Learnings LinPersonal

I would like to share my learning that I had at LinPersonal

The topic that I would like to talk about is Customer Relationship Management and few other terms that are related with the topic.
Let me start with a very fundamental definition of CRM.

“It’s the evolving practice of understanding customer behavior and reacting to it in order to maximize profitability”.

One of the important points to understand under CRM is Lifetime Customer Value
There are two ways to calculate it.
Absolute – Difficult to calculate
Relative – Easy to calculate

Customer behavior changes over time and these changes are clues to the future. These changes over time are referred as the customer life cycle.

We should also look at RFM Model if we talk about CRM

RFM Model – Recency, Frequency, Monetary
RFM is directly proportional to Life Time Value.

Customers are labeled as best or worst then mails are sent to both. Then their responses are compared. Cut back mail to worst and spend more on best customers.

Also we try to optimize -
Optimize - spend more to increase response rate from the customers while cut down costs on discounts.

Another thing that should be considered is
Customer Retention
Hold on to most valuable customers
Make less valuable customers more valuable

Customer loyalty programs are very important

Data is a very important part of marketing

Data Driven Marketing
1 Allocating marketing resources
2 Customer behavior is more effective than just demographics
3 Make customers feel good about their decisions
4 Actions ------- Reaction ------ Feedback ------ Repeat

Data speaks

Hurdle Rate – The percentage of customers demonstrating a certain level of the behavior being profiled.

Marketing programs comes from one basic concept – tracking, understanding, and profiting from the customer lifecycle.

ROI – It’s the amount of money spent divided by the net profit generated over a defined length of time.

Simple CRM

Measure – evaluates current customer retention situation
Manage – implements customer retention marketing and training program.
Maximize – creates a feedback loop for continuous employee learning.

CRM can generate increased profitability
Reducing costs
Increasing customer value

Kavita