Metro

Chapter 2 – Literature review

2.1 Significance of Customer relationship management in customer servicing 2

2.2 Ensuring profitability by realizing customer lifetime value 5

2.3 Behavioral consequences of CRM leads to profitability 7

2.4 Effects of Customer acquisition and customer retention on business profitability 9

2.5 Benefits associated with effective CRM practices 10

2.6 Basic types of loyalty programs in CRM 14

2.7 4C’s of customer loyalty 16

2.8 Avoiding the pitfalls of loyalty program 19

2.9 Strategic gaps between CRM and loyalty programs for customer retention 21

2.10 Conclusion 22

2.11 References 24

Chapter 2 – Literature Review

2.1 Significance of Customer relationship management in customer servicing

If seen intuitively, the word customer has been the centre of all the efforts done in the field of marketing, sales, contacts, products, services, time, resource allocation, profitability and long term growth and strength of enterprising organizations. Although the term customer has been used by businesses since the beginning of the twentieth century, but it took them 100 years to realized its meaning and importance. The expanded customer relationships have inspired businesses and service provider to serve and cater to the needs of their customers in exchange for the profit and repeat business. Before 1990s, customers were hunted by sellers/suppliers to buy what was produced. Global brand leaders decided who their customers were and marketing techniques were built around products. It was believed “The public wants what the public gets”. Since 1990s, the idea of Henry Ford’s concept of ‘everyone being able to have any color automobile that he or she wants as long as its black‘ have wiped out. Now customers are treated as special and cultivated. Investing in them today profits the organizations in the long run (Swift, 2001). Customer relationship management (CRM) is an enterprise approach to understanding and influencing customer behavior...