Understanding how CRM enhances business and customer value
With Customer Relationship Management systems, customers are served better on day-to-day process. With more reliable information, their demand for self-service from companies will decrease. If there is less need to interact with the company for different problems, customer satisfaction level increases.
These central benefits of CRM will be connected hypothetically to the three kinds of equity that are relationship, value, and brand, and in the end to customer equity. Eight benefits were recognized to provide value drivers.
Each benefit creates customer value by affecting customer retention or customer acquisition. Customer acquisition is affected by benefits through a changed perception of brand image. Customer retention is affected by benefits through the purchase satisfaction that creates the intention to repurchase, which in turn leads to actual repurchase.
Customer retention leads to profitability because of a lowered cost of sales and services. Customer acquisition leads to profitability through an increased market share and economies of scale. In this way, the total customer equity is created.