Statistical Methods in Customer Relationship Management

1.3 What is Needed to Implement CRM Strategies?

The implementation of a CRM strategy is an ongoing process of developing and executing a series of small projects aimed at satisfying the business needs and enhancing the value proposition to customers. In this section, we focus on three essential ingredients needed to implement CRM strategies from a modeling perspective: database, technology, and metrics.

1.3.1 Database

The database is the core of any CRM planning. Companies gather information to store, analyze, and make marketing decisions based on the results of data analysis. This section provides a basic overview of the categories of databases and the sources from which data can be collected.

1.3.1.1 Categories of Databases

There are several types of databases and various ways to categorize them. This can be done according to firms' main business function, information contents, underlying marketing activities, or database technology. As the focus of this book is on data modeling, we look at the following two types of databases in detail: the transaction-related database and the customer database.

• Transaction-related database. This database refers to all the information associated with the transactions that customers have made. Examples of this type of information are:

– What transactions have the customers conducted?

– What type of product was purchased?

– How frequent is this type of product purchased by the customer?

– How much was spent in the transaction?

• Customer ...