CRM: Customer Relationship Management the

CRM: Customer Relationship Management The use of Customer Relationship Management (CRM) in general and customer loyalty programs specifically have continued to escalate as analytics make the traceability and auditability of programs more efficient (Marshall, 2010). The use of CRM as a foundation for creating trust and sustaining it as loyalty is achieved has been an elusive goal for many companies who struggle with consistent performance (Ou, Shih, Chen, Wang, 2011).

The intent of this analysis is to evaluate how the company that is the focus of this study is using CRM and loyalty programs to enable higher levels of sales effectiveness, profitability and long-term growth. The Objective of Customer Loyalty Programs Using customer loyalty programs to create habitual purchasing is one of the side benefits, not the primary focus as many have said in academic and popular media (Schmitt, Skiera, Van den Bulte, 2011).

The goal of a customer loyalty program is to increase lifetime customer value by concentrating purchasing on the most valuable products and services from a user's perspective in addition to those that are the most profitable from a company's standpoint (Schmitt, Skiera, Van den Bulte, 2011). This is the essence of effective customer loyalty program management, which is the ability to sell the most profitable items while also generating the greatest loyalty as well to drive up lifetime customer value (Ou, Shih, Chen, Wang, 2011).

In the example of the company being tracked for this project, their focus continues to be on lifetime customer value purely from a services standpoint, which is common for many businesses that look only to the aftermarket and add-on warranty sales for the majority of their revenue.

I Instead the key determinants of customer value including the frequency of new product introductions, reduction in lifetime cost of ownership, and a continual contributing to greater value delivered on the part of products all contribute to the highest levels of customer loyalty and corresponding profitability over time (Marshall, 2010). In conjunction with these factors there needs to be a continual focus on increasing the quality of service as well, often using metrics including Service Quality Index (SERVQUAL) to quantify the performance of customer loyalty programs over time.

At present the company being evaluated in terms of their use of customer loyalty is entirely focused on service lifecycle management and warranty cost management. They see customer loyalty purely from the standpoint of how to create ongoing sales, not necessarily increase customer lifetime value by motivating customers to return and purchase more. This has had a corresponding effect of creating attrition in the customer base over time and lost sales.

What is needed is a concerted strategy that takes into account unmet needs of customers and responds to them innovatively with exciting products and services to drive up lifetime customer value over time. Conclusion CRM serves as a foundational series of strategies on which customer loyalty and many other programs rely on. The integration of CRM and customer loyalty.