Answer the following 4 questions Review Questions 1 Define

Review Questions --(1) Define CRM. why it is important for an organization? -(2) What do you mean by customer life cycle? How we can -(3) Cost of retaining old customer is always less than generating - (4) Explain customer interaction. analyze Customer Lifetime Value (CLV)? new one. Justify the statement with proper example.

Solution

1) CRM (Customer Relationship Management) is an integrated business process which includes improving the relationship with client based on building products and services catering to their requirements, increasing the share of wallet of the customer and improvement in overall brand value through marketing strategies.

It is definitely important to the organization to understand customer requirements, retain old customers and gain new customers with minimum costs and increase in the brand value of the company.

2) Customer life cycle is the complete stage involving acquisition of the customer, development of relationship with the customer to result in wallet share and then stabilizing in the revenue from the customer. The customer life cycle value is assessed by calculating the total potential revenue which could be earned from the customer over the entire stage of the customer’s relationship with the company.

3) Cost of acquiring a new customer will include efforts and expenses related to business development, aligning products and service in line with customer requirement, and providing attractive discounts to gain customer. Thus this needs more cost as compared to customer retention which needs only catering to the existing and evolving needs and no extra costs in giving introductory discounts or lower prices.

For example an online portal will give sign up bonuses to its customers who are new to the portal but similar schemes are not provided to existing customers. Thus acquiring new customers is more costly.

4) Customer interaction is the total and continuous process of getting requirements from customer, making the actual sale and interacting with the customer to get feedback and improving on the product and service to delight the customer in further transactions.