CRM objective is to build good relationship between company and their member (customer). Good relationship will bring good impact on the response of company program. Company program it could be: invitation on launching new product, sales promotion, new branch opening, anniversary celebration, member gathering or other event.
Response mean number of customer come to the event and purchase the product or an inquiry, which can be converted to an order. Response rate as measurement of the promo program is percentage of ratio customer who purchase the product at the event to total customer were contacted by company trough direct marketing media.
There are three factors effect to response rate. Those three factors are Frequency, Recently and Monetary or commonly shorted as FRM.
- Frequency indicates to customer loyalty. More frequent purchase customer made at the particular store indicate that the customer more loyal to that store.
- Recency indicate that the customer is loyal at current period. Combination with frequency it could be some of the customer frequent shops to the store but not at this year perhaps last year. This is indicating that customer less loyal compare to some customer who purchase rarely but at current year.
- Monetary mean total amount customer spent at the store. Group customer with higher spent at the store relatively indicating more loyal compare to group customer with low spent at the store.
Base on the above factor we could group customer become three categories and we may labeled let?s say as gold, silver and bronze groups customer. Gold group customer who is categories as loyalist usually will bring good response to the program. While silver group customer will bring lower response compare to Gold customer and bronze customer will give lowest response. This is for the standard approach or promo program.
We can manipulate the above situation if we have information about the need and want each of the group. Than mixed each group with suitable promo offer, time deliver, medium contact or other marketing mix to improve customer response for the entire group.
