Why Customer Relationship Management? What Makes CRM Viable?

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Why Customer Relationship Management? What Makes CRM Viable?
Ankit Kedia, Member
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.

What Makes Customer Relationship Management Viable
Emiel Veenstra, Member
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.

Viability of Customer Relationship Management (CRM)
Stefania Escobar, Member
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.

Customer Relationship Management is not Just Signing New Customers
Tracking Works, Member
One of the main functions of CRM can be to increase the spend of your current clients. Make them realize why they need additional services you can provide. CRM should never just be focused on signing new clients or bringing in new business. CRM should also apply to your current clients that you feel have room for growth.


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