Statistical Methods in Customer Relationship Management

3.1 Introduction

As many companies have transited from brand-centric to customer-centric, the management of customer relationships has become especially important. Much research attention has also transferred from the product life cycle to the customer life cycle. Along the customer life cycle, the essential processes of CRM can be separated into four circulatory steps: customer acquisition, customer retention, customer churn, and customer win-back. Customer acquisition, the first step, is the foundation of the whole CRM process and is also a cornerstone in the development of the business of a company. The statement that acquiring a new customer is several times more costly than retaining an existing customer has clearly shown the importance of a successful customer acquisition program. And, without sustained customer acquisition there will eventually be no customers left for the company to try and retain. Despite the significance of customer acquisition, research on this topic is still not sufficient. This chapter seeks to review and summarize the limited research on customer acquisition and provide guidelines on how a firm can use its own prospect and customer data to aid in successful and profitable customer acquisition.

In the past 15 years, researchers have paid attention to the key issues which occur in the customer acquisition process. Questions that have been considered, as shown in Figure 3.1, include:

• How likely is it that the prospects will respond to our acquisition ...