Peter C. Verhoef, University of Groningen
Katherine N. Lemon, Boston College
*Extract from article*
One of the key developments in marketing and management practice in the last decade has been the growth of customer relationship management (CRM). Many firms have invested in large customer databases to understand, monitor and influence customer behavior (Boulding et al. 2005). “CRM is defined as the practice of analyzing and utilizing marketing databases and leveraging communication technologies to determine corporate practices and methods that will maximize the lifetime value of each individual customer” (Kumar and Reinartz 2005: 5). One of the critical aspects in this definition is the role of customer value, which is the economic value of the customer relationship for the firm. Therefore, other researchers also use the term “customer value management” (CVM), which: entails the optimization of the value of a company’s customer base. CVM focuses on the analysis of individual data on prospects and customers. The resulting information is used to acquire and retain customers, and to drive customer behavior with the developed marketing strategies in such a way that the value of all current and future customers is optimized. (Verhoef, van Doorn et al. 2007) CVM conceptually has its roots within relationship marketing. Relationship marketing has mainly focused on measuring constructs, such as commitment and trust, which create successful relationships with customers (R.M. Morgan and Hunt 1994). Customer data are not essential within relationship marketing.
* Peter C. Verhoef, and Katherine N. Lemon. “Advances in customer value management.” Handbook on Research in Relationship Marketing (2015): 75.