Impact of Crm on Customer Retention

4714 Words Jul 28th, 2010 19 Pages
ABSTRACT CRM (Customer Relationship Management) is an integrated approach to identifying, acquiring, retaining and delighting customers. The purpose of this thesis is to analyze the impact of Customer Relationship Management Process on Customer Retention with reference to Banking Sector. We describe the objectives of Customer Relationship Management (CRM) in Customer Retention which is very important for the survival of companies in today’s competitive environment. CRM helps organizations maximize the value of every customer interaction and drive superior corporate performance. The challenge is to make it easy for customers to do business with the organization any way they want at any time, through any channel, in any language or …show more content…
On the other hand, in the world of relationship marketing, attention shifted to retention. This happened mainly because of the cost involved. In general, it is believed that “it is five to 10 times more expensive to acquire a new customer than obtain repeat business from an existing customer.”As the needs of customers became diversified, conventional promotions became less efficient and drove up costs. According to the well-known empirical “Pareto principle,” it is assumed that 20 percent of a company’s customers generate 80 percent of its profits.2 In other words; retention of a large customer base is a major issue. Birth of Customer Relationship Management In this context, CRM came into existence in the late 1990’s. Although there is no clear definition of CRM, Jeffrey Peel, CEO of Quadriga Consulting, defined it as follows: [CRM] is about understanding the nature of the exchange between customer and supplier and managing it appropriately. The exchange contains monetary considerations between supplier and customer – but also communication. The challenge to all supplier organizations is to optimize communications between parties to ensure profitable long-term relationships. CRM is a key focus for many organizations now as a shift away from customer acquisition toward customer-retention and churn reduction strategies dictates a need for best practice CRM processes. “Share of Wallet” and Life Time Value In the age of target
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