Customer Relationship Management

Analytical customer relationship management (CRM) is the process of collecting and analyzing a rms information regarding customer interactions in order to enhance the customers values to the rm. Firms exploit such information by designing strategies uniquely targeted to consumer needs. This process enhances loyalty and increases switching costs, as information on consumer preferences affords an enduring competitive advantage. By integrating various data (e.g. across purchases, operations, service logs, etc.), choice researchers can obtain a more complete view of customer behavior. These developments cut across industries, including banking, telephony, Internet, and other areas that have received limited attention in the marketing literature. In addition, each industry likely has unique challenges of its own.

We differentiate between analytical CRM, which is the focus of this paper, and behavioral CRM. Analytical CRM involves using rms data on its customers to design longitudinal models of choice over the breadth of the rms products and using them prescriptively to increase the revenues from customers over their lifecycle. In contrast, behavioral CRM uses experiments and surveys to focus upon the psychological underpinnings of the service interaction, or the managerial structures that make CRM effective.

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