Why Customer Relationship Management? What Makes CRM Viable?

Customer Relationship Management
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Ankit Kedia
Australia

Why Customer Relationship Management? What Makes CRM Viable?

What makes CRM a viable option is the cost dynamics
- The cost of getting a new customer is 4 times the cost of retaining an existing customer.
- 80% of a firm's business comes from 20% of the customers.
Hence the firm should channelise its efforts in retaining this 20% section of customers through its CRM activities.

  Emiel Veenstra
Business Consultant, Netherlands
 

What Makes Customer Relationship Management Viable

Ankit, I completely agree. Although one important factor should not be forgotten: to check whether the customer, even if he is one of the 20%, is profitable.
So, I think this is an element you should add to CRM: Only keep the customers that are profitable.
Therefor the company must have the possibility to calculate the real costs and thus profits per customer.

  Stefania Escobar
Student (University), Colombia
 

Viability of Customer Relationship Management (CRM)

I agree too! And one way of estimating customer profitability is the CLV (Customer Lifetime Value) Concept, a good approach to know what will be the expected purchase behavior.
Customer Loyalty Programs look to improve customer retention rate, customer profitability and reduce marketing costs.

  Tracking Works
Manager, United States
 

Customer Relationship Management is not Just Signing New Customers

One of the main functions of CRM can be to increas (...)

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