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386 Part Three Key System Applications for the Digital Age

OPERATIONAL AND ANALYTICAL CRM

All of the applications we have just described support either the operational or
analytical aspects of customer relationship management. Operational CRM
includes customer- facing applications, such as tools for sales force automation,
call center and customer service support, and marketing automation. Analytical
CRM includes applications that analyze customer data generated by operational
CRM applications to provide information for improving business performance.
Analytical CRM applications are based on data from operational CRM systems,
customer touch points, and other sources that have been organized in data
warehouses or analytic platforms for use in online analytical processing (OLAP),
data mining, and other data analysis techniques (see Chapter 6). Customer data
collected by the organization might be combined with data from other sources,
such as customer lists for direct-marketing campaigns purchased from other
companies or demographic data. Such data are analyzed to identify buying pat-
terns, to create segments for targeted marketing, and to pinpoint profitable and
unprofitable customers (see Figure 9.10).
Another important output of analytical CRM is the customer’s lifetime value to
the firm. Customer lifetime value (CLTV) is based on the relationship between
the revenue produced by a specific customer, the expenses incurred in acquiring
and servicing that customer, and the expected life of the relationship between the
customer and the company.

BUSINESS VALUE OF CUSTOMER RELATIONSHIP
MANAGEMENT SYSTEMS

Companies with effective customer relationship management systems
realize many benefits, including increased customer satisfaction, reduced
direct- marketing costs, more effective marketing, and lower costs for customer

FIGURE 9.10 ANALYTICAL CRM

Analytical CRM uses a customer data warehouse or analytic platform and tools to analyze customer
data collected from the firm’s customer touch points and from other sources.

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