When we talk about lifetime customer value (LCV), we’re always hoping for the best-case scenario. What we would prefer is to establish a customer early in their consumer life (business or domestic), and sustain loyal in that customer through the end of their consumer life. And, yes, this can be achieved. Many start drinking Coca Cola early in their life and never sway from the brand. There are found Ford truck buyers in the same family generation after generation. Certainly, many factors go into creating such product allegiance. Quality of product is important. So too, brand marketing that include advertising and public relations.

But, as any mom-and-pop business will tell you, it is the direct relationship with their customer that is all-important when it comes to long-term customer loyalty. “Knowing the customer” is the bottom-up approach practiced by the best of small operations—ones that know their customers well, even personally. While this practice is intuitive to small companies that life and work in the same community where their customers live, for national and international companies such intimacy comes a little bit harder. In other words, the bigger you are the less personal you get. This can be a problem, particularly with the wealth of historical customer-related data that is increasingly accumulated by growing manufacturing operations.

To handle the need for building LCV in the advanced industrial age, the business strategy of Customer Relationship Management (CRM) was developed to instill a more solid sense of loyalty with geographically distant customers. The idea is that any investment in CRM will produce manifold returns through the practice of organized and two-way communication with customers on several levels. CRM is a customer-centered approach to doing business, and it is hoped that by taking such an approach customers see themselves as tied to their vendors/suppliers in more than just a seller-buyer paradigm; rather, customers see themselves and their success as part and parcel of a concerted relationship effort.

CRM data blends together to give a more complete view of customers for those who deal with them on a regular basis. These personnel could include front office, sales staff, and customer support and service. In each interaction opportunity with customers, CRM data is used by staff to produce rapid, informed, and, desirably, helpful decisions in order to both satisfy the customer in the present, and maintain their loyalty in the future. Though there are many approaches and techniques for CRM, all successful applications have three things in common. First, it is important to recognize that people are the most vital link between an organization and their customers. Second, the process of CRM must be tested and sophisticated, as well continuously improving. Third, there is usually a relatively large degree of technology integrated into the process.

With ever-stiffening competition on the global stage, and a similarity of product type and quality output, CRM provides the opportunity to meet competitors in a place apart from the shop floor. When customers believe and feel that their suppliers and vendors care about them in ways that transcend the sale and service of goods, then a relationship is built. And, when a positive relationship is built and sustained with a customer over years, decades, and even generations, LCV reaches its greatest potential.

This entry was posted on Monday, June 2nd, 2008 at 9:00 am and is filed under CRM. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.