Showing papers on "Customer relationship management published in 2005"

A Strategic Framework for Customer Relationship Management

Abstract: In this article, the authors develop a conceptual framework for customer relationship management (CRM) that helps broaden the understanding of CRM and its role in enhancing customer value and, as a result, shareholder value. The authors explore definitional aspects of CRM, and they identify three alternative perspectives of CRM. The authors emphasize the need for a cross-functional, process-oriented approach that positions CRM at a strategic level. They identify five key cross-functional CRM processes: a strategy development process, a value creation process, a multichannel integration process, an information management process, and a performance assessment process. They develop a new conceptual framework based on these processes and explore the role and function of each element in the framework. The synthesis of the diverse concepts within the literature on CRM and relationship marketing into a single, process-based framework should provide deeper insight into achieving success with CRM strategy...

The Effects of Customer Satisfaction, Relationship Commitment Dimensions, and Triggers on Customer Retention

Abstract: In a study of telecommunications services, the authors examine the effects of customer satisfaction, affective commitment, and calculative commitment on retention. The study further examines the potential for situational and reactional trigger conditions to moderate the satisfaction–retention relationship. The results support consistent effects of customer satisfaction, calculative commitment, and prior churn on retention. Prior churn also moderates the satisfaction–retention relationship. The results have implications for both customer relationship managers and researchers who use satisfaction surveys to predict behavior.

The Role of Relational Information Processes and Technology Use in Customer Relationship Management

Abstract: Drawing on the relationship marketing and market information processing literature streams, the authors conceptualize and measure relational information processes, or organizational routines that are critical for customer relationship management (CRM). The authors examine the key drivers and outcome of relational information processes and the role of technology in implementing CRM using data collected from a diverse sample of firms. The results show that relational information processes play a vital role in enhancing an organization's customer relationship performance. By moderating the influence of relational information processes on customer relationship performance, technology used for CRM performs an important and supportive role. The study provides insights into why the use of CRM technology might not always deliver the expected customer relationship performance outcome.

A Customer Relationship Management Roadmap: What Is Known, Potential Pitfalls, and Where to Go

Abstract: The goal of this preface is to describe how the special section on customer relationship management (CRM) was developed. In May 2003, Richard Staelin, Executive Director of the Teradata Center for Customer Relationship Management at Duke University, proposed that Journal of Marketing (JM) publish a special section. The proposal included activities that were designed to promote interactions among marketing academics and practitioners; the goal was to stimulate dialogue and new research on CRM. I found the proposal attractive because CRM is a broad-based topic that interests many marketers. After extensive discussion, the American Marketing Association (AMA) and the Teradata Center formally agreed to cosponsor the special section. Subsequently, there was a conference on Relationship Marketing and Customer Relationship Management (cochaired by Michael Ehret, Wesley Johnston, Michael Kleinaltenkamp, and Lou Pelton) that took place at Freie Universitat Berlin in the summer of 2003; a conference on Cus...

Understanding organization-customer links in service settings.

Abstract: We develop a framework of service-unit behavior that begins with a unit's leader's service-focused behavior and progresses through intermediate links (service climate and customer-focused organizat...

Valuing customers

Abstract: This paper considers the metric of customer lifetime value as a way of placing an expected future value on a company's customers. This approach looks at the fundamental contribution a customer makes to a company's profits. The basic concept is useful in its own right, but it also allows an analogue between a customer and the equity of the company to be drawn. This allows the customer to be considered as a revenue-producing asset. Financial engineering tools, such as portfolio and options theory, then become natural means to analyse the customer's value further. In particular, the uncertainty in the future profits created by a customer can be shown to create an added dimension to the value a customer brings to the business. The results from these analyses can be used to guide customer relationship strategy. Better decisions on the levels of investments in customers and customer services, and their timings, can also be made.

Data mining applications in healthcare.

Abstract: Data mining has been used intensively and extensively by many organizations. In healthcare, data mining is becoming increasingly popular, if not increasingly essential. Data mining applications can greatly benefit all parties involved in the healthcare industry. For example, data mining can help healthcare insurers detect fraud and abuse, healthcare organizations make customer relationship management decisions, physicians identify effective treatments and best practices, and patients receive better and more affordable healthcare services. The huge amounts of data generated by healthcare transactions are too complex and voluminous to be processed and analyzed by traditional methods. Data mining provides the methodology and technology to transform these mounds of data into useful information for decision making. This article explores data mining applications in healthcare. In particular, it discusses data mining and its applications within healthcare in major areas such as the evaluation of treatment effectiveness, management of healthcare, customer relationship management, and the detection of fraud and abuse. It also gives an illustrative example of a healthcare data mining application involving the identification of risk factors associated with the onset of diabetes. Finally, the article highlights the limitations of data mining and discusses some future directions.

CRM: conceptualization and scale development

Abstract: Purpose – To develop a reliable and valid measuring scale for customer relationship management (CRM).Design/methodology/approach – A series of studies were conducted for the development and validation of multiple measures for the dimensions of CRM. Once the dimensions of CRM were identified, data from study 1 (n=150 business executives attending a part‐time MBA program) were used to select items based on factor analysis. Then, confirmatory factor analyses was used on data obtained from a mail survey of Hong Kong financial firms in study 2 (n=215) to examine factor structure, as well as to provide evidence of dimensionality, scale reliability and validity. Finally, in study 3, data from 276 business executives attending a seminar on CRM were used to test the scale generalizability of CRM measures in various industries.Findings – A reliable and valid scale was developed to measure the four dimensions of CRM: key customer focus, CRM organization, knowledge management and technology‐based CRM.Research limitat...

Modeling consumer satisfaction and word‐of‐mouth: restaurant patronage in Korea

Abstract: Purpose – The research seeks to extend the notions of utilitarian and hedonic value to account for outcomes of consumer service encounters.Design/methodology/approach – The research question is examined using a sample of Korean restaurant consumers who used a structured questionnaire to evaluate their dining experience. Structural equations analysis is used to test various research hypotheses and examine the extent to which consumer service value mediates the effect of the environment on customer satisfaction and future intentions.Findings – Key findings include the ability of the consumer service value scale to account for utilitarian and hedonic value, the role of functional and affective service environment components in shaping consumer satisfaction and future patronage intentions and the relative diagnosticity of positive affect.Research limitations/implications – There is a need to extend the results to a diverse range of cultures.Practical implications – Restaurant managers should place increased e...

Determinants of Customers' Responses to Customized Offers: Conceptual Framework and Research Propositions

Abstract: Marketers have been challenged by proponents of individual (one-to-one) marketing to shift from focusing on market segments to making individually customized offers. Building on current knowledge regarding the construction of customers’ preferences, the author examines the basic assumptions underlying individual marketing and presents a process model of customers’ responses to customized offers. The model addresses (1) preference development, (2) evaluation of customized offers, (3) likelihood of purchasing the customized offers, and (4) maintenance of relationships with one-to-one marketers. The analysis leads to specific propositions regarding determinants of customers’ responses to customized offers. The author discusses future research directions and managerial implications.

Customer relationship management research (1992‐2002): An academic literature review and classification

Abstract: Purpose – To review the academic literature on customer relationship management (CRM), provide a comprehensive bibliography and propose a method of classifying that literature.Design/methodology/approach – A range of online databases were searched to provide a comprehensive listing of journal articles on CRM. Six hundred articles were identified and reviewed for their direct relevance to CRM. Two hundred and five articles were subsequently selected. Each of these articles was further reviewed and classified. The review and classification process was independently verified. All papers were allocated to the main and sub‐categories based on the major focus of each paper.Findings – Papers and research on CRM falls into five broad categories (CRM – General, Marketing, Sales, Service and Support, and IT and IS) and a further 34 sub‐categories. The most popular areas covered by the papers lay in the sub‐category of CRM management, planning and strategy; and CRM general, concept, and study followed by papers in s...

Gaining customer knowledge through analytical CRM

Abstract: Purpose – This paper aims to examine how customer relationship management (CRM) systems are implemented in practice with a focus on the strategic application, i.e. how analytical CRM systems are used to support customer knowledge acquisition and how such a system can be developed.Design/methodology/approach – The current practice of CRM application is based on examining data reported from a four‐year survey of CRM applications in the UK and an evaluation of CRM analytical functions provided by 20 leading software vendors. A conceptual model of an analytical CRM system for customer knowledge acquisition is developed based on the findings and literature review.Findings – Current CRM systems are dominated by operational applications such as call centres. The application of analytical CRM has been low, and the provision of these systems is limited to a few leading software vendors.Practical implications – The findings shed light on the potential area in which organisations can strategically use CRM systems. I...

Strategic firm commitments and rewards for customer relationship management in online retailing

Abstract: Academic studies offer a generally positive portrait of the effect of customer relationship management (CRM) on firm performance, but practitioners question its value. The authors argue that a firm's strategic commitments may be an overlooked organizational factor that influences the rewards for a firm's investments in CRM. Using the context of online retailing, the authors consider the effects of two key strategic commitments of online retailers on the performance effect of CRM: their bricks-and-mortar experience and their online entry timing. They test the proposed model with a multimethod approach that uses manager ratings of firm CRM and strategic commitments and third-party customers' ratings of satisfaction from 106 online retailers. The findings indicate that firms with moderate bricks-and-mortar experience are better able to leverage CRM for superior customer satisfaction outcomes than firms with either low or high bricks-and-mortar experience. Likewise, firms with moderate online experie...

Predicting customer retention and profitability by using random forests and regression forests techniques

Abstract: In an era of strong customer relationship management (CRM) emphasis, firms strive to build valuable relationships with their existing customer base. In this study, we attempt to better understand three important measures of customer outcome: next buy, partial-defection and customers' profitability evolution. By means of random forests techniques we investigate a broad set of explanatory variables, including past customer behavior, observed customer heterogeneity and some typical variables related to intermediaries. We analyze a real-life sample of 100,000 customers taken from the data warehouse of a large European financial services company. Two types of random forests techniques are employed to analyze the data: random forests are used for binary classification, whereas regression forests are applied for the models with linear dependent variables. Our research findings demonstrate that both random forests techniques provide better fit for the estimation and validation sample compared to ordinary linear regression and logistic regression models. Furthermore, we find evidence that the same set of variables have a different impact on buying versus defection versus profitability behavior. Our findings suggest that past customer behavior is more important to generate repeat purchasing and favorable profitability evolutions, while the intermediary's role has a greater impact on the customers' defection proneness. Finally, our results demonstrate the benefits of analyzing different customer outcome variables simultaneously, since an extended investigation of the next buy-partial-defection-customer profitability triad indicates that one cannot fully understand a particular outcome without understanding the other related behavioral outcome variables.

Customer Relationship Management: A Databased Approach

Abstract: Preface. PART I: DATABASE MARKETING STRATEGY. Chapter 1. CRM, Database Marketing, and Customer Value. Chapter 2. CRM Industry Landscape. Chapter 3. Strategic CRM. Chapter 4. Implementing the CRM Strategy. Chapter 5. Introduction to Customer-Based Marketing Metrics. Chapter 6. Customer Value Metrics-Concepts and Practices. PART II: IMPLEMENTATION OF DATABASE MARKETING. Chapter 7. Using Databases. Chapter 8. Designing Loyalty Programs. Chapter 9. Effectiveness of Loyalty Programs. Chapter 10. Data Mining. Chapter 11. Campaign Management. PART III: ADVANCES IN CRM APPLICATIONS. Chapter 12. Applications of Database Marketing in B-to-C and B-to-B Scenarios. Chapter 13. Application of the Customer Value Framework to Marketing Decisions. PART IV: CHANNELS AND CRM. Chapter 14. Impact of CRM on Marketing Channels. Glossary. Index.

Cross-Selling Sequentially Ordered Products: An Application to Consumer Banking Services:

Abstract: Customers have predictable life cycles. As a result of these life cycles, firms that sell multiple products or services frequently observe that, in general, certain items are purchased before others. This predictable phenomenon provides opportunities for firms to cross-sell additional products and services to existing customers. This article presents a structural multivariate probit model to investigate how customer demand for multiple products evolves over time and its implications for the sequential acquisition patterns of naturally ordered products. The authors investigate customer purchase patterns for products that are marketed by a large midwestern bank. Among the substantive findings are that women and older customers are more sensitive to their overall satisfaction with the bank than are men and younger customers when determining whether to purchase additional financial services, and households whose head has a greater level of education or is male move more quickly along the financial ma...

Optimizing the Marketing Interventions Mix in Intermediate-Term CRM

Abstract: We provide a fully personalized model for optimizing multiple marketing interventions in intermediate-term customer relationship management (CRM). We derive theoretically based propositions on the moderating effects of past customer behavior and conduct a longitudinal validation test to compare the performance of our model with that of commonly used segmentation models in predicting intermediate-term, customer-specific gross profit change. Our findings show that response to marketing interventions is highly heterogeneous, that heterogeneity of response varies across different marketing interventions, and that the heterogeneity of response to marketing interventions may be partially explained by customer-specific variables related to customer characteristics and the customer's past interactions with the company. One important result from these moderating effects is that relationship-oriented interventions are more effective with loyal customers, while action-oriented interventions are more effective with nonloyal customers. We show that our proposed model outperformed models based on demographics, recency-frequency-monetary value (RFM), or finite mixture segmentation in predicting the effectiveness of intermediate-term CRM. The empirical results project a significant increase in intermediate-term profitability over all of the competing segmentation approaches and a significant increase in intermediate-term profitability over current practice.

The priority factor model for customer relationship management system success

Abstract: As the market competition becomes keen, constructing a customer relationship management system is coming to the front for winning over new customers, developing service and products for customer satisfaction and retaining existing customers However, decisions for CRM implementation have been hampered by inconsistency between information technology and marketing strategies, and the lack of conceptual bases necessary to develop the success measures Using a structural equation analysis, this study explores the CRM system success model that consists of CRM initiatives: process fit, customer information quality, and system support; intrinsic success: efficiency and customer satisfaction; and extrinsic success: profitability These constructs underlie much of the existing literature on information system success and customer satisfaction perspectives We found the empirical support for CRM implementation decision-making from 253 respondents of 14 companies which have implemented the CRM system These findings should be of great interest to both researchers and practitioners

Loyalty trends for the twenty‐first century

Abstract: Purpose – As loyalty marketing programs have reached a state of maturity, the aim of this paper is to outline the key loyalty‐marketing trends for the twenty‐first century that can serve as guideposts as marketers create, expand and revamp their loyalty and customer relationship management (CRM) strategies.Design/methodology/approach – The paper uses data and statistics from numerous loyalty‐marketing programs to support its conclusions.Findings – Five key loyalty‐marketing trends are identified and explored in detail: ubiquity; technology enables but imagination wins; coalition lite; customer analytics; and the Wow! factorPractical implications – The challenge for marketers is to reinvigorate the market with new strategies, tactics, and technologies backed by imagination, innovation and sound program design. The five key loyalty‐marketing trends for the twenty‐first century identified in this paper can serve as guideposts as marketers create, expand and revamp their loyalty and CRM strategies in the new ...

Reducing Adverse Selection through Customer Relationship Management

Abstract: Adverse selection is an important problem for marketers. To reduce the chances of acquiring an unprofitable customer, companies may screen prospects who respond to a marketing offer. Prospects who respond are often not approved. At the same time, prospects who are likely to be approved are unlikely to respond to a given marketing offer. Using data from a firm's customer relationship management system, the authors show how to target prospects who are likely to respond and be approved. This approach increases the number of customers who are approved and reduces the number of applicants who may defect after being turned down. This method can be extended to new customer acquisition and more effective targeting of costly promotions to migrate customers to higher levels of lifetime value.

Designing the Customer-Centric Organization: A Guide to Strategy, Structure, and Process

Abstract: Preface. The Author. Introduction. 1. Surviving the Customer Revolution. The Status Quo Has to Go. The Customer-Centric Imperative. The Rise of the Customer Dimension. Strategy and Organization Model. Conclusion. 2. Customer-Centricity: How Much Is Enough? Customer Relationship Strategies. The Strategy Locator. Creating a Lateral Networking Capability. Conclusion. 3. Light-Level Application. Customer Lite. Degussa Automotive Catalysts Division. Learnings and Salient Features. 4. Medium-Level Application. The Global Investment Bank Case. Lessons from IBank. 5. Complete-Level Application. Complex Solutions and Customer-Centric Organizations. IBM. Lessons Learned. 6. Alternate High-Level Solutions Companies. Nokia Networks. Procter & Gamble. The Capability That Citibank Built. How to Manage the Change Process. Conclusion. 7. Designing a Customer-Centric Organization. The Semiconductor Company. Learnings and Salient Points. 8. Leading Through Management Processes. Leading Strategic Change. Linking Processes. Reconciling Strategies. Portfolio Planning and Solutions Development. Opportunity Management Process. Conclusion. References. Index.

Customer Relationship Management: A Comparative Analysis of Family and Nonfamily Business Practices*

Abstract: It has been reported that family businesses perceive excellent customer service as critical to the future of their businesses. However, little research into the customer relationship management (CRM) practices of family businesses has been performed. In this study, we examine CRM implementation among 82 family and 370 nonfamily firms. Family and nonfamily businesses report similar attitudes toward the importance of CRM, their knowledge of CRM, and their success when they do implement it. However, using a logit regression model, we find that the actual implementation strategies of family businesses are significantly different from those of nonfamily businesses. These results remain constant when controlling for size and industry sector.

Determinants of customer loyalty and share of wallet in retail banking

Abstract: Previous research has investigated the determinants and consequences of customer loyalty, but, in banking, a critical measure largely neglected in previous studies is the customer's ‘share of wallet’. This study, based on a survey of 1,924 retail banking customers, suggests that a large proportion of the variance in stated behavioural intentions can be predicted, in particular, by customers' attitude measures. More importantly, the study shows that a substantial amount of the variance in share of wallet can be predicted, allowing banks to identify and focus on customer segments where there is most potential for growth. In recognition of the fact that dissatisfied customers are a distinct segment, the study models actual behaviour in terms of share of wallet for dissatisfied customers. Implications for research and for business are discussed.

What Customers Want: Using Outcome-Driven Innovation to Create Breakthrough Products and Services

Abstract: A world-renowned innovation guru explains practices that result in breakthrough innovations. Twenty years into the customer-driven innovation movement, breakthroughs are rare and these failures cost Fortune 1000 companies between $50 million and $800 million each year. Growing out of Anthony Ulwick's revolutionary "Harvard Business Review" article and featured in Clayton Christensen's new bestseller, "The Innovator's Solution", "What Customers Want" describes a groundbreaking approach that improves on the conventional methods for product and service innovation.

Intelligent profitable customers segmentation system based on business intelligence tools

Abstract: For the success of CRM, it is important to target the most profitable customers of a company. Many CRM researches have been performed to calculate customer profitability and develop a comprehensive model of it. Most of them, however, had some limitations and accordingly the customer segmentation based on the customer profitability model is still underutilized. This paper aims at providing an easy, efficient and more practical alternative approach based on the customer satisfaction survey for the profitable customers segmentation. We present a multi-agent-based system, called the survey-based profitable customers segmentation system that executes the customer satisfaction survey and conducts the mining of customer satisfaction survey, socio-demographic and accounting database through the integrated uses of business intelligence tools such as DEA (Data Envelopment Analysis), Self-Organizing Map (SOM) neural network and C4.5 for the profitable customers segmentation. A case study on a Motor company's profitable customer segmentation is illustrated.

Method and apparatus for consumer interaction based on spend capacity

Abstract: Share of Wallet (“SoW”) is a modeling approach that utilizes various data sources to provide outputs that describe a consumer's spending capability, tradeline history including balance transfers, and balance information. These outputs can be appended to data profiles of customers and prospects and can be utilized to support decisions involving prospecting, new applicant evaluation, and customer management across the lifecycle. In addition to credit card companies, SoW outputs may be useful to companies issuing, for example: private label cards, life insurance, on-line brokerages, mutual funds, car sales/leases, hospitals, and home equity lines of credit or loans. “Best customer” models can correlate SoW outputs with various customer groups. A SoW score focusing on a consumer's spending capacity can be used in the same manner as a credit bureau score.

Customer Knowledge Management Competence: Towards a Theoretical Framework

Abstract: Customer knowledge has been increasingly recognized as a key strategic resource in any company's success. Recent studies conducted in the fields of Knowledge Management and Customer Relationship Management have proposed that the two approaches can have great synergies. In this paper, our purpose is to provide an understanding of Customer Knowledge Management (CKM) as an integrated management approach and competence it requires. We describe CKM as an ongoing process of generating, disseminating and using customer knowledge within an organization and between an organization and its customers. In addition, we propose a tentative theoretical framework of CKM competence, i.e., the ability to integrate customer knowledge into customer relationship management processes.