Database Reference
In-Depth Information
Thus, it is critical to identify and develop models for managing different types of profitable
customer relationships. For adoption, each of these models may need a different business and mar-
ket strategy and, therefore, a different approach to implement the CRM systems. The following
are some of these profitability models relevant to CRM systems projects:
3.2.3.1 Solutions Profit
This strategy demands up-front investment commitment to understand customers' economics and
identify ways to make them more favorable. This demands working closely with the customer to
discover how they search, evaluate, test, buy, and use their products and then find ways to help the
customers in improving the difficult, time-consuming, or expensive areas of their functions and
processes. This strategy is characterized by
◾
Early negative cash flow
◾
Customized products that are finely integrated with customer's operations
◾
Midterm to long-term payback horizon
◾
High customer retention
For this model, the CRM systems have to provide a unified view of key customers across all chan-
nels and touch points.
3.2.3.2 Time Profit
This strategy enables exploitation of the early mover advantages for innovative solutions; being
first allows innovators to generate excess returns, but only until imitators begin to erode margins.
Price premiums exist, but the opportunity window is for a short period of times. This strategy is
characterized by
◾
Sporadic but large investments
◾
Constant innovation as value migrates away from the current innovation
◾
Ability to bring new products and services to market quickly
◾
High prices and abundant profits but for short period of times
◾
Immediate-term to short-term payback horizon
◾
High customer satisfaction resulting from acquiring unique products or solutions
For this model, the CRM systems require rapid development and quick deployment.
3.2.3.3 Multiplier Profit
This strategy churns out gains from the same product, character, trademark, capability, or service,
over and over again. Technologically, this corresponds to the economics of
increasing returns
that
is characteristic of network effect phenomenon as witnessed in media, software, and related indus-
tries. Business-wise, this is allied closely to the brand-building strategy. This strategy is character-
ized by
◾
Large and even huge investments in building brands
◾
Unified brand across a broad array of products
