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The Customer Life Cycle (CLC) has obvious similarities with the Product Life Cycle (PLC).

However, CLC focuses upon the creation of and delivery of lifetime value to the customer i.e. looks at the products or services that customers NEED throughout their lives. It is marketing orientated rather than product orientated, and embodies the marketing concept. Essentially, CLC is a summary of the key stages in a customer's relationship with an organization. The problem here is that every organizations product offering is different, which makes it impossible to draw out a single Life Cycle that is the same for every organization.

Let's consider an example from the Banking sector. HSBC has a number of products that it aims at its customers throughout their lifetime relationship with the company. Here we apply a CLC. You can start young when you want to save money. 11-15 year olds are targeted with the Live cash Account, and 16-17 year olds with the Right Track Account. Then when (or if) you begin College or University there are Student Loans, and when you qualify there are Recent Graduate Accounts. When you begin work there are many types of current and savings account, and you may wish to buy property, and so take out a mortgage. You could take out a car loan, to buy a vehicle to get you to work. It would also be advisable to take out a pension. As you progress through your career you begin your own family, and save for your own children's education. You embark upon a number of savings plans and schemes, and ultimately HSBC offer you pension planning (you may want to insure yourself for funeral expenses - although HSBC may not offer this!). This is how an organization such as HSBC, which is marketing orientated, can recruit and retain customers, and then extend additional products and services to them throughout the individual's life. This is an example of a Customer Life Cycle (CLC). Another important point is that a lifetime CLC is made up many shorter CLC's. So, for example, Volkswagen Cars retains a customer for many years and one can predict the products that meet a customers needs throughout his or her family lifetime. However the purchase of each car, will in itself be a CLC with many Customer Touch Points. The consumer may need a bigger vehicle as his or her family expands - so they visit VW's website and register. The customer reviews models and books a test-drive with her or his local dealer. He or she decides to buy the car and arranges finance. The car is then delivered from the factory, and returns every year for its annual service. Then after three years, the customer decides to trade in his or her car, and the cycle begins again. The longerterm life cycle is simply the shorter-term life cycles viewed consecutively.

CRM is a term that is often referred to in marketing. However, there is no complete agreement upon a single definition. This is because CRM can be considered from a number of perspectives. In summary, the three perspectives are: Information Technology (IT) perspective The Customer Life Cycle (CLC) perspective Business Strategy perspective As we have discussed, CRM is more than just software. For the purposes of this introduction - Information Technology (IT) and CRM have three key elements, namely Customer Touch Points, Applications, and Data Stores. This section is based loosely upon Raisch (2001) The eMarketplace.

Customer Touch Points are vital since your business has a marketing orientation and focuses upon the customer and his or her current and future needs. This is the interface between your organisation and its customers. For example you buy a new car from a dealership, and you enter a showroom. The dealership is a contact point. You meet with a salesperson whom demonstrates the car. The salesperson is a contact point. You go home and look at the car manufacturer's website, and then send the company an e-mail. Both are contact points. Other contact points include 3G telephone, video conferencing, Interactive TV, telephone, and letters. Applications are essentially the software and programmes that support the process. Incidentally, this is what some would call CRM - but we know better. Applications serve Marketing (e.g. data mining software* and permission marketing**), Sales (e.g. monitoring Customer Touch Points), and Service (e.g. customer care). Data Stores contain data on every aspect of the customer, and the Customer Life Cycle (CLC). For example, an organisation keeps data on the products you buy, when you buy them, and where they are sent. Data is also kept on the web pages that you visit and the products that you consider, but then do not buy. Leads are stored here. Data on the life time value of individual customers is stored here, as well as details of how and when the customer was recruited, how - and for how long - individuals have been retained, and details of any products that have been extended to individuals are also stored. The data is analysed using Applications. *Data Mining is where an organisation evaluates large Data Stores for patterns, or relationships between groups or individuals (or segments). Applications present 'patterns' in a format that can be used for marketing decision-making.

** Permission Marketing is where a customer elects to accept (or 'opt-in' to) marketing material from an organisation e.g. where you buy insurance and the vendor asks if you wish to receive further details from them, or similar organisations. It is so called because marketers need your 'permission' to market to you. Permission marketing can occur at any of the Customer Touch Points. CRM is a term that is often referred to in marketing. However, there is no complete agreement upon a single definition. This is because CRM can be considered from a number of perspectives. In summary, the three perspectives are:

We now consider the Business Strategy Perspective on CRM. Here, we propose a model, which is a hybrid, and typical of many of the models and diagrams of CRM that you will find on The Internet and in popular books on the topic of eMarketing/eCommerce. The model has three key phases and three contextual factors:

Three key phases:



1. Customer Acquisition. 2. Customer Retention. 3. Customer Extension.

Three contextual factors:



4. Marketing Orientation. 5. Value Creation. 6. Innovative IT.

1. Customer Acquisition - This is the process of attracting our customer for the first their first purchase. We have acquired our customer. Growth - Through market orientation, innovative IT and value creation we aim to increase the number of customers that purchase from us for the first time. 2. Customer Retention - Our customer returns to us and buys for a second time. We keep them as a customer. This is most likely to be the purchase of a similar product or service, or the next level of product or service.

Growth - Through market orientation, innovative IT and value creation we aim to increase the number of customers that purchase from us regularly. 3. Customer Extension - Our customers are regularly returning to purchase from us. We introduce products and services to our loyal customers that may not wholly relate to their original purchase. These are additional, supplementary purchases. Of course once our loyal customers have purchased them, our goal is to retain them as customers for the extended products or services. Growth - Through market orientation, innovative IT and value creation we aim to increase the number of customers that purchase additional or supplementary products and services. 4. Marketing Orientation - means that the wholes organisation is focused upon the needs of customers. Customer needs are addressed by the Three Levels of a Product whereby the organisations not only supplies the actual, tangible product, but also the core product and its benefit, and also the augmented product such as a warranty and customer service. Marketing orientation will focus upon the needs of consumers for all three levels of a product. (N.B. 'market' orientation and 'marketing' orientation are not the same). 5. Value Creation - centres on the generation of shareholder value based upon the satisfaction of customer needs (as with marketing orientation) and the delivery of a sustainable competitive advantage. 6. Innovative IT - is exactly that - Information Technology must be up-to-date. It should be efficient, speedy and focus upon the needs of customers. Whilst IT and/or software are not the entire story for CRM, it is vital to its success. CRM software collects data on consumers and their transactions. Huge databases store data on individuals and groups of individuals. In some ways, CRM means that an organisation is dealing with a segment of one person, since every consumer displays different purchasing habits and preferences. Organisations will track individuals, and try to market products and services to them based upon similar buyer behaviour seen in other individuals (e.g. When Amazon tells you that customers that viewed/bought the same product as you, also bought another product).

It is simply the behavior of a customer with your company over time. Customers begin a relationship with you, and over time, either decide to continue this relationship, or end it. At any point in this LifeCycle, the customer is either becoming more or less likely to continue doing business with you, and demonstrates this likelihood through their interactions with you. If you collect data from these interactions (purchases for commerce, page views or log-ins for publishing, contacts for service) you can use this data to predict where the customer is in their LifeCycle - is the customer becoming more or less likely to do business with you? If you can predict

where customers are in the LifeCycle, you can maximize your marketing ROI by targeting customers most likely to buy, trying to save customers who have declining interest, and not wasting money on customers unlikely to continue doing business with you. Remote selling companies like TV Shopping channels and catalogs have been using a LifeCycle approach for years, and have developed methods for using LifeCycle information to increase profitability by driving customer sales higher while reducing marketing costs. Its a proven method, and it works with interactive customers very well. I should know; as VP of Marketing and Programming for Home Shopping Network, it was my responsibility to maximize the value of TV, Internet, and Catalog customers while minimizing marketing costs. If you understand and can predict the LifeCycle of a customer, you can answer a lot of other important questions, including:

How can we compare the long-term effects on customer value of our different advertising approaches and product selections / pricing? When will a customer stop buying or visiting and how can we most cost effectively delay this event?

How can we measure the impact on customer value of operationally oriented changes such as the implementation of CRM or changes in web site design?

What is the Lifetime Value of a customer compared with other customers and how do we increase it cost effectively?

You Can Do It Yourself My book (with free software application, more on this below) outlines a very simple method for creating and tracking customer LifeCycle metrics, and using these metrics to increase sales while reducing costs. There are no special requirements for implementing this method; you can use an Excel

spreadsheet as the tool, and no programming skills are required. All you need are dated customer transactions, each having a customer ID. The book explains in very simple terms exactly how to take your customer transactions, create a database of them in an Excel spreadsheet, and score each customer with LifeCycle metrics. These scores literally tell you where the customer is in their LifeCycle relative to all the other customers. Then the book shows you how to use these scores to dramatically improve the ROI of your customer marketing efforts by choosing customers to target and customizing offers based on their LifeCycle scores. Small companies (under 65,000 customer transactions, the limit of an Excel spreadsheet) can score all their customers by hand in under 30 minutes using an Excel spreadsheet. For larger companies (up to 100,000 customer transactions) or smaller companies with light technical capabilities, a MS Access application is included free with the book. The application will import all your customer transactions and create the LifeCycle scores for each individual customer. You can then view the scores for each customer, choose customers to target for a campaign, and export the targeted customers for campaign execution. If you run a larger business (over 100,000 customer transactions in the database), you probably wont be using Access for scoring your customers, so the business rules for scoring customers are described in detail and can be put into action with a simple query system. Customer LifeCycle scores will help you solve the drowning in data problem by allowing you to organize your customer data and reporting around the LifeCycle and future value of customers. This approach paves the way for any CRM efforts you may be considering, because the scores allow you to establish LifeCycles and project Lifetime Values for your customers, two metrics critical to the success of CRM and forecasting the ROI of CRM implementation. Using the methods in this book,

you can get your company half-way there and practice analytical CRM before you install it. No vaporware, no compatibility issues, just a proven behavior-based profiling method you can implement yourself and use to start making more money with customer marketing. Call it Simple CRM. For years TV Shopping and catalog companies have organized their marketing activities around the LifeCycle of a customer, and now they are paving the way on the Internet with very high success rates and profitability. Find out how they are doing it (and start doing it yourself) with this site and book.
The life cycle of CRM consists of three phases - customer acquisition, customer relationship enhancements and customer retention. CRM software streamlines CRM activities at each phase of customer relationship management. Customer Acquisition Contact management module and direct marketing module of CRM allow companies to effectively promote and market their products and services to prospects. Those modules help speed up the acquiring processes and reduce the cost of acquiring new customers. Customer Relationship Enhancements CRM helps companies better understand existing customers' needs and behaviors and enhance the profitability from existing customers by cross-selling. They can customize their products and services to individual customers' needs and preferences. Customer Retention Customer service module of CRM system gives the organizations the edge in customer support ( http://www.sysoptima.com/crm/call_center_management_software.php ). They can increase customer satisfaction while reducing the cost of support. Customer retention is critical to the overall profitability of an organization. A customer you spend hundreds of dollars and months to acquire may leave you in seconds as a result of poor customer

CRM Definition
Customer Relationship Management (CRM) is an information industry term for methodologies, software, and usually Internet capabilities that help an enterprise manage customer relationships in an organized and efficient manner. In many cases, an enterprise builds a database about its customers. This database describes relationships in sufficient detail so that management, salespeople, and customer service reps can access

information; match customer needs with product plans and offerings; remind customers of service requirements; know what other products a customer had purchased; etc. There are three parts of application architecture of CRM.

1. Operational CRM
Operational CRM means supporting the so-called "front office" business processes, which include customer contact (sales, marketing and service). Tasks resulting from these processes are forwarded to employees responsible for them, as well as the information necessary for carrying out the tasks and interfaces to back-end applications are being provided and activities with customers are being documented for further reference.

2. Analytical CRM
In analytical CRM, data gathered within operational CRM are analyzed to segment customers or to identify cross- and up-selling potential. Data collection and analysis is viewed as a continuing and iterative process. Ideally, business decisions are refined over time, based on feedback from earlier analysis and decisions. Business Intelligence offers some more functionality as separate application software.

3. Collaborative CRM
Collaborative CRM facilitates interactions with customers through all channels (personal, letter, fax, phone, web, e-mail) and supports co-ordination of employee teams and channels. It is a solution that brings people, processes and data together so companies can better serve and retain their customers. The data/activities can be structured, unstructured, conversational, and/or transactional in nature. Collaborative CRM provides the following benefits:

Enables efficient productive customer interactions across all communications channels. Enables web collaboration to reduce customer service costs. Integrates call centers enabling multi-channel personal customer interaction. Integrates view of the customer while interaction at the transaction level.

CRM has to two typical implementation methods: on-premise and on-demand/hosted. Each method has its advantages and disadvantages as described below. On-premise CRM is appropriate for:

Companies seeking to implement highly customized customer-management practices

Companies that need specialized data structures Companies with complex or real-time integration requirements Companies with available in-house IT resources and support systems Companies who can afford the up-front capital investment and fixed costs Companies who deal with sensitive data that don't want other parties to see

On-demand/hosted CRM is appropriate for:


Customers seeking to implement standard processes from a variety of industries and companies Companies that are able to use standard data structures Companies with more basic integration requirements Companies with limited technical resources and support personnel Companies seeking variable pricing and lower up-front costs Companies dealing with non-proprietary data

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