Business Analytics for Sales and Marketing Managers: How to Compete in the Information Age

GENERIC CRM STRATEGY

Even though a generic CRM strategy could seem like a contradiction in terms, we suggest one here. It can serve as starting point or a first draft for your stakeholder interviews. You then can enrich it with specific activities to customize it to your organizational needs. It is based on a value-based segmentation, which in all cases is a logical starting point for all customer analytics activities (see Exhibit 2.8).

Exhibit 2.8 Generic CRM Strategy Based on Value-Based Segmentation

The strategy simply suggests that you should treat every segment differently and according to its value. The overall idea behind this method is to increase the value of some customers and focus on retaining the most valuable ones. If you cannot grow the customer into becoming valuable, consider terminating the customer relationship since it is destroying value in your business.

Gold customers should be retained even at very high cost simply because they represent very high value. As you already know from the 80-20 rule, they provide the core of your profit. In most cases, reducing their churn by 50% (churn is the percentage of customers that leave you, e.g., per month) can make a company profitable again. This is also described in the case study in Chapter 9. The same results can be found in Frederic Reicheld’s book, The Loyalty Effect, for different industries.¹

Silver customers ...