers
are based outside the U.S.telephone-centeredContact

33. Centerextends coverage to telephone, mail, fax, and e-
mailCustomer Interaction Center has the ability to generate
revenue for the organizationextends across all channels and
functions
© Taylor & Francis 2016
1.3 The Tangible Components of CRMSales-Force
Automationoriented toward developing customer relationships
and improving satisfaction360-Degree Viewcompanies should
treat customers throughout the business cycle based on their
lifetime profitability focus on profitability, not revenue or value
© Taylor & Francis 2016
1.4 Customer Lifetime Value (CLV) and Second Lifetime Value
(SLTV)Customer lifetime value (CLV) = the net present value
of the future profits to be received from a given number of
newly acquired or existing customers during a specified period
of yearsLifetime value (LTV) = the net present value of the
customer’s profitability throughout the customer-firm
relationshipSecond lifetime value (SLTV) = focuses on only the
net present value generated after a customer has been reacquired

34. © Taylor & Francis 2016
1.5 Who Uses CRM and Why?Firms develop CRM systems for
the following reasons:To increase customer retention and
customer loyaltyTo stay even with their competitionTo attempt
to differentiate themselves from their competitors based on their
ability to provide outstanding customer serviceTo encourage
development of customer communities and social networks
© Taylor & Francis 2016
1.5 Who Uses CRM and Why?
The Types of Companies Benefiting Most and Least from CRM
Systems
Requirements
Below is the link for the book! Please use chapter 1 for this
assignment.
Follow the steps below .
Please send me any questions before starting
it's a huge assignment for me
https://www.google.com/books/edition/Customer_Relationship_
Management/KW6uDQAAQBAJ?hl=en&gbpv=1&dq=Customer
+Relationship+Management:+The+Foundation+of+Contemporar
y+Marketing+Strategy,+2nd+Ed.,+by+Roger+J.+Baran+%26+R

35. obert+J.+Galka&printsec=frontcover
1. Choose 1 chapter that we have already studied from the
textbook that interests you.
2. Choose 1 article from a newspaper, journal, or other
periodical (can be web-based as long as it is a newspaper,
journal, or periodical - NOT a blog or opinion piece) that
represents a concept(s) of that chapter (or portion of the
chapter).
3. Choose 3 web sites that provide useful information about
that concept(s) of that chapter.
4. Your research paper must be at least 3 but no more than 4
written, double-spaced pages. Your paper should use the
Footnote Citation method for citing and documenting your
secondary sources (instead of, for example APA or MLA Style).
See Footnote Citations in the "Essentials for Students" Module.
5. Review the Grading Rubric for this research paper.
Use the following headings in your research paper (use a larger
font, bolded font, or underlined font to designate headings):
Introduction
· include a first paragraph, 2-3 sentences, that introduces the
topic of your research paper (be sure to include the chapter
number from your textbook)
· discuss in 1 paragraph why this topic interests you, why this
topic is important to you, and why this topic should be
important to the reader
· describe the topic in 2-3 paragraphs, going beyond what the
textbook says. Assume the reader knows nothing about the topic
and needs to have a good understanding of your topic after
reading the introduction. Include some information from some
of your secondary sources here to provide an in-depth
description of the topic. Your Introduction should be no longer
than 1 page long.
Key Knowledge
· This section should be the bulk of your paper - so 2-3 pages
long. What have you learned about this topic through your
research? Include your secondary sources. Do not simply list

36. each secondary source and describe it in order (e.g., In XXXX,
Smith indicated that . . . . In XXXX, Godsend described . . . . "
Rather, find commonalities and differences in your sources,
organize your information, and integrate the secondary sources
together (e.g., both Smith and Godsend agree that . . . . " (This
is a crucial critical thinking piece!)
· Provide examples of this topic from your life experiences
(professional and/or personal). You can provide this as a
separate paragraph or integrate it into the information above.
Future Research
· This section should be at least one paragraph long. Provide
information here about gaps in the research or your knowledge
concerning this subject.