Customer Relationships Management

Customer relationship management (CRM) is a business philosophy and set of strategies, programs, and systems that focuses on identifying and building loyalty with a retailer’s most valued customers (Levy, Weitz 275). A loyal customer is one who is committed to purchasing merchandise and services from a specific retailer, he or she resists the efforts of competitors, and also has an emotional attachment to a retailer. The four steps involved in the formation of a CRM program are collecting customer data, analyzing customer data, developing a CRM program, and implementing the CRM program. Implementing CRM programs can be extremely beneficial in increasing business and creating/maintaining a competitive edge. They also categorize customers into the four categories of the customer pyramid. The lowest level is lead. These customers actually have a negative lifetime value, which means they cost the retailer money. A successful CRM program can identify these customers so the retailer can strategize ways to get them out. The next level is iron. These customers don’t receive much attention because their spending levels, loyalty, and profitability are not substantial. However, if the retailer can identify them as iron, they can strategize ways to make them into the next highest level, gold. These customers are slightly price conscious, but buy a significant amount of merchandise. The goal of the retailer is to utilize their CRM program to turn them into the highest level of the customer pyramid, platinum, which brings the retailer the highest profit. These customers are the best and most loyal. They’re also the least price-sensitive, and they have the highest lifetime value. If retailers utilize CRM programs to their full potential, they can be extremely beneficial. A few retailers that have exceptional CRM programs are The Ritz-Carlton, Neiman Marcus, and The Buckle. The Ritz-Carlton is a prime example in demonstrating how a business can use the data generated by their

Cited: Buckle Credit Card. N.p., n.d. Web. 4 Feb. 2013. <https://d.comenity.net/buckle/>. Delio, Michelle. For Ritz-Carlton, It All Begins With Customer Knowledge. N.p., 17 Apr. 2000. Web. 3 Feb. 2013. <http://www.destinationcrm.com/Articles/CRM-News/Daily-News/For-Ritz-Carlton-It-All-Begins-with-Customer-Knowledge-47424.aspx>. Levy, Michael, and Barton A. Weitz. Retailing Management. Eighth ed. New York: McGraw-Hill/Irwin, 2012. Print. Michelli, Joseph. Take It From Ritz-Carlton:Data Is Nothing Without Personal Touches. N.p., 18 Aug. 2008. Web. 3 Feb. 2013. <http://www.customerthink.com/article/data_nothing_personal_ritz_carlton>. The Point of More Return. N.p., n.d. Web. 3 Feb. 2013. <http://www.incircle.com/store/catalog/templates/Entry.jhtml?itemId=cat103411&parentId=cat000001&siloId=cat103411&navid=topNavcat103411>. Customer Relationship Management (CRM) Programs Emily Schrems Professor Craig MRCH 1750 2 February 2012