Effective CRM using Predictive Analytics

1An overview of data mining: The applications, the methodology, the algorithms, and the data

1.1 The applications

Customers are the most important asset of an organization. That’s why an organization should plan and employ a clear strategy for customer handling. Customer relationship management (CRM) is the strategy for building, managing, and strengthening loyal and long-lasting customer relationships. CRM should be a customer-centric approach based on customer insight. Its scope should be the “personalized” handling of the customers as distinct entities through the identification and understanding of their differentiated needs, preferences, and behaviors.

CRM aims at two main objectives:

1. Customer retention through customer satisfaction
2. Customer development

Data mining can provide customer insight which is vital for these objectives and for establishing an effective CRM strategy. It can lead to personalized interactions with customers and hence increased satisfaction and profitable customer relationships through data analysis. It can offer individualized and optimized customer management throughout all the phases of the customer life cycle, from acquisition and establishment of a strong relationship to attrition prevention and win-back of lost customers. Marketers strive to get a greater market share and a greater share of their customers. In plain words, they are responsible for getting, developing, and keeping the customers. Data mining can help them in all these tasks, ...