Electronic commerce requires the redefinition of the firm’s relationships with partners, suppliers, and customers. The goal of effective customer relationship management (CRM) practice is to increase the firm’s customer equity, which is defined by the quality, quantity, and duration of customer relationships (Fjermestad & Romano, 2003). The explosive development of the online market and the rapid evolution of customer management applications have determined the companies to implement electronic customer relationship management (eCRM) systems, which are using advanced technology to enhance customer relationship management practices. The successful implementation of an eCRM system requires a specific combination of IT applications that support the classic domains of the CRM concept: marketing, sales, and service (Kennedy, 2006). Electronic marketing aims for acquiring new customers and moving existing customers to further purchases. Electronic sales try to simplify the buying process and to provide superior customer support. Electronic service has the task to provide electronic information and services for arising questions and problems or to convey customers to the right contact person in the organization. The eCRM system comprises a number of business processes, interlinked in a logical succession: • Market segmentation: The collection of historical data, complemented with information provided by third parties (such as marketing research agencies), is segmented on the basis of customer life-time value (CLV) criteria, using data mining applications. • Capturing the customer: The potential customer is attracted to the Web site of the firm through targeted promotional messages, diffused through various communication channels. • Customer information retrieval: The information retrieval process can be either implicit or explicit. When implicit, the information retrieval process registers the Web behaviour of customers, using specialized software applications, such as “cookies.” On the other hand, explicit information can be gathered through direct input of demographic data by the customer (using online registration forms or questionnaires). Often, these two categories of information are connected at database level. • Customer profile definition: The customer information collected is analyzed in relation with the target market segments identified through data mining, and a particular customer profile is defined. The profile can be enriched with additional data (e.g., external information from marketing information providers). This combination creates a holistic view of the customer, his needs, wants, interests and behaviour (Pan & Lee, 2003). • Personalization of firm-customer interaction: the customer profile is used to identify the best customer management campaign (CMC), which is applied to personalize the company-customer online interaction. • Resource management: The company-customer transaction require complex resource management operations, which are partially managed automatically, through specialized IT-applications, such as Enterprise Resource Planning (ERP) or Supply Chain Management (SCM), and partly through the direct involvement and coordination of operational managers.
Data Mining For Customer Relationship Management