TABLE OF CONTENTS
I. INTRODUCTION 1
II. HISTORY OF CRM MARKET 3
Major Vendors 5
Current Offerings 6
III. DEFINITIONS OF CRM 6
IV. DRIVERS FOR CRM APPLICATIONS 9
Reasons for Adopting CRM: The Business Drivers 9
Cost Goals 10
V. THE CRM INDUSTRY 11
Size of the CRM Industry 12
Vendors 13
Technology and Service 15
VI. INFORMATION TECHNOLOGIES FOR CRM 20
Key CRM Tasks 20
IT Factors of CRM Tasks 22
VII. CONSULTANTS 23
VIII. RETURN ON INVESTMENT OF IMPLEMENTATION 24
Cost and time 24
Benefits 25
ROI of CRM Projects 27
IX. PRINCIPLES OF CRM 27
X. CRM ISSUES 28
Customer Privacy 28
Technical Immaturity 30
XI. CASE STUDIES 31
Amazon.Com 31
Dell 32
Volkswagen 33
Wells Fargo 34
XII. CONCLUSIONS 36
REFERENCES 37
APPENDIX A BASIC ASSUMPTIONS OF CRM 40
APPENDIX B COMMON MYTHS OF CRM 41
APPENDIX C LIFETIME VALUE OF A CUSTOMER 44
C1. Simple Approach 45
C2. More Sophisticated Calculation 46
C3. Effect of Loyalty Programs 47
C4. Additional Factors to Consider 49
C5. The Arithmetic of Lifetime Value 49
C6. Example: Applying Lifetime Value Concepts in Banking 51
C7. Summary and Conclusions on Lifetime Value 53
APPENDIX D VENDOR’S WEB SITE ADDRESSES 55
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Version 3-6
March 23, 2001
CUSTOMER RELATIONSHIP MANAGEMENT
Paul Gray
Jongbok Byun
I. INTRODUCTION
Over a century ago, in small-town America, before the advent of the supermarket, the mall, and the automobile, people went to their neighborhood general store to purchase goods. The proprietor and the small staff recognized the customer by name and knew the customer's preferences and wants. The customer, in turn, remained loyal to the store and made repeated purchases.
This idyllic customer relationship disappeared as the nation grew, the population moved from the farm communities to large urban areas, the consumer became mobile, and supermarkets and department stores were established to