Customer Relationship Management

422 Pages·2018·8.93 MB·english

by  V. Kumar

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Springer Texts in Business and Economics
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V. Kumar
H i g h
Werner Reinartz L o w
Customer
Relationship
Management
Concept, Strategy, and Tools
Third Edition
Springer Texts in Business and Economics
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V. Kumar
Werner Reinartz
Customer
Relationship
Management
Concept, Strategy, and Tools
Third Edition
V. Kumar Werner Reinartz
J. Mack Robinson College of Business Department of Retailing
Center for Excellence in Brand and Customer Management
and Customer Management University of Cologne
Georgia State University Cologne
Atlanta Germany
Georgia
USA
Originally published by John Wiley & Sons, Inc., 2006
ISSN 2192-4333 ISSN 2192-4341 (electronic)
Springer Texts in Business and Economics
ISBN 978-3-662-55380-0 ISBN 978-3-662-55381-7 (eBook)
https://doi.org/10.1007/978-3-662-55381-7
Library of Congress Control Number: 2018935246
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Dedicated with Love
To my parents, Patta and Viswanathan, and Uncle Kannan,
To other Family Members - Prita, Matt, Anita, Rohan, Ryan and Aparna
To Cosmic Guru – Chinna Kumar
V. Kumar
To my parents Hermann and Resi
and to my siblings Josef, Sabine, and Ralf
Werner Reinartz
Preface
Customer relationship management into several customer level marketing
(CRM) as a strategy and as a technology strategies that can be implemented by
has gone through an amazing evolutionary adopting a customer lifetime value
journey. After the initial technological approach – also integrating the digital
approaches, this process has matured con- approaches that are prevalent these days.
siderably – both from a conceptual and The goal of this book is to be a useful
from an applications point of view. Of learning companion to students, teachers,
course this evolution continues, especially and practitioners of CRM.
in the light of the digital transformation.
Today, CRM refers to a strategy, a set of The goal of this book is to be a valuable
tactics, and a technology that has become learning companion to students, teachers,
indispensable in the modern economy. and practitioners of CRM. To summarize,
with this book, you can:
Based on both authors’ rich academic and 5 Obtain a comprehensive understand-
managerial experience, this book gives a ing of CRM strategy, concepts, and
unified treatment of the strategic and tools. This unified perspective would
tactical aspects of customer relationship enable readers to see the forest and the
management as we know it today. It trees.
stresses developing an understanding of 5 Benefit from the numerous cases that
economic customer value as the guiding show direct application of concepts
concept for marketing decisions. The goal thus making the material very acces-
of this book is to be a comprehensive and sible and applicable.
up-to-date learning companion for 5 Learn the latest developments in
advanced undergraduate students, master metrics, practices, and substan-
students, and executives who want a tive domains (e.g., CRM and social
detailed and conceptually sound insight media).
into the field of CRM.
Aimed at students, teachers, and practi- O bjectives of this Text
tioners of CRM, this book offers a
comprehensive treatment of CRM and This book captures the critical elements of
database marketing, the approach to managing customer relationships.
strategic CRM, and implementing the
CRM strategy and the various metrics to The objectives in writing this text are to:
measure customer value. This book 1. Outline the need for customer-
provides all the necessary steps in centric marketing strategies.
managing profitable customer relation- 2. Explore the science behind CRM
ships. It stresses on developing an and the effectiveness of various CRM
understanding of customer value as the techniques.
guiding concept for marketing decisions, 3. Explain the concepts, metrics, and
and illustrates the importance of the techniques that form the backbone of
customer lifetime value metric as the CRM activities.
guiding concept for profitable customer 4. Learn and apply CRM tools and
management. This book also analyzes the methodologies that aid customer-
implementation of CRM strategies in the level analytics.
areas of loyalty programs, marketing 5. Provide clear examples and illustra-
campaigns, and channel management. tions that tie concepts with real-world
Specifically, this book provides insights scenarios.
VII
Preface
6. Understand the relationship between traditional past customer value, and
CRM analytics and business perfor- the forward-looking customer life-
mance. time value.
7. Discuss the structure of databases, 8. Procedures to follow when measuring
their uses and benefits from a mar- past customer value and customer life-
keting standpoint, rather than a tech- time value.
nical one. 9. Explanations of techniques like RFM,
8. Understand the implications of CRM logistic regression, decision trees,
and marketing activities like loyalty and data mining in an easy-to-follow
programs, channel management, and fashion.
planning promotional campaigns. 10. Presentation of the latest advances in
9. Learn the cutting-edge profitable customer value management prac-
customer-level strategies and how tices, which include implementation
they have been implemented in com- of several CRM-related strategies.
panies with impressive bottom-line 11. Adoption of a non-technical viewpoint
results. of CRM rather than a technical one.
10. Understand the reasons of CRM as a
dominant form of marketing strategy.
Supplements to this Book
Highlights of this Book 1. An online Instructor’s Manual with
Test Questions accompanies this
This book offers a comprehensive treat- text. This manual provides solutions
ment of CRM and database marketing. to end-of-chapter Questions and
Problems, and discusses all text cases
The highlights of this book are as follows: in greater detail. Exam questions are
1. An overview and summary at the arranged by chapters and include
beginning and the end of each chap- multiple-choice and true/false
ter to help the reader stay focused. questions. An example of a course
2. Exhaustive cases to help readers syllabus is presented, and many
appreciate how CRM is being carried suggestions for the organization of
out in the age of information. the course are provided. A link to the
3. Real-world illustrations in various Instructor’s Manual can be found at
chapters under the title «CRM at http://www.springer.com/?SGWID=
Work.» 0-102-2-1583162-0 
4. Mini cases at the end of various 2. Web site support: The Web site will be
chapters designed to address key updated periodically in order to sup-
managerial issues, stimulate thinking, plement the text with new up-to-d ate
and encourage a problem-solving examples. This site includes the cases
approach. and Web links cited in the text. URL:
5. A new section on International Per- http://www.drvkumar.com/crm3.
spectives. 3. A computerized version of the test
6. Illustrations and explanations of key bank is available to instructors for
traditional and new marketing met- customization of their exams.
rics in a clear and concise manner. 4. Downloadable PowerPoint presenta-
7. Clear explanations for the need for tions are available for all chapters via
customer value metrics, such as the the text Web site.
V III Preface
O rganization of the Text customer lifetime value. This part also
discusses the concepts relating to data
This book adopts a holistic approach mining and implementing database
towards CRM by providing the concepts, marketing. Types of databases and their
explaining the tools, and developing rele- uses and benefits are outlined. Guide-
vant strategies. It introduces key concepts lines to develop and plan marketing
and metrics needed to understand and campaigns in order to maximize cus-
implement CRM strategies. It describes tomer value are discussed. This section
the process of successful CRM implemen- also addresses the technical aspects of
tation. Finally, it presents techniques to aid CRM software tools and dashboards
in strategic marketing decisions using the required to implement and manage
concept of customer lifetime value. This CRM applications.
book is divided into four parts as follows: 5 Part Four: Operational CRM consists
5 Part One: Introduction consists of two of 7 Chaps. 9, 10, 11, 12, 13, 14, and 15
chapters and introduces the concept of and presents the strategies involved in
customer equity/value as a key aspect operational CRM. This part discusses
of customer relationship management loyalty programs and the characteris-
(CRM). This part explains the role of tics that make up an effective loyalty
CRM in the current business scenario program. This part also discusses the
and presents a comprehensive link that impact of CRM on marketing chan-
connects CRM and customer value. nels. A separate chapter discusses the
5 Part Two: Strategic CRM consists developments of CRM using social
of 7Chaps. 3 and 4 and introduces media. The last chapter looks into the

the concepts related to strategic future and envisions the developments
CRM. This part describes the differ- and changes that are likely to take
ence between strategic and functional CRM ahead.
CRM and presents the case for devel- 5 Part Five: Advances in CRM Applica-
oping a CRM strategy. It also elabo- tions consists of 7 Chaps. 16, 17,
rates on the elements of a CRM system and 18 and traces recent advances
and provides the implementation in CRM applications. This section
aspects of the customer management illustrates new and emerging tech-
strategy. niques in customer value–based
5 Part Three: Analytical CRM consists CRM. Critical marketing issues like
of 7Chaps. 5, 6, 7, and 8 and presents optimum resource allocation, pur-

the tools pertaining to analytical chase sequence, and the link between
CRM. This part focuses on commonly acquisition, retention, and profit-
used CRM metrics and techniques such ability are examined on the basis of
as acquisition rate, retention rate, share empirical findings. These applica-
of wallet, logistic regression, decision tions are categorized on the basis of
trees, RFM, past customer value, and applicability for the B2B and B2C
scenarios.
V. Kumar
Atlanta, GA, USA
Werner Reinartz
Köln, Germany
IX
Acknowledgments
We wish to thank Maren Becker, Manuel in developing this book. Special thanks
Berkmann, Vanessa Junc, Annette Ptok, are owed to Elena Gros, Anisa Hiabu,
Julian Wichmann, and Nico Wiegand for Amber McCain, Maria Niebrügge, and
their assistance and contribution in the Bharath Rajan for their assistance in vari-
preparation of this text. We would also ous aspects of this book. We owe addi-
like to thank our colleagues at various tional thanks to Renu for copyediting this
universities for giving valuable suggestions book.