The paper 'Effects of Customer Acquisition and Retention Orientations" is a perfect example of a Marketing Assignment. The world has increasingly become globalized meaning that the market for various goods and services has also enlarged. This has come to the challenge of increased competition and a more enlightened customer with more complicated needs and wants. In a bid to deal with the challenges, the concept of customer relationship management has been developed to manage the company’ s interaction with its current and potential future customers. This is aimed at helping improve business relationships with customers by focusing on customer retention hence ultimately driving sales growth.
CRM encompasses attending to the customers’ needs at the various stages of the customer lifecycle. In a bid to gauge the effectiveness of a company’ s CRM efforts, the management usually come up with key performance indicators (KPIs) the achievement of which tells that the company is in the right track. It is worth noting that the entire CRM efforts have financial implications and hence companies use customer lifetime value to decide whether the relationship so established is profitable to be continued with or not to be discontinued.
This essay looks at the concept of CRM with its aims and objectives explained below. Aim The aim of this essay is to explain how a ‘ customer’ is developed through a customer life-cycle and how KPIs are determined. The essay also aims at matching the customer lifetime value with customer lifecycles. Objectives The objectives of this essay include: To review the existing literature regarding the various aspects of customer relationship management To explain the concept of customer lifetime value and its use for marketing purposes. To relate the concept of CLV with key performance indicators -to explain the stages of customer lifecycle and to relate CLV, KPIs and customer lifecycle while explaining their use in CRM. Literature Review The modern-day customer has a great deal of power. in fact, Galbraith (2005) argues that they own and control the business since they not only demand everything but also want the business to change and hence be able to meet their desires and whims.
Thus, the success of the business is ultimately dependent on the carefully maintained and groomed connections that the business establishes with its customers as stated by Zablah et al (2004).
In this regard, Shah et al (2006) state that customer relationship management (CRM) has emerged to create a customer-oriented organization that maximizes customer value and hence long-term organizational profitability via realization of mutually beneficial and durable relationships with the customer. Thus CRM enables the organization to treat its customers on an individual and unique basis as stated by Bose (2002). According to Richard and Jones (2008), CRM is vital in overcoming increased competition, expanding markets as well as increased customer expectations.
This according to Chang (2007) improves long-term customer loyalty, satisfaction and retention owing to better serving the customer. Chen and Popovich (2003) view CRM as incorporating the management of the entire customer life cycles thus creating the customer lifetime value. But to effectively manage the customer relationship, organizations must effectively identify the key performance indicators that will enable them to effectively meet the customers’ needs thus effectively managing the customer relationship thus resulting in a more satisfied customer as postulated by Chang (2007).
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