Statistical Models For Customer Relationship Management
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INTRODUCTION Customer Relationship Management (CRM) enabIes an organization to better manage relationships with customers, distributors and dealers among others. CRM is a process to compile information that increases understanding of how to manage an organizations relationship with its customers. It can be considered as a process of storing and analyzing the vast amounts of data produced by sales calls, customer service centers, and actual purchase etc. CRM'S goal is to increase the opportunity of (customers buying again) by improving the process to communicate with the right customer, providing the right offer (product and price) through the right channel, and the right time. CRM integrates marketing, sales and service functions through business process automation, technology solutions and information sources to maximize each customer contact. Generally companies compute Recency, frequency and Monetary (RFM) score for each customer in order to determine the likelihood the customer will respond favorably to an offer, promotion or catalogue. RFM measures have shortcomings, however they ignore the pacing of customer's purchases; ie., the time between each purchase. This can result in over investment on lapsed customers. Many organizations have reaped the benefits of CRM such as retaining and pleasing the right kind of customers, gaining repeat purchase and increasing profitability. There are three major ways in which organizations can overcome the barriers to effective CRM implementation: (i) Through communication (ii) Through integration and (iii) Through foresight in relating CRM functions to the tactics that drive success in their companies,
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