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Customer Relationship Management And Applications of Data Mining Techniques In Business-to-Business Industry
Customer Relationship Management (CRM): The Concept
Firms today are becoming more aware of the fundamental changes of customer relationships and the need to implement new solutions and strategies that address these changes (Rygielski et el. 2002). And thus the concept of CRM has been introduced.
Definition of CRM:
CRM is an enterprise-wide business strategy designed to optimize profitability, revenue and customer satisfaction by organizing an enterprise around customer segments, fostering customer-satisfying behaviours and linking processes from customers through suppliers. (Collins 2001)
Functions of CRM:
CRM requires the firm to know and understand its markets and customers. This involves detailed customer intelligence in order to select the most profitable customers and identify those no longer worth targeting. CRM also entails development of the offer: which products to sell to which customers and through which channel. In selling, firms use campaign management to increase the marketing department’s effectiveness. Finally, CRM seeks to retain its customers through services such as call centres and help desks. (Rygielski et el. 2002)
Many practitioners recognise that keeping customers is more profitable than attracting new customers (Bitran and Mondschein, 1997). According to Srivastava et el. (2002), to acquire a new customer costs five to seven times more than to retain an existing one. Hence, many companies are adopting CRM as a means to develop and maintain successful customer relationship (Verhoef and Donkers, 2001). This generally accepted view on the motive of adopting CRM focuses more on maintaining the relationship of existing customers, not on acquiring new customers. However, acquiring new customers, which can be viewed as Customer Relationship Establishment (CRE), should form a part of Customer Relationship Management. My arguments are a) a
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