Statistical Methods in Customer Relationship Management

1.1 Introduction

Henkel, a European multinational corporation that operates in three business areas (home care, personal care, and adhesive technologies), also operates in a highly competitive, fast-moving consumer-goods industry that also has a global outreach. Some of the key operational challenges include low product margins on its products and a lack of direct customer contact, among other region-specific challenges. Henkel has managed to overcome these challenges by implementing customer relationship management(CRM) practices. Management at Henkel realized the importance of identifying and understanding the needs of individual high-value customers, in order to target, establish, develop, and retain long-lasting relationships with customers. Through these practices, Henkel has actively pursued the development of strong relationships with its customers, and at the same time increased its profitability [1].

Just like Henkel, many corporations are increasingly adopting CRM as a means to forge their competitive advantage – the ability to understand individual customer needs, and therefore to manage their marketing efforts more efficiently. Such firms are also under tremendous pressure to adjust quickly to rapid changes in the marketplace with regard to the customer, technology and marketing functions. Customers are becoming not only more value-conscious, but also less loyal and less tolerant of low service levels. Consequently, markets are becoming more fragmented, making differentiation ...