CRM Value Chain CRM value chain identifies five key steps in the development and implementation of a CRM strategy :customer portfolio analysis, customer intimacy, network development, value proposition development, and manage customer life cycle. In brief, the five steps are as follows. Two Types of CRM Operational CRM is focused on the automation of the customer-facing parts of businesses. Various CRM software applications enable the marketing, selling and service functions to be automated. The major applications within operational CRM are as follows. Model of Customer Retention The customer retention process actually begins during acquisition, which creates customer expectations, including perceptions of product value and uniqueness. Initial product usage determines whether these expectations are met. Then other factors, such as ease of exit, ease of purchase, and customer service, come into play. Together these factors affect long-term customer behavior and determine the relationship between seller and buyer. Steps for Effective CRM Implementation It is important that a CRM solution is business-oriented. This means that the solution should reflect the way the enterprise wishes to work in the future. To do this, it is necessary to start with the enterprise's CRM strategy and to ensure that once implemented the system will support the customer, channel and product strategies. Customer Lifetime Value The actual value of a customer is equivalent to a quantity that is frequently called the customer lifetime value (LTV), or the net present value of the stream of expected future financial contributions from the customer. Every customer of an enterprise today will be responsible for some specific series of events in the future, each of which will have a financial impact on the enterprise. Database Marketing Database marketing is now an essential part of marketing in many industries. The main principle of database marketing is that at least part of the communication organizations have with their consumers is direct. From this simple principle has grown a whole new discipline. However, it has not grown that quickly. The seeds of database marketing as we use it today were sown in the 19th century by the US mail order industry, which served so well the needs of remote farmers, ranchers, settlers and new townships. CRM Application Customer relationship management applications are generally organized into the primary functions of marketing, sales and service. The following descriptions outline the main elements of each of these application areas. Customer Value Category In the quest to tell which customers are more valuable than others, companies may have several motivations. In addition to making better decisions about resource allocation, a firm also has to report the value of its "intangible assets," and the proclivity of customers to buy in the future is an important intangible asset to the firm.

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