Development of a framework to retain customers
through customer relationship management
Angela Haran
School of Computing
Dublin Institute of Technology
Kevin Street, Dublin 8, Ireland
angela_haran@yahoo.co.uk
ABSTRACT
Customer Relationship Management (CRM)
discusses the management of relationships with
customers through various technologies. It has
evolved over the years to play a very important
role to aid organizations retain their customers.
To retain customers, organizations must
understand why customers leave initially and
realize a solution which would stop the customer
leaving. Organizations must then question
themselves as to why they need to retain
customers, and how they will benefit from
retaining their customers. Customer retention
strategies are designed to help aid organizations,
it is shown through the customer retention model
that no one strategy is superior. It is better to
create an overall strategy and implement it.
A framework is then created to assist the
implementation with a list of guidelines which
should all agree with the strategy before its
implementation. A customer retention cycle is
designed to help understand the process from
initial implementation of the CRM technology
right through to retaining customers. The cycle
shows loop facilities to allow the organization to
return to previous step if they are not successful
at any stage.
Keywords: Customer relationship
management, customer retention, data
warehousing, data mining, data mart, customer
trust, customer satisfaction, SWOT analysis of
CRM
1. Introduction
“To satisfy the customer is the mission and
purpose of every business.”
Drucker (1973)
The aim of this paper is to provide a framework
which would assist an organization to retain its’
customers through customer relationship
management (CRM). Peter Drucker (1973) is
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quoted above, this paper aims to prove the truth
in this statement and further suggest that
customer satisfaction and customer loyalty lead
to customer retention.
The paper is aimed at the management of
organizations who have a strategic view on how
they are going to retain their customers through
CRM.
Section 2 sets out what CRM is and how it has
evolved over the past number of years. This
information will then be used to conduct a
SWOT analysis and assist in the development of
the framework.
Section 3 investigates why organizations need to
retain customers and also how to satisfy the
customers within the customer base. Customer
retention strategies will be formed and they will
be tested to ensure that they do actually help
retain customers.
Section 4 will discuss a set of principles that may
be used in a retention framework – this will be
combined with a model which draws all the
information together from the initial stages.
2. An overview of customer
relationship management
The following section looks at what customer
relationship management is and how it has
evolved over the years. Also included in this
section is a context diagram, designed by the
author to show the many different departments
and people that CRM can affect in an
organization.
2.1 What is customer relationship
management?
Customer relationship management (CRM) was
the buzz word of the 1990’s. Many researchers
such as Peppers and Rogers, (1999) have tried to
describe it. In some businesses,
) CRM is seen as
extended databases full of information about the
customer to help extend sales while others see it
as being a tool specifically designed to work on a
one to one basis with each of their customers
(Peppers and Rogers, 1999). CRM, when
implemented properly, can serve as a multi-
tasking technology that enables the firm to
maximize profits and their relationships with
their customers (Goldenberg, 2000). According
to the mentioned researchers, CRM’s main aim
is to gather as much information as possible
about a customer which will help increase
profits.
XU et al, (2002) describe CRM as being ”An
information industry term methodologies,
software and usually Internet capabilities that
help enterprises, manage customer relationships
in an organized way”, they also describe it as
“an all-embracing approach, which seamlessly
integrates sales, customer service, marketing,
field support and other functions that touch
customers” (XU et al., 2002 )
sales, marketing effectiveness, responsiveness
and market (Twomey, 02). Customers are assets
to any company and therefore the more
information that is held about them the easier it
will be to know what exactly they want. “CRM
is a system which ensures that customers receive
consistent treatment in all of their interactions
with the organization. It enables them to be
treated as individuals and makes them feel
valued by the organization” (Twomey, 2002).
“Customer relationship management is a
combination of people, processes and technology
that seeks to understand a company’s
customers” (Chen & Popovich, 2003).
(Laudon & Laudon, 2002) perceive CRM as
being “A business and technology discipline to
coordinate all of the business processes for
dealing with customers”.

CRM is a strategy used to learn more about
customers’ needs and behaviours in order to
develop stronger relationships with them. It
involves a process that will help bring together
lots of pieces of information about customers,
The table below demonstrates how CRM has
evolved over the last couple of years through
different researchers;

Peppers& Goldenburgh, Xu et al., Twomey, Laudon& Chen&

Rodger 2000 2002 2002 Laudon, Popvich,
1999 2002 2003
Database full
of x
information
Multi-tasking
technology x
Increases x
profit
Integration of
customer X x x
systems
Get to know
your x X x x
customers
Combining
business and X x x x
customers
Figure 1: Evolution of CRM (Source: Author, 2005)
“A multi tasking technology set up in the form of
Each of the heading are an extract from a database to hold vast amounts of information
definitions each of the mentioned researchers about a customer. This would enable the
used to describe CRM. integration of customer systems, allowing the
organisation to get to know their customers by
According to the author CRM could now be combining business details with customer
defined as; details, in turn improving profit” (Author, 2005)

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It must be pointed out at this stage that CRM
itself is not a new concept but is now practical
due to recent advances in technology (XU et al.,
2002). It is the authors opinion that CRM started
years ago within the corner shops where
shopkeepers knew all their customers and their
exact needs. Through the use of increased
technology, CRM now aims to improve
profitability, with emphasis on winning new
customers and retaining them through the
effective management of customer relationships
(Christopher et al., 1991). Acquiring a better
understanding of customers allows companies to
interact, respond and communicate more
Strengths
• Identifies best customers
• Holds all customer information
• Increases sales efficiency
• Ensures customer satisfaction
Opportunities
• Ability to please customer
• Increase sales base
• Improve relationship with customer
Figure 2: SWOT Analysis of CRM (Source; Conlon (1999), Kale (2004), Twomey (2005), Xu et al.,
2002), Robertswitt (2000) adapted Author (2005))
2.2.1 Strengths:
• The main strength of a good CRM
strategy is the ability to identify the best • The final strength adds to the previous,
and most profitable customers (Conlon,
1999). While a good customer may be
regarded as someone who comes to the
shop everyday for one item, the best
customer will be someone who visits
regularly spending 10 times as much as
the good customer – these best
customers must be identified and
rewarded (Kale, 2004).
• The author puts forward that the second
strength of CRM is that it holds all the
valuable information about
customer and allows an organisation to
get to know the customer on a more
personal level.
• The third strength is increased sales
efficiency (Xu et al., 2002). The
organization, through good CRM,
knows what the customer needs. This
increases the loyalty of the customer
and the customer becomes more reliant
on the organization and discourages
effectively and significantly to improve retention
rates (Apicella et al., 1999).
2.2 A SWOT analysis of CRM
At this stage of the paper, a SWOT (Strengths,
Weaknesses, Opportunities, Threats) analysis
must be conducted on CRM with view to
customer retention – it will help form the
framework which will be discussed in section
four.
Weaknesses
• Overload of information
• Does not arrive with information already
entered
• Lack of cultural preparation
Threats
• Loss of personal interaction
• Over automation
• Poor integration with back office systems
customers to leave the organisation
(Twomey, 2002).
as customers become more reliant on
the organization, their satisfaction with
the organization is increased
(Robertswitt, 2000). If customers are
happy, they will not leave what they are
familiar with (Xu, et al 2002).
2.2.2 Weaknesses:
• The first weakness of a CRM is
overload of customer data – or
information about the customer is “not
being stored in a logical manner”
the (Kale, 2004). The relevant information
maybe there, but if not managed
properly it could lead to failure of the
CRM project (Crosby & Johnson,
2002).
• The second weakness of CRM is that no
CRM system comes preloaded with
customer information. Organizations
do not realize that they actually have to
collect the relevant information and that
this takes time (Bultema, 2000). The
author states that this could cause the
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 project to fail and the organization
losing valuable time and money.
• The third weakness is CRM
implementation will lead to cultural
change within the organization,
especially among frontline staff (Fickel,
1999). For example; staff in a retail
firm may be focused on managing
accounts and contracts but not
customers. Through the
implementation of a CRM technology,
staff will be forced to change their
approach to their work.
2.2.3 Opportunities:
• The first opportunity of CRM
technology is giving the organization
the ability to please the customer
(Galbraith, 2002). This can be achieved
by knowing what the customer wants.
For example, a good CRM system will
keep track of a particular brand of
product a customer may use, if the
customer forgets what this particular
brand is, a staff member would be able
to find out using the CRM system. The
customer is satisfied, and chances of
them returning in the future are
increased.
• The second opportunity presented by
CRM technology is the opportunity to
increase the organizations sales base.
According to (Kendrick & Fletcher,
2002), sources of future profits lie with
existing customers. They state “By
analyzing existing customers,
organizations are able to adapt to their
changing needs”. Organizations are
able to increase their sales base by
selling more to their existing customers.
Peppers & Rodgers (1993) quote a
statement made by a dry cleaning
company in the early 90’s. “Instead of
trying to get as many dry cleaning
customers in town as possible, we will
try to get more business from each of
the customers we already have, we now
include repairs, alterations and
specialty cleaning as part of our
service”. The sales bases can be
increased by including other services or
incentives. Organizations can then
focus on their existing customers,
offering them the extras.
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• The final opportunity of CRM is to help
improve relationship with customer.
Todman, (2001) points out that the
secret to customer relationship
management is “to know who our
customers are and what it is that they
need from us”. This can be achieved
through good control of CRM
technology, ensuring customer data is
clear and concise, as well as
ensuring that staff are good with
the customers.
2.2.4 Threats:
• The first threat of CRM is loss of
personal interaction. Through extended
use of technology the customer
becomes an identification number rather
than a person – the organization must
ensure that staff are meeting customers
face-to-face to combat this threat
(Dickie, 1999).
• The second threat of over automation
suggests that CRM can become too
computerized and again would lead to
the loss of personal interaction – this
suggests it could lead to the customer
feeling worthless. According to
(Galbraith, 2002) customers themselves
prefer a relationship with their supplier
and want a single contact point rather
than the impression that they are just
another buyer on a long list.
• Poor integration with back office
systems is the third threat – the ability
to integrate CRM technology with back
office systems has proven to be a
critical success factor for CRM
implementation and success (Chan,
2005). According to (Chan, 2005),
“Implementing a new CRM module is
like adding a new room to an existing
house, it requires guidance to ensure
everything fits together in function and
form”. The researcher contends that
even if the CRM technology is
implemented it still may not interact
correctly with the back office system to
achieve results.
CRM depends on “systems” to support
continuous interactions, fast feedback, adaption
and proactivity (XU et al.,2002). The researcher waiting for 10 minutes while the sales
contends that technology alone cannot do this, assistants ignored them, they probably
and (Xu et al., 2002) states that “companies need would not go back to that store. Rust et al.,
to understand how they are going to fill these (1995) agrees with the researcher when they
gaps as no application can organize the data in suggest that “quality of service is viewed as
the most beneficial way”. Successful CRM an important means for customer retention”.
technology is a combination of a good system
along with good human interaction. Product dissatisfaction/Better product
elsewhere
The second reason a customer may leave is
3. Customer Retention Strategies because of product dissatisfaction, this also
includes the cost of the product (Schmittlein,
Most organizations will agree that repeat
1995). Customers will pay a high price for
customers are the most profitable (Jamieson,
a product if they are satisfied with it, but
1994). This section investigates the reasons why
will not pay if they think the product is
customers leave, discusses reasons why
inferior to that of its competitors (Jamieson,
organizations need to retain their customers and
1994). If the product does not meet the
develops some customer retention strategies.
customers’ requirements the customer will
move to another vendor.
3.1 Why do customers leave an Friend recommendation
organization A third reason why a customer may leave
Customers may leave an organization at any could be that a friend recommended another
time, some of the main reasons for this include; vendor (Malhorta, 1982). The organization
• Poor service, (Fisk et al., 1995) has little or no control over this situation and
• Product dissatisfaction/Better product can only strive to make themselves better
elsewhere, (Jamieson, 1994) than their competitors (Rowe &
• Friends recommendation, (Rowe & Barnes, 1998).
Barnes, 1998)
• Relocate, (Schmittlein, 1995)
Move house
The final reason is not controllable by the
Poor service
organization as the customer may have
The first reason a customer may leave an
relocate (Author, 2005). If the organization
organization is poor service. Quality of
becomes aware that a customer is moving,
service is considered to be a critical success
perhaps they could encourage the customer
factor for organizations (Venetis & Ghauri,
to locate their nearest store to their new
2004). According to Fisk et al., (1995),
address (Schmittlein, 1995).
“The quality of service provided to a
customer is one of the main links to
If the organization knows the reason why the
customer satisfaction. Customer satisfaction
customer is leaving, they must try to stop them in
leads to customer retention.” If a customer
order to retain them. The following model
receives poor service, they would not
describes methods on how they may achieve this.
consider returning. For example, if a
customer walked into a store and stood

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 • Train staff
Poor Service

Product • Improve
dissatisfaction quality of
product
Why do Customer
customers Relocate • Location of satisfaction
leave? other stores

Friend’s • Invite
recommendations friend to
the store

Figure 3: Customer satisfaction model (Author, 2005)

Having discussed why customers leave, the
diagram describes four methods to overcome
customers’ reasons for leaving and how to create
customer satisfaction. Figure 4 presents a
solution to overcome the problem of poor service
within the organization; introduction of training
for the staff on how to treat customers.
According to Bolton et al., (2000) “service
excellence enhances customers’ inclinations to
buy again, to buy more, to buy other services, to
become less price sensitive, and to tell others
about their positive experiences”. It would end
up costing the organization more money not to
train staff properly, than the actual cost of
training (Cronin & Taylor, 1994).
If the customer is dissatisfied with the product, it
is with the quality or the price of it (Jamieson,
1994). The organization must go back to the
design phase of the product and to locate where
it can be improved or they must try to reduce
their
service. They could perhaps offer special
discounts for first time-users.
The final reason of relocation cannot be
controlled by the organization in anyway, as
previously mentioned they may let the customer
know the location of other store in the area they
are moving to (Schmittlein, 1995).
3.2 Why organizations retain
customers
According to (Hilebrand, 1999), “retaining
customers is more profitable than building new
relationships” or as the Harvard Business
Review states “it costs six to seven times more to
attain a new customer than to sell to the ones
you have”. It is financially better and less time
consuming for an organization to retain their
customers rather than acquiring new ones.

margins to help lower the price of the product
(Anderson & Fornell, 94).
If organizations find customers are leaving due
to friends’ recommendations or business
partners, the organization could invite the
customers and their friends to their store or
organization show the benefits of their product or
Research has shown that the main factors of why
organizations retain customers include;
• Increase profits
• Create a healthy image
• The more customers retained, the larger
the customer base will become

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Long-term customer retention relationships can
lead to increased profits, therefore organizations
want to retain their customers as long as possible
(Berry, 1995). These relationships create
barriers against competition and customers,
although buying regularly could be getting a
reduction in the price of the product or service
but yet still create a profit for the organization
due to regular sales (Reichheld & Sasser, 1990).
When an organization retains its customers for
long periods it creates an image that helps attract
new customers as it is perceived that there must
be something worthwhile about the organization
as it has retained previous customers for so long
(Berry, 1995). This creates more buying and
therefore higher profit margins for the
organization.
When organizations successfully retain
customers, their customer base will increase due
to customers recommending the organization to
business partners and customers (Anderson et
al., 1994). It sustains deeper relationships made
with previous customers while gaining
commitment from new customers (Bitner, 1990).
So the main aim of retaining customers is to
create profit, but also to create a larger customer
base for the organization.
3.3 Development of customer retention
strategies
To retain customers, you must focus on customer
satisfaction. Organizations must work at
creating and maintaining an ongoing relationship
with their customers (McCall, 2004). Customer
expectations are always high. According to
Horowitz, (2004) “To keep a customer, you need
to get close to the customer and understand his
or her wants and needs”
The researcher has identified seven strategies
that an organization may follow when retaining
customers:
Customer Customer
satisfaction
Figure 4: Customer trust model (Source Author, 2005)
• Ensuring sales equals marketing
• Getting the customer to trust you
• Critically analyzing customer
intelligence through data mining
• Handling complaints correctly
• Specifying products for specific
customers
• Prioritizing the needs of key customers
• Securing loyal customers
Ensuring sales equals marketing
The first strategy an organization may follow is
to ensure that sales equal marketing (Chan,
2005). Chan, (2005) states that an organization
must make sure that every detail of the
marketing campaign of a product or service
matches exactly what is being sold.
Turban et al., (2004) put forward an example of
how things can go wrong when marketing
promises more than sales can deliver. During the
1999 Christmas season ToyRUs.com failed to
deliver toys to one in twenty children for
Christmas. Marketing had promised prompt
delivery to everybody and guaranteed delivery
before the Christmas, but did not check with how
much the sales department could actually handle.
It resulted in a significant number of irate
customers and a huge loss on profit. The
majority of these customers failed to use
ToysRUs.com again.
McKenzie, (2001) reiterates in order to retain
customers, sales departments must always be
aware of special offers or discounts that
marketing are making to customers, otherwise it
seems as if nobody within the organization really
cares about the customers.
Getting the customer to trust you
The second strategy is to create trust between the
buyer and the organization. Customer trust plays
a major role in customer retention but it does not
always guarantee continued customer patronage
(Jones & Sasser, 1995).
Customer
trust retention
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According to Hart & Johnson, (1999), customer
satisfaction is a main driver of customer
retention and it evokes positive feelings from the
customer. Even though the customer is satisfied
it does not mean that they automatically assume
that they will receive the same service or product
at all times – it takes time to build the trust.
Ranaweera& Prabhu, (2003) state that
satisfaction neither may nor ensure a long-term
commitment, but that organizations who look
beyond satisfaction for the customer and allow
the customer to develop trust in the organization
do establish long-term relationship’s with the
customer. Once the trust had been placed, the
relationship formed, the likelihood of either party
ending the relationship decreases (Morgan &
Hunt, 1994).
Critically analyzing customer intelligence
through data mining
Critical customer intelligence through data
mining is the third strategy put forward by the
researcher.
3.3.1 Dataminig
“Data mining is the process of exploration
and analysis by automatic or semi-
automatic mean, of large quantities of data
in order to discover meaningful pattern and
rules” (Berry et al., 1999) Data mining
digs down through data until it finds a
certain pattern or occurrence which will help
the organization get to know their customers
better through CRM (Story, 1998). Data
mining extracts information from a database
that the organization did not know existed.
Relationships between customer patterns
and customer behaviours that are non-
intuitive are the jewels that data mining
hopes to find (Thearling et al, 2000).
Through the use of data mining,
organizations can learn critical information
about their customers. It allows them to
identify market segments containing
customers or prospects with high potential
(Au, et al., 2003). Because organizations
can see what customers want before the
customers know themselves, they are able to
present this to the customer and therefore
increase satisfaction; this leads to the
customer trusting the organization to know
what they want followed by customer
retention (Lejeune, 2001).
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So, good data mining is a critical success
factor initially in the CRM process, but also
proves to be important in customer
retention.
Handling complaints correctly
The fourth strategy an organization may follow
is to set up a list of procedures to deal with
customer complaints.
Research has shown that customers who perceive
their complaint has been dealt with satisfactorily
are amongst the most loyal thereafter.
Addressing a customer's grievance with honesty
and integrity is as good a path to retaining your
customer as any (Crosby et al.,2002).
A growing number of customer complaints are
caused by fragmentation within a large
organization. According to Gale, (1994) there is
nothing more annoying than ringing up to
complain and being passed onto another
department, it immediately causes a customer to
get angry before they even give their complaint.
Most dissatisfied customers don't complain –
they just leave - taking their business with them.
Organizations will not even know they have
disappeared until they notice a decrease in profit.
After this the customer will inform business
partners and other cusotmers of their experience,
about how incompetent the organization is (Gale,
1994).
The idea put forward is to set up a link on a web
page, or even something as simple as a
grievances box in store to allow customers vent
their annoyances and complaints about the
organization, the product or the service.
Specifying products for specific customers
The fifth strategy presented is to create a specific
product for a specific customer (Wyner, 2002).
Organizations would identify a niche in the
market, and produce the service or product
(Porter, 1995). The difference with this
approach is that organizations would find it
easier to retain their customers due to the fact
that nobody else would be selling the product or
service in that particular area– it must be noted
that organizations should not let their standards
drop because customers will always find an
alternative (Conlon, 1999).
Prioritizing the needs of key customers
A sixth strategy that may be put forward is to
ensure that the organization prioritizes the needs
of key customers. Focusing on these customers’
needs, is not about giving them everything they
want or need, it is about understanding what they
are willing to pay for, delivering that efficiently
and capturing the value back through the price
(Jamieson, 1994). The researcher puts forward
that it must be clear to the organization who the
key customers are and what exactly they want,
this could be achieved through data mining.
Securing loyal customers
The final strategy of securing loyal customers is
about locking in valuable customer relationships
(Kale, 2004). (Kale, 2004) also suggests that it
will not be enough to satisfy customers as
Sales and
marketing
Specific
products for Prioritise key
specific customers
people needs
Customer
intelligence
and data
mining
Handling
customer
complaints
Figure 5: Customer retention model (Source Author, 2005)
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satisfied customers may leave or switch for no
good reason, and loyalty must be built through
getting customers to trust the organization.
According to Kendrick & Fletcher, (2002)
“getting customer relationships correct leads to
loyalty, this should ensure that competitors will
not get the organizations customers”. Loyalty
has a direct link to customer satisfaction and
customer trust.
It can be seen that each of the strategies
mentioned are unique but they do require the
support of other suggested strategies in order to
achieve an overall strategy when retaining
customers (Bowden, 1998). The model below
shows which strategies rely on each other and
why. No one strategy is superior.
Create
customer
loyalty
Create
customer
trust
 The customer retention model shows how each
of the seven strategies previously mentioned are
closely linked to one another. Customer
intelligence and data mining filter for data about
a customer to ensure organizations are aware of
customer’s needs and expectations (Thearling et
al, 2000). Once the expectations have been met,
customers start to trust the organization and this
leads to customer loyalty and retention (Jones &
Sasser, 1995).
It is a two-way channel between customer
intelligence/data mining and prioritizing key
customers needs, again customer intelligence
allows the organization to know who the key
customers are and how to meet their needs
(Story, 1998). The researcher contends that
prioritizing key customer needs allows for the
customer intelligence to be updated and to keep
track of who these customers are and if their
needs change.
If the marketing and sales department know of
the key customer needs they can present directly
to the customer or present as a specific product
for a specific customer (Jamieson, 1994).
Marketing must ensure that the product they are
presenting is identical to the one that is being
sold (Chan, 2005).
Handling of customer complaints can prove vital
to gaining the customers trust which again leads
to loyalty (Gale, 1994). The information
gathered through complaints is also fed into the
data mining process allowing the organization to
identify why customers are not happy with the
product or the service (Crosby et al., 2002).
According to the researcher the combinations of
the various strategies lead to customer loyalty
which can nearly guarantee customer retention.
4. Framework of how to retain
customers through Customer
Relationship Management
(CRM)
It has been noted that retaining customers leads
to an increase in the customer base as well as an
increase in profit. In this section the researcher,
through extensive research will present a
framework which an organization may use to
help retain customers. At this stage that the
framework is a synthesis of the work of other
acknowledged authors and are brought together
in this paper.
4
It is a precondition at this early stage that the
CRM technology has already being
implemented, and the technology itself is
working in accordance with the organization’s
strategies.
The framework will follow a step by step process
as follows:
• Establish customer base
• Manage of customer relationships
• Satisfy the customers needs
• Meet Business Drivers
• Meet IT Drivers
• Retain the customers
4.1 Establish customer base
The first step to be taken after the initial
implementation of the CRM technology is to
establish a customer base. Most organizations
will already know who their customers are and
have built up a relationship with them (Conlon,
1999). Acquiring customers through
promotional campaigns such as two for one
offers, offer of discounts and various incentives
through loyalty cards and coupons have been
shown to be effective when trying to establish a
customer base (Twomey, 2002).
To maximize these new relationships, steps
could include customer surveys to establish what
the customers thought of the product or service,
assisting customers in the use of the product or
service and providing free postage or delivery if
required (Conlon, 1999). Organizations must be
willing to show that they are there to cater to all
needs of the customer. According to (Walder,
2000), “Not all customers are comfortable with
unassisted transactions, so it is important to
address the initial meeting with the customer as
if they are the only customer, prove how
important the relationship with them is and
avoid eroding relationships before they have
even begun properly”.
Once the customer base has been established, the
organization then must ensure that these
relationships are managed properly.
4.2 Manage of customer relationships
All relationships in whatever business are built
on the communication of ideas between two
parties (Walder, 2000). A relationship will grow
or die depending on the level of communication
and the mutual acceptance of ideas
communicated by both parties. Therefore, good
management is the key to building a relationship
between the organization and the customer
(Walder, 2000).
Personalization of each relationship leads to the
customer being happy and satisfied with services
or products. Keeping the customer updated
through a monthly newsletter for example, would
increase the customers’ knowledge of the
product and the organization (Eckerson &
Watson, 2000).
According to (Gale, 1994), one of the main
reasons a customer leaves a relationship is due to
poor handling of complaints. To discourage this,
a proper complaints procedure must be included
as part of the management of customer
relationships.
Good management of relationships should
include knowing your customers needs before
they even know them, a good example is that of
a mobile phone company who actually send out a
replacement phone to their customers before
their customers even order them. The customer
is then enticed to buy the newer model before
they really need to.
4.3 Satisfy customer needs
Section 3.3 discussed how to satisfy dissatisfied
customers through correcting different situations
such as staff been rude to customers, poor
product quality, moving of house and friends
recommendations. Rather than dealing with
dissatisfied customers, the author now looks at
how an organization can satisfy new and existing
customers. It has been shown in section three
that customer satisfaction leads to customer trust
and in turn leads to customer retention so it is
vital that all customers are happy.
According to (Moses, 2001), many types of
businesses send out customer-satisfaction
questionnaires after a transaction or an
interaction with a customer. In a retail situation,
a manager may speak to the customers before
they leave the store to establish why the
customer was satisfied, and what could be done
to improve it (Gale, 1994). Again in the retail
situation, something as simple like learning the
5
customers name could prove to be as satisfying
as getting a promotional offer (Twomey, 2002)
4.4 Meet Business Drivers
How can businesses benefit from CRM? As
explained in section 3.3, it is cheaper to retain
and satisfy current customers than to acquire new
ones (Hilebrand, 1999). However, it must be
noted that it is not profitable to hold onto all
customers. Some customers buy very little and
may end up costing the organization more time
and money than they are worth. Through the
correct use of CRM technologies – these
customers can be selected and staff made aware
of them, and also made aware not to waste too
much of the organizations resources on them
(Patten, 2001).
Levine,(1993) states that organizations who have
successfully implemented CRM technologies
have enjoyed customer retention because of this
success. These organizations did not view the
CRM technology as an IT project which was run
by a specific department, they viewed it as an
enterprise-wide initiative. Because CRM has
been installed across the organization, and all
staff members are aware of what to and what not
to do, the organizations’ staff will be able to
deliver higher levels of support and customer
satisfaction (Fickel, 1999).
The first business driver is profit – because
organizations aim to make a profit and increase
on it, they are willing to try new ways of
enhancing their opportunities (Apicella, et al.,
1999 ).
Other business drivers include;
• Reduce customer relationship
management (CRM) costs, (Bultema,
2000)
• Ensure the scalability and flexibility of
customer relationship management
(CRM) application resources, (Chan,
2005)
• Focus on core business, (Wyner, 2002)
Reduce customer relationship management
(CRM) costs Though cost tops the list of
business criteria and is typically the reason
manufacturers first consider having their
customer relationship management (CRM)
applications hosted, costs should be factored in
with other drivers (Bultema, 00). The researcher
states that if the CRM is costing the organization
less but it is not functioning properly, it could
lead to losing valuable custom.
Ensure the scalability and flexibility of
customer relationship management (CRM)
application resourcesThis ensures scalability
and flexibility (Chan, 05). There are factors
which constantly change both internally and
externally every day. The CRM application
must allow for change, and be able to adapt to
various situations (Conlon, 99). The researcher
puts forward an example; if a major factory was
closed down and resulted in redundancies in a
particular town or area, different stores would
see a reduction in customer figures – the CRM
application must understand that the organization
has not lost their custom they simply cannot
afford luxuries, perhaps in this instance, stores
could put on special offers on products in order
to retain customers.
Focus on core businessThe third driver put
forward is focusing on core business; this relates
back to the strategy of key services or products
for key customers (Wyner, 02) – the organization
must find a niche in the market and focus their
time and resources on this niche. This will
increase the barriers against other competitors
and help retain customers (Porter, 95).
The business drivers reiterate the strategies afore
mentioned. Profit and costs play a major role,
followed by the customer needs, defining a niche
as well as flexibility within CRM technology.
4.4 IT Drivers
Some main IT drivers include:
• Applications, (Thearling et al., 2002)
• Data/Data Warehousing, (Thearling et
al., 2002)
• End user capability and improving
service levels for internal users, (Patton,
2001)
6
• The ability to upgrade customer
relationship management (CRM)
application quality, processes, and
methodologies, (Jamieson, 1994)
Applications
The initial technology driver is the applications
used for CRM. CRM technology requires
customer-facing applications – such as call
centre or web systems – and back end systems.
Front office systems providing data about
customers transactions and enquires can be
matched up with back-end financial systems that
have records of customer credit and invoices.
Data/Data Warehousing
The next driver mentioned is data and data
warehousing (Thearling et al., 2002). The
technology would not be able to function without
data about customers and the data warehouse is
the storage area (Lejeune, 2001). Data can come
from a variety of sources – call centers, point of
sale transactions, web based data and back-end
databases, even telephone records. This data is
integrated into a customer oriented data mart or
data warehouse which captures customer data
(Story, 1998).
4.4.1 Data warhousing
A data warehouse is “..a collection of
integrated, subject-oriented databases
designed to support the DSS function, where
each unit of data is relevant to some moment
in time. The data warehouse contains
atomic data and lightly summarized data..”
(Inmon, 2002)
Building a data warehouse is a necessary
"pre-processing" activity for developing
knowledge discovery applications. The
warehouse must be in place to hold vital
data to assist in the knowledge discovery
cycle (Mattison, 1996). He goes on to
describe the warehouse as a data base which
is organized to serve as a neutral data
storage area and used by data mining. He
also states that “it must meet specific
requirements as well as having a predefined
set of business criteria” (Mattison, 1996).
Laudon & Laudon, (2002) describe a data
warehouse as been “A database, with
reporting and query tools, that stores
current and historical data extracted from
various operational systems and
consolidated for management reporting and
 analysis”. According to the author, data
warehouse is a repository where a vast
amount of data is held after it has been
extracted and transformed.
Data warehouses have various components,
according to Inmon (2002) they main ones
comprise of :
• Subject Oriented – data is organized by
subject instead of application
• Integrated – The encoding of data is
often inconsistent
• Time Variant - The data warehouse
contains a place for storing data that are
five to 10 years old, or older e. g. for
comparisons, trends, and forecasting
Figure 6: Structure of a data warehouse (Source Inmom, 2002)
Figure 7 gives a clear picture of the structure of a
data warehouse. It shows the different levels of
detail. (Inmon, 2002)
An example used to discuss this model could be
student details held by a college or university.
The current detail level refers to the students of
today, those found in DIT this year or semester.
It would hold information such as, name,
address, date of birth, course of study, faculty
and school. Old detail data would refer to past
students, what they did, and what they actually
achieved. The lightly summarized level may
hold information of all the students who passed
recently and what courses were the highest pass
rates. The highly summarized could refer to the
top students of the past number of years and
what exactly they have achieved. It could also
hold information about the top courses.
7
• Non-Volatile – Data is not updated or
changed in anyway once it has entered
the warehouse
A data mart should also comprise of these
components. Data marts are created as a
smaller and decentralized version of data
warehouses, where only a portion of the
organizations data for specific function or
population of users. (Laudon & Laudon,
2002)
Structure of data inside the data warehouse
Meta data/information is data about data. It
supports the understanding of the data stored in
the data warehouse (Hoffman, 2003). This could
include times, dates about the data, or maps of
how to find certain data.
Queries are run against this data to perform
business intelligence functions – reporting,
analyses and data mining (Story, 1998).
According to (Story, 1998) “ Such tools can
help the organizations visualize patterns and
relationships in customer behavior and trends”.
A number of variables can be measured through
this data analysis such as profit, patterns on
returned goods and re-order rates. Through this
information organizations will know who key
customers are, and how to cater for their specific
needs (Inmon, 2002). The researcher puts
forward that you may be treating your best
customers the worst.
End user capability
The third driver is that it is essential that CRM
technology is end user friendly – if end users
have difficulty in using the system, or cannot
pull up the data they need within a few seconds
they will abandon the application and its’
benefits will not be realized (Patton, 01). The
researcher suggests that constant internal training
for staff must be provided to ensure the
technology is performing to maximum ability.
Upgrade customer relationship management
(CRM) application
The final driver mentioned is that the CRM
application can be upgraded easily and that the
quality, processes and methodologies used are
upgraded also. This again is essential if the
organization wants maximum usage from its
resources (Jamieson, 1994).
4.4 Retain the customers
Although front end systems such as advertising,
public relations, press releases, direct mail, sales
letters and promotional items are important,
organizations must be willing to invest money to
build and maintain relationships with existing
customers. It is vital to have the organizations
name known to existing and potential clients
(Bolton et al, 2000). Also, having programs in
place that make it easy for people to do business
with you is essential in order to retain your
customers (Chen & Popovich, 2003).
Modern organizations depend on repeat business.
They must ensure that they have a good
5
customer retention system in today’s competitive
environment (Jamieson, 1994).
The following example is given. A pet store
offering grooming services could potentially
increase revenue by having a reminder system in
place to notify the customer when their dog is
due for grooming or to let them know when a
new product arrives. They may also consider
gathering information on the customer, their
frequency in the store and perhaps a free
grooming service may be offered after a
predetermined amount of visits have been made.
Many pet owners view their animals as family
members and will be more likely to do business
with you when they believe you care about their
pets just as much as they do.
Customers who regularly visit your business
would also be more likely to refer you to their
friends and associates (Fickel, 1999). It must be
noted that frequency is determined by your
particular industry or service. The researcher
states that a grocery store may consider twice-
weekly visits a good frequency, whereas a dry
cleaner may only be monthly.
One of the most important things for
organizations is changing customers from being
a one or two item purchaser to purchasing
several products. Most businesses can take their
basic product or service and expand into other
offerings (Berry, 1995). A good example of this
is a car dealership offering free car washes for
first year after purchase or a beautician offering a
free manicure after every ten. This is how to
keep the customers aware of the organization.
Customer Retention Framework

Comments
• Establish a customer base

• Manage of customer relationships

• Establish customer needs

• Identify the business drivers

¾ Let unprofitable customers go
¾ Project not viewed as IT project
¾ Increase profits
¾ Reducing CRM costs
¾ Flexibility of CRM applications
¾ Focus on core business
• Identify the IT drivers
¾ Data/Data Warehousing
¾ Applications
¾ End User capability
¾ Ability to upgrade CRM applications
• Retain your customers

Figure 7: Retention Framework (Source: Author,2005)

The above framework shows the steps that must
be taken to ensure that customers can be
retained. It will be shown in Figure 9 how this
framework allows for organizations to retain
their customers. It must be pointed out that the
framework must be followed in the order shown.
For example, there would be no point in trying to
manage customer relationships and establish
their needs if the organization had not even
established their client base.
The organization now questions the need to
retain customers, at this stage also, organizations
must learn how to satisfy customers who have
been previously dissatisfied with the product or
the service. The organization now is in a
position to create customer retention strategies;
the researcher has presented a list of these
possible strategies, and it has previously been
shown that a combination of the possible
strategies proves vital to customer retention.

Figure 9 uses the SWOT (Strengths,

Weaknesses, Opportunities, Threats) analysis,
the customer satisfaction model, the seven
strategies and the retention framework to show
how each step is needed in order to retain
customers. The starting point chosen is the CRM
technology, as previously mentioned the CRM
technology has already been installed. A SWOT
analysis is then conducted to access the
Strengths, Weaknesses, Opportunities and
Threats to CRM, the information is then fed back
into the CRM technology to ensure that the
initial step is a success. It then exits this loop
and moves forward.
If the strategy fails, it is fed back through the
SWOT analysis to understand why this failure
has occurred. If the strategy is successful, it then
follows the steps in the retention framework
which then leads to customer retention – this
information on the customers is retained and fed
back to the CRM technology to help understand
on the next cycle why it was a success. If the
strategy does not suit the framework, the
information is re-entered into the retention
strategies and another combination is assessed
and tested until the correct combination is met.

5
 CRM
Technology

SWOT Analysis

Why organizations Customer satisfaction

retain model

Customer retention
Strategies

Retention
Framework

Customer
Retention

Figure 8 : Customer Retention Model (Source Author, 05)

5
5. Conclusion
The aim of this paper was to develop a
framework which would retain customers
through the use of customer relationship
management (CRM) technology. In the initial
stages the author defined CRM according to
other authors and then described the evolution of
CRM over the years. The author then puts
forward their own personal interpretation of what
CRM is. A SWOT analysis was then conducted
on CRM to assist with the development of the
framework.
The second section of the paper then investigated
the reasons why organizations need to retain
customers, how to keep customers satisfied and
finally some suggestions for retention strategies.
The paper shows that while one strategy alone
may encourage a customer to stay, a combination
of more than one could almost guarantee
customer retention.
For the final section of the paper the researcher
designed a framework and a customer retention
cycle that organizations may use to help retain
customers. The framework lists six guidelines
that can be followed to help implement a
strategy. If the strategy dosen’t suit the situation,
in accordance with the cycle it can loop back and
keep looping until a suitable strategy/strategies
achieved – customer retention is almost
guaranteed at this stage.
No customer is guaranteed to remain 100 %
loyal to any one vendor – if they see a better
offer or price they will leave for the better deal.
This is the general barrier that organizations
must bear in mind for the future and these
organizations must understand this fact and not
become disillusioned by it.
The areas of further research could include
customer myopia – this deals with the over use
of existing customers, organizations exhaust
their resources and result in customers leaving –
also how issues such as the environment,
economy and political issues could influence
customer relationship management. The
development of a model which is particularly
suited to an industry could then be created by the
addressing the issues that would effect them
most.
5
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